SUSTAINABILITY VALIDATION REPORT. Ceará Renewable Energy Bundled Project

Transcription

1 SUSTAINABILITY VALIDATION REPORT for the Gold Standard Project Activity Ceará Renewable Energy Bundled Project in Brazil Report No. Version No. 03.1, TÜV Rheinland (China) Ltd.

2 I. Project description: Project title: Host Country: Methodology: Ceará Renewable Energy Bundled Project Brazil AMS-I.E, Version 04 Annual average emission 36,173 tco2e/yr reductions (Estimated) : GHG reducing measure/technology: Fuel Switch Large Scale Micro Scale Small Scale II. Validation: Contract party: Sustainable Carbon - Projetos Ambientais Ltda GS-VER Validation team: Role Full name Affiliation Team leader Sebastián del Valle TÜV Rheinland do Brasil Ltda Team Member Tais Gennari Luciano TÜV Rheinland do Brasil Ltda Technical Reviewer Ralf Kober TÜV Rheinland Energy and Environment GmbH Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues Validation Status: Corrective Actions / Clarifications Requested Full Approval and Submission for Registration Rejected III. Validation Report: Report No.: Current revision No.: Date of current revision: Distribution: No distribution without permission from the Client or responsible organizational unit Unrestricted distribution Final approval: Released on: Designated Operational Entity (DOE): TÜV Rheinland (China) Ltd. Unit 707, AVIC Building, No.10B Central Road, East 3rd Ring Road Chaoyang District Beijing , P.R. China Tel.: , Fax: cdm@tuv.com Page 2

3 Introduction TÜV Rheinland on its ground as UNFCCC accredited DOE has been commissioned to perform validation of the Gold Standard VER Project Activity Ceará Renewable Energy Bundled Project on the state of Ceará in Brazil (hereafter called the project ). The purpose of a validation is to have an independent third party assess the project design. In particular, the project's sustainable development matrix, sustainability monitoring plan, and the project s compliance with relevant Gold Standard and host Party criteria are validated in order to confirm that the project meets the identified criteria. This report summarises the findings of the validation of the project, performed on the basis of Gold Standard criteria for the GS VER, as well as criteria given to provide for consistent project operations, monitoring and reporting. The GS-VER validation has been executed with the following steps: - Desk review of preliminary GS Passport (Version 1, uploaded to the GS website on 10th June 2011) and Prefeasibility Assessment on the Retroactive Registration Request (dated 7 th July 2011) - On-site visit with stakeholder interviews (08th to 10th August 2011) - Issue of checklist with corrective action requests (CARs) and clarification requests (CLs) and the draft validation report & protocol (Table 1) - Desk review of revised GS Passport and PDD - Review of proposed corrections and clarifications - Issue of the final validation report & protocol Page 3

4 Abbreviations CAR CDM CL CO2 COEMA CONAMA DOE DOF EB EIA ER GHG GS I IPCC kwh MDGs MoV MW NGO PDD PP SD SEMACE UNDP UNFCCC VVM Corrective Action Request Clean Development Mechanism Clarification Request Carbon Dioxide Environmental Council of Ceará National Environmental Council of Brazil Designated Operational Entity Document of Forest Origin of the State of Ceará Document Review Executive Board Environmental Impact Assessment Emission Reductions Greenhouse Gas Gold Standard Interview Intergovernmental Panel on Climate Change Kilo Watt Hours Millennium Development Goals Means of Validation Mega Watt Non Government Organization Project Design Document Project Proponent Sustainable Development State Superintendent of Environment of the State of Ceará United Nations Development Programme United Nations Framework Convention on Climate Change Validation and Verification Manual Page 4

5 TABLE OF CONTENTS 1. METHODOLOGY REVIEWED DOCUMENTATION PROJECT ELIGIBILITY DEVIATIONS IN GHG EMISSION REDUCTION ESTIMATION (GS CONSERVATIVENESS PRINCIPLE) GOLD STANDARD CRITERIA ON ADDITIONALITY SUSTAINABILITY ASSESSMENT ENVIRONMENTAL IMPACT ASSESSMENT GOLD STANDARD CRITERIA FOR STAKEHOLDER CONSULTATION PRE-FEASIBILITY ASSESSMENT SUSTAINABILITY MONITORING PLAN VALIDATION OPINION Appendix A: Validation Protocol Page 5

