While at first sight aimed primarily at enhancing the success quota of projects requesting registration, it is difficult to avoid the suspicion that DOEs are applying this policy simply to shed unwelcome validation requests in a period of full order books.

Projects that find resources to commence without having secured supplemental revenues from the CDM are generally suspected of being viable in their own right and therefore non-additional.

Lately, in fact, the main reason for EB rejection has been that projects have failed to prove they have seriously considered CDM before the project start – without the EB, however, providing a strict definition for “serious consideration” or “project start.”

Reacting to this development, the DOE Forum – a contact group established by the EB a year ago – tried to formalise the expression of “seriously considering the CDM.” It was agreed at the last DOE Forum meeting in April that the time lag between project start and validation would be a good indicator for the seriousness of CDM consideration.

Based on that rationale four DOEs – SGS, DNV, TÜV Süd and TÜV Rheinland – decided to adopt a joint policy of rejecting projects with a start date earlier than 12 months before requesting validation.

While a stringent application of additionality criteria is of paramount importance to the CDM, it must be left without doubt that the only authority to define such criteria is the EB. A unilaterally imposed policy by DOEs – even if well-justified and well-intended – needs approval of the EB in order to be legitimate.

Needless to say, DOEs at all times have the freedom to accept or reject a project for validation. However, if they put forward jointly adopted new additionality criteria for rejecting validation requests, this should be of concern not only to project owners and project developers but also to the EB itself, whose sole authority on defining criteria for the CDM is questioned by such action.

Furthermore, and in a formalistic approach, the DOEs – accredited by the EB for the purpose of following the rules of the Kyoto protocol – by such action may jeopardise their re-accreditation, when they have to prove that their procedures are in line with the EB requirements.

The response within the CDM community shows a general tendency: a strict application of the additionality concept is widely accepted, but there is a need for clear indicators or criteria, especially to evidence “serious consideration of CDM.”

An arbitrary determination of a cut-off period cannot be accepted as a criterion applicable to all project types and all regions, especially if project start is defined as broadly as with the DOEs’ definition. The case may well arise, for example, where all permits are in place well before the “real” start of the project and more than a year before validation.

In the light of the above, the DOEs would be well advised to reconsider their policy and wait for clear instructions of the EB. In its recent 41st meeting the EB has provided significant clarification by adopting a “guidance on the demonstration and assessment of prior consideration of the CDM” and the clarification of a project’s starting date (Paragraph 67 and Annex 46). It seems likely that the conflicting parties will converge gradually with their views on how to ensure additionality while speeding up the registration process.

After all – and hopefully – the cut-off rule might well be of no practical importance when the guidance provided by the EB proves apt to meet the requirements of both the project developers and the DOEs.

Source: CDM & JI Monitor, 6 August 2008, p. 7.