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1.6 

Steps to Implement a Carbon Offset Project

The general steps taken to develop carbon sequestration project depend in large part upon the type of project and/or policy regime that the project developer will follow. As noted, multiple national and regional climate change initiatives and policy regimes are under development that would allow a project developer to benefit from the carbon market.



1.6.1 

CDM project cycle

If a project developer seeks to comply with the Kyoto Protocol, they can establish carbon offset projects through afforestation and reforestation activities. This is true whether the project developer chooses to use JI or CDM as their mechanism. As previously noted, JI projects are implemented between developed countries while CDM projects are carried out in developing countries with investors from developed countries. Unlike JI, the CDM sets out a very detailed process for project developers to follow, known as the project cycle. JI does not have to go through such a rigorous process. However, there are many similarities in the course of action. In both scenarios, project documents should be developed.

Click here to see a template for a CDM project document (section 1 of the Appendix).

As national regimes depend on country-specific policies there is no one definitive project cycle, however project developers may want to use the project document guidelines provided for the CDM as a preliminary standard. Since the CDM has the most rigorous process, a project developer following those steps will have a high likelihood of abiding by other regimes, which will tend to be more lenient in approving carbon offsets.

The project cycle established by the Marrakech Accords for the CDM has five fundamental stages: design and formulation, national approval, validation/registration, monitoring, and verification/certification. The first three are performed before the implementation of the project. The last two are performed during the lifetime of the project.

The step-by-step methodology we recommend provides also for a pre-feasibility phase, which serves as an initial screening tool to evaluate if it is worth investing more money into a full feasibility study.



1.6.2 

Step-By-Step Methodology

The following methodology outlines general steps for implementing a forestry-based carbon offset project. In this illustrative methodology, land management activities (such as afforestation and reforestation) and forest protection activities (avoided deforestation) are considered viable options given the emerging opportunities of national and regional carbon policy regimes. It is important to note that precise sequencing and implementation of these steps will vary considerably, depending on many circumstances specific to the project. It is also important to note that the steps outlined below (e.g. conducting an in-depth feasibility study) should be integrated into a broader conservation or land management plan. This methodology assumes that the carbon project developer is a conservation practitioner such as a protected area manager or environmental NGO.

Step 1: The project developer, with the help of consultants if necessary, conducts a pre-feasibility study to determine the potential of a carbon offset project proposal.

Approximate time: One month. Approximate Cost: less than US$10,000

IF THE PRE-FEASIBILITY STUDY INDICATES THAT A CARBON OFFSET PROJECT IS POTENTIALLY VIABLE AND RESOUCES AND