PROGRAMME OF ACTIVITIES DESIGN DOCUMENT (PoA-DD)

Transcription

1 CDM Executive Board Page 1 PROGRAMME DESIGN DOCUMENT FORM FOR SMALL-SCALE CDM PROGRAMMES OF ACTIVITIES (F-CDM-SSC-PoA-DD) Version 02.0 PROGRAMME OF ACTIVITIES DESIGN DOCUMENT (PoA-DD) PART I. Programme of activities (PoA) SECTION A. General description of PoA A.1. Title of the PoA MicroEnergy Credits Mongolia - Microfinance for Clean Energy Product Lines VER Project Version 5 Date: 14/08/2014 A.2. Purpose and general description of the PoA 1. General operating and implementing framework of PoA The purpose of this small scale Programme of Activities ( SSC-PoA ) is the dissemination of clean energy products in Mongolia. The Programme will promote two broad categories of Clean Energy Products ( CEP ): Efficient Stoves and heating technologies Home Insulation technologies CEPs disseminated under this PoA reduce carbon emissions by reducing the amount of fuel required to provide heat to homes and gers in Mongolia. 1 MicroEnergy Credits is a social enterprise that helps low-income households in developing countries to invest in Clean Energy Products through their local microfinance institution. Under the PoA, MEC will develop programs with microfinance institutions 2 and clean product suppliers to market, distribute, and finance CEPs to these micro-entrepreneurs and low income households. Many microfinance clients suffer from energy poverty, impacting their health, their ability to educate their children, the gender balance of their household and their ability to save and accumulate wealth. Presently, available clean and low carbon technologies can both improve their quality of life and reduce carbon emissions. Many low-income households lack access to clean energy technologies due to economic barriers and market inefficiencies including: Lack of access to upfront finance Lack of awareness of clean energy products and their value proposition Lack of supply of products in the local market place Lack of aftersales service and maintenance Inability to afford the clean energy product MicroEnergy Credits addresses these barriers by working with microfinance institutions to market affordable, reliable clean energy products right to doorstep of the low-income households. Microfinance institutions are well positioned to provide clean energy to their clients because they offer: 1 Target groups are discussed in Annex 3. 2 For the purposes of this document, a microfinance institution is defined as a local institution that provides financial services to low income households.

2 CDM Executive Board Page 2 Awareness: Microfinance institutions (MFIs) offer education in addition to finance with frequent touch points Finance: Ability to finance upfront costs Local knowledge: MFIs are typically local organizations that understand local energy resources and needs Longevity: Most microfinance clients remain bank clients for many years or decades Historically a very small percentage of microfinance institutions have offered microfinance for lowcarbon technologies due to economic barriers. MicroEnergy Credits has developed a program that enables Microfinance institutions to overcome these barriers. Obstacles that have prevented Microfinance institutions from starting clean energy product lines include: 1. High cost of hiring additional staff 2. Expense of marketing and awareness building 3. Steep learning curve to understand products and technologies 4. Lack of partnerships with local suppliers and distributors. 5. Reputational risk 6. Scarcity of on-lending funds 7. Difficulty developing financial products for consumptive loans MicroEnergy Credits uses carbon finance to overcome all of these obstacles, enabling low-income households and individuals to invest in clean energy products. First, MicroEnergy Credits works with the microfinance institution to develop an attractive clean energy product offering to its microfinance client base, addressing each of the barriers such as education, price, finance, and supply and aftersales service. Second, MicroEnergy Credits trains the microfinance institution to implement the clean energy lending program. This includes business planning, capacity building, and implementation of marketing, education and supply chain processes. Third, MicroEnergy Credits implements a robust and transparent carbon credit monitoring and tracking system to quantify and record the volume of carbon emission reductions created through the clean energy program. Finally, the carbon finance is used to expand and sustain the clean energy program through: 1. Client education and marketing 2. Internal training and capacity building 3. Onlending funds to local SMEs producing the clean energy systems. 4. Aftersales service and maintenance 5. Lowering the interest or principal cost to the client. The partner organizations (POs) will operate clean energy lending units that disseminate CEPs to local households. They will keep track of the list of CEP installations pertaining to the PoA in the electronic Credit Tracker Platform (described in Section C). All CEPs disseminated under the PoA shall have a unique identifier number, allowing to doubtlessly identify the CEP. Identifier numbers are transferred to the booking record in the Credit Tracker Platform and assigned to one VPA to ensure no double counting. This GS PoA uses the same project boundary and technologies to the registered GS CDM PoA 8142 (GS1343), also operated by MicroEnergy Credits, the CME. MicroEnergy Credits is developing this GS PoA to credit the CEPs sold prior to those credited in the GS CDM PoA. All CEPs sold under both this GS PoA and the GS CDM PoA are tracked in the Credit Tracker Platform, ensuring that no double counting exists between or within the two PoAs. When purchasing a CEP the user will have signed a title transfer with the PO (the Title Transfer ). The title transfer will assert the legal rights of the carbon credits generated by the CEP to the PO. Accordingly the POs will use the VER proceeds to expand and sustain the CEP program including providing some or all of the following: education, training, linkages to local product suppliers, aftersales service and maintenance, and reducing the cost of the CEP to the client.

3 CDM Executive Board Page 3 Based on the title transfer, the POs will transfer information for each CEP to the Credit Tracker Platform which will ensure that no CEP is counted more than once under the SSC-VPAs or the PoA. The Credit Tracker Platform will also serve as the basis for the calculation of the VERs. The monitoring plan will be validated and verified by a Designated Operational Entity ( DOE ). CEP suppliers will have to be educated by the PO, ensuring that stakeholders involved in the implementation of the SSC-VPA are aware and have agreed that their activity is being subscribed to the SSC-PoA. Organizational chart showing the stakeholders involved in the PoA: Figure 1: Relationship between stakeholders in PoA Sustainable Development Benefits: Impact on the Environment Climate Change: The new stoves and insulation will increase energy efficiency of the households in Mongolia. The stoves reduce the amount of fuel required to keep the house at a habitable temperature during cold weather. This means that households will need less fuel to cook their food, heat their water and warm their homes. The better home insulation will ensure that less heat is lost to the environment, thus increasing the efficiency of the household heating system. This will result in less Greenhouse gas emissions from burning fuels and will have a positive effect on climate change. Local Environment: Through the introduction of the more efficient stoves and insulation technologies this PoA will result in the reduction of pollution caused by particulate matter released during the burning of fuels. Impact on Society Poverty Alleviation: MicroEnergy Credits utilizes carbon credits to help provide low-cost affordable micro finance to project participants so they can purchase modern energy systems that can reduce monthly energy expenditures, improve health conditions, and increase household

4 CDM Executive Board Page 4 productivity. This will ensure that less money is spent on fuel and more money can be saved for other uses. Equity: This programme allows for low-income households to afford these desired efficient stoves and better insulation which increase fuel savings and means less money is spent on fuel each year and there is more money to be spent on other things. Health: The new stoves reduce particulate matter emissions and smoke. This will have a positive effect on the health of the project participants who will inhale less smoke. Satisfying Basic Demand: The new blankets have a single or double layer of insulation together with a waterproof layer. This helps satisfy the basic demand of keeping warm and dry. The stoves are energy efficient which help satisfy the need for energy to keep warm, cook and boil water. All of this is done in an efficient manner ensuring minimal energy waste. Impact on Economy and Technology Efficient Resource Utilization: Setting up a Micro Finance Institution to provide Clean Energy Products requires a lot of resources. Micro Energy Credits is making use of carbon finance to help alleviate the costs of client education and marketing, internal training and capacity building, lending funds to local small enterprises producing the Clean Energy Systems, aftersales service and maintenance, and lower the interest or principal cost to the client. This means that less of the cost of providing this service is passed on to the project participants who can enjoy an efficient micro-finance service with reduced cost for the clean energy products. Transfer of Technology and Knowhow: The installation of the insulation will be done with local people who will learn about how the technology works. In some cases the assembly of the stove will also be done by local people who will learn about the stoves. 2. Policy/measure or stated goal of the PoA The goal of the PoA is to use microfinance to expand access to clean energy to millions of low income households, enabling: Households to achieve critical development improvements (health, education, economic status) Households to benefit from savings on energy expenditures Expansion of the clean energy product supply chain to serve low income populations Reduced environmental impacts from carbon emissions and deforestation 3. Confirmation that the proposed PoA is a voluntary action by the coordinating/managing entity The PoA is a purely voluntary activity by the coordinating entity MicroEnergy Credits, a private entity. MicroEnergy Credits is under no requirements to complete such programs. A review of the national energy policies of the country shows that there are no mandatory laws, policies or requirements mandating the use of the CEPs being implemented within this PoA. A.3. CMEs and participants of PoA MicroEnergy Credits ( MEC ) is the CME for the PoA. MEC is a social enterprise that helps microentrepreneurs and low income households in developing countries to invest in Clean Energy Products through their local microfinance institution. As such it will coordinate the efforts of different POs to disseminate clean energy products. POs will act as SSC-VPA Activity Implementers/Operators.

5 CDM Executive Board Page 5 A.4. Party(ies) Name of the party involved(*) ((host) indicates a host party Private and/or public entity(ies) project participants (*) (as applicable) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Mongolia (host) MicroEnergy Credits No UK MicroEnergy Credits No A.5. Physical/ Geographical boundary of the PoA The geographical boundary for the PoA is defined by the national boundary of Mongolia. In each VPA, project-specific boundaries will be defined by the locations 3 of each household-level clean energy product installation, which will be recorded in MEC s Credit Tracker Platform. The following example demonstrates how the Credit Tracker technology has previously been used to track the physical boundaries of a project in Mongolia. Figure 2: Project Boundary Mongolia (Source: Google maps) Figure 3: Efficient Product Households in Mongolia (Source: MEC Credit Tracker) 3 Location is defined by one of the following sets of information: A. Precise GPS location of the household that purchases/installs clean energy product. B. GPS location within one mile of the household and credible address for household. C. Three of the following identifiers: Purchaser name, household address, phone number, bank ID number, national ID number, product serial number, household GPS location, or GPS location within one mile of household.

6 CDM Executive Board Page 6 Figure 4: Efficient Product Households in Greater Ulaanbaatar (Source: MEC Credit Tracker) A.6. Technologies/measures The technologies that will be employed by the PoA are all small-scale, low cost clean energy products that meet the basic needs of Mongolia s poor. In general, these technologies are deployed in homes and small businesses. All of the technologies employed by the VPAs provide development benefits as well as environmental benefits. The PoA will be implemented using the following approved methodologies: AMS-II.E. Energy Efficiency and Fuel Switching Measures for Buildings, version 10 Under AMS-II.E, each SSC-VVPA will make the following clean energy products available to low income populations in Mongolia: 1. Energy efficiency o Efficient cooking and heating technologies 2. Insulation products: o Ger blankets Energy Efficiency Efficient Cooking and Heating Stoves The energy efficient stove is a clean energy solution to heat Gers and other types of homes. This product reduces the amount of fuel required to keep the house at an inhabitable temperature during cold weather. The stoves utilize the most common and locally accessible fuel sources (primarily pit-coal along with a minority use of wood), while significantly enhancing the combustion process. To be conservative this POA does not include emissions reductions from decreased consumption of biomass. The stoves use an insulated combustion chamber and are designed to retain heat for longer and at a higher temperature than the traditional versions, allowing users to keep their homes warmer while using less fuel. 4

7 CDM Executive Board Page 7 Improved Heating Systems Example: Heating Stove - Designed to circulate and draft heat for longer periods of time - Retains heat longer using a specially designed insulating brick Figure 5: Efficient Cooking and Heating Stove Value Proposition (Source: XacBank Eco Energy Unit Business Plan) SSC-VPAs will deploy efficient stoves as requested by AMS II.E, v.10. For example, one efficient stove disseminated under the PoA will be the Silver Mini. This stove has a specified thermal efficiency of 71%. 5 Design of the Silver Mini may develop over time. Efficient Low-Pressure Boilers Efficient low-pressure boilers (LPBs) are a clean energy solution to heat large, freestanding homes that are not connected to the city heating grid. Approximately 16% of free standing homes in the ger districts use low-pressure boilers to heat their homes, as opposed to a traditional stove. 6 Typically, an LPB is a traditional coal-fired stove connected to a hot water distribution system and radiators, which heat the home. LPBs serve homes of m 2. Similar to efficient cook stoves, energy efficient LPBs reduce the amount of fuel required to heat the home during winter. Efficient LPBs can reduce fuel use by up to 40%, compared to traditional LPBs. Efficient LPBs use the same locally accessible fuel primarily coal with wood for igniting, but enhance the combustion process by using an insulated combustion chamber and secondary air source, which allows complete combustion. The stoves retain heat longer than traditional LPBs, enabling lower fuel use. 5 Thermal efficiency manufacturer specifications, Silver Mini World Bank Report 2008: _UB_ASTAE_ENG.pdf