6 1. METHODOLOGY The validation consists of the following phases: I desk review of the project design documentation; II on-site visit and follow-up interviews with project stakeholders; III the resolution of outstanding issues and the issuance of the final validation report and opinion; The following sections outline each step in more detail. 1.1 REVIEWED DOCUMENTATION The following table outlines the documentation reviewed during the validation: /1/ /1.1/ PDD Version 01.2, 19/08/2011 /1.2/ PDD Version 05, Date 08/03/2012 /2/ /2.1/ GS Passport, Version 1.2, Date 19/08/2011 /2.2/ GS Passport, Version 05, Date 08/03/2012 /3/ Local Stakeholder Consultation Report, 27/09/2011 /4/ Gold Standard Requirements and Toolkit (with its Annexes), Version 2.1, 01/06/2009 /5/ CDM Validation and Verification Manual, Version 01.2, EB 55 Annex 1 /6/ UNFCCC, Approved Baseline & Monitoring Methodologies: AMS-I.E: Switch from non-renewable biomass for thermal applications by the user, Version 04, EB 60. /7/ UNFCCC, Tool for the demonstration and assessment of additionality, Version 05.2,EB 39 Annex10 /8/ UNFCCCC, Approved small scale methodologies: AMS-I.C: Thermal energy production with or without electricity, Version 19 EB 61. /9/ Stakeholder consultation questionnaires during the LSC of August 29 th and 30 th /10/ Records of the receipts purchase of renewable biomass (such as cashew nut shell, residues from cashew tree, coconut husk) of 2009 for each ceramic. /11/ Financial Barrier Ceará Renewable Energy Bundled_v04, spreadsheet. /12/ Decree no. 5,975 of November 30th /13/ Records of the receipts purchase of native firewood of 2009 for each ceramic. /14/ VER Estimates Ceará Renewable Energy Bundled v04, spreadsheet /15/ DOF- Document of Forest Origin of the State of Ceará, documents records from 2009, for each ceramic. /16/ International Labour Organization on Freedom of Association Collective 1 Page 6

7 Bargaining, and Industrial Relations 2. These include Conventions C098 (Right to Organize and Collective Bargaining Convention), C135 (Workers Representatives Convention), C141 (Rural Workers Organizations Convention), C151 (Labour Relations (Public Service) Convention) and C154 (Collective Bargaining Convention). /17/ ILO Conventions 3 C29 (Forced Labour Convention) and C105 (Abolition of Forced Labour Convention). /18/ ILO Conventions 4 C138 (Minimum Age Convention) and C182 (Worst Forms of Child Labour Convention). /19/ ILO Conventions 5 C100 (Equal Remuneration Convention) and ILO C111 (Discrimination (Employment and Occupation) Convention). /20/ United Nations Convention against Corruption 6. /21/ Brazilian Millennium Development Goals website 7. /22/ Social Carbon Standard - The SOCIALCARBON Standard is a certification adept at bringing demonstrable social, environmental and economic benefits to the stakeholders of carbon offset projects: < >. /23/ EB 23, Annex 18 Definition of renewable biomass 8. /24/ Resolution 001/1986 from CONAMA (National Environmental Council of Brazil) 9. /25/ Resolutions from COEMA (Environmental Council of Ceará) PROJECT ELIGIBILITY The project has been selected as a small scale, the PPs argue that is due to the fact that the size is under 45MW thermal as stated on the type of selected methodology /8/ (Small scale type I). As already explained, the project comprehends 5 ceramic plants, that all together in the year 2009 generated 190,732 KWh (spreadsheet checked: VER Estimates Ceará Renewable Energy Bundled v1.2/14/) this was validated by reviewing the local records of use of firewood and biomass onsite /10/ and /13/. According to the type I SC CDM, in order for a project to be considered as small scale, it must not go over 45MW thermal capacity, which in the project s case, is well over its total size of MW. This project is not a debundled project of any other registered large scale project in the region, verified through a desk review of registered projects on the region and later on through interviews with local stakeholders and project owners. 2 < 3 < 4 < 5 < 6 < 7 < 8 < 9 < 10 < Page 7

