MDG Carbon Facility | Project Cycle & Services

CARBON FINANCE FOR SUSTAINABLE DEVELOPMENT

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Project cycle and Facility services

The Facility guides the project proponent through all steps of the Clean Development Mechanism (CDM) or Joint Implementation (JI) project cycles. The proponent not only gains access to the extra revenue stream from carbon credits, but also benefits from UNDP's project development experience.

The Facility's project cycle and services consist of two phases:

Phase I: UNDP performs its due diligence, assessing the viability of the project and laying the foundation for project development.

Phase II: UNDP provides project development services, including assistance with project design, validation and registration, as well as assisting in the development of a monitoring system for the emission reductions.

CDM PROJECT ACTIVITY CYCLE		MDG CARBON FACILITY SERVICES
Design	Project Proponent (PP)	PHASE I: DUE DILIGENCE
		Facility conducts in-depth due diligence; risk areas are identified & project risk management strategies developed.
		PHASE II: PROJECT DEVELOPMENT
		UNDP provides project development services
		Assists with the development of a baseline study
		Assists in coordinating stakeholder consultations
		Assists with preparation of CDM/JI project documents, including the Project Design Document (PDD)
		Facilitates host-country approvals, including a letter of approval from the Designated National Authority (DNA)
Validation/ registration	Designated Operational Entity (DOE)	Pre-validates the PDD
	Designated Operational Entity (DOE)	Arranges and pays the costs of validation by a DOE
	Executive Board (EB)	Assists with registration or final determination of the project
Monitoring	Project Proponent (PP)	Assists with the development and implementation of a monitoring plan, overseeing data collection and monitoring ongoing MDG impacts during the project's first year of operation

		Conducts pre-verification of monitoring report
Verification/ certification	Designated Operational Entity (DOE)	Arranges and pays for the preparation of an initial verification report and the performance of verification for the first issuance of carbon credits by a DOE
Issuance	Executive Board (EB)	The financial services provider
	Certified Emission Reduction (CER)	Purchases credits generated by the project
		Manages carbon credits generated by the project via custody arrangements
		Offers credit marketing services to the project for any carbon credits not purchased

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PHASE I: DUE DILIGENCE

After the prospective emission reduction project passes initial screening for eligibility and feasibility, Phase I begins with the project proponent signing a Memorandum of Understanding with UNDP. Then UNDP conducst an in-depth due diligence process, analyzing the project according to standardized criteria in the areas of carbon and technical feasibility, financial and legal viability, impact on the MDGs, and country risk. During this process, all parties work together to identify and mitigate any risks to the project, and to lay the foundations for successful project development.

Once a project satisfies the due diligence phase, Phase I culminates with project approval by the Facility the project proponent's entry into a Service Agreement with UNDP, covering project development services). TOP >

PHASE II: PROJECT DEVELOPMENT

Phase II begins with the Facility guiding the preparation of the Project Design Document (PDD), a requirement in the CDM project cycle. The PDD indicates how the project will reduce emissions below levels that would otherwise have been emitted. Once the PDD has been prepared, it is reviewed by a Designated Operational Entity (DOE) for validation and is then submitted to the CDM Executive Board for registration. The PDD, the validation report and an approval letter from the Designated National Authority form the basis for the project's registration.

Following registration with the CDM Executive Board, the emission reduction project's activities may now count towards generating carbon credits. The precise level of activities is recorded through a Project Monitoring Report before being verified by the DOE. The DOE issues a Verification and Certification Report that is submitted to the CDM Executive Board, which then issues Certified Emissions Reductions (CERs) to the project proponent.

Throughout the CDM project cycle, project proponents will benefit from the Facility's comprehensive services package, including its extensive worldwide, on-the-ground presence in developing countries; its broad understanding of local contexts and ability to effectively manage local risks; and its expertise in environmental project development and knowledge of the CDM regulatory process. TOP >

UNDP and Manna register Rwandan clean water project credits

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“The Manna projects in Rwanda demonstrate that carbon finance has the potential to achieve a double dividend. It can help reduce greenhouse gas emissions and deliver basic social services like clean water to the developing communities most in need. That underlines the win- win connections between tackling climate change and reaching the Millennium Development Goals,” Olav Kjorven, the Director of UNDP’s Bureau for Development Policy. MORE FACILITY NEWS >