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Preparing a CDM Project Design Document (PDD) Michael Gerbis, P.Eng. President The Delphi Group.
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Transcript of Preparing a CDM Project Design Document (PDD) Michael Gerbis, P.Eng. President The Delphi Group.
Preparing a CDM Project Design Document (PDD)
Michael Gerbis, P.Eng.
President
The Delphi Group
The Delphi Group
In Business since 1987 Complexity, Creativity, Change Business Units:
Health and the Environment Business and the Environment Clean Energy Markets and Technologies Climate Change
Strategic Analysis Policy assessment & development GHG Mng Services
Overview
PDD 101 What is a Project Design Document? Key Components
Baselines
Monitoring Plans
Lessons Learned
Sources of Information
What is a PDD?
A PDD: presents information on the essential
technical and organizational aspects of the project activity
is a key input into the project validation, registration, and verification processes required for CDM projects under Kyoto
Key Components of a PDD
A. General description of project activity
B. Application of a baseline methodology
C. Duration of the project activity / Crediting period
D. Application of a monitoring methodology and plan
E. Estimation of GHG emissions by sources
F. Environmental impacts
G. Stakeholders’ comments
Lessons Learned*
Project participants not identified clearly Insufficient description of the
technology Lack of logic and consistency in PDD Small-scale selected for a large-scale
project Compliance with local legal
requirements not covered sufficiently Insufficient information on the
stakeholder consultation process
* Source: CDM PDD Guidebook: Navigating the Pitfalls, DNV & UNEP
Baselines
Lesson LearnedIt is important to have a clearly defined baseline as early as possible; it is especially important to recognize how conditions may change a project's
estimated emission reduction volume and to integrate these scenarios with a realistic project
performance. - TransAlta
What is a Baseline?
A baseline is a hypothetical scenario that represents what would have happened in the absence of the project (i.e. business as usual).
A baseline methodology is used to estimate baseline GHG emissions that will be compared to project emissions to determine overall emission reductions
Application of a Baseline Methodology
CDM project proponents have two options: Use an existing approved methodology
Simpler approach Only if a relevant methodology exists
Develop a new methodology Additional effort required A new monitoring methodology and plan
(Section D) will also be required
Application of a Baseline Methodology
In either case, in the PDD: Identify the methodology to be used (either an
existing or new methodology) Justify why the methodology is relevant for the
specific project Describe how the methodology will be applied in
the project context Describe how project GHG emissions will be
reduced below baseline emissions Describe how the baseline boundary in the
methodology is applied to the project activity
What is a Baseline Study?
Is a systematic and methodological analysis to determine the most likely development scenario and its evolution in time in absence of the Kyoto Protocol mechanisms
Is the basis for the projection of emission reductions
Credibly demonstrates environmental additionality
Provides all arguments, facts and evidence in support of the determined project baseline, so that the baseline can be validated
Required for the Project Design Document
Examples of Baseline Variables
Accessibility & reliability of relevant data Location, type and size of project Existing and planned policies Available resources
Lesson Learned
Generally accepted data is vital, particularly when it comes to baselines. This will guard against future questioning of validity, and requests for a more objective baseline (i.e., one not established by the company looking to validate the project). Transparency is key. - Mikro-Tek
Complexities of Baselines
Baselines are complex & difficult to determine
Inherently speculative – it attempts to predict what will not happen
Forecasting uncertainty Business-cycle forecasting is extremely
difficult Baseline level of emissions tend to be
overstated
What is Additionality?
“Additionality” is the key eligibility criterion for CDM projects
Interpreted as “environmental additionality” Assessed against a baseline
Emission Reductions=
hypothetical baseline emissions – actual (CDM project) emissions
Project Boundary
Sets the physical area Identifies sources and sinks
Anthropogenic;
Includes all GHG that are significant and attributable On-site Off-site
The project boundary defines the area within which emissions reductions occur
Project Boundary
Off-site Transportation of fuel or Fugitive Gas Emissions - Pipelines
Takes into consideration “significant” and “reasonably attributable” including both:
Boiler Emissions or Flaring Emissions
On-site emissions reductions that
arise immediately from the project activity itself
Off-site emissions reductions occur
upstream or downstream of the project
Leakage
GHG reductions or increases that result from the project outside the project boundary
Identification and quantification of leakage remains one of the most challenging technical issues related to the development of GHG mitigation projects.
