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The CDM Project Cycle. The first step -- submit a PIN (template on www.carbonfinance.org). Description of Project Proponent Type of Project Location of Project Expected Schedule Financing Sought Technical Summary of Project Expected Environmental Benefits.

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The CDM Project Cycle

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The cdm project cycle l.jpg

The CDM Project Cycle


The first step submit a pin template on www carbonfinance org l.jpg

The first step -- submit a PIN (template on www.carbonfinance.org)

  • Description of Project Proponent

  • Type of Project

  • Location of Project

  • Expected Schedule

  • Financing Sought

  • Technical Summary of Project

  • Expected Environmental Benefits


Project proposal review and upstream due diligence l.jpg

Project Proposal Review and Upstream Due Diligence

Proposal Review and Upstream Due Diligence

  • PIN reviewed by CFB

  • Upstream Due Diligence

  • If PIN is acceptable, sponsor notified with request to prepare CFD; Regional/ Sectoral approval sought

  • Host Country Endorsement/No Objection sought in some cases where country CDM approval process is not clear

  • If CFD approved (approval process varies from fund to fund), further work is authorized

  • Letter of Intent issued after PIN or CFD approval

Project completion

Up to 21 years

3 months

Periodic verification & certification

1-3 years

2 months

3 months

Negotiation of Project Agreements

Construction and start up


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Carbon Asset Due Diligence

Project completion

Preparation and review of the Project

Carbon Asset Due Diligence

3 months

  • Project Design Document prepared (a. Determine whether existing methodology is applicable

  • b. may require baseline study)

  • 2 Monitoring Plan prepared

  • 3. CFB quality control of results

  • 4. Documents for Validation prepared by CFB and sponsor

  • 5. Bank region begins technical, financial, environmental and social due diligence

Up to 21 years

1-3 years

Periodic verification & certification

2 months

3 months

Construction and start up


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Validation Process

Project completion

Preparation and review of the Project

3 months

Carbon Asset Due Diligence

Up to 21 years

Periodic verification & certification

2 months

Validation process

1. CFB contracts the Independent Validator and submits documents

2. Validator studies project design document, including baseline study and monitoring plan where applicable

3. Documents are posted for 30-day comment period

4. Validator issues a report and opinion

5. Registration request is submitted (can be after the ERPA signature)

2 months

1-3 years

3 months

Construction and start up

Negotiation of Project Agreements


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Negotiation of Project Agreements

Project completion

Preparation and review of the Project

3 months

Carbon Asset Due Diligence

Up to 21 years

Periodic verification & certification

2 months

Validation process

1-3 years

2 months

3 months

Construction and start up

Negotiation of Project Agreements

1. CFB prepares term sheets and draft ERPA and negotiations initiated.

2. 3. Project Due Diligence is completed and World Bank internal approvals are secured.

4. Letter of Approval obtained from Host Country

5. ERPA is signed


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Start of Generation of ERs & Monitoring

Project completion

Preparation and review of the Project

3 months

Carbon Asset Due Diligence

Up to 21 years

Periodic verification & certification

2 months

Validation process

1-3 years

2 months

3 months

Negotiation of Project Agreements

Construction and start up

1. At construction completion, CFB contracts Independent Verifier

2. Verifier checks that specifications of the monitoring plan are met (“Initial Verification”)

3. Project implementation starts

4. Project entity monitors in accordance to the monitoring plan


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Verification and Certification

Project completion

Preparation and review of the Project

3 months

Baseline Study and Monitoring Plan (MP)

Up to 21 years

Periodic verification & certification

2 months

1. Verifier issues periodic verification report

2. CFB pays project sponsor for ERs

3. Certified ERs are issued by the CDM Exec. Board

4. Verification undertaken annually or as deemed appropriate

Validation process

2 months

3 months

Negotiation of Project Agreements

Construction and start up


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Project Completion

Project completion

Preparation and review of the Project

  • Crediting period either

  • 10 years fixed or

  • 7 year renewable (maximum 21 years)

3 months

Up to 21 years

Carbon Asset Due Diligence

Periodic verification & certification

2 months

Validation process

1-3 years

2 months

3 months

Construction and start up

Negotiation of Project Agreements


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Carbon Asset Creation and Maintenance

Manufacturing Process and Costs based on Bank experience

Preparation and review of the Project

Project completion

  • Upstream Due Diligence, carbon risk assessment and documentation: $ 25K

3 months

Carbon Asset Due Diligence

Up to 21 years

  • For new methodologies

  • Baseline : $30 K

  • Monitoring Plan: $25K

Periodic verification & certification

2 months

  • Verification: $10-25 K

  • Supervision: $10-20K

Validation process

1-3 years

2 months

  • Contract, Processing

  • and documentation: 25k

3 months

Construction and start up

Project Appraisal and Negotiation

  • Initial verification at start-up: $25K

  • Consultation and Project Appraisal: $60K

  • Negotiations and Legal documentation: $100K

Total through Negotiations

All expenses:

$265 K for regular size projects

$150 K for small scale projects


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What is involved in CFD/ PCN preparation?

  • Field visits for identification and preparation

  • Due diligence on:

    • environmental and social issues,

    • carbon asset,

    • status of project financing,

    • quality and experience of project sponsors and any financial intermediaries

  • Consultations with Government on the proposed carbon financed project (including relevant discussions needed to obtain a letter of approval), and related legal services review and support


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