Module 11 The Clean Development Mechanism

Original text: L. Morgan, APEC Capacity Building in the APEC Region, Phase II Update on CCS in the CDM by CO2CRC

Overview

The Clean Development Mechanism (CDM) is an instrument under the Kyoto Protocol which could enable CO2 capture and storage projects to receive an additional revenue stream and become more economically viable. This module will assist the reader to gain familiarity with the CDM and associated components.

Learning objectives

By the end of this module you will:

  • Be familiar with the Kyoto Protocol and the Clean Development Mechanism;
  • Know the eligibility requirements for a project to become a CDM project;
  • Understand the partners needed to undertake a CDM project;
  • Have an understanding the CDM project cycle and its various requirements; and
  • Understand the current progress to recognising CO2 capture and storage as a CDM project.

Introduction to the Kyoto Protocol and the Clean Development Mechanism

In 1992, international collaboration on climate change reached a new level when 186 economies agreed in Rio de Janeiro to limit or reduce greenhouse gas (GHG) emissions by ratifying the United Nations Framework Convention on Climate Change (UNFCCC). This was in response to growing evidence that human activity was contributing to global warming. The Framework Convention on Climate Change sets an overall framework for intergovernmental efforts to tackle the challenge posed by climate change. The Convention also provides for the dissemination of educational materials for the general public, assistance to developing economies to adapt to climate change, and a forum to quantify and report on emissions.

After several years of negotiations, the international community came together again in Kyoto, Japan in December 1997 and reached agreement on the Kyoto Protocol. The Kyoto Protocol is the instrument under the UNFCCC that set legally binding targets for reducing greenhouse gas (GHG) emissions, and put in place mechanisms to realize the objectives of the UNFCCC. Only industrialized economies (referred to in this module as "Annex 1 economies") that ratify the Protocol commit themselves to limiting their emissions of six greenhouse gases:

  • Carbon Dioxide (CO2);
  • Methane (CH4);
  • Nitrous Oxide (N2O);
  • Hydrofluorocarbons (HFCs);
  • Perfluorocarbon (PFC); and
  • Sulfur hexafluoride (SF6).

Taken together, all Annex 1 economies are obliged to reduce their combined GHG emissions by 5.2% compared to 1990 levels in the period 2008-2012. This time period is known as the First Commitment Period. Developing economies (referred to in this module as "Non-Annex 1 economies") do not have emission reduction targets for the First Commitment Period. The Kyoto Protocol came into force on February 16th, 2005.

Formal negotiations are taking place under UNFCCC on finding a replacement for the Kyoto Protocol as the commitment period for the Kyoto Protocol will end in 2012. A series of UNFCCC meetings have taken place throughout 2009, prior to the United Nations Climate Change Conference (COP 15) in Copenhagen, 7-18 December, 2009. In addition, there are parallel initiatives led by governments and research institutes to develop the new agreement on global cooperation to reduce GHG emissions.

The Clean Development Mechanism

The Kyoto Protocol includes three flexibility mechanisms to enable its implementation. These mechanisms provide economically efficient alternatives for Annex 1 economies to reduce GHG emissions and meet their Kyoto targets. This module focuses on only one of these flexibility mechanisms: the Clean Development Mechanism (CDM). CDM projects are initiatives that result in a reduction of greenhouse gases. These projects must be implemented by Annex 1 economies in Non-Annex 1 economies where both parties have ratified the Kyoto Protocol. It also may be possible for Non-annex 1 economies to develop CDM projects to sell the credits they generate. This concept – called "unilateral CDM" is under debate. Article 12 of the Kyoto Protocol says that the CDM is intended to:

  • Assist developing economies to achieve sustainable development;
  • Assist industrialized economies to fulfill their emission reduction obligations under the Kyoto Protocol; and
  • Contribute to global greenhouse gas reductions.

