Transcript Document 7463766

Introduction to CDM
Project Idea Note and
Project Design Document
Department of Environment and Natural Resources
CDM Training Workshop
November 4-6,2003
Climate Change Information Center Conference Room
Manila Observatory, Ateneo de Manila Campus
Outline
• Overview of the Project Idea Note and the Project
Design Document
• Contents of the PIN
• Contents of the PDD
• Summary
Sample PIN : Guatemala El
Canada Hydroelectric Project
Overview of the
Project Idea Note (PIN) and the
Project Design Document (PDD)
What is a Project Idea Note ?
• Developed to standardize submission requirements
and review of project ideas to the various funds
sources
• First step in the development of a project
• Provides indicative information on:
Type and size of the project
Location
the anticipated total amount of Greenhouse Gas (GHG)
reduction compared to the “business-as-usual” scenario
suggested crediting life time
suggested Certified Emission Reductions (CER) price in
$/ton CO2eq reduced
financial structuring
socio-economic or environmental effects/benefits
PIN Templates
• PIN For CDM Projects
• PIN for Small Scale Projects
• PIN for LULUCF Projects
Main Differences
• PIN for Small Scale Projects
– Only for projects that conform to the definition of small
scale projects
– MUST provide a description of how the project will
improve the welfare of the community(ies) involved in it
• PIN for LULUCF Projects
– Only for Land Use, Land Use Change and Forestry
Projects
– Must identify the code of the LULUCF category that the
project belongs to
LULUCF PIN Template: Illustrative
Project Categories
Categories
accepted for the 1st
commitment period
What is a Project Design Document
(CDM-PDD) ?
 A standardized document format developed and
adopted by the CDM Executive Board to be used
for submitting CDM Proposals
 Outlined in Appendix B to the Modalities and
Procedures for CDM
 First Version (CDM-PDD) launched on Aug. 29,
2002; Simplified Version for small-scale (SSC-PDD)
projects launched on January 31, 2003
Project Design Document (PDD)
Project Activity Summary with Annexes:
Information
on
Baseline Study (BLS)
 project
 project
context
Monitoring Plan (MP)
Emission Reduction Study
(ERS)
 Kyoto
Protocol
CDM M&P
 etc.
Main Differences for Small Scale
CDM Projects
• Baseline methodology
–
Simplified modalities
• Monitoring methodology and plan
–
Simplified modalities
• Additionality Requirements
-
Simplified checklist provided
• Environmental impacts
–
Documentation on analysis of environmental
impacts of the project activity must be provided
only if required by the host country
Contents of the PIN
(Project Idea Note)
Contents of PIN
A. Project Description, Type, Location and
Schedule
B. Expected Environmental and Social
Benefits
C. Finance
A. Project Description, Type,
Location and Schedule
 Objective of the Project
 Type of Project
 Project Description and
Proposed activities
 Location
 Expected Schedule
 Technology to be
employed
 Project
Developer/Sponsors
 Current Status of
Acceptance of Host
Country
B. Expected Environmental and
Social Benefits
 Estimate of GHG abated/CO2 Sequestered
 Baseline Scenario
 Specific Global and Local Environmental
Benefits
 Socio-Economic Aspects
 Environmental Strategy/Priorities of the Host
Countries
C. Finance
 Total Project Cost Estimate
 Sources of Finance to be Sought or
already Identified
 Sources of Carbon Finance
 Indicative CER Price
 Total ERPA Value
PIN Template
A. Project description, type, location and schedule
Name of Project:____________________________
Technical summary of the project
Objective of the project
Project description and
proposed activities (including
a technical description of the
project)
Technology to be employed
Date submitted:_____________
Describe in less than 5 lines
About ½ page
Describe in less than 5 lines. Please note that support can only be
provided to projects that employ commercially available
technology. It would be useful to provide a few examples of where
the proposed technology has been employed.
Project Idea Note: An Example
Name of the project:
– El Canada Hydroelectric Project
A.