Can occur at a local and international levels Activity shifting Outsourcing Market shifts in supply and demand Inaccurate or incomplete baseline (although
should be seen as baseline fault not really leakage)
Set Crediting Period
Two Options An initial period of 7 years (may be
renewed a maximum of two times, for a total of 21 years) Renewals are contingent on re-validation
of the original baseline. Baseline may need to be updated with
newly available data
A maximum of 10 years with no option of renewal
Calculate Emissions Reductions
Determine project boundary
Project & Baseline Emissions
Estimate Net Emissions Reductions
Adjust Results for uncertainties and deduct any possible “leakage”
0
500,000
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1,500,000
2,000,000
2,500,000
3,000,000
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1 2 3 4 5 6 7 8 9 10
Project Year
Co
2 T
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Emission Reductions
Baseline emissions
Project emissions
Lessons LearnedHost country expertise, particularly in sequestration projects, is vital. These experts possess information with respect to best practices and the establishment of baselines that can save both time and considerable expense. – Mikro-Tek
Lessons Learned*
Insufficient explanation of baseline scenarios
Insufficient explanation of project additionality
Baseline information not sufficiently supported by evidence and/or not referenced sufficiently
Major risks to the baseline not identified/ described
The project boundaries not defined clearly
Project and/or crediting start date unclear
* Source: CDM PDD Guidebook: Navigating the Pitfalls, DNV & UNEP
Monitoring Plans
Lessons LearnedContracting is one of, if not the most, essential steps in the CDM process. Specifically, it is of paramount importance that all contracts (e.g. between buyer and seller of CERs) are legally
binding and have an adequate process for arbitration - TransAlta
“Continuous or periodic data collection to check the accuracy of the baseline and
project emissions”
Required for Validation and Project Design Document (attachment)
Builds on Baseline Study
Revisions need to be validated
Monitoring Basics
Application of a Monitoring Methodology and Plan
Provides information on how to collect/ archive data needed to: Estimate/measure emissions within the
project boundary; Determine the baseline; and Identify increased emissions outside of
the project boundary (i.e. leakage) The Monitoring methodology describes
how to prepare a project-specific monitoring plan
Application of a Monitoring Methodology and Plan
As with baseline methodologies, project proponents have two options: Use an existing approved methodology
Simpler approach Only if a relevant methodology exists
Develop a new methodology Additional effort required Necessary if a new baseline methodology is
being used
Monitoring Plan
A description of the project activities Key parameters involved
Emission sources to be monitored Specific monitoring process
√ The data sources used to calculate baselines√ All sources of GHG’s√ Processes & procedures for data collection, measuring, reporting√ Technical equations√ Roles and responsibilities of participants √ Quality assurance and control procedures√ Record keeping systems√ ER model and calculation procedures
Simple Examples of Data Monitoring
Project Type Data to be monitored
Retrofit of existing fossil fuel power generation
Quantity of fuel being used Electricity being generated Test fuel samples to derive emissions
factor
Recovery of exhaust gas in oilfield
Metering quantity of methane captured and used as fuel
Sampling gas composition for CH4 levels
Tail Gas Quantity of fuel being loaded Number of manual loads (maintenance)
Flare Gas recovery Metering of flare gas composition Quantity being captured, flare & reused Amount of flare gas being exhausted to
atmosphere
Preparing a New Monitoring Methodology
A template is available from UNFCCC website Key areas:
Method description Monitoring of leakage Formulae used to estimate project emissions (as
per baseline methodology) Key assumptions (e.g. emission factors) QA & QC procedures Descriptions of past successful application of the
method
Lessons Learned*
Deviations from monitoring methodology not justified sufficiently
Monitoring and project management procedures not defined
* Source: CDM PDD Guidebook: Navigating the Pitfalls, DNV & UNEP
Lessons Learned: World Bank’s Prototype Carbon Fund (PCF)
The WB has developed, applied and tested a number of baseline and monitoring methodologies for a broad range of different project types and locations. Some of their lessons are highlighted in their Annual Reports and on their website www.prototypecarbonfund.org.
Key References
UNFCCC CDM website: http://cdm.unfccc.int/Reference/Documents
Official PDD guideline document Templates for PDDs; new baseline methodologies; and
new monitoring methodologies.
