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Implementation of the Kyoto Protocol’s Clean Development Mechanism in Armenia

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Table of contents 1. CDM POLICY FRAMEWORK IN ARMENIA ..................................................................2 1.1 Background ....................................................................................................................2 1.2 Implementation...............................................................................................................2 1.2.1 Capacity building .......................................................................................................................... 2 1.2.2 Legal framework ........................................................................................................................... 4 1.3 Institutional Set up of the Armenian DNA.......................................................................5 1.3.1 Head of the DNA and the DNA Contact Person .......................................................................... 5 1.5 DNA Secretariat .............................................................................................................6 1.5 Expert Group ..................................................................................................................6 1.6 Procedure Proposed for CDM Project Approval in Armenia ..........................................7 1.7 Conclusions....................................................................................................................7 2. CDM PROJECT APPROVAL PROCESS ......................................................................7 2.1 Background ....................................................................................................................7 2.2 Procedure Proposed for CDM Project Approval in Armenia ..........................................8 2.3 CDM projects approval criteria .....................................................................................12 2.4 General national requirements to CDM projects ..........................................................13 2.5 Sectors prioritized by the Armenian DNA for CDM project implementation .................13 2.6 CDM projects in Armenia .............................................................................................14 3. LEGAL ISSUES REGARDING CDM IN ARMENIA......................................................15 3.1 Definition of the legal nature of CERs in Armenia ........................................................15 ANNEX I: SAMPLE LETTER OF ENDORSEMENT.............................................................17 ANNEX II: SAMPLE LETTER OF APPROVAL ....................................................................18 ANNEX III: CDM PROJECT ACTIVITIES IN ARMENIA ......................................................19 1. Nubarashen Landfill Gas Capture Project in Yerevan ............................................................... 20 2. Lusakert Biogas Plant (LBP), methane capture and combustion from poultry manure

treatment..................................................................................................................................... 22 3. Yeghegis Small-Scale Hydro Project ......................................................................................... 24 4. Argichi Small Hydroelectric CDM Project ................................................................................... 26 5. Jradzor Small Hydro Electric CDM Project................................................................................. 28 6. Eghvard-2 Small Hydropower Project in Armenia...................................................................... 30 7. Hankavan-1 Small Hydroelectric CDM Project........................................................................... 32 8. Energocor Small-Scale Hydro Bundled Project in Armenia ....................................................... 34 9. Saravan and Her-Her Small-Scale Hydroelectric CDM Project ................................................. 36 10. Optimization of Cement Production Technological Processes and Introduction of Power and

Resources Saving Technologies at CJSC MICA-CEMENT....................................................... 38 11. Cascade Credit Small Scale Hydro Bundled Project in Armenia ............................................... 40 12. Gegharot Small Hydropower Plant in Armenia........................................................................... 42 13. Community Small Scale Afforestation/Reforestation Project in RA Lori Marz........................... 44 14. Recovery of Biogas from Chicken Manure and Thermal (Electrical) Energy Generation at

Araks Poultry Factroy ................................................................................................................. 47 15. Semenovka 14.5 MW Wind Farm Project .................................................................................. 49 16. Restoration of the Heat and Hot Water Supply for the Avan District in Yerevan, Armenia........ 51 ANNEX IV: CDM PROJECT OPPORTUNITIES IN VARIOUS REGIONS OF ARMENIA ...53 ANNEX V: LIST OF CLEAN DEVELOPMENT MECHANISM PROJECTS IN ARMENIA....54 ANNEX VI: ABBREVIATIONS .............................................................................................57 ANNEX VII: GLOSSARY OF CDM TERMS.........................................................................58


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1. CDM Policy Framework in Armenia

1.1 Background The Republic of Armenia signed the United Nations Framework Convention on Climate Change (UNFCCC) on June 13, 1992 and ratified it as a non-Annex I country on May 14, 1993. On December 26, 2002, the National Assembly of Armenia ratified the Kyoto Protocol, which made the Armenia the 108-th Party to join the Protocol. Thus, Armenia has met one of the main requirements for participation in Clean Development Mechanism (CDM). It is important to mention that Armenia, as a non-Annex I country, does not have any quantitative obligations regarding greenhouse gases emissions reduction or limitation.

1.2 Implementation On September 16, 2003, the Ministry of Foreign Affairs of the Republic of Armenia submitted a notification to the UNFCCC Secretariat on the assignment of the Ministry of Nature Protection (MoNP) of the Republic of Armenia as Designated National Authority (DNA) for CDM in Armenia. On November 9, 2004, the Memorandum of Understanding between the Government of the Republic of Armenia and the Government of the Kingdom of Denmark on co-operation for the implementation of the Kyoto Protocol was signed. The main objective of the Memorandum is to facilitate the development and implementation of project activities in the Republic of Armenia and the transfer to Denmark of the agreed part of the Certified Emission Reductions (CERs) resulting from those project activities in accordance with Article 12 of the Kyoto Protocol. The Memorandum was ratified by Decree of the President of the Republic of Armenia on March 9, 2005 and entered into force on March 17, 2005. Starting from 1998, four year Action Plans were developed for the implementation of commitments of Armenia under UNFCCC. The Action Plans adopted by the Government Decisions set measures, responsible and co-operating national agencies for the implementation of certain activities and measures. The Action Plan adopted in 2004 for the period of 2004-2008 envisaged measures for the implementation of the Kyoto Protocol in Armenia. Particularly it was planned to elaborate and adopt the procedures for national approval and implementation of CDM projects.

1.2.1 Capacity building In 1996, the UNDP/GEF funded project ”Armenia - Country Study on Climate Change” was launched in order to support Armenia in capacity building and developing its First National Communication (FNC). The ultimate objective of this project was building capacity in Armenia to fulfil the country’s commitments to the UNFCCC and respond to the objectives of the Convention on a sustained basis. Within the framework of the implementation of Phase I of the mentioned project, Armenia’s First National Communication was developed and presented in Buenos Aires in 1998, at the fourth Conference of the Parties to UNFCCC. In 1997, the Climate Change Information Center along with its web site (www.nature-ic.am) was established aiming at provision of the information on


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ongoing and envisaged environmental projects targeted to climate change mitigation, as well as development and dissemination of publications and awareness rising materials. In II phase of the project, Armenia received additional funding from UNDP/GEF for incorporating a technology needs assessment in priority areas. The elaborated report also provides the outcomes of a self-assessment of national needs for GHG abatement and adaptation technologies and prioritised them under a set of evaluation criteria agreed by experts and stakeholders consulted. After selection of key technologies, a package of project proposals, addressing each selected technology option was developed. In 2002 GEF supported also the regional project aimed at national capacity building for development of GHG inventories. This project targets 12 countries from Eastern Europe and Newly Independent States (NIS), including Armenia. By strengthening the institutional capacity to prepare inventories and establishing a trained, sustainable inventory team, the project contributed to building country capacity to reduce uncertainties and improve the quality of inventories for subsequent NC thus contributing to the improvement of national strategies for reducing greenhouse gas emissions. In 2003-2004 the UNDP/GEF funded project - “Armenia – National Capacity Self-Assessment for Global Environmental Management (NCSA)” commenced having in its objective determination of the priority needs for developing Armenia’s capacity to meet its commitments to the global environmental management. Its activities focused on capacity related issues that are common across the UN environmental conventions, including needs associated with strengthening institutional mechanisms, environmental assessment, monitoring and research, improving the dialogue, information exchange and co-operation amongst all stakeholders. As an outcome of the project, the national NCSA Action Plan for 2004-2008 has been developed and approved by the Governmental Decree. In 2004 the EU funded “Technical Assistance to Armenia, Azerbaijan, Georgia and Moldova with Respect to their Global Climate Change Commitments” regional project started. The overall objective of this three-year project was to assist participant countries in building institutional and technical capacity for participation to the UNFCCC and Kyoto Protocol. The regional project assumed the following: (a) capacity building for hosting CDM projects in the beneficiary countries, including assistance in forming the institutional infrastructure required to support CDM projects and development of a portfolio of CDM projects, which fits into the sustainable development strategy of the beneficiary country; (b) awareness raising among key policy-makers, the business community and the general public on the issues related to the UNFCCC and the Kyoto protocol, and on the development opportunities and issues with respect to CDM and GHG mitigation; (c) local capacity development in GHG emission forecast modeling and assessment of sectoral GHG mitigation potentials and options and (d) assistance to the beneficiary countries in developing their national climate change strategies, including mitigation and adaptation measures. The project outcomes include: (i) organization of a series of local and international awareness raising seminars on Kyoto Protocol and CDM for representatives of key ministries, project partners, private companies and NGOs; (ii) development and update of the CDM project pipeline; (iii) development of CDM Manual for Armenia; (iv) development and maintenance of the project website (www.cdm.nature-ic.am) which serves as a channel for dissemination of project materials and CDM related


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information; (v) development of a draft procedure of CDM project submission and approval; (vi) development of baseline study for grid-connected small renewable projects and three CDM project design documents. In addition, the Project Armenian office supported the MoNP in evaluation of CDM project proposals and design documents and maintaining other administrative functions regarding the CDM, thus, contributing to effective operation of the DNA in Armenia. Provision of assistance to the MoNP has been continued by the UNDP/GEF “Enabling Activities for the Preparation of Armenia’s Second National Communication to the UNFCCC” Project since 2007. In particular, the Project has been assisting the MoNP in executing its function as CDM DNA, which includes technical and administrative assistance to the DNA, communication with project proponents and potential investors, organization of awareness raisins seminars and public hearings with participation of key stakeholders and environmental NGOs, assessment of CDM project activities submitted for endorsement or approval, elaboration of analytical papers regarding CDM developments, identification and promotion of GHG mitigation projects as well as development of sub-legislative draft acts.

1.2.2 Legal framework On July 19, 2006, the Government of the Republic of Armenia adopted Decision N-974N on “Implementation of Projects within the framework of the Clean Development Mechanism of the Kyoto Protocol under the United Nations Framework Convention on Climate Change”. In order to ensure the implementation of Article 12 of the Kyoto Protocol under UNFCCC, the Government of the Republic of Armenia has decided to: 1. Recognize that the Ministry of Nature Protection of the Republic of Armenia is

the DNA for the Clean Development Mechanism, which is defined by Article 12 of the Kyoto Protocol under the United Nations Framework Convention on Climate Change.

2. Define that the Ministry of Nature Protection of the Republic of Armenia: a) Approves the compliance of project activities implemented under the CDM

with the requirements of Article 12 of the Kyoto Protocol; b) Certifies the voluntary participation of project participants in projects

implemented under the CDM; c) Ensures availability of information on projects implemented under the CDM; d) Conducts negotiations with potential investors and develops strategic

directions for implementation of projects under the CDM; e) Ensures the efficient participation of the Republic of Armenia in international

processes of the CDM under the Kyoto Protocol; f) Ensures the co-ordination of CDM projects and project documents with

relevant stakeholders and organizations, according to the procedures defined by the legislation of the Republic of Armenia.

The decision has also authorized the MoNP to develop and approve the “Procedure for submission of project documents under the CDM” as well as negotiate (jointly with the Ministry of Foreign Affairs of the Republic of Armenia) with international organizations and/or donors for provision of technical and financial assistance to the DNA.


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In pursuance of the above provision, on 26 December 2008, the Minister of Nature Protection of RA signed the Decree N 474-N on Establishing a Procedure for Submittal of Project Design Document under the Kyoto Protocols’ Clean Development Mechanism. The procedure sets conditions for submission of CDM Project Design Documents in two steps, including: (i) the non-obligatory stage of submission, assessment and endorsement of a project idea note and (ii) the mandatory stage of submission, assessment and approval of a project design document. The provisions of the Decree N 474-N is mandatory for all CDM project design documents submitted to the MoNP for endorsement and approval. The document is available on the Climate Change Information Center’s website at: www.nature-ic.am. On September 10, 2009 MoNP finalized drafting of the formal procedure for evaluation and approval of the CDM projects. The current third edition of the document went through broad consultation with the MoNP legal and normative departments as well as the Ministry of Justice of RA. The final adoption of the procedure is expected by the end of year 2009.

