GHG Reduction Project / Background

Background

  1. About CDM

The Clean Development Mechanism (CDM) is one of the cooperative mechanisms under the Kyoto Protocol to help developed countries in Annex I of the UNFCCC achieve their GHG emissions by 5% from 1990 levels over the 2008-2012 commitment period. Annex I Party can purchase certified emission reductions (CERs) from a project that reduces GHG emission in the territory of a non-Annex I Party. The CERs can then be used by the Annex I Party in order to comply with their emission reduction target.

Certified Emission Reductions, known as CERs, is a certified reduced or sequestered amounts of GHG gases resulting from the CDM project. CERs are certified by the CDM Executive Board (CDM EM).

Participation under the CDM scheme must be on voluntary action with results in reductions in emissions that are additional to any that would occur in the absence of the project activity. The CDM assists country achieving sustainable development objectives in term of natural resources and environment, socio-economic and technology.

More information on the Clean Development Mechanism can be found in the Principal Guideline for the Clean Development Mechanism.

2. CDM Operational Principles

1. The GHG emission reduction from CDM project must be certified through various entities. These include: a Designated National Authority (DNA), a Designated Operational Entity (DOE) and the Executive Board of the UNFCCC CDM, which is elected by COP/MOP.

2. Project participation must be voluntary and received endorsement by all Parties involved including the host countries

3. Project must lead to real, measurable, long-term benefits related to the mitigation of climate change, and result in reductions in emissions that are additional to any that would occur in the absence of the project activity (additionality).

4. Project must have additional operation compared to business-as-usual scenario in terms of financial, investment, technology and environment aspects.

5. Project must be in line with the sustainable development objectives of the developing countries as a hosting country of CDM project.

6. Development process of a CDM project must be transparent, efficient, accountable, and under independent auditing and verification.

 

3. CDM Project Modalities/Types

There are three types of CDM projects:

1.  Single Project (General CDM project)

The Kyoto protocol identified and defined 16 Sectoral scopes for eligible CDM project as listed below:                                                       

                                    

2. Small-scale CDM project and bundled project

The small-scale CDM project provides the following advantages: a simplified project design document and simplified methodologies for baseline determination and monitoring plans. It also has lower transaction costs. In addition to this, the same DOE can validate and certify.  However, the project must fall under one of the following type:

Type I:  Renewable energy project activities with a maximum output capacity equivalent of up to 15 MW.

Type II: Energy efficiency improvement project activities which reduce energy con- consumption, on the supply (i.e. power plant) and/or demand side (i.e. electric industries), by up to the equivalent of 60 GWh per year; or

Type III: Other project activities that both reduce emissions and directly emit less than 60 kt thousand tonnes of carbon dioxide equivalent (kt CO2 eq) annually.

The afforestation and reforestation (A&R) projects that emit less than or equivalent to 16 kt CO2 per year will be eligible as a small-scale CDM.

Projects may be bundled as long as the total size is below the limits of a single project (small-scale bundling project) can combined into one Project Design Document (PDD). The limitation of this condition is these bundled projects will have the same starting date and crediting periods.

3. Programme of Activities:  PoA

A POA is a CDM concepts of project modality that made up of CDM Programme Activities (CPA). Multiple CPAs can be included under the same Programe of Activities. This will lower the transaction costs and shorten some precedural steps. The CDM PoA contains the following characteristic:

  • Registration with CDM Executive Board requires only one Programme of Activities Design Document (PoA-DD) covering the programme lifetime.
  • The CPA Design Document (CPA-DD) and Environmental Impact Assessment Framework (either EIA or IEE) are required upon the registration by CDM Executive Board and letter of approval by TGO.
  • New project under the same PoA requires the preparation of CPA Design Document (CPA-DD) and Environmental Impact Assessment Framework.
  • Timeframe of PoA are not more than 28 years for general CDM projects and 60 years for reforestation and afforestation type.  
  • The CPAs are not required to have the same start/end date and each project activities shall count crediting period independtly.
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