CDM projects allow companies or organizations in Annex 1 economies another option outside of domestic action for meeting their emission reduction target. They offer companies or organizations in Non-Annex 1 economies with access to more efficient technology and processes, and the opportunity to reach sustainable development goals. By investing in CDM projects in Non-Annex 1 economies, investors from Annex 1 economies can buy the ownership of Certified Emission Reductions (CERs) from the Non-Annex 1 economy project partner that owns them. CERs can used to meet the GHG reduction commitments of Annex 1 economies under the Kyoto Protocol. Thus, CDM projects help both developed and developing economies to work together to achieve sustainable development and decrease GHG emissions.

The mechanism has already registered more than 1,000 projects since becoming operational at the beginning of 2006 and is anticipated to produce certified emission reductions amounting to more than 2.7 billion tonnes of CO2 equivalent in the first commitment period of the Kyoto Protocol, 2008-2012. (UNFCCC website)

CO2 capture and storage as a CDM option

The status of CO2 capture and storage (CCS) projects under the CDM is still under review. A decision was due at Poznan in 2008 but the move to include CCS in the CDM was blocked. The matter is still under consideration.

The debate about whether CCS should form part of the CDM is centered around issues including:

  • the role CCS plays in climate change mitigation;
  • long-term liability;
  • potential leakage;
  • the impact of CCS projects on the CDM market; and
  • how CCS will affect sustainable development by continuing the use of fossil fuels

The Conference of the Parties serving as the Meeting of the Parties (COP/MOP) to the Kyoto Protocol (CMP) invited intergovernmental organisations (IGOs) and non-governmental organisations (NGOs) to provide to the secretariat, by 31 May 2007, information on the following issues relevant to the consideration of CCS under the clean development mechanism (CDM):

Technical issues considered in relation to CCS projects as CDM projects

  • Long-term physical leakage (seepage) levels of risks and uncertainty.
  • Project boundary issues (such as reservoirs in international waters or several projects using one reservoir) and projects with operations across boundaries.
  • Long-term responsibility for monitoring the reservoir and any remediation measures that may be necessary after the end of the crediting period.
  • Long-term liability for storage sites.
  • Accounting options for any long-term leakage (seepage) from reservoirs.
  • Criteria and steps for the selection of suitable storage sites with respect to the potential for leakage of greenhouse gases (GHGs).
  • Potential leakage paths and site characteristics and monitoring methodologies for physical leakage (seepage) from the storage site and related infrastructure, for example, transportation.
  • Operation of reservoirs (for example, well-sealing and abandonment procedures), dynamics of carbon dioxide (CO2) distribution within the reservoir and remediation issues.
  • Any other relevant matters, including environmental impacts.

The first synthesis report, prepared in response to this request, was considered by the Subsidiary Body for Scientific and Technological Advice (SBSTA) at its twenty-eighth session. In addition, the SBSTA, at its twenty-seventh session, invited Parties, IGOs and accredited NGOs to submit to the secretariat, by 16 June 2008, their views on technological, methodological, legal, policy and financial issues additional to those listed above. The synthesis report was presented at Poznan in December 2008.

Summary of the report: (available at http://unfccc.int/resource/docs/2008/sbsta/eng/inf03.pdf)

Technical issues

  • Broad agreement that understanding potential leakage paths, including consideration of potential leakage pathways beyond the near-term project boundaries, is critical.
  • Conflicting views on whether there is sufficient experience with CCS, particularly relating to risks of leakage.

Methodological issues

  • Broad agreement that emissions associated with the energy required for CCS should be included within the project boundary, that strict site selection criteria are critical and that site selection processes should draw on the 2006 IPCC Guidelines and the SRCCS for information on site selection and site characterisation methods.
  • Conflicting views on whether sites can be selected to isolate CO2 from the atmosphere safely over very long periods of time, whether project boundaries can be practically defined for CCS and whether the current CDM modalities and procedures could be applicable to CCS.

Legal issues

Broad agreement that robust legal frameworks and legislation are necessary, that regulations are needed for post-closure obligations, that capacity-building is needed for non-Annex I Parties on various aspects of CCS project approvals and that there are several key types of liabilities (e.g. for any local damage from CO2 seepage, or climate damage from release of CO2 to the atmosphere).