1.3 Institutional Set up of the Armenian DNA The proposed draft procedure aims at 1) utilizing the existing institutional structure of the DNA; 2) being less bureaucratic and more transparent; 3) relying on existing consultation practice; 4) using the experience gained so far from the approval process of the first CDM projects in Armenia. The final decision on a CDM project endorsement / approval is made by the DNA (MoNP) based on positive evaluation of the key stakeholders. For that reason, the DNA (while using the already established practice of consultations between different ministries) will acquire the official opinions of the Ministry of Economy of RA and the Ministry of Labor and Social Security of RA. The choice of these key-ministries is justified by the fact that these bodies are responsible in the country for preparation and implementation of strategy in the field of economic and social development, i.e., for the social and economic components of the country’s sustainable development. As to the environmental component, the DNA itself will assess it, as the responsible ministry for environmental policy. To provide more transparency and efficiency of decision-making on CDM projects, the Armenian DNA has defined a set of basic criteria for project evaluation, which reflects the objectives of the country’s sustainable development. These criteria will serve as a constituent part of the official procedure for CDM project approval. In addition, the conformity of the project objectives to the policy in the particular sectors has to be confirmed by the corresponding ministries and agencies. The DNA will request also an official letter from the project national participant(s) stating their willingness to participate in the CDM project. Besides that, the project participants have to submit the official protocol on the results of public hearings and/or comments received from stakeholders and public during the consultation period. More information on CDM projects approval process is provided in Section 2.

1.3.1 Head of the DNA and the DNA Contact Person The Minister of Nature Protection of RA is acting as the Head of the CDM Designate National Authority in Armenia. The Head of Environmental Protection Department of the MoNP acting as UNFCCC National Focal Point has been appointed the DNA Contact Person. Contact details are provided below.


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Head of Designate National Authority for the CDM in Armenia: Mr. Aram Harutyunyan Minister of Nature Protection of RA Government Building #3, Republic Square Yerevan 0010, Republic of Armenia Tel.: (+374 10) 521 099, 585 469 Fax: (+374 10) 583 933 E-mail: [email protected] Website: www.mnp.am

DNA Contact Persons: Mr. Aram Gabrielyan Head of Environmental Protection Department Ministry of Nature Protection of RA UNFCCC Focal Point Government Building #3, Republic Square Yerevan 0010, Republic of Armenia Tel.: (+37410) 583934, 583920 Fax: (+37410) 583933 E-mail: [email protected] Website: www.mnp.am

1.5 DNA Secretariat The DNA organizes and implements its activities with the assistance of the DNA Secretariat. The Secretariat functions in the initial phase are entrusted to the Environmental Protection Department of the MoNP Whereas, the final operational and financing structure of the Secretariat is still a subject of discussion, the main administrative functions of the Secretariat proposed by the draft Procedure are as follow: Organize and regulate the process of submission, evaluation and approval of the

CDM project documents; Provide consulting for local partners on the development of project documents,

including development and provision of Project Idea Note (PIN) forms, guides and other relevant materials;

Register the Project Design Documents (PDD) in the national CDM database and make the documents public in electronic format;

Assist the DNA in development of sustainable development criteria for CDM projects and evaluation of PDDS against those criteria;

Review officially submitted project documents (PIN/PDD) and prepare evaluation reports for decision making by the DNA; and

Develop and maintain a publicly accessible database containing information from all approved project design documents and their evaluation reports on which the Designated National Authority based its approval decision as well as subsequent validation and verification reports on emission reductions from approved projects.

1.5 Expert Group At the stage of projects evaluation, the DNA may request the services of experts. The objective of this Expert Group is to review the project documents in terms of their conformity with national strategies and policies, examine technical aspects of the project, assess the projects in terms of the CDM requirements; and develop and submit to the DNA (Secretariat) relevant evaluation report. The Expert Group will include independent experts, representatives of sectoral ministries as well as their separate divisions, etc. It will also include the trainees of the CDM capacity building workshops organized within the EC TACIS project. The issue of financing of the experts to be included in the Expert Group is still under discussion. At the beginning, the experts may volunteer, however, later on a


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transparent mechanism of their sustainable financing should be developed in order to ensure the Group’s effective work.

1.6 Procedure Proposed for CDM Project Approval in Armenia National approval of CDM projects has a twofold purpose: 1) formally indicate that the country is voluntarily participating in a specific project

activity; and 2) acknowledge, that the project is assisting in achieving national sustainable

development goals. It must be stated that the national approval process reviews the conformity to the CDM requirements and does not free the project owner of complying with national legislation and regulations.

The detailed description of the procedure proposed for CDM project approval in Armenia is given in Section 2.

1.7 Conclusions As of today, the DNA is legally established and operational. It provides efficient approach for CDM project approval. However, further development of the CDM potential in the country requires time and additional financial resources and is directly connected with relevant capacity building. A number of measures aimed at reinforcement of CDM processes in the country have been already developed, since it is viewed as a promising mechanism for attracting financial means in the sectors of economy and social development where regular investments are often hampered. Due to the support provided by the DNA and its active participation in all stages of project development, Armenia holds a leading position in the Commonwealth of Independent States on the number of CDM projects registered by the CDM Executive Board. At the same time, the country recognises that there are barriers preventing CDM projects from development. These obstacles can be listed in the following order: sophisticated and costly procedures of project documentation development and

approval; low awareness of national decision-makers, private sector actors and general

public on the benefits and specifics of the CDM process; lack of awareness on legislative and financial aspects of CDM;

The national capacity has to be enhanced to ensure the smooth implementation of the CDM projects and monitoring of the expected mitigation objectives. 2. CDM Project Approval Process

2.1 Background Project approval by the Host Country is a mandatory prerequisite established by the international regulations for potential CDM project registration by the CDM Executive Board. The assessment of projects for the Host Country approval is the primary role of the DNA, which has the responsibility to decide whether a proposed CDM project activity makes contribution to achieving the country’s sustainable development goals and whether the country participates in a project voluntarily.


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With this regard, it is necessary that a country which is willing to host CDM projects establish a logical, clear and transparent procedure for projects submission, evaluation and approval. Availability of such a procedure is not only a necessary formality but also an important factor which provides protection of the rights and interests of the host country lowers risks for local and international project participants and raises attractiveness of the country from the point of view of CDM project realisation. The last factor is especially imperative for Armenia, since the country has a relatively small CDM potential. A well-developed and clear procedure would improve Armenia’s competitiveness in the field of CDM and encourage local and international investors to participate in the development of CDM projects in the country.

2.2 Procedure Proposed for CDM Project Approval in Armenia The procedure includes two stages of the CDM projects submission and approval: 1) the non-obligatory (voluntary) stage of submission, assessment and

endorsement of a project idea note (PIN); 2) the mandatory stage of submission, assessment and approval of a project

design document (PDD).

The voluntary stage The voluntary stage includes development and submission of a Project Idea Note (PIN) for the DNA's consideration and endorsement. The PIN shall be submitted to the DNA on a voluntary basis and shall not be considered as a prerequisite for approval of a CDM. Project participants may develop a PIN for initial review of the proposed project activity and obtaining the Letter of Endorsement from the DNA based on evaluation results. There are several purposes of the project initial screening process and the issuance of the Letter of Endorsement such as: i) evaluation of project eligibility under CDM and the national legislation at the earlier stage, ii) improvement of project quality based on the received comments and recommendations, iii) facilitation of contact between potential partners, investors and carbon funds, iv) lowering risks and financial losses for project participants in case of major unacceptability of the proposed project activity, etc. A PIN is to be prepared in accordance with the format developed by the Armenian DNA and filled in to the best of the participants’ knowledge. If the PIN is prepared by the Project Participants in collaboration with any international organization, then the format in which it is submitted can be that used by that international organization. However, in that case the project participants are to submit also all the specific information requested by the DNA but missing in those formats as a separate file (e.g. availability of water and land use permissions, pre-feasibility study, etc.) Availability of the mentioned supplementary information on the project is preferable but not mandatory for PIN consideration and approval. The PIN shall be submitted to the DNA in the Armenian language in two copies in electronic and hard forms along with a respective Letter of Application. The Letter of Application shall be signed and stamped by all the participants of a CDM Project.


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If, by the time of the official submission of the PIN, participants of the project already know which organizations shall acquire the expected CERs, they will make a relevant note about it in the Letter of Application. The Project Participants shall notify the DNA in written of any changes in the parties and/or organizations acquiring the CERs if such changes take place before the formal submission of a Project Design Document. Together with the PIN, a project participant may also submit other supporting documents to justify the project and prove the proposal’s conformity with the country's sustainable development goals. In particular, these may be supported by recommendation letters obtained from various state and private organisations. During the official evaluation of a PIN, the DNA considers such supporting documentation. Nevertheless, the DNA reserves the right to address to the referee once again in order to obtain a more thorough estimation of the project activity and ensure unbiased references. Upon the reception of the documents, the DNA Secretariat will check the accuracy of both the PIN and the application letter along with the presence of additional documentation on the proposed project. After that, a relevant summary report will be submitted to the DNA. Having received the report, the DNA directs the copies of the PIN along with supporting documentation to the two key-ministries, namely, the Ministry of Labour and Social Security and the Ministry of Economy. Both Ministries will check compatibility of the PIN with the respective social and economic contribution to sustainable development and get back to the DNA with a written assessment of whether they would support the endorsement of the project. Depending on a project scale and complexity, the DNA may assign experts from the Expert group to perform an additional review of the project. The DNA may also send the document to various sectoral ministries, and agencies, responsible of the specific sector of the project activity, and request their opinion of the project’s compliance with the national sectoral strategy. All comments received from respondents should be collected and analysed by the Secretariat and relevant summary reports should be submitted to the DNA. The final decision on a PIN endorsement is taken by the DNA with consideration of all received feedback. The PIN evaluation and issuance of a response as either the endorsement letter or a letter describing why the project cannot be endorsed will require up to 25 working days. In case of a positive decision on a PIN, the DNA will issue the Letter of Endorsement (see Annex I) to the project participant. The project participant can then continue with further project development and start developing the Project Design Document (PDD). At the same time, the DNA endorses the possible CER transfer to the mentioned CER recipient (if the given circumstance has been mentioned in the application letter) as well as further participation of the Host Party’s representatives in the mentioned project. If the submitted project idea receives a negative opinion, the DNA returns the document to the project participant indicating the rationale for rejection and/or necessary improvements required according to the received comments.


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PIN endorsement does not guarantee, secure or imply the automatic approval of the proposed project in the future. During the approval stage the PDD will be checked by the DNA regardless of any positive comments or conclusions received during the endorsement stage. This means a project may be rejected in case of not-meeting approval requirements despite having received endorsement.

The mandatory stage The mandatory stage requires the submission of a PDD for the DNA’s consideration and approval. For the purpose of obtaining approval for a project activity under the CDM project participants shall develop and officially submit to the DNA the following documents both in electronic and printed formats: - Application letter addressed to the Armenian DNA, signed and stamped by all

the participants of the CDM Project - A PDD developed in accordance with the requirements and guidelines of the

CDM Executive Board under the UNFCCC. PDD shall also include information on the contribution of the submitted CDM Project to the sustainable development objectives of the Republic of Armenia and on the compatibility of the project with the country’s sustainable development goals);

- A declaration signed by all project participants nominating and approving the participant (person) in charge of negotiating with the DNA;

- An Initial Environmental Evaluation or Environmental Impact Assessment report (if available) required under the DNA procedures (the necessity of such depends on the project type);

- A protocol of stakeholders meeting (Public hearings on the project) and relevant supporting letters from stakeholders;

- Other available supporting documentation, such as: water use permit, license for construction and operation, power purchase agreement, feasibility study, information on temporary and permanent land acquisition, validation report from DOE, etc.;

- The Letter of Commitment stating the distribution of any ultimately acquired CERs (if such a decision were taken at the moment of PDD submission)

It must be noted that the Armenian DNA does not require that PDD be validated by the DOE at the moment of the PDD submission to the DNA. The process of project validation may also be initiated after the DNA’s approval or carried out simultaneously with the approval process. However, once a project is validated, the copy of a relevant report should be submitted to the DNA for information. Upon the reception of the PDD, the DNA Secretariat checks the accuracy of both the PDD and the application letter along with the presence of additional documentation on the proposed project. After that, a relevant summary report will be submitted to the DNA. Having received the report, the DNA directs the electronic and draft copies of the PDD along with the executive summary and other supporting documentation to the Ministry of Labor and Social Affairs and the Ministry of Economy. Both Ministries will check compatibility of the received project documents with the respective social and economic contribution to sustainable development and get back to the DNA with a written assessment of whether they would support the approval of the project.