8 CDM Executive Board Page 8 Figure 6: Efficient low pressure boiler heating technology SSC-VPAs will deploy efficient LPBs as requested by AMS-II.E, v.10. One example of an efficient LPB we will distribute in future VPAs is the Silver Luxury Floor Heating Stove, pictured above, with 14kW output and 77% thermal efficiency. 7 Insulation Products Ger Blankets A ger blanket is a home insulation product that is attached to the ger. (A ger, or yurt, is a portable feltcovered dwelling structure that is a low-cost alternative to a house for many Mongolians.) A ger insulation blanket is an insulated blanket which can go over the traditional wool felt ger covering or replace it. It has a double layer of insulation inside and a waterproof layer outside. The blanket comes in six sections, including a special door covering and a section that covers the base of the ger on the outside to keep out wind, water and dirt. The ger blanket s use reduces the amount of fuel required to heat the home by up to 50%. Previously, well-insulated ger blankets were not available on the market due to market barriers. Ger producers did not think there was a demand for the product, because low income people could not afford them, and because marketing and distribution were difficult given the large geographic spread of ger homes. XacBank LLC worked with local small and medium enterprises to develop a high quality ger blanket, and then created the clean energy financing program that would make the products affordable. 7 Silver Trading Co., Ltd. [

9 CDM Executive Board Page 9 Improved Insulation Systems Example: Highly Insulated Ger Blanket Six components: - Roof insulation covering - Wall insulation covering - Roof opening insulation - Wall lower edge strip - Door insulation - Water proof covering Figure 7: Ger Blanket (Source: XacBank LLC Eco Energy Unit Business Plan) SSC-VPAs will deploy ger blankets as requested by AMS-II.E, v.10. For example, one ger blanket disseminated under the PoA will be a 5 walled ger blanket. This insulated blanket will meet the following technical specifications: Highly Insulated Ger Blanket Model - Technical Requirements Highly Insulated Ger Blanket - Felt Insulation Requirements Moisture Content Thermal Conductivity Density Average Thickness <15% <0.05W/m2K <200kg/m3 1.5cm Design of the ger blankets may develop over time. A.7. ODA Public funding of PoA No public funding or ODA have or will be diverted for the implementation of the POA. SECTION B. Demonstration of additionality and development of eligibility criteria B.1. Demonstration of additionality for PoA As required to demonstrate additionality of the PoA according to GS Annex F: PoA Rules, it shall be demonstrated that in the absence of carbon financing the proposed voluntary measure would not be

10 CDM Executive Board Page 10 implemented. 8 The PoA is a voluntary measure undertaken by MEC with partnership from microfinance institutions. MEC s microfinance partners are not required to lend for clean energy products, nor is the project activity mandated by law. The PoA involves end users purchasing and using the clean energy products, which is also a voluntary action. The action is not financially viable without the support of revenues from the sale of VERs. This financial support is required in order to develop, disseminate, and ensure continued operation of the activity proposed under the PoA. Additonality is established at the VPA level for both retroactive and regular stream VPAs (per GS TAC decision 30 Apr 2014: Revision to rule on the applicability of deemed additionality ) using EB 68 Annex 27, Guideline on the Demonstration of Additionality of Small-Scale Project Activities, Version 09. VPAs under the PoA shall include eligibility criteria derived from the relevant requirements of this guideline. Following EB 68 Annex 27 Paragraph 2 Version 09, the positive list of technologies and project activity types that are defined as automatically additional for project sizes up to and including the small-scale CDM thresholds comprises of: a) Grid-connected and off-grid renewable electricity generation technologies; b) Off-grid electricity generation technologies where the individual units do not exceed the specified threshold; c) Project activities solely composed of isolated units where the users of the technology/measure are households or communities or Small and Medium Enterprises (SMEs) and where the size of each unit is no larger than 5 per cent of the small-scale CDM thresholds; d) Rural electrification project activities using renewable energy sources in countries with rural electrification rates less than 20 per cent. The target groups of every VPA included under the PoA are households (eligibility criteria #19). In addition, each VPA will demonstrate it is exempt from a de-bundling check as each subsystem is no more than 1 per cent of the small-scale threshold (eligibility criteria #16). It follows that each VPA included under the PoA satisfies criterion 19 and 16 and thereby meets the requirements of item c) under the positive list of the Guideline on the Demonstration of Additionality of Small-Scale Project Activities Version 09: Each CPA is composed solely of isolated units where the users of the technology/measure are households or communities or Small and Medium Enterprises (SMEs); Each unit under the CPA is no larger than 1 per cent of the small-scale CDM thresholds (i.e. less than the required 5 per cent of the small-scale threshold). As each VPA under the PoA meets the requirements of item (c) under the positive list of the Guideline on the Demonstration of Additionality of Small-Scale Project Activities Version 09, it follows that each VPA under the PoA is additional. Early Consideration of carbon revenues Carbon revenues were considered from the outset in developing the PoA, as neither the PoA nor any of the project activities would have occurred without carbon revenues. The following timeline displays concrete actions which demonstrate the early consideration of carbon revenues: Date Action 1 September 2009 Agreement signed between MicroEnergy Credits and VPA Implementer XacBank for development of GS project activities and compensation for VERs 8 GS Annex F: The Gold Standard PoA Rules and Guidance (v2.2)

11 CDM Executive Board Page May 2011 First product was distributed under GS PoA 4 April - 27 Local Stakeholder Consultation process conducted for VPAs 1-8 October August 2013 ERPA signed between Carbon Neutral (offtaker) and MicroEnergy Credits (CME) 6 January 2014 Validation documentation submitted to DOE B.2. Eligibility criteria for inclusion of a VPA in the PoA Eligibility Criteria Complianc e Nr Category Description Yes No 1 Boundary and location of the VPA 2 No Double counting of CEP 3 VER ownership The VPA is located within Mongolia. Please note that not all CEP installations may have been deployed at VPA inclusion stage, however the location of the CEP can also be checked during verification. In the event that any deployed CEP is found to be outside of the project boundary/location, those CEP will not be counted in the emission reduction calculation. A unique numbering or identification system for the CEP installed is applied. End users receiving CEP under the specific VPA contractually cede their rights to claim and own emission reductions under the Gold Standard to the CME of the PoA Mean of proof / Evidence Document (to be checked at VPA inclusion) Location and boundary is specified in the specific VPA-DD stating that the location is limited to Mongolia. Documentation: 1. Statement of CME that the location and boundary is within Mongolia. The unique numbering or identification regime is included in the specific VPA-DD Documentation: 1. MEC Credit Tracker database 2. First Booking Record (first VPA of PoA) The default CEP Booking includes the provision that emission reductions generated by the CEP are transferred from the end-user to the PO and ultimately owned by the CME 1. Documents:Carbon rights waiver 2. First CEP Booking Record (first VPA of PoA) 4 No Double counting of VPA The VPA is exclusively bound to the PoA. Confirmation that the programme activity has A statement is included in the VPA- DD that the specific VPA will not be part of another single CDM project activity or VPA under another PoA.

12 CDM Executive Board Page 12 not been and will not be registered either as a single CDM or GS project activity or as a VPA under another PoA. VPA-DD See section A.13: MEC s Credit Tracker platform is used to record detailed information on each CEP installation, including the unique identification number. Using this data, MEC is able to ensure that all CEP in the proposed VPA are uniquely defined and included in the proposed SSC VPA only, thereby avoiding double counting of emission reductions generated by the SSC VPA. 5 Awareness and agreement of those operating a VPA on PoA subscription 6 Non-diversion of ODA in case of Public funding 7 VPA Start Date Contractual provisions to ensure that those operating the VPA are aware and have agreed that their activity is being subscribed to the PoA. The CME and the VPA operator (in case of being different from the CME) shall confirm that in case of public funding there shall not be diversion of Official Development Assistance. The start date of the VPA shall not be before the PoA start date. Please note that not all CEP installations may have been deployed at VPA inclusion stage, however the CEP start date can also be checked during verification. In the event that any deployed CEP is found not in line In addition, declaration from VPA operators as part of their contract with the CME, stating that their activities are not registered as part of another CDM/GS project activity with a different CME. Documentation: 1. Contract with CME and MFI. Declaration from VPA operators as part of their contract with the CME, stating that they are aware and have agreed that their activity is being subscribed to the PoA. VPA Operator is: [see specific VPA] Statement of CME and the VPA operator (in case of being different from the CME) Documentation: 1. ODA Declaration form for each VPA (GS Annex D) Starting date as stated in the VPA-DD A.8.1 is after PoA-DD start date. Documentation: 1. Statement from CME that no CEP under the VPA were sold prior to the PoA start date of 25/05/2011, the sales date of the first product included in the PoA.

13 CDM Executive Board Page 13 8 VPA Crediting Period 9 Approval of VPA by CME 10 Additionality of VPAs: 11 Baseline for Target Group with VPA start date, those CEP will not be counted in the emission reduction calculation VPA starting date of the crediting period is date of inclusion into registered PoA or up to two years prior, in case of retroactive crediting. Crediting period shall not exceed the PoA end date. Each VPA shall provide verifiable evidence. CME approved each VPA to be included into its registered PoA. Additionality is demonstrated at the VPA level using the UNFCCC tool EB 68 Annex 27: Guideline on the Demonstration of Additionality of Small- Scale Project Activities Version 09, Paragraph 2(c) which states that a barriers analysis is not required to document Additionality for: (c) Project activities solely composed of isolated units where the users of the technology/measure are households or communities or Small and Medium Enterprises (SMEs) and where the size of each unit is no larger than 5 per cent of the smallscale CDM threshold. A regression model is developed for baseline that is relevant for the baseline technology and the target group of the A statement is included in the VPA- DD that the crediting period starting date is date of VPA inclusion into registered PoA or up to two years prior, in case of retroactive crediting and that crediting period shall not exceed the PoA end date. Statement of CME giving approval for the VPA to be included into its registered PoA. Documentation: 1. Description of VPA activity as documented in VPA-DD Sections A.3 and A.5 2. VPA-DD Section A.12 proves that the size of each unit is no larger than 5% of the small-scale CDM threshold. Documentation: 1. Regression model for target group in the VPA

14 CDM Executive Board Page 14 VPA, specifically for: 1. C y,old,household stoves and/or insulation = Residential homes in ger areas of Ulaanbaatar. (Determined at the time of first inclusion into a VPA and updated annually based on regression model variables) 2. C y,old,household stoves and/or insulation = Residential homes in yet to be determined location in Mongolia. (Determined at the time of first inclusion into a VPA and updated annually based on regression model variables) 12 Compliance with Environmental Impact Assessment (EIA) Requirements and relevant host countries laws and policies As stated in the PoA- DD, the EIA was conducted at the PoA level. Each VPA complies with EIA and relevant host country laws and policies as listed in the EIA report: 1. The Article of Environment Impact Assessment Law of 4.6.2: o The standard methods of environment impact assessments 3.2.2, Resolution of Minister of Environment and Nature s the 1st annex of resolution 236, in The Law of Nature and Environment Protection Documentation: To demonstrate compliance with the EIA, the PP shall implement the following: 1. Regular household stove s technical general requirement MNS 5216:1, hard fuel usages of household stove MNS 5216:2002, MNS 13240:2011, in the frame work of this project, those type of requirements must be fulfilled on household energy efficient stoves. o Manufacturer specifications 2. If there is any waste from production, the project implementers should make a collaboration contract with the local waste management foundation or companies. o Agreements with stove dismantling

15 CDM Executive Board Page Local Stakeholder Consultation and Sustainable Development A local stakeholder consultation must be conducted prior to inclusion of any regular VPA into the PoA. If the VPA is retroactive, further stakeholder consultation may be conducted based on Gold Standard guidance in the Pre-Feasibility Assessment (PFA). A sustainability assessment must be conducted prior to inclusion of any VPA into the PoA, which shall be reported upon in the VPA Passport. Mitigation measures shall be provided for any sustainable development indicators for which there is potential negative impact. company(ies) to dismantle old stoves 3. As the stove is lit from the top, it may have difficulty heating at the ground level. o Manuals provided to end users at time of purchase provide information on how to properly light and refuel stoves. 4. The energy efficient products should be distributed with brochures and user manuals to the clients. o Manuals associated with the stove disseminated. 5. Project parties should follow all of safety codes and user manuals, which is developed by producers and PIU. o Training on product use and information provided. Document: 1. Copy of the report for the LSC that was conducted to determine if the LSC is applicable for the VPA. 2. If retroactive, PFA feedback from GS to determine stakeholder consultation requirements. 3. VPA Passport including Outcome of Sustainability Assessment.

