The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the United Nations Framework Convention on Climate Change (UNFCCC). A CDM project has to seek approval from the CDM host country that will provide assessment whether the project is in line with the country's sustainable development. The national body in charge of issuing approval of the CDM project is known as Designated National Authorities (DNA). DNA for CDM in China is National Development and Reform Commission.CDM Project Cycle: Any project requires the execution of a series of well-defined steps over a specific timeframe and CDM projects are no exception. The process followed in the case of a CDM Project is known as the CDM Project Cycle.
The CDM Project Cycle consists of the following steps:
1. Design
2. Validation/Registration
3. Monitoring
4. Verification/Certification
5. Issuance of CERs
Design This step starts with an analysis to determine whether a given project concept would qualify as a CDM project. After going into a procedure of screening, estimating the magnitude of emissions reduction and establishing project viability, project developers draft the Project Design Document (PDD). While the PDD is being prepared it is common to identify potential CER purchasers' interest in the project. Each PDD must have a baseline and monitoring plan clearly defined. These must use baseline and monitoring methodologies already approved by the CDM Executive Board or must clearly indicate the new methodology to be adopted. The new methodology shall be submitted by the designated operational entity to the Executive Board for review with the draft project design document, including a description of the project and identification of the project participants.
Validation Validation is the process of independent evaluation of the project activity by a designated operational entity (DOE) against the requirements of the CDM, on the basis of the PDD. The DOE to validate a project activity, being under a contractual arrangement with project participants, shall review the project design document and any supporting documentation to confirm that relevant requirements of CDM have been met. On review, the DOE issues a validation report and opinion. The project sponsor and PDD consultant must respond to the validation report queries and comments to the satisfaction of the DOE for the final Validation Report to be issued. Prior to the submission of the validation report to the CDM Executive Board, the DOE must receive from the project participants written approval of voluntary participation from the Designated National Authority of each Party involved, including confirmation by the host Party that the project activity assists it in achieving sustainable development (DNA approval).
Registration On satisfying itself that the proposed project activity is a valid CDM activity, the DOE shall submit to the CDM Executive Board a request for registration in the form of a validation report. It is the official recognition of the project feasibility to generate CERs. The CDM Executive Board reviews the proposals and may invite public comments or ask for additional information/details before rejecting or accepting the proposal.The process of negotiations for certified emission reduction purchase/sale agreement can usually start as the Project Design Document is being finalized. A Term Sheet spelling out the terms of the agreement is initially prepared and later used as the basis for drafting the Certified Emission Reduction Purchase/Sale Agreement (CERP/SA). Once the project has been validated by one of the Designated Operational Entities, the CERP/SA is signed. The CERP/SA spells out the period for which the emission reductions will be credited/purchased and this can extend up to 21 years. CDM projects can obtain CERs for up to three periods of 7 years each, with project validation between each period. Alternatively, the crediting period may be a single interval of up to 10 years, with no further validation requirements. In no case, the CER crediting period can exceed the life of the project activity, and the resulting emission reductions.
Monitoring Once the project has been validated, the detailed engineering activities for the project are taken up. Once the construction is completed, and the activity has been initiated, the project sponsors initiate the monitoring of emission reductions as specified in the PDD and the project monitoring plan. Measurements as per the Monitoring Plan should be carried out to quantify the GHG emission reductions generated by the project, through the monitoring of activity levels and key parameters allowing GHG emission calculation. In order to calculate emission reductions, the emission of the project activity has to be subtracted from the reference scenario (called Baseline), which has to be determined by a methodology previously approved by the CDM Executive Board.
Verification/Certification Verification is the periodic independent review and ex post determination by the DOE of the monitored reductions in anthropogenic emissions by sources of GHG that have occurred as a result of a registered CDM project activity during the verification period. Certification is the written assurance by the DOE that, during a specified time period, the project activity achieved the reductions in anthropogenic emissions by sources of GHG as verified.The designated operational entity contracted by the project participants to perform the verification shall: 1. Determine whether the project documentation provided is in accordance with the requirements of the registered project design document. 2. Conduct on-site inspections, as appropriate, that may comprise, inter alia , a review of performance records, interviews with project participants and local stakeholders, collection of measurements, observation of established practices and testing of the accuracy of monitoring equipment. 3. Review monitoring results and verify that the monitoring methodologies for the estimation of reductions in anthropogenic emissions by sources have been applied correctly and their documentation is complete and transparent. 4. Recommend to the project participants appropriate changes to the monitoring methodology for any future crediting period, if necessary. 5. Determine the reductions in anthropogenic emissions by sources of greenhouse gases that would not have occurred in the absence of the CDM project activity, using calculation procedures consistent with those contained in the registered project design document and in the monitoring plan. 6. Provide a verification report to the project participants, the Parties involved and the CDM Executive Board. The report shall be made publicly available. 7. The Designated Operational Entity shall inform the project participants, Parties involved and the CDM Executive Board of its certification decision in writing immediately upon completion of the certification process and make the certification report publicly available.Once the project activity goes on stream, periodic verifications and certifications are undertaken as per a predefined schedule, typically annually.
Issuance of CERs The certification report shall constitute a request to the CDM Executive Board for issuance of CERs equal to the verified amount of reductions of anthropogenic emissions by sources of greenhouse gases. |