Conflicting views on whether CCS activities fit within the modalities and procedures of the CDM, whether CCS activities fulfill the purpose of the Convention and Kyoto Protocol, whether the CDM institutional structures are sufficient for CCS projects and the size of financial liabilities potentially posed by CCS projects.

Policy issues

  • Broad agreement that CCS is an important part of the overall portfolio of GHG mitigation options, whether it is in the CDM or not.
  • Conflicting views on who should undertake CCS demonstration, whether there should be a pilot phase for inclusion of CCS as a CDM project activity, how to account for potential long-term seepage, the probability of major seepage events and whether it is necessary or possible to manage the risk of seepage over the long term.

Financial issues

  • Broad agreement that additional financing is required for projects with CCS as compared with equivalent projects without CCS.
  • Conflicting views on whether inclusion of CCS as a CDM project activity will adversely affect carbon market prices, the degree to which CCS will develop without carbon market incentives, whether the CDM is the appropriate vehicle to provide seed finance for emerging technologies such as CCS, the degree to which CCS inclusion as a CDM project activity could result in more fossil fuel consumption and whether CCS will negatively affect the equitable distribution of CDM projects.

There was general agreement that capacity-building is required for CCS projects for non-Annex I Parties in the areas of technical assistance, and design and implementation of effective regulations.

No agreement was apparent on the degree to which CCS contributes to sustainable development; whether the current CDM institutional structure is sufficient to handle CCS; or whether CCS would result in coal and gas displacing less-carbon-intensive fuels.

The Executive Board of the CDM is still considering the issues relating to the inclusion of CCS into the CDM.

Eligibility requirements for the CDM

In order to be eligible to qualify under the Kyoto Protocol, a CDM project must meet the following requirements:

  • Generate real, measurable and verifiable GHG reductions The project must be able to measure and report the amount of GHGs it reduces (in tonnes). The process used for doing this must be verifiable by an independent party. The project also can not cause GHGs to increase in another location. For example, the project cannot displace emissions across a border - this is known as "leakage".
  • Gain approval from the host economy that is a party to the Kyoto Protocol Each Non-Annex 1 economy that has ratified the Kyoto Protocol has a Designated National Authority (DNA) that is authorized to accept or reject proposed CDM projects. In order to secure this approval, project developers will be required to demonstrate how the project contributes toward the sustainable development objectives of the Host Economy. The DNA should publish information on which sustainable development objectives it requires projects to meet.
  • Projects must contribute to emissions reductions above and beyond business-as-usual. This is called additionality. The Kyoto Protocol specifies that only those "reductions in emissions that are additional to any that would occur in the absence of the certified project activity" will be eligible to earn CERs (UNFCCC (4), 1998). To receive credits for a carbon offset project, it will be necessary to demonstrate that the project would not have been undertaken were it not for its emission reduction benefits.

In addition, participation in CDM requires that:

  • Both participating economies have an assigned authority for the CDM;
  • Both parties undertake the initiative voluntarily;
  • CDM projects must include the participation of stakeholders;
  • The project must not cause any degradation in local social, economic or environmental domains;
  • Any technologies that are transferred during the project to developing economies must be appropriate to their needs and business environment; and
  • Parties must be able to prove that the CERs generated are owned by the party selling them. The owner of the credits needs to be identified and involved in all contract negotiations around transferring ownership of the CERs.

If a proposed CDM project does not meet these basic criteria, it will not be officially classified as a CDM project, nor will it be eligible under the Kyoto Protocol to earn CERs.

Who is involved in a CDM project?

There are numerous organizations that will be involved in process of developing and approving a CDM project. A quick snapshot of key players and their roles is listed below:

  • Project developers are the owners and managers of companies looking to develop and operate a project that will result in CERs. These will include parties from both the Non-Annex 1 economy (the seller) and the Annex-1 economy (the buyer).
  • Technology providers are suppliers of environmental and support technologies and services that provide technology, support or expertise that will lead to reductions of GHGs.
  • CDM experts provide essential insight into the development of various components of the project such as baselines, preparation of the Project Design Document (PDD), ensuring project design will meet host economy approval requirements, public engagement, etc. This will be covered in more detail in the section entitled: Overview of the CDM Cycle.
  • The public includes individuals, groups or communities that are affected or likely to be affected by the proposed project. There is a specific requirement for a CDM project to consult local stakeholders for input and comment.
  • Investors support CDM projects through the investment of capital. They will typically be located in an Annex 1 economy, but not always. CDM initiatives may provide new options that are attractive to investors. Some investors will require that all or a portion of the CERs are transferred to them as part of their investment.
  • The Designated National Authority (DNA) is a governmental agency or department which handles all matters relating to the development of CDM projects in the host economy. The DNA takes part in the validation process and must officially approve any CDM project that takes place in the economy. It also is responsible for administering CDM implementation. The UNFCCC website maintains a list of Designated National Authority contacts.
  • The CDM Executive Board is part of the UNFCCC process. It oversees the development of rules and procedures supporting the CDM such as emission monitoring methodologies, baseline methodologies, and emission reduction verification procedures. It also is responsible for approving CDM methodologies, registering approved projects as CDM projects, and accrediting Operational Entities (described below). It is responsible to report back to the Parties on its decisions. This board consists of 10 members, plus 10 alternates.
  • Operational Entities (OEs) are domestic or international legal companies that carry out the verification and validation of a registered CDM project activity. OE's must first become designated by the CDM Executive Board before they are able to officially carry out these functions. A list of approved operational entities is maintained on the UNFCCC website.

Overview of the CDM project cycle

CDM projects have a formalized series of protocols for project proponents to follow if they who wish to have their projects declared CDM eligible under the Kyoto Protocol and want be able to sell their emission reduction credits on the international market. The steps required for this certification can be simplified into five major steps (Figure 11.1):

  • Project design and the project design document;
  • Host economy approval;
  • Validation and registration;
  • Implementation and monitoring;
  • Verification and certification; and
  • Issuance of CERs.

Figure 11.1: The CDM project cycle.

Step 1: Project design and the project design document

Design of a CDM project involves a number of specific steps which help proponents to evaluate the potential of the project to gain host economy and CDM Executive Board approval, its economic and technical feasibility, and risks and monitoring issues of importance. All of this also is necessary to prepare the Project Design Document (PDD). The PDD is the principle document required to gain approval for a CDM project.

After identifying a potential project, the following must be undertaken:

  • Establish the baseline – this is one of the most important stages of CDM project development. The project baseline represents the projected GHG emissions of a company, business unit or activity over a defined period of time under business-as-usual conditions. The business-as-usual forecast takes into consideration the economic, political, and technological conditions within which the implementing entity - a company, village or public utility for instance – would have operated within the established timeframe of the project if the project had not taken place. Comparing the established baseline to the estimated (or actual) GHG emission reductions generated by the project will provide an indication of the number of GHG reduction credits that might be generated annually by the project or over the life of the project. The project developer must document in a clear, logical fashion the rationale, parameters, assumptions and processes used to establish the projected emissions under the business-as-usual scenario. This will help facilitate future validation and certification of emissions reductions.
  • Calculating the baseline includes defining the project boundaries. These boundaries clearly identify the sources and sinks of all GHGs that the project will reduce, and set the physical limits of the area in which the emissions will be reduced. All GHG emissions that are significant and reasonably attributable to the project activity must be included.

    The principal responsibility for defining the baseline lies with the project developer. However, the underlying assumptions and data that support a baseline definition must be derived from national or international entities and archives.

    Overall, the baseline development methods will depend on a number of influential factors such as the accessibility and reliability of relevant data; the location, type and size of project; existing and planned policies, and available resources. In all cases the calculation must be project-specific and take into consideration economic, political, and technological conditions under which the entity implementing the CDM project would have operated over the established timeframe had the project not been undertaken. It also must consider all GHGs within the project boundary from the sectors and sources that will be positively or negatively affected by the proposed CDM project. Emissions are calculated using data sets such as actual or historical emissions, emission profiles of proven technologies that have been or are likely to be introduced, and/or average emissions for similar projects.