Objective of the project
 Construction of a 43 MW peaking run-of-river hydroelectric plant
located on the Samala River, Guatemala to generate total
electricity of 178Gwh/year
 Output of the Project to be sold to the Grid through a commercial
distributor on a 10 year Power Purchase Agreement
 Will displace fossil fuel thermal power generation sources
Project Idea Note: An Example
A. Project Description and Proposed activities

El Canada project is a 43 MW gross peaking hydroelectric plant
producing an average of 178 Gwh/year.

The Project will collect power flows from the existing Santa Maria
power plant and also collects spillages from the Santa Maria dam
and local inflow from the area between the Santa Maria dam and
the project diversion dam.

The collected power flows will flow through a desander and are
subsequently diverted through a tunnel to a regulating pond. The
penstock will be approximately 2400 m long (in plan) and will
convey the power flows from the regulating reservoir to the
powerhouse and submitted to a substation for delivery to the grid.
Project Idea Note: An Example
A. Technology to be employed
 The project will use hydro power as source of electricity.
PIN Template
Project developer
Name of the project developer
Organizational category
Other function(s) of the project
developer in the project
Summary of the relevant
experience of the project
developer
Address
Contact person
Telephone / fax
E-mail and web address, if any
Government / Government agency / Municipality / Private company
/ Non Governmental Organization
(mention what is applicable)
Sponsor / Operational entity / Intermediary / Technical advisor /
(mention what is applicable)
Describe in less than 5 lines
Address, PO Box, City, Country
Name of the Project Development Manager
Project Idea Note: An Example
A. Project Developer
Name of the project developer
Generadora de Occidente, S.A. (“Project Company”)
Organizational category: Private Company
Other function (s) of the project developer in the project:
Construct, own, operate and finance the project
Address: Diagonal 6 10-65 Zona 10, Torre I, Nivel 8, Oficina
80101010 Guatemala
Contact person:Juan Carlos Mendez, Project Manager
502-339-3174 ext. 137
[email protected]
PIN Template
Project sponsors
(List and provide the following information for all project sponsors)
Name of the project
sponsor
Organizational category Government / Government agency /
Municipality / Private company / Non
Governmental Organization /
(mention what is applicable)
Address (include web
Address, PO Box, City, Country
address, if any)
Main activities
Not more than 5 lines
Summary of the
Summarize the financials (total assets,
financials
revenues, profit, etc.) in less than 5 lines.
Project Idea Note: An Example
A. Project Sponsor
Name of the project sponsor:
EGI Guatemala S.A. and Mesoamerica Power
Development Ltd. Both companies are subsidiaries of
Energía Global International Ltd.
Organizational category: Private company
Address:
Energia Global International, Ltd.
c/o CHI Energy, Inc.
Andover Business Park MA 01810
United States
Main activities: Development and operations of renewable energy
electricity generation facilities in Latin America
PIN Template
Type of the project
Greenhouse gases targeted
Type of activities
Field of activities
a. Energy supply
b. Energy demand
c. Transport
d. Waste management
e. Land Use Change and
Forestry
CO2 / CH4 / N2O / HFCs / PCFs / SF6
(mention what is applicable)
Abatement / CO2 Sequestration
Renewable energy, excluding biomass / biomass /
cogeneration / improving energy efficiency by replacing
existing equipment / minimization of transport and
distribution / fuel switch (e.g., switch coal to biomass)
(mention what is applicable)
Replacement of existing “household equipment” /
improvement of energy efficiency of existing production
equipment
(mention what is applicable)
More efficient engines for transport / modal shift / fuel switch
(e.g. public transport buses fuelled by natural gas)
(mention what is applicable)
Capture of landfill methane emissions / utilization of waste
and wastewater emissions
(mention what is applicable)
Afforestation/ reforestation/ forest management/ wetlands
management/ watershed management/ improved agriculture
/ land degradation prevention
(mention what is applicable)
Project Idea Note: An Example
A. Type of the Project
Greenhouse gases targeted :
Type of activities:
Field of the activities:
a. Energy supply:
b. Energy demand
c. Transport
d. Waste management
CO2
Abatement
Renewable energy
(hydroelectricity)
N/A
N/A
N/A
PIN Template
Location of the
project
Region
Country
City
Brief description of the
location of the plant
East Asia & Pacific / South Asia / Central Asia /
Middle East / North Africa / Subsaharan Africa
/ Southern Africa / Central America & the
Caribbean / South America/Central & Eastern
Europe
(mention what is applicable)
No more than 3 - 5 lines
Project Idea Note: An Example
A. Location of the Project
Region:
Central America
Country:
Guatemala
City:
Quetzaltenango
Brief description of the location of the plant:
The Project is located on the Samalá River, 12
kilometers south of the Quetzaltenango Municipality and
198 kilometers due west from Guatemala City. The
Samalá River is nearly 130 kilometers in length.
