0703 Cogeneration CDM 2

Cogeneration Projects
within the CDM

Framework
Author: Thomas Esdaile-Bouquet
COGEN Europe
Email: Thomas.bouquet@cogen.org
T@W: Sustainable Energy Technology at Work

www.setatwork.eu
March 2007
Please note: While this guide provides some background information about the Clean
Development Mechanism, readers are expected to have prior knowledge of the CDM
framework. Should this not be the case, it is possible to acquire the necessary basics
through the material presented on the United Nations Framework Convention on Climate
Change’s Website, particularly its section devoted to the CDM.1
T@W: Sustainable Energy Technology at Work on the market generated by the EU Emission
Trade Scheme and the linked CDM and JI markets
© March 2007, COGEN Europe
T@W is supported by the European Commission under the Sixth RTD Framework
Programme Contract: TREN/05/FP6EN/S07.55796/020065
T@W Website: http://www.setatwork.eu
Legal notice: Neither the members of the T@W project nor the European Commission nor
any person acting on their behalf may be held responsible for the use to which information
contained in this publication may be put, nor for any errors that may appear despite careful
preparation and checking. The opinions expressed do not necessarily reflect the views of all
members of the T@W project, nor the European Commission.
Non-commercial reproduction is authorized, provided the source is acknowledged.
1
http://cdm.unfccc.int
Table of Contents
About T@W .............................................................................................................................................2
1 The Clean Development Mechanism: the Essential Facts ..................................................................3
1.1 The principle behind the CDM ......................................................................................................3
1.2 Types of Projects under the CDM..................................................................................................3
1.3 Parties involved in the CDM..........................................................................................................5
1.4 The price of CERs..........................................................................................................................6
1.5 CDM related costs..........................................................................................................................6
1.6 CDM related risks ..........................................................................................................................7
2 Cogeneration Projects and the CDM: a Nice Fit.................................................................................8
3 Overall Trends for Cogeneration Projects in the CDM.......................................................................9
4 Overview of the CDM project cycle for cogeneration projects ........................................................10
4.1 Screening and Planning a CDM Project.......................................................................................11
4.2 Preparing the Project Design Document (PDD) ..........................................................................12
4.3 Obtaining National Approval.......................................................................................................19
4.4 Validation and Registration .........................................................................................................19
4.5 Project Activity and Monitoring ..................................................................................................20
4.6 Verification and Certification ......................................................................................................20
4.7 Issuance of CERs .........................................................................................................................21
4.8 Approved CDM methodologies relevant to cogeneration projects ..............................................21
5 Country Profile – China ....................................................................................................................25
5.1 CDM in China..............................................................................................................................25
5.2 Potential for cogeneration projects in China................................................................................29
6 Country Profile – India......................................................................................................................32
6.1 CDM in India ...............................................................................................................................32
6.2 Potential for cogeneration projects in the CDM in India .............................................................36
7 Conclusion.........................................................................................................................................38
7.1 Political Uncertainty: Post-Kyoto Arrangements.........................................................................38
8 Glossary ...........................................................................................................................................39
Annex I – List of registered CDM cogeneration projects and cogeneration projects that have
requested registration (17/01/2007) in China....................................................................................41
Annex II – List of registered CDM cogeneration projects and cogeneration projects that have
requested registration (17/01/2007) in India .....................................................................................42
Annex III – List of registered CDM projects and projects that have requested registration
(17/01/2007) in Malaysia ..................................................................................................................45
Annex IV – List of Cabinet approved cogeneration projects in Thailand (as of 31/01/2007) ...............46
1
About T@W
The overall objective of the T@W project is to undertake thematic promotion of RES-e, RES heating
and cooling and Polygeneration (Sustainable Energy Technologies, SET) at emerging Emission
Trading Scheme markets in EU (EU ETS) and CDM markets in Asia. The T@W action aims to
exploit FP RTD results at these markets, thereby bringing SET to the market. Hence the short title:
Technology at Work - T@W.
The T@W project has the expected impact of paving the way for SET uptake on the EU ETS covered
companies and in the Asian CDM field and raising a general awareness of high standard SET/RTD
technologies, thereby facilitating European companies to comply with their CO2 obligations, and
providing markets for the SET in EU and Asia.
To summarise, the key aims of the T@W Project are to:
! Assist EU ETS companies to develop CO2 projects at their own installations

! Assist EU ETS companies to develop CDM projects in Asia
! Assist European SET suppliers in entering EU ETS and CDM markets
The T@W action consists of 5 work packages:
! WP1 T@W Co-ordination

! WP2 SET Promotion at EU ETS market
! WP3 SET Promotion at CDM markets
! WP4 Dissemination
! WP5 Evaluation and Strategy
The T@W project is coordinated by Energy Consulting Network (ECNet), Denmark and the partners
are: Zentrum für Rationelle Energieanwendung und Umwelt (ZREU), Germany; KanEnergi Sweden
AB; CPL Press, UK; Sofia Energy Centre (SEC), Bulgaria; ETA - Renewable Energies, Italy; EC
Baltic Renewable Energy Centre (EC BREC), Poland; Institute of Mechanical Engineering (IDMEC-
IST), Portugal; Energy Centre Bratislava (ECB), Slovak Republic; Ente Vasco de la Energía (EVE),
Spain; COGEN Europe; European Biomass Industry Association (EUBIA); European Small
Hydropower Association (ESHA); Guangzhou Institute of Energy Conservation, Chinese Academy of
Science (GIEC); Zhejiang Energy Research Institute of China (ZERI); The Energy and Resource
Institute (TERI), India; Pusat Tenaga Malaysia (PTM); Centre for Energy Environment Resource
Development (CEERD), Thailand
Project acronym: T@W

Project full title: Sustainable Energy Technology at Work on the market generated by the EU
Emission Trade Scheme and the linked CDM and JI markets
Contract no: TREN/05/FP6EN/S07.55796/020065
Start date of contract: 1 April 2006
Duration: 24 Months
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1 The Clean Development Mechanism: the Essential Facts
1.1 The principle behind the CDM
The Clean Development Mechanism (CDM) enables countries that are signatories of the Kyoto
Protocol to meet part of their GHG reduction commitment through projects located in another host
country. Participation is on a voluntary basis and more and more Kyoto signatories have put in place
the necessary administrative structures.
In the specific case of CDM, countries belonging to the Annex I of the Kyoto protocol can fund and
help implement projects in non-Annex I countries. Non-Annex I countries are typically developing
countries.
Successful CDM projects generate Certified Emission Reduction credits (CERs), each CER
representing a quantity of avoided GHG emissions in the non-Annex I host country, which are then
transferred to the Annex I country.
1.2 Types of Projects under the CDM
Any project that can demonstrate that it achieves GHG emission reductions is eligible under the CDM.
CDM projects are categorised and one can distinguish 3 types of CDM projects:
! Renewable Energy Projects (Type I)

! Energy Efficiency Improvement Projects (Type II)
! Other Projects (Type III)
In most cases, cogeneration projects are classified as Type I projects. Type I projects are further
categorised, a distinction being made between projects depending on the type of energy generated. The
4 sub-categories of Type I projects are:
! I-A Electricity generation by the user

! I-B Mechanical energy for the user
! I-C Thermal energy for the user
! I-D Renewable electricity generation for a grid
In some cases however, cogeneration projects will be classified as Type II or Type III. Type II projects
cover both supply side and demand side energy efficiency improvements and fuel-switching, while
Type II projects could be methane recovery projects, possibly linked to a cogeneration plant.
Because the administrative costs for CDM projects can outweigh the financial gain derived from CER
generation, small-scale projects form a special category of projects and have simplified procedures to
follow2.
2
UNFCCC Webpage on Small scale CDM project activities: http://cdm.unfccc.int/Projects/pac/pac_ssc.html
3
Eligibility for Small scale CDM project status
Small-scale CDM projects are projects that apply to one of the following three definitions:
- Type I project activities: renewable energy project activities with a maximum output capacity
equivalent to up to 15 megawatts.
- Type II project activities: energy efficiency improvement project activities, which reduce energy
consumption, on the supply and/or demand side, by up to the equivalent of 15 gigawatt hours per year.
Graph: Illustration of eligibility condition for Type II project activities (prior to revision)
GWh
Business as usual
Must be
< 15 GWh Project
Project start
Time
- Type III project activities: other project activities that both reduce anthropogenic emissions by
sources and directly emit less than 15 kilotonnes of carbon dioxide equivalent annually.
4
Graph: Illustration of eligibility condition for Type III project activities (prior to revision)
kt CO2
Business as usual
Project
Must be
< 15 kt CO2
Project start
Time
Please note:
The CDM EB has revised the definition of small-scale project activities by increasing the energy
saving threshold for small-scale energy efficiency projects (type II projects) from 15GWh/year to
60GWh/year.
For type III small-scale projects, the definition has been modified to avoid large-scale projects with
few direct emissions to qualify as small-scale: the former definition applied to projects with less than
15ktCO2e/year total direct emissions whereas the new definition focuses on the amount of emission
reduction, which is now capped at 60ktCO2e/year.
1.3 Parties involved in the CDM
The table below gives an overview of the various parties involved in the CDM.
Global level ! Conferences of the Parties to the Kyoto ! Designated Operational

protocol (COP) Entities (DOEs)
! CDM Executive Board (CDM EB)
National level ! Designated National Authority (DNA)
Project level ! Annex I Party
! Non-Annex I Party
! Investors (CER buyers)
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The CDM Executive Board (CDM EB) is responsible for the management of the CDM. It plays a very
important role as it is responsible for:
! Accrediting the Designated Operational Entities (DOE)