    Establishing the baseline is a complex undertaking and should be done in consultation with an expert. The expert will know how other issues such as the chemical composition of the fuel used, the efficiency of fuel conversion, technology characteristics, company operations, coefficients and other elements will influence the resultant baseline.

  • Verify against leakage – leakage refers to a net change of GHG emissions that occur outside of the project boundary but which are the result of the CDM project. In essence, leakage occurs when CDM projects do not reduce emissions, but rather displace them somewhere outside the project boundary. CDM projects must be able to demonstrate that they will not create leakage of GHG emissions in this way.
  • Negotiation of contractual agreements – the CDM and the buying and selling of carbon credits are new phenomena. This can increase project risks. Having a legal contract agreement among the main project parties is essential for all proponents. These risks, as well as lost opportunities, are minimized when the key stakeholders in a project, particularly the buyer and seller, negotiate and sign legally binding contracts early in the process that address:
    • Collection, transfer and ownership of the data and information required to establish a baseline and generate monitoring reports;
    • Ownership of rights, title and interest in future GHG reductions;
    • Responsibility for verification;
    • Timelines, quantity, price setting procedures and future credit payments; and
    • Technology transfer and intellectual property.
  • Select the crediting period – the project proponent should recognize that the time period during which credits arising from the project can be claimed is not necessary equal to the operational lifetime of the project activity. There are two options for the crediting period:
  • A fixed crediting period has a maximum of 10 years after which CERs will be awarded. The starting date for a fixed crediting period is determined once for a project activity with no possibility of renewal or extension once the project activity has been registered.

    A renewable crediting period has an initial period of 7 years after which CERs are awarded. This may be renewed a maximum of two times for a total of 21 years. For each renewal, a designated operational entity must determine that the original baseline is still valid or has been updated taking in account new data where applicable.

    Selection of a crediting period should take into consideration:

    • The technical and/or economic lifetime of the technology installation;
    • Project payback time for the investor; and
    • Period during which the project is considered to be additional (technology is not yet a business-as-usual investment).
  • Identification and mitigation of risks – CDM projects, like any projects, face certain risks. These can be associated with a broad range of issues and conditions, for example:
    • Project and technology performance;
    • Force majeure (unforeseeable events, such as an earthquake, that excuse a party from fulfilling a contract);
    • Management and team skills;
    • Changing market forces; and
    • Political, social and economic instability in the host economy.

    Identification of all possible risks and opportunities, and addressing them appropriately in the project agreement, is key to ensuring current uncertainties are manageable under the future regulatory setting.

  • Establish a monitoring plan – an effective monitoring plan will have a clear, concise and transparent GHG reduction report providing the necessary information required by the operational entity to verify that the project is proceeding as planned. Project proponents should include a description of the project activities and emission sources to be monitored, the key parameters involved, and the specific monitoring process that is to be undertaken. The monitoring plan should identify and describe:
    • The data sources (type and quality) used to calculate project baselines and estimate emissions removed by the project during the crediting period;
    • All sources of GHGs outside the project boundary that might increase total emission reductions attributed to the project;
    • Environmental impacts that have been addressed by the organization implementing the project;
    • Processes and procedures for collecting required data, measuring all emissions, effectively reporting information on a timely basis and maintaining a high level of quality control;
    • Roles and responsibilities of all those who will take part in the monitoring process; and
    • Quality assurance and control procedures for the monitoring process, and procedures documenting the calculations used to determine leakage.
  • Prepare the project design document – all of the elements outlined above are important components of the Project Design Document. The resultant PDD should include the following information:
    • A general description of the project;
    • A baseline derived from an approved baseline methodology;
    • The estimated lifetime of the project and the crediting period;
    • A demonstration of how the project generates emission reductions that are additional to what would have occurred without the CDM;
    • An analysis of the environmental impacts;
    • A discussion of the stakeholder consultation process and how stakeholder comments were taken into account; and
    • A monitoring and verification plan that uses an approved monitoring methodology.

