There are a number of steps that small island developing states need to take to prepare for the CDM. Formally, the preparation that is needed for the CDM is: • Meet the CDM eligibility requirements (1.1): ratify the Kyoto Protocol (3) and designate a national CDM authority (1.3.2)

Information on the CDM Executive Board (1.6.2) section of the UNFCCC website provides the information on the CDM rules (cdm.unfccc.int).

Other preparation that is recommended is: • Consider the pros and cons (1.2) of participating in the CDM. • Decide national CDM investment priorities (1.3.3) • Establish national CDM approval process (1.3.4) • Build national private sector capacity (1.3.5)

Examples (1.3.1) of how some countries are preparing for the CDM provide ideas that could be useful.

Each developing country that participates in the CDM must have in place a designated national CDM authority (1.3.2) that will approve CDM projects, thus confirming that the projects are in line with the country’s sustainable development needs. National approval processes are not set down in the CDM rules and each country must consider how best to carry out this function. Transparent and simple procedures will be more helpful to investors. One of the benefits of national preparations is that clarity on national decision-making processes will improve a country’s attractiveness to potential CDM investors. Foreign investors will look for the most cost-effective opportunities but are also more likely to seek CDM project opportunities in countries that have well organized project approval processes.

1.3.1 Examples of national CDM preparations

Preparing for the CDM – CDM Susac The CDM Susac project is a two-year project funded by the European Commission and the UK Foreign and Commonwealth Office, which aimed to identify, develop and promote CDM projects in Senegal, Uganda, and Zambia. The project put into place tools that assist these countries in building the necessary capacities to attract investments by using a learning-by-doing, fast track approach to training and education. One of the techniques that the project used is the putting in place of national clearinghouse agencies to identify, verify, certify and monitor investments and emissions and to coordinate national activities. National stakeholders were informed and involved, potential CDM projects were identified, baselines and monitoring plans developed, national secretariats and action plans were initiated, and national workshops, websites, and seminars were begun. The project focused on combining the use of local expertise and knowledge with on-the-job training. The project was concluded in 2002.
See CDM Susak website http://cdmsusac.energyprojects.net

1.3.2 National CDM authority

The rules of the CDM require countries that participate in the CDM to designate a national authority (1.3.2). The role of the designated national authority is to ensure that proposed CDM projects meet any planning and other legal requirements, and that the project is in accordance with national sustainable development investment needs. The national authority checks that the project design document (1.5.1) is complete and realistic and decides whether to approve the project. The national authority also provides written confirmation of its country’s voluntary participation in each CDM project to the designated operational entities (1.6.3) and confirms that the CDM project activity assists it in achieving sustainable development.

A national authority could be a person or unit in an existing government ministry. In order for a national authority to effectively undertake its responsibilities, new national regulatory policies may need to be enacted and expertise gained to ensure the national authority has the mandate and skills to assess and approve CDM projects.

Links to further information: http://cdm.unfccc.int/DNA
www.csdanet.org/English/publications/CDMguide.pdf

1.3.3 CDM investment priorities

Although not required under the CDM rules, an important step in preparing for the CDM is to decide national priorities and goals for CDM investment. In setting these priorities, consideration could be given to the types of technology needed, the degree of sustainability they will achieve, and the amount of emissions reductions that will be secured. Considerations could include: • What development path does the country wish to take? • What sectors of the economy need investment? • What are the needs of local people? • What environmental attributes must be protected?

Putting the national priorities for CDM investment (and any activities that will not be acceptable) on a website or in a brochure shows and active interest in the CDM and will enable investors to see whether their project ideas are likely to be accepted. Project proposals that are not in line with national priorities can then be dropped by investors at an early stage with no unnecessary effort in meeting the requirements of the CDM process, while those that do fit with national priorities will be encouraged to proceed.

1.3.4 National CDM approval process

All CDM projects must be approved by the government of the country in which the project is located. The governments of the country under whose responsibility the foreign investor operates may also need to approve the project.

CDM projects will need to comply with existing national law (such as foreign investment, planning, environmental impact assessment, and pollution laws and regulations). There may be additional requirements for CDM projects from the country’s national priorities (1.3.3) and goals for CDM investment.

If the national authority decides to approve a CDM project, it must provide the project participants with a formal letter of approval stating, among other things, that the project assists the host country in achieving sustainable development. As part of the national approval process, governments may decide to require an environmental impacts assessment (1.3.4.1) (EIA).

Project participants will need to ensure that their proposed project is in accordance with the municipal, planning, environmental, health and safety, and other laws of the host country in order to receive formal approval of the government. Project participants and potential CDM investors will need access to information on the country’s CDM investment priorities and any laws and regulations with which they must comply. Information on agencies that may be able to assist them in ensuring that they meet these national requirements should be provided. A telephone hotline or a website could be set up directing interested people to information on the country’s approval process and requirements for CDM projects.

1.3.4.1 Environmental Impact Assessment

If the impacts of the project on the environment are considered by the host country government or the participants to be significant, then an Environmental Impact Assessment (EIA) may be required for a CDM project. In such cases, government approval might only be given if the host country’s rules (if any) are followed for determining environmental and other impacts and considering plans to mitigate and monitor their effects.

