Carbon Markets for Energy Access Projects

Clean Development Mechanism

The CDM allows emission-reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.

The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets.

The projects must qualify through a rigorous and public registration and issuance process designed to ensure real, measurable and verifiable emission reductions that are additional to what would have occurred without the project. The mechanism is overseen by the CDM Executive Board, answerable ultimately to the countries that have ratified the Kyoto Protocol.

In order to be considered for registration, a project must first be approved by the Designated National Authorities (DNA).

Operational since the beginning of 2006, the mechanism has already registered more than 1,000 projects and is anticipated to produce CERs amounting to more than 2.7 billion tonnes of CO2 equivalent in the first commitment period of the Kyoto Protocol, 2008–2012.

The mechanism is seen by many as a trailblazer. It is the first global, environmental investment and credit scheme of its kind, providing a standardized emissions offset instrument, CERs.

Source: http://cdm.unfccc.int/about/index.html

Bundling CDM Projects

Bundle is defined as: “Bringing together of several small-scale CDM project activities, to form a single CDM project activity or portfolio without the loss of distinctive characteristics of each project activity. Project activities within a bundle can be arranged in one or more sub-bundles, with each project activities retaining it distinctive characteristics. Such characteristics include its: technology/measure; location; application of simplified baseline methodology. Project activities within a sub-bundle belong to the same type. The sum of the output capacity of project actvities within a sub-bundle shall not exceed the maximum output capacity limit for its type.”

Sub-bundle is defined as: “An aggregation of project activities within a bundle having the characteristics that all project activities within a sub-bundle belong to the same type.”

General principles for bundling:

• Project activities wishing to be bundled shall indicate this when making the request for registration;
• Once a project activity becomes part of a bundle for a project cycle stage, it shall not be de-bundled for this stage. The Board may consider debundling in exceptional situations;
• The composition of bundles shall not change over time (i.e. the submission of project activities to be used in a bundle shall be made at the same time. A project activity shall not be taken out of a bundle nor shall a project activity be added to the bundle after registration).
• All project activities in the bundle shall have the same crediting period (i.e. the same length and same starting date of the crediting period);
• A form with information related to the bundle must be included in the submission;
• The form should cover issues such as title of the bundle, general description, project participants, locations, types and categories, estimated amount of emission reduction, crediting period and monitoring plans.

The advantage of bundling is that bundled projects can obtain a single validation report and a single certification report for the entire bundle, which streamlines these processes for project participants.

Further information on bundling:

• UNFCCC-CDM
• CDM Rulebook

General Information

CDM Project Activity Cycle

Small Scale CDM Project Activities

Small Scale CDM Methodologies

Gold Standard

A Guide to CDM and Family Hydro Power

Selected Small Hydro CDM Projects

Phu Mau hydropower project (Vietnam): small scale run-of-river hydropower plant; three cascades with a total installed capacity of 5.6 MW. Crediting period 05 Jun 09 - 04 Jun 16.

Sichuan provincial Longchi & Caoyuan Small-scale Hydro Power Bundle Project (China): two small-scale hydro projects - Longchi 5 MW + Caoyuan 4MW. Crediting period 28 Apr 09 - 27 Apr 16.

Iruttukanam Small Hydro Electric Project (India): small scale run-of-river, 3 MW. Crediting period 01 Jun 09 - 31 May 19.

e7 Bhutan Micro Hydro Power CDM Project (Bhutan): power generation capacity 70kW. Crediting period 19 Aug 05 - 18 Aug 12.

Sanquhar and Delta Small Hydro Power Projects (Sri Lanka): two small-scale, run of river hydropower plants, each with an installed capacity of 1.6 MW. Crediting period 01 Jan 04 - 31 Dec 10.

Santa Lúcia II Small Hydropower Plant (Brazil): run-of-river small hydro plant with installed capacity of 7.6 MW. Crediting period 01 Oct 03 - 30 Sep 10.

Feasibility of CDM as a financing model (Case studies from Ethiopia)

⇒ Back to Solar Section
⇒ Back to Hydro Section