! Approving the methodologies for GHG emission reduction calculations
! Keeping the CDM project Registry
! Issuing the Certified Emission Reductions.
In addition, the CDM EB regularly publishes technical reports.
The Designated Operational Entities (DOE) are independent organisations, accredited by the CDM
EB, that validate CDM project proposals before they are submitted to the CDM EB. The DOE will
also verify the emissions reductions achieved by the project before the CDM EB issues the
corresponding CERs.
A list of accredited DOEs can be found on the CDM part of the UNFCCC’s Website.3
Designated National Authorities (DNAs) are responsible for implementing the CDM at the national
level. In many cases the DNA is an integral part of the natural resources or environment ministry.
DNAs play an important role in non-Annex I countries as they set up the specific procedures for CDM
activities in the country.
A project developer wishing to register his project as a CDM project must first get approval from his
DNA before applying for registration with the CDM EB. In addition both the host country (non-
Annex I) DNA and the Annex I DNA have to give their approval before any credits can be issued.
DNAs are listed on the UNFCCC’s Website.
1.4 The price of CERs
Prices of CERs generated by CDM projects are influenced by several factors, the main of which are:
! Price of European allowances traded under the European Emissions Trading Scheme
! Demand from other Annex I countries (e.g. Japan)
! Delivery stage of the CER credits (e.g. registered project with delivery guarantee, without
guarantee, CER futures from project not yet registered…).
The price range for CERs has hovered around 7-14 EUR, with variations in prices depending on the
host countries. China for example has set a floor price for CERs issued for projects on its territory at 8
USD per CER.
1.5 CDM related costs
Projects willing to register as CDM projects and generate CERs face additional costs compared to
similar non-CDM projects.
3
http://cdm.unfccc.int
6
Each step of the CDM procedure involves costs. The total up-front costs to prepare, register and
validate a CDM project are in the 50,000-100,000 EUR range. This figure is likely to drop as more
projects become eligible.
Besides the up-front costs, a small fraction of the value of the CERs generated will be used to cover
CER sale costs as well as the monitoring and verification of the project’s emissions reductions. These
“operational costs” would typically amount to a few percents of the value of the generated CERs.
1.6 CDM related risks
CDM projects have a complex risk profile. It is possible to distinguish between several different types
of risks for CDM projects, namely:
! Registration risk
! Performance risk
! Counterparty risk
! Country risk
! Market risk
Registration risks derive from the possibility that the DOE does not validate the project and that it is
not registered by the CDM EB. This can stem from
1. the non approval of a new methodology,
2. the unsuccessful validation of a methodology for calculating emissions reduction,
3. the non-approval by the host country,
4. a request for review by the CDM EB at either the registration or CER issuance step.
Performance risk is similar to that of any projects, although in the case of cogeneration projects
technological risk is lower as cogeneration is a proven mature technology.
Counterparty risk resides in the fact that CERs are usually sold in the form of forward contracts. There
is always the risk that one of the parties defaults on its contractual obligation.
Country risk reflects the importance of host country regulations. CER ownership rights may differ
from country to country.
Market risk is directly linked to the fluctuations in the price of CERs. This creates uneven flows of
CER-derived cash flows and can endanger the viability of CDM projects, should they rely heavily on
CER revenue streams.
When looking at the issues facing the parties involved in project financing, it is apparent that for
investors the main problem with CDM projects is their financial uncertainty. The risks related to the
CDM’s procedures, their costs, and the CER delivery risk still put off many financing organisations
from investing in CDM projects. As a result, project developers are faced with limited availability of
project funding, a problem the CDM was supposed to solve. It should be noted however that with
additional know how being added on an on-going basis financing is less problematic than a few
months or indeed years ago.
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2 Cogeneration Projects and the CDM: a Nice Fit
Cogeneration is a cost-effective way of reducing CO2 emissions from power generation. By using both
the heat and electricity produced in the single generation process, cogeneration installations reach very
high overall efficiencies and effectively lower the need for grid electricity or, put differently, avoid
investments in central power generation and electricity transmission and distribution infrastructure.
The benefits of cogeneration are numerous: not only does this technology reduce CO2 emissions but it
is suitable to many types of fuel and can run on biomass, making it very suitable for applications in
rural backgrounds. It should be noted that cogeneration using biomass as a fuel has very positive
impacts on emission reductions and hence offers very positive perspective in the CDM framework.
At the same time, cogeneration is not size-specific and can be applied in large-scale industrial sites as
well as in small district heating or manufacturing installations. Large-scale cogeneration installations
can generate substantial amounts of CERs, thus allowing industrial organisations to invest in on-site,
reliable cogeneration technology instead of relying on outside supply of energy.
Competitiveness and reliability of cogeneration as a technology need no longer be proved, as

cogeneration is considered to be a mature technology. The competitiveness of cogeneration as a
technology is particularly clear when the fuels powering the installation are locally sourced at low
cost. In addition, cogeneration installations burning agricultural residues can be seen as solving a
waste issue, as is recognised in some methodologies that take into account the avoided methane
emissions from decomposing biomass when used in cogeneration installations.
The reliability of cogeneration as a technological solution is backed by thousands of MW of

cogeneration capacity operating around the world, with most installations having operational lifetime
well beyond 20 years. This is in stark contrast with other technologies used in the CDM and is a strong
incentive to invest in cogeneration technology as the benefits will extend far beyond the CER crediting
period.
While technology providers have so far mostly been European or North American companies,
technological capabilities in countries across Asia and Latin America have augmented steadily over
the years and with the creation of the CDM market cogeneration technology know-how can also be
found in these regions, a very important point given the need for permanent operational management
of the installations and periodical maintenance activities.
8
3 Overall Trends for Cogeneration Projects in the CDM
As of the 15 January 2007 out of a total of 489 registered CDM projects, an estimated 70 were
cogeneration projects.
Most of the CDM cogeneration projects are located in India and Brazil and rely on locally-sourced risk
husk, bagasse or biomass residues as primary energy inputs. Malaysia has also a few cogeneration
projects that are registered as CDM projects. These typically rely on palm oil.
While several other countries have approved cogeneration projects for the CDM, China has remained
a country where cogeneration projects are rare, with only one registered CDM project so far, in a
cement factory.
Initially, the majority of cogeneration projects registered were biomass-fired applications in small food
manufacturing. Particularly the sugar industry was strongly represented. Recently the types of projects
registering have been diversifying, and a number of other biomass cogeneration projects have been
registered.
From April 2006 industrial waste-heat recycling projects have been registered as well. These represent
a different type of cogeneration projects, but they can deliver many of the same benefits. All of these
are in India, except the system at the Taishan Cement Works in China.
These projects are generally larger and located at heavy industrial sites, rather than small
manufacturing facilities. It has taken longer for the first of these projects to register, because they are
larger and drafting the PDD can be complicated, but they represent a huge potential for energy
efficiency improvement in large industry, so the emission reductions obtained through these is likely
to overtake those from conventional biomass cogeneration in the near future.
9
4 Overview of the CDM project cycle for cogeneration projects
The figure below outlines the CDM project cycle, showing the seven stages, and the participants
involved and documents produced at each stage, where “PP” stands for project partners. The CDM
project cycle is identical for all projects under the CDM, although in its fine details the cycle is
simplified for small-scale projects.
Figure 1 The CDM project Cycle
Project Stage Party Output
1. Screening and PP
Measurable emmissions
Planning CDM Project
savings & additionality
2. Preparing the Project PP Project Design Baseline & monitoring

Design Document (PDD) Document methodologies
3. National Approval of DNA Letter of Approval

Host-country approval
Involved Parties PP
4. Validation and DOE 1 Validation Report

Validation of proposed
Registration CDM-EB methodologies
5. CDM Project Activity PP Monitoring Report Monitor emissions from

and Monitoring the project
6. Verification and DOE 2 Verification and Verify emissions

Certification Cerification Reports reductions
7. Issuance of CERs CDM-EB CERs
Source: Wade, 2006; Based on IGES, CDM in Charts, 2006; and DTI, A Climate Change Projects Office Guide,
2004
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4.1 Screening and Planning a CDM Project
Project developers interested in registering their project for the CDM must first check that they meet
the criteria of the CDM. They must then determine whether the benefits of registering as a CDM
project outweigh the associated costs.
Preliminary screening based on the

STEP0
starting date of the project activity
PASS
Identification of alternatives to the project activity

STEP1
consistent with current laws and regulations
PASS
Investment Barrier
STEP2 STEP3
analysis analysis
PASS
STEP4 Common practice
PASS
STEP5 Impact of CDM registration
PASS
PROJECT ACTIVITY IS ADDITIONAL
MINISTRY OF THE ENVIRONMENT JAPAN AND GLOBAL

ENVIRONMENT CENTER FOUNDATION, CDM MANUAL FOR
PROJECT DEVELOPERS AND POLICY MAKERS, 2005.
4.1.1 Eligibility of the project
Project eligibility for CDM is depend on the project meeting the three global criteria (voluntary
participation, real and measurable emissions savings, additionality), as well as the project being in line
with the host-country’s criteria for sustainable development.
Of greatest importance is the additionality of the GHG emissions savings over the baseline scenario
alternatives, as derived from the methodology.
11
Additionality is a necessary pre-condition for any project to qualify as a CDM project and it must be
demonstrated4. A simple definition of additionality is that a future CDM project’s additionality is
proven when the project developer can demonstrate that the CER revenue stream was necessary for
the project to be implemented. In other words additionality implies that the project was only able to
overcome the barriers thanks to the CERs it will generate, and not, for example, thanks to government
subsidies.
It must be noted that it is in some case difficult to show that a project faces particular barriers for
implementation, and that the removal of these particular barriers would make the project viable, and
that the CDM would remove these barriers.
For cogeneration projects a good element towards meeting the additionality criteria is the absence of
cogeneration in the baseline scenario.
4.1.2 The benefit of registration as a CDM project
By definition, if a project meets the eligibility criteria the project would not be economically viable (or
financially viable) without the stream of CERs that will be issued after the start of the project activity.
CDM revenue through CER must be greater than the costs incurred in the registration process (and
subsequent steps).
Because CDM-related costs are proportionally lower for larger projects with a greater flow of CERs,
initially only large projects with substantial emission reductions were considered to be economically
attractive. The CDM EB has recognised this and improved the economics of small-scale projects by
simplifying the procedures and lowering costs while allowing for the bundling of similar small-scale
projects, thereby reducing costs even further.
It is important to mention that due to the risk of failure associated with registration, but also CER
delivery, some borderline projects may prefer not to go through the registration process. This situation
however is becoming less likely as the uncertainties surrounding the registration process have been
lifted. Because cogeneration technology is well-proven, the level of emission reductions is relatively
safe over time.
4.2 Preparing the Project Design Document (PDD)
The PDD is the key document for a project’s CDM registration application.
The PDD is the standardised application format for CDM projects. The form can be downloaded from
the CDM Executive Board (CDM EB)’s Webpage. The PDD is important in that it gives a description
of the project activity, it indicates which the baseline methodology will be used and demonstrates the
additionality of the project. The PDD also indicates which monitoring methodology will be used and
highlights the project’s contribution to sustainable development.
4
The UNFCCC has prepared tools to help project developers assess the additionality of their project. These can
be downloaded at http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html
12
A CDM Project Design Document consists of 7 sections and is available from the UNFCCC website5.
The baseline methodologies applicable for cogeneration projects are presented further in this
document.
4.2.1 Language requirement
The PDD must be written in English for the CDM-EB. In addition, some countries also require a
translation in the national language for national approval.
A. Description of the Project Activity