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At the same time, the DNA will forward the PDD and other supporting documentation for the consideration of sector-specific ministries as well as, -agencies, companies and NGOs in order to obtain feedback on the PDD. The mentioned group of relevant parties may include the following organizations depending on project type:

Ministry of Energy and Natural Resources of Republic of Armenia Ministry of Urban Development of Republic of Armenia Ministry of Agriculture of Republic of Armenia Public Services Regulatory Commission “Environnemental Expertise” State Non-commercial Organisation Agency on Water Resource Management Agency on Biological Resources Management Environmental NGOs Others

Sector-specific ministries review the project’s compliance with the national and regional, policies and strategies. If needed the ministries and agencies may address to the DNA with a request to organise a working panel with the project participants and the DNA representatives to clarify any concerns or questions. The Expert Group may be asked by the DNA to review the PDD on its technical and environmental aspects. Starting with the initiation of project evaluation, the DNA will post a summary of the submitted PDD (due to its proprietary character) on its web site in order to invite public comments. Depending on the project type as well as its social and ecological significance, the DNA may require project participants to organise and hold a public hearing on the reviewed project. At that, the DNA is to take part in the development of the list of the invited stakeholders, experts, interested organisations and NGOs as well as representatives of local communities and self-government bodies. Minutes of the meeting may be later be used as an annex to the PDD or, alternatively, as a separate file presenting the hearings outcomes, drawn conclusions and developed recommendations.

Ministry of Nature Protection (DNA) Ministry of Economy Ministry of Labor

and Social Security

DNA Secretariat (Ministerial department)

Technical committee (Expert Group)

Project evaluation: • Environmental impact assessment (EIA) • Compliance to standards

Stakeholders• Ministries • Agencies and institutions • Local self governing bodies • NGOs and SNCOs • Private companies, etc.

Owner / CDM project developer

• Private company • State company • NGO etc.

Investor / CERs buyers • Carbon founds • Banks and other IFIs • Private / state organizations and companies etc.

CDM Project Participants

Recommendations on the project Decision on the project

Decisions on the project Approval /Refusal

Project submission (PIN / PDD)

Consultations on project


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All comments received from respondents should be collected and analysed by the Secretariat and a relevant summary evaluation report should be submitted to the DNA. The report will incorporate conclusions developed by the Expert Group as well. The DNA will evaluate the PDD against its contribution to the country’s sustainable development and make the final decision on the project approval taking into consideration the following information:

The information received and included in the PDD Evaluation report developed by the Secretariat Public comments received during the consultation period

In case of a positive decision on the PDD, the DNA will issue the Letter of Approval (see Annex II) to project participants. If the submitted PDD receives a negative opinion, the DNA returns the document to the project participants indicating the rationale for rejection and/or necessary improvements according to the received comments. The procedure of a PDD evaluation and approval lasts up to 30 working days. In case the DNA requires additional information from the project participants, the mentioned period will be halted until the required information has been received. A chart above demonstrates the CDM project submission, evaluation and approval process as currently in place.

2.3 CDM projects approval criteria The Armenian DNA has not officially approved a detailed list of sustainable development criteria yet. This explains the accepted practice of project approval when each relevant ministry deals with individual assessment of the project’s sustainability aspects and informs the DNA on its decision to support/reject project approval. Even though the given approach guarantees efficient and prompt addressing the issue of project approval, it does not provide enough transparency and objectivity. Considering both, this fact and the international practices, the Armenian DNA has defined a set of basic criteria for project evaluation, which may later lay grounds for development of an official procedure for CDM project approval. These basic criteria take into account technical, environmental, economic and policy aspects of the country’s sustainable development and fall into the four following categories: Environmental criteria (depending on the type of CDM project)

Improvement of air and water quality Efficient utilization of natural resource Biodiversity protection

Economic criteria Attraction of foreign direct investments Renewable energy development, energy-saving Sustainable technology transfer Employment generation Development of regional and local economy


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Social criteria Full participation of stakeholders Creation of new jobs Services quality improvement Capacity development

Political criteria Effects on national and/or regional priority objectives Effect on sector priority objectives

For each of the sub-criteria, it is imperative that the project describes possible effects, including mitigation measures in case of negative impacts.

2.4 General national requirements to CDM projects General national requirements to CDM projects may be grouped as follows:

Voluntary participation of the project participants and Project Host: a project must be developed on a voluntary basis and agreed with all the parties involved;

CDM project's contribution to sustainable development: the overall contribution of the project to sustainable development must be positive;

Prevention of any negative impact on the environment: projects should not result in negative impacts on the environment; and

Compliance with all national and international requirements for CDM projects.

2.5 Sectors prioritized by the Armenian DNA for CDM project implementation Taking into consideration the structure of the Armenia’s economy, its development potential, the lack of energy resources as well as some ecological aspects, the following sectors may be prioritized as the most promising in terms of CDM project realization: Energy, Industry, Waste Management, Agriculture, Forestry, Transport. The most preferable would be projects involving technology transfer, since this guarantees most sustainable support to the country. Next table provides more detailed information on CDM project categories with higher priority for Armenia.

Sectors prioritised for CDM project implementation

Sector Category Options

Renewable energy

Solar, wind, large and small hydro1, biomass, biogas, geothermal.

Energy

Energy efficiency

Co-generation, combined cycle technologies, heat supply, high-performance boilers, control and metering, insulation, reduction of the energy intensity of the production, industrial energy efficiency.

1 Given the fact that due to non-observation of basic environmental norms by project owners and lack of environmental monitoring system, the construction and operation of small hydro power plants might cause serious environmental harm and destabilize environment systems of rivers leading to unpredictable consequences for flora and fauna, the Ministry of Nature Protection of RA is currently reconsidering its polity toward small HPP CDM project activities and drafting more strict approval criteria for such projects.


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Fugitive emissions from

fuels

Reduction of methane leakage from gas transportation and distribution systems.

Industry Technological improvements Optimization of technology for cement production.

Waste Waste-to-energy Municipal solid waste and wastewater treatment.

Agriculture Biogas capture Mitigation of animal effluent related to GHG emissions.

Forestry Carbon sequestration

Afforestation and reforestation projects, enlargement of greenery areas, establishment of recreational areas, establishment of protection forest belts and other agro-forestry systems.

Transport Fuel economy improvement

Improvement of the level of motor transport gasification, diversification of urban public transport, increase in the number of buses of great capacity as well as electrified transport means, introduction of alternative fuel.

2.6 CDM projects in Armenia Due to transparent and understandable CDM procedures as well as qualified technical, expert and institutional support provided by the Armenian DNA, the number of CDM projects in Armenia is increasing constantly. Currently there are 16 project activities and proposals under the CDM in Armenia. More detailed information on the above mentioned projects is provided in Annex III and Annex V.


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3. Legal issues regarding CDM in Armenia

3.1 Definition of the legal nature of CERs in Armenia The legal nature of CERs has not been defined under the national legislation yet. However, it is important for Armenia as Host Country to consider the issue of CERs status and whether they are sovereign or private rights, since the uncertainty of this issue increases the risks for both local and foreign investors and may impede further development of CDM projects. Today, the only official document that outlines the country’s policy on CDM is Governmental Decision on “Implementation of Projects within the framework of the CDM of the Kyoto Protocol under the UNFCCC” which was ratified by Armenia's President on July 19, 2006. The document entrusts the MoNP (as the DNA) to develop and approve the Procedure for submission of project documents under the CDM. Most likely that the answer to the question, on who will be legally entitled to any benefits from GHG emissions reduction or sequestration (and, therefore, entitled to CERs) will be received in the process of approval of the above-mentioned procedure, taking into consideration all relevant aspects of the national legislation. During determination of the legal nature of CERs, the following two general approaches will be considered. One approach is that in the absence of any legal, normative document or regulation to the contrary, the project owner who undertakes a specific CDM project activity is considered the legal owner of any CERs produced and entitled to deal with them exclusively. However, it must be recognized that Kyoto Protocol is an international agreement providing rights and obligations for states. Thus, the second approach has been accepted that the reduction of GHG emissions is in effect the management of a natural resource. Therefore, some host countries may consider that CERs are sovereign rights that can only be owned and traded for profit by the government, since natural resources (such as the air and water) are seen to be the responsibility and the property of the government . At the same time, the Armenian DNA considers CDM as an effective tool for attracting foreign investment that may lead to development of projects in various sectors of the country’s economy. In this case, CERs become more important for Host Country as a factor increasing the appeal of CDM projects and attracting relevant investment and, consequently, fostering the country’s sustainable development. Taking into account this factor and the relatively small CDM potential of Armenia, the DNA will develop a liberal position regarding CERs. If that is the case, the DNA has to consider authorization of the project participants from the Republic of Armenia to be involved in proposed CDM project activity, and thereby, allow them to enter into arrangements to manage CERs and create revenue from their sale. At the same time, the Host Country DNA may charge a certain fee for this or take a proportion of project CERs depending on project size, type and strategic importance in the context of Host Country’s sustainable development priorities. It is necessary to note that such a practice has already been applied to "Nubarashen Landfill Gas Capture and Power Generation Project in Yerevan" when the DNA has


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requested that 1% of CERs be forwarded to the Armenia’s national CDM account under Executive Board CDM Registry. Authorization of a local project participant will substantially decrease risks for CER purchasers, since the latter’s primary concern when entering into a contract to buy CERs from a project will be to ensure that the seller under the agreement (ERPA) can prove either that he has legal title to the CERs or is entitled by Host Country to conduct CERs transfer or sale. This certainty will also enable the seller to obtain a higher price for CERs. The Host Country participant’s authorization can be stated either in the Letter of Approval issued by the DNA or in a separate document. Once the state policy on this matter has been defined and approved in compliance with the acting national legislation of Armenia, it will be delivered to potential CDM project participants and investors by the DNA via the Climate Change Information Center’s website at: www.nature-ic.am as well as publications in newspapers.


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ANNEX I: Sample Letter of Endorsement

LETTER OF ENDORSEMENT

To project participants,

Referring to the request of [company/organization] as a CDM Project Host from the [date and reference number of the letter] with respect to the submitted Clean Development Mechanism (CDM) Project Idea Note on [CDM project title], I inform you of the following.

As Minister of Nature Protection of the Republic of Armenia and appointed Designated National Authority for the CDM under the Kyoto Protocol of the United Nations Framework Convention on Climate Change I declare that:

1. The Republic of Armenia ratified the Kyoto Protocol on 26 December, 2002.

2. Designated National Authority has taken notice of the submitted CDM Project and is aware that the [company/organization] as a Project Host intends to transfer ensuing Certified Emission Reductions (CERs) to [CER recipient company/organization] for the account of [Annex I country].

3. Designated National Authority will assess the CDM Project according to the criteria implying sustainable development and attraction of investments for the Clean Development Mechanism project realization in Armenia.

4. Designated National Authority endorses further development of the CDM Project and is committing itself to render such assistance as may be necessary in the future validation, verification and transfer of the CERs. Yours Sincerely, Minister of Nature Protection of the Republic of Armenia and Designated National Authority for the Clean Development Mechanism under the Kyoto Protocol


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ANNEX II: Sample Letter of Approval

LETTER OF APPROVAL

To project participants,

1. As Minister of Nature Protection of the Republic of Armenia and appointed Designated National Authority for the Clean Development Mechanism (CDM) under the Kyoto Protocol of the United Nations Framework Convention on Climate Change, I hereby confirm: (i) The Republic of Armenia ratified the United Nations Framework Convention on

Climate Change on May 14, 1993 and the Kyoto Protocol on December 26, 2002;

(ii) The Republic of Armenia participates voluntarily in the Clean Development Mechanism and in the "Project" identified in paragraph 1(iii) of the present letter;

(iii) The "Project" as defined in the Project Design Document [CDM project title], submitted on [date of submission] to the Designated National Authority of Armenia for the CDM, will assist the Republic of Armenia in achieving sustainable development objectives. The Project Design Document is available on the following web site at: www.nature-ic.am

2. I further inform that the "Project" can be submitted to the Clean Development Mechanism Executive Board in order to request registration of the "Project" as a Clean Development project activity.

3. I henceforth declare that the Designated National Authority of Armenia for CDM reserves the right to submit to the CDM Executive Board a request for review of the "Project" in case the Project Design Document submitted to the CDM Executive Board for registration does not correspond to the document identified in paragraph 1(iii) above.

Please note that the issuance of this Letter of Approval shall not exempt the Project Participants from complying with all applicable laws, rules and regulations of the Republic of Armenia.

Project Participants shall regularly update the Designated National Authority for CDM in Armenia on the status of implementation of the "Project". Based on the provided information the Designated National Authority for CDM will evaluate compliance of the "Project" implementation with the conditions stipulated in the approved Project Design Document.

