The Role of the Designated National Authority (DNA) in preparation of CDM

Projects

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Designated National Authority for the Clean Development Mechanism

in the Republic of Uzbekistan

The Ministry of Economy

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• By his Resolution issued in December 2006, the President of Uzbekistan designated the Ministry of Economy as the National Authority for the CDM• An Inter-agency CDM Council was set up including representatives of over 20 key ministries, agencies and largest structural enterprises of the country• In January 2007, the Cabinet of Ministers’ Resolution approved the “Regulation on the procedure for preparation and implementation of investment projects under CDM”• The National Authority is involved in preparing legislative regulatory acts granting additional benefits and preferences to companies implementing CDM investment projects

Institutional aspects of CDM in UzbekistanInstitutional aspects of CDM in Uzbekistan

Functions of the Inter-Agency CDM CouncilFunctions of the Inter-Agency CDM Council

The Inter-Agency CDM Council is responsible for addressing strategic issues:

• Defining priority areas for the application of Clean Development Mechanism

• Approving national rules and procedures for selection and approval of CDM projects

• Approval of CDM projects

Functions of the Inter-Agency CDM CouncilFunctions of the Inter-Agency CDM Council

The Designated National Authority is charged with the following functions:

• Selection of CDM projects• Signing endorsement letters• Maintaining a database of CDM projects• Coordinating appraisal of CDM projects• Monitoring implementation of CDM projects• Addressing other issues pertaining to

implementation of CDM projects

CDM project selection and approval systemCDM project selection and approval system

Stage one – Approval of project application

PIN submission

Examination of the

PIN

No Objection

Letter

Partner selection for a CDM projectPartner selection for a CDM project

Project initiator – Government institution

(Cost-efficient CDM project – where revenues from CER sales over 5 years exceed investment costs)

Cost-efficient

CDM Project

Non-cost-efficient

CDM Project

Competitive proceduresCompetitive procedures

Once a No Objection letter received for a Cost-Efficient CDM project, the Project Initiator (government institution) prepares project documentationProject documentation is published on the website of the Designated National CDM Authority (www.mineconomy.uz/cdm) and circulated via email to companies included in the DNA’s database

Criteria for CDM investor selectionCriteria for CDM investor selection

A 10-point scale is used for selection. The following parameters are evaluated:

• Financial standing of the Bidder• Experience in implementing CDM projects

including similar CDM projects• Timeframes for PDD preparation• Timeframes for validation• Availability of commitments for each stage of

project preparation and implementation• CER purchase obligations• Project costs, including operation costs• Proposed CER price• Commitments to purchase CERs after 2012

CDM Project Selection and Approval SystemCDM Project Selection and Approval System

Once the CDM project implementation partner is selected, the Project Initiator and the CDM investor sign Exclusivity LetterThe Project Initiator undertakes in the letter to provide all the information required for conducting due diligence and preparing the PDD.The exclusivity letter shall be valid for no longer than 6 months.

CDM Project Selection and Approval SystemCDM Project Selection and Approval System

Upon expiration of the term indicated in the Exclusivity letter, the Project Initiator and the CDM Investor / CER purchaser start negotiation of financing agreements if required by the Project’s financing structure, and negotiate signature of the Emission Reduction Purchase Agreement (ERPA). The terms of the ERPA and the price for the CER indicated in the contract shall be agreed with the Designated National CDM Authority

CDM Project Selection and Approval SystemCDM Project Selection and Approval System

Stage Two – Approval of the Project Design Document (PDD)

PDD Submission

PDD Examinati

on

Approval Letter

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• The Designated National Authority for CDM, together with UNDP have done the following since 2007 when the programme was incepted:• To expand Uzbekistan’s cooperation with international carbon funds and foreign companies in the framework of CDM and to further utilize this mechanism in different economic sectors, an International Forum on Carbon Financing was organised on 29-30 October 2007• Over 15 publications on different aspects of CDM were developed and circulated• Over 30 workshops, trainings, round tables including over 15 regional workshops were organised where over 1000 specialists and managers from different levels have taken part