B. Application of the Baseline Methodology
C. Crediting Period
D. Application of the Monitoring Methodology and Plan
E. Estimation of the GHG Emissions by Sources
F. Environmental Impacts
G. Stakeholder Comments
UNFCCC CDM, Project Design Document Form
A. Description of the project activity
The Project Design Document starts with a description of the project, covering its location, its aims,
the local circumstances, the technology used and the type of project activity.
Can the project be registered without an Annex I party involved?
Some host countries will only approve of a project if it has secured the involvement of an Annex I
party. Such is the case in Malaysia. However, India for example does not impose such a restriction.
What should the technology description include?
It is important that the technology description should contrast the prevalent local practice or the
current technology on-site with the best technology available, in this case cogeneration. This helps
establish the additionality of the project later on. For biomass cogeneration, the standard technology is
a Rankine Cycle Steam Turbine, which can be compared to a boiler for combustion of biomass for
heat only, combined with grid electricity.
B. Baselines and additionality
The baseline methodology explains how the project activity will be compared with baseline scenarios
“that reasonably represent the anthropogenic emissions by sources of greenhouse gases that would
occur in the absence of the proposed project activity”6. The baseline methodology describes how to
5
http://cdm.unfccc.int/Reference/Documents/cdmpdd/English/CDM_PDD.pdf
6
UNFCCC, CDM Modalities and Procedures, paragraph 44.
13
establish this baseline, against which the GHG emission savings of the CDM project can be measured.
This is the foundation of establishing the additionality of the CDM project, and is therefore essential
for project approval.
The baseline methodology should be project specific, cover all significant emissions within the project
boundary that are in control of the project participants and can reasonably be attributed to the project.
These should be adjusted for leakage – anthropogenic emissions of GHG outside the project boundary
that can be reasonable attributed to the CDM project activity. The baseline should reflect local
standards and policies, to give a reasonable business-as-usual case. The methodology and data used
should be transparent, and specified in the PDD.
The CDM EB has approved standard baseline methodologies for various types of projects.
These can be used directly and applied to comparable projects. Alternatively, a project developer can
propose a new methodology, which will then need to be approved by the CDM EB.
Baseline methodologies generally take one of three approaches:
! Using actual or historical GHG emissions (i.e. by extrapolation)

! Using the emissions data of a technology that represents an economically attractive course of
action (e.g. Cost Benefit Analysis)
! Using the emissions data from similar projects undertaken in the previous 5 years, in similar
social, economic, environmental and economic circumstances.
A number of baseline methodologies have been proposed for cogeneration projects, so generally it
should be possible to find a methodology applicable to a new cogeneration project.
Consolidated methodologies are general versions of project-specific methodologies, so they are easy
to replicate. Approved methodologies are project-specific, but this can be an advantage if used for
projects with similar circumstances. Each baseline methodology outlines the criteria for its application.
The additionality of CDM projects is established in comparison with the baseline scenarios. Firstly,
the PDD should show that the project activity is not one of the baseline options. This is the case if the
project is not the most economically attractive option, it is not common practice, it is not economically
viable without CDM registration, or faces other barriers. Secondly, additionality requires that the
estimated GHG emissions of the project activity are lower than any of the baseline cases. The
UNFCCC has developed the ‘Tool for Demonstrating Additionality’, which is available on the
UNFCCC CDM website7.
The drawbacks of presenting a new methodology
Drafting, submitting and registering a new methodology is a time and money intensive process. Hence
in most cases it makes more sense to use an existing approved methodology. Not only does this limit
methodology registration risk (in the past the CDM EB has been very selective when registering
methodologies), but finding a DOE to validate the project PDD can be easier.
7
http://cdm.unfccc.int/methodologies/PAmethodologies/AdditionalityTools/Additionality_tool.pdf
14
However, if no suitable baseline methodology exists, a new methodology will have to be prepared and
registered.
More information on how to do this can be found in the CDM User Manual.
Potential for new methodologies:
EMISSION REDUCTIONS FROM ON-SITE GENERATION
One of the main advantages of cogeneration and other on-site generation is the avoidance of losses in the
electricity network. However, most approved methodologies for cogeneration projects assume that this is
negligible, and no emission reductions are credited for this. It would be possible, though, to develop a
methodology that includes the emission reductions resulting from avoided network losses due to on-site
generation of electricity. The calculation of emission reductions can be based on the total amount of grid
electricity used, the average T&D losses of the local electricity network, and the average CO2 emission factor of
the grid electricity, as shown in the example below.
Calculating the CO2 emission reductions from avoided T&D losses
This simplified example considers the CO2 emission reductions from a hypothetical on-site generation project at
an industrial facility in India. If we assume the facility currently uses 40
GWh/yr of grid electricity, local network losses are 20% and the average emission factor of the supplied electricity
is 600t CO2/GWh, then the resulting emission reductions from on-site generation of the same amount of electricity
are: 40 GWh/yr * 0.20 * 600 t CO2/GWh = 4800 t CO2/yr
The example shows that the emission reductions from avoided T&D losses are relatively small, unless the total
electricity consumption and gird losses are large. Emission reductions through on-site generation are therefore
maybe not attractive as a stand-alone methodology, but it can form an important part of other methodologies for
on-site generation projects. The incorporation of T&D losses in other methodologies would recognise one of the
key benefits of on-site generation, and the additional emission reductions could improve the economic viability of
decentralised energy projects.
COGENERATION REPLACING CCGT
Cogeneration projects currently registered for the CDM have particularly focussed on biomass cogeneration, so
that fossil-fuel cogeneration has been very much neglected. There is one methodology for natural-gas based
cogeneration (AM0014), but this is a very specific case, and the only relevant project in Chile has not been
submitted to the CDM-EB yet. The potential for emission reductions from fossil-fuel cogeneration projects is
significant, but for the number of applications to rise a general methodology for fossil-fuel cogeneration projects is
required.
A methodology for fossil-fuel based cogeneration can be based on methodology AM0014, but it would also make
sense to develop a methodology for cogeneration replacing CCGT, as there is already a methodology for
conversions from single cycle to combined cycle power generation (ACM0007). The upgrade from CCGT to
cogeneration is a similar improvement of efficiency of the generation system, so that the new methodology could
be based on the existing methodology.
Which approved baseline methodology is most appropriate for cogeneration projects?
Not all cogeneration projects have relied on the same methodology. In fact, as long as the cogeneration
project satisfies the methodology’s application criteria, the methodology is applicable.
15
Cogeneration project developers however have an incentive to use methodologies that have already
been applied with success to similar cogeneration projects, even if the project was located in another
country. In such a case the only important modifications that will have to be made concern the data on
the host country’s electricity sector (e.g. different fuel mix).
Demonstrating additionality
The UNFCCC has developed a ‘Tool for Demonstrating Additionality’.
How are project alternative scenarios identified?
The UNFCCC Tool for Demonstrating Additionality indicates that three alternative scenarios are to be
considered in the baseline:
! the same project outside the CDM;

