Determination Verification under JI Challenges and Pitfalls Bonn

Determination / Verification under JI - Challenges and Pitfalls Bonn - UNFCCC, February 13 th, 2007 Technical Workshop on Joint Implementation Thomas Kleiser thomas. kleiser@tuev-sued. de TÜV SÜD Industrie Service Gmb. H 1

Agenda 1. Short Overview TÜV SÜD and Carbon Management Services 2. General Remarks: Validation and Verification, the role of AIEs 3. Determination and Verification of JI-projects: Challenges and Pitfalls 4. Resumee and Expectations TÜV SÜD Industrie Service Gmb. H 2

1. Overview: TÜV SÜD and Carbon Management Services TÜV SÜD Industrie Service Gmb. H 3

What TÜV SÜD Does Certification Testing Training on behalf of industry, trade and commerce, public institutions and private individuals Overview on the entire company: - > 12. 000 employees - founded more than 140 years ago - 130 offices in more than 60 countries - 1 bn. € in sales (per business area: 47% industry, 39% mobility, 14% people) www. tuev-sued. com TÜV SÜD Industrie Service Gmb. H 4

TÜV SÜD Industrie Service and CMS Department Carbon Management Service (CMS) Founded end of 1999 • The team of the Department Carbon Management Service (CMS) maintains a team of around 16 professionals in its HQ in Munich. Globally about 55 local auditors are active for CMS in the field of CDM and JI in more than 40 countries. • A key asset of CMS is the high level of technical expertise present inhouse. • Validation/Determination and Verification of more than 350 CDM and JI projects • Accreditation for all scopes under CDM TÜV SÜD Industrie Service Gmb. H www. tuev-sued. de/our_locations/tuev_sued_group_worldwide 5

CMS - Activities and Experiences under JI TÜV SÜD - Activities and experiences under JI - determinations started end of 2002 - (Pre-) Determination of more than 45 JI projects in almost all countries in Eastern Europe as well as projects in some EU-15 countries - among these: 14 JI-projects in Ukraine and 12 JI-projects in Russia - verification started for around 10 JI projects - more than 15 projects published on JI-SC website for Global Stakeholder Consultation Process (GSP) currently - 1 (the first) project submitted to JI-SC for final approval TÜV SÜD Industrie Service Gmb. H 6

2. General Remarks: Validation, Verification and the role of AIEs TÜV SÜD Industrie Service Gmb. H 7

Reminder: JI Process of Determination and Verification Project Design PDD Proj. Part. ERUs DFP Host Country Lo. E Determination Det. -Report AIE Acceptance of Verification DFPs Lo. As Project. Registration JISC Implementation of Project and Monitoring System TÜV SÜD Industrie Service Gmb. H DFP Host Country Initial and Periodic Verification Report AIE Monitoring Report 8

Reminder: Role of AIEs - Determination and Verification of JI track 2 projects - Carrying out the Global Stakeholder Process (GSP) via JISC website - Assessment and approval of project specific baseline and monitoring methodologies - Assessment of compliance with national regulations and procedures - Initiating of approval of JI track 2 projects (on behalf of Annex I host country) by uploading final reports and Lo. A s (!) to JISC. TÜV SÜD Industrie Service Gmb. H 9

Timing of Determination/Verification Determination: 2 ½ - 6 month depending on project and PDD quality Additional issue: in case the validation period can be kept short the risk to adjust the PDD according to new rules/regulations can be minimized. Verification: No predefined period, but can be decided by the PP. Advisable: once per year as this complies with fiscal year and other reporting formats An Initial Verification after project implementation makes always sense at least in complex projects TÜV SÜD Industrie Service Gmb. H 10

Decisive parameters in determination/verification process Decisive parameters for determination/verification - complexity of the project (small scale/large scale/bundle of sites and methodologies, technology) - applied methodology (CDM or project-specific) - location of the project - availability of local auditors - country specific requirements - quality of submitted documents TÜV SÜD Industrie Service Gmb. H 11

Assistance for project developers - VVM Guidelines Validation and Verification Guidelines for CDM and JI Projects See: http: //www. vvmanual. info The VVM is an initiative of World Bank, IETA and all Applicant Entities, which aims to harmonize the process and quality of all GHG assessments. At the same time the VVM gives guidance for PDD developers regarding requirements in the validation and verification process. TÜV SÜD Industrie Service Gmb. H 12

