pcf project cycle training workshop : project formulation for the clean development mechanism hanoi,...

PCF project cycle

Training Workshop : Project Formulation for the Clean Development Mechanism

Hanoi, Vietnam

September 30 – October 2, 2002

Preparation and review of the Project1. Project ideas reviewed by PCF 2. PCN prepared by project sponsor 3. Host country endorsement sought 4. Further work authorized by FMC &

Participants 5. PCF signals intention to purchase ERs

Baseline Study and Monitoring and Verification Plan (MVP)

Validation process

Negotiation of Project Agreements

Periodic verification & certification

Construction and start up

Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

Project Preparation

Preparation and review of the Project

Baseline Study and Monitoring Protocol (MP)

1. Baseline study and MP prepared 2. PCF quality control of results3. Documents for Validation

prepared by PCF and sponsor

Validation process




Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

Baselines and Monitoring and VerificationProtocol



Validation process

1. PCF contracts the validator and submits documents

2. Validator studies project design, baseline and MVP and consults with PCF and project participants

3. Validator issues a report and opinion




Project completion

3 months

2 months

2 m

onth

s3 months

1-3 years

Up

to 2

1 ye

ars

Validation Process



Validation process




1. PCF prepares terms sheets and draft legal documents. 2. Pre-negotiations workshop for project participants

(optional)3. Negotiations completed and project agreement

initialed 4. Project participants achieve financial closure and

formal approval5. Signing of project agreements

Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars




Validation process



Construction and start up1. At construction completion, verifier contracted by PCF2. Verifier checks that specifications of the MP are met (“initial

verification”)3. Project implementation starts4. Project entity monitors in accordance to the MP

Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

Construction and Start Up



Validation process




1. Verifier periodic verification report2. PCF pays project sponsor for ERs certified 3. Certified ERs issued as per distribution

agreement4. Verification undertaken annually or as deemed

appropriate

Project completion

3 months

2 months

2 m

onth

s

3 months

Up

to 2

1 ye

ars

Verification and Certification



Validation process




Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

Crediting period either• 10 years fixed or• 7 year renewable (maximum 21 years)

Project Completion



Validation process




Project completion

3 months

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

• Project Idea Note• Project Concept Note• Project Concept Document (or equivalent)

• Project Design Document • Baseline study and ER projections• Monitoring and Verification Plan

• Validation protocol and report

• Project Appraisal and related documentation• Term sheet• Emission Reduction Purchase Agreement• Host Country Agreement or equivalent

• Initial verification report

• Verification report• Supervision report

PCF Project Documentation

Project design: identification, preparation, review

Negotiations of purchase agreement

Validation Report and Opinion

Baseline Study, Monitoring Plan

PCF Project Cycle

Project Implementation and Initial Verification

Transfer ERs to Participants accounts

Periodic verification & certification of ERs

Production of ERs and monitoring

PCF payments for ERs to Project Entity

What is involved in PCN preparation?

• Field visits for identification and preparation• Due diligence on:

– environmental and social issues,– carbon asset, – status of project financing, – quality and experience of project sponsors and any financial

intermediaries

• Consultations with Government on the proposed carbon financed project (including relevant discussions needed to obtain a letter of endorsement), and related legal services review and support

The first step is to submit a PIN (template on website)

• Description of Project Proponent• Type of Project• Location of Project• Expected Schedule• Financing Sought• Technical Summary of Project• Expected Environmental Benefits