! other projects that deliver the same energy outputs and services; and
! continuation of the current situation.
Because a cogeneration plant produces both heat and electricity, the alternative scenarios must indicate
how the heat and electricity are normally generated. It should be noted that electricity can be either
taken from the public grid or generated on-site (e.g. with a diesel generator).
Alternatives must comply with existing legislation.
What existing laws and regulations should be considered for the baseline?
The UNEP’s CDM User Guide distinguishes between 4 types of law and regulations that have to be
considered in the baseline methodology8:
! Type E+: legislation that gives competitive advantages to more GHG-intensive practices
! Type E-: legislation that gives competitive advantages to less GHG-intensive practices
! Type L-: sectoral mandatory regulations that internalise environmental externalities and
incidentally reduce GHG emission
! Type L+: sectoral mandatory regulations that internalise environmental externalities, and
prevent implementation of less GHG-intensive technologies
How does one identify barriers to the project activity?
The CDM project activity must face barriers to meet the additionality requirement of the CDM. There
are three steps in assessing these barriers9:
1. Investment analysis: the project without a stream of CERs is not a financially attractive option.
2. Barrier analysis: the project cannot secure investment, infrastructure or the local skill base is
insufficient, or the project is ‘the first of its kind’.
3. Common practice analysis: similar projects are not already occurring in the area.
8
UNEP Energy and Environment Group, The CDM – A User’s Guide, 2003.
9
UNFCCC, Tool for the demonstration and assessment of additionality (version 2), 2005.
16
Investment analysis provides the strongest case for additionality. For cogeneration projects the fact
that there is no previous expertise with such projects in the country or sector can also be important.
However, this argument is fast loosing steam as more and more cogeneration projects are being
implemented and cogeneration looses its “technology transfer” qualification. On the other hand
cogeneration projects are often still a marginal solution; hence the common practice analysis is still a
potent tool to demonstrate additionality, in conjunction with other arguments.
How can be shown that the project removes these barriers?
The final step in proving additionality is showing that the benefits of the CDM remove the barriers
identified. The primary benefit is the CER revenue, but also the opportunity to attract new players able
to provide funding or technical expertise, and reduced investment risks. Cogeneration projects are
often cost-effective, making additionality difficult to prove. In such cases additionality assessment can
focus on the up-front capital required, which is often unavailable to small manufacturers. Projects can
sometimes not achieve the required rate of return to pay back commercial loans, unless CER revenue
is included. Baseline methodology AM0007 proves additionality by showing that biomass is not the
cheapest available fuel for cogeneration.
The definition of the project boundaries
The project boundary is defined so that it covers all emissions that can reasonably be considered direct
result of the project activities. Emissions not directly resulting from the project are outside the
boundary. For cogeneration projects emissions within the boundary include those from the generation
process and heat and electricity distribution.
What is leakage?
Leakage is defined as “the net change of anthropogenic emissions by sources of GHG, which occurs
outside the project boundary, and which is measurable and attributable to the CDM project activity.”
In most cases, this refers to imports and exports of fuels. For biomass-fired cogeneration projects, the
transport of biomass is normally the main type of leakage, assuming that the transport vehicles run on
fossil fuel.
C. Crediting period
Project developers are faced with a choice between two options: either they opt for a fixed one 10-year
crediting period or they can alternatively opt for a 7-year crediting period which can be renewed twice.
The choice will be dictated by the expected timing of the delivery of emissions savings (some projects
have a short operational lifespan, although this is rarely the case for cogeneration projects). In
addition, the choice can be influenced by the level of risk aversion of the parties involved. The aim is
to optimise CER revenue streams.
Cogeneration projects aiming for a renewal of their 7-year crediting period will have to have the
baseline methodology and alternative scenarios re-validated by a DOE, in order for the methodology
to account for evolutions in the host’s energy sector and changes in technologies.
17
D. Monitoring methodologies
Monitoring methodologies describe how GHG emissions from the project activity will be measured
during implementation and operation of the project. Monitoring methodologies are part of baseline
methodologies, so that the choice of baseline methodology also determines the monitoring
methodology. They are approved by the CDM EB in the same way as baseline methodologies are.
New monitoring methodologies can also be submitted for approval.
Monitoring methodologies for energy generation projects generally require measuring the fuel used for
electricity and heat generation from the project activity, as well as the electricity and heat output of the
process. These then serve to calculate the emissions reductions from the project activities and the
baseline alternatives.
Monitoring of a CDM project requires the project developer to gather and file (for 2 years after the end
of the crediting period) of three kinds of data:
! estimate or measurement of GHG emissions from the project activity (based on the
measurement of electricity and heat output of the project activity);
! calculation of emissions from the baseline; and
! identification of emissions outside the project boundary (leakage).
E. Estimation of the GHG Emissions by Source
In the PDD, the project developer must give an initial estimate of the GHG emissions by source for the
project scenario and baseline alternatives. This enables the calculation of the expected emissions
reductions from the project, based on the formulas described in the baseline methodology. For
cogeneration projects, baseline emissions can be calculated from the heat and electricity output of the
project, and the GHG emission factor of the baseline technologies used to generate these. Different
baseline alternatives can therefore have different total GHG emissions.
For energy generation, GHG emissions from the project activities are normally calculated on a fuel-
consumption basis (this is also true for cogeneration projects, with operational conditions and
efficiencies coming into play), while baseline emissions are based on the electricity and heat output,
and the alternative processes through which these would be generated.
By comparing the GHG emission in the baseline scenario(s) and the project scenario, one gets the
GHG emission saving from the project activity.
F. Environmental Impacts
The PDD requires the project developer to indicate the environmental impacts the project activity
might have, other than GHG emissions. Only those impacts deemed significant will have to be
detailed. The most straightforward way of doing this is by conducting an Environmental Impact
Assessment.
Many registered CDM projects have carried out Environmental Impact Assessments and these can be
used as useful sources of information. It should be noted that such assessments should be adapted to be
in line with the host country’s regulations.
18
Although the impacts on soils and biodiversity from cogeneration projects are not substantial, these
points nevertheless also have to be covered by the Environmental Impact Assessment study, as this
document incorporates all impacts, both negative and positive.
G. Stakeholder Consultation
It is mandatory to hold meetings, record the involvement and include the results of consultations with
the local communities and stakeholders in the PDD, under the form of a consultation report. The
project developer must take into consideration the inputs from the consultations and if need be must
amend his project proposal to address any concerns raised.
The consultation phase takes place throughout the initial project scoping and development stage. The
exact requirements for the stakeholder consultations vary between the various CDM host countries and
it is therefore advised to contact the host country’s DNA before launching the stakeholder consultation
process.
4.3 Obtaining National Approval
Once the PDD is ready it must be submitted to the host country’s DNA for approval. Usually the PDD
has to be accompanied by an application form, while the DNA sometimes requires additional
information to be submitted.
The DNA will check if the project complies with all local procedures and regulation. This process is
not ruled by international accords and is left up to the host countries. Therefore, the approval process
can take more or less time, depending on the host country the project is located in. However, in most
cases the process will take about 2 to 3 months, provided no requests for additional information are
made.
Because there is always the possibility that the host country will not grant approval, it is important to
thoroughly check the DNA’s requirements, besides complying with all host-country laws and
regulations. Many countries have indicated priority areas for CDM projects, with cogeneration
sometimes mentioned as one of these. This should be emphasised in the PDD. Support and
involvement of local organisations also bolsters the project proposal.
4.4 Validation and Registration
After the project is approved by the host-country DNA, the PDD and letter of approval from the host
country are submitted to a DOE, which will validate the PDD and the methodologies proposed.
Not all DOEs are accredited to validate all methodologies, so one must check before hand whether the
DOE pre-selected can perform the validation process. However, all DOEs are validated for Type-I
activities.
Note that the project developers bear the costs of the validation process and may wish to compare not
only the track record of a DOE in a given country or for a given type of project but also their fees with
that of other DOEs.
19
The DOE will evaluate whether the project proponent:
1) has calculated the baseline in a conservative and transparent manner and made a reasonable
estimate of the volume of emissions reductions; and
2) convincingly demonstrated that the project is additional. There is a risk that the project is not
validated if the baseline calculations are inappropriate or inaccurate, or if the project is not
deemed to be additional.
The DOE assesses the PDD, checks whether it complies with the CDM requirements, and validates the
baseline scenarios, additionality, and emission reductions formulas of the PDD.
The DOE then writes a validation report, which it must make available for 30 days for public
consultation, and records comments. The time of the validation period depends on the DOE, but
generally not less than two months should be reserved for it, as the validation report must be publicly
available for at least 30 days.
Once validated, the DOE will send the PDD, the letter of approval and its Validation Report to the
CDM EB for registration. Project registration takes 8 weeks. If no objections from the CDM-EB have
been made within that period, the project is officially registered. For small-scale projects this period is
reduced to 4 weeks.
4.5 Project Activity and Monitoring
The start of the project activity does not have to coincide with the start of the crediting period and can
even come before the project registers as a CDM project. However, this raises the risk of failing to
meet the CDM eligibility criteria.
Projects that have been started between 1 January 2000 and 18 November 2004 could request
retroactive credits, if they submitted a new methodology or requested validation with a DOE before 31
December 2005, and were registered by the CDM-EB no later than 31 December 2006. Projects that
have not requested for validation yet are not eligible for retroactive credits.
Once the project has been registered as a CDM project and has entered the crediting period, the
emissions reductions have to be monitored and the information collected (as defined in the
methodology) in the Monitoring Report, which must be kept in electronic format for two years after
the end of the crediting period.
4.6 Verification and Certification
Once the crediting period has elapsed, the project participants submit the Monitoring report to a DOE
for verification of the achieved emission savings. The DOE produces Verification and Certification
Reports, which it sends to the CDM EB with a request for issuing the CERs.
The DOE that validated the PDD cannot also verify the project emission reductions (except for small-
scale project activities), hence another DOE accredited for the chosen methodology must be chosen.
The DOE prepares its verification report based on the monitoring report.
20
The DOE checks if the submitted information meets the requirements of the monitoring methodology
and verifies the monitoring results to check that the methodology has been applied correctly, and then
determines the GHG emission reductions achieved by the project activity.
If necessary, the DOE can conduct site-visits or request additional information. It can also recommend
changes to the monitoring methodology for future applications. All information is included in the
verification report, which will be made publicly available.
Based on the verification report, the DOE certifies the amount of CERs. CERs are issued if no
requests for review are made within 15 days.
The time required for the verification and certification process depends on the DOE, as there are no
specific guidelines or time limits.
Please note: a document providing guidance on Validation and Verification can be downloaded from
the website http://www.vvmanual.info.
4.7 Issuance of CERs
CERs are issued each time GHG emissions reductions are verified and certified. The project developer
can choose when and how often to have this done. Clearly, more frequent verification increases the
verification costs, but it ensures a steady issuance and revenue from CERs. A single verification is
cheaper, but also reduces the occasions CERs are issued and can be sold. The choice depends therefore
on the cash flow of the project, and on the CER purchasing agreement with the buyer.
The regulations and laws of the host country determine the ownership arrangements.
CERs are normally issued to the project proponents, but the national government can claim national
ownership (as is the case in China). If the project proponents receive the CERs, their legal ownership
is determined by the contractual arrangements between the project proponent, investors, and CER
buyers.
4.8 Approved CDM methodologies relevant to cogeneration projects
The nomenclature of CDM methodologies distinguishes between several types of methodologies:
AM: Approved methodologies for CDM projects

AR-AM: Approved afforestation and reforestation methodologies (not applicable to
cogeneration projects)
ACM: Approved consolidated methodologies
AMS: Approved small-scale methodologies
The table below outlines baseline methodologies used for cogeneration projects. Please note that
methodologies are being revised on an on-going basis, while some methodologies are replaced by
other methodologies (e.g. ACM0006 replaces both AM0004 and AM0015).
21
Table 1 Methodologies applicable to cogeneration projects (as of 11/01/2007)
Methodology Methodology Title Comments