PIN Template
Expected schedule
Earliest project start date
Estimate of time required
before becoming
operational after approval of
the PIN
Expected first year of CER
delivery
Project lifetime
Current status or phase of
the project
Current status of the
acceptance of the Host
Country
Year in which the plant will be operational
Time required for financial commitments: xx months
Time required for legal matters: xx months
Time required for negotiations: xx months
Time required for construction: xx months
Year
Number of years
Identification and pre-selection phase / opportunity
study finished / pre-feasibility study finished / feasibility
study finished / negotiations phase / contracting phase /
etc.
(mention what is applicable and indicate the
documentation [e.g., the feasibility study] available)
Letter of No Objection is available / Letter of
Endorsement is under discussion or available / Letter of
Approval is under discussion or available / Host
Country Agreement is under discussion or signed /
Memorandum of Understanding is under discussion or
available / etc.
(mention what is applicable)
Project Idea Note: An Example
A. Expected Schedule
Earliest project start date:
The project is expected to begin Commercial Operations
in the 4th quarter of 2003.
Estimate of time required before becoming operational after approval
of the PIN: N/A
Expected first year of CER-delivery: End of 2003
Project lifetime:
The useful life of a hydroelectric plant typically exceeds
50 years
Project Idea Note: An Example
A. Expected Schedule
Current status or phase of the project:
The Project Developer has recently completed EPC contract
negotiations and is in the preliminary states of construction startup. Detailed project design and engineering has commenced,
with site construction expected to begin late in the 1st quarter or
early in the 2nd quarter of 2002. Construction is expected to take
22 months. The Project Company has entered into a mandate
letter with a multilateral lending institution and is in negotiations
to secure and structure debt financing.
A. Current status of the acceptance of the Host Country
A preliminary contact with Guatemalan Government for Letter of
Endorsement is under way.
PIN Template
The position of the
Host Country with
regard to the Kyoto
Protocol
The Host Country
a. signed, signed and ratified, accepted,
approved or acceded to the Kyoto
Protocol or
b. signed and has demonstrated a clear
interest in becoming a party in due time
(e.g., countries which have already
started or are on the verge of starting the
national ratification, acceptance or
approval process) or
c. has already started or is on the verge of
starting the national accession process
d. other.
(mention what is applicable)
Project Idea Note: An Example
A. The position of the Host Country with regard to the Kyoto
Protocol
Guatemala has signed and ratified the Kyoto Protocol
PIN Template
B. Expected environmental and social benefits
Estimate of
Greenhouse Gases
abated / CO2
Sequestered (in
metric tons of CO2equivalent)
Annual:
Up to and including 2012: xx tCO2-equivalent
Up to a period of 10 years: xx tCO2-equivalent
Up to a period of 7 years: xx tCO2-equivalent
Up to a period of 14 years: xx tCO2-equivalent
Project Idea Note: An Example
B. Estimate of GHG Abated
Annual:
Up to and including 2012: 1.5 million tCO2-equivalents
Up to a period of 10 years: 1.67 million tCO2-equivalents
Up to a period of 14 years: 2.34 million tCO2-equivalents
Up to a period of 21 years: 3.5 million tCO2-equivalents
PIN Template
Baseline scenario
CDM projects must result in GHG emissions
being lower than “business-as-usual” in the
Host Country. At the PIN stage questions to be
answered are at least:
 What is the proposed Clean Development
Mechanism (CDM) project displacing?