8 Another important issue that must be pointed out is the fact that this project is only being registered under the Gold Standard scheme. Furthermore, there is no local energy efficiency law that obliges the ceramic industry to change its technological patterns. According to the Annex C Guidance on Project Type Eligibility the eligibility of a project will be constrained if project activities making use of non-renewable biomass resources shall NOT be eligible for Gold Standard registration, which is not the case of the project activity here being validated. All of the biomass used for burning in the kilns is from renewable resources, that was validated through the revision of the receipts of bought wood /13/ at the onsite assessment. But firewood will not be the only fuel used to fire the ovens, also rests of other type of biomass such as coconut and cashew shells shall be used. For this it was made sure there was a surplus in the region of the mentioned fuel sources. This was viewed and asked directly to local stakeholders. The project only reduces CO 2 from non renewable resources, since there is no degradation of the biomass, there s no generation of CH4 to the atmosphere. This was all validated at the onsite assessment, and asked directly with the factory workers that operated the biomass. 3. DEVIATIONS IN GHG EMISSION REDUCTION ESTIMATION (GS CONSERVATIVENESS PRINCIPLE) The project proposes to use the UNFCCC approved small methodology AMS-I.E: Switch from non-renewable biomass for thermal applications by the user, Version 04 /6/. According to the available information on the website of the UNFCCC this is the latest available version of the methodology. The baseline described on the PDD is the use of native wood for burning on the kilns of all of the ceramics. Based on this, it was calculated the mean heat production per tile and extrapolated the quantity of heat to be generated during the project s lifetime. This was made for the sense that in the methodology itself in the moment of calculating the CO2 baseline emissions, the emission reductions. This was properly applied by the PPs on the calculation and well expressed on the PDD. During the onsite assessment and stakeholder round, it was evidenced that on this specific region of the state of Ceará it is the common practice the use of non renewable biomass, that is wood extracted from native forest of the region. According to the local authorities, there is evidence of the constant disappearing of the native forest nearby. The PPs presented the validation team with extensive evidence of the fact that before the project activity there was major use of wood from non managed forests. Only a small fraction was from a controlled origin, with proper government control /15/ (DOF documents that were revised during onsite assessment). These DOF documents are a regulatory mechanism from the state for the wood that is extracted from cultivated forests. The state body that regulates these documents is the SEMACE (State Superintendent of Environment of the State of Ceará). Despite this regulation, there is no local task force to enforce the compliance with the use of DOF for the Page 8

9 firewood sold to the public. So, with this information collected by the validation team, it is then concluded that the use of DOF is not to be considered as mandatory and hence not a normal baseline. The baseline calculation was cross-checked by the Validation Team through a comprehensive spreadsheet /14/. The historical of consumption of non renewable firewood and consumption of demonstrably renewable woody biomass for each ceramic during the year 2009 was validated by checking the records of the receipts purchase native firewood /13/ and DOF- Document of Forest Origin of the State of Ceará /15/, respectively. Thus, the Validation Team considers appropriate the data for determination of ƒnrb,y stated on Table 13 of PDD /1.2/. The only accounted emissions for emission reductions come from the non renewable biomass used during this period. This is considered as an additional and conservative approach which will make the generation of emission reductions accountable and reproducible. 4. GOLD STANDARD CRITERIA ON ADDITIONALITY The PPs selected the Tool for the demonstration and assessment of additionality, version 05.2 /7/. According to the way the project was presented, the most possible scenario is the continuation of using non renewable biomass on the plant sites. On section B.5 of the PDD, is heavily stated the fact that even thought there is state law for use of renewable biomass (Decree 5,975 of November30th 2006 /12/) there is no real enforcement of it. This was proven by the onsite assessment team, and also by third party research. The Decree itself is a document that describes as a rule of law, management of certain areas on renewable basis, from these areas is where the PPs extract their biomass. Due to lack of a proper state control, this law is not being enforced to its full extent. This was directly asked to locals during the onsite assessment. The investment analysis was carried out comparing the normal scenario (non renewable biomass) with the use of other types of biomass (cashew, coconut shell, wood from sustainable management). The results were presented in the form of Excel tables which were checked by the validation team, and compared with local invoices from the time when they used non renewable biomass and now with sustainable management forests. It can be stated that the calculations are properly done based on retraceable data and all the results are reproducible in all their extent. Finally there is the Sensitivity Analysis done. On this, it can be well observed that even with a 20 percent downfall on the renewable fuel (except for cashew nuts) the price is still not under the non renewal s one, checked through Financial Barrier_Ceará Renewable Energy Bundled_v1.2 spreadsheet /11/. With that it can be concluded that after following the first two steps of the additionality tool, the project proves to be generating additional emission reductions. Page 9

10 Barrier analysis was not chosen, so the PPs moved on the step 4 of the Tool, the Common Practice Analysis. As already mentioned on this document, the most normal practice in the region for the ceramic industry is still the use of wood from non managed areas. This was already asked to local stakeholders during onsite assessment. It can be stated that the PPs on the basis of a conservative approach making use of the common scenarios and real and measurable data have been able to prove that the project activity will be generating real, measurable and additional carbon credits from the avoidance of use of wood with non renewable source. 5. SUSTAINABILITY ASSESSMENT Do no harm assessment According to the GS Toolkit Section and as indicated in the GS Passport /2.2/, the project proponent could assess the risk of the project regarding harmful impacts based on the safeguarding principles of the UNDP in four aspects: Human Rights, Labour Standards, Environmental Protection and Anti-Corruption. These aspects and the risks involved are listed on the Section F.1 of the GS Passport /2.2/. The Do no harm assessment was carried out with accordance with relevant labour laws and conventions /16/-/20/. The validation team considers that the Do no harm assessment has been based on precise information, with all the reference sources indicated in the GS Passport /2.2/. Sustainable Development matrix In order to check the indicators of the Sustainable Development matrix, an analysis was performed for each item following the Section F.2 of the GS Passport. According to Local Stakeholder Consultation Report /3/, a blind exercise was conducted during the consultation process and the stakeholders have attributed no negative impacts to the project. All impacts considered positive by the project developers were also considered positive by attendants to the meetings. According to GS Toolkit Section and Annex I, the validation of Sustainable Development matrix is presented on table below: Page 10

