TÜV NORD

„Calibration regarding project assessment requirements“

7th CDM Joint Coordination Workshop 2011

Bonn, 2011-03-12

Contents

Conclusions

Compliance issues

Request for Review Analysis

Req for Review Analysis

Issue: As per EB53, Annex 32 (Information Note On The Implementation Of E+/E- Policies), §4c: “In addition if the lower tariff cannot be fully attributed to policy changes […], the DOE is expected to explain the differences in tariffs in a quantitative manner with reference to other factors“.

Tariff in China: Nation→Province→City→County→Village

Case study: „Reference tariff“Conclusion:

The calculation of the reference tariff has to be further clarified.

The current guidance needs to be further elaborated to reflect the actual situation in China.

Investment analysis

Issue: Benchmark determination: As per VVM 111 a), „DOE should conduct an assessment of all parameters and assumptions used in calculating the relevant financial indicator“, Case Study: Appropriate benchmark for equity IRR – CAPM (Capital Asset Pricing Model)Conclusion: It should be clarified under which conditions independent financial analysis can be considered as sufficient for justification of the benchmark value.

Investment analysis

Issue: According to EB48, Annex 67, (Guidelines on assessment of diferent types of changes from PA as decribed in PDD), §5.d, „Values of operational parameters relevant to determination of emission reduction which are within the control of PP and which result in the IRR passing the benchmark …shall be considered when analysing the impact on the additionality”, however not clear whether …

Unexpected changes (not within the control of the PP) after the investment decision that might make the financial indicator cross the benchmark be considered for assessing the additionality of the project?

Case Study: PLF in Hydro Projects Conclusion: a)The meaning of “within the control of the PP”

needs further clarification. b) How to deal with changes clearly out of control of PP but significantly affect the additionality.

Project implementation (Notification of Changes)

Issue: Slight changes, e. g. editorial changes not affecting the applicability or the additionality of the project, triggering request for notification of changes.

Case Study: Name plate of the turbines, or very insignificant changes in operation parameters (rated flow, water head, diameter of the rotor)

Conclusion: EB could consider the possibility for DOEs to handle these cases within the verification process in the FVerR.

Project implementation (Notification of Changes)

Issue: Assessment of barrier analysis (Pt. 1). According to EB 50, Annex 13, §7, Guidelines for objective demonstration and assessment of barriers:

Guideline 1: Barriers related to the lack of access to capital

Case study: Is a loan rejection letter from a bank enough? Conclusion: A more elaborated guidance would

provide more clarity on what is acceptable and what not.

Barrier analysis

Issue: Assessment of barrier analysis. (Pt. 2) Guideline 4: Barriers that can be mitigated by

additional financial means can be quantified and represented as costs and should not be identified as a barrier for implementation … The DOE should assess the correctness of the additional cost, which in certain situations can be really difficult.

Case study: the price of rice husk in a certain region where the market for this product has boomed and it is foreseen that the price will increase. However, it is hard to quantify this trend, only a quality analysis based on studies that show that a similar situation has occurred in other regions under same economic and circumstantial situation.

Conclusion: same as for (Pt. 1)

Barrier analysis

Issue E+ E- policies: At EB 55, the Board considered draft "Guidelines on the treatment of national and sectoral policies in the demonstration and assessment of additionality” and agreed not to continue the consideration of the treatment of national and sectoral policies in the demonstration and assessment of additionality, […] but shall be assessed on a case by case basis

Case Study: Subsidies on electricity from RE need not to be taken into account. Background: 22nd EB Meeting – Latest definition of National and Sectoral Policies:

E+ :NSPs adopted after the agreement on KP (Dec. 1997) must not be taken into account

E- : NSPs adopted after the Marrakesh Accords (Nov. 2001) need not to be taken into account

Conclusion: Clarification is sought what is meant by „case to case basis“. Furthermore the UNFCCC website should indicate which guidance has become obsolete.

Other compliance issues

Issue: Guidelines for demonstrating additionality of renewable energy projects <= 5MW in LDCs, underdeveloped regions within DC ´… could lead to different additionality assessment conclusion

Case study: The validation process started with additionality being demonstrated by means of an investment analysis.

Conclusion: Guidance is required if the new guidelines overrule the original CDM considererations at the time of decision making.

Other compliance issues

Issue: “Tool for the demonstration and assessment of additionality” - Common practice analysis: “If necessary data/information of some similar projects are not accessible for PPs to conduct this analysis, such projects can be excluded from this analysis […] and the PDD should include justification about non-accessibility of data/information”.

Case study: No official data (on news or non-official newsletter) can be considered as “no information available”?

Conclusion: Further clarification is required what data quality is required to be eligible for CDM considerations

Other compliance issues

More clarity for a lot of issues is required for normal CDM. For pCDM the guidances are still very generic.

Under the current approach to consider all „grey area“ issues as shortcomings in DOE performance definitely more guidance and crystal clear requirements are necessary.

In case of different interpretations of „grey area“ issues would not lead to disadvantages for DOEs the level of detailed guidance required may be less.

Conclusions

Thank youfor your interest

TÜV NORD CERT GmbHA member of TÜV Nord GroupRainer WinterLangemarckstraße 20D-45141 EssenTel +49 (201) 8 25-3329Fax +49 (201) 8 25-2139cdm@tuev-nord.dewww.tuev-nord.dewww.global-warming.de

TÜV NORD CERT GmbHA member of TÜV Nord GroupEmilio MartinLangemarckstraße 20D-45141 EssenTel +49 (201) 8 25-2248Fax +49 (201) 8 25-2139cdm@tuev-nord.dewww.tuev-nord.dewww.global-warming.de