Number
AM007 Analysis of the least-cost fuel option for Refurbishment only
seasonally-operating biomass
cogeneration plants
AM0014 Natural gas-based package cogeneration Cogeneration systems must be owned by
(Version 2) third party
AM0024 Methodology for greenhouse gas
reductions through waste heat recovery
and utilization for power generation at
cement plants
AM0029 Methodology for Grid Connected Only savings on the electricity production
Electricity generation Plants using side appear to be taken into account.
natural Gas Cogeneration does not seem to be
advantaged by this methodology
AM0032 Methodology for waste gas or waste
heat based cogeneration systems
AM0036 Fuel switch from fossil fuels to biomass Applicable to cogeneration but no extra
residues in boilers for heat generation electricity can be generated for
cogeneration to be eligible than under the
previous situation.
AM0042 Grid-connected electricity generation Seems applicable to cogeneration but the
using biomass from newly developed project has to be a Greenfield project (i.e.
dedicated plantations totally new with no prior on-soite power
production). Biomass produced
exclusively for the installation.
AM0044 Energy efficiency improvement ESCO-focused methodology. Uncertain
projects: boiler rehabilitation or whether cogeneration applications
replacement in industrial and district eligible.
heating sectors
ACM0001 Consolidated methodology for landfill
gas project activities (version 5)
ACM0004 Consolidated methodology for waste
gas and/or heat for power generation
(version 2)
ACM0006 Consolidated methodology for grid-
connected electricity generation from
biomass residues (version 4)
22
Table 1 Methodologies applicable to cogeneration projects (as of 11/01/2007)
Methodology Methodology Title Comments

Number
ACM0008 Consolidated methodology for coal bed
methane and coal mine methane capture
and use for power (electrical or motive)
and heat and/or destruction by flaring
(version 3)
AMS-I.C. Thermal energy for the user Applicable to biomass cogeneration
systems with a 45 MWth total output
upper limit.
AMS-I.D. Grid connected renewable electricity Applicable to biomass cogeneration
generation systems with a 45 MWth total output
upper limit.
AMS-II.B. Supply side energy efficiency Applicable for cogeneration pant
improvements - generation improvements, if up to 60 GWhe of
energy/fuel savings, equivalent to 180
GWhth per year (maximum)
AMS-II.D. Energy efficiency and fuel switching Unclear whether cogeneration projects can
measures for industrial facilities use this methodology
AMS-II.E. Energy efficiency and fuel switching Unclear whether cogeneration projects can
measures for buildings use this methodology
AMS-III.E. Avoidance of methane production from This methodology is being used, in
biomass decay through controlled conjunction with AMS-I.C., in several
combustion biomass-cogeneration projects.
23
Procedures and modalities applicable to Small-scale CDM projects
Project Design Document (PDD): requirements and time taken to complete reduced through
simplified PDD10 particularly in the baseline methodologies, monitoring methodology and plan,
additionality checklist and environmental impact requirements.
Baseline methodologies: simplified standardised baseline methodologies provided for project

activities to reduce the cost of developing a project baseline, these methodologies simplify the baseline
calculations for example by the use of default emission factors for certain project activities
Monitoring methodology and plan: simplified monitoring requirements are specified per project
category, including a less frequent and reduced monitoring plan, such as the metering of a sample of
renewable energy systems.
Additionality requirements: project developers can determine additionality using a simple barrier
analysis showing the existence of investment barriers, of technological barriers, barriers due to
prevailing practice, or other barriers such as institutional barriers or information requirements that
affect the project.
Environmental impacts: documentation of environmental impacts must be provided only if required

by host country.
Leakage: no calculation is required if the technology is installed for the first time.
Validation/verification and Certification: the same designated operational entity (DOE) may
undertake validation, verification and certification.
Registration: a shorter review period for registration is required and registration costs are lower for
small-scale projects (e.g. in the 5,000 USD range for emission reductions of 15 ktCO2/year compared
to up to 30,000 USD for larger projects with emission above 200 ktCO2/year).
In addition to cost reductions in the project cycle thanks to the simplifications outlined above, the
CDM EB has also allowed the bundling of several small-scale projects, thereby lowering even further
the costs for the various stages.
Bundled small-scale CDM project activities are interesting for cogeneration projects because such
cogeneration projects are often similar in that they will use the same type of biomass as fuel and will
be found in similar industrial sector, meaning that replicability is high.
10
The UNFCCC has published a document entitled “Clean Development Mechanism simplified Project Design
Document for small-scale project activities (SSC-CDM-PDD) [Version 2 of 7 December 2006] that can be
downloaded from the following address:
http://cdm.unfccc.int/UserManagement/FileStorage/6NP36K05XX134ZP12JA48EMCN9EVIT
24
5 Country Profile – China
5.1 CDM in China
5.1.1 Organisational structure
The CDM in China is regulated through the Measures for Operation and Management of Clean
Development Mechanism Projects in China, (12 October 2005).
This document stipulates that China’s DNA is the National Development and Reform Commission
(NDRC), which operates under the joint supervision of the National Coordination Committee on
Climate Change (NCCC) and the National CDM Board (NCB).
The CDM Bodies, Members and Tasks in China
Body Represented parties Responsibilities

NCCC NDRC (chair) Review national CDM policies
Ministry of Foreign Affairs (vice chair) Approve members of NCB
Ministry of Science and Technology Review other relevant issues
State Environmental Protection Administration
China Meteorological Administration
NCB NDRC (chair) Review project applications
Ministry of Foreign Affairs (vice chair) Report overall progress of CDM activities
Ministry of Science and Technology to NCCC
State Environmental Protection Administration Recommend interim measures
China Meteorological Administration
Ministry of Agriculture
NDRC Assess and approve project applications
Supervise implementation of CDM
projects
Establish CDM management institute
INSTITUT FOR GLOBAL ENVIRONMENTAL STRATEGIES, CDM COUNTRY GUIDE FOR CHINA, 2005.
The NDRC (i.e. the Chinese DNA) is central in the CDM process in China, and manages the
involvement of the relevant ministries and other government organisations. It functions as a one-stop
shop for project application and approval, and regulates the implementation of CDM projects in China
through the CDM Management Institute.
Other relevant organisations
The main parties involved in the CDM in China are state-organisations, both at national and local
level. However, any foreign company doing business in China needs to work with a local partner
company, and the applicant for CDM endorsement must be a Chinese company, so CDM projects
necessary involve local industries and manufacturers as well.
25
5.1.2 Sustainability Criteria
Sustainability Criteria for CDM Projects in China
Category Criteria
Environmental Sustainability Reduce GHG emissions
Maintain resource sustainability and avoid degradation
Maintain biodiversity
Economic Sustainability Additional investment consistent with needs of the people
Funding additional to ODA
Social Sustainability Alleviate poverty by generating employment
Remove social disparities
Contribute to the provision of basic amenities
Technological Sustainability Transfer of environmentally safe and sound technologies
The Chinese government’s sustainable development strategy emphasises the harmonic development of
the economy, society and the environment. Social aspects are important, but for CDM projects the
focus is on the environmental criteria. Projects are evaluated primarily on the basis of their impact in
the three designated priority areas: energy efficiency; renewable energy; and methane recovery. The
NDRC focuses on CO2 and CH4, rather than the other four GHG. Cogeneration projects improve
energy efficiency of generation, and can use renewable fuels or recovered methane, so they are
suitable for meeting these criteria.
5.1.3 Country approval application process
CDM project application letter

Completed application form
PDD
General information on project construction and financing
Certificate of the applicant’s enterprise status
The NDRC regulates the CER value for Chinese CDM projects, to avoid unacceptably low prices.
Project developers must indicate the CER price agreed with the buyer in their project application.
However, without government approval it is difficult to find a buyer. To avoid this ‘catch-22’, the
NDRC has an initial screening process to provide preliminary endorsement for projects before they are
officially approved.
To apply for national approval in China the project developer must submit the required documentation
to the NDRC. After endorsement, the NDRC will review the PDD and consult experts to reach its
decision, which is communicated to the project developer within 50 days. If further review is needed,
additional information may be requested, but otherwise an approval letter is issued.
26
After registration by the CDM-EB the project developer must notify the NDRC within 10 days.
During project operation the developer must submit the implementation report and monitoring reports
to the NDRC, so that the NDRC can check that the project meets the criteria set for CDM projects.
Government Incentives
The Chinese government has been increasing its support for energy efficiency and renewable energy
in recognition of their importance for the country’s development. Current government incentives are:
! Favourable energy prices for Independent Power Producers

! 2-year taw breaks for cogenerators and energy saving generators
! Favourable rates on loans for energy efficiency projects (about 30% lower than average)
! Quotas for energy consumption in key industries
! Subsidies for Renewable Energy Sources (RES)
! Reduced-VAT and income tax rates
! Favourable customs duties for some RES equipment
Financial and legal arrangements
The NDRC regulates the CER price for Chinese CDM projects to ensure that it does not fall below a
set minimum. This aims to secure a good CER revenue for Chinese projects, but it also complicates
the contractual arrangements between the project developer and the CER buyer. To guarantee the
minimum set price there needs to be an advance contract, which specifies this price before a project
can apply for national approval. However, contracts are hard to agree without national approval, and
rules out certain CER contract types, like market price based agreements. This complicates the
implementation of CDM projects in China.
The Chinese banking system is traditionally centralised and state dominated, but it is gradually being
restructured and Chinese banks are increasingly able to provide financing and services to foreign
investors. However, for CDM financing the problem remains that most knowledge concentrated in
government offices, not banks. This situation is gradually improving, and as a result of the
government’s encouragement of Foreign Direct Investment (FDI) different kinds of financing
available from Chinese and international institutions.
27
PIN submission by project
proponents
Optional,
subject to
project No
proponent Initial screening Rejection /
request by the DNA resubmit
Letter of
endorsement
Submission of PDD and CDM project

applicaton by project proponents
DNA
No
Rejection /
Expert review
resubmit
Yes
DNA
May be
reconsidered
subject to further
Decision of the
improvements
National CDM Board
meeting
Reconsider
Letter of
DNA
rejection
Approve
Letter of approval
INSTITUT FOR GLOBAL ENVIRONMENTAL STRATEGIES, CDM

COUNTRY GUIDE FOR CHINA, 2005.
28
However, the complicated international and national rules pose a major obstacle.
The Measures for Operation and Management of Clean Development Mechanism Projects in China
specify that the CER revenues from CDM projects belong to the Chinese government and enterprises
implementing the project. The government fixes the distribution proportions of the revenue and before
the fixation, the revenue shall belong to enterprises. The CER revenue is subject to government levies
(table 14), additional to normal taxes for foreign-led projects.
LEVIES ON CER REVENUE IN CHINA

