Cubidor AG - Green Division

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Idea & Requirements

  • General Knowledge
  • Requirments
  • Emissions
  • Procedure 

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Procedure & Risks

1. Process Steps and Their Duration

Depending on your project’s size and complexity it will take several months (approx. 6 to 9 months) to pass the necessary UNFCCC procedural steps. This long process period is quite short in comparison to the project’s overall time scope of at least 10 years!

Delays in the process cycles are often caused by lack of technical descriptions on the client's side!

Our intention is to keep the process cycles which can be influenced by us as short as possible! It is your most important task to feed the PDD creation with appropriate data in time! Thus, an optimized process cycle can be achieved! In compliance with the UNFCCC procedure enhanced by our experts experience the following steps should be passed:

0. PIN Phase (1-2m)

Get a sound data base for your decision whether to start a UNFCCC project or not!

Even not mandatory we believe that the Project Idea Note (PIN) Phase is a very good starting point of the whole UNFCCC process. The PIN aims at evaluating and calculating your projects CO2 emission reduction potential. Hence, it forms a sound decision base for you as an investor and project initiator. The PIN phase normally takes 1 month, for large and highly complex projects it might be 2 months.

By collecting all relevant technical data and calculating the emission reduction potential your project also benefits from technological input as alternative technologies with higher reduction potential and reduced operative costs!

1. PDD Phase (2-3m)

The Project Description Document (PDD) Phase is the most crucial step in the whole process! It is based on the PIN phase and refines the collected data by detailed descriptions of the technology base to be used. Furthermore, it describes and evaluates the Baseline scenario and the Monitoring Plan. The latter is a very important factor in the PDD as it explains in detail how the emission reductions are to be measured over time!

2 DNA Approval (1-2m)

The next step in the UNFCCC procedure is the approval of the PDD by the local UNFCCC agency called Denominated National Agency (DNA). This Letter of Approval must confirm that (1) the project activity contributes to sustainable development in the country, that (2) the country has ratified the Kyoto Protocol, and (3) that participation in CDM is voluntary. It is then submitted to CDM Executive Board to support the registration of the project.

DNAs have additional roles to play, such as the submission of proposed standardized baselines for their country, among others. These responsibilities have increased as the CDM has evolved.

3. DOE Validation(1-2m)

A Designated Organization Entity (DOE) under the CDM is either a domestic legal entity or an international organization accredited and designated (on a provisional basis until confirmed by the CMP) by the CDM Executive Board. It has two key functions:

  1. A DOE validates and subsequently requests registration of a proposed CDM project activity
  2. A DOE verifies emission reductions of a registered CDM project activity, certifies as appropriate and requests the Board to issue certified emission reductions accordingly. (Source: UNFCCC Website, 2014)

4. Project Registration (1-2m)

Registration is the formal acceptance by the Executive Board of a validated project as a CDM project activity. Registration is the prerequisite for the verification, certification and issuance of CERs related to that project activity". (Source: UNFCCC Website, 2014)

After a registration request is submitted by the DOE and the registration fee is paid, the secretariat endeavours to begin the registration process as soon as possible. The first step is the completeness check, scheduled for 7 days, followed by the information and reporting check, scheduled for 23 days. The relevant check lists may be viewed here.

  • If a registration request does not meet the checking-requirements, it is considered incomplete and the responsible DOE and project participants are notified accordingly. In this case, the registration request may be re-submitted with revised documentation, and will then be treated as a new submission.

  • Only after the successful completion of both checks is the registration request published on the CDM website and presented to the CDM Executive Board. Parties involved in the project or members of the CDM Executive Board may request a review of any project within the first 28 days of publication. If a Party involved or at least three members of the CDM Executive Board do so, the registration request will go under review. Otherwise, the secretariat will take action to register the project.

  • When it is determined that a registration request will go under review, the review will be made in accordance with section V.B. of the CDM Project Cycle Procedure.

  • The starting date of a CDM project activity is the date at which the implementation or construction or real action of a project activity begins.

Source: UNFCCC Website, 2014.

5. Carbon Reduction Certificate Trading (1-2m)

By selling your achieved carbon emission reduction (CERs) units at one of the dedicated carbon stock exchange funds your project's activities. 

 

2. Risk Analysis from an Investor's Perspective

The major risk potential from an investor’s point of view is that the return on investment may not pay off the initial costs. Some prominent risks and means to avoid them shall be briefly focused below.

UNFCCC Procedure Costs

The UNFCCC process imposes a set of costs on the project initiator which shall be taken into consideration when you are planning to engage in the UNFCCC process cycle.

 

Too little Reduction

If your project's emission reduction potential is little

the whole UNFCCC process may not pay off for you!

Solution:

  • Our UNFCCC experts are very much interested in providing you with the possible reduction potential at an early stage. Thus, the conduct of the PIN Phase is super important for you! Based on these hard facts you are able to decide whether to proceed or to stop the whole procedure.

  • The technical analysis of your project's data may unfold additional potential to save energy and to reduce and recycle emissions to enhance the overall energy level of your project. Such results pay off directly for you as they may lead to better more sustainable technology selection and may lead to reduced operative costs.    

Lack in Documentation

Most problems are caused by lack of inappropriate documentation.

Solution:

  • UNFCCC experienced experts are trained to collect and prepare data which qualifies for a sufficient technical description of the whole process and the UNFCCC related areas.

  • We do stress over and over again that the availability of a precise technical description of your project is mandatory to reduce your costs and to keep the time cycles as short as possible.

  • In case that you lack adequate technicians it is also possible to get assistance during the planning and design phase. 

Rejection by EB

There is a certain possibility that your project is being rejected by the Executive Board.

The majority of rejected projects are marked with “lack of documentation”. This means that the PDD (Project Description Document) which is being filed in at the Executive Board lacks substantial technical, social or environmental related information!

Solution:

  • Professionalism - Knowledge - Experience! We cooperate and collaborate with academic trained UNFCCC experts who have a record of at least 80 approved UNFCCC projects! Thus, their experience is the best shield against Executive Board rejection! Their experience decides what items are of substantial importance during the approval process and also anticipate a series of possible additional questions right in the beginning. Thus, they save you time and money as well!

CERs' Price Fluctuation

The price for a carbon credit is being determined at several stock exchanges worldwide.

Thus, there can be fluctuations.

In December 2013 prices range between approx. EUR 0,7 and EUR 13,-, depending which form of certificate is being traded. The price applicable depends on the type of your project and on the quality and the efficiency enhancement your project can achieve. In the end your project has to be attractive to those who buy your CO2 reduction certificates!

 
Solution:

  • Experience: As there are significant differences by continent and trading places it is important to have a partner on board who knows where to offer your project’s certificates to achieve the best price per ton!