11 Summary of Sustainable Development matrix Indicator Environment Score proposed in the GS Passport Validation Team s opinion Air quality + As per PDD and according to the on-site visit, the Validation Team confirmed that the project is expected to generate positive impacts on air quality by improving operational procedures related to fuel usage, by increasing monitoring procedures on atmospheric emissions and due to the more efficient burning of fuels. The score for Air quality is confirmed to be +. Water quality and quantity 0 The Validation Team considers that the project would not result in impacts in water quality and quantity. According to the on-site visit it was confirmed that the water is used in the brick production process during the molding phase and the project only involves modifications in the burning phase, where impacts on water are unlikely to occur. The use of water shall remain similar to the baseline situation, where major impacts on water quality and quantity are not observed. The score for Water quality and quantity is confirmed to be 0. Soil condition 0 The Validation Team agrees that the project might result in environmental pollution in case appropriate procedures to manage and dispose ashes are not followed; and generation of ashes might increase with the use of new kinds of fuels (renewable biomasses such as biomass residues). To alleviate the impact, the PPs will monitor the procedures to control and dispose ashes on each ceramic by applying the following indicator from Social Carbon Standard /22/: Social Carbon indicators for Ceramic Industry11: Ashes - Evaluates the procedures adopted by the entrepreneur in order to control the ashes and its destination. Thus the score for Soil condition is confirmed to be 0. Other pollutants 0 The Validation Team considers that the fuel switching project is not expected to result in increase or decrease of other pollutants. Brazilian legislation does not establish emission standards to ceramic industries, which indicates that these impacts are not expected to occur. The score for Other pollutants is confirmed to be Available at: < >. Page 11

12 Biodiversity 0 The Validation Team agrees that the fuel switching project is expected to result in positive impacts on biodiversity, since it will likely result in the reduction of deforestation of the Caatinga biome by providing alternative fuels (biomass residues). However, the actual effects on biodiversity and on the conservation of the Caatinga biome depend on several factors outside the project boundaries. Hence, as a conservative measure, a neutral impact on biodiversity is considered by PP. The score for Biodiversity is confirmed to be 0. Social development Quality of employment Livelihood of the poor Access to affordable and clean energy services Human and institutional capacity Economic and technological development Quantitative employment and income + According to the on-site visit, the Validation Team confirmed that the project includes a certain level of automation in the logistics and fuel usage, improving the working conditions of employees responsible for feeding the kilns with bricks and fuels. The score for Quality of employment is confirmed to be +. 0 As per requirements stipulated in the GS Toolkit Annex I /4/ and through the on-site visit the Validation Team confirmed that the project is not expected to affect the living conditions of the poor. The score for Livelihood of the poor is confirmed to be 0. + The Validation Team considers that the project is expected to positively impact the access to affordable and clean energy services. The measures applied by the project activity will result in renewable energy generation by utilizing renewable biomasses, thus providing alternative and clean energy sources that were not utilized in the baseline situation. The score for Access to affordable and clean energy services is confirmed to be +. 0 The Validation Team considers that the project is not expected to affect human and institutional capacity. The project includes the introduction of new technologies and processes that demanded additional training from some of the ceramics employees. However, as this is not considered to be very significant in scale, a neutral impact is conservatively considered by the PP. The score for Human and institutional capacity is confirmed to be 0. + According to the on-site interview the quantitative employment and income generation is considered positively affected by the project. The ownership of the Page 12

13 generation Balance of payments and Investment Technology transfer and Technological self-reliance carbon credits is considered an important income for the ceramic owners, as these resources allowed them to invest in the fuel switching measures applied by the project. The score for Quantitative employment and income generation is confirmed to be +. 0 The Validation Team considers that this indicator will not be affected by the project. The score for Balance of payments and Investment is confirmed to be 0. 0 Despite the project includes the utilization of renewable biomasses in a sector where this is not a common practice, the PP is conservatively in consider this indicator with a neutral impact. The Validation Team agrees with the statement. The score for Technology transfer and Technological selfreliance is confirmed to be 0. The project has used the sustainable development assessment matrix as required by the Gold Standard. The total score obtained is +4, based on the above validation of sustainable development indicators. The scoring in each section is summarized below: Environment has a subtotal of +1 (from positive impact of air quality), while other indicators all score neutral. Social development has a subtotal of +2 (from positive impact as of both indicators: quality of employment; and access to affordable and clean energy services), while other indicators all score neutral. Economic and technological development has a subtotal of +1 (from positive impact from quantitative employment and income generation), while other indicators all score neutral. None of the sub-total scores is negative, the total score is positive and none of the indicators has a negative score. All the assumptions used in defining the score values have been reviewed by the validation team based on the submitted Gold Standard documentation and the on-site visit. Hence, the project activity complies with this Gold Standard criterion. 6. ENVIRONMENTAL IMPACT ASSESSMENT The Environmental Impact Assessment is not required by the host party for this project activity, as stated on PDD Section D.1. This information is confirmed by Resolution 001/1986 from CONAMA /24/ (National Environmental Council of Brazil) that defined the activities subject to environmental impact assessment. No reference is made on such resolution about the activities proposed by the project (fuel switch to renewable biomass). Also, COEMA (the Environmental Council of Ceará) has released no resolution requiring the impact assessment Page 13

