Identifying and Monitoring of Sustainable Development Benefits on CDM Projects and PoAs

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1 Identifying and Monitoring of Sustainable Development Benefits on CDM Projects and PoAs Presented by: Albert Altarejos MAGALANG Climate Change Office-Environmental Management Bureau Department of Environment & Natural Resources /Philippine DNA for CDM

2 Outline of the Presentation CDM Process and Key Players Minimum CDM Requirement Role of DNA National Approval Process (Basic Steps) Evaluation of CDM Project Application SD Criteria/Indicators Measuring and Monitoring SD Benefits Survey on the Implementation of CDM Projects

3 Minimum CDM Eligibility Requirement CDM eligibility depends on specific project circumstances. At the minimum, the main CDM eligibility criteria are as follows: not a baseline scenario Is an additional Contributes to sustainable development Host country participation is voluntary Both host and investor country have ratified KP Participating country parties have their respective DNA for CDM

4 Role of DNA Formulates and develops a national CDM policy Develops the criteria, indicators, standards, systems and procedures, and evaluation tools Undertakes the assessment of proposed CDM projects Monitors the implementation of CDM projects

5 CDM National Approval Process Basic Steps Technical Evaluation Committee DNA (DENR Secretary) Project Application Project Evaluation Project Endorsement Project Approval/ Non Approval Project Proponent CDM Steering Committee Project Application Monitoring by the CDM Secretariat

6 Needed Documents for Host Country Approval Notarized Project Design Document (PDD) or Project Application Document (PAD) Sustainable Development Benefits Description (SDBD) Documentation of Stakeholders Consultation Proofs of Legal Capacity (Articles of Incorporation, SEC Registration, etc.)

7 Evaluation of CDM Project Application The evaluation is based on sustainable development criteria with the following dimensions: Economic Dimension Environmental Dimension Social Dimension

8 SD Criteria ECONOMIC DIMENSION Provides livelihood and other economic opportunities in the community Provides proper safety nets and compensatory measures for affected stakeholders Promotes the use of cleaner, more efficient and environmentfriendly technology Provides new financial resources ENVIRONMENTAL DIMENSION Complies with environmental policies and standards Improves local environment (e.g. air, water, soil) quality Promotes sustainable use of natural resources SOCIAL DIMENSION Provides education and training which build the capacities of local stakeholders Provides vulnerable groups access to local resources and services Promotes local participation in the project

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12 Proposed Guidelines/Scheme for Measuring and Monitoring SD Benefits in the Philippines (Point System) A proposed scheme for measuring and monitoring SD benefits was developed by the EMB (CDM Secretariat) with assistance from IGES. The guidelines cover both proposed and existing projects by giving scores to a set of sustainable development (SD) criteria/indicators that is applicable to a particular project.

13 Economic Dimension SD Criteria/Indicators Points Additional employment generated (permanent) per Php 1,000,000 CER revenue 10 Additional employment generated (temporary) per Php 1,000,000 CER revenue 5 Additional PhP 100,000 generated in livelihood activities per Php 1,000,000 CER revenue 5 Additional PhP 100,000 generated in micro-financing activities per Php 1,000,000 CER revenue 5 Per 1% of compensation paid for relocation, resettlement 2 Additional employment generated (perm) in livelihood activities per PhP 1,000,000 CER revenue 10 Additional employment generated (temp) in livelihood activities per PhP 1,000,000 CER revenue 5 A well-designed or well-maintained pollution control facility/system 5 For each program on clean technology, energy and water conservation in use 5 For each community environmental outreach program in place 5 For each program on waste reduction in specific media (e.g., solid, liquid) 5 For every $1000,000 new investment generated internationally (i.e., direct foreign investment) 10 For every $1000,000 new investment generated domestically (i.e., from local banks) 5

14 Environmental dimension SD Criteria/Indicators Points Compliance with all required environmental permits 5 For every environmental award (local/provincial) 5 For every environmental award (national) 10 For every environmental award (international) 20 For every pollution level of effluent/emission better than standards 2 for every pollution level of effluent/emission 20% better than standards 5 Environmental Management System is in place 10 per PhP 100,000 allocated in outreach program on sustainable use of natural resources per PhP 1,000,000 CER revenue per PhP 50,000 allocated in direct investment on natural resources (e.g., reforestation) per PhP 1,000,000 CER revenue 5 5

15 Social dimension SD Criteria/Indicators Points per PhP 100,000 allocated to training activities per PhP 1,000,000 CER revenue 5 per PhP 50,000 allocated to (formal school) scholarship per PhP 1,000,000 CER revenue 5 per PhP 100,000 allocated to basic services (e.g., water, health, sanitation) per PhP 1,000,000 CER revenue per PhP 50,000 allocated to special services targeted for vulnerable groups per PhP 1,000,000 CER revenue per 10% of community involvement as measured in participation in MMT, monitoring activities, company events, etc per PhP 50,000 allocated to IEC campaign on CDM per PhP 1,000,000 CER revenue 10 per PhP 50,000 of goods or services from CDM projects given to residents for free (e.g., compost, electricity) per PhP 100,000 of goods or services from CDM projects given to residents at below market cost (e.g., compost, electricity subsidy) 5 5

16 Post-2012 Assessment and Monitoring of CDM Projects The DNA in cooperation with IGES and ASoG conducted a survey last year on CDM implementation in the Philippines to look into the progress of CDM project activities in the country. Specifically, the survey aims to: Get updates on the stage of development of the CDM project activities; Identify problems and issues of project developers; Provide recommendations to address the issues

17 Survey Summary Results Some of the proposed projects will not be pursued due to their failure to meet the December 2012 CDM registration deadline causing the cancellation of the Emission Reduction Purchase Agreement (ERPA); Some of the other reasons for the discontinuation of the CDM process are low market price of carbon credits, change in management priorities, lack of incentives from national policy, additionality, and low emission reduction potential; Only one non-operational project disclosed having no financial closure; Only one project activity engaged in waste management disclosed technical barrier in the issuance of CER. All three (3) projects with CER issuances have a 10-year CER purchase contract covering 100% of the CER generated. CER price of the two (2) project activities are at market rate and the other one at fixed rate.

18 Survey Summary Results CER issuances as compared to planned range from 32% - 79%. Due to the low CER price and high transaction cost, some project proponents are deferring verification and CER issuance; Most CDM projects implemented are able to deliver the sustainable benefits to the nearby community. (the lack of revenue from CERs was the reason for the non-delivery of the economic and social benefits of one project activity )

19 Conclusions Project activities are in different stages of development primarily depending on the start date of the CDM process; Most of the project activities are in the power generation sector, followed by the waste management sector; CDM-PoA are already being adopted in the sectors of waste management, power generation and energy efficiency; CER market is the most pressing concern of many project developers

20 Conclusions There are CDM-specific and non-cdm specific reasons affecting the decision-making of project proponents at different stages of project development. CDM specific reasons include carbon market price and technical barriers, which can be addressed by the improvement of the mechanism itself. But non CDM specific reasons such as national policies can only be addressed by the broader approach of the national government.

21 Recommendations Explore other mechanisms such as the Nationally Appropriate Mitigation Actions (NAMAs) or new market mechanism as an alternative market for carbon credits generated by mitigation projects implemented in the Philippines; Actively support the improvement of the modalities and procedures of CDM to encourage better participation; National policies should promote the participation of the small players in the industry especially in the energy sector; The DNA needs a regular reporting system to facilitate better monitoring and feedback mechanism for the CDM projects implemented in the Philippines.

22 Thank you..