Registering a carbon project with the CDM through a programme of activities
Submitted by: Amanda Botes, Tuesday, July 17, 2012
The Clean Development Mechanism (CDM) offers an alternative way to register a small carbon project and earn carbon credits by registering a project under a Programme of Activities (POA). A POA is a mechanism that allows for an unlimited number of similar small scale carbon projects to be registered under one project application. The POA approach has been designed for projects that would have been too small to participate in the CDM on their own and for large programmes implementing multiple small-scale projects at different sites.
The mechanism suits sectors such as household energy efficiency, small scale waste management and agriculture. The POA mechanism has been put in place to help developing countries assist low-income groups on a large scale.
What is a POA?
A POA is voluntarily set up by a private or public entity with a set policy or goal to achieve a decrease in emissions. A broad framework is set up by a co-ordinating and managing entity (CME) and specific parameters defined in order for a project to be included. A United Nations Framework Convention on Climate Change (UNFCCC) approved CDM methodology is specified by the CME that all projects under the specific POA subscribe to. An unlimited number of projects can be included in a POA and are registered as a single CDM project activity. The projects can be at more than one site and can include more than one measure. The POA tool has been designed specifically to take into account small replicable projects that are in different locations so that similar projects do not have to be resubmitted. A POA has a maximum lifespan of 28 years.
CDM Programme Activities
Projects under a POA are called CDM Programme Activities (CPA). A CPA is a carbon project that reduces greenhouse gas emissions or removes greenhouse gases from the atmosphere. Usually CPA’s are projects that are small-scale. In order for a CPA to be included under a POA it must follow the same policy/goal and CDM approved methodology as set out originally by the POA. CPA’s can be run in different countries under a single POA. Each renewable crediting period for a CPA is limited to seven years but can be renewed twice. A fixed crediting period has a limit of ten years. More information can be found on the UNFCCC website.
Applications to the CDM
The CME applies to register the POA with the CDM and pays one set fee and goes through a similar process as when a stand-alone project applies for registration (For more information read our article on how to register a stand-alone project with the CDM). If the programme is registered successfully CPA’s can then be added to the programme without having to apply to the CDM individually. The CME ensures that each CPA is in line with the overall goal of the POA and that the methodology used is the same that was initially set and validated. The CME also makes sure that the CPA has not already been registered as a stand-alone project with the CDM. Furthermore the CME handles the distribution of the carbon credits.
Why register a carbon project under a POA?
Registering a carbon project with the CDM through a POA is less risky than applying as a stand-alone project. The CME takes most of the risk as they set up the programme and apply to register with the CDM. The CPA’s do not have to apply individually to the CDM and therefore do not risk losing money if their application is unsuccessful. The relative transaction costs of applying to the CDM as a small stand-alone project are extremely high and these costs are lessened by applying through a POA. Furthermore the CME handles all correspondence with the Executive Board of the UNFCCC which means less administration for the CPAs.
POA’s in South Africa
Presently there are only a small number of POA’s that exist in South Africa. The Carbon Protocol of South Africa has recently registered four different POA’s with the UNFCCC that focus on wind energy, solar energy and trigeneration. Another POA registered in South Africa is a solar water heating project registered by International Carbon. A full list of South African projects in the process of registering with the CDM, both POA’s and stand-alone projects, can be found here.
South African entities that are considering registering a POA with the UNFCCC need to have the POA approved by the UNFCCC before the end of 2012 as the European Union will prohibit the purchase of carbon credits from new projects from 2013 unless they are from Least Developing Countries. Additional CPA’s can be added on and credits sold on the EU Emissions Trading Scheme if the POA is registered before 2013.
Disadvantages to setting up a POA
For the entity setting up the POA costs are higher than registering a stand-alone project and the time taken to register the POA is longer. It is therefore advised that the entity consider all their options, such as looking at stand-alone and small-scale bundling, before deciding to register a POA with the CDM.
Difference to small-scale bundling
The CDM also offers an alternative way to register small-scale carbon projects through a bundling system. Bundling requires that every small project under the group is registered from the start of the application and no new projects can be added. The total value of the projects cannot exceed a certain amount and risk is higher at the initial application stages for the projects.
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