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PCF project cycle
Training Workshop : Project Formulation for the Clean Development Mechanism
Hanoi, Vietnam
September 30 – October 2, 2002
Preparation and review of the Project1. Project ideas reviewed by PCF 2. PCN prepared by project sponsor 3. Host country endorsement sought 4. Further work authorized by FMC &
Participants 5. PCF signals intention to purchase ERs
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Project Preparation
Preparation and review of the Project
Baseline Study and Monitoring Protocol (MP)
1. Baseline study and MP prepared 2. PCF quality control of results3. Documents for Validation
prepared by PCF and sponsor
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Baselines and Monitoring and VerificationProtocol
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
1. PCF contracts the validator and submits documents
2. Validator studies project design, baseline and MVP and consults with PCF and project participants
3. Validator issues a report and opinion
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
Project completion
3 months
2 months
2 m
onth
s3 months
1-3 years
Up
to 2
1 ye
ars
Validation Process
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
1. PCF prepares terms sheets and draft legal documents. 2. Pre-negotiations workshop for project participants
(optional)3. Negotiations completed and project agreement
initialed 4. Project participants achieve financial closure and
formal approval5. Signing of project agreements
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Negotiation of Project Agreements
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up1. At construction completion, verifier contracted by PCF2. Verifier checks that specifications of the MP are met (“initial
verification”)3. Project implementation starts4. Project entity monitors in accordance to the MP
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Construction and Start Up
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
1. Verifier periodic verification report2. PCF pays project sponsor for ERs certified 3. Certified ERs issued as per distribution
agreement4. Verification undertaken annually or as deemed
appropriate
Project completion
3 months
2 months
2 m
onth
s
3 months
Up
to 2
1 ye
ars
Verification and Certification
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Crediting period either• 10 years fixed or• 7 year renewable (maximum 21 years)
Project Completion
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic verification & certification
Construction and start up
Project completion
3 months
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
• Project Idea Note• Project Concept Note• Project Concept Document (or equivalent)
• Project Design Document • Baseline study and ER projections• Monitoring and Verification Plan
• Validation protocol and report
• Project Appraisal and related documentation• Term sheet• Emission Reduction Purchase Agreement• Host Country Agreement or equivalent
• Initial verification report
• Verification report• Supervision report
PCF Project Documentation
Project design: identification, preparation, review
Negotiations of purchase agreement
Validation Report and Opinion
Baseline Study, Monitoring Plan
PCF Project Cycle
Project Implementation and Initial Verification
Transfer ERs to Participants accounts
Periodic verification & certification of ERs
Production of ERs and monitoring
PCF payments for ERs to Project Entity
What is involved in PCN preparation?
• Field visits for identification and preparation• Due diligence on:
– environmental and social issues,– carbon asset, – status of project financing, – quality and experience of project sponsors and any financial
intermediaries
• Consultations with Government on the proposed carbon financed project (including relevant discussions needed to obtain a letter of endorsement), and related legal services review and support
The first step is to submit a PIN (template on website)
• Description of Project Proponent• Type of Project• Location of Project• Expected Schedule• Financing Sought• Technical Summary of Project• Expected Environmental Benefits