4. I look forward to the project smooth start up according to the procedures. Yours Sincerely, Minister of Nature Protection of the Republic of Armenia and Designated National Authority for the Clean Development Mechanism under the Kyoto Protocol


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ANNEX III: CDM Project Activities in Armenia

Status of CDM Projects Registered by the CDM Executive Board – 5 Projects

1. Nubarashen Landfill Gas Capture Project in Armenia 2. Lusakert Biogas Plant 3. Yeghegis Small-Scale Hydro Project 4. Argichi Small Hydroelectric CDM Project 5. Jradzor Small Hydroelectric CDM Project

Approved by the Armenian CDM DNA - 4 Projects 6. Eghvard-2 Small Hydropower Project 7. Hankavan-1 Small Hydroelectric CDM Project 8. Energocor SSC Hydro Bundled Project 9. Saravan and Her-Her Small HPPs

Endorsed by the Armenian CDM DNA - 1 Project 10. Optimization of Technological Cement Production Processes and Introduction of Power

and Resource Saving Technologies at Mika-Cement CJSC Projects under development at PIN and PDD levels - 6 Projects

11. Cascade Credit Small Scale Hydro Bundled Project in Armenia (PDD) 12. Gegharot Small Hydropower Plant in Armenia (PDD) 13. Community Small Scale Afforestation/Reforestation Project in RA Lori Marz (PDD) 14. Araks Biogas Plant Project 15. Semenovka 14.5 MW Wind Farm Project in Armenia (PDD) 16. Restoration of the Heat and HWS for the Avan District in Yerevan, Armenia


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1. Nubarashen Landfill Gas Capture Project in Yerevan

Project location: Yerevan City, Republic of Armenia

Project Participants: Local Authorized Participant: Municipality of Yerevan City Other Parties: Shimizu Corporation, a construction and engineering firm (Japan)

Sectoral Scope: Fugitive gas capture Alternative / renewable energy

Activity Scale: Large

Methodologies Used: AMS-I.D. ver. 5 - Renewable electricity generation for a grid ACM0001 ver. 1 - Consolidated methodology for landfill gas project activities

GHG Reduction: Annual: 56.000 metric tones CO2 equivalent Total: 896.000 tones of CO2e during crediting period of 16 years

Capital Costs: 5.6 mln USD

Crediting Period: 16 years

Project Description: The project’s overall objective is to collect and flare landfill gas (LFG) from Nubarashen landfill site in Yerevan. The Nubarashen landfill site has been handling almost all the solid waste of Yerevan city ever since its establishment on the outskirts of the city in 1960. Due to a lack of funds, site operation and heavy machinery maintenance cannot be carried out according to the prescribed manuals. Landfill gas from the site is released into the atmosphere unchecked and current conditions on the site are detrimental to the local environment. This is because LFG is a source of odor when emitted in low concentrations and a potential cause of explosion or ignition when emitted in high concentrations. LFG collection system constructed on the site is composed of 28 vertical collection holes, horizontal gas drains, gas collection pipes, airtight sheet, gasholders, measuring instruments, and blowers. This applies technology adopted in cases where ground containing high water content is improved by the vacuum consolidation method. It is a high-efficiency system in which an LFG collection efficiency of 60% or more can be anticipated. The collected gas is burned in the flare unit. It is possible that in the further stages of the project (depending on the actual amount of generated gas) a gas engine generator will be installed. In that case collected LFG will be utilized in GEG for electricity generation.

Expected Outcomes Along with the positive environmental outcome of the project, the following benefits are expected: improvement of hygiene and sanitary conditions of the landfill due to its partly covering with gravel and sand; odor dissemination and wastes ignition prevention; human development at innovative technology introduction; employment within the project implementation.


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Project Data:

Project Design Document

Approved by the Armenian CDM DNA on February 16, 2005 Approved by the Government of Japan on February 23, 2005

Validation Validated by DOE (JQA) on March 31, 2005

Registration Registered by the CDM Executive Board on November 28, 2005

Other Relevant Documents

On May 11, 2006 the Protocol of Understanding was signed among the project participants. The Protocol is a framework document setting mutual liabilities of the participants and stipulating conditions of further project implementation. It envisages signing of a separate agreement which will endorse the project construction works.

CERs Recipient: 99% of CERs will be transferred to Shimizu Corporation (1% of CERs will be forwarded to the Armenia’s national CDM sub-account under Executive Board CDM Registry).

Project Timing: The construction works was completed in August 2009. The project has been in operation since October 2009.

Project Status: In operation.

Project Site


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2. Lusakert Biogas Plant (LBP), methane capture and combustion from poultry manure treatment

Project location: Nor Geghi village, Kotayk region, Republic of Armenia

Project Participants: Local Authorized Participant: Max Concern LLC Other Parties: Danish Environmental Protection Agency (DEPA)

Sectoral Scope: Waste management and handling Agriculture


Methodologies Used: AM0016 ver. 3 - Greenhouse gas mitigation from improved animal waste management systems in confined animal feeding operations

GHG Reduction: Annual: 62.832 metric tones CO2 equivalent Total: 439.824 tones of CO2e during the first crediting period of 7 years

Capital Costs: About 3.4 mln EURO

Crediting Period: Renewable crediting period of 21 years (3 times 7 years)

Project Description: The purpose of the project is to mitigate Lusakert Pedigree Poultry Plant's animal effluent related GHG emissions, by improving the farm's Animal Waste Management System practices. The project consists of an advanced improvement to the common practice of poultry waste treatment, reducing a significant volume of greenhouse gases compared to those emissions that would otherwise occur in a scenario with traditional poultry manure treatment systems. The project will also result in improving of the rejected water quality.

The technology implementation is based on the use of anaerobic digester treatment as the first step before a lagoon system. Produced effluent from the biogas plant will be routed to the existing lagoons and the captured gas will be used in a gas engine generator to produce heat and electricity. The heat from the cogeneration plant is used for heating the digester, in order to optimize operation and increase the speed of decomposition of the organic matter of effluents, thus replacing the use of fossil fuel that would otherwise contribute to emissions leakage.

Most of the mechanical equipment will be imported from Denmark as standard units. The project developer in conjunction with its in-country suppliers will be responsible for the civil works and the on-site construction of digesters. The operational income will derive from sale of electrical energy to the distribution grid as well as realization of a fertilizer from the biogas production.

Expected Outcomes The environmental impacts due to the development of this project can be summarized as ancillary benefits:

Reducing atmospheric emissions of Volatile Organics Compounds that cause odor

The use of the biogas collected as an energetic resource for power generation

Reducing the risk of releasing disease-transmitting vectors and airborne pathogens


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Project Data:

Project Idea Note Endorsed by the Armenian CDM DNA on May 16, 2005


Approved by the Armenian CDM DNA on May 5, 2005 Approved by the Danish CDM DNA on December 22, 2005

Public Hearings Held on November 7, 2005 Validation Validated by DOE (Det Norske Veritas) on December 8,2005

Registration Registered by the CDM Executive Board on September 11, 2006

CERs Recipient: DEPA (50% of expected CERs)

Project Timing: The project has become operational since October 2008.

Project Status: Project participants developed technical design of the project and started construction works in 2007. The project became fully operational in October 2008 after completion of adjustment and testing works. DEPA will receive only a part of CERs, whereas the rest CERs to be generated by the project can be traded or transferred by the project owner (Max Concern LLC) to other interested party. The project is co-funded by Lusakert Pedigree Poultry Plant LLC (Armenia), Vekst Project Financing Facility AS (Norway), Bigadan A/S and Industrialization Fund for Developing Countries – IFU (Denmark).

Lusakert Poultry Farm and Project Site


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3. Yeghegis Small-Scale Hydro Project

Project location: Vardahovit village, Vayots Dzor region, Republic of Armenia

Project Participants: Local Authorized Participant: Bazenc CJSC

Sectoral Scope: Energy industries (renewable - / non-renewable sources)

Activity Scale: Small

Methodologies Used: AMS-I.D. - Grid connected renewable electricity generation ACM0002 - Consolidated baseline methodology for grid-connected electricity generation from renewable sources


Capital Costs: About 1.1 mln EURO


Project Description: The purpose of the project is to install and operate a second turbine of 3.75 MW (3,750 KW) at the small scale hydropower plant on the upper flow of the Yeghegis river. This turbine will only operate during a wet season of approximately 2.5 months (1824 hours) and will produce about 7296 MWh per year. The planned total installed capacity of the entire facility, including both turbines, is 9.95 MW, allowing the production of an estimated 32.3 million KWh (32,300 MWh) per year. The electricity produced will be supplied to the national grid of Armenia. A first turbine at Yeghegis has already been installed and is operational. This first turbine will not be part of this CDM project. The second turbine was included in the original business plan, but without the CDM it was not possible to finance that turbine. This is mainly because this turbine will only operate during a wet season of approximately two and a half months and thus produces much less MWh than the first turbine. The first turbine produces about 25,000 MWh. The project will leave a minimum water flow of 0.29 m3/sec. in order to ensure the environmental stability of the river and the river bed vegetation. This is in line with the legal obligation stipulated by the Ministry of Nature Protection of the Republic of Armenia in the environmental impact assessment. In addition, a fish pass will also be installed at the earliest possible opportunity, weather permitting in order to prevent any potential impacts of the project on the local fish species.

Expected Outcomes The project will contribute to sustainable development of Armenia via: - Diversification of electricity generation sources and decrease of dependence on imported natural gas; - Provision of a minimum ecological water flow of 0.29m3/sec to ensure environmental stability of the river; - Utilization of hydro and other renewable energy sources; - Increase of employment opportunities to local people both during construction and operation of the project in the area where the project is located. - Attraction of funds for the local municipality via the land-lease contracts, land taxes and also property tax on the equipment that is installed.


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Project Data:


Approved by the Armenian CDM DNA on May 29, 2006

Public Hearings Public hearings on the project were organized within the framework of the project environmental expertise.

Validation Validated by KPMG Sustainability B.V. on September 10, 2007

Registration Registered by the CDM Executive Board on December 1, 2007 CERs Recipient: N/A

Project Timing: According to PDD, project activity should have stated on August 1, 2006

Project Status: The European Bank of Reconstruction and Development (EBRD) is lending 1.1 million Euros over the next 5 years towards the financing of the project. However, the EBRD does not claim any compensation in the form of Certified Emission Reductions for the repayment of the loan. Construction works was initiated in 2007 and finalized in March 2008. At present the project if fully operational.

Yeghegis Hydro Project


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4. Argichi Small Hydroelectric CDM Project

Project location: Gegharkunik region, Republic of Armenia

Project Participants: Local Authorized Participant: Hydro Corporation CJSC Other Parties: Danish Environmental Protection Agency (DEPA)




GHG Reduction: Annual: 14.273 metric tones CO2 equivalent Total: 128.467 tones of CO2e during the crediting period of 10 years

Capital Costs: About 5,5 mln USD

Crediting Period: Fixed crediting period of 10 years

Project Description: The proposed project activity involves implementation and operation of 8.5 MW Small Hydroelectric grid connected renewable energy project on the Argichi river, Armenia. The electricity generated by Argichi SHPP will be sold to the Armenian Electricity Network.

Argichi HPP is located in Gegharkunik marz and embraces middle site of Argichi River, which is the largest confluent of the lake Sevan.

The main purpose of the project activity is generation of clean hydroelectric energy and contribution to climate change mitigation efforts.Argichi SHPP will use the hydro potential of river Argichi. The length of that section is equal to 9 km, and the fall is 287 m.

The hydropower plant is of derivation type. Its principal units are: - Head unit - Pressure derivation water carrier - Station unit - Removing water canal.

Argichi SHPP will be equipped with 4 horizontal Pelton turbines with 8.5 MW of nominal power. The electricity will be supplied to Lichk substation which is 7 km distance from the head unit. The hydro-energy indices of Argichi HPP are as follows: • Designed pressure – 223.0 m • Designed outflow – 4.8 m3/sec. • Generation capacity – 8.56 MW • Average annual power generation – 29.1 million kWh.

Expected Outcomes The following outcomes are expected in case of project materialization: - Diversification of energy sources in Armenia; - Reduction of the dependence on imported energy carriers, such as

natural gas; - Employment generation for skilled and unskilled local population, etc.


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Project Data:


Approved by the Armenian CDM DNA on November 11, 2006

Public Hearings Held on April 25, 2006

Validation Validation of the project has been performed by KPMG Sustainability B.V.

