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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
Integrating the CDM into the Bank’sproject development cycle
The CDM and the Carbon MarketsAfDB, Tunis, 21st September 2011
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
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
--
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
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
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
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
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
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.
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
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).
Summary of CDM integration process
Final message
Please use us!
Damian Casmiri Barnabas
Faouzi Senhaji