GHG Regulated base price +
HFC and PFC 65%
N2O 30%
Other 2%
INSTITUT FOR GLOBAL ENVIRONMENTAL
STRATEGIES, CDM COUNTRY GUIDE FOR
CHINA, 2005.
5.2 Potential for cogeneration projects in China
5.2.1 Cogeneration status and potential
Cogeneration Potential in China (2010)

Potential (in MWe)
6000
5000
4000
3000
2000
1000
0
ne
r
s
r
t
l
ls
s
s
ee
en
we
pe
ga
as
ga
ica
ha
St
m
pa
Po
om
fill
&
em
et
Ce
nd
&
il
m
Bi
O
Ch
lp
La
ed
Pu
-b
al
Co
The present installed cogeneration capacity in China is 48.1 GWe, 10,9% of total capacity, which
generates 10% of the country’s electricity11. There is still ample potential for further cogeneration
development, though.
The table below illustrates that the cogeneration potential in China is large. Biomass availability and
potential is significant, but the main sectors for CDM cogeneration projects in China are industry and
power generation, as much of the biomass-cogeneration potential lies in very small projects, while
China’s industries are very energy-intensive and inefficient.
11
WADE, DE World Survey 2006.
29
The number of registered CDM projects in China is surprisingly small (36 out of 489), considering
that the country is thought to represent about half of the global CDM potential. Projects in China are
generally large, though, with an average of over 1.8 Mt/yr. The one cogeneration project registered so
far is a waste-heat-driven electricity generation project in a cement plant. It is interesting to note
however that the three cogeneration projects awaiting registration are relatively large scale biomass-
fired projects. This is a recent evolution and could point towards an upturn in the number of CDM
cogeneration projects in China.
Table 2 Chinese CDM projects (as of 17 January 2007)
Number of Number of Name of projects GHG reductions

approved projects (metric tonnes per
projects requesting annum)
registration
All Chinese CDM 36 7 - 51505765
projects
Of which, 1 3 Taishan Cement Works 659736
cogeneration Waste Heat Recovery and
projects Utilisation for Power (i.e. circa 1.3% of
Generation Project total Chinese
requested CERs)
Hebei Jinzhou 24MW
Straw-Fired Power Project
Shandong Yucheng
Xinyuan Biomass Heat &
Power (“Yucheng Biomass
CHP”)
Henan Luyi 25MW

Biomass Cogeneration
Project
Source: COGEN Europe, based on UNFCCC Website, 17th January 2007.
Table 3 SWOT analysis for CDM projects in China

Strengths Weaknesses
Opportunities Rapidly rising energy demand Large potential for industrial
Power market restructuring efficiency improvements
Large CDM potential
Government’s policies prioritize
electricity
Threats Continued government control Government ownership of CERs
of power sector CER price regulation
Slow liberalisation Lack of financing opportunities
30
5.2.2 Prospects
The potential for CDM projects in China is the largest of any country in the world: about 50% of the
global CER potential. A large part of the potential can be achieved through cogeneration application in
industrial energy efficiency and power generation projects. However, CDM project implementation
has been remarkably slow and has only started to accelerate. While the vast majority of Chinese CDM
projects have been windfarm project or HFC decomposition projects, we can expect many new
biomass-fired cogeneration projects.
31
6 Country Profile – India
6.1 CDM in India
6.1.1 Organisational structure
The National Clean Development Mechanism Authority (NCA) is the Designated National Authority
in India, supervised by the Ministry for Environment and Forests. The NCA consists of representatives
from various ministries, and aims to ensure successful implementation of CDM projects that promote
sustainable development. It set guidelines and administers the project approval process. It consults
local experts for technological information, and works with stakeholders and other government
organisations to allow for a wide range of inputs during the process. It reports to the Ministry for
Environment and Forests at least once every 3 months.
Body Represented parties Responsibilities

NCA Ministry of Environment and Forests (chair) Take measures to improve environment
Ministry of Foreign Affairs Project evaluation and approval
Ministry of Finance Recommend additional requirements for
Industrial Policy and Promotion CDM projects in India
Ministry of Non-Conventional Energy Sources Maintain a CDM registry
Ministry of Power
Planning Commission
State-level State-level government officials Capacity building
CDM Creating a forum for parties involved in
promotional CDM projects
cell
Help with project identification and planning
Analysing state-level potentials and sectors
Disseminate information
Three states with a particular interest in the CDM have established state-level promotional cells: the
Environmental Protection and Training Research Institute (EPTRI) in Andhra Pradesh; the Madhya
Pradesh Pollution Control Board (MPPCB) in Madhya Pradesh; and the West Bengal Renewable
Energy Development Agency (WBREDA) in West Bengal. Currently these focus mostly on capacity
building and promotion, but they are expected to be involved in project identification and
implementation in the future too.
Other relevant organizations
Currently the only India-based DOE accredited for project validation and emission reduction
verification is the Indian Council for Forestry Research and Education, which only deals with
afforestation projects. However, the NCA is expected to establish DOEs in other sectors as well to
support local projects and reduce procedural costs. These would be relevant for cogeneration projects.
Most CDM projects in India are small-scale projects, which require bundling to keep CDM related
costs down. Several local bundling organisations have therefore emerged, most notably the Small
Industries Development Bank of India and National Bank for Agriculture and Rural Development.
32
These banks have strong links to small food production and processing, and can therefore provide
valuable services for cogeneration projects in the sugar industry and other food manufacturing.
The NCA has been working closely with other stakeholders through sectoral initiatives, education and
training. Organisations currently involved in the CDM in India include Apex industry bodies, NGOs,
Consulting firms, ESCOs, private and public sector companies, International development
organisations and International lending institutions.
6.1.2 Sustainability Criteria
Category Criteria
Environmental Sustainability Environmental Impact Assessment
Economic Sustainability Additional investment consistent with local needs
Social Sustainability Generate employment
Remove social disparities
Improve quality of life
Technological Sustainability Technology transfer
The sustainability criteria used by the NCA to evaluate submitted CDM projects focus on the social
benefits of the project. CDM projects are expected to have a direct positive effect on the lives of the
local community, and promote development. This shows the importance of using local skills and
resources, and working with local partners. It also suggests that cogeneration projects in food
manufacturing using local biomass, like the sugar industry, are well-positioned for CDM approval.
The economic criterion for additional investment is also important, and implies that the CDM related
investment must be additional to normal Official Development Assistance (ODA).
6.1.3 Country approval application process
The table below shows the documents required for submitting a project for CDM approval in India. A
Project Concept Note, as well as the PDD must be submitted, together with any supporting documents.
Required Documentation for National Approval In India
Electronic copy of the Project Concept Note (PCN)

Electronic copy of the PDD
20 hard copies of the PCN and PDD each
Supporting documents
Two CDs containing all information
Cover letter signed by the project developers
The documents submitted are circulated among the members of the NCA for initial evaluation, and the
developer is invited to present the proposal, so that NCA members can ask for clarification.
Simultaneously NCA members and experts assess the PDD in detail, producing an assessment report.
33
The NCA will check that the CER revenue is additional to ODA (i.e. they are not sold to an
organisation using ODA funds). Once the NCA is satisfied, Host Country Approval is granted.
There is no indication of the length of the process.
Government Incentives
The Indian government considers the CDM as a promising opportunity to achieve its sustainable
development goals and attract foreign investment. It therefore offers a number of incentives to
promote CDM projects in the country.
For cogeneration projects the most important of these are:
! National Programme on promotion of Biomass Power/Bagasse-based cogeneration (capital

grants and interest subsidies)
! 80% depreciation on cogeneration equipment may be claimed in first year
! 5-year tax break with 30% exemption for projects with power Purchasing Agreements (PPAs)
! Customs duty for RE projects under 50 MW fixed at 20% ad valorem
! Central sales tax exemption, in addition to general sales tax exemption in certain states for RE
projects
! Minimum purchase rates of Rs 2.25 per unit (for all renewable sources)
! Encouragement of bundling to bring down transaction costs
! Incentives to promote rural energy generation and rural electrification
Financial and legal arrangements
The general investment climate in India is good, which facilitates Foreign Direct Investment (FDI) in
CDM projects. The governments promotes FDI through the Foreign Investment
Promotion Board and Foreign Investment Implementation Authority. No government approval is

needed, Indian capital markets are freely accessible, and tax incentives are available for investment in
the power sector.
A more problematic issue is the legal status of CERs in Indian law. They are defined as “intangible
assets that can be traded and transferred”, but their ownership is not clearly defined. Investors have
avoided this uncertainty through clear contractual arrangements with the project developers about the
ownership rights of the CERs. However, the taxation of CERs is still unclear too, hampering CDM
investment.
34
The Project Approval Process in India
PCN and PDD submitted by

the project developer
Initial
screening by Rejection /
the DNA resubmit
secretariat
In-depth assessment by In-depth assessment by

NCA members and other NCA members and other
consultants consultants
Assessment
report
Rejection / DNA
resubmit decision
Approval letter
INSTITUT FOR GLOBAL ENVIRONMENTAL STRATEGIES, CDM

COUNTRY GUIDE FOR CHINA, 2005.
35
6.2 Potential for cogeneration projects in the CDM in India
6.2.1 Cogeneration status and potential
In Indian cogeneration facilities represent 16% of total installed capacity (18.7 GWe), and generate
12.1% of the country’s electricity. Most of this is located in food manufacturing plants, particularly in
the sugar sector. There is therefore already a strong tradition and expertise with bagasse cogeneration,
but in other sectors cogeneration is also used. The total potential for cogeneration is estimated at
20,000 MWe, most of which is in the food processing sector.
Cogeneration Potential in India
3500
Potential in MWe
3000
2500
2000
1500
1000
500
0
i ll s
en t
er
eel
r
ti les
ar
..
e
p ap
ri
tili s
em
Sug
Cem
&s t
ti ll e
Tex
Fer
Ric
p&
Di s
Ir an
Pul
;
ri es
Dai
CDM Status in India
Approved Projects Installed Capacity GHG Emissions Reductions (t/yr)

