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IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN)...

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Integrating the CDM into the Bank’s project development cycle The CDM and the Carbon Markets AfDB, Tunis, 21 st September 2011
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Page 1: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Integrating the CDM into the Bank’sproject development cycle

The CDM and the Carbon MarketsAfDB, Tunis, 21st September 2011

Page 2: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

The need to integrate the CDM into the Bank’s project cycle

Early identification of CDM potential

• Fundamental requirement to show that the project developer considered

CDM when making investment decision

• Essential that potential CDM projects are evaluated at an early stage of the

Bank’s project processing cycle

• Project developer/owner should be informed of this potential early on

• Submission of a “Prior Consideration of the CDM” form to the UNFCCC as

early as possible

• Further assessments and analyses of CDM revenue prospects should follow

as part of the Bank’s project development cycle

Page 3: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Effective interaction between Bank’s Project Team and the ACSPKey to success

ADB project cycle Project Team ACSP Quality Control

1. Project identification

(In country mission)

- Identify if project leads to

reductions in GHGs

-- --

2. Preparation of the

project

- Notify the ACSP if project leads

to reductions in GHGs

- Provide ACSP with data needed

for CDM assessment (e.g.

technology used, project

financials, timeline)

- Preliminary assessment of

CDM potential

- PIN draft preparation

--

3. Drafting of the PCN - Include CDM related text into

PCN

- Draft CDM related text for

PCN

--

4. Approval of the PCN -- -- - Ensure

assessment for

CDM is included in

PCN (ONEC)

5.Project Appraisal

(In country mission)

- Provide ACSP with data needed

for CDM assessment

- Submit the PIN and the “prior

consideration form” to project

Owner/developer

- Undertake detailed

assessment of CDM potential,

with focus on additionality

- Prepare final version of PIN

and “CDM prior

consideration” form

- Assist project

developer/owner in the first

steps of the CDM process if

needed.

--

6. Drafting of the PAR - Include CDM related text into

PAR

- Include cash flow from CDM in

financial analysis

- Draft CDM related text for

PAR

--

7. Approval of the PAR -- -- - Ensure

assessment for

CDM included in

PAR (ORQR)

8. Project approval by the

Board of Directors

-- - Assist project developer in

pursuing following step in the

--

Page 4: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stages 1 & 2: Project identification and preparation

• The Project Team should be able to spot CDM opportunities during project

identification

• Early in the project assessment seek support and advice from the ACSP team in

order to ensure that their project is adequately assessed for its CDM potential

• The ACSP team should determine whether the project developer has already

assessed the potential for the project to qualify under the CDM

• If yes, are they actively working with a third party (e.g. a broker or another

development or commercial bank) to develop the CDM component of the project.

• ACSP team could then start working on a draft Project Idea Note (PIN)

Summary of role of the ACSP team:

� Support the Project Team in determining whether the project developer is already working on

development of the CDM component of the project

� Undertake a preliminary assessment of CDM potential of project (incl. estimate of baseline and

project emissions, emission reductions and availability of methodology)

� If the project is deemed to have a good potential to qualify under the CDM, prepare a draft PIN

Page 5: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 3: Project Concept Note (PCN)

• Incorporate the CDM aspects into the PCN (from draft PIN)

• Text should include a brief description of how the project leads to reductions in

emissions of GHGs, estimate/range for the volume of CERs and the potential

revenue stream from the sale of these CERs

• Should also acknowledge that registration of the CDM project and potential

revenue from sale of the CERs is expected to make a significant contribution to the

economic viability of the project

• Finalize work on the draft PIN - to be presented to the project developer for further

discussion of CDM opportunities and follow up

Summary of role of the ACSP team:

� Prepare relevant text on CDM potential for PCN, with emphasis on importance of the CDM for

project viability

� Complete draft PIN for presentation to project developer

� Co-ordinate discussions and negotiations with project developer on further development of