16 CDM Executive Board Page Technological requirements 15 Technological requirements In accordance with methodology AMS- II.E, paragraph 2: This category is applicable to project activities where it is possible to directly measure and record the energy use within the project boundary (e.g. electricity and/or fossil fuel consumption). In accordance with methodology AMS- II.E, paragraph 3: This category is applicable to project activities where the impact of the measures implemented (improvements in energy efficiency) by the project activity can be clearly distinguished from changes in energy use due to other variables not influenced by the project activity (signal to noise ratio). Specification of CEP-i type and compliance with the technological requirements of AMS-II E will be described in the specific VPA-DD. CEP energy use will be directly measured and recorded through surveys following the sampling plan as stated in the specific VPA-DD. Sampling plan, as stated in PoA-DD Part II, Section B.7.2, will conform with EB 75 Annex 8: Guidelines for Sampling and Surveys for CDM Project Activities and Program of Activities. Documentation: Fuel savings improvement will be demonstrated through results of ongoing monitoring compared to the regression model results Independent variables will be measured for the relevant regression models (when models are applicable). As explained in Appendix 3, regression analysis was applied to comprehensive dataset on fuel usage of target population (low-income households in Ulaanbaatar) to determine the independent variables that affect fuel consumption in the absence of the project activity. Independent variables are used for calculation of baseline fuel consumption in each year. Use of regression model ensures that only the impact of the improvements in energy efficiency by the project activity are applied in calculation of emissions reductions. Changes in household energy use due to other variables that are found to affect fuel consumption which are not influenced by the project activity, i.e. specific season temperature and wind speed, dwelling type, location, are accounted for by the baseline regression model and do not affect calculation. Documentation: 1. Regression analysis is applied to ensure that independent variables are

17 CDM Executive Board Page 17 accounted for. 2. Booking record in Credit Tracker ensures that the product was installed. 16 De-bundling In accordance with paragraph 9 of Annex 32 to the EB47 Report, Guidance for determining the occurrence of debundling under a Programme of Activities (PoA), if each independent subsystem/ measures included in the VPA of a PoA is no greater than 1% of the small scale threshold defined by the methodology applied, than that VPA of PoA is exempted from performing de-bundling check, i.e. considered as being not a debundled component of a large scale activity Documentation: 1. Debundling calculations provided in the PoA-DD that demonstrates that according to thermal energy savings calculation provided in AMS-II.E. each independent subsystem/ measures included in the VPA of the PoA, conservatively assuming an efficiency of 100%, is no greater than 1% of the small scale threshold defined by the methodology applied. 17 SSC Limit for VPAs The VPA will remain under the thermal threshold of 180 GWh/a thermal energy savings (threshold as per clarification request SSC_233) throughout the crediting period of the VPA. Please note that not all CEP may have been deployed at VPA inclusion stage, the SSC limit for VPAs can however also be checked during verification, and in case any deployed CEP will be found not in line with VPA SSC Limit for VPAs requirement, those CEP will not be The estimated maximum number of CEP is to be defined by the following equation. CEP Stove Insulation Combined 180 GWh Thermal Energy Savings per CEP Energy Savings per CEP Total CEP Under 180 GWh th/yr

18 CDM Executive Board Page Technological requirements counted for emission reduction calculation. Each VPA will employ (1) Efficient Stoves and heating technologies and/or (2) Home Insulation technologies cooking and heating stoves or home insulation products that meet the following criteria: 1) Efficient Stoves and heating technologies: - Used for household level heating - Coal burning - Thermal efficiency at minimum 70% Documentation: 1. Manufacturer specifications and/or test results for each technology employed. 2) Home Insulation Technologies - Moisture content <15% - Thermal conductivity <0.05W/m2K - Density <200kg/m3 - Insulation average thickness >1.5cm - One of following models: - 4-wall model - 5-wall model - 6-wall model - 19 Target group The target group shall be domestic households in uban, peri-urban, or rural homes. The baseline regression model will be determined using baseline data from the target population. 20 Sampling requirements The distribution mechanism is direct sales and sales through distribution partners. The sampling method applied in the VPA Documentation (one of the following): 1. MEC Tracker booking record, showing residential address and end user. 2. Technology specification for domestic use. 3. Contract with VPA implementer or distribution partner. 4. Operations Manual describing distribution mechanism. Documentation: 1. PoA Sampling plan

19 CDM Executive Board Page 19 (e.g. in the monitoring plan) follows the Standard for Sampling and Surveys for CDM Project Activities and Programme of Activities (EB 74, Annex 6) and follows the sampling requirements laid out in the PoA. 2. VPA Sampling Plan (in VPA- DD) A minimum 90% confidence interval and a 10% margin of error requirement is achieved for the sampled parameters. When a single sampling plan covers a group of VPAs, confidence/precision of 95/10 for the sample size calculation is applicable. Any divergence to statistical requirements shall follow appropriate procedures in EB74 Annex6. According to the Guidelines on assessment of debundling for SSC project activities, v03 (EB 54, Annex 13, par. 10) for determining the occurrence of debundling under a Programme of Activities (PoA), if each of the independent subsystem/measures included in the VPA of a PoA is no larger than 1% of the small scale threshold defined by the methodology applied, then that VPA of PoA is exempted from performing the de-bundling check, i.e. considered as being not a de-bundled component of a large scale activity. The small-scale threshold defined by the methodology applied, AMS II.E., is a maximum energy saving of 180 GWh. The calculations below demonstrate the energy saved by each single appliance is less than 1% of the small-scale threshold of 1.8GWh. For the purposes of this calculation, we take a conservative approach and assume 100% efficiency for each improved CEP and that 100% of coal used is bituminous, which has the highest net calorific value (NCV). Debundling is analysed for technologies in the target group Ger Area homes. Debundling will be conducted for subsequent technology CEP-i in new baseline target areas at the time they are first included into a VPA, specifically, for CEPs installed in Commercial and Institutional buildings. Equation 1: Energy Saving 100% CEP Value Unit Source MCA Report/ Baseline 5.14 tons coal/heating season Regression Model Percent Savings 100% Assumption

20 CDM Executive Board Page 20 Coal Saved 5.14 tons coal/heating season Equation 1a We then calculated the AMS II.E small scale threshold in terms of energy per a tonne for coal, which is demonstrated in Equation 2. Equation 2 Energy per tonne = 1000 x NCV coal Energy units conversion factor Parameter Value Unit Source NCV coal TJ/tonne IPCC default, bituminous coal Energy units 3600 GJ/GWh Default SSC Type II limit 180 GWh (thermal)/year AMS-II.E (60GWh/yr equivalent) Energy per tonne GWh/tonne Equation 2 In Equation 3 we calculate the energy saved by multiplying the savings from equation 1 with the energy per a tonne in equation 2. This demonstrates the amount of energy saved by each measure. This is then divided by the threshold SSC Type II limit (180 GWh/year) demonstrating the percent of the SSC Type II threshold each measure/technology saves. The results show that each is less than 1% of the small scale limit. Equation 3 Energy saved (GWh/year) = Coal Saved x Energy per tonne Equation 4 Percentage of the Type II limit = Energy saved (GWh/year) SSC Type II limit x 100 Parameter CEP Value Unit Source Coal saved 5.14 tonnes/year Equation 1a Energy per tonne GWh/tonne Equation 2 Energy saved GWh/year Equation 3 Percentage of the Type II limit 0.020% percentage Equation 4 The energy saved for each measure/technology has been demonstrated to be less than 1% of the small scale type II threshold (180Wh/year) and thus herewith demonstrates at the PoA level that each VPA of this PoA is exempted from performing the de-bundling check. B.3. Application of methodologies This section shall demonstrate the application of the baseline and monitoring methodology to a typical SSC-VPA. The information defines the PoA specific elements that shall be included in preparing the PoA specific form used to define and include a SSC-VPA in this PoA (PoA specific CDM-SSC-VPA-DD). The following methodology will be used in this PoA:

21 CDM Executive Board Page 21 For efficient cooking and heating technologies and home insulation products including efficient gers and homes, the SSC-VPAs will use the small-scale methodology AMS-II.E Energy Efficiency and Fuel Switching Measures for Buildings, (version 10) Each section below is common to all CEPs and thus included only once. CEP Type 1: Efficient Cooking and/or Heating Technologies for residential homes CEP Type 2: Building insulation for residential homes The project activities included in these SSC-VPAs involves providing financing and supporting distribution of efficient cooking and heating technologies and home insulation products for use by households. The AMS-II.E methodology is applicable because the project activities fulfill the following criteria:. Introduces technologies involving the efficiency improvements in households. The energy efficient measures (efficient cooking and heating technologies) reduce the use of fossil fuels (coal) which results in less emission of carbon dioxide. It is possible to directly measure and record the energy use within the boundary (fossil fuel consumption). This methodology specifies that it is applicable to project activities where the impact of the measures implemented by the project activity can be clearly distinguished from changes in energy use due to other variables not influenced by the project activity (signal to noise ratio). Hence this methodology works well for improved cooking and heating stoves in Mongolia where the more efficient cooking and heating stove creates an efficiency improvement on the order of magnitude of 40%. The baseline scenario 9 includes the use of 5.14t of coal and 1.5t of biomass. 10 Although the new more efficient cooking and heating stoves will reduce the use of both fuels, only the reduction in coal will be credited. In order to pursue a conservative approach, reductions in the consumption of biomass will not be credited. Hence the only fuel considered in this baseline is coal. Each household in this POA is less than 1% of the Small-Scale limit of 180 GWh (thermal) applied to the VPA. The full calculation is demonstrated in Section B.2. SECTION C. Management system The CME manages the PoA as a whole. The management system is designed as per the Standard for Demonstration of Additionality, Development of Eligibility Criteria and Application of Multiple Methodologies for Programme of Activities (Version 03.0, EB 74, Annex 05), and includes all relevant information as per paragraph 19 therein. a) A clear definition of roles and responsibilities of personnel involved in the process of inclusion of VPAs, including a review of their competencies; b) Records of arrangement for training and capacity development for personnel; c) Procedures for technical review of inclusion of VPAs; d) Procedures to avoid double counting (e.g. to avoid the case of including a new VPA that has already been registered either as a GS project activity or as a VPA of another PoA); e) Records and documentation control process for each VPA under the PoA; f) Measures for continuous improvements of the PoA management system; 9 If Heat Only Boilers (HOB) are included in a VPA, the relevant baseline will be established at the time of inclusion. 10 MCA Mongolia Household Survey Report. 2011

22 CDM Executive Board Page 22 a) A clear definition of roles and responsibilities of personnel involved in the process of inclusion of VPAs, including a review of their competencies; The CME will help the PO establish a marketing and lending program for CEPs. This program will engage its own staff, as well as local distributors, technicians and other service providers to effectively market the CEPs to clients. The PO will follow the monitoring plan and procedures to identify each CEP sold during the project so that the appropriate amount of emissions reductions can be claimed. MEC is responsible for carrying out the process of inclusion of VPAs in the PoA. Within MEC, the person responsible for carrying out this process is the Carbon Credit Manager. This individual will be trained using the MEC CME manual, which specifies how to complete the inclusion process. The Carbon Credit Manager will have sufficient experience with GS projects and terminology to successfully carry out the required duties. MEC management will ensure that Carbon Credit Manager receives relevant training and has all necessary competencies to accurately assess and oversee the inclusion process, including the following: Sound understanding of all inclusion criteria; Knowledge on issues relating to additionality; and Adept at ensuring protocol are followed to prevent double counting. The Carbon Credit Manager will ultimately report to the CEO of MEC. As necessary, the Carbon Origination Manager will contract expert assistance from a carbon consulting group to complete the inclusion process. If the Carbon Credit Manager leaves or takes on a new role, the incoming manager will be similarly trained. The Carbon Credit Manager, the CME and the POs will all respond to annual audits and address any issues found during those audits to ensure that the PoA continues to improve over time. The personnel and their relevant competencies involved in the implementation of the PoA and the VPA inclusion process are shown below: Table 1: MEC management team Title Reporting to Responsibilities Chief Executive Officer (CEO) MEC Board of Directors Oversees major PoA management and budgetary decisions Carbon Credit Manager CEO Oversees PoA and VPA implementation activities Client Relations Manager CEO Oversees relationships and establishes contracts with POs Chief Technology Officer (CTO)/VP of Technology Development CTO Oversees technology research and development for both project CEPs and record systems Table 2: MEC operational team Title Reporting to Responsibilities Regional Director, South Asia CEO Maintains relationships with POs, including through frequent communication and training MFI Partnership Coordinators Regional Director Coordinates carbon related activities, outreach and implementation of field activities

23 CDM Executive Board Page 23 and sales. Carbon Associate CEO Manages carbon asset development, including documentation b) Records of arrangement for training and capacity development for personnel; MEC management is responsible for ensuring that PoA personnel have the knowledge and skills to effectively carry out project activities and achieve set goals for the PoA. Accordingly, the Carbon Credits Manager has analysed the competence requirements for each critical role and task, and identified the knowledge and skills required for these competences and how personnel will be evaluated with respect to these standards. It is the responsibility of the Carbon Credits Manager to ensure that these knowledge and skills are maintained through reviews, evaluations, and training. Training shall be provided on the PoA management system so that roles, responsibilities and communication channels are clear. This, amongst others, should include: Title transfer of carbon rights; How data are recorded in the Carbon Tracker Platform; How to uniquely identify the installed CEPs; Where to send hard copies of the carbon rights waivers and any associated relevant documentation; Procedure for dealing with a change in the address or modifications in the capacity of the technology; and Monitoring procedures. On completion of trainings, a record of attendance that includes the name and contact details of all attendees should be recorded and filed. c) Procedures for technical review of inclusion of VPAs; The Carbon Credit Manager is responsible for technical review of all new VPA inclusions and monitoring reports used to support verification. Specifically, the manager will verify that new VPAs meet eligibility criteria and design requirements described in the registered PoA-DD. Furthermore, VPAs and related monitoring reports should be in compliance with GS standards. In the case that a VPA owner differs from the VPA owner, the owner can conduct the technical review, but final approval must be obtained from the CME. d) Procedures to avoid double counting (e.g. to avoid the case of including a new VPA that has already been registered either as a GS project activity or as a VPA of another PoA); Each VPA has unique identifier number that is attached to each household and installation within that VPA in MEC Tracker to ensure no double-counting. At the time of registering a new VPA, MicroEnergy Credits will ensure that the project activity is not part of a GS project activity or another PoA: MicroEnergy Credits signs contracts with each microfinance institution documenting that the emissions reductions in a specific project activity are included in that project and that project alone The partner microfinance institution explains the concept of carbon credits to the end user. The microfinance institution signs a contract with each end user recognizing the end user s title to the