CDM PDD Guidebook: Navigating the Pitfalls, DNV & UNEP http://cd4cdm.org/Publications/UNEP-DNV_PDD%20Pitfalls%20Guidebook.pdf
World Resource Institute GHG Protocol Guide http://www.ghgprotocol.org/templates/GHG5/layout.asp?MenuID=849
Small Scale CDM Projects
Small-Scale CDM (SSC) Overview
Simplified to reduce cost
14 small-scale CDM project activity classifications
Opportunities for bundling projects
A simplified project design document
Simplified methodologies for baseline determination and monitoring plans
Small-Scale CDM (SSC) Overview
Furthermore
Simplified provisions for environmental impact analysis
Lowered project registration fee
Shorter review period for registration of project activities
The same DOE can validate as well as verify and certify emissions reductions
SSC Eligible Project Types
Type (i) – renewable energy <= 15 MW output capacity (disregarding actual load factor)
Type (ii) – energy efficiency improvement (supply and/or demand side) <= 15 GWh per year
Type (iii) – other activities that reduce emissions and have direct CO2e emissions <= 15 kT
Eligible Small Scale Project Types
Type I: Renewable Energy ProjectsA. Electricity generation by userB. Mechanical Energy for the userC. Thermal energy for the userD. Renewable Electricity generation for a
grid
Eligible Small Scale Project Types
Type II: Energy Efficiency Improvement Projects
A. Supply side energy efficiency improvements – transmission and distribution
B. Supply side energy efficiency improvements – generation
C. Demand-side energy efficiency programs for specific technologies
D. Energy efficiency and fuel switching measures for industrial facilities
E. Energy efficiency and fuel switching measures for buildings
Eligible Small Scale Project Types
Type III: Other Project ActivitiesA. AgricultureB. Switching fossil fuelsC. Emission reductions by low-greenhouse
emission vehiclesD. Methane recovery and avoidance
Types I - IIIA. Other small-scale project
PDD for SSC Projects
Same general approach, project cycle and PDD sections as for regular CDM projects
A. General Description of Project Activity Essentially the same, except that
confirmation must be given that the SSC project is not simply a ‘debundled’ large-scale project
PDD for SSC Projects
B. Application of a Baseline Methodology Streamlined additionality explanation Project boundary description linked to
project type guidance Detailed baseline info not required –
simply reference relevant approved methodology
PDD for SSC Projects
C. Duration of the Project Activity / Crediting Period Identical
D. Application of a Monitoring Methodology and Plan Streamlined requirements For monitoring plan, complete relevant
table from approved methodology Information on formula used moved to
the next section of the document
PDD for SSC Projects
E. Estimation of GHG emissions by sources Essentially the same, except formulae used
are to be described in this section for the SSC project document
F. Environmental Impacts Streamlined – only a short summary with
relevant attached documentation required, if applicable
G. Stakeholders Comments Identical
SSC Baseline and Monitoring Methodologies
A key area of difference between regular and small-scale project approaches
SSC methodologies are very simple, on the order of a few pages for both baseline and monitoring information combined
All approved methodologies contained in one document – “Appendix B”
Proposed new methodologies are simply submitted in writing to CDM executive board for consideration
SSC Baseline and Monitoring Methodologies – Key Sections
Technology/measure
Boundary
Baseline
Leakage
Monitoring
Example Cat. 1D: Renewable Electricity generation for a grid
E.G.: PVs, hydro, tidal/wave, wind, geothermal and biomass making electricity for a grid.
For small networks emission coefficients below is used.
For other systems an average of ”approximate operating margin” and ”build margin” is used, or a weighted average emissions of current generation mix if data not available.
Mini grid 24 h 4-6 h withKgCO2/kWh service service storageLoad factors 25% 50% 100%<15 kW 2.4 1.4 1.215-35 kW 1.9 1.3 1.135-135 kW 1.3 1 1135-200 kW 0.9 0.8 0.8>200 kW 0.8 0.8 0.8
Cat. 2C: Demand-side energy efficiency programs for specific technologies
This category comprises programmes that encourage the use of energy-efficient equipments, lamps, ballasts, refrigerators, motors, fans, air conditioners, appliances etc . At many sites
Baseline: number of devices times power of device times average annual operating hours/ grid loss times emission coefficient as in 1.D.
Monitoring: the number and power and operating hours of replaced devices. Annual check of a sample to show that they are still operating.
Further Questions?
Please contact:
Mike GerbisThe Delphi Group428 Gilmour StreetOttawa, OntarioCanada
Tel: 613-532-2005
Fax: 613-562-2008
E-mail: [email protected]
Web site: www.delphi.ca