Registration The project was registered by the CDM EB on February 24, 2008.

CERs Recipient: According to the information provided by the project participant Emission Reduction Purchase Agreement (ERPA) for the sale and purchase of CERs generated by the proposed CDM project activity will be signed with EBRD Multilateral Carbon Credit Fund (MCCF).

Project Timing: Construction works was launched in 2009.

Project Status: The company has already signed a loan agreement with EBRD. Currently the project owner is expecting the final part of the investment to initiate construction works.


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5. Jradzor Small Hydro Electric CDM Project

Project location: Jradzor village, Shirak region, Republic of Armenia

Project Participants: Local Authorized Participant: ANI OJSC



Methodologies Used: AMS-I.D. - Grid connected renewable electricity generation


Capital Costs: About 2.5 mln USD


Project Description: The proposed project activity involves implementation and operation of a 5.9 MW Small Hydroelectric grid connected renewable energy project on the irrigation canal of Akhuryan, located in Shirak region.

The electricity generated by Jradzor SHPP will be sold to the Electrical Network of Armenia

The main purpose of the project activity is generation of clean hydroelectric energy and contribution to climate change mitigation efforts.

Jradzor SHPP is located in irrigation canal of Akhuryan, in Shirak region. The water canal possesses 6.0 m3/s maximum capacities and carries out hydraulic works from the River Akhuryan through headwork facilities located 3.5 km far from designed Small Hydropower Plant of Jradzor.

Current project will utilize water pressure, which is created between tail-end of designed water reservoir and irrigation canal. The latter flows parallel to the River Akhuryan. The distance between water canal and the River Akhuryan is about 700 m. Jradzor SHPP will include the following principal premises and units:

• Penstock forebay; • Penstock; • Headrace flume; • Station unit and head unit

Head unit of Jradzor SHPP should be equipped with two-packaged hydropower equipment with 4.0 MW installed capacity. Designed pressure of the plant is 142.6 m. Designed outlet is 2.0 m3/sec.

The SHPP is characterized with the following indicators: • Installed capacity 5.93 MW • Quantity of hydropower equipment 2 units • Designed pressure 142.6 m • Designed outlet 2.0 m3/sec • Annual average electricity generation 20.0 million KWh

Expected Outcomes The following outcomes are expected in case of project materialization: - Diversification of energy sources in Armenia; - Reduction of the dependence on imported energy carriers, such as

natural gas; - Employment generation for skilled and unskilled local population, etc.


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Project Data:


Approved by the Armenian CDM DNA on November 11, 2006

Public Hearings A public hearing on the project was organized within the framework of the project environmental expertise.

Validation Validation of the project has been performed by KPMG Sustainability B.V.

Registration The project was registered by the CDM EB on July 10, 2009

CERs Recipient: According to the information provided by the project participant Emission Reduction Purchase Agreement (ERPA) for the sale and purchase of CERs generated by the proposed CDM project activity will be signed with EBRD Multilateral Carbon Credit Fund (MCCF).

Project Timing: The project has become operational since 2009.

Project Status: In operation.


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6. Eghvard-2 Small Hydropower Project in Armenia

Project location: Ohanavan Village, Aragatsotn region, Republic of Armenia Project Participants: Local Participant: Bur Group CJSC

Other Parties: Fichtner Carbon Management GmbH (Germany)





Capital Costs: About 9 mln USD


Project Description: The proposed project aims to install and operate a small-scale hydropower plant with a total capacity of 9.31 MW on the spillway of Arzni-Shamiram irrigation canal in the Aragatsotn district of the Republic of Armenia. The overall objective of the project is to meet the increasing national demand for power by generating clean renewable energy and to sell it to the Electric Network of Armenia CJSC through a power purchase agreement contract with duration of 15 years. The project also aimed to register the Eghvard-2 SHPP under the CDM.

The Eghvard-2 small hydropower project uses hydropower technology to convert the potential energy available in the channel water flow into mechanical energy and then to electricity. Two Pelton type turbines, standard for this head and commonly used worldwide will be applied. The annual generation of 18.21 GWh of electrical energy will directly reduce the GHG emissions resulting from the use of fossil fuels at thermal power plants that are currently in operation in Armenia.

The basic project idea is to use the available head of 361.0 m for power generation instead of energy dissipation by means of a spillway. The Eghvard-2 SHPP could produce power and energy during the season, when the water is planned to be spilled and dissipated at the spillway.

Technical parameters of the plant are as follows:

• The design discharge for Eghvard-2 SHPP was selected as 3.2 m3/s; • Annual flow through HPP - 22.45 mln m3; • Head losses at design discharge - 13.91m; • Installed capacity - 9.31 MW; • Annual electricity generation - 18.21 GWh.

Expected Outcomes The following outcomes are expected in case of project materialization: • Generation of permanent and temporary employment opportunities; • Professional and intellectual capacity building; • Contribution to energy security; • Reduction of harmful emissions; • No deforestation and degradation of natural resources; • Attraction of capital and contribution to the economic development of

the local community; • Contribution to reliability of energy supply.


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Project Data:


Approved by the Armenian CDM DNA on July 12, 2007

Public Hearings Held on April 20, 2007 Validation Project participants will initiate validation of the project after its approval

by the Armenian CDM DNA Registration Project participants will apply to the CDM EB for the project registration

only upon validation of the project activity by DOE. CERs Recipient: According to the agreement (Carbon Assets Development Agreement)

signed between the project participants, part of CERs to be generated by the project will be transferred to Fichtner Carbon Management GmbH.

Project Timing: Expected date for commissioning of construction works - January 1, 2008

Project Status: The project participants negotiate with various carbon funds and companies interested in project financing and CERs purchase. Once investor is found, the project participants will proceed with project validation and further registration.

Site photographs


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7. Hankavan-1 Small Hydroelectric CDM Project

Project location: Hankavan village, Kotayk region, Republic of Armenia

Project Participants: Local Authorized Participant: H.A.G. Eryak LTD







Project Description: The proposed project activity involves implementation and operation of a 0,955 MW Small Hydroelectric grid connected renewable energy project on the Siskhana river, Armenia. Hankavan-1 SHPP is located in Kotayk Marz and embraces middle site of Siskhana River. The electricity generated by Hankavan SHPP will be sold to the Armenian Electricity Network (AEN). Hankavan-1 SHPP will use the hydro potential of river Siskhana. The length of that section is equal to 3,0 km, and the fall is 81,3 m. All constructions of the HPP are located in that section. The hydroelectric power station is of derivation type. Its principal units are: [

• Head unit; • Pressure derivation water carrier; • Station unit; • Removing water canal.

Hankavan-1 SHPP will be equipped with 3 horizontal Pelton turbines with 0,995 MW of nominal power. The electricity will be supplied to the substation which is 3 km distance from the head unit. The hydro-energy indices of Hankavan SHPP are as follows:

• Designed pressure - 81,35 m; • Designed outflow - 1,52 m3/sec; • Generation capacity - 0,995 MW; • Average annual power generatio- 2,71 million kWh.

Expected Outcomes The following outcomes are expected in case of project materialization: - Generation of permanent and temporary employment opportunities; - Attraction of capital and contribution to the economic development of

the local community; - Contribution to reliability of energy supply.


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Project Data:


Approved by the Armenian CDM DNA on August 21, 2008.

Public Hearings N/A Validation The project document has not been validated yet.

Registration The project document has not been submitted to the CDM Executive Board for registration yet.

CERs Recipient: Has not been identified yet.

Project Timing: According to PDD, project activity should start in March 2009.

Project Status: Currently, the project participant negotiates with various carbon funds and companies interested in project financing and CERs purchase. Once investor is found, the project participants will proceed with project validation and further registration.


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8. Energocor Small-Scale Hydro Bundled Project in Armenia

Project location: • Irrigation Canal on Ayrk River, RA Gegharkunik Marz • Irrigation Canal on Ayrk River, RA Gegharkunik Marz • Avazan River, RA Gegharkunik Marz • Getik River, RA Gegharkunik Marz • Arpa River, RA Vayots Dzor Marz

Project Participants: Local Authorized Participants: (i) Energocor LTD; (ii) Lusakunk LTD; (iii) Erik LTD; (iv) Jermuki Hydrotech LTD Other Parties: EnBW Trading GmbH (Germany)




GHG Reduction: Annual: 9.396 metric tones CO2 equivalent Total: 93.960 tCO2e during the first crediting period of 10 years

Capital Costs: -


Project Description: The main purpose of the project activity is generation of clean hydroelectric energy and contribution to climate change mitigation efforts.The proposed project activity involves implementation and operation of 5 small hydroelectric grid connected renewable energy projects with total capacity 6.81 MW. The SHPPs will be located Gegharkunik and Vayots Dzor regions of Armenia. The purpose of bundling the nine project activities is to reduce transaction costs and documentation preparation costs for each of the small scale power plants. The electricity generated by the small hydropower plants will be sold to the Armenian Electricity Network (AEN). The hydro-energy characteristics of Ayrk-1 SHPP are as follows:

• Gross head - 90,4 m • Design capacity -0,361 MW • Average annual energy production - 1.212 million kWh • The number of units - 2

The hydro-energy characteristics of Ayrk-2 SHPP are as follows: • Gross head -77,7 m • Design capacity -0,311 MW • Average annual energy production - 1,47 million kWh • The number of units - 2

The hydro-energy characteristics of Avazan 1-2 SHPPs are as follows: • Gross head - 72.8 m • Design capacity - 0,291 MW • Average annual energy generation - 1.83 million kWh • The number of units - 2

The hydro-energy characteristics of Erik SHPPs are as follows: • Gross head - 102.3 m • Generation capacity - 3.5 MW • Average annual power generation - 15 million kWh • The number of units - 3


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The main characteristics of the Jermuk-2 SHPP are: • Gross head - 81.95 m • Generation capacity - 2.35 MW • Average annual power generation - 10.2 million kWh • The number of units - 2

Project Data:





CERs Recipient: EnBW Trading GmbH

Project Timing: The project implementation started in March 2009.

Project Status: Construction / Operation


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9. Saravan and Her-Her Small-Scale Hydroelectric CDM Project

Project location: • Darb River, Saravan village, Vayots Dzor Marz • Her-Her Water Storage Pool, Her-Her Community, Vayots Dzor

Marz

Project Participants: Local Authorized Participants: Firma G.A.Kh. LTD Other Parties: EnBW Trading GmbH (Germany)




GHG Reduction: Annual: 5.321 metric tones CO2 equivalent Total: 53.210 tCO2e during the first crediting period of 10 years

Capital Costs: -


Project Description: The main purpose of the project activity is generation of clean hydroelectric energy and contribution to climate change mitigation efforts.The Saravan and Her-Her Small-Scale Hydropower Project developed by Firma G.A.Kh. LTD is a small-scale hydropower project in Vayots Dzor in the Republic of Armenia. Total installed capacity of the Project will be 6,041 MW. The project consists of two hydro power plants. The capacity of the Her-Her SHPP is 0,995 MW, the capacity of the Saravan SHPP is 5.046 MW. Saravan and Her-Her SHPPs will start generate electricity in September 2009. The electricity generated by Project will be sold to the Armenian Electricity Network (AEN). The hydro-energy characteristics of Saravan SHPP are as follows:

• Design capacity - 5,046 MW • Average annual energy production - 11,9 million kWh • The number of units - 4

The hydro-energy characteristics of Her-Her SHPP are as follows: • Design capacity -0,955 MW • Average annual energy production - 5,19 million kWh • The number of units - 2

Expected Outcomes The following outcomes are expected in case of project materialization: - Generation of permanent and temporary employment opportunities; - Attraction of capital and contribution to the economic development of

the local community; - Contribution to reliability of energy supply.


37

Project Data:





CERs Recipient: EnBW Trading GmbH

Project Timing: The project implementation started in September 2009.

