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The Clean Development Mechanism A Field Guide for Transport Projects Through the Clean Development Mechanism, developing countries can sell certified emission reductions (CERs) or carbon credits to developed countries. A standard-sized project (reducing about 200,000 tCO2 per year) that does not need a new methodology will take about 1.5–2 years for registration and will require a budget of about $200,000. A new methodology can take more than 3 years and will need a budget of over $300,000. While the CER income will not cover investment costs, it can be quite attractive and can make a project South Asia more sustainable, financially attractive, and less prone to stalling. Operational Knowledge Working Paper Series About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two-thirds of the world’s poor: 1.7 billion people who live on less than $2 a day, with 828 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. The Clean Development Mechanism A Field Guide for Transport Projects No. 1 | January 2013 Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org/poverty Printed on recycled paper Printed in the Philippines ADB South Asia Operational Knowledge Working Paper Series The Clean Development Mechanism A Field Guide for Transport Projects No. 1 | January 2013 Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org © 2013 by Asian Development Bank January 2013 Publication Stock No. WPS135442 The views expressed in this paper are those of the author and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this publication, “$” refers to US dollars. The ADB South Asia Operational Knowledge Working Paper Series is an avenue for sharing operational knowledge on policies and processes relevant to the implementation of ADB technical assistance, programs and projects. This series is a new knowledge product that consolidates knowledge of operational rules, guidelines, conventions, and experiences with a view to inform and improve the preparation, implementation, management, and delivery of development assistance, programs, and projects. Titles under this Series could subsequently be revised for publication as articles in professional journals or chapters in books. The Series is maintained by the South Asia Department. The Series is made available on the ADB website and on hard copy. Printed on recycled paper CONTENTS I. INTRODUCTION ................................................................................................................... 1 II. CDM ORGANIZATIONAL SET UP ....................................................................................... 2 III. PROCESSES ........................................................................................................................ 4 A. KEY ELEMENTS ................................................................................................................ 4 B. CDM METHODOLOGY....................................................................................................... 5 C. CDM PROJECT CYCLE ..................................................................................................... 6 1. PROJECT IDENTIFICATION ........................................................................................... 6 2. PROJECT DESIGN ....................................................................................................... 8 3. VALIDATION AND REGISTRATION ................................................................................. 9 4. MONITORING ............................................................................................................ 10 5. VERIFICATION,CERTIFICATION, AND ISSUANCE ......................................................... 11 6. TIME,COST, AND RISK ............................................................................................. 11 7. LINKING CDM ACTIVITIES WITH ADB PROJECTS........................................................ 12 IV. CURRENT STATUS OF CDM IN THE TRANSPORT SECTOR ........................................ 14 A. STATUS OF TRANSPORT METHODOLOGIES ...................................................................... 14 B. STATUS OF TRANSPORT CDM PROJECTS ....................................................................... 17 C. RAIL PROJECTS POTENTIAL ............................................................................................ 19 1. TYPES OF PROJECTS................................................................................................ 19 2. APPLICABILITY CONDITIONS OF RAIL METHODOLOGIES .............................................. 20 3. CORE DATA REQUIREMENTS FOR RAILWAY PROJECTS .............................................. 20 4. BASELINE,PROJECT,LEAKAGE, AND EMISSION REDUCTIONS .................................... 21 V. CONCLUSIONS AND DISCUSSION .................................................................................. 22 LIST OF BOXES, TABLES, AND FIGURES Box 1: Key issues and basic requirements for Clean Development Mechanism projects ............ 4 Table 1: Approved transport methodologies (excluding biofuel production) ............................... 15 Table 2: Rejected transport methodologies ................................................................................ 16 Table 3: Clean Development Mechanism transport projects ...................................................... 17 Table 4: Applicability conditions of Clean Development Mechanism rail methodologies ............ 20 Table 5: Data requirements of methodologies ............................................................................ 20 Figure 1: CDM organizational set up for transport projects .......................................................... 3 Figure 2: Methodology approval cycle of the Clean Development Mechanism ............................ 6 Figure 3: Project cycle of the Clean Development Mechanism .................................................... 7 Figure 4: CDM project cycle compared with the ADB project cycle ............................................ 13 Figure 5: Clean Development Mechanism project types ............................................................ 18 FOREWORD Strategy 2020 and Sustainable Transport Initiative of the Asian Development Bank (ADB) acknowledge prioritize the role of transport sector in climate change and vice-versa in transport. The Clean Development Mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) uses project formulation and implementation to combat climate change by providing additional finance to encourage the reduction of carbon dioxide (CO2) emissions. While the transport sector currently contributes more than 20% of emissions, a figure projected to increase rapidly in the next few decades, only 0.3% of the Clean Development Mechanism projects are in the transport sector. This is mainly due to methodological intricacies, costly data requirements, complex procedures, and weaker capacity in the sector. These are not readily available or easy to understand in the UNFCCC website. Therefore, this field guide has been developed to share the basic ideas and concepts of the application, development, and approval process of the Clean Development Mechanism for transport projects. Through this field guide, the hope is that it makes a contribution to expanding the limited knowledge and encourages more transport projects to take advantage of this mechanism, thus helping to create more sustainable transport projects. I would like to thank Ms. Susan Lim, former Transport Specialist for the South Asia Transport and Communications Division (SATC) of ADB and Dr. Jurg Grütter, a consultant from Grütter Consulting, who initiated this study, and Ms. Karma Yangzom, Environment Specialist of SATC for completing the study and bringing it to the final form. I am also thankful to the Transport CoP and the Regional and Sustainable Development Department (Technical Support Facility) for providing technical guidance and helping to make the paper more meaningful. Sri Widowati Director Transport and Communications Division South Asia Department ABBREVIATIONS ADB – Asian Development Bank BRT – bus rapid transit CDM – Clean Development Mechanism CDTA – capacity development technical assistance CER – certified emission reduction CoP – community of practice DNA – designated national authority DOE – designated operational entity EB – Executive Board GHG – greenhouse gas HSR – High Speed Rail

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