24 CDM Executive Board Page 24 emissions reductions and transferring it to the microfinance institution, which then transfers it to MicroEnergy Credits MicroEnergy Credits and partner microfinance institutions consult with participating clean energy product suppliers to clarify that credits are not included in other projects and will be included in this PoA Each project is publicly announced at launch The MEC Credit Tracker Platform will maintain data on all installations, including date of installation and the VPA/PoA with which they are associated. The platform s use of locations for each installation will ensure that each clean energy product is only included in a single VPA under a single PoA. As noted in section A.2., MEC also owns GS CDM PoA 8142 (GS1343, pending GS registration), which distributes the same CEP types in the same target area. All CEPs distributed in both PoAs are included in the MEC Credit Tracker Platform. The unique code, or Sysnum for each product is tied to a specified VPA or CPA within the specified GS PoA or GS CDM PoA. Upon installation, products are assigned to a project activity. Once that product has generated VERs or CERs which have been issued, that assignment is permanent for the life of the product and may not be adjusted in the MEC Credit Tracker Platform. This ensures that no single product may ever be credited under more than one asset or project activity, thereby removing the risk of double counting. e) Records and documentation control process for each VPA under the PoA; MicroEnergy Credit s Credit Tracker Platform will be used to maintain records for each SSC-VPA. The MEC Credit Tracker Platform has been designed specifically for accelerating microfinance access to clean and efficient energy. The Credit Tracker Platform is used to collect and store the information related to the unique identification number, location, installation date, and usage status of each clean energy product (CEP) in each VPA, making it easy to identify, locate and verify any or all of the installations that pertain to a given VPA. The MEC Credit Tracker Platform is a hosted internet service, limiting the risk of loss of data. The Credit Tracker Platform enables MicroEnergy Credits to maintain consistent data on all VPAs and product installations. The process for entering data into the Credit Tracker Platform will be consistent across all VPAs. At the time of installation, the PO will create a Booking Record (in paper or electronic format) that captures detailed data on the installation and is linked to the customer s transfer of carbon rights (title transfer): Household name Location of household (address and/or GPS location) Product type installed Date of installation Unique identifier number for CEP Respective VPA District name Once the installation is complete, the PO will ensure that all the data from the Booking Record created at the time of installation is accurately captured in the electronic Booking Record in the Credit Tracker Platform. The PO will implement an internal check to verify the accuracy of data entry and to ensure that the data captured in Credit Tracker is identical to the data recorded at the time of installation. The Credit Tracker Platform includes a VPA Dashboard that provides a summary on the status of each VPA, and includes the fields: Name and unique identifier of each VPA

25 CDM Executive Board Page 25 List of CEPs included in each VPA Name of PO implementing each VPA Number of CEPs installed Aggregate emissions reductions per year for each VPA The VPA Monitoring Record maintains monitoring and auditing data on each installation in a VPA that is selected for representative monitored according to the monitoring plan: Unique identifier number for CEP Date of monitoring Usage status at time of monitoring f) Measures for continuous improvements of the PoA management system; MEC reviews the operations of the PoA management system on an annual basis in order to evaluate the effectiveness of and identify ways to improve operations. The Carbon Credit Manager is responsible for coordination of the management review; preparation of information for consideration; and documentation and implementation of the decisions reached by the review. Information to be considered during the review includes the following: Internal audits of the implementation of the CME management system Corrective and preventive action (both internal and those received from external auditors) Nonconforming products (e.g. VPAs or units within the VPA) Supplier performance (equipment and verifiers) Results of external audits Results of GS reviews Changes to GS and PoA requirements Conclusions from the review should be related to the following topics: Suitability of CME manual, SOPs, forms and templates New performance objectives Changes to the CME management system Resource requirements Resource plans Plans for new VPAs Such conclusions will help inform what will continue to be measured and monitored, and what changes will be made to improve operations. SECTION D. Duration of PoA D.1. Start date of PoA The starting date of the PoA is 25/05/2011, when the first CEP was sold (retroactive). All CEPs implemented since that date can be accounted within the PoA but the crediting period will commence at earliest 2 years retroactively from the official inclusion date of the specific VPA. The inclusion date of each VPA will be demonstrated at the time of verification.

26 CDM Executive Board Page 26 D.2. Length of the PoA The lifespan of the PoA is 28 years, thus ending on the 24/05/2039. SECTION E. Environmental impacts E.1. Level at which environmental analysis is undertaken The PoA involves the distribution and installation of household-level clean energy products. These products are small-scale with no anticipated negative environmental impacts. Furthermore, because of their small size and lack of negative impact, they are not subject to national level Environmental Impact Assessments. Therefore, it is reasonable to undertake a single environmental analysis at the level of the PoA rather than individual assessments for each SSC-VPA. The Ministry of Nature, Environment, and Tourism of Mongolia requires a general Environmental Impact Assessment, in accordance with the law on Evaluating Environmental Impacts (passed in 1998, amended 2003). This program falls into the category of local, small- and medium-sized producers, therefore it can be evaluated by the local or capital administration office of the Ministry of Nature, Environment and Tourism at the PoA level. E.2. Analysis of the environmental impacts The Environmental Impact Assessment (EIA) Report provided by the Head of the Environment Protection Office of the Capital City concludes that the project is not considered to have significant negative environmental consequences, therefore the project may continue implementation, thus providing approval for the PoA and all typical VPAs included in the PoA. The EIA was based on the following articles: Environment Impact Assessment law of 4.6.2, the standard methods of environment impact assessments 3.2.2, Resolution of Minister of Environment and Nature s the 1st annex of resolution 236, in Based on the information presented in items C.1 and C.2 and the host country requirements, the Environmental Impact Assessment Report provides approval for the PoA and all typical VPAs included in the PoA. The EIA requires that the project implementers work in accordance with the Law of Nature and Environment Protection and address any issues raised by the local administration office. Specific requirements listed under the EIA with the project response are listed below, also included in the eligibility criteria: EIA Table Addressed by MEC/ Project Implementer Object matter Comment Responsible party 1. Regular household stove s technical general requirement MNS 5216:1, hard fuel usages of household stove MNS 5216:2002, MNS 13240:2011, in the frame work of this project, those type of requirements must be fulfilled on household energy efficient stoves. Fulfill before project start Project implementer Each stove meets the required standards, as demonstrated by Manufacturer Specifications.

27 CDM Executive Board Page If there is any waste from production, the project implementers should make a collaboration contract to the local waste management foundation or companies. 3. As the stove is lit from the top, it may have difficulty heating at the ground level. Implement on daily process Review on project term Project implementer Project implementer Agreements signed with stove dismantling company(ies) to dismantle old stoves and remove waste. Manuals provided to end users at time of purchase or installation provide information on how to properly light and refuel stoves. 4. The energy efficient products should distribute with brochures and user manuals to the clients. 5. Project parties should follow all of safety codes and user manuals, which is developed by producers and PIU. Implement on project term and daily process Project implementer Manuals associated with the stove disseminated upon stove installation. Training on product use and information provided by program staff. Because the clean energy products being distributed in this PoA are small scale for household use, no negative environmental impacts are anticipated. These negative impacts are far outweighed by the positive environmental impacts that result from use of these technologies, including: Reduction in carbon and other GHG emissions from burning coal, wood, and other fuel sources. Reduction in air pollution caused by particulate matter released in burning traditional fuels. Reduction in deforestation as reliance on non-renewable fuel sources is reduced. Trans-boundary impacts Emissions calculations are based on the performance of individual CEPs within each SSC-VPA, irrespective of where they are manufactured. SECTION F. Local stakeholder comments F.1. Solicitation of comments from local stakeholders The information is provided at the VPA level. See specific VPA-DD, Section C for further details. The stakeholder consultations for the PoA are conducted at the VPA level. F.2. Summary of comments received See specific VPA-DD. F.3. Report on consideration of comments received See specific VPA-DD.

28 CDM Executive Board Page 28 SECTION G. Approval and authorization N/A PART II. Generic component project activity (VPA) SECTION A. General description of a generic VPA A.1. Purpose and general description of generic VPAs The application of the methodology and the inclusion criteria do not change for different measures/combinations of measures, thus the Generic component of the VPA is provided once. Each small-scale VPA ( SSC-VPA ) involves the installation and maintenance of clean energy products (CEPs) including efficient stoves, heating technologies and/or home insulation products by Partner Organization ( PO ) in Mongolia. The current practice in Mongolia is to use inefficient stoves and home insulation at the household level, resulting in necessary combustion of large amounts of coal. The use of these fuels generates a variety of gases including Carbon dioxide (CO2). The replacement of these traditional products with Clean Energy Products reduces the amount of fuel required for heating, and reduces the amount of GHG emitted into the atmosphere. Each SSC-VPA will be implemented using the following approved methodologies: AMS-II.E. Energy Efficiency and Fuel Switching Measures for Buildings, version 10 Under AMS-II.E, each SSC-VPA will initially make the following clean energy products available to low income households in Mongolia: Energy efficiency The efficient cooking and heating technology models that will be disseminated under this VPA are: Silver Stove Mini (model 131) Silver Stove Turbo (model 26) Silver Twin (model 181) Royal Stove Dul (Royal Single) Royal Stove Golomt (Royal Double) Ikh Tengeriin Khuhch LLC Bekas Stove (model 107) Elmeko LLC Talst Stove (model 001) Each of the efficient cooking and heating technology models will meet the following criteria: Used for household level heating Coal burning Thermal efficiency at minimum 70% Life expectancy of at least 5 years. As life expectancy of stove is less than the crediting period for each VPA (i.e. 21 years), the PP confirms that products which go out of use shall not cause environmental harm. As such, the VPA implementer shall make arrangements for the disposal of stoves at the end of their life to ensure their reuse for scrap metal or replacement parts.

29 CDM Executive Board Page 29 Further, the VPA implementer shall continue to offer loans for energy efficient products, enabling households whose product is no longer functioning to purchase an available energy efficient stove. Each user receives contact information of the VPA implementer at the time of sale. Insulation products The ger-blanket models that will be disseminated under the VPA are: 4-walled model 5-walled model 6-walled model Each of the ger-blanket models will meet the following criteria: Moisture content <15% Thermal conductivity <0.05W/m2K Density <200kg/m3 Insulation average thickness >1.5cm Life expectancy of at least 5 years As life expectancy of the ger blanket is less than the crediting period for each VPA (i.e. 21 years), the PP confirms that products which go out of use shall not cause environmental harm. As such, the VPA implementer shall make arrangements for the disposal of ger blankets at the end of their life to ensure that materials are properly disposed of and recycled and/or reused where possible. Further, the VPA implementer shall continue to offer loans for energy efficient products, enabling households whose product is no longer functioning to purchase available energy efficient ger blankets. Each user receives contact information of the VPA implementer at the time of sale. MicroEnergy Credits ( MEC ) is the CME for the PoA. MEC is a social enterprise that helps microentrepreneurs and low income households in developing countries to invest in Clean Energy Products through their local microfinance institution. Under the PoA, MEC will develop programs with microfinance institutions 11 and clean product suppliers to market, distribute, and finance CEPs to these micro-entrepreneurs and low income households. The SSC-VPA will be developed and implemented by the PO which has signed the standard contractual agreement with the CME (MEC) to participate in the PoA, and this agreement guides the transfer of the emission reduction rights to the CME (MEC). SECTION B. Application of a baseline and monitoring methodology B.1. Reference of the approved baseline and monitoring methodology(ies) selected This VPA will be implemented using the CDM approved methodology AMS-II.E. Energy Efficiency and Fuel Switching Measures for Buildings, version 10. The approved SSC baseline and monitoring methodology is approved for use in a PoA by the GS. B.2. Application of methodology(ies) Title: Monitoring Methodology for Energy efficiency and fuel switching measures for buildings. Reference: Paragraphs 8 and 9 of Category II.E (Version 10, 2 nd of November 2007) as provided in Appendix B of the Indicative Simplified Baseline and Monitoring Methodologies for Selected Small- Scale CDM Project Activity categories. 11 For the purposes of this document, a microfinance institution is defined as a local institution that provides financial services to low income households.