Project Status: Construction / Operation


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10. Optimization of Cement Production Technological Processes and Introduction of Power and Resources Saving Technologies at CJSC MICA-CEMENT

Project location: Hrazdan City, Kotayk region, Republic of Armenia

Project Participants: Local Authorized Participant: Mika Cement CJSC Other Parties: Danish Environmental Protection Agency (DEPA) SusDev Consulting Ltd. (Estonia)

Sectoral Scope: Manufacturing industry


Methodologies Used: ACM0005 - Consolidated Baseline Methodology for Increasing the Blend in Cement Production ACM0002 - Consolidated baseline methodology for grid-connected electricity generation from renewable sources

GHG Reduction: Annual: 117.478 metric tones CO2 equivalent Total: 1,17 mln. tones of CO2e during the crediting period of 10 years

Capital Costs: About 4,348 mln USD


Project Description: CO2 emitted during the cement production process represents the most important source of non-energy industrial carbon dioxide emissions. Carbon dioxide is produced directly during the production of clinker, an intermediate product from which cement is made, as well as indirectly by the thermal power plants, due to electricity consumption for cement production. “Mika-Cement” CJSC is one of the two cement producers in the Republic of Armenia. The plant is specialized in production of Portland cement and utilizes the most energy intensive wet process technology, main equipment of which was produced by former Soviet Union manufacturers before 1971, when due to cheapness of fossil fuels energy efficiency was not a priority. As a result, the energy consumption benchmarks of the plant are high, compared with the world’s best practice with similar wet process technology. The most energy consuming processes at the plant are associated with grinding of raw materials, clinker and additives, firing of clinker kilns and cement production. The main objective of the project is optimization of cement production technology via introduction of energy and raw material saving measures at “Mika-Cement” CJSC. Optimization also means a better control of clinker and cement quality, which enables to increase of blending additives in cement and reduce the share of clinker. Implementation of the following measures is planned in the frame of the proposed project activity: Introduction of a scoria-based technology in order to replace the clay

component with the scoria (volcanic cinder) with partial replacement of internal equipment of the two raw material mills;

Reconstruction of the kiln internal heat exchangers; Implementation of a rational fuel burning system; Reconstruction of two cement mills with complete replacement of

internal equipment, grinding load and installation of a separator.


39

Project Data:

Project Idea Note Endorsed by the Armenian CDM DNA on June 17, 2005


Finalized on 5 October, 2006

Public Hearings Held on May 18, 2006 Validation N/A

Registration Project participants can apply to the CDM EB for the project registration only upon validation of the project activity by DOE.

CERs Recipient: N/A

Project Status: According to the project design document (PDD), CERs generated by the project activity was to be purchased by DEPA. However, in 2007 DEPA informed the plant management on its refusal to continue participation in the proposed project activity. Currently, the project participant negotiates with various carbon funds and companies interested in project financing and CERs purchase. Once investor is found, the project participants will proceed with project validation and further registration.

Mika-Cement Factory


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11. Cascade Credit Small Scale Hydro Bundled Project in Armenia

Project location: Hndzorut river, Tavush region, RA Ayri river, Syunik region, RA Artashat water channel, Aygezard village, Ararat region, RA Agstev river, Diligen city, Tavush region, RA Kharachoban river, Lernapat village, Lori region, RA Tandzut river, Vahagni village, Lori region, RA Chanagchi river, Debet village, Lori region, RA Adjidadg-Gehi water pipe, Kapan village, Syunik region, RA Bovadzor and Stepanavan villages, Lori region, RA Vorotan river, Uyts village, Syunik region, RA

Project Participants: Local Participant: (i) Cascade Credit; (ii) Atlas Energo LLC; (iii) Zorakar CJSC; (iv) Bitlis Men LLC; (v) Elenex LLC; (vi) Lernapati Kantexh LLC; (vii) Apahov Taniq LLC; (viii) Mavr LLC; (ix) Ler LLC; (x) Hosq LLC; (xi) Syunik LLC. Other Parties: EBRD




GHG Reduction: Annual: 30,137 metric tones CO2 equivalent Total: 257,937 tones of CO2e during 10 years of crediting period



Project Description: The purpose of the “Cascade Credit small-scale hydro bundled project in Armenia” is to install and operate ten mini hydro power stations (six run-of- river plants and three plants constructed on artificial water flows) each with electric capacity below 3.6 MW for generation of renewable energy and to bundle them in one CDM project. The total capacity of the ten power plants is 14.839 MW and the estimated average annual electric generation of the ten mini-hydro plants is 69,459 MWh. All ten mini hydropower plants receive funding and consulting services from Cascade Credit, a Closed Joint Stock Company located in Armenia which acts as the project proponent and provider of channelled funding. Cascade Credit in turn receives a loan from the European Bank for Reconstruction and Development (EBRD, USD 7 million), a loan from the World Bank (USD 5 million) and contributes USD 3 million of its own equity. The purpose of bundling the ten project activities is to reduce transaction costs and documentation preparation costs for each of the small scale power plants. All ten mini hydro power plants belong to the same type (Type I, renewable energy project), same category (D. Electricity generation for a system) and same technology (hydro electric generation). The electricity will be supplied to one single grid, the national grid of Armenia. The development of this bundled project contributes to a total emission reduction of 257,937 tCO2e over a ten years of crediting period from April 2006 to March 2016, by offsetting more carbon-intensive electricity production from the Armenian electric grid.


41

Expected Outcomes The following outcomes are expected in case of project materialization: • Generation of permanent and temporary employment opportunities; • Professional and intellectual capacity building; • Contribution to energy security; • Reduction of harmful emissions; • Attraction of capital and contribution to the economic development of


Project Data:


The second version of the PDD was drafted in June 2007.

Public Hearings No public hearings was organized by the project participants

Validation Validation of the project has been performed by SGS United Kingdom Ltd.

Registration Project participants will apply to the CDM EB for the project registration upon validation of the project activity by DOE and its approval by the DNA of the Host country.

CERs Recipient: EBRD

Project Timing: According to the PDD, the first crediting period of the project will start on January 1, 2008

Project Status: The PDD submitted to the CDM DNA for approval was returned by the latter to Cascade Credit CJSC (project participant) with comments and remarks. The revised version of the PDD will be resubmitted to the DNA after consideration of all received comments.


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12. Gegharot Small Hydropower Plant in Armenia

Project location: Village Aragats, Aragatsotn region, Republic of Armenia Project Participants: Local Participant: El-Kas LLC

Other Parties: No Annex I Party participates in the project




GHG Reduction: Annual: 3,395 metric tones CO2 equivalent Total: 23,765 tones of CO2e during the first crediting period of 7 years



Project Description: The project aims to install and operate small-scale hydropower plant with total capacity of 2,49 MW at the foot of the Mountain Aragats, on the river Gegharot. The overall objective of the project is to meet the increasing national demand for power by generating clean renewable energy and sell it to the Electric Network of Armenia CJSC through a power purchase agreement contract with duration of 15 years. The Gegharot SHPP is expected to generate 10.61 GWh of electricity annually.

The Gegharot Small Hydropower Project (SHPP) mainly consists of the headworks with appurtenant structures, an embedded penstock and the powerhouse with the hydro-mechanical and electrical equipment:

The headworks of Gegharot SHPP are located in a remote area at the foot of the mountain Aragats. They convey the water to the headrace system. No daily storage device was foreseen at the headworks.

It is foreseen to connect the plant to the national grid of RA with one 35 kV over-head line. For the transfer of 6 kV generator voltage to the 35 kV over-head line it is foreseen to construct a substation of 6/35 kV near by HPP Building. One power transformer of 3,250 kVA with a 6 kV/35 kV circuit breaker provides the connection to the national grid of RA.

Gegharot SHPP utilizes a natural head of 338 m between the headworks and the village of Aragats.

Other technical parameters are as follows: • The design discharge was selected for Gegharot SHPP as 1.0 m3/s, • Annual flow through HPP: 15.10mln m3 • Annual flow through weir: 10.09mln m3

Expected Outcomes The following outcomes are expected in case of project materialization: • Generation of permanent and temporary employment opportunities; • Professional and intellectual capacity building; • Contribution to energy security; • Reduction of harmful emissions; • No deforestation and degradation of natural resources; • Attraction of capital and contribution to the economic development of



43

Project Data:


PDD is drafted and submitted to the Ministry of Nature Protection of RA on April 15, 2006

Public Hearings No public hearings was organized by the project participants Validation Project participants will initiate validation of the project after its approval

by the Armenian CDM DNA Registration Project participants will apply to the CDM EB for the project registration

upon validation of the project activity by DOE and its approval by the DNA of the Host country.

CERs Recipient: TRICORONA AB

Project Timing: According to the PDD, the first crediting period of the project will start on September 1, 2008

Project Status: In December 2007, after a series of meetings and discussions, the plant management entered into agreement (ERPA) with TRICORONA AB aimed at sale of CERs generated by the project during the first crediting period. It is envisaged that TRICORONA AB will update the PDD and submit it to DOE for validation in 2009.

Site photographs


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13. Community Small Scale Afforestation/Reforestation Project in RA Lori Marz

Project location: Lori region, Republic of Armenia

Project Participants: Local Participant: 25 rural communities of RA Lori marz (Memorandums of Cooperation were signed between Fichtner and 25 identified rural communities on project join implementation.) Other Parties: “Fichtner GmbH & Co. KG” (Germany)

Sectoral Scope: Afforestation / reforestation


Methodologies Used: AR-AMS0001 - Simplified Baseline and Monitoring Methodologies for Selected Small Scale Afforestation and Reforestation (A/R) Project Activities


Capital Costs: N/A


Project Description: The proposed project activity aims to facilitate and promote the implementation of community afforestation and reforestation activities in Armenia and particularly in the Lori region. This is one of the few regions of the country with a high poverty and unemployment rate where the natural and climatic conditions are favorable for forest establishment without artificial irrigation. The proposed A/R project activities are to promote growing of forests on grassland and cropland consistent with the simplified baseline and monitoring methodologies for SSC-CDM-A/R activities. The country has a scarcity of forest resources, which are currently under strong pressure. Any carbon sequestration benefits through the proposed A/R activities will facilitate the establishment of forests, so contributing to sustainable development of low-income communities. Proposed project has a clear community based orientation focused on one of the largest but poorest administrative region of the country called Lori. Another important aspect related to the nature -climatic conditions were also taken into account when choosing the appropriate region for the A/R project activity. Ensuring the voluntary project participation, the country TACIS office has prepared the official letter on behalf of the Ministry of Nature Protection addressed to the local government of Lori, presenting the goal and the objectives of the current initiative. In parallel a series of community meetings and field visits were undertaken to accelerate the site identification process and to promote the community participation. Most of the surveyed communities are strongly interested to join the A/R project, highlighting the expected positive socio-economic impacts, such as creating local employment opportunities, poverty reduction, and development of community forest. The environmental aspects were also highlighted by the communities in relation to prevention of land erosion, regulation of water sources and superficial flows, improvement of the microclimate, avoidance of torrents, biodiversity enrichment etc. Certain communities could not joint the initiative, in spite they find it very attractive due to lack of eligible lands for the proposed A/R activity.

The proposed project is going to be a bundle of relatively small areas located in low income communities or individuals of Lori region embracing around 1000 ha of area. The project area limitation is based


45

on applied methodology for the small scale project type, since the project is expected to result in net anthropogenic GHG removals by sinks less than 8 kilotons of CO2 per year. Other aspects influencing the A/R project area are derived on selection of target forest species, stand density, management technique, site index etc.

The crediting period chosen for the project is 20-years, with the renewals of two further 20-year periods for a total crediting period of 60 years.

There are a number of site identification activities which are still to be performed in order define precisely the territories eligible for A/R project.

The planned activities are as follows: • Technical inspection of proposed A/R sites in the selected

communities. If they meets the land eligibility requirements under Ssc-AR-CDM project activities;

• Preparation of maps with geographic coordinates of the A/R sites in selected communities;

• Obtaining the legal documents proving the land ownership and tenure rights from the landholder (community/private owner).

Expected Outcomes Various socio-economic and ecological benefits are expected from the community-based SSC-AR-CDM activity: • employment generation and poverty reduction, • development of community forest, • carbon sequestration and erosion control, especially in hilly areas, • regulation of watersheds and enhancement of biodiversity, • improvement of the communities’ general microclimate, • utilization of forest by-products.

Project Data:


Draft PDD is finalized and submitted to the Ministry of Nature Protection of RA on November 23, 2006.

Public Hearings Held on September 27, 2006. Presentation on the proposed project activity was organized for the local communities and governing bodies.

Validation Validation will be conducted after identification of the project investors and CERs buyers.

Registration Project participants can apply to the CDM EB for the project registration only upon validation of the project activity by DOE and its approval by the Armenian CDM DNA.

CDM Developers: Fichtner GmbH & Co. KG (Germany) and the Armenian office of EC “Technical Assistance to Armenia, Azerbaijan, Georgia and Moldova with respect to their Global Climate Change Commitments” Project Number: EuropeAid/115123/C/SV/Multi/Lot No.2

CERs Recipient: N/A

Project Timing: To de decided by the project participants and potential investors.

