Clean Development Mechanism
The Clean Development Mechanism (CDM) is an element of the Kyoto Protocol that creates credits Certified Emission Reductions (CERs) from emission abatement projects in developing countries. CERs can be used for compliance in the EU ETS and other national schemes, such as in Canada, Japan and other developed nations.
The CDM is designed to provide finance to projects that will contribute to sustainable development in the country where the project is located. To qualify under the CDM a project must go beyond ‘business as usual’ and reduce emissions below what they ‘would have been’, assuming normal economic development.
CDM project developers range from small cooperatives to large industrial corporations, and the CDM touches every economic sector, from agriculture to heavy industry. Typical project types include renewable energy, methane capture from landfill, agriculture and coal mines, fuel-switch in boilers for heat and electricity generation, energy efficiency and reduction of industrial gas emissions such as HFCs and N2O.
Anderson Consulting (Private) Limited’s Energy Group helps project developers identify project opportunities, finance the project, create the credits and to bring them to market to achieve the best price. We can also introduce technology and we can package a full ‘build-own-operate’ service, where we combine project management, technology and finance together to enable clients who don’t have the time or the resources to benefit from the CDM.
Project Identification
Anderson Consulting’S CDM experts help clients to identify project opportunities. This can happen in a number of ways:
- Clients retain us to audit their existing operations to identify opportunities and assess the costs and benefits. This can often result in real financial benefits, as energy savings bring their own reward, as well as creating CERs.
- Clients approach us with project ideas and we advise on the availability of carbon finance, and how best to maximise it.
We approach clients with new technology ideas, introducing ‘clean tech’ technologies and transferring best practice ideas from country to country within our global footprint.
These services are provided at no cost to clients who retain ACPL to create and market their CERs.
Credit Creation
There is an established process for creating CERs:
- assess the additionality of the project and write a ‘project idea note’ (PIN)
- choose a baseline methodology or if none is available, create one and get it approved
- write a detailed ‘project design document’ (PDD)
- Have the PDD independently validated by a ‘Designated Operational Entity’ (DOE)
- have the project approved by the ‘Designated National Authority’ (DNA) of the country where the project is located
- submit the project for approval by the United Nations CDM Executive Board
- have the project registered by the CDM Executive Board, following public consultation
- monitor the performance of the project every year, have the emission reductions independently verified by a DOE, and
- get the CERs issued
Anderson Consulting (Private) Limited alongside it’s international partners has experts available to take your project through the whole credit creation and issue process. We create the necessary documents including PDDs and methodologies, manage the appointment of DOEs and shepherd the project through the CDM Executive Board. We have strong expertise and a reputation for successfully rescuing other advisors’ projects that have failed in their first attempts at registration.
ACPL can either charge a fee for carrying out some or all of these activities (except independent validation and verification), or be paid on a ‘success fee’ basis when it markets and monetizes the CERs on behalf of the client.
Carbon Finance
Anderson Consulting specialises in securing ‘carbon finance’ for its clients – realising the best value for the CERs generated by each project, according to the requirements of the developers. There are three instances in a project’s lifecycle when developers typically seek to monetize the value of their CERs.
- A project can be brought to market early in its development cycle, where the developer is looking for assistance in the development of the project itself. The developer contracts at a lower price, but gets the benefit of a strong financial partner, often with expertise in the sector concerned, to co-develop the project.
Anderson introduces co-developers to partner in this way, and then helps take the CERs to market as described below.
- The project developer can retain full control of the development process, and lock-in a known price at the time of project-financing by selling the CERs forward. Price is dependent on a number of factors, including technology, performance, credit and guarantees.
- Anderson works with the developer to determine the right contract terms and then takes the project to market. We deal with all the principal buyers in Europe, North America and Japan. This process is fully transparent, so the seller knows he/she is getting the best possible market price. This marketing process is often referred to as a ‘bespoke auction’.
- The project developer can finance the whole of the project development and implementation, and then sell the CERs on the “Spot” market once they have been issued. This achieves best market price, as it eliminates credit and volume risk for the buyer, but it exposes the developer to movements in market price through the life of the project.
Anderson Consulting simplifies the process of taking spot CERs to market, and maximises the realised price. Transactions are concluded on voice with EU ETS market participants, or by means of our electronic auction.
All these services are provided on a contingent basis – i.e. Anderson Consulting only gets paid following a successful transaction and shares the risk with you in achieving a successful transaction.
For more information regarding our services, please feel free to contact us.
Latest News
ACPL awarded ISO Certification (Oct 2, 2008)
Karachi: Continuing on it's tradition of providing the highest quality solutions to it's clientele, Anderson Consulting (Private) Limited, a local affiliate ... (Read More)
Eid Mubarak (Sep 30, 2008)
Anderson Consulting (Private) Limited's Directors and ... (Read More)
Energy Group
Contact Us
Suite 811 Trade Tower
Abdullah Haroon Road
Saddar, Karachi
Phone: +92-21-5650328/29
Fax: +92-21-5650330
More Contact Information >