14 for the activities proposed by the project, according to the website with resolutions from COEMA /25/. 7. GOLD STANDARD CRITERIA FOR STAKEHOLDER CONSULTATION According to the Annex J of the Gold Standard Toolkit, in order to validate a proper Stakeholder Consultation, there must be well stated an invitation tracking table, this was properly filled and the confirmations from the post office where presented, meaning that all of the invited parties did receive the notification for both of the meetings. The meetings were held on August 29 th and 30 th of 2011 on São Gonçalo do Amarante and Itaitinga respectively, both being on the state of Ceará. Already included on the shown letter of invitation was the non technical summary written on an appropriate level for general understanding. On this letter it was well described the place and time of the meetings, as well as all the activities within the project boundary. The following documents were presented to the validation team: signed attendance list, photos and videos taken during the meetings and completed questionnaires. They were all in accordance with the GS requirements. As confirmed from completed questionnaires /9/, all of the stakeholders supported the project activity, no negative comments were received and during the blind exercise no indicators were scored negatively. The received comments where all positive towards the project, not only due to its nature based on sustainable development but also because it will be of advantage for the biodiversity. No relevant opinion was made, so no changes to the sustainable development assessment are needed. 8. PRE-FEASIBILITY ASSESSMENT Prior to the validation, the passport had been uploaded to the GS system on 10 June 2011, following this it was submitted to the pre-feasibility assessment on 07 July This was done through a teleconference with Mr. Ivan Hernandez, GS Focal Point for Latinamerica. On this day he gave his positive opinion and the project went forward for validation with TÜV Rheinland. 9. SUSTAINABILITY MONITORING PLAN The sustainability monitoring plan is included in the GS Passport as per the requirements in the GS Toolkit Annex I. According to GS Toolkit 2.4.3, all non-neutral indicators must be monitored, and any indicators that were neutralized (i.e. originally scored negative, but now score neutral due to a suitable mitigation measure) must also be included. Moreover, any sensitive issue brought up during the stakeholder consultation must also be included. Page 14

15 The sustainability monitoring plan contains nine (9) parameters of seven (7) indicators, including four indicators which score + in the SD Matrix, one (1) indicator regarding soil condition (score neutral due to a suitable mitigation measure) and two (2) indicators as required according Annex C: biomass resources and surplus biomass. The validation of monitored indicators is shown on the table below: Summary of Sustainability Monitoring Plan No Indicator Chosen parameter 01 Air quality Emissions to the atmosphere 02 Soil condition Procedures related to the control and disposal of ashes 03 Actions of health and 04 security Quality of Use of safety employment equipments 05 Access to affordable and clean energy services 06 Quantitative employment and income generation Total energy produced from renewable sources Voluntary Emission Reductions issued 07 Additional revenues for Way of monitoring Evaluations by applying Ringelmann smoke charts as recommended by SEMACE (Environmental Superintendence of the State of Ceará), the environmental authority. Results shall be stored to assess the intensity of atmospheric emissions. Quantification of ashes using standard storage bags with a known weight. Spreadsheets to control the amount of storage bags, with information of the person/entity responsible for collecting and the place of destination. Photographs to evidence the final destination, whenever is feasible. Interviews and meetings with stakeholders and ceramic personnel on each ceramic. Site visits and interviews with employees and Managers of each ceramic. Ceramic managers shall use spreadsheets to control the use of safety equipments by employees. The amount of renewable biomass used by each ceramic will be monitored during the crediting period (through purchase invoice, delivery notes or other documents concerning the acquisition of biomass). By using default values of energy content, the project proponents will be able to determine the amount of renewable energy produced during each year of the crediting period. The issuance of Voluntary Emission Reductions (or similar assets from the carbon market) will be monitored. Total revenues will be monitored by storing purchase invoices, receipts of sale and Frequency On an bi-weekly basis When the final destination occur. The assessment score of the Social Carbon indicator will be performed once every monitoring period. Once every monitoring period. On a weekly basis. Data will be consolidated for every monitoring period. On a monthly basis. Data will be consolidated on an annual basis. Once every monitoring period. Once every monitoring period. Page 15