Project Status: After finalization of the PDD the document was officially submitted to the Ministry of Nature Protection of RA as a main beneficiary of the TACIS project. Since then both Fichtner and MoNP have been negotiating with various donor organizations and carbon funds in order to provide project funding. However, no major interest has been shown by the foreign companies, due to high project risks and uncertainties related to this project category.


46

Lori Region sites


47

14. Recovery of Biogas from Chicken Manure and Thermal (Electrical) Energy Generation at Araks Poultry Factroy

Project location: Jrarbi village, Armavir Marz, Republic of Armenia

Project Participants: Local Participant: Araks Poultry Factory CJSC



Methodologies Used: AMS - III.D - Methane recovery in animal manure management systems AMS - I.D - Grid connected renewable energy generation




Project Description: The main objective of the project is to reduce the level of greenhouse gas emissions originated from chicken manure; by improving the animal waste management system currently used in "Araks Poultry Factory" CJSC and by utilizing (flaring) the biogas originated as a result of project implementation in the cogeneration system (CHP): for electrical and thermal energy generation. The generated electrical energy will be supplied to the distribution grid, thus, replacing electricity generated by fossil fuel thermal power plants presently serving the energy system. Additional objectives of the project are the processing and neutralization of organic wastes (chicken manure) generated in "Araks Poultry Factory" CJSC as well as production of fertilizers. In the framework of the project it is envisaged to reduce greenhouse gas emissions to the atmosphere generated from the chicken manure stocked in open anaerobic lagoons of "Araks Poultry Factory" CJSC through anaerobic fermentation of organic wastes and utilizing the produced biogas in cogeneration station's flaring system. The biogas capture and recovery will favor the reductions of greenhouse gas emissions in poultry factory, in comparison to the presently applied animal waste management, and the electricity generated in CHP plant will be supplied to the national distribution grid and will reduce the greenhouse gas emissions from the energy system. To meet the objective set above, it is planned to built biogas generation plant on the territory of "Araks Poultry Factory" CJSC, which main units will be: organic waste receiving (homogenization) reservoirs, anaerobic fermentation tank (methane tank), pumps, heat exchangers, moisture trapping, desulphurization and stocking systems, surplus gases flaring appliance (flare), electrical and thermal energy combined production station (CHP).

Expected Outcomes The following outcomes are expected in case of project materialization: • Project implementation will favor to demolish the stench from

organic wastes spreading from the open lagoons, thus, improving the work conditions of factory's personnel;

• Project will enable to create new work places requiring corresponding professional qualification.


48

Project Data:

Project Idea Note PIN was endorsed by the DNA on August 31, 2009

Public Hearings No public hearings was organized by the project participants Validation N/A

Registration N/A Project Timing: Construction works will start in 2010.

Project Status: The CDM Project Idea Note (PIN) was developed by the experts of the UNDP/GEF "Enabling Activities for Preparation of Armenia's Second National Communication to the UNFCCC" Project by request of the Board of Directors of "Araks Poultry Factory". Upon completion of the PIN in 25.07.2009, the document was submitted by the project owner to the Ministry of Nature Protection of RA (CDM DNA) for consideration and was granted Endorsement Letter on 31.08.2009. The project owner is open for communication and negotiation with all parties interested in financing / implementation of the project under the CDM.

Araks Poultry Farm


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15. Semenovka 14.5 MW Wind Farm Project

Project location: Semenovka Pass, Gegharkunik region, Republic of Armenia

Project Participants: Have not been identified yet.





Capital Costs: About 22 mln EURO


Project Description: The proposed project aims to install and operate a small-scale wind power plant with a total installed capacity of 14.5 MW at Semenovka Pass area, Gegharkunik Region, Republic of Armenia. The overall objective of the project is to meet the increasing national demand for power by generating clean renewable energy and to sell it to the Electric Network of Armenia CJSC through a power purchase agreement contract with duration of 15 years. Apart from generation of renewable electricity, the project has also been conceived for the following: (i) to register the Semenovka Wind Farm under the CDM: (ii) to contribute to the sustainable development of the Republic of Armenia, environmentally, socially, economically and politically. Given the results of twelve-month wind monitoring conducted by the project team (SolarEn LLC) as well as other technical and financial aspects, 17 VESTAS (Denmark) manufactured V52/850kW type turbines have been proposed to be installed along the ridge of the site. The expected annual generation of about 25 GWh/year of electrical energy will directly reduce the GHG emissions resulting from the use of fossil fuels at thermal power plants that are currently in operation in Armenia. Generated power will be transformed to match the nearest grid sub-station for proper interconnection with the National Grid.

The project main technical parameters are introduced below. • Annual average wind speed - 6,4m/s; • Wind turbine rated power – 850 Kw; • Number of turbines – 17; • Wind plant capacity – 14,5 MW; • Hub height – 44 m; • Wind speed at hub height – 6,5 m/s; • Energy delivered – 25.250 kWh.

Expected Outcomes The following outcomes are expected in case of project materialization: • Generation of permanent and temporary employment opportunities; • Professional and intellectual capacity building; • Contribution to energy security; • Reduction of harmful emissions; • Attraction of capital and contribution to the economic development of



50

Project Data:


PDD is completed on October 1, 2007 and submitted to the Ministry of Energy and Natural Resources of RA as the main beneficiary of the TACIS Project.

Public Hearings Public hearing session on the proposed CDM project activity was held on November 16, 2007.

Validation Validation of the project will be performed after identification of the project participants.

Registration Has not been submitted to the CDM Executive Board for registration yet. CDM Developers: The project was developed by the EU funded Technical Assistance to

CIS countries (TACIS) programme that is being implemented by Dansk Energy Management Company (Denmark) in cooperation with British Energy / Amec NNC Ltd. (UK).

CERs Recipient: Has not been identified yet.

Project Timing: According to the PDD, the first crediting period of the project will start on January 1, 2010.

Project Status: Ministry of Energy and Natural Resources of RA (MENR) as the key beneficiary of the TACIS project is negotiating with various companies and funds on further development and materialization of the proposed CDM project activity.

The first 2.6MW Wind Power Plant in Armenia (Pushkin Pass)


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16. Restoration of the Heat and Hot Water Supply for the Avan District in Yerevan, Armenia

Project location: Avan district, Yerevan City, Republic of Armenia

Project Participants: Local Authorized Participant: ArmRusCogeneration LLC


Activity Scale: Small scale

Methodologies Used: AMS-II.B. – Supply side energy efficiency improvements (co-generation)

AMS-III.B. – Switch fossil fuels GHG Reduction: Annual: project will result in annual saving between 144 and 170 GWh of

thermal energy, emission reductions are around 36,924 t CO2/year Total (during the first crediting period of 7 years): between 1008 and 1190 GWh of thermal energy,

Capital Costs: 21.000.000 USD


Project Description: As a consequence of economic and energy crisis Armenia experienced in the 1990s, the former, largely centralized district heating (DH) based municipal heat and hot water supply systems in all Armenian cities practically collapsed and residents were forced to use electricity, wood, gas, kerosene or any other available means to cover their heating needs. The project envisages restoration of centralized DH system in the Avan residential area on the outskirts of the capital Yerevan. In contrast to all previous pilot-scale restoration projects in Armenia, not only space heat supply shall be restored, but also Hot Tap Water (HTW) supply. In addition a co-generation unit (13.48 MW) will be installed to generate electricity to the grid.

A working group under the Ministry of Environment of Republic of Armenia (RoA) has elaborated Feasibility Study2 for the mentioned restoration. Under the framework of UNDP/GEF project further support was provided to review and refine this study, findings and final recommendations are presented in “Pre-Feasibility Study for Restoring the Heat and Hot Water Supply for the Davidashen and the Avan Areas in Yerevan, Armenia”, conducted in 2006 by Ramboll consultancy company, Denmark.

Memorandum of Understanding has been signed between Eurosibenergo-engineering LLC (Russia), potential investor, and the Government of RoA. For implementation of the project. The new company, ArmRosGogeneration LLC has been established in August 2006 with the majority of shares owned by Eurosibenergo-engineering and a minority held by Avan community.

Expected Outcomes Project will bear strong positive impact on the quality of local and global environment by reducing emissions of CO2 and local pollutants. It will also help improve the in-door air quality and safety situation in the apartments currently heated by the individual heating devices. Furthermore, it will significantly improve the quality and availability of energy (heat and hot water) services to consumers, in both residential

2 Feasibility Study – Restoration of District Heating for space heat and Hot Tap Water supply of the residential area Avan of the city of Yerevan]; Yerevan 2006


52

and public buildings. The project will directly benefit 10,200 individual households in the Avan community of Yerevan, as well as other consumers as schools, hospitals and kinder-gardens by providing reliable and affordable heating services which most of them have been deprived of for than a decade due to the collapse of the previous heat supply system.

Project Data:

Project Idea Note Finalized in August 2007


Pending

Public Hearings N/A Validation N/A

Registration N/A

CDM Developers: UNDP MDG Carbon Facility

CERs Recipient: UNDP MDG Carbon Facility

Project Timing: Construction phase: 3 years (with partial commission of the systems parts expected after year 1). The project will be launched in 2008. Operational life-time of the project is 20 years.

Project Status: The PIN was submitted to UNDP MDG Carbon Facility Head Quarter for evaluation and further approval of the proposed project activity. Civil and erection works was started in summer 2007. In January 2008 three residential buildings were supplied with heat and hot water under the project pilot stage.

Site and boiler-house photographs


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ANNEX IV: CDM Project Opportunities in Various Regions of Armenia

ENERGY: construction of large and small HPPs and WPPs LULUCF: afforestation and reforestation

ENERGY: construction of small HPPs and WPPs LULUCF: afforestation and reforestation activities

ENERGY: construction of small HPPs INDUSTRY: introduction of EE measures at cement factory LULUCF: establishment of protection forest belts (A/R)

ENERGY: construction of small HPPs LULUCF: afforestation and reforestation

ENERGY: construction of large and small HPPs and WPPs WASTE: landfill gas capture and power generation project LULUCF: afforestation and reforestation activities

ENERGY: construction of large and small HPPs and WPPs WASTE: landfill gas capture and power generation project LULUCF: afforestation and reforestation activities

ENERGY: construction of small HPPs and WPPs LULUCF: afforestation and reforestation activities activities

ENERGY: construction of small HPPs and WPPs LULUCF: afforestation and reforestation activities

ENERGY: installation of a new gas turbine at Hrazdan TPP, construction of small HPPs INDUSTRY: introduction of EE measures at cement factory AGRICULTURE: mitigation of GHG emissions from poultry farm by improving AWMS LULUCF: afforestation and reforestation activities

ENERGY: installation of a CC unit at Yerevan TPP, rehabilitation of DH system of the city INDUSTRY: introduction of EE measures at alabaster factory, shift to butadiene technology at Nairit Factory WASTE: landfill gas capture and power generation, rehabilitation of Yerevan WWTP WATER SUPPLY: introduction of EE measures at pumping stations LULUCF: establishment of protection forest belts (A/R)

ALL REGIONS TRANSPORT: Improvement of the level of motor transport gasification and diversification of urban public transport FUGITIVE EMISSIONS FROM FUELS: reconstruction of linear parts of gas pipelines, gas leakage prevention from gas-distribution and compressor substations, etc.

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Dev

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sm P

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in A

rmen

ia

List

of C

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Dev

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t Mec

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in A

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ANNEX VI: Abbreviations

CER - Certified Emission Reductions CO2 - Carbon Dioxide CH4 - Methane DNA - Designated National Authority DOE - Designated Operational Entity EIA - Environmental Impact Assessment GHG - Greenhouse Gases GEF - Global Environmental Facility IPCC - Inter Governmental Panel on Climate Change LFG - Landfill Gas MoNP - Ministry of Nature Protection of RA NC - National Communication N2O - Nitrous Oxide PDD - Project Design Document PIN - Project Idea Note PSRC - Public Services Regulatory Commission of Armenia UNDP - United Nations Development Programme UNFCCC - United Nations Framework Convention on Climate Change


58

ANNEX VII: Glossary of CDM Terms

Additionality: The term refers to the reduction in Greenhouse Gas emissions by sources or removals by sinks that is additional to any that would occur in absence of the CDM Project activity. The term is stated in the Marrakech Accords clarifying that a project activity is additional if anthropogenic emissions of Greenhouse Gases are reduced below those that would have occurred in the absence of the CDM project. Rom this perspective, additionality is often referred to as Environmental Additionality.