Step 2: Host economy approval

Host economy approval by a Designated National Authority (DNA) is a mandatory step for CDM project proponents before the project can be submitted to the CDM Executive Board for consideration and accreditation as an official CDM project. Each host economy is responsible for setting and publishing criteria against which it will base its approval process. Many, but not all, host economy have finalized this process of criteria selection and publication

Host economy DNAs will typically wish to see that:

The project meets sustainable development objectives, and provides local benefits including benefits to local project partners;

The project is appropriate (e.g.: transfers appropriate technology), desirable and represents positive development, The project is in-line with current and future policies and programs which may influence how the project's baseline is established and how additionality is determined;

Emission reductions achieved through the project are not the lowest cost reductions (referred to as 'low-hanging fruit'), nor are they achievable by the host economy through local technology or know-how; and

Issues surrounding the ownership, rights, title and interest in future GHG reductions, and all related technology transfer and intellectual property issues have been negotiated and agreed upon as outlined in the CDM project's PDD.

Step 3: Validation and registration

Validation involves an independent evaluation of the activities described in the PDD. It is undertaken by an Operational Entity (OE) that has been designated by the CDM Executive Board. Once the PDD has been completed and host economy approval has been received, the PDD is then submitted to an OE for review and approval. Typically this process will involve a detailed examination of the stakeholders involved, calculations of the GHGs mitigated by the project, review of the system used for monitoring, and verification that all the relevant government approvals have been obtained.

The OE will confirm that:

  • The Kyoto Protocol participation requirements have been satisfied, including voluntary participation of both parties, DNA involvement, and Kyoto Protocol eligibility;
  • Comments by stakeholders have been invited and summarized, and there is an account of the proponent's response to those comments;
  • Proper attention has been given to possible environmental impacts from the project;
  • Provisions for baselines, monitoring, reporting and verification are in accordance with current standards and approved by the Executive Board; and
  • A quantifiable GHG reduction will result from the project.

When submitting a project for validation and registration a project proponent is required to submit information on their proposed CDM project using the approved PDD format and glossary of terms. Project proponents must either:

  • Submit a proposal of a new baseline and/or monitoring methodology; or
  • Use a methodology that has already been approved by the Executive Board.

In both of these cases the project proponent must submit the PDD to either a designated OE or an applicant entity (from the approved UNFCCC list) for validation. If a previously approved methodology is submitted, the designated OE may proceed directly with the validation process and submit the PDD for registration.

If a new methodology is submitted, the OE will submit the PDD to the Executive Board for their consideration. This includes the following sequential steps:

  • The UNFCCC Secretariat makes the proposed new methodology publicly available on the UNFCCC CDM web site and invites public inputs for a period of 15 working days;
  • Two members of the Methodology Panel are chosen and responsible for compiling desk reviews of the project and preparing draft recommendations within 10 working days to the Methodology Panel;
  • The Methodology Panel prepares recommendations regarding the approval of the proposed new methodology to the Executive Board. The recommendations could be approved with minor changes; approved subject to more major changes; or not approved. The Methodology Panel's recommendations can be technically revised by the Chair & Vice Chair of the panel;
  • Return of methodologies that have been approved subject to major changes or not approved. Where changes must be made, the methodology can be resubmitted to the Panel for reconsideration; and
  • Submission of methodologies approved by the Methodology Panel to the CDM Executive Board. The Board makes a decision on proposed new methodology and, if approved, will register the project.

Step 4: Project start-up & monitoring

Once the project has been registered with the CDM Executive Board, it can be implemented. While project implementation is underway, the project proponents are required to monitor and measure emissions emitted and reduced on an on-going basis. The monitoring component of a CDM project is an extremely important step and not one to be overlooked or taken lightly. It must be based on the parameters set-out in the Monitoring Plan established in the project design stage and approved by the OE. Project participants are required to maintain internal monitoring and tracking systems to demonstrate that they are achieving the emission reductions specified in the PDD. This includes collecting and archiving data for the duration of the project.

According to the Kyoto Protocol, GHG emissions may be monitored:

  • Directly using dedicated monitoring devices, and/or;
  • Indirectly using predictive methods such as models or conversion of fuel inputs.