16 08 Origin of renewable biomass 09 Competing uses of biomass biomass suppliers Origin renewable biomass Biomass surplus of other documents concerning biomass acquisition and then compared to the baseline fuel cost for the ceramics which were destined to native firewood suppliers. The origin of the renewable biomass will be assessed storing documents (receipts, invoices) from the biomasses providers, thus allowing determining its origin. The biomasses shall be considered renewable as fulfilling definitions of renewable biomass approved by the CDM Executive Board - EB 23, Annex 18 /23/. National and international articles and databases will be assessed to determine the availability of each type of biomass used during the project operation. Once every monitoring period Once every monitoring period In conclusion, the validation team considers that all the chosen parameters are relevant to sustainable development indicators and the sustainability monitoring plan complies with the Gold Standard requirements. 10. VALIDATION OPINION DOE TÜV Rheinland has been commissioned to perform the validation of the GS VER Project Activity Ceará Renewable Energy Bundled Project in the state of Ceará, Brazil. The information is based on the information made available to the validation team, and the validation engagement only covered the project components detailed in this report. The validation team of TÜV Rheinland would not be held liable by any party for decisions made or not made based on the validation opinion, which will go beyond that propose. According to the GS requirements and Toolkit Version 2.1, the chosen parameters and the justification of scores have been fully demonstrated in the Sustainable Development Matrix and the corresponding Sustainability Monitoring Plan. The project made use of the approved CDM methodology AMS-I.E: Switch from non- Renewable biomass for thermal applications by the user, Version 04, EB 60 /6/. To the date of this validation, this methodology was valid, and proved to be the most recent one in existence. The additionality was widely demonstrated according to the UNFCCC CDM requirements. The project will have emission reductions of 36,173 tco2eq/yr. The validation team concludes that these emissions are conservative, retraceable and reproducible at any time. In summary, the validation team of TÜV Rheinland concludes that the GS-VER Project Activity Ceará Renewable Energy Bundled Project as described on the PDD and GS Passport both Version 04 of January 18 th 2011, meets all relevant requirements of the Gold Standard version 2.1 for the GS VER Project activities. The DOE therefore requests the registration of the project. Page 16

17 Appendix A SUSTAINABILITY VALIDATION PROTOCOL - FOR GOLD STANDARD PROJECTS - Project Title: Ceará Renewable Energy Bundled Project Project Location: Brazil REPORT NO.

18 Table 1: Validation requirements (based on the GS Toolkit, GS Requirements and their relevant Annexes) Checklist question Ref. MoV 12 Findings, comments, references, data sources 1. Project Eligibility 1.1 Has the correct project size been selected? 1.2 Does a written statement (e.g. in the PDD) clearly describe that the project is not a de-bundled part of a large or small scale project? 1.3 If there is an applicable cap-and-trade scheme in the project s host country, has an arrangement been made to cancel allowances in the applicable scheme? 1.4 Does the project clearly demonstrate its eligibility under Gold Standard? 1.5 Does the project reduce an applicable GHG? 1.6 Does the project clearly demonstrate that no ODA has been used under the condition that the credits coming out of the project are transferred to the donor country?, /6/, /6/ www Yes, the project shows sufficient proof to be considered as a small scale category. Yes, it can be read on the PDD that the project is not a part of another project. Furthermore it was found through direct questioning with stakeholders that this project had not existed on this plants before. No, there is no cap and trade system in Brazil, neither compulsory nor voluntary. Yes, the project fulfils the requirements of a Gold Standard project, where energy is generated. Draft conclusion Final conclusion Yes, the reduced GHG is CO2. Yes, there is no public funding for this project. 12 MoV = Means of Verification, = Document Review, I = Interview, www = internet search. Page 18

19 1.7 Does the project apply the correct project cycle (regular vs. prefeasibility assessment)? 1.8 Is the project being registered under any other certification scheme for the same or overlapping crediting periods? Yes, retroactive applied. cycle is properly No, the project is only to be registered under Gold Standard. 2. Deviations in GHG Emission Reduction Estimation (Gold Standard Conservativeness Principle) 2.1 Has the baseline scenario been constructed in a conservative manner (i.e. assumptions are made explicitly and choices are substantiated)? 2.2 Does the PDD use the latest version of the methodology and the latest interpretation form the EB at the time of first submission to the GS? 2.3 Does the PDD describe the baseline methodology? 2.4 Does the PDD describe the quantified baseline scenario? 2.5 Does the PDD include and overview of the current and known future legally binding regulatory instruments and assess whether the project would be implemented anyway because of these? 2.6 Does the PDD provide evidence based on which common practice of the technology used can be assessed?, /6/, /6/, /6/, /6/, /6/, /6/ I/ www Yes, the project applies a correct baseline, being that of common practice in the region. Yes, the PDD uses the latest version of the Yes, the PDD describe a proper baseline methodology. Yes, the PDD describe the baseline scenario. The regulatory frames regarding the use of renewable biomass in the state of Ceará are not taken into force at the present time. Therefore the use of non renewable biomass is still well spread throughout the industry of the state. There is also no future forecast regarding the implementation of a more rigid legislation on the matter. Yes, the PDD provides evidence that the non-renewable biomass (firewood) is the common practice in ceramic factories in Brazil. Page 19