(MWe)
All CDM projects 104 - 10,975,109
CHP projects 23 298.5 1,295,246
Sugar 8 91.8 340,526
Iron and Steel 7 158 653,466
Textiles 3 13.0 75,804
Pulp and Paper 1 3.0 14,744
Other 4 32.7 210,706
WADE, 2006.
India represents almost one-third of all registered CDM projects, and over one-third of registered
cogeneration projects. Initially most projects were in sugar mills, but throughout 2006 the range of
projects has diversified. The sugar sector still has most registered projects, but represents only 26% of
GHG emissions reductions from approved projects, as most projects are small.
Since May various waste-heat driven energy generation projects in industry have been registered, lead
by the iron and steel sector, which now represents over half of all registered emission reductions.
36
Cogeneration Potential in India by Sector
India - CHP and CDM Potentials

3500 8
CHP Potential
CDM Potential 7
3000
6
2500
CDM Potential (Mt/yr)

CHP Potential (MWe)
5
2000
1500
3
1000
2
500
1
0 0
Sugar Iron & Steel Beverages Rice mills Textiles Pulp & Paper Cement Fertiliser
INSTITUTE FOR GLOBAL ENVIRONMENTAL STRATEGIES, CDM COUNTRY GUIDE FOR CHINA, 2005.
The above graph shows that the CDM potential mirrors energy use in India: 65-70% of India’s total
energy use by 7 sectors: cement, pulp & paper, fertiliser, iron & steel, textiles, aluminium and
refineries, all of which can benefit from cogeneration. The food sector is still the most significant, but
many large industrial energy recovery projects are attractive as well. For food-processing cogeneration
represents a large share of the CDM potential, while for industrial energy efficiency many more
technologies and measures can deliver emission reductions, so cogeneration is a smaller segment of
the total potential. However, potentials in industries are generally larger, so the opportunities for
cogeneration are still significant.
SWOT analysis
Strengths Weaknesses
Opportunities Strong governmental support for CDM CDM transaction costs
Good investment climate
Threats Low reliability of grid electricity Uncertainty around taxation
Need for clarification concerning
ownership of CERs
No fixed timelines for approval process
6.2.2 Prospects
The potential for cogeneration projects in the CDM in India is substantial, particularly in industrial and
food manufacturing applications. Furthermore, the long tradition of bagasse cogeneration makes such
projects relatively low-risk. However, there is no clarity yet about the legal and fiscal status of CERs,
and the approval process and related costs. This needs to be resolved to reduce risks and make CDM
more attractive for investors.
37
7 Conclusion
The CDM provides a major opportunity for cogeneration projects in developing countries. The
necessary conditions for cogeneration often do exist in these places, although project implementation
is hampered by lack of experience or resources. The CDM can alleviate these problems by facilitating
knowledge and technology transfer from Annex I countries, and giving the projects an additional
source of revenue through CERs.
The CDM EB has established the general procedures for the CDM, although the scheme is still being
perfected.
Among the first registered CDM projects were biomass-fired cogeneration projects, often in small
food transformation plants. Currently the share of cogeneration projects in the CDM is about a fifth of
all registered projects, with only a few large cogeneration projects. However, more industrial
cogeneration projects are to be expected with new methodologies targeting industrial waste-heat
recovered and utilisation.
India leads by far when it comes to cogeneration projects, but more countries are becoming involved,
such as Malaysia.
The potential for future cogeneration projects registering as CDM projects is good, in particular thanks
to the dual opportunities offered both by small-scale biomass-fired units and larger industrial projects.
Some commentators have also argued that building integrated cogeneration projects could be
implemented but this will require a widespread familiarity with the CDM registration process. WADE
research has indicated that the potential emission reductions from building-integrated cogeneration in
China are 135 Mt CO2 eq/yr in 2020, and 40 Mt CO2 eq/yr in 2020 in India.
7.1 Political Uncertainty: Post-Kyoto Arrangements
The future development of the CDM is generally thought to be promising, but a number of
uncertainties remain. On a political level it is not yet clear what kind of climate change agreement will
emerge in 2012 after the first commitment period of the Kyoto Protocol.
Negotiations are still taking place, and the main questions are whether the US will be involved, and
whether developing countries will adopt emission caps. American participation would be a huge boost
for the CDM, as it would raise the expected demand for CERs, and increase prices. The effect of
emission caps for developing countries is more complicated to predict, because emission reductions
currently in the CDM would then also have be used for meeting targets in the host countries
themselves. This would not have to mean the end of the CDM, but it would be more like the Joint
Implementation mechanism. It is therefore conceivable that the two will merge in the future.
Whatever happens after Kyoto, any future global climate agreement is likely to include international
trading and project implementation mechanisms such as JI and CDM, because these are supported by
all major parties in the negotiations.
38
8 Glossary
Additionality Principle – The requirement for CDM projects that ‘the reduction of emissions through
the CDM project must be additional to reductions that would occur without the CDM project’.
Annex I country – Country signed up to the Kyoto Protocol that has a GHG emission cap.
Baseline Methodology – Methodology for assessing the scenario and emissions for a project in
absence of the CDM project activity.
Certified Emission Reduction (CER) – Tradable emission reduction certificates issued to
CDM projects for GHG emission reductions achieved.
Clean Development Mechanism (CDM) – Mechanism that allows Annex I countries to meet part of
their emission reductions through projects in non-Annex I countries.
CDM Executive Board (CDM-EB) – International supervisory board for the CDM, operated by the
UNFCCC.
Combined Heat and Power (COGENERATION) – The combined thermal generation of heat and
electricity for local use.
CO2 equivalent (CO2-eq) – The effective global warming effect of a GHG expressed in the amount of
CO2 with equivalent warming effect.
Conference of the Parties (COP) – Annual meeting of the Parties of the Kyoto Protocol. Since
ratification of the Protocol in 2005, this is combined with the Meeting of the Parties (MOP) of
countries that have ratified the treaty.
Crediting Period – The period over which CERs are issued for a CDM project.
Decentralised Energy (DE) – Electricity generation at the point of use.
Designated National Authority (DNA) – National supervisory organisation, which regulates and
manages the CDM procedures and implementation in a county.
Designated Operational Entity (DOE) – Independent organisation accredited by the CDMEB to

validate the baseline methodology for CDM projects, and verify the emission reductions achieved.
EU Emissions Trading Scheme (EU ETS) – European market-based mechanism tha distributes
emission quota between major GHG emitting industries, and allows trade between these to meet
emission caps cost-effectively.
First Commitment Period – First period during which Annex I countries must meet their emission
caps (2008 – 2012).
Greenhouse Gas (GHG) – Chemical substance, which has a net positive global warming effect when
released into the atmosphere. GHGs covered by the Kyoto Protocol are: CO2, CH4, N2O, HFCs, PFCs
and SF6.
39
‘Hot air’ – Excessive emission quota of former Soviet Union countries, which do not account for the
sharp reduction in economic output during the collapse of communism.
Joint Implementation (JI) – Mechanism that allows Annex I countries to meet part of their emission
reductions through projects in other Annex I countries.
Kyoto Protocol – International agreement adopted at the 3rd COP in Kyoto in 1997, which quantifies
emission reduction targets and establishes the mechanisms to reduce global GHG emissions.
Leakage – ‘Net change of GHG emissions which occurs outside the project boundary and which is
measurable and attributable to the CDM project activity’.
Marrakech Accords – Agreements adopted during the 1st meeting of the CDM-EB at COP 7 in 2001
in Marrakech, which specify the procedures and rules for the CDM.
Monitoring Methodology – Methodology for monitoring the GHG emissions from CDM
40
Annex I – List of registered CDM cogeneration projects and cogeneration
projects that have requested registration (17/01/2007) in China
For an updated list of all projects already registered or requesting registration in China, please follow
this link: http://cdm.unfccc.int/Projects/projsearch.html and use the advanced search function in order
to select “China” as host country. In addition, it is possible to access all the relevant documentation for
each project.
Registered Title Host Other Parties Methodology * Reductions Ref

/ Status Parties (kt/y)**
24 Jun 06 Taishan Cement Works Waste China United Kingdom AM0024 105894 366
Heat Recovery and Utilisation
for Power Generation Project
Requesting Hebei Jinzhou 24MW Straw- China United Kingdom ACM0006 ver. 178626 778
Registration Fired Power Project 3
Requesting Shandong Yucheng Xinyuan China United Kingdom ACM0006 ver. 189552 811
Registration Biomass Heat & Power 3
(“Yucheng Biomass CHP”)
Requesting Henan Luyi 25MW Biomass China United Kingdom ACM0006 ver. 185664 825
Registration Cogeneration Project 3
41
Annex II – List of registered CDM cogeneration projects and cogeneration projects that
have requested registration (17/01/2007) in India
Please note: due to the high number of registered projects in India (190), some cogeneration projects
may have been overlooked when compiling this table.
For an updated list of all projects already registered or requesting registration in India, please follow
this link: http://cdm.unfccc.int/Projects/projsearch.html and use the advanced search function in order
to select “India” as host country. In addition, it is possible to access all the relevant documentation for
each project.
Registered Title Host Other Methodology Reductions Ref