Afforestation: refers to the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources.

Allocation Statement: is the statement which may be provided by Project Participants to the CDM Executive Board.

Annex B Country: are those countries and economies in transition, listed in Annex B to the Kyoto Protocol, which have agreed to achieve emission reduction targets by the Commitment Period, 2008-1012. The targets became legally binding with the Kyoto Protocol that entered into force on 16 February 2005.

Annex I Country: refers to those developed countries and economies in transition listed in Annex I of the UNFCCC, which have agreed to non-binding commitments to reduce their GHG emissions to 1990 levels by the year 2000.

Approved Baseline methodology: A baseline methodology approved by the Executive Board is publicly available along with relevant guidance on the UNFCCC CDM Website (http://unfccc.int./cdm) or through a written request sent to [email protected].

Approved Monitoring methodology. A monitoring methodology approved by the Executive Board and made publicly available along with relevant guidance, see above for references).

Assigned Amount Unit (AAU): are tradable units, equal to one metric ton of CO2 equivalent and calculated according to an Annex B country’s Assigned Amount.

Attributable: In an operational context, the term attributable in paragraph 51 (project boundary) of the CDM modalities and procedures should be read as “directly attributable”, respectively.

Baseline: refers to the scenario that reasonably represents the anthropogenic emissions by sources of Greenhouse Gases that would occur in the absence of the proposed project activity.

Baseline approach: Baseline approach is the basis for a baseline methodology. The Executive Board agreed that the three approaches identified in sub-paragraphs 48 (a) to (c) of the CDM modalities and procedures be the only ones applicable to CDM project activities. They are: (i) Existing actual or historical emissions, as applicable; (ii) Emissions from a technology that represents an economically attractive course

of action, taking into account barriers to investment; or (iii) The average emissions of similar project activities undertaken in the previous

five years, in similar social, economic, environmental and technological


59

circumstances, and whose performance is among the top 20 per cent of their category.

Baseline methodology: A methodology is an application of an approach as defined in paragraph 48 of the CDM modalities and procedures, to an individual project activity, reflecting aspects such as sector and region. No methodology is excluded a priory so that participants have the opportunity to propose a methodology. In considering paragraph 48, the Executive Board agreed that, in the two cases below, the following applies: (i) in case of a new methodology: In developing a baseline methodology, the first

step is to identify the most appropriate approach for the project activity and then an applicable methodology;

(ii) in case of an approved methodology: In opting for an approved methodology, project participants have implicitly chosen an approach.

Bilateral CDM project: A bilateral CDM project is the standard form of the CDM project, involving an investor, a developed country and a host developing country.

CDM Registry: Standard electronic database to be established and maintained by the CDM Executive Board which will contain common data elements relevant to the issuance, holding, transfer and acquisition of CERs.

Certification (of CERs): The written assurance by the DOE (Designated Operational Entity) to confirm that, during a specified time period, a CDM Project activity achieved the reductions in Greenhouse Gas emissions as verified.

Certified Emission Reduction (CER): Units issued for emission reduction generated by CDM project activities. One unit is equal to one metric ton of CO2 equivalent.

Clean Development Mechanism (CDM): Flexible mechanism under Article 12 of the Kyoto Protocol with the purpose to (1) assist non-Annex I Parties in achieving sustainable development; (2) contribute to the ultimate objective of the UNFCCC; and (3) assist Parties included in Annex I achieve compliance with their quantified emission limitation and reduction commitments.

Conservative: see Transparent and conservative Conference of the Parties (CoP): The CoP is comprised of countries that have ratified or acceded to the UNFCCC. The CoP is the supreme governing body of the UNFCCC.

Crediting Period: The period for which the CDM project can generate CERs for eligible emission reductions.

Designated National Authority (DNA): is the national authority for CDM designated by the relevant Party to the Kyoto Protocol.

Designated Operational Entity (DOE): is an independent legal entity accredited by CDM Executive Board that can validate proposed CDM Projects and verify and certify Greenhouse Gas emission reductions. Using the same DOE for non-small-scale CDM projects requires the prior acceptance through the CDM Executive Board. For small-scale CDM projects the same DOE may be contracted without prior approval.

Emission Reduction Purchase Agreement (ERPA): governs any contractual arrangements between the entity having received entitlement of selling CERs and


60

another entity in need to purchase CERs. Most importantly, the ERPA includes provisions for CER delivery, payments, and several obligations of both Parties. In many case, intermediaries such as brokers or Carbon Funds purchase CERs and will make purchase agreements with the seller directly.

Executive Board (EB) (also referred to as CDM Executive Board): The CDM Executive Board supervises the CDM, under the authority and guidance of the COP/MOP, and is fully accountable to the COP/MOP.

First Commitment Period: The period between 2008-2012 during which Annex I countries to the Climate Change Convention are required to reduce their emissions of Greenhouse Gases to the levels established in the Kyoto Protocol.

Gold Standard (CDM project) : is an independently audited, globally applicable best practice methodology for CDM project development that delivers high quality carbon credits of premium value. It serves internationally as a kind of benchmark for developing high quality CDM project. CERs from Gold Standard CDM projects are usually traded at higher prices than for non-Gold Standard CDM project CERs.

Greenhouse Gas (GHG): One or more of the six gases listed in Annex A to the Kyoto Protocol that trap heat when released into the atmosphere, being carbon dioxide (CO2), methane, nitrous oxide, ozone, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). They occur through natural and human-induced activities.

Host County: The non-Annex I country in which a CDM Project is based. Issuance (of CERs): Issuance of CERs refers to the instruction by the Executive Board to the CDM registry administrator to issue a specified quantity of CERs for a project activity into the pending account of the Executive Board in the CDM registry, in accordance with paragraph 66 and Appendix D of the CDM modalities and procedures.

Kyoto Protocol: The Protocol to the UNFCCC signed at the third COP meeting, establishing binding Annex I Greenhouse Gas emission reduction targets of 5.2% below 1990 levels by 2008-2012. The Koto Protocol entered into force on 16 February 2005 once at least 55 Parties representing 55% of industrial nations’ Greenhouse Gas emissions have ratified it.

Leakage: refers to the net change of anthropogenic emissions by sources of Greenhouse Gases that occurs outside the project boundary as result of CDM project implementation and is measurable and attributable to the CDM Project activity.

Letter of Approval (LoA): A letter issued by the Designated National Authority of the Host Country to a CDM Project confirming that the project, as proposed, will assist in resulting in GHG emission reductions that are additional to what would occur without the project and will assist the Host Country to achieve its sustainable development goals.

Letter of Endorsement (LoE): An LoE confirms that in principle the host government is has no objections against a proposed project idea and would further support its development as a complete CDM project.

LULUCF: Land Use, Land-Use Change and Forestry as defined under the Kyoto Protocol and Marrakech Accords particularly decision 11/CP.7.


61

Marrakech Accords: Decisions 2/CP.7 through to Decision 24/CP.7 (inclusive) of the seventh session of the COP/MOP.

Measurable: In an operational context, a term measurable in paragraph 51 (projct boundary) of the CDM modalities and procedures should be read as “which can be measured”, respectively.

Methodology Panel (short: Meth Panel): Shall develop specific proposals for consideration by the Executive Board on e.g. appropriateness of new proposed baseline and Monitoring methodologies.

Mitigation: An anthropogenic intervention to reduce the sources or enhance the sinks for greenhouse gases.

Monitoring of a CDM project activity: Monitoring refers to the collection and archiving of all relevant data necessary for determining the baseline, measuring anthropogenic emissions by sources of greenhouse gases (GHG) within the project boundary of a CDM project activity and leakage, as applicable.

Monitoring methodology: A monitoring methodology refers to the method used by project participants for the collection and archiving of all relevant data necessary for the implementation of the monitoring plan.

MOP: Meeting of the Parties. This refers to the meetings of all Parties having ratified the Kyoto Protocol. The first MoP was held in December 2005 in conjunction with CoP11 at Montreal, Canada.

New baseline methodology: Project participants may propose a new baseline methodology established in a transparent and conservative manner. In developing a new baseline methodology, the first step is to identify the most appropriate approach for the project activity and then an applicable methodology. Project participants shall submit a proposal for a new methodology to a designated operational entity by forwarding the proposed methodology in a draft project design document (CDM-PDD), including the description of the project activity and the identification of the project participants.

New monitoring methodology: Project participants may propose a new monitoring methodology. In developing a monitoring methodology, the first step is to identify the most appropriate methodology bearing in mind good monitoring practice in relevant sectors. Project participants shall submit a proposal for a new methodology to a designated operational entity by forwarding the proposed methodology described in a draft project design document (CDM-PDD), including a description of the project activity and identification of the project participants.

Non Annex I Country: Countries which are not listed in Annex I of the UNFCCC (generally, developing and least developed countries).

Official Development Assistance (ODA): Annually disbursed official bilateral government assistance from Annex I to non-Annex I countries.

Operational lifetime: It is defined as the period during which the CDM project activity is in operation. No crediting period shall end after the end of the operational lifetime (calculated as from starting date)

Project activity: A project activity is a measure, operation or an action that aims at reducing greenhouse gases (GHG) emissions. The Kyoto Protocol and the CDM modalities and procedures use the term “project activity” as opposed to “project”. A


62

project activity could, therefore, be identical with or a component or aspect of a project undertaken or planned.

Project boundary: The national boundaries surrounding an actual or proposed CDM Project within which Greenhouse Gas emission impacts and effects are considered and quantified.

Project Design Document (PDD): The document to be prepared and submitted by Project Participants to an accredited DOE for validation of a proposed project activity.

Project Identification Note (PIN) also referred to as Project Idea Note: A PIN is often used to describe a new CDM project idea and provide a first rough estimation of CO2e emission reductions. The PIN often serves to request the DNA for a Letter of Endorsement. It also serves to justify in a later CDM project validation stage that CDM was taken into account seriously at early project planning stage.

Project participants: The legal entity (both public and private entities) that develop and implement CDM Project activities.

Public consultation period: sometimes also referred to as stakeholder consultation process is the process where the project developer invites stakeholders that may be affected by the project to explain the project, to answer questions and to clarify issues of public concern. The project developer must as part of the PDD development summarise how the public consultation period was organised and how due account was taken on public comments.

Reforestation: The direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the First Commitment Period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989.

Stakeholder/s: The public, including individuals, groups or communities affected, or likely to be affected, by the proposed CDM project activity.

Starting date: The starting date of a CDM project activity is the date at which the implementation or construction or real action of a project activity begins.

Transaction log: Under the Marrakech Accords, a transaction log will be established by the secretariat to the UNFCCC to verify the validity of all transactions involving Kyoto Protocol rights including CERs within or between registries (including between a national registry and the CDM registry). The log will cover the issuance, transfer, acquisition, cancellation, retirement or carryover into the next commitment period of any Kyoto Protocol rights.

Transparent and conservative: Establishing a baseline in a transparent and conservative manner means that assumption are made explicitly and choices are substantiated. In case of uncertainty regarding values of variables and parameters, the establishment of a baseline is considered conservative if the resulting projection of the baseline does not lead to an overestimation of emission reductions attributable to a CDM project activity (that is, in the case of doubt, values that generate a lower baseline projection shall be used)

Registration: The formal acceptance by the CDM Executive Board of a validated project as a CDM Project. Registration is the prerequisite for verification, certification and issuance of CERs related to that project.


63

UNFCCC: United Nations Framework Convention on Climate Change, signed at the ‘Earth Summit’ in Rio de Janeiro in May 1992.

Unilateral CDM project: A Clean Development Mechanism project developed and implemented by a developing country (non-Annex I) party and/or entity.

Validation: is the process of independent evaluation of a project activity by a designated DOE against the requirements of the CDM as set out in the Marrakech Accords on Article 12 and on the basis of the Project Design Document.

Verification: The periodic independent review and ex post determination by the designated DOE of the monitored reductions in anthropogenic emissions by sources of Greenhouse Gases that have occurred as a result of a registered CDM Project activity during the verification period.

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CLIMATE CHANGE INFORMATION CENTER OF ARMENIA

Address: Ministry of Nature Protection of the Republic of Armenia Governmental building #3, Republic Square, Yerevan 0010, Armenia

Tel.: (+374 10) 583932, 583920 Fax: (+374 10) 583933

E-mail: [email protected] URL: www.nature-ic.am

This document is prepared and published within the scopes of the “Enabling Activities for the Preparation of Armenia’s Second National

Communication to the UNFCCC” UNDP/GEF/00035196 Project

Armenia