20 2.7 Does the PDD address leakage issues as part of the baseline and project boundary?, /6/ PDD does attend to methodological leakage requirements, showing enough evidences that no extra residues will be generated. 2.8 Does the project apply the methodology that results in the lowest baseline emission?, /6/ Yes the PDD shows a conservative approach regarding the calculation of CERs using proper inputs. 2.9 Are all likely baseline scenarios developed and quantified in the PDD?, /6/ Yes, in the PDD is well documented the most likely scenario, being that the one of continued use of non renewable biomass Are there any material uncertainties over the numerical data sets applied (e.g. generator efficiencies, and fuel types and resulting emission factors, etc.)?, /6/ The PPs used a wide range of data that covers 100% of the used biomass Is there a systematic referencing to publicly available information or to expert or expert opinions? Yes, the PDD provide a systematic referencing to publicly available information Is information verifiably presented with a sufficient degree of detail and transparency? Yes, it was possible to trace the sources therefore it was concluded that it does have a high degree of transparency Is it fully transparent from the PDD which sets of data were selected based on the prerogative of conservativeness? CL 1: There is no mention on the PDD about the criteria of conservativeness and degree of it. CL 1 CLOSED 2.14 Does the PDD include full references to sources of data used? Yes, the PDD is well explicit on its sources of data Are data uncertainties clearly stated, if possible, with associated margins of error? CL 2: There is no uncertainty risk stated on the PDD. CL 2 CLOSED Page 20

21 3. Gold Standard Criteria on Additionality 3.1 Has the PP selected and applied the correct tool for demonstrating additionality?, /7/ Yes, the PP has chosen to use the Tool. 3.2 Is the line of argumentation used by the PP to demonstrate additionality correct?, /7/ Yes, the argumentation used by the PP to demonstrate additionality is correct. 3.3 Are the references used to demonstrate additionality up-to-date and reliable?, /7/ Yes, the references used are from the baseline year. 3.4 Has the PP compared the proposed project activity with normal practice in the region (especially if similar projects have already been implemented on a commercial basis in the region)?, /7/ Yes, the project activity has been wide compared with the use of nonrenewable biomass. There is no wide spread use of renewable sources of fuel in the region. 3.5 Are assumptions (qualitative or quantitative) used to demonstrate additionality conservative?, /7/ Yes, there are assumptions used to demonstrate additionality conservative. 4. Sustainability Assessment 4.1 Is Do no harm assessment based on accurate information?, /16/, /20/ CL 3: More information about the international labour standards. CL 3 CLOSED 4.2 Has a sustainable development matrix been developed? If yes, is it prepared according to the guidance under GS Toolkit Section 2.4.2, Table 3.2 and Annex I? /3/, /4/, /5/, /22/ Yes, the sustainable development matrix has been developed and it is prepared according to the guidance under GS Toolkit. Page 21

22 4.3 Is the matrix based on existing sources of information (data from existing reports, results from stakeholder consultation, experiences with similar projects in similar situations, expert judgement if data are unavailable or are of poor quality, etc)? 4.4 Are data and expert opinions presented in a sufficient degree of detail and transparency? Are they verifiable? 4.5 Are data uncertainties clearly stated with associated margins of error? 4.6 Is scoring reproducible and verifiable? 4.7 Are at least two of the sub-totals (categories) positive? Is the third sub-total at least neutral? 4.8 Is there a clear explanation on how the matrix was completed together with the stakeholders? 5. Environmental Impact Assessment 5.1 Does the project activity conform to host country (local, regional or national) requirements concerning environmental impact assessment? 5.2 For micro-scale projects, is there an owner declaration that guarantees that the project complies with local environmental regulations? /3/, /4/, /5/, /22/ /3/, /4/, /5/, /22/ /3/, /4/, /5/, /22/, /24/, /25/ 6. Gold Standard Criteria for Stakeholder Consultation Yes, the matrix based on existing sources of information with good quality and from different creditable sources. Yes, the data presented in a good quality of detail and there are verifiable. CAR 1: Margins of error are to be cleared if they are applicable. The scoring based on the Social Carbon Standard is reproducible and verifiable. CAR 1 CLOSED Yes, three of the subtotals are positive. CAR 2: There is no stakeholder consultation done. Operational and environmental licenses where assessed and verified during onsite assessment. N/A. The project activity is not micro scale project. CAR 2 CLOSED Page 22

