Introduction to the Project Cycle

Transcription

1 Introduction to the Project Cycle Jane Ebinger Senior Energy Specialist Sustainable Development Department The World Bank

2 Outline Introduction to the project cycle Illustrate concepts through the preparation of a typical carbon project by the World Bank

3 Introduction to the Project Cycle The project cycle is unique: Governed by the requirements of the Kyoto Protocol Requires international approval from the CDM Executive Board Requires domestic approval and actions by the Designated National Authority (DNA) A number of specific responsibilities also reside with the project developer The World Bank has significant experience with supporting projects through this process

4 When to Integrate the Carbon Project Cash in Debt Equity = annual carbon payments = other sources of revenue from service or production = debt servicing Carbon revenues Operating revenues Construction Cash out Carbon contract Develop a PIN

5 Nine Steps to a Carbon Contract There are nine key steps to take a project from a concept to a contract to sell GHG emission reductions. Typically it takes months to complete Costs range between US$ 150, ,000 The World Bank can advance preparation funds and provide support to process the project

6 Step 1 The project developer should first develop a Project Idea Note (PIN) and submit this to the World Bank: Description of Project Developer Type of Project Location of Project Expected Schedule Financing Sought Technical Summary of Project Expected Environmental Benefits Financial Analysis The World Bank will typically review (and approve) this within 2 weeks

7 Steps 2 and 3 The project developer applies for a Letter of Endorsement from the DNA for the project To ensure that the host country approves of the project and understands its follow up responsibilities under the Kyoto Protocol A Letter of Intent is negotiated between the project developer and the World Bank Formal signal of intent to purchase Exclusive right to contract for the purchase Commitment by project developer to repay (a capped amount) preparation costs

8 Steps 4, 5, 6 and 7 The project developer prepares a Carbon Finance Document expanded PIN The World Bank contracts consultants to prepare the Project Design Document and Monitoring Plan required under the Kyoto Protocol completes due diligence of the project contracts an independent auditing company ( validator ) to confirm that the project ERs are additional to the baseline, that the monitoring plan is sufficient and that there is a high probability that the ERs will be certified.

9 Steps 8 and 9 The project developer applies for a Letter of Approval from the Designated National Authority Confirms the project assists the host country to achieve sustainable development Signals formal approval for the purposes of Article 12 of the Kyoto Protocol An Emission Reduction Purchase Agreement is negotiated and signed by the project developer and the World Bank Detailed requirements, obligations and procedures for emission reduction generation, verification and delivery

10 Kyoto Documentation A complete list of approved methodologies is on UNFCCC website More than 50 methodologies available, covering broad range of sectors generic The PDD is project specific Demonstrates that the project is eligible to use selected methodology Required before emission reductions can be used for compliance Monitoring Plan provides methodology and tools for measuring and calculating emission reductions Project developer monitors project according to this plan, periodic verification in line with this plan

11 What Happens after the Contract is Signed Initial verification after construction and before project commissioning The World Bank contracts an independent auditing company ( verifier ) Registration (acceptance) of project by CDM EB Periodic (typically annual) monitoring, verification and certification The project developer implements the monitoring plan The World Bank contracts verifier Annual transfer of emission reductions from the CDM registry to the national registry of the purchasing country Annual payment by World Bank

12 Thank you