 What would the future look like without
the proposed CDM project?
 What would the estimated total GHG
reduction be?
(About ¼ - ½ page)
Project Idea Note: An Example
B. Baseline Scenario
 Displace electricity that would otherwise have been generated by
thermal plants.

Guatemala is experiencing accelerated growth in demand for
electricity while, at the same time, finding itself unable to meet the
demand with projected hydro and other sources of electricity due to
delays in construction. The demand gap has been filled with lowcost, quickly developed bunker fuel generated electricity to avoid
power shortages in the near term. The El Canada Project will
displace these emergency measures by producing electricity to meet
part of the demand using hydro resources and will help avoid the
installation of new fossil plants upon retirement of older ones.
•
The El Canada Project would offset approximately 167,000 metric
tons of CO2 equivalent for each full year of operations
PIN Template
Specific global & local (In total about ¼ page)
environmental
benefits
Which guidelines will be Name and, if possible, the website location
applied?
Local benefits
Global benefits
Project Idea Note: An Example
B. Specific Global and Local Environmental Benefits
 Which guidelines will be applied to?
The Project will be subject to local regulations from the
Guatemalan Ministry of Environment and is being constructed to
comply with applicable World Bank environmental guidelines.
 Local benefits
Protection of water sources found locally in the area near the
Project’s water intake The project has committed to reforesting
certain INDE (the Guatemalan national utility) properties on
which the Project is being constructed.
 Global benefits
The Project utilizes natural resources for the generation of
electric energy rather than contaminating technologies/fuels.
This achieves the objective of benefiting both the local and
global populations by reducing greenhouse gas emissions.
PIN Template
Socio-economic aspects (In total about ¼ page)
What social and economic
effects can be attributed to
the project and which would
not have occurred in a
comparable situation
without that project?
Which guidelines will be
Name and, if possible, the website location
applied?
What are the possible direct
effects (e.g., employment
creation, capital required,
foreign exchange effects)?
What are the possible other
effects? For example:
 training/education
associated with the
introduction of new
processes, technologies
and products and/or
 the effects of a project
on other industries
Project Idea Note: An Example
B. Socio Economic Aspects
 What social and economic effects can be attributed to the project
and which would not have occurred in a comparable situation
without that project?
The Project will have the ability to open the river to future
projects since an additional 30 to 50 MW can be developed
down river after the Project is operating. The Project will provide
relatively clean and filtered water to these other potential
projects down river and will avoid the need to construct
regulating reservoirs.
The geographic location of the Project also has an important
impact of the stability and reduction of electric losses in the
electricity distribution system due to the increased levels and
quality of service in the area. This will also benefit the local
communities.
Project Idea Note: An Example
B. Socio Economic Aspects
Which guidelines will be applied to?
Project will be subject to local regulations from the Guatemalan
Ministry of Environment and is being constructed to comply with
World Bank environmental guidelines.
What are the possible direct effects (e.g. employment creation, capital
required, foreign exchange effects)?
Approximately 200 to 250 direct local jobs will be created directly.
It is estimated that at least US $30 million will be invested in the
Guatemalan economy.
What are the possible other effects? None
PIN Template
Environmental
strategy/ priorities of
the Host Country
A brief description of the relationship of the
consistency of the project with environmental
strategy and priorities of the Host Country
(Not more than ¼ page)
Project Idea Note: An Example
B. Environmental strategy/ priorities of the Host Country
The Guatemalan Ministry of Energy and Mines urged discussion
about and approval of a law which would provide incentives for the
development and construction of renewable energy projects.
Amongst renewable energy, projects using hydro technology have
received the most interest, given that in Guatemala there is a large
identified (but largely under-utilized) hydro potential.