CDM potential

Page 6: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 4: Approval of PCN

• Mainly Bank actions – so little input form ACSP

Summary of role of the ACSP team:

� Provide information and clarifications on an ad-hoc basis if required during the approval

process

Page 7: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 5 & 6: Project Appraisal and PAR

• Once PCN approved, ACSP team should work closely with Project Team and the

project developer to develop the CDM component further in parallel with the

appraisal mission and drafting of the PAR

• The ACSP team will coordinate all necessary activities deemed to be required to

optimize eligibility of the project under the CDM - focus on the issue of

additionality of the project

• The ACSP will work with the Project Team to determine the additionality of the

project and ensure that the additionality of the project is clearly demonstrated in

the PAR, including, where relevant, by integrating the cash flow from the sale of

CERs into the financial analysis of the project

Summary of role of the ACSP team:

� Undertake detailed assessment of CDM potential, with focus on additionality

� If relevant, support Project Team in integrating the cash flow from the sale of CERs into the

financial analysis of the project

� If relevant, prepare and submit “CDM prior consideration” form

� Prepare final version of PIN for submission with PAR

Page 8: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 7: Approval of PAR

• Mainly Bank actions – so little input form ACSP

Summary of role of the ACSP team:

� Provide information and clarifications on an ad-hoc basis if required during the approval

process

Page 9: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 8: Project approval by the Board of Directors

• Preparation of full project documentation should start when project approved by

Bank Board

• Includes the full documentation of the project and its CDM qualities in a PDD and

preparation for third party validation and other approval processes

• ACSP will initiate and supervise the preparation of the PDD by third parties (or in

certain cases undertake the PDD preparation), and facilitate the processing of the

proposed CDM project through the validation and registration process.

• ACSP can support the project developer in identifying the optimal buyer for the

CERs produced by the project, and assist in negotiations between the two parties

• ACSP can provide an independent assessment of which CER buyers to approach,

with focus on buyers prepared to pay a premium for projects on the African

continent, or for specific types of CDM projects

• ACSP can also assist with initiating and co-ordinating the required activities vis-a-vis

the in-country agencies (DNA) giving host country approval. Where relevant, the

ACSP may also assist the host country DNA where the project is being implemented

to process the project though provision of capacity building and technical support

• Assistance may also be given to the project developer in setting up the detailed

monitoring and reporting plan for the project once it is implemented.

Page 10: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Stage 8: Project approval by the Board of Directors

Summary of role of the ACSP team:

� Initiating the process of obtaining the Letter of Approval (LoA) from the DNA, including

determining the process for obtaining the LoA

� Assisting the host country DNA where the project is being implemented to process the project

though provision of capacity building and technical support

� Providing advice to the Project Team and project developer on the need for and nature of

environmental impact assessments and stakeholder consultations

� Supporting the project owner during identification of optimal CER buyers and negotiation with

the latter

� Where possible, and depending on the information available, to prepare draft versions of

specific sections of the PDD

� In specific cases, and depending on availability of funding, undertake preparation of the

complete PDDs and coordination of the CDM project cycle through to registration

� Once the project is implemented, assist the project developer in setting up the detailed

monitoring and reporting plan

Page 11: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Quality Control

� “Quality control” procedures should aim to ensure that the CDM has been effectively

taken into consideration during project preparation and appraisal. Can be undertaken

at two points during the Bank’s project cycle:

� As part of the environmental appraisal of the project during project preparation

(stage 4);

� As part of the safeguard procedures undertaken by ORQR during project

appraisal (stage 7).

Page 12: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Summary of CDM integration process

Page 13: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Final message

Please use us!

Damian Casmiri Barnabas

[email protected]

Faouzi Senhaji

[email protected]

Page 14: IntegratingtheCDM intotheBank’s projectdevelopmentcycle · Stage 3: Project Concept Note (PCN) • Incorporate the CDM aspects into the PCN (from draft PIN) • Text should include

Thank you for listening

François SammutCarbon Limits

[email protected]


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