EIA is simply a review of the impacts that an activity may have on people, the environment, and society. Laws that implement EIAs vary. Some review the social, cultural, and policy implications as well as the environmental impacts that a new activity may have. Others concentrate simply on the environmental impacts. In some EIA laws, projects are only required in specific sectors or for large publicly financed or operated activities. In the CDM context, EIAs are only required where, in the view of the host country or one of the project participants, it is likely that significant impacts of one form or another will result from the proposed activity. If a country has no EIA legislation or policies, then no EIA is required regardless of the significance of the impacts that may arise.

Click here for details on the EIA process (1.3.4.2)

Click here for examples of national EIA processes (1.3.4.3) that have been implemented.

When validating a project, a designated operational entity must review the analysis of the environmental impacts of the project activity. In situations where there is unlikely to be significant environmental impacts of a CDM project, there will be little or no documentation to review. However, in cases where significant environmental impacts are likely to occur and EIA laws in the SIDS apply, environmental impact assessments must be conducted for CDM projects. These assessments usually review the impacts that an investment will have on the environment, local communities, and the economy and suggest measures that can be taken to reduce the damage that could be caused by a project. However, the scope of EIA requirements depends on the legislation of each country. EIAs allow the public to become aware of projects and to assist decision-makers by making highlighting impacts that might not otherwise be considered in the planning process.

1.3.4.2 Environmental Impact Assessment process

The EIA process

The EIA process generally consists of eleven steps. Each piece of EIA legislation will have different requirements, thus this list is not definitive or exhaustive. At almost each of these stages, there is a role for public input and participation. The process can be summarized as follows: • Screening: Screening is a rapid appraisal to determine whether an EIA is needed for a particular project. • Scoping: determining what factors are to be considered in the assessment, what methodologies for impact prediction will be used in testing the chosen factors, and the degree and ways to which these tests will be conducted. • Data Collection: Once the methodologies for conducting the assessment are selected, the assessor will commence with the collection of data to apply to these methods for predicting the project’s impacts. • Impact Prediction and Evaluation: The data that has been collected is applied to the methodologies selected at the scoping phase. • Mitigation Plan: Plans for mitigating the harm caused by the impacts are devised. • Monitoring Plan: Plans should be made on how the actual impacts of the project after its implementation will be monitored. • Review Plan: A plan for the periodic review of the real impacts that the project causes. • Environmental Impact Statement (EIS): A detailed report (EIS) describing the methodologies, research and findings of the assessment. • Decision-making: Decision on whether the project’s impacts are significant enough to deny government approval of it, or to require adjustments to reduce the project’s impacts. • Appeal: Appeals may be initiated in cases where parties or stakeholders believe that relevant factors were not considered in the decision-making process. • Review and Adjustments: Reviews of the actual impacts caused by a project once it is implemented should be conducted based on the project’s monitoring plan and review plan

1.3.4.3 Examples of EIA processes that have been implemented

EIA in the Seychelles

The Seychelles’ EIA regulations provide for the undertaking of environmental impact assessment for certain projects and activities that are likely to have adverse environmental effects. Projects and activities, and all proposals, plans and programmes in respect of these projects and activities in both the public and in the private sectors require this environmental authorisation. The regulations provide for public to participate in the EIA process by allowing them to make written or verbal comments on the project or activity relating to the EIA. If the government authority deems it is necessary, it may refer the EIA to the Seychelles’ Environmental Appraisal Committee (EAC), which consists of technical experts in the relevant development sector and the representatives of the relevant ministries. When granting environmental authorisation, the authority must have regard to any comments made by the public and any recommendations made by the EAC.

In its Environmental Protection Act 1996, the Seychelles introduced public participation into its policy decision-making process. Under the Act, any member of the public may comment during an EIA and give input relating to a project or activity undergoing an assessment. The public must also be given notice comprising of information on the project or activity including its description, location, and lifespan. This information must be placed for public inspection at a specified place and published in local newspapers.

EIA in the Bahamas

The Bahamian Government is in the process of introducing an Environmental Impact Assessment Act and related regulations. Under the draft legislation any large development in the Bahamas must undergo a rigorous EIA process. At present, the Ministry of Public Works has ministerial approval to open any project for public comment and for more formal public consultation. This process is designed through the work of the Bahamas Environmental Science and Technology Commission (BEST Commission). The main objective of the BEST Commission is to protect and conserve the environment by: • creating framework strategies for sustainable development • implementing the EIA process • co-ordinating international assistance to develop conservation policies • develop data banks of information on the environment

The BEST Commission exists at the pleasure of the prime minister. It co-ordinates EIAs and responds to EIA reviews conducted by the board of key government agencies appointed by the PM. The BEST Commission also reviews final EISs and recommends approval and modifications to the prime minister.

1.3.5 National private sector capacity

The private sector needs both the capacity to identify and implement domestic CDM projects and the capacity to provide services at stages of the CDM project cycle (1.5) which require independent third party assessment, such as validation (1.5.2), monitoring (1.5.3), and verification and certification (1.5.4). The development of local CDM service providers will provide income for national companies rather than this business going to foreign consulting and certification firms.

The local private sector entities may also benefit from investing in CDM projects so need to be aware of the opportunities the CDM provides. Local education and training, publicity about the CDM, stakeholder consultation and public participation in national decision processes for the CDM are examples of ways to encourage private sector participation in CDM projects.