Structure of the VVM Protocol Report Template Guideline Part One: Generic Guidelines Part Two: CDM Validation Part Three: Small Scale CDM Validation Report Template CDM Validation Protocol TÜV SÜD Industrie Service Gmb. H Small Scale CDM Validation Protocol Part Four: JI Determination Part Five: Initial Verification Part Six: Periodic Verification JI Determination Report Template Initial Verification Report Template JI Determination Protocol Initial Verification Checklist 13

3. Determination and Verification of JI Projects: Challenges and Pitfalls TÜV SÜD Industrie Service Gmb. H 14

Determination Process – Different Steps Different steps of Determination: 1. Pre-check of the project documentation 2. Desk review of PDD, baseline study, monitoring plan as well as further documents such as Business Plan, Technical Study etc. 3. On-site visit/audits: visit of the project location, audits/discussions with project owner and investors, consultation of local authorities, contacts to local stakeholders, identification of national requirements (stakeholder process, EIA), assessment of approval process (licenses, permits, ownership etc. ), assessment of the additionality of the project 4. Starting of GSP (parallel to 2 -3) via JI-SC website 5. Draft determination protocol (+ report) 6. Issuing of the final determination report with information reference list and determination protocol 7. Submission to the JISC for approval TÜV SÜD Industrie Service Gmb. H 15

Determination Process - main topics Main topics of the assessment: - Project documentation – project history – project motivation - Additionality (additionality tool for CDM projects), business plan, barriers, risks etc. - Crediting period/project lifetime - Applied technology and technological issues - Baseline study – correctness of scenario and assumptions (proof of information given in the PDD) - Monitoring Plan – concept, responsibilities, maintenance, calibration, emergency case, internal reviews, trainings etc. - Environmental Impact Assessment - Local Stakeholder Process - Results of the Global Stakeholder Process TÜV SÜD Industrie Service Gmb. H 16

3 a. Experiences of Determination TÜV SÜD Industrie Service Gmb. H 17

Experiences from Determination of JI-Projects In general: Our experiences are positive! - most PDDs are well-developed already in the initial phase of determination less revisions of PDDs in comparison to CDM - in most cases good data basis - high standard in technical planning and technical solutions - well-developed monitoring concepts in most PDDs Difficulties: - in most cases development of a project-specific methodology and/or bundling of (CDM-) methodologies - very complex projects (bundle of a number of measures in one project) TÜV SÜD Industrie Service Gmb. H 18

Experiences from determination of JI projects Observed Problems (1): - In some cases limited understanding of “additionality” - Missing experiences with “additionality tool”/how to proof additionality - Mixture of business-as-usual measures and additional measures - Project start without clear evidence for JI-consideration at the beginning - International accepted default values not always applied / proof for applied national values are sometimes not sufficient - Problems in defining project boundaries correctly/ not all sources and emissions included - Receipt of Lo. A TÜV SÜD Industrie Service Gmb. H 19

Experiences from Determination of JI-Projects Observed Problems (2): - Changes of project measures/technical solutions during project lifetime - Change in project boundaries during the lifetime of the project - Changes in the monitoring plan (missing sensibility what a JI project means) - Limited Environmental Impact Assessment - Limited local stakeholder process - Not all “JI-documents” in English available TÜV SÜD Industrie Service Gmb. H 20

Pitfalls: Project description The description of the project history and motivation is too limited. The description of the technical equipment to be applied in the project is not detailed enough or even missing. The management structure of the project and the corresponding responsibilities are not clearly described or missing. Risk management tools in case of unintended developments affecting the projects’ success but also the generation of carbon credits is not defined clearly enough. TÜV SÜD Industrie Service Gmb. H 21

Pitfalls: Application of Methodologies Expectations are partly too high regarding the contribution of the AIE to the application of already available methodologies (CDM) and the acceptance of project-specific methodologies Not all solutions are acceptable under JI! The project developer needs to develop the project-specific methodology! Applied methodologies are in some cases insufficiently described. Conditions and consequences of the application of the methodologies are sometimes unknown! A lot of projects use a mix of different methodologies – sometimes a confusion in the description of the methodologies emerges. Old CDM-methodology versions are applied. TÜV SÜD Industrie Service Gmb. H 22

Pitfalls: Monitoring plans are sometimes not sufficiently detailed (in technical issues) and comprehensive enough in the stage of PDD presentation for determination Quality assurance due to national standards, but differences in standards Routines and procedures are well performed by a motivated project team, but mostly not documented in a management system (risk for the future) No project specific manual (work instructions, organization) available TÜV SÜD Industrie Service Gmb. H 23

