Steps in the CDM project cycle
Project identification and design: the project owner identifies an opportunity for a CDM project and develops a project design document which includes a baseline estimate and an analysis of the net carbon emissions.
Host country approval: International acceptance of a CDM project first requires approval at the national level, consistent with the country’s domestic laws and policy priorities. The designated National Authority (DNA ) issues this approval.
Third party validation of project design and baseline: To ensure that later verification of performance will provide certified credits, the project design document, and especially the baseline, has to be validated by an independent third party before implementation Most of these are ISO certified companies such as Bureau Veritas, SGS, DNV etc).
Registration: Once a project is validated and approved by the host country, it is registered by the CDM Executive Board.
Financial structuring: Finances are then secured. The investors provide capital investment in the form of debt or equity. These investors may or may not be the carbon buyers who will pay for certified credits on delivery.
Implementation and operation: The project is built, commissioned, and begins operation.
Monitoring: Project performance, including baseline conditions, is measured by the project developer in the commissioning process and during on-going project operation.
Third party verification of project performance: An independent third party verifies project performance against the validated design and baseline, in order to approve certification.
Certification and issuance: Based on the host-country approval, the validated project design under baseline, and the verified project performance, CERs are certified and issued by the CDM executive board.
CDM Approval Process
The DNA uses a 2-step approval process. There is screening by the National CDM Clearing House Mechanism, a body composed of institutions that have a stake in the project. Sometimes if necessary a sub-committee considers the project before it is presented to the Clearing House. In practice, the project proponents are usually advised to first come up with the Project Idea Note (PIN) and submit it to the DNA for a letter of endorsement that the project is feasible. Once the proponent receives the letter of endorsement, he or she can go ahead and prepare a PDD. For the PDD to move to the next stage and to be considered by the CDM Executive Board for registration, a letter of approval by the DNA indicating that the project meets the host country’s sustainable needs is necessary.
The project proponent therefore applies to the DNA for a letter of approval. The application must be accompanied by the Project Design Document (PDD) for the issuance of the letter. Before the proponent is granted the approval, he or she must satisfy Sustainable Development criteria, Environment Impact Assessment and other national planning requirements as spelt out by the relevant institutions. The methods for testing projects against the sustainability criteria are also specified. The Clearing House Mechanism reviews the document and then advises the Director General of NEMA (DNA) whether or not to sign the letter of approval. If satisfied, the DG signs the letter of approval for and on behalf of the DNA.
The approval process is fairly standardized and is applied to all projects. The process is transparent and t he record of meetings and the decision DNA are accessible on request. It is proposed that in future this information will be at the NEMA and Ministry of Environment and Natural Resources websites.
The development of a PDD requires specialized expertise which is not readily available in Kenya. Currently, the DNA advises the project proponents to have their PDDs and PINs developed by expert firms, such as ESDA, ECM, Pioneer Carbon, Carbon Reductions, etc.
More information CDM-UNFCCC
Roles and responsibilities of host countries
- Designate a national authority for CDM
- Issue written approval of voluntary participation
- Evaluate CDM project if it contributes the
- Sustainable development
- Environmental Impact Assessment
- Local stakeholder consultation
- Provide information on national and/or sectoral
- policies and circumstances, such as sectoral reform
- Initiatives, local fuel availability, power expansion plans etc.