cdm basics
DESCRIPTION
CDM Basics. Marcos Castro, World Bank Institute CFCB Sao Paulo Workshop São Paulo City Hall, 4 May 2010. Financing Low Carbon Development in Cities. The CDM Option. 20.08.2014. 2. CDM survival kit for city officiers: 1. Baseline. - PowerPoint PPT PresentationTRANSCRIPT
CDM Basics
Marcos Castro, World Bank Institute
CFCB Sao Paulo Workshop
São Paulo City Hall, 4 May 2010
2Sao Paulo Carbon Finance Workshop, April 26 222.04.23
Financing Low Carbon Development in Cities
The CDM Option
3Sao Paulo Carbon Finance Workshop, April 26
CDM survival kit for city officiers: 1. Baseline
The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox
Reveals how much GHG can be saved and therefore demonstrates
Carbon Financing potential (ex-post and market-dependent!)
Carbon credits = emissions
Carbon credits = emissions
Gre
en
hou
se g
as
em
issio
ns
Historical Trend
Project start
Project start
Time
Baseline
Actual emissions
4Sao Paulo Carbon Finance Workshop, April 26
CDM survival kit for city officiers: 2. Additionality
The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox
Proves that the targeted emmissions wouldn‘t be saved without
CDM (precondition for every CDM project)
Project without carbon revenue is profitable – but not
sufficiently profitable compared with
alternatives
Project without carbon revenue is profitable – but not
sufficiently profitable compared with
alternativesProject without carbon
element
Project with carbon
element
Carbon revenue makes the project
attractive relative to investment alternatives
Carbon revenue makes the project
attractive relative to investment alternatives
Investmentthreshold
Revenue /
NPV
/
IRR
5Sao Paulo Carbon Finance Workshop, April 26 522.04.23
Some examples of additionality
Capturing methane from an urban landfill and flaring it Carbon credits represent the only source of income for undertaking
this activity
? Capturing methane from an urban landfill and utilising it to generate electricity
Project developer would have to demonstrate that the electricity revenue alone would not make this project attractive
Building a large hydro project for the grid in Ethiopia
Questionable additionality: there is already plenty of hydro activity in Ethiopia
6Sao Paulo Carbon Finance Workshop, April 26
The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox
The Carbon Finance add-on challenge!
CDM survival kit for city officiers: 3. CDM Toolbox
Project
Recall: CDM Project Cycle Depicts the step-by-step approach to CDM as well as the key institutions
6 to 12 months 1.5 months Crediting period of the project
Pro
ject
D
evel
op
erD
NA
DO
EC
DM
EB
PINPIN PDDPDD
Host country approval
Host country approval
Project validation
Project validation
Project registrati
on
Project registrati
on
CER issuance
CER issuance
Project verificatio
n
Project verificatio
n
http://cdm.unfccc.int/methodologies/index.html
Recall: CDM Methodologies Depict the approach for different project types
CDM Cycle
7Sao Paulo Carbon Finance Workshop, April 26 722.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
8Sao Paulo Carbon Finance Workshop, April 26 822.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
9Sao Paulo Carbon Finance Workshop, April 26 922.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
10
Sao Paulo Carbon Finance Workshop, April 26 1022.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cutiv
eB
oard
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
11
Sao Paulo Carbon Finance Workshop, April 26 1122.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
12
Sao Paulo Carbon Finance Workshop, April 26 1222.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
13
Sao Paulo Carbon Finance Workshop, April 26 1322.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
14
Sao Paulo Carbon Finance Workshop, April 26 1422.04.23
6 to 12 months 1.5 months Crediting period of the project
Pro
jec
t D
evel
op
erD
NA
DO
EC
DM
Exe
cuti
veB
oar
d
Project feasibility
assessment / PIN
Project feasibility
assessment / PIN
CDM project development
/ PDD
CDM project development
/ PDD
Host country approval
Host country approval
Project validation
Project validation
Project registration
Project registration
CER issuance
CER issuance
Project verification
Project verification
The CDM project cycle
15
Sao Paulo Carbon Finance Workshop, April 26
Roles and timing for starting a CDM project in Cities
Who
Key points
City officers/ Project teams
Technical experts
Timing
1. BaselineCollect basic data First estimate Before PIN
2. Additionality Announce project as under CDM
Initial adoption Before official announcement/ project tender
3. Toolbox •Refer to expert for choosing methodology•Become project participant and work on a contract•Plan project according to CDM project cycle
Technical expertise, guiding through project cycle
According to steps in CDM project cycle
16
Sao Paulo Carbon Finance Workshop, April 26
Thank you very much for your attention!
t. +44.(0)207.983.4627
17
Sao Paulo Carbon Finance Workshop, April 26
References (amongst others)
CFCB: www.lowcarboncities.info
Carbon Finance Assist/Carbon Finance Unit, World Bank
www.climatefinanceoptions.org (WB/ UNDP)
t. +44.(0)207.983.4627