Pitfalls: Environmental Impact Assessment EIA: Elaboration often limited National and international requirements unknown (EU Accession) Only partial aspects of the environmental impacts are considered Frequently the only comment: project is per se environmental additional Limited information on social aspects of the project Consequence: problems with the “Letter of Approval” TÜV SÜD Industrie Service Gmb. H 24

Pitfalls: Local Stakeholder Process The project should be presented not only to local authorities but the actual local stakeholders. Appropriate media should be used. Otherwise the local stakeholder process is not very elaborated and limited to support from local and regional authorities. In order to consider comments stakeholder process should take place early in advance. TÜV SÜD Industrie Service Gmb. H 25

Experiences: Global Stakeholder Process Stakeholders and Parties contribute rarely to the global stakeholder process but the number of comments is increasing since JI Guidelines are available and publishing via JI-SC website is possible. The chance to comment on projects is mainly only taken by accredited observer organisations as environmental NGOs. Some comments come from competitors. Most comments given are negative. The number of comments for JI projects is lower than for CDM projects. TÜV SÜD welcomes all comments and takes them in its conclusion into account. TÜV SÜD Industrie Service Gmb. H 26

3 b. Experiences of Verification TÜV SÜD Industrie Service Gmb. H 27

Solutions for monitoring - use of “best practice” in monitoring and quality assurance - reference to accepted standards - norms, - metering equipment, - Third Parties for external services - maintenance of a project-specific QM System - inclusion of the determination of data uncertainty into MP - consideration of conservativeness - development of prepared (e. g. ) spreadsheets for later use TÜV SÜD Industrie Service Gmb. H 28

Advantage: Initial Verification - necessity depends on the size of the project (transaction costs) and the requirements of the involved parties - latest a first verification at the end of the first year always makes sense - an independent assessment of the monitoring plan before starting the project is helpful - delivers initial input for interim reports and internal reviews TÜV SÜD Industrie Service Gmb. H 29

Experiences from Verification Observed Problems (1): Project Implementation - unexpected problems with applicability of methodolgy - interpretable descriptions of monitoring method - missing approvals or licenses - inconsistencies of external data sources - use of accuracy indication given by equipment manufacturers - no availability of local support (e. g. accredited laboratories) TÜV SÜD Industrie Service Gmb. H 30

Experiences from Verification Observed Problems (2): Data Management - consistency in time over reporting period - data transfer between multiple computerized systems - time demand for consolidating data - verifiability of data processing (software codes, excel spreadsheets) - missing documentations - „private Know-How“ of single employees TÜV SÜD Industrie Service Gmb. H 31

Experiences from Verification Observed Problems (3): Quality Management - missing description of procedures and processes - availability of proofs (e. g. calibration documents) - missing investigation on representativity of samples (problems with confidence intervals) - missing calibration - access to plausibility parameter, which can deliver required level of assurance TÜV SÜD Industrie Service Gmb. H 32

4. Resumee and Expectations TÜV SÜD Industrie Service Gmb. H 33

Resumee - Nearly all JI projects determined by us can or could run under Track 2 and are able to fulfil the requirements set up by the JI-SC - Knowledge of additionality needs to be improved - In some cases major adjustments of the projects will be necessary; also experiences from CDM should be considered in the baseline concept and monitoring plan. - deficits in monitoring plans cause problems in verification in some cases - Problem: Early projects TÜV SÜD Industrie Service Gmb. H 34

Expectations in regard to JI-SC: - Periodic meetings between JI-SC, AIEs, DFPs and project developers would be helpful - Additional guidance necessary: a. ) grid factors (conservative approach) b. ) use of a project-specific methodologies in case a CDM methodology is available c. ) use of outdated CDM methodologies - Trust in independent entities must be justified by qualified work! TÜV SÜD Industrie Service Gmb. H 35

Thank you for your attention! Thomas Kleiser Tel. ++49 89 57 91 – 11 86 Thomas. Kleiser@tuev-sued. de www. netinform. net TÜV SÜD Industrie Service Gmb. H 36

TÜV Süd Industrie Service Gmb. H Carbon Management Servic Thomas Kleiser Tel. ++49 89 57 91 – 11 86 Thomas. Kleiser@tuev-sued. de www. netinform. net TÜV SÜD Industrie Service Gmb. H 37