30 CDM Executive Board Page 30 As per the provisions of the Simplified Modalities and Procedures for Small Scale CDM Project Activities [FCCC/CP/2002/7/Add.3, English, Page 22 and FCCC/KP/CMP/2005/8/Add.1 Page 46] the Project participants may use the simplified baseline and monitoring methodologies specified in Appendix B for their project category if they meet the applicability criteria of small scale CDM project activity. Since the project activity is a small-scale project consisting of energy efficient retrofit measures implemented at a group of similar buildings classifiable under II.E category the monitoring methodology and plan has been developed in line with the guidance provided in paragraph 8 of Category II.E, Appendix B. Description of Monitoring Methodology: According to Appendix B of the simplified M&P for small-scale CDM project activities of the UNFCCC CDM website, the project has been identified to belong to Category II.E [Energy efficiency and fuel switching measures for buildings]. Paragraph 8 under Category II.E of the same document specifies that for the said category of CDM projects, In the case of retrofit measures, monitoring shall consist of: (a) Documenting the specification of the equipment replaced (b) Calculating the energy savings due to the measures installed. Monitoring for typical SSC-VPAs is described in B.7.2. The monitoring activity provides a framework for project preparation and monitoring processes that will be undertaken at the VPA level for either each VPA, or across-vpas, as required by the CDM or GS rules. This schedule takes into account the key parameters that are needed during the crediting periods of the project. All required monitoring and documentation will be implemented, reported, consolidated and managed by the CME or a qualified expert partner to meet verification requirements. Continued use of displaced traditional stoves Methodology document: Monitoring shall ensure that the replaced low efficiency appliances are disposed of and not used within the boundary or within the region or continued usage of baseline stoves needs to be monitored and taken into consideration for the baseline emission calculations. Continued usage of the baseline stoves is taken into consideration for the baseline emission calculations in the following way. The baseline products, once displaced may end up in a variety of scenarios, all of which lead to an equal or greater emission reduction impact, than the one that is used in this PoA. The four scenarios for displaced baseline products include the following: 1. Disposed of 2. Put to use for a secondary purpose (eg, as a table/storage vessel) 3. Put to a secondary heating use 4. Sold on the market. In scenarios 1 and 2, the impact on calculated emissions is zero, because these products no longer create emissions. Scenario 3 and 4 represent a leakage. The aim of this PoA is to scrap the old stoves however if a situation arises in which a project participant has not scrapped his stove, MEC will adjust the project emissions accordingly. In accordance with methodology AMS-II.E In case the project activity involves the replacement of equipment, and the leakage effect of the use of the replaced equipment in another activity is neglected because the replaced equipment is scrapped, an independent monitoring of scrapping of replaced equipment needs to be implemented. The monitoring should include a check if the number of project activity equipment distributed by the project and the number of scrapped equipment correspond with each other. For this purpose scrapped equipment should be stored until such correspondence has been checked. The scrapping of replaced equipment should be documented and independently verified.

31 CDM Executive Board Page 31 Project implementer shall collect old stoves for dismantling upon installation of the new cooking and heating stoves and records shall be maintained. Collected stoves shall be stored until a third party monitors the replaced equipment. The third party shall be responsible for monitoring of and scrapping the old stoves, confirming the number of stoves scrapped corresponds with the number of project activity equipment distributed by the project. Alternatively, surveys shall be conducted on a sample of cooking and heating stoves to investigate the extent to which traditional stoves are destroyed and no longer used, even in a secondary role, in the houses adopting the new cooking and heating stoves, following the Disposal Policy. If it is found that a portion of kitchens exists in which a traditional stove is used, even in a secondary role, then the Disposal Policy will be extended to include return visits to the vintages of new cooking and heating stoves, including short and long-serving cooking and heating stove kitchens, and the Policy will be further implemented. In cases where further implementation of the Disposal Policy is shown by the monitoring visits to be ineffective, emission reductions shall be adjusted accordingly. In case of scenario 3 above in which the displaced baseline stove is put to a secondary heating use, total household coal consumption shall be monitored in calculation of project emissions to ensure that coal consumed on the baseline stove is considered in the calculation of emissions reductions. In the case of scenario 4 above in which the displaced baseline stove is sold on a secondary market, PP shall conduct survey to investigate extent to which baseline stove increases coal consumption by end user of baseline stove, i.e. if replaced baseline stove is replacing a more efficient stove. If continued use of baseline stove increases coal consumption in project boundary, PP may discount up to 100% of emissions reductions for proportion of stoves for which baseline replace stove was sold on secondary market. Quality assurance The sampling approaches described in Section B.7.2 follow the CDM EB General Guidelines For Sampling and Surveys for Small Scale CDM Project Activities. This applies both to single-stage and twostage approaches. B.3. Sources and GHGs The project boundary is the physical, geographical location of each technology (e.g., each CEP) installed. The installed insulation products reduce the use of unclean fuels, particularly coal, which release carbon dioxide, methane, and nitrous oxide when burned. Source Gas Included? Justification/Explanation Baseline Cooking or heating CO 2 Yes Important source of emissions CH 4 Yes Minor source of emissions N 2 O Yes Minor source of emissions Project Activity Cooking or heating CO 2 Yes Important source of emissions CH 4 Yes Minor source of emissions N 2 O Yes Minor source of emissions B.4. Description of baseline scenario According to AMS-II.E: The energy baseline consists of the energy use of the existing equipment that is replaced in the case of retrofit measures and of the facility that would otherwise be built in the case of a new facility. Each

32 CDM Executive Board Page 32 energy form in the emission baseline is multiplied by an emission coefficient. For the electricity displaced, the emission coefficient is calculated in accordance with provisions under category I.D. For fossil fuels, the IPCC default values for emission coefficients may be used. The baseline scenario for efficiency cooking and heating technologies consists in the use of coal as a fuel source with traditional stoves as the primary heating technology. The baseline scenario for ger insulation technologies is also the use of coal as a fuel source for heating the ger, which is constructed with four or five walls and insulated with one to two layers of traditional insulation for the walls and roof. See Annex 3 for details of the baseline. B.5. Demonstration of eligibility for a generic VPA Eligibility Criteria Complianc e Nr Category Description Yes No 1 Boundary and location of the VPA 2 No Double counting of CEP 3 VER ownership The VPA is located within Mongolia. Please note that not all CEP installations may have been deployed at VPA inclusion stage, however the location of the CEP can also be checked during verification. In the event that any deployed CEP is found to be outside of the project boundary/location, those CEP will not be counted in the emission reduction calculation. A unique numbering or identification system for the CEP installed is applied. End users receiving CEP under the specific VPA contractually cede their rights to claim and own emission reductions under the Gold Standard to the CME of the PoA Mean of proof / Evidence Document (to be checked at VPA inclusion) Location and boundary is specified in the specific VPA-DD stating that the location is limited to Mongolia. Documentation: 1. Statement of CME that the location and boundary is within Mongolia. The unique numbering or identification regime is included in the specific VPA-DD Document: 1. MEC Credit Tracker database 2. First Booking Record (first VPA of PoA) The default CEP Booking includes the provision that emission reductions generated by the CEP are transferred from the end-user to the PO and ultimately owned by the CME Documents: 1. Carbon rights waiver 2. First CEP Booking Record (first VPA of PoA)

33 CDM Executive Board Page 33 4 No Double counting of VPA 5 Awareness and agreement of those operating a VPA on PoA subscription 6 Non-diversion of ODA in case of Public funding 7 VPA Start Date The VPA is exclusively bound to the PoA. Confirmation that the programme activity has not been and will not be registered either as a single CDM or GS project activity or as a VPA under another PoA. Contractual provisions to ensure that those operating the VPA are aware and have agreed that their activity is being subscribed to the PoA. The CME and the VPA operator (in case of being different from the CME) shall confirm that in case of public funding there shall not be diversion of Official Development Assistance. The start date of the VPA shall not be before the PoA start date. Please note that not all CEP installations may have been deployed at VPA inclusion stage, however the CEP start date can also be A statement is included in the VPA- DD that the specific VPA will not be part of another single CDM project activity or VPA under another PoA. VPA-DD See section A.13: MEC s Credit Tracker platform is used to record detailed information on each CEP installation, including the unique identification number. Using this data, MEC is able to ensure that all CEP in the proposed VPA are uniquely defined and included in the proposed SSC VPA only, thereby avoiding double counting of emission reductions generated by the SSC VPA. In addition, declaration from VPA operators as part of their contract with the CME, stating that their activities are not registered as part of another single CDM/GS project activity or VPA with a different CME. Evidence: 1. Contract with CME and MFI. Declaration from VPA operators as part of their contract with the CME, stating that they are aware and have agreed that their activity is being subscribed to the PoA. VPA Operator is: [see specific VPA] Statement of CME and the VPA operator (in case of being different from the CME) Documentation: 1. ODA Declaration forms (GS Annex D) Starting date as stated in the VPA-DD A.8.1 is after PoA-DD start date. Documentation: 1. Statement from CME that no CEP under the VPA were sold prior to the PoA start date of 25/05/2011, the sales date of the first product

34 CDM Executive Board Page 34 8 VPA Crediting Period 9 Approval of VPA by CME 10 Additionality of VPAs: 11 Baseline for Target Group checked during verification. In the event that any deployed CEP is found not in line with VPA start date, those CEP will not be counted in the emission reduction calculation VPA starting date of the crediting period is date of inclusion into registered PoA. Any date thereafter and crediting period shall not exceed the PoA end date. Each VPA shall provide verifiable evidence. CME approved each VPA to be included into its registered PoA. Additionality is demonstrated at the VPA level using the UNFCCC tool EB 68 Annex 27: Guideline on the Demonstration of Additionality of Small- Scale Project Activities Version 09, Paragraph 2(c) which states that a barriers analysis is not required to document Additionality for: (c) Project activities solely composed of isolated units where the users of the technology/measure are households or communities or Small and Medium Enterprises (SMEs) and where the size of each unit is no larger than 5 per cent of the smallscale CDM threshold. A regression model is developed for baseline included in the PoA. A statement is included in the VPA- DD that the crediting period starting date is date of VPA inclusion into registered PoA or any date thereafter and crediting period shall not exceed the PoA end date. Statement of CME giving approval for the VPA to be included into its registered PoA. Documentation: 1. Description of VPA activity as documented in VPA-DD Sections A.3 and A.5 2. VPA-DD Section A.12 demonstrating that the size of each unit is no larger than 5% of the small-scale CDM threshold. Documentation: 1. Regression model for target group in

35 CDM Executive Board Page 35 that is relevant for the baseline technology and the target group of the VPA, specifically for: 1. C y,old,household stoves and/or insulation = Residential homes in ger areas. (Determined at the time of first inclusion into a VPA and updated annually based on regression model variables) 2. C y,old,household stoves and/or insulation = Residential homes in TBD location in Mongolia. (Determined at the time of first inclusion into a VPA and updated annually based on regression model variables) the VPA 12 Compliance with Environmental Impact Assessment (EIA) Requirements and relevant host countries laws and policies As stated in the PoA- DD, the EIA was conducted at the PoA level. Each VPA complies with EIA and relevant host country laws and policies as listed in the EIA report: 2. The Article of Environment Impact Assessment Law of 4.6.2: o The standard methods of environment impact assessments 3.2.2, Resolution of Minister of Environment and Nature s the 1st annex of resolution 236, in The Law of Nature Documentation: To demonstrate compliance with the EIA, the PP shall implement the following: 1. Regular household stove s technical general requirement MNS 5216:1, hard fuel usages of household stove MNS 5216:2002, MNS 13240:2011, in the frame work of this project, those type of requirements must be fulfilled on household energy efficient stoves. o Manufacturer specifications 2. If there is any waste from production, the project implementers should make a collaboration contract with the local waste management foundation or companies.

36 CDM Executive Board Page Local Stakeholder Consultation and Sustainable Development and Environment Protection A local stakeholder consultation must be conducted prior to inclusion of any regular VPA into the PoA. If the VPA is retroactive, further stakeholder consultation may be conducted based on Gold Standard guidance in the Pre-Feasibility Assessment (PFA). A sustainability assessment must be conducted prior to inclusion of any VPA into the PoA, which shall be reported upon in the VPA Passport. Mitigation measures shall be provided for any sustainable development indicators for which there is o Agreements with stove dismantling company(ies) to dismantle old stoves 3. As the stove is lit from the top, it may have difficulty heating at the ground level. o Manuals provided to end users at time of purchase provide information on how to properly light and refuel stoves. 4. The energy efficient products should be distributed with brochures and user manuals to the clients. o Manuals associated with the stove disseminated 5. Project parties should follow all of safety codes and user manuals, which is developed by producers and PIU. o Training on product use and information provided by Program Staff. Document: 1. Copy of the report for the LSC that was conducted to determine if the LSC is applicable for the VPA. 2. If retroactive, PFA feedback from GS to determine stakeholder consultation requirements. 3. VPA Passport including Outcome of Sustainability Assessment.