Strengthening CDM capacity in UzbekistanStrengthening CDM capacity in Uzbekistan

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• Over 25 in-service workshops held in key ministries and agencies• 2-month trainings organised in a number of agencies and organisations (Uzbekenergo, Uzneftegazdobicha, Uztransgaz companies, UzLITIneftegaz and Teploelektroproekt design institutes) for specialists covering all aspects of CDM, from Project Idea Note (PIN) preparation to development of full scale Project Design Documentation (PDD) and Emission Reduction Purchase Agreements (ERPA)• The Designated National CDM Authority has prepared and organised over 14 meetings of the Inter-Agency CDM Council• The work of the Designated National Authority is organised on a regular basis and constructively involved interaction with CDM project developers and initiators

Strengthening CDM capacity in Uzbekistan Strengthening CDM capacity in Uzbekistan (2)(2)

Website of the Designated National CDM Authority

Website of the Designated National CDM Authority

Since the DNA website was established in January 2008:

• over 5000 internet users from over 120 countries have visited the

• overall number of visits has exceeded 12,000

• the website of the DNA and its main domain (www.mineconomy.uz) have won prizes at national internet contests on numerous occasions

Priority areas for CDM projects in UzbekistanPriority areas for CDM projects in UzbekistanPriority areas for CDM projects in UzbekistanPriority areas for CDM projects in Uzbekistan

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Introduction of energy saving technologies in the following sectors is a priority area for implementation of CDM projects in Uzbekistan:

• oil and gas sector• electrical power sector• chemical industry• public utilities sector

Use of renewable energy sources (solar, wind power, small hydropower generation) for electricity supply to rural and remote areas

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As of 1 June 2012 the national portfolio of Clean Development Mechanism projects includes 70 projects, including:

- 63 projects that have already been approved by the Inter-Agency CDM Council, featuring CER reductions of 12.5 mln tons per year (annual revenues from CER sales – about 125 mln USD)

- 7 projects are at PDD preparation stage, featuring aggregate CER reduction forecasted at 1.54 mln tons per year (annual revenues from CER sales – about 15.4 mln USD)

Clean Development Mechanism Projects Portfolio in Clean Development Mechanism Projects Portfolio in UzbekistanUzbekistan

Clean Development Mechanism Projects Portfolio in Clean Development Mechanism Projects Portfolio in UzbekistanUzbekistan

List of project proposals approved by the Inter-Agency CDM CouncilList of project proposals approved by the Inter-Agency CDM Council

Nr SectorsNumber

of projects

Envisaged CER volume (thousand tons CO2-eq/year)

Total forecasted investment (thousadn

USD)

1 Oil and Gas 18 7,517.1 353,050.0

2 Power Generation 20 3,163.4 2,277,059.2

3 Chemical 6 1,020.0 6,000.0

4 Methane formation prevention (at municipal solid waste landfills, waste processing)

13 777.8 76,523.0

5 Other 6 79.0 23,613.6

Total: 63 12,557.3 2,736,245.8

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Registered and Prospective CDM ProjectsRegistered and Prospective CDM Projects

At present, the Republic of Uzbekistan is ranked Number 1 among CIS and Eastern European countries in number of registered CDM project and

forecasted annual reduction of emissions

Number of projects approved by the Inter-Agency Council for Kyoto Protocol’s CDM 63 projects

Projected emission reduction (equivalent per year)

12.5 mln tons per year

Including:Registered CDM projects 14 projectsProjected emission reduction (equivalent per year)

6,505,578 tons per year

PDD under preparation 7 projectsProjected emission reduction (equivalent per year)

1,537,100 tons per year

TOTAL registered and prospective projects 8,042,678 tons per year, or projected 80.4 mln USD per year

2020

Registered and Prospective CDM Projects Registered and Prospective CDM Projects (2)(2)

Uzbekistan is now ranked 8th in the global ranking of countries (by projected annual emissions reduction) and 19th (by number of projects)

Potential areas of cooperation for implementation of CDM projectsPotential areas of cooperation for implementation of CDM projects

Energy efficiency measures in oil and gas, checmical and power sectors (co-generation, utilisation of waste heat, electrical drivers’ frequency regulation);

Energy efficiency measures in municipal sectors of the country (utilization of municipal organic waste, energy saving light fixtures, closed loop heat supply systems, etc.);

CDM projects involving introduction of renewable energy technologies (biogas, small HPPs, solar water heaters, hybrid wind/solar powered electrical devices, etc.)

Large CDM projects can be implemented as stand-alone projects while standardized small CDM projects could be merged into respective CDM Programmes or transformed into NAMAs.

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Thank you for your attention!