 Government of
India interim approval criteria
Purpose
The purpose of the clean development mechanism
(CDM) is defined in Article 12 of the Kyoto Protocol to the United Nations Framework
Convention on Climate Change. The CDM has a two-fold purpose: (a) to assist developing
country Parties in achieving sustainable development, thereby contributing to the ultimate
objective of the Convention, and (b) to assist developed country Parties in achieving
compliance with part of their quantified emission limitation and reduction commitments
under Article 3. Each CDM project activity should meet the above two-fold purpose.
Eligibility
The project proposal should establish the following in order to qualify for consideration
as a CDM project activity:
Additionalities
 Emission Additionality: The project should
lead to real, measurable and long term GHG mitigation. The additional GHG reductions are
to be calculated with reference to a baseline.
Financial Additionality: The funding for
CDM project activity should not lead to diversion of official development assistance. The
project participants may demonstrate how this is being achieved.
Technological Additionality: The CDM
project activities should lead to transfer of environmentally safe and sound technologies
and know-how.
Sustainable development indicators
It is the prerogative of the host Party to confirm whether a clean development mechanism
project activity assists it in achieving sustainable development. The CDM should also be
oriented towards improving the quality of life of the very poor from the environmental
standpoint.
The following aspects should be considered while designing CDM project activities:
Social well-being: The CDM project activity
should lead to alleviation of poverty by generating additional employment, removal of
social disparities and contributing to provision of basic amenities to people leading to
improvement in their quality of life.
Economic well-being: The CDM project
activity should bring in additional investment consistent with the needs of the people.
Environmental well-being: This should
include a discussion of the impact of the project activity on resource sustainability and
resource degradation, if any, due to the proposed activity; biodiversity-friendliness;
impact on human health; reduction of levels of pollution in general;
Technological well-being: The CDM project
activity should lead to transfer of environmentally safe and sound technologies with a
priority to the renewables sector or energy efficiency projects that are comparable to
best practices in order to assist in upgradation of the technological base.
Baselines
The project proposal must clearly and transparently describe the methodology of
determination of the baseline. It should conform to following:
Baselines should be precise, transparent,
comparable and workable;
Should avoid overestimation;
The methodology for determination of
baseline should be homogeneous and reliable;
Potential errors should be indicated;
System boundaries of baselines should be
established;
Interval between updates of baselines
should be clearly described;
Role of externalities should be brought out
(social, economic and environmental);
Should include historic emission data-sets
wherever available;
Lifetime of project cycle should be clearly
mentioned;
The baseline should be on a project-by-project basis except for those categories that
qualify for simplified procedures. The project proposal should indicate the formulae used
for calculating GHG offsets in the project and baseline scenario. Leakage, if any, should
be described. For the purpose of Project Idea Notes (PIN), default values may be used with
justification. Determination of the base project which would have come up in the absence
of the proposed project should be clearly described in the project proposal.
Financial indicators
The project participants should bring out the following aspects:
Flow of additional investment
Cost effectiveness of energy saving
Internal Rate of Return (IRR) without
accounting for CERs
IRR with CERs
Liquidity, N.P.V., cost/benefit analysis,
cash flow etc., establishing that the project has good probability of eventually being
implemented
Agreements reached with the stakeholders,
if any, including power purchase agreements, Memoranda of Understanding, etc.
Inclusion of indicative costs related to
validation, approval, registration, monitoring and verification, certification, share of
proceeds
Funding available, financing agency and
also description of how financial closure seeks to be achieved
Technological feasibility
The proposal should include following elements:
The proposed technology/process
Product/technology/material supply chain
Technical complexities, if any
Preliminary designs, schematics for all
major equipment needed, design requirement, manufacturers name and details, capital cost
estimate
Technological reliability
Organizational and management plan for
implementation, including timetable, personnel requirements, staff training, project
engineering, CPM/PERT chart etc.
Risk analysis
The project proposal should clearly state risks associated with it including apportionment
of risks and liabilities; insurance and guarantees, if any.
Credentials
The credentials of the project participants must be clearly described.
Contact
Secretary
Government of India
Ministry of Environment & Forests
Climate Change Division
Paryavaran Bhawan, CGO Complex
Lodi Road, New Delhi - 110 003 India
E-Mail : secy at menf.delhi.nic.in
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