PIN Template
C. Finance
Total project cost
estimate
Development costs
Installed costs
Other costs
Total project costs
xx US$ million
xx US$ million
xx US$million
xx US$million
Project Idea Note: An Example
C. Total Project Cost Estimate
Development costs:
Installed costs:
Other costs:
Total project costs:
3.27 EURO million (US$ 2,841,000)
50.6 EURO million (US$ 44,034,000)
11.1 EURO million (US$ 9,625,000)
65 EURO million (US$ 56,500,000)
PIN Template
Sources of finance to be
sought or already
identified
Equity
Debt – Long-term
Debt - Short term
Not identified
CDM contribution sought
CDM contribution in
advance payments. (The
quantum of upfront
payment will depend on the
assessed risk of the project
by the World Bank, and will
not exceed 25% of the total
ER value purchased by the
World Bank for the project.
Any upfront payment will be
discounted by a factor
considered appropriate by
the World Bank for the
project.)
Name of the organizations and finance (in xx
US$million)
Name of the organizations and finance (in xx
US$million)
Name of the organizations and finance (in xx
US$million)
xx US$million
xx US$million
xx US$million and a brief clarification (not more than 5
lines)
Project Idea Note: An Example
C. Sources of Finance to be Sought or Already Identified
Equity: Shareholders equity contributions are expected to be
approximately 22.7 EURO million (US$ 19,775,000). Final
equity contributions level will be determined once project
financing has been completed.
Debt - Long-term:
To be determined
Debt - Short term:
N/A
Not identified:
N/A
CDM contribution sought:5-7 EURO million depending on time frame
(US$4.5-6.2 million)
CDM contribution in advance payments:
Not yet determined.
PIN Template
Sources of carbon
finance
Indicative CER Price
(subject to
negotiation and
financial due
diligence)
Total Emission
Reduction Purchase
Agreement (ERPA)
Value
A period until 2012 (end
of the first budget
period)
A period of 10 years
A period of 7 years
A period of 14 years (2
* 7 years)
Name of carbon financiers other than PCF that
your are contacting
(if any)
xxUS$
xx US$
xx US$
xxUS$
PIN Template
If financial analysis is available for the proposed CDM activity,
provide the forecast financial internal rate of return for the
project with and without the CER revenues. Provide the
financial rate of return at the expected CER price above and
US$3/ tCO2e. DO NOT assume any up-front payment from the
PCF in the financial analysis that includes PCF revenue stream.
Please provide a spreadsheet to support these calculations.
Project Idea Note: An Example
C. Sources of Carbon Finance (other than PCF): None
Indicative CER Price
Total Emission Reduction Purchase Agreement Value
A period until 2012:
5.25 EURO/mt CO2
A period of 10 years:
5.25 EURO/mt CO2
A period of 14 years :
5.25 EURO/mt CO2
A period of 21 years:
5.25 EURO/mt CO2
Financial Analysis: not yet available
Contents of the PDD
Contents of CDM-PDD
A. General description of project activity
B. Baseline methodology
C. Duration of the project activity/
Crediting period
D. Monitoring methodology and plan
E. Calculations of GHG emissions by sources
F. Environmental impacts
G. Stakeholders comments
Contents of CDM-PDD
Annex 1.
Annex 2.
Annex 3.
Annex 4.
Annex 5.
Contact Information on Project
Participants
Information Regarding Public
Funding
New Baseline Methodology
New Monitoring Methodology
Table of Baseline Data
Summary
- Contents of the PIN
- PIN templates
- Contents of the PDD
• Sample PINs and PDDs are available at the
following websites:
http://www.dnv.com/certification/ClimateChange/
http://unfccc.int/cdm
http://prototypecarbonfund.org
Thank You!
Jeanette S. Laurente
Climate Change Information Center
Manila Observatory
Ateneo de Manila Campus
Tel. No. (02) 426-6134 to 37
Fax. No.(02) 426-6070
Email: [email protected]