CDM Projects

Procedure for implementing a CDM project

The first steps are largely the same as those for the general project cycle. Project developers submit their PDDs to a Designated Operational Entity (DOE) accredited by the CDM EB. Other than with JI projects, CDM project developers must used EB-approved methodologies when determining the baseline and when monitoring project implementation. The EB cannot, however, develop these methodologies itself; instead, project developers must submit proposed methodologies to the EB for approval. This step can only be skipped if a methodology already approved for another project can be used for the new one.

Public input is expressly required in the approval process. The DOE must make the PDD available to the public during the assessment phase in order to allow both the general public and those actually affected by the project an opportunity to comment. The DOE receives objections and comments, evaluates them and then publishes them.

For a long time confusion reigned regarding the provision of adequate proof of a project’s additionality. The EB has thus developed a tool to enable demonstration and assessment of additionality. While the tool is designed to assist project developers, they may also develop and use other procedures to provide proof of additionality.

Article 12 of the Kyoto Protocol calls for CDM projects to foster sustainable development in the host country. The host countries themselves assess whether or not this is the case. Each host country develops its own criteria and procedure; assessment takes place as part of the host country’s general CDM approval procedure. Normally, host and investor countries approve a project on the basis of the DOE’s validation report. The respective national procedures are explained on the various DNA websites.

According to the EB decisions, registration of a CDM project is not subject to the availability of a letter of approval from an investor country (see the Unilateral Projects section). A letter of approval must only be provided if emission reduction certificates are to be transferred to an industrialised country after they are issued.

If the DOE finds that the project meets all the required criteria, it forwards it to the EB for registration. The EB registers the project automatically eight weeks after the project is submitted for approval unless a party involved in the project or at least three members of the EB request a review by the EB. If a review is requested, the EB decides at its next meeting whether to perform the review or allow the project through. If the EB determines as the outcome of a review that a project does not comply with CDM rules, it may require changes to the project or turn down the project in its entirety.

A significant difference when compared with the JI procedure involves how verified emission reductions are dealt with. Firstly, validation and verification are not normally to be performed by the same DOE. Secondly, the emission reductions must be certified by the DOE. In other words, the DOE must provide written confirmation that the respective emission reductions were actually achieved. Public participation is mandatory.

Following certification, the appropriate quantity of emission reduction certificates (Certified Emission Reductions or CERs) is normally issued automatically by the EB, although the EB can also elect to conduct another review of the project at this point. Two percent of CERs issued are retained and transferred to the Adaptation Fund, which is designed to support the least developed countries in adapting to the effects of climate change.

The UNFCCC CDM website ( cdm.unfccc.int) provides detailed information, including approved methodologies, the Tool (PDF) (PDF) for proof of additionality, lists of accredited DOEs, DNAs established so far and all necessary forms and instructions needed to request project registration by the EB.

Unilateral Projects

The CDM was originally designed as a mechanism to promote cooperation between industrialised and developing countries. Following clarification by the EB in February 2005, projects may also be registered without the involvement of an industrialised country. These ‘unilateral’ projects give project developers in host countries the opportunity to develop their own projects and sell the CERs they generate on the free market instead of having to find an investor in the initial planning stage. A letter of approval from an industrialised country must be submitted after the fact, however, if the CERs are to be transferred there. Unilateral projects now make up more than half of the projects currently being developed.

Simplified procedure for small-scale projects

As part of the Marrakech Accords it was agreed to establish a simplified procedure for small-scale projects. It was developed by the CDM Executive Board and comprises the following simplified modalities and procedures:

• Simplified requirements for the PDD.

• Simplified methodologies to produce the baseline and the monitoring plan.

• The possibility of bundling multiple project activities to form a single project.

• The possibility of using the same DOE for validation, verification and certification.

The simplified procedure applies for the following CDM project types:

• Renewable energy projects with a capacity of up to 15 MW.

• Energy efficiency projects with energy savings (on either the supplier or the user side) of up to 60 gigawatt hours per year.

• Other projects which result in annual emission reductions of no more than 60,000 tonnes CO2e.

Also, projects that promise annual emission reductions of less than 15,000 tonnes of CO2e are exempt from the registration fees levied by the CDM EB. Further details are available on the UNFCCC website.

Programmatic CDM

At the first Conference of the Parties serving as a Meeting of the Parties (CMP) to the Kyoto Protocol in 2005, it was decided to allow an additional project type known as programmes of activities (PoAs). A PoA is a programme combining multiple decentralised activities. While project bundling was already an option for small-scale projects (as mentioned above), the activities in a bundle nominally each retain their separate status, it is necessary to state what activities make up the bundle at the time of registration and the composition of the bundle is not allowed to change over the duration of the project. Additionally, as noted, the thresholds for small-scale projects must not be exceeded by the bundle as a whole.

A PoA, in contrast, is a measure with a central coordinator that provides impetus for decentralised activities, for example by creating financial incentives. The size of a PoA is also not fixed from the outset and further CDM programme activities (CPAs) can be added at any time. All CPAs in a PoA must, however, be able to use the same baseline and monitoring methodology. It is therefore not possible to combine, say, renewable energy and energy efficiency activities in the same PoA.

On application to register a PoA, a CPA characteristic of the PoA must be submitted to the EB and appraised. The PoA PDD must also describe the criteria by which additional CPAs may be added to the PoA. Further CPAs may be added at any time once a PoA has been registered with the EB. Such CPAs are submitted for checking to the DOE that validated the PoA; they are not appraised by the EB. If the EB subsequently determines that a CPA has been erroneously included in the PoA, the entire PoA becomes subject to review. To replace any CERs issued erroneously as a result of the CPA’s inclusion, the responsible DOE must transfer an equal quantity of emission reduction certificates to the EB.



Details of the legal basis for the CDM.