Information from the monitoring procedures will need to be complete, comprehensive and based on established fact. Assumptions, measurements, calculations, models and methodologies must be well documented. Throughout the project, the project managers must collect data exactly as specified in the monitoring plan. Any changes to the monitoring plan will need to be approved by a validating Operational Entity once the project has started.

Step 5: Verification & certification

The verification process confirms the total number of CERs resulting from the CDM project during a specific period of time. At this stage, the project developer is responsible for finding a designated operational entity to carry out the verification. This should be a different OE than the one that initially validated the CDM project. It is the responsibility of the OE to verify that the data collected by the project developer is what was proposed in the monitoring plan. This may involve an on-site inspection or interviewing of appropriate personnel.

Once the quantity of GHG reductions from the project has been verified, the OE will issue a certification report that will include the following information:

  • The quantity of GHG reductions generated, and confirmation that they were real and measurable over the identified period of time;
  • Ownership of the GHG reductions; and
  • An indication that no further analysis is required.

The certification report is submitted to the CDM Executive Board by the OE and certifies in writing that the project has achieved the verified amount of GHG reductions. The certification report constitutes a request that the board issue CERs equal to the verified amount of GHG reductions.

Step 6: Issuance of CERs

Once the CDM Executive Board receives the verification and certification report from the OE, it will review it and may have additional questions to pose of the OE or CDM project proponents. If the CDM Executive Board believes no further review of the project is required, the registry administrator will issue the CERs into the CDM Executive Board's pending account. Credits are subsequently distributed according to the contracts negotiated by the project participants. The issuance of CERs will be considered final fifteen days after the date of receipt of the request for issuance. The administrator will hold back a share of the CERs for administrative expenses as well as an additional 2% for an adaptation fund to help less developed economies mitigate the impact of climate change in their economy.

Bibliography

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Kallbekken, S. and Torvanger, A. Can geological carbon storage be competitive? CICERO Working Paper 2004:05 May 2004. 12 pages.

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The Pembina Institute, A User's Guide to the Clean Development Mechanism (CDM), Canada, 2002.

Torvanger, A., Kallbekken, S, and Rypdal, K. Prerequisites for Geological Carbon Storage as a Climate Policy Option. CICERO Report 2004:04, 20 pages.

UNFCCC (4) (United Nations Framework Convention on Climate Change), Kyoto Protocol. FCCC/CP/1997/7/Add.1 18 March 1998.

UNFCCC (1) (United Nations Framework Convention on Climate Change), "Simplified modalities and procedures for small-scale CDM project activities" available at: http://unfccc.int/cdm/ssc.htm.

UNFCCC (2) (United Nations Framework Convention on Climate Change), "Appendix A - Simplified project design document for small-scale CDM project activities" available at: http://unfccc.int/cdm/ssc.htm

UNFCCC (3) (United Nations Framework Convention on Climate Change), "Appendix B - Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories" available at: http://unfccc.int/cdm/ssc.htm

UNFCC Subsidiary Body for Scientific and Technological Advice, Twenty-eigth session, Bonn, 4-13 June, 2008, "Synthesis of views on issues relevant to the consideration of carbon dioxide capture and storage in geological formations as clean development mechanism project activities" available at http://unfccc.int/resource/docs/2008/sbsta/eng/inf01.pdf

UNFCC Subsidiary Body for Scientific and Technological Advice, Twenty-ninth session, Poznan, 1-10 December, 2008, "Synthesis of views on technological, methodological, legal, policy and financial issues relevant to the consideration of carbon dioxide capture and storage in geological formations as project activities under the clean development mechanism" available at http://unfccc.int/resource/docs/2008/sbsta/eng/inf03.pdf

Websites

United Nations Framework Convention on Climate Change: www.unfccc.int

The Clean Development Mechanism: cdm.unfccc.int/index.html

Intergovernmental Panel on Climate Change: www.ipcc.ch

OECD : www.oecd.org

SinksWatch : www.sinkswatch.org

PEW Centre : www.pewclimate.org

Climate Ark: www.climateark.org

GHG Emission Reduction Trading: www.gert.org

Natsource : www.natsource.com

Environmental Finance : www.environmental-finance.com