Parties Parties
23 Sep 05 SRS Bagasse Cogeneration India United AMS-I.D. ver. 5 22000 80
Project Kingdom
11 Dec 05 3.5 MW Rice Husk based India AMS-I.C. ver. 6 22267 117
Cogeneration Project at Nahar
Spinning Mills Ltd.
16 Dec 05 3.5 MW Rice Husk based India AMS-I.C. ver. 6 22267 118
Cogeneration Project at Oswal
Woolen Mills Ltd.
15 Jan 06 RSCL cogeneration expansion India United AM0015 80157 127
project Kingdom
03 Feb 06 Rice Husk based Cogeneration India United AMS-I.D. ver. 6 14744 195
project at Shree Bhawani Paper Kingdom
Mills Limited (SBPML), Rae
Bareli, Uttar Pradesh, India
6 Mar-06 Grid connected bagasse based India Sweden AM0015 63934 189
cogeneration project of Ugar
Sugar Works Limited (USWL).
01 May 06 Ajbapur Sugar Complex India United AMS-I.D. ver. 7 40392 332
Cogeneration Project Kingdom
Rejected Cogeneration system based on India AMS-I.C. ver. 7 47463 348
biomass (rice-husk) replacing oil
fired boiler for process steam and
generating power for partly
replacement of grid power supply
to the plant at M/s Indian
Acrylics Ltd., District Sangrur,
Punjab, India.
15 May 06 Waste Heat Recovery Power India ACM0004 ver. 1 70796 284
Project at JK Cement Works
(Unit of JK Cement Limited),
Nimbahera, Chittorgarh,
Rajasthan
29 May 06 Process Waste Heat utilization India Sweden ACM0004 ver. 1 45721 309
for power generation at Phillips Netherlands
Carbon Black Limited, Gujarat
42
Parties Parties
12 Jan 07 Generation of Electricity through India United ACM0004 ver. 1 767325 325
combustion of waste gases from Kingdom
Blast furnace and Corex units at
JSW Steel Limited (in JPL unit
1), at Torangallu in Karnataka,
India
31 Aug 06 Waste heat recovery project India AMS-II.D. ver. 7 23429 389
based on technology up-gradation
at Apollo Tyres, Vadodara, India
08 Aug 06 Bagasse Based cogeneration India AMS-I.D. ver. 8 24539 355
power project of Rana Sugars
Limited, Amritsar District,
Punjab;
12 Jan 07 Use of waste gas use for India United ACM0004 ver. 2 1267392 350
electricity generation at JSW Kingdom
Energy Limited
19 Jun 06 Power generation from waste India ACM0004 ver. 1 387643 351
heat of non-recovery type coke
ovens at JSPL
29 Aug 06 Ganpati co-generation project at India United AMS-I.D. ver. 7 48552 370
Medak, Andhra Pradesh Kingdom
17 Jul 06 VGL - Waste Heat based 4 MW India ACM0004 ver. 2 18965 432
Captive Power Project at Raipur
Registering Efficient utilisation of waste heat India AMS-II.D. ver. 7 4631 500
with and natural gas at Dahej complex
Corrections of GACL
15 Dec 06 OSIL - Waste Heat Recovery India ACM0004 ver. 2 41052 515
Based Captive Power Project
15 Dec 06 MAHARASHTRA, INDIA- India AMS-I.C. ver. 8 36897 581
Kurkumbh, 1.5 MW Biomass /
Bagasse Based Co-generation
Power Project
15 Dec 06 12MW Captive Power Project India United ACM0004 ver. 2 78380 556
based on Waste Heat Recovery of Kingdom
Industrial Waste Gases
Under “16 MW Bagasse based India ACM0006 ver. 3 40182 552
Review cogeneration plant” by GMR
Industries Ltd. (GIDL)
3 Nov 06 Deoband Bagasse based Co- India ACM0006 ver. 3 85470 578
generation Power Project ACM0002 ver. 6
13 Nov 06 12MW Captive Power Project India United ACM0004 ver. 2 52330 588
based on Waste Heat Recovery of Kingdom
Industrial Waste Gases
Review Sesa-Waste Heat Recovery Based India ACM0004 ver. 2 112357 535
Requested Power Generation
43
Parties Parties
Review The Godavari Sugar Mills Ltd India ACM0006 ver. 3 64084 577
Requested (TGSML)’s 24 MW Bagasse
Based Co-generation Power
Project at Sameerwadi
17 Dec 06 “Waste Heat Recovery based India ACM0004 ver. 2 116773 674
captive power generation by SKS
Ispat Ltd”
23 Dec 06 Usha Martin Limited - Waste India ACM0004 ver. 2 54340 696
Heat Recovery Based Captive
Power Project activity
29 Dec 06 Biomass based captive India AMS-I.C. ver. 8 19369 713
cogeneration project at Shri
Renuga Textiles Limited
Review Power generation from the India ACM0004 ver. 2 22473 683
Requested proposed 11.2 MW waste heat
recovery boiler at the ISA Smelt
furnace of the Copper Smelter,
Sterlite Industries India Limited
(SIIL), Tuticorin
15 Jan 07 Rice husk based cogeneration India AMS-I.D. ver. 9 13993 802
power plant-II at SBPML
Requesting Waste Heat based 4.75 MW India ACM0004 ver. 2 23887 783
Registration captive power project "RSIPL-
WHRB(1&2)" CDM PROJECT
ACTIVITY
Requesting Waste Heat based 10 MW India ACM0004 ver. 2 50620 772
Registration captive power project “GPIL-
WHRB 2” CDM PROJECT
ACTIVITY
Requesting Bagasse based Co-generation India ACM0006 ver. 3 21704 803
Registration Project at Titawi Sugar Complex
Registration Project at Nanglamal Sugar
Complex.
Requesting Installation of co-generation India ACM0006 ver. 3 26321 813
Registration project at sugar manufacturing
unit of Mawana Sugars Limited
Registration Project at Mawana Sugar Works
44
Annex III – List of registered CDM projects and projects that have requested
registration (17/01/2007) in Malaysia
For an updated list of all projects already registered or requesting registration in Malaysia, please
follow this link: http://cdm.unfccc.int/Projects/projsearch.html and use the advanced search function in
order to select “Malaysia” as host country. In addition, it is possible to access all the relevant
documentation for each project.
Registered Title Host Other Methodology * Reductions ** Ref

(status/date) Parties Parties
24 Feb 06 Biomass Energy Plant- Malaysia Denmark AMS-I.C. ver. 7 32545 249
Lumut.
23 Apr 06 Sahabat Empty Fruit Malaysia United AMS-I.C. ver. 7 53986 288
Bunch Biomass Project Kingdom
10 Jun 06 LDEO Biomass Steam Malaysia Canada AMS-I.C. ver. 7 208871 395
and Power Plant in AMS-III.E. ver. 7
Malaysia
10 Jun 06 SEO Biomass Steam Malaysia Canada AMS-I.C. ver. 7 216831 402
and Power Plant in AMS-III.E. ver. 7
Malaysia
2 Sep 06 Bentong Biomass Malaysia Canada AMS-I.C. ver. 8 380934 501
Energy Plant in AMS-III.E. ver. 8
Malaysia
24 Sep 06 Jendarata Steam & Malaysia Denmark AMS-I.C. ver. 8 8851 558
Power Plant
* AMS - Small scale
** Estimated emission reductions in metric tonnes of CO2 equivalent per annum (as stated by the
project participants)
45
Annex IV – List of Cabinet approved cogeneration projects in Thailand (as of
31/01/2007)
Thailand has suffered from a prolonged period of political instability that has severely hindered the
registration process for potential CDM projects. However, with the new interim government in place
since the second half of 2006, the deadlock has been overcome and projects are being assessed by the
national environmental committee, before being sent to the Cabinet for approval.
So far (as of 31/01/2007), seven projects have been approved by the Thai Cabinet, five of which are
biomass projects and 2 biogas projects.
Two of these installations are cogeneration projects:
! Dan Chang Bio-Energy cogeneration plant in Suphan Buri

! Phu Khieo Bio-Energy Cogeneration plant in Chaiyaphum.
Due to the fact that at the time of writing little information was available on the projects it is not to be
excluded that some of the other projects, including bagasse-based plants and rice-husk plants may be
in a cogeneration configuration as well.
46

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Cogeneration Projects

within the CDM

T@W: Sustainable Energy Technology at Work

© March 2007, COGEN Europe

T@W Website: http://www.setatwork.eu

Non-commercial reproduction is authorized, provided the source is acknowledged.

To summarise, the key aims of the T@W Project are to:

! Assist EU ETS companies to develop CO2 projects at their own installations

! WP1 T@W Co-ordination

Project acronym: T@W

1.1 The principle behind the CDM

1.2 Types of Projects under the CDM

! Renewable Energy Projects (Type I)

! I-A Electricity generation by the user

1.3 Parties involved in the CDM

Global level ! Conferences of the Parties to the Kyoto ! Designated Operational

! Accrediting the Designated Operational Entities (DOE)

In addition, the CDM EB regularly publishes technical reports.

DNAs are listed on the UNFCCC’s Website.

1.4 The price of CERs

1.5 CDM related costs

1.6 CDM related risks

1. the non approval of a new methodology,

2. the unsuccessful validation of a methodology for calculating emissions reduction,

3. the non-approval by the host country,

Competitiveness and reliability of cogeneration as a technology need no longer be proved, as

The reliability of cogeneration as a technological solution is backed by thousands of MW of

Figure 1 The CDM project Cycle

Project Stage Party Output

2. Preparing the Project PP Project Design Baseline & monitoring

3. National Approval of DNA Letter of Approval

4. Validation and DOE 1 Validation Report

5. CDM Project Activity PP Monitoring Report Monitor emissions from

6. Verification and DOE 2 Verification and Verify emissions

7. Issuance of CERs CDM-EB CERs

Preliminary screening based on the

Identification of alternatives to the project activity

STEP4 Common practice

STEP5 Impact of CDM registration

PROJECT ACTIVITY IS ADDITIONAL

MINISTRY OF THE ENVIRONMENT JAPAN AND GLOBAL

4.1.1 Eligibility of the project

4.1.2 The benefit of registration as a CDM project

4.2 Preparing the Project Design Document (PDD)

4.2.1 Language requirement

A. Description of the Project Activity

UNFCCC CDM, Project Design Document Form

A. Description of the project activity

Can the project be registered without an Annex I party involved?

What should the technology description include?

B. Baselines and additionality

Baseline methodologies generally take one of three approaches:

! Using actual or historical GHG emissions (i.e. by extrapolation)

The drawbacks of presenting a new methodology

Potential for new methodologies:

EMISSION REDUCTIONS FROM ON-SITE GENERATION

Calculating the CO2 emission reductions from avoided T&D losses

COGENERATION REPLACING CCGT

Which approved baseline methodology is most appropriate for cogeneration projects?

The UNFCCC has developed a ‘Tool for Demonstrating Additionality’.

How are project alternative scenarios identified?

! the same project outside the CDM;