23 6.1 Stakeholder Consultation Have PPs fulfilled the GS requirements, set out in GS Toolkit Section 2.6 and 2.11, regarding stakeholder consultation? Has an Invitation tracking table been filled out? Are copies of invitations published/sent out available? Is a non-technical summary included in the Local Stakeholder Consultation report? Is a participant list available? Are stakeholder evaluation forms available? Are minutes of the meeting(s) available? Has due account been made on comments received? If stakeholders required a revisit of the sustainable development assessment, has this been done? Is the consolidated sustainable development matrix presented based on own preliminary scoring and the matrix from the outcome of the blind stakeholder exercise? 6.2 -Stakeholder Feedback Round CAR 2: There is no stakeholder consultation done. CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Page 23

24 6.2.1 Is there evidence clearly showing that the latest version of the complete PDD (including the EIA, if applicable) was made publicly available for a period of two months prior to completion of the validation in a readily accessible form? Is there evidence clearly showing that the non-technical summary of the project (in appropriate local language(s)) was made publicly available for a period of two months prior to completion of the validation in a readily accessible form? Is there evidence clearly showing that all relevant supporting information (if available, in appropriate local language(s)) was made publicly available for a period of two months prior to completion of the validation in a readily accessible form? Does the Passport include a description of the procedure followed to invite comments, including addressing all the details of the oral hearing such as place, date, participants, language, local or national GS NGO supporters, etc.? Does the Passport include all written or oral comments received? Does the Passport include the argumentation on whether or not comments are taken into account and the respective changes to the project design? 7. Pre-Feasibility Assessment Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Idem to CAR 2 CLOSED Page 24

25 7.1 Has the feedback from GS been followedup? 8. Sustainability Monitoring Plan Yes, the retroactivity of the project has been well assessed. 8.1 Are chosen parameters relevant to the indicators? /3/, Yes, the chosen parameters are all relevant. 8.2 Is the sustainability monitoring plan unambiguous about who will monitor with what frequency? /3/, Yes, it is clearly stated on this section who will be monitoring the parameters. CL 4: In some cases it is not clear about the frequency of monitoring. CL 4 CLOSED 8.3 Is there any concern regarding the feasibility of the plan? /3/, No, there is no concern regarding this point. Page 25

26 Table 2: List of Requests for Corrective Action (CAR) and Clarification (CL) No. CAR/CL Observation (CAR/CL) 1. X CL 1: There is no mention on the PDD about the criteria of conservativeness and degree of it. 2. X CL 2: There is no uncertainty risk stated on the PDD. 3. X CL 3: More information about the international labour standards. 4. X CAR 1: Margins of error are to be cleared if they are applicable. 5. X CAR 2: There is no stakeholder consultation done. Reference (Table 1) Summary of project owner response 2.13 Information on conservativeness was included in Section B.4 and B.6.3 of the PDD. More information on conservativeness was included in Section H.2 of the Passport as well Information on the most relevant uncertainty risks was included in Section A.4.2 of the PDD. 2. A reference to the leakage section was included in the description of the availability of renewable biomass, section A Information on labour standards was included in Section F.1 of the Passport. 4.5 Information on margins of errors was included in Section F.2 of the Passport (under Justification choice). 4.8/ 6.1/ 6.2 Stakeholder consultation was performed as required during the pre-feasibility assessment. The Stakeholder Feedback Round (which Validation team conclusion The information included in PDD /1.2/ and GS Passport /2.2/ were accepted by the Validation Team. The CL is CLOSED. 1. The information was accepted but it needs to be included the reference regarding the studies of the availability of renewable biomass. 2. The revised PDD /1.2/ is checked and the reference to the leakage section has been included. The CL is CLOSED. The revised GS Passport /2.2/ is checked. The information about the labour standards was included and accepted by the Validation Team. The CL is CLOSED. The information about the margins of errors included in the revised GS Passport /2.2/ was accepted by the Validation Team. The CL is CLOSED. The Validation Team received and accepted the Report of Local Stakeholder Consultation Process /3/. The CL is CLOSED. Page 26

27 6. X CL 4: In some cases it is not clear about the frequency of monitoring. is the required step of stakeholder Consultation for retroactive projects) was performed following Gold Standard requirements for the Local Stakeholder Consultation Process. Two of physical meetings were held to local stakeholders. A Report on such a consultation process was uploaded to the Gold Standard Registry and is being sent to the validation team via as well. 8.2 The frequency of monitoring of the Sustainability Monitoring Plan was revised to provide more clarity. The review of the frequency of monitoring of Sustainability Monitoring Plan was revised on GS Passport /2.2/ and was accepted by the Validation Team. This CL is CLOSED. Page 27