Nathan E. Hultman

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Climate Policy and Sustainable DevelopmentWorking
with the Clean Development Mechanism

• Nathan E. Hultman
• Science, Technology, and International Affairs
• Walsh School of Foreign Service
• Georgetown University

hultman_at_socrates.berkeley.edu
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Topics

• What is the Clean Development Mechanism?
• How does it work?
• What other options exist?

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What is the CDM?
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Kyoto Protocol

• Commitments
• Binding targets for Annex I parties
• 5 below 1990 levels by 2012
• Targets based on net changes in emissions of 6
  greenhouse gases
• General commitments for all parties
• Implementation
• Domestic policies, incl. domestic sinks
• Supplemental Flexibility mechanisms
• Emissions Trading
• Clean Development Mechanism
• Joint Implementation

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Kyoto Protocol Article 12

• Host countries may be only Developing Countries
• Two requirements for projects
• 1. Achieving sustainable development
• 2. Allowing developed countries to offset
  emissions
• Voluntary participation
• Benefits
• Real, measurable, long-term
• additional to business as usual
• Subject to verification and approval

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The CDM Executive Board

• 10 members, 10 alternates (names are online)
• Duties
• Approve methodologies for baselines, monitoring
• Accredit operational entities
• Develop and administer CDM registry
• COP/MOP retains oversight and review
• First meeting was June 2002 most recent was
  early June 2003

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Summary of CDM

• Credits arise from additionalityover a baseline
• Acceptable projects
• Renewable energy
• Repowering
• Nuclear
• Sinks (Afforestation and Reforestation)
• Governance Executive Board
• Public participation and oversight
• Independent monitoring and verification

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Information on Kyoto Protocol / CDM Correction
Web addresses have changed!

• Framework Convention on Climate Change
• http//unfccc.int
• Rules, forms, and information for CDM projects
• http//cdm.unfccc.int
• A CDM how-to list
• http//cdm.unfccc.int/pac/howto/

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How does the CDM work?
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Project Approval Processknown as Project
Activity Cycle
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Project Approval ProcessStep 1 Design

• Project idea is developed
• Choose location, technology
• Decide on Regular or Small-scale
• Discuss with stakeholders
• Proposal drafted according to Project Design
  Document (PDD)

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Project Approval ProcessWriting the PDD

• A. General description of project
• B. Baseline methodology
• C. Duration of the project activity / Crediting
  period
• D. Monitoring methodology and plan
• E. Calculations of GHG emissions by sources
• F. Environmental impacts
• G. Stakeholders comments

Simplified PDD for Small Projects!
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Project Approval ProcessSimplified PDD
Small-scale projects

• (i) Renewable energy project activities with a
  maximum output capacity equivalent of up to 15
  megawatts
• (ii) Energy efficiency improvement project
  activities which reduce energy consumption, on
  the supply and/or demand side, by up to the
  equivalent of 15 gigawatt/hours per year
• (iii) Other project activities that both reduce
  anthropogenic emissions by sources and directly
  emit less than 15 kilotonnes of carbon dioxide
  equivalent annually

Source Decision 17/CP.7
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Project Approval ProcessStep 2a Validation

• PDD submitted for independent evaluation
• Performed by a Designated Operational Entity
  (DOE)
• DOE compares PDD to the requirements of the CDM

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Project Approval ProcessAccreditation and
Designation

• Designated Operational Entity (DOE)
• Term for project developer or auditor
• Must be approved by the EB and MOP
• Current applicants include KPMG, PWC, Det Norske
  Veritas, others from DE, JP, KOR, FR, UK
• Designated National Authority (DNA)
• Selected by each Party to communicate with the EB
• Usually Environment Ministry or similar
• Must authorize projects!

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Project Approval ProcessStep 2b Registration

• Once the DOE validates the project, it must be
  registered with the EB with approval from DNA

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Project Approval ProcessStep 3 Monitoring

• Once the project starts, it will be regularly
  monitored for compliance

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Project Approval ProcessStep 4 Verification and
Certification

• Carbon credits will be verified by the DOE

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Project Approval ProcessStep 5 Issuance

• The DOE provides written certification to the EB
• The EB issues Certified Emissions Reduction
  credits (CERs) to the project

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Project Approval Process
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What other options exist for combining climate
protection with sustainable development?
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Climate Policy Sustainable Development

• Kyoto Instruments
• Clean Development Mechanism
• Adaptation Fund
• Least Developed Countries Fund
• Climate Change Fund
• Arrangements outside Kyoto
• Corporate initiatives
• NGO activities
• Bilateral initiatives
• GEF