37 CDM Executive Board Page Technological requirements 15 Technological requirements potential negative impact. In accordance with methodology AMS- II.E, paragraph 2: This category is applicable to project activities where it is possible to directly measure and record the energy use within the project boundary (e.g. electricity and/or fossil fuel consumption). In accordance with methodology AMS- II.E, paragraph 3: Specification of CEP-i type and compliance with the technological requirements of AMS-II E will be described in the specific VPA-DD. CEP energy use will be directly measured and recorded through surveys following the sampling plan as stated in the specific VPA-DD. Sampling plan, as stated in PoA-DD Part II, Section B.7.2, will conform with EB 75 Annex 8: Guidelines for Sampling and Surveys for CDM Project Activities and Program of Activities. Documentation: Fuel savings improvement will be demonstrated through results of ongoing monitoring compared to the regression model results Independent variables will be measured for the relevant regression models (when models are applicable) This category is applicable to project activities where the impact of the measures implemented (improvements in energy efficiency) by the project activity can be clearly distinguished from changes in energy use due to other variables not influenced by the project activity (signal to noise ratio). 16 De-bundling In accordance with paragraph 9 of Annex 32 to the EB47 Report, Guidance for determining the occurrence of debundling under a Programme of Activities (PoA), if each independent Documentation: 1. Regression analysis is applied to ensure that independent variables are accounted for. 2. Booking record in Credit Tracker ensures that the product was installed. Documentation: 1. Debundling calculations provided in the PoA-DD that demonstrates that according to thermal energy savings calculation provided in AMS-II.E. each independent subsystem/ measures included in the VPA of the PoA, conservatively assuming an

38 CDM Executive Board Page 38 subsystem/ measures included in the VPA of a PoA is no greater than 1% of the small scale threshold defined by the methodology applied, than that VPA of PoA is exempted from performing de-bundling check, i.e. considered as being not a debundled component of a large scale activity efficiency of 100% and that 100% of coal used is bituminous with highest net calorific value (NCV), is no greater than 1% of the small scale threshold defined by the methodology applied. 17 SSC Limit for VPAs 18 Technological requirements The VPA will remain under the thermal threshold of 180 GWh/a thermal energy savings (threshold as per clarification request SSC_233) throughout the crediting period of the VPA. Please note that not all CEP may have been deployed at VPA inclusion stage, the SSC limit for VPAs can however also be checked during verification, and in case any deployed CEP will be found not in line with VPA SSC Limit for VPAs requirement, those CEP will not be counted for emission reduction calculation. Each VPA will employ (1) Efficient Stoves and heating technologies and/or (2) Home Insulation technologies cooking and heating stoves or home insulation products that meet the following criteria: 1) Efficient Stoves and The estimated maximum number of CEP is to be defined by the following equation. CEP Stove Insulation Combined 180 GWh Thermal Energy Savings per CEP Documentation: Energy Savings per CEP Total CEP Under 180 GWh th/yr 1. Manufacturer specifications and/or test results for each technology employed.

39 CDM Executive Board Page 39 heating technologies: - Used for household level heating - Coal burning - Thermal efficiency at minimum 70% 2) Home Insulation Technologies - Moisture content <15% - Thermal conductivity <0.05W/m2K - Density <200kg/m3 - Insulation average thickness >1.5cm - One of following models: - 4-wall model - 5-wall model - 6-wall model 19 Target group The target group shall be domestic households in uban, peri-urban, or rural homes. The baseline regression model will be determined using baseline data from the target population. 20 Sampling requirements The distribution mechanism is direct sales and sales through distribution partners. The sampling method applied in the VPA (e.g. in the monitoring plan) follows the Standard for Sampling and Surveys for CDM Project Activities and Programme of Activities (EB 74, Annex 6). Documentation (one of the following): 1. MEC Tracker booking record, showing residential address and end user. 2. Technology specification for domestic use. 3. Contract with VPA implementer or distribution partner. 4. Operations Manual describing distribution mechanism. Documentation: 1. PoA Sampling plan 2. VPA Sampling plan (in VPA- DD) A minimum 90% confidence interval and a 10% margin of error requirement is achieved for the sampled

40 CDM Executive Board Page 40 parameters. When a single sampling plan covers a group of VPAs, confidence/precision of 95/10 for the sample size calculation is applicable. Any divergence to statistical requirements shall follow appropriate procedures in EB74 Annex6. B.6. Estimation of emission reductions of a generic VPA B.6.1. Explanation of methodological choices As described in Part II. B.7.2, AMS-II.E.: Energy Efficiency and Fuel Switching Measures for Buildings, version 10, has been applied as one of the eligibility criteria for each SSC-VPA proposed under the PoA. Emissions reductions for each SSC-VPA will therefore be calculated according to this methodology. This project provides more efficient cooking and heating technologies and home insulation technologies to existing low income households in Mongolia and reduces consumption of coal. It falls under the CDM Small-scale Methodology AMS-II.E.: Energy efficiency and fuel switching measures for buildings. BASELINE: A baseline measurement campaign was conducted on Ger Area homes to measure: Energy use of the households in the baseline scenario (fossil fuel and biomass, renewable and non-renewable) through surveys. 12 Independent variables that determine energy use, such as ambient temperatures and stove type. A baseline measurement campaign will be conducted for new target groups (Commercial and Institutional buildings) at the time they are first included into a VPA. The baseline measurement campaign provides sufficient information to ensure that the impact of the measures implemented by the project activity are clearly distinguishable from changes in energy use due to other variables not influenced by the project activity (signal to noise ratio). Thus energy use and independent variables were measured: (a) During various heating seasons (Fall, Winter, Spring) to capture the range of independent variables expected to be encountered during the crediting period. (b) For a randomly selected sample of all representative target residences in compliance with Standard For Sampling And Surveys For CDM Project Activities And Programme Of Activities. The baseline measurement campaign captured energy use data and the independent variables that were used to define a relationship between baseline energy use/emissions and the independent variables, ie. a regression analysis was used to determine this equation (See Annex 3 for full regression analysis). The baseline measurements are valid for both heating and cooking technologies and insulation technologies. 12 Only reductions in fossil fuel (coal) consumption will be used in ER calculations, as specified in Section E.2

41 CDM Executive Board Page 41 During the crediting period, the same independent variables will be monitored and used for calculating the baseline energy use/emissions for the values of the independent variables experienced during the crediting period. If, during the crediting period, conditions are such that the value(s) of the independent variables fall outside of the range of value(s) encountered during the baseline campaign, then either (a) Additional analysis will be required to conservatively demonstrate that the relationship between baseline energy use/emissions and the independent variables (as defined using data collected during the baseline campaign) is still valid; or (b) A new baseline measurement campaign must be conducted; or PROJECT: (c) Emissions reductions cannot be claimed during periods of time when the value(s) of the independent variables fall outside of the range of value(s) encountered during the baseline campaign. Throughout the crediting period, energy used (for each fuel type) for the subject appliances (heating and insulation technologies) will be measured through survey or direct measures for a representative sample (in compliance with Standard For Sampling And Surveys For CDM Project Activities And Programme Of Activities) of the residences participating in the project and compared with energy use (for each fuel type) of a baseline group. The control group (baseline) will be adjusted according to the monitored independent variables collected on current users and adjusted accordingly. The difference in energy use between the participating residences and the control group residences is used to determine energy savings and emission reductions. Unbiased estimation of treatment-effects will be obtained by using appropriate statistical analysis, such as Propensity Score Matching (PSM) or t-tests, to compare baseline to project fuel consumption. These tests ensure that the control group is statistically similar to the project group, in both observable and unobservable characteristics, such that any difference in outcomes between the twogroups can be attributed to the treatment (project activity) with a high degree of validity (i.e. that the savings estimates are unbiased and precise). For example, these statistical tests could match independent variables gathered during the baseline and project measurement campaign and may include socio-economic and demographic indicators. The AMS II.E methodology is applicable because the project activities fulfill the following criteria:. Introduces technologies involving the efficiency improvements in households and non-domestic premises. The energy efficient measures reduce the use of fossil fuels (coal) which results in lower emissions. It is possible to directly measure and record the energy use within the boundary (fossil fuel consumption). As explained in monitored parameters section B.7.1, the values of NCV coal and EF coal, CO2e are monitored parameters, to take into account the changing composition of household coal consumption in the country as mines are shut down and other mines are opened. In order to take this into account over the life of the PoA and project activities, the proportion of consumption of available coal types in Mongolia, bituminous, subbituminous, and lignite, shall be monitored or determined by national or regional data in order to apply more accurate inputs into the calculation of emissions reductions in each monitoring period.

42 CDM Executive Board Page 42 B.6.2. Data and parameters that are to be reported ex-ante Each parameter listed below will be repeated separately for each of the CEP (efficient cooking, heating technologies and insulation): Data / Parameter: Data unit: GWP CO2 GWP Description: Global warming potential of CO 2 Value set at PoA level. Source of data used: IPCC default value Value applied: 1 Justification of the IPCC default choice of data or description of measurement methods and procedures actually applied : Purpose of data: Baseline and project emissions calculations. Any comment: - Data / Parameter: Data unit: GWP CH4 GWP Description: Global warming potential of CH 4 Value set at PoA level. Source of data used: IPCC default value Value applied: 25 Justification of the IPCC default choice of data or description of measurement methods and procedures actually applied : Purpose of data: To determine EF coal, non-co2 ; Baseline and project emissions calculations. Any comment: - Data / Parameter: Data unit: Description: GWP N2O GWP Global warming potential of N 2 O Value set at PoA level. Source of data used: IPCC default value Value applied: 298 Justification of the IPCC default choice of data or description of measurement methods and procedures actually applied : Purpose of data: To determine EF coal, non-co2 ; Baseline and project emissions calculations.

43 CDM Executive Board Page 43 Any comment: - Data / Parameter: Data unit: Description: Source of data used: Value applied: Baseline Coal Consumption Regression Model Variable Regression coefficients for the determination of baseline coal consumption Regression model set at VPA level, based on target area of VPA. Baseline Report Regression model set at VPA level, example regression model for VPA1: Where: = Mean coal consumption during the heating season (Fall, Winter, Spring)\ T y,s = Mean temperature in Celsius for year y and season s (Fall, Winter, Spring, Summer) WS y,s = Mean wind speed in Knots for year y and season s (Fall, Winter, Spring, Summer) D y,songinokhairkhan = District location is Songinokhairkhan district (dummy variable 1=yes, 0=no) D y,bayangol = District location is Bayangol district (dummy variable 1=yes, 0=no) DW y,house = Dwelling is a house (dummy variable 1=house, 0=ger) Applied regression analysis found the five aforementioned independent variables to have a statistically significant effect on coal consumption. Justification of the choice of data or description of measurement methods and procedures actually applied : Purpose of data: Any comment: See Appendix 3 Baseline emissions calculations. If additional areas are reached in VPA, additional baseline analysis may be conducted. Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : B y,old,cep-i m 3 of wood Baseline wood consumption per heating season Value shall be set at VPA level based on target area of VPA. Baseline Report 5.29m 3 for ger area households Example for CPA1 in Ulaanbaatar ger districts, mean baseline wood consumption is derived from 2011 MCA Baseline study dataset, used to create coal consumption regression model. A regression model is not used to determine mean wood consumption because wood is used primarily as a starter fuel and the severity of the winter is not expected to have an impact on the amount of wood consumed as households will still be lighting their stoves as frequently, though they may consume less fuel for heating. Further, the regression model developed in Annex 3 had an overall R 2

44 CDM Executive Board Page 44 value of 0.3 (as compared to an R 2 value of 0.65 to the coal consumption regression model) indicating that the model did not have high explanatory power for the variability of wood consumption data. Purpose of data: Any comment: Determine if consumption of biomass increases as a result of project activity. If additional areas are reached in VPA, additional baseline analysis may be conducted. B.6.3. Ex-ante calculations of emission reductions The SSC-VPAs will calculate ex-ante emission reductions through application of the following equations Where: ER y BE y CEPi PE y,cep- i POF Emission reductions during the year y in tco 2 e Baseline emissions for CEP-i during the year y in tco2e. Project activity emissions for CEP-i during the year y for technology i in tco2e. Product Operation Fraction, the fraction of CEPs which are in use and operational BEy,PEy, and POF are determined through Surveys, which may encompass single CEP or multiple CEP installations into a building. POF serves to adjust emissions reductions per product to account for the fraction of CEPs which are not found to be in use. CEP-i Baseline and Project are determined for the following combinations of installed project CEPs per building: CEP-1 = Frame 1 Cooking and/or heating technologies installed only CEP-2 = Frame 2 Insulation installed only CEP-3 = Frame 3 Stoves and Insulation installed in the same home at the same time When a second CEP is installed subsequent to an existing CEP, then the baseline will use the project consumption of the previously installed technology (PEy,CEPi) as its baseline. BE ycep-i = Cy_ old, CEP-i * NCV coal * PE y,cep-i = Cy, new,cep-i * NCV coal * EF coal EF coal Where: C y,old,cep-i Quantity of coal used in the heating season in the absence of the project activity in tonnes. Baseline C y,old,cep-i will be updated annually through surveys and - applied to a regression analysis (See Annex 3 for full regression analysis).

45 CDM Executive Board Page 45 C y,old,cep-i will apply regression coefficients in the form of C y,old,cep-i = ß 0 + ß 1 x i + ß 2 x i + ɛ i Where: C y,old,cep-i = Quantity of coal used in the absence of the project activity. ß 0 = Intercept value of the regression model. ß 1 ß i = Coefficient of regression model ɛ i = Error term of the regression model x i = Covariate as measured in the regression model, from household i,.,n. C y,new,cep-i C y,old,cep-i See Annex 3 for a description of the frequency and variables to be measured. Quantity of coal in the heating season used during the project activity in tonnes, measured through surveys. For CEPs in both urban ger and small private houses, baseline fuel usage is estimated at 5.14t of coal per year for heating purposes, excluding the summer season. 13 This value, used only for ex-ante estimation of emissions reductions, is a conservative estimate of baseline coal consumption when considering that overall coal consumption is even higher when accounting for coal used for cooking during the nonheating season. To be conservative, the project only credits the reduction in coal used during the heating season. Moreover, stoves also make use of an additional 5.29m 3 of biomass per heating season for heating and cooking. Although the new stoves will also reduce biomass consumption, no emission reductions will be credited for this activity in order to be conservative. However, the project will monitor project activity consumption of biomass to ensure emission reductions are adjusted accordingly if baseline levels of biomass consumption are exceeded. Baseline fuel consumption values and regression models for new target areas will be established at the time of first inclusion in a VPA. Using above calculation ERy is determined per CEP. To calculate ERs for the VPA, Product Operation Fraction (POF) is applied as an adjustment factor to the number of CEPs installed. As described above, using ex-ante estimations of parameters, the GWh thermal savings for each technology is calculated, with each household using a cooking and heating technology saving [XX%] of the small-scale limit of 180 GWh (thermal) per year and each household using efficient insulation saving [XX%] of the small-scale limit. Applying the calculation to the ex-ante values for N all of [XX] stoves and [XX] ger blankets, the ex-ante annual thermal savings are [XX] GWh thermal per year (as shown in emissions reductions calculations), meeting the CDM small-scale threshold. The VPA shall remain within the small-scale limit throughout the crediting period by ensuring that CEPs are not added to the project activity unless the equivalent number of CEPs are deemed permanently out of use. Further in case the thermal energy savings of the VPA are found to exceed the small-scale threshold at any point during the crediting period, those CEP which result in thermal energy savings in excess of the threshold shall not be counted for emission reduction calculation. B.7. Application of the monitoring methodology and description of the monitoring plan B.7.1. Data and parameters to be monitored by each generic VPA 13 MCA Mongolia Household Survey Report. 2011

46 CDM Executive Board Page 46 Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures N all Number Total number of CEPs disseminated Credit Tracker Platform of product installation records [See specific CPA] Each PO shall maintain these records in the Credit Tracker Platform. Target population: All CEPs that have been disseminated through the project activity Objective: Establish the number of CEPs disseminated as part of the SSC-VPA Description and reliability requirements: primary data collection No sampling is applied to this parameter. All disseminated stoves will be tracked to ensure credible and realistic amount to be credited. Each PO shall maintain records in the Credit Tracker Platform. N all is adjusted according to actual operational days during a given monitoring period. The installation date for each CEP listed in Credit Tracker signifies the start of operation for each CEP. The operational days of each CEP is divided by the total number of days of the current monitoring period to determine the adjusted N all, number of CEPs in operation. Per requirements of the PoA, when purchasing a CEP the user shall sign a title transfer agreement with the PO surrendering the user s rights to any carbon offsets associated with the CEP. Monitoring frequency QA/QC procedures Purpose of data Additional comments Continuous The CME will supervise the activities of the PO, providing training, guidelines and templates to facilitate accurate record keeping in the Credit Tracker Platform. Calculation of emissions reductions All CEPs disseminated under the PoA shall have a unique identifier number, allowing to doubtlessly identify the CEP. Identifier numbers are transferred to the booking record in the Credit Tracker Platform and assigned to one VPA to ensure no double counting. Each CEP record in the MEC Tracker Database shall also contain appliance type, date of installation, and geographic location (through GPS coordinates or other specific location identifiers) allowing appliance to be monitored on a regular basis. Per requirements of the PoA, location is defined by one of the following sets of information: A. Precise GPS location of the household that purchases/installs clean energy product. B. GPS location within one mile of the household and credible address for household. C. Three of the following identifiers: Purchaser name, household address, phone number, bank ID number, national ID number, product serial number, household GPS location, or GPS location within one mile of household.

47 CDM Executive Board Page 47 Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures POF Fraction Product Operation Fraction the fraction of CEPs which are in use and operational Survey [See specific VPA] Target population: Products disseminated through project activity Objective: Establish the product operation fraction of CEPs disseminated through the project activity. Description and Reliability Requirements: Primary data collection. This is measured ex-post by investigation of the number of CEP installations within the sampled CEPs which are operational during the heating season. The PO maintains within the MEC Credit Tracker Platform a monitoring record of the CEPs on an annual basis. Then a sample of the CEPs is chosen for participation in the survey. If for example, the survey reveals that 90% of the sample is only found to be operational, then POF is 90%. Sampling method: Field survey by a dedicated team annually. Ex-post monitoring and surveys will determine the number of appliances still in operation. Simple random sampling technique will be employed. Sampling Frame: Credit Tracker of each VPA as defined by sales date, appliance type, unique identification number, and end-user information. Sample Size and Desired Precision: See PoA-DD for statistical sampling procedures and equations. Monitoring frequency QA/QC procedures Purpose of data Additional comments Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Annually (once per 12 month period) for representative sample of appliances installed. Exact date of monitoring may vary by +/- 3 months from the date of monitoring in previous year.. The CME/PO conducts the survey with expert assistance. Training will be provided to enumerators and testers. Calculation of emissions reductions C y,new,cep-i Tonnes/year C y,new,cep-i represents the quantity of coal used in the heating season in the project scenario for CEP-i installation, weighted average if multiple clusters of CEP for target groups in Ger Area homes. Survey or field study [See specific VPA] Target population: End-users of CEP-i installation. Objective: To establish the quantity of coal used in the project scenario for CEP-i installation.

48 CDM Executive Board Page 48 Description/reliability requirements: This is measured ex-post by investigation of end-users with single or multiple CEP installations. The PO maintains within the MEC Credit Tracker Platform a monitoring record of the CEPs on an annual basis. Then a sample of the CEPs is chosen for participation in the survey or study. The sample will be surveyed for self-reported coal consumption during the previous heating season; alternatively fuel consumption will be directly measured by enumerators. Sampling Frame: Credit Tracker Platform Sample size and desired precision: See PoA-DD for statistical sampling procedures and equations. Monitoring frequency QA/QC procedures Purpose of data Additional comments Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Annually (once per 12 month period) for representative sample of appliances installed. Exact date of monitoring may vary by +/- 3 months from the date of monitoring in previous year. The CME/PO conducts the survey or field study with expert assistance. Training will be provided to enumerators and testers. Calculation of emissions reductions C y_old,cepi Tonnes/year Quantity of coal used in the baseline cluster (installation cluster CEP (i) may represent baseline for single or multiple CEP installations, thus addressing crosseffects). Household information from Credit Tracker database and household survey [See specific VPA] Target Population: Households living in gers and houses in ger areas of of Ulaanbaatar. Objectives and Reliability Requirements: To establish the quantity of coal used in the baseline scenario for CEP-i installation during year y Sample Frame: The sampling frame consists of all users in the Credit Tracker Platform. Description: According to the regression model in Annex 3, the following parameters shall be updated annually to calculate C y,old,household stoves and/or insulation for each sampled household included in the survey for C ynew CEPi, using the following regression equation: Parameter Mean daily temperature Source Monitored parameter T y,s household stoves and/or insulation

49 CDM Executive Board Page 49 Mean daily wind speed Dwelling is a house Household is in Songinokhairkhan District Household is in Bayangol District Monitored parameter WS y,s household stoves and/or insulation Monitored parameter DW y,type, household stoves and/or insulation Monitored parameter DW y,type, household stoves and/or insulation Monitored parameter DW y,type, household stoves and/or insulation Sample Size: The baseline will be calculated for the same households that are included in the survey for C ynew CEPi. See B.2 for statistical sampling procedures and equations. Monitoring frequency QA/QC procedures Purpose of data Additional comments Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Monitoring frequency QA/QC procedures Purpose of data Additional comments Data / Parameter Unit Description Source of data Value(s) applied Annual (at least every 1 year) for representative sample of appliances installed. The CME/PO conducts the survey or field study with expert assistance. Training will be provided to enumerators and testers. Calculation of baseline emissions T y,s household stoves and/or insulation Celsius Independent Variable: Mean temperature in Celsius for year y and season s (Fall, Winter, Spring) for target groups in Ger Area homes (US) National Climatic Data Center Climatic Service Branch of the National Oceanic and Atmospheric Administration via geodata.us. T 1,Winter = [See specific VPA] T 1,Fall = [See specific VPA] T 1,Spring = [See specific VPA] (US) National Climatic Data Center Climatic Service Branch of the National Oceanic and Atmospheric Administration (NOAA) records daily temperatures. These data were collected at Air Force Datsav3 station number (USAF) , located at School Number 56, less than 2 km from the Khairkahn District Statue. Temperature is monitored continuously by NOAA. Data is extracted and recorded annually for each season. Check that temperature data corresponds to time that seasonal surveys were conducted for year y Applied in regression model for calculation of baseline emissions WS y,s household stoves and/or insulation knots Independent Variable: Mean wind speed in Knots for year y and season s (Fall, Winter, Spring,) for target groups in Ger Area homes (US) National Climatic Data Center Climatic Service Branch of the National Oceanic and Atmospheric Administration via geodata.us. T 1,Winter = [See specific VPA] T 1,Fall = [See specific VPA] T 1,Spring = [See specific VPA]

50 CDM Executive Board Page 50 Measurement methods and procedures Monitoring frequency QA/QC procedures Purpose of data Additional comments - (US) National Climatic Data Center Climatic Service Branch of the National Oceanic and Atmospheric Administration records daily temperatures. These data were collected at Air Force Datsav3 station number (USAF) , located at School Number 56, less than 2 km from the Khairkahn District Statue. Wind speed is monitored continuously by NOAA. Data is extracted and recorded annually for each season. Check that wind speed data corresponds to time that seasonal surveys were conducted for year y Applied in regression model for calculation of baseline emissions Data / Parameter DW y,type, household stoves and/or insulation Unit 1=House, 0=Ger Description Independent Variable: Number of dwellings that are houses for target groups in Ger Area homes Source of data Credit Tracker Value(s) applied [See specific VPA] Measurement methods and procedures Monitored for as many as possible sales made in Credit Tracker. Dwellings will be categorized as either a house or ger. Monitoring frequency Monitored continuously QA/QC procedures - Purpose of data Applied in regression model for calculation of baseline emissions Additional comments - Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures D y, Songinokhairkhan 1=Songinokhairkhan, 0=Other district Independent Variable: Number of CEPs that are located in Songinokhairkhan district Credit Tracker [See specific VPA] Monitored for all sales made in Credit Tracker. CEPs will either be located in Songinokhairkhan district or not. Parameter is used to calculate the baseline coal consumption for each sampled household in CEP-i installation cluster, to determine C y_old,cepi Monitoring frequency Monitored continuously QA/QC procedures - Purpose of data Applied in regression model for calculation of baseline emissions Additional comments - Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures D y, Bayangol 1=Bayangol, 0=Other district Independent Variable: Number of CEPs that are located in Bayangol district Credit Tracker [See specific VPA] Monitored for all sales made in Credit Tracker. CEPs will either be located in Bayangol district or not. Parameter is used to calculate the baseline coal consumption for each sampled

51 CDM Executive Board Page 51 household in CEP-i installation cluster, to determine C y_old,cepi Monitoring frequency Monitored continuously QA/QC procedures Applied in regression model for calculation of baseline emissions Purpose of data - Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures EF coal, CO2e tco2e/tj Weighted average CO 2 e emission factor for coal IPCC default values combined with survey, national, or regional data to determine the percent of bituminous, subbituminous, and/or lignite coal used in project scenario. [See specific CPA] Parameter will be determined based on IPCC default values for EF coal, as demonstrated in table below: Coal Type EF [GHG] (t[ghg]/tj) CO 2 CH 4 N 2 O CO 2 e Bituminous Sub-bituminous Lignite Source: EF CO2, EF CH4, and EF N2O is from IPCC (2006) Table 2.2 (p.2.15), except for EF CH4 for bituminous coal type, which is from table 2.9 (p.2.25). 14 EF CO2e is calculated using GWP [GHG], ex-ante parameters listed in section B.6.1, through the following equation: EF [coal type],co2e = EF [coal type],co2 X GWP CO2 + EF [coal type],ch4 X GWP CH4 + EF [coal type],n2o X GWP N2O Monitoring frequency A survey, regional, or national data shall be used to determine the proportion of types of coal used in the specified heating season. A weighted average value shall be applied, using following equation: EF coal, CO2e = EF bituminous,co2e X [proportion of bituminous coal used] + EF subbituminous,co2e X [proportion of subbituminous coal used] + EF lignite,co2e X [proportion of lignite coal used] Annually (once per 12 month period) for representative sample. Exact date of monitoring may vary by +/- 3 months from the date of monitoring in previous 14 Value from Table 2.9 Residential Source Emissions Factors (IPCC 2006) represents a Tier 3 approach, which uses fuel statistics and data on combustion technologies applied together with technology-specific emission factors. Tier 3 values are deemed more accurate than Tier 1 values (Table 2.2) as Tier 1 values require the simplest calculations, or methods that require the least data; thereby likely providing the least accurate estimates of emissions (IPCCC 2006, p.2.9). Tier 3 values are considered to be more accurate as they are technology specific. Tier 3 value applied is based on residential other bituminous coal stoves. The source for the emissions factor for other bituminous coal stoves is Results of experimental studies conducted on a number of household stoves from China (Zhang et. al. 2000). These stoves are expected to be much more similar to the stoves used in Mongolia, thus ensuring that the value in Table 2.9 is more accurate than the Tier 1 equivalent default value of The table only includes values for EF CH4 for other bituminous coal stoves, therefore Tier 1 values are applied in all other cases.

52 CDM Executive Board Page 52 year. QA/QC procedures In case survey is used, training will be provided to enumerators and testers. Purpose of data Calculation of emissions reductions Additional comments - Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures NCV coal TJ/tonne Net calorific value of the coal that is substituted. IPCC default values combined with survey, national, or regional data to determine the percent of bituminous, subbituminous, and/or lignite coal used in project scenario. [See specific CPA] Parameter will be determined based on IPCC default values for NCV of bituminous, subbituminous, and lignite coal, as demonstrated in table below: NCV Coal Type (TJ/ton) Bituminous Sub-bituminous Lignite Source: IPCC (2006) table 1.2 (p.1.19). A survey, regional, or national data shall be used to determine the proportion of types of coal used in the specified heating season. A weighted average value shall be applied, using following equation: NCV coal = NCV bituminous coal X [proportion of bituminous coal used] + NCV subbituminous coal X [proportion of subbituminous coal used] + NCV lignite coal X [proportion of lignite coal used] Monitoring frequency Annually (once per 12 month period) for representative sample. Exact date of monitoring may vary by +/- 3 months from the date of monitoring in previous year. QA/QC procedures In case survey is used, training will be provided to enumerators and testers. Purpose of data Calculation of emissions reductions Additional comments - Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures η new fraction Efficiency of the new efficient cooking and heating stove (not applicable to ger blankets) Manufacturer technical specifications or Controlled Heating Test Determined at the time of inclusion of appliance type into VPA. Data obtained through manufacturer specification, or Controlled Heating Test. Target population: systems deployed by CEP type Objective: Establish the efficiency of the system/s deployed per CEP model. Objectives and reliability requirements: Per CDM Methodology AM094, Efficiency of stove or heater type l used in the project shall be determined by an independent expert entity in the controlled environment (i.e. in the field or

53 CDM Executive Board Page 53 laboratory). The project participants shall document in the VPA-DD whether the efficiency test was carried out in the field or in the laboratory and shall ensure that the efficiency test was carried out in the same control environment (field or laboratory) as in the case of efficiency of the baseline stove or heater type. The project participants shall use recognized provincial, national or international protocols/standards to determine the efficiency. Note that building insulation technologies may apply a protocol/standard to determine the efficiency of new project technologies so long as consistency is retained for comparability. Monitoring frequency QA/QC procedures Purpose of data Additional comments Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures Sample size and desired precision: A 90% confidence interval and a 10% margin of error requirement shall be achieved for the sampling parameter. Monitored at inclusion of new technology into project activity; to be checked at time of verification. PP will ensure consistency and comparable outcomes. It shall be ensured that the same protocol/standard and conditions has been used to determine the efficiency of new project stove or heater type as well. Eligibility criteria #17, to demonstrate the efficiency of new technologies. All data will be kept for 2 years following the crediting period or the last issuance of the VERs of the project activity. All data will be kept for 2 years following the crediting period or the last issuance of the VERs of the project activity. B y,new,cep-i Cubic meters/year B y,new,cep-i represents the quantity of wood used in the heating season in the project scenario for CEP-i installation, weighted average if multiple clusters of CEP for target groups in Ger Area homes. Survey or field study [See specific VPA] Target population: End-users of CEP-i installation. Objective: To establish the quantity of wood used in the project scenario for CEPi installation. Description/reliability requirements: This is measured ex-post by investigation of end-users with single or multiple CEP installations. The PO maintains within the MEC Credit Tracker Platform a monitoring record of the CEPs on an annual basis. Then a sample of the CEPs is chosen for participation in the survey or study. Sampling Frame: Credit Tracker Platform Sample size and desired precision: The sample size determined for C y,new,cep-i will be used for surveying B y,new,cep-i. The parameter does not need to meet 90/10 or 95/10 confidence precision because it is not used to calculate emissions reductions.

54 CDM Executive Board Page 54 Monitoring frequency QA/QC procedures Purpose of data Additional comments Annually (once per 12 month period) for representative sample. Exact date of monitoring may vary by +/- 3 months from the date of monitoring in previous year. The CME/PO conducts the survey or field study with expert assistance. Training will be provided to enumerators and testers. Confirmation that consumption of biomass does not increase due to application of the project activity. Conservative assumption is made that 100% of biomass consumed is nonrenewable. B y,new,cep-i shall be compared to ex-ante parameter B y,old,cep-i, baseline wood consumption, of 5.29m 3 per HH per heating season, determined from the 2011 MCA baseline dataset. B.7.2. Description of the monitoring plan for a generic VPA The following information shall be provided here: (i) Description of the proposed statistically sound sampling method/procedure to be used by DOEs for verification of the amount of reductions of anthropogenic emissions by sources or removals by sinks of greenhouse gases achieved by VPAs under the PoA. The sampling plan for the monitored parameters shall follow the outline below. This sampling plan shall be followed by the CME during ongoing monitoring activities and also by the DOE during verification: Parameter values shall be estimated by sampling in accordance with the requirements in the applied methodology separately and independently for each of the VPAs included in a PoA except when a single sampling plan covering a group of VPAs is undertaken, in which case 95/10 confidence/precision is applied for the sample size calculation. If sampling across a group of VPAs is carried out, a single sample plan will combine together the populations of all VPAs, and the sample size is determined and a single survey is undertaken to collect data e.g. if the parameter of interest is daily self-reported fuel consumption, it may be feasible to undertake a single sampling and survey effort spread across geographic regions of several VPAs when either homogeneity of included VPAs relative to the fuel usage can be demonstrated or the differences among the included VPAs is taken into account in the sample size calculation, such as proportional and weighted averages. One or more criteria from the list below may be used to demonstrate homogeneity across CPAs, as per EB 75 Annex 8: (a) Project technology/equipment have comparable input/output characteristics, including efficiency, and provide comparable service, e.g. stove efficiencies are comparable; (b) End users of the project technology/equipment have comparable socioeconomic conditions, e.g. low-income households; (c) The geographic locations of project equipment do not have a significant influence on the parameter of interest, e.g. insulation systems installed in colder climates have different output rates than those in warm climates, in which case stratification of technologies by geographical area is desirable; (d) Installation dates of the CPAs are not significantly different to considerably impact on the parameter of interest; for example the range of installation dates does not exceed the life span of the appliance Sampling Objective The sampling objective for each parameter is to determine via survey a statistically significant value for the emission reduction calculations. These parameters are defined in the tables presented in section B.7.1 under Data / Parameter.

55 CDM Executive Board Page 55 Field Measurement Objective and data to be collected This is defined in the tables in section B.7.1 under Description. Target population and sampling frame The target population is the total population served under the POA, and the sampling frame consists of end-users of the CEPs as recorded in the Credit Tracker. The sampling frame will be kept in hard-copy form for 2 years following the crediting period or the last issuance of the VERs of the project activity. Sample method The sampling will be conducted using simple random sampling techniques, within frame of CEP and/or building type, i.e: CEP-1 = Frame 1 Cooking and/or heating technologies installed only CEP-2 = Frame 2 Insulation installed only CEP-3 = Frame 3 Stoves and Insulation installed in the same home at the same time Desired precision / expected variance and sample size unless otherwise noted in the description of the monitored parameter in section B.7.1, and as allowed by the methodology, the sample size will be chosen for a 90/10 precision (90% confidence interval and 10% margin of error); in cases where survey results indicate that 90/10 precision is not achieved, the lower bound of a 90% confidence interval of the parameter value may be chosen as an alternative to repeating the survey efforts to achieve a 90/10 precision. If cross-vpa sampling is employed, sample size will be chosen for 95/10 precision (95% confidence interval and 10% margin of error). Implementation - The sampling for surveyed data will be implemented consistent with the approach described above unless survey results necessitate additional or alternative statistical analysis techniques. All survey responses will be assessed for outliers. Outliers will be defined as datapoints that are more than 1.5 times the inner quartile range. Outliers will be removed from the dataset, unless a root cause analysis is conducted and the datapoint is found to be accurate. Monitoring shall be carried out by the operating entity of the VPA according to the procedures and monitoring framework as follows and will be submitted to the managing entity. The managing entity will store the data in an electronic database. Primary data will be stored by the implementing entities/operators. The MEC Credit Tracker Platform is used to keep detailed records of all installations under each VPA. Each installation is monitored annually to check usage status. Monitoring records are maintained in the Credit Tracker Platform. 1. The PO maintains in the Credit Tracker Platform a record of all clean energy products that are installed 2. The PO identifies the exact location of the CEP using gps location and/or address of the household or organization. 3. The emissions parameters required for ex-post management are also maintained in the Credit Tracker Platform. These include the number and model of stoves still in operation. These parameters are determined through a sampling study as described above. 4. The CME uses the Credit Tracker Platform to cross-check the new records with the existing Platform in order to confirm that the installation record is authentic and that no double-counting occurs. 5. The Credit Tracker records will be cross-checked with the MFI banking internal information system, so that the number of systems will be equivalent to the number of systems that were paid for. 6. The project will be audited by a DOE at minimum biennially. Corrective actions will be taken to ensure more accurate monitoring as necessary, based on the results of the audit

56 CDM Executive Board Page All monitored data required for verification and issuance will be kept for two years after the end of the crediting period or the last issuance of VERs for the PoA, whichever occurs later. 8. The electronic files holding installation records are backed up on the Internet, reducing risk of any loss of data. 9. The unique system ID number which is linked to a gps location or verified address eliminates any risk of double-counting between VPAs. Sampling Methodology To reduce monitoring efforts a single sample is drawn based on which all of the parameters determined via sampling shall be monitored. The CME will determine the number of users/appliances monitored during sampling for each of the parameters separately. The reason is that the variation within the values obtained will be different for each parameter. Since the precision of a sampled parameter depends on the variation of its values, the necessary number of users/appliances to be monitored in order to achieve the 5% or 10% precision will also depend on the variation of values. Therefore, although the monitoring team will undertake monitoring of various parameters simultaneously and on the same sample, the managing entity may decide to stop monitoring of a particular parameter during the campaign once the required precision for this parameter is achieved. The monitoring team will continue to monitor appliances in the sample with respect to the remaining parameter(s) until again the required precision for these parameters is achieved. Simple random sampling will be used to select samples from the Credit Tracker database for monitored parameters for each of the sampling frames. Sample size is determined for Proportional Values using (EB75 Annex 8): VPA Sampling - 90% confidence 10% precision achieved: n = Sample Size N = Total Number of Households p = Expected proportion 1.96 = Represents the 95% confidence interval 0.1 = Represents the 10% relative precision Alternatively, when population sizes are large then an approximate equation may be used: Cross-VPA Sampling - 95% confidence 10% precision achieved:

57 CDM Executive Board Page 57 Where: n = Sample Size N = Total Number of Households p = Expected proportion = Represents the 90% confidence interval (1.96 represents the 95% confidence interval) 0.1 = Represents the 10% relative precision Sample size is determined for a Mean Value using: VPA Sampling - 90% confidence 10% precision achieved: Where: n = Sample Size N = Total Number of Households mean = Mean SD = Standard deviation = Represents the 90% confidence interval (1.96 represents the 95% confidence interval) 0.1 = Represents the 10% relative precision Cross-VPA Sampling - 95% confidence 10% precision achieved: n N mean SD = Sample Size = Total Number of Households = Mean = Standard deviation

58 CDM Executive Board Page = Represents the 95% confidence interval 0.1 = Represents the 10% relative precision Organizational Diagram of Monitoring Plan Figure 8: PoA Monitoring Plan Procedures for training of monitoring personnel Personnel are trained in a group training session where the monitoring presentation is given by staff of the clean energy product unit. Personnel are also provided with a user manual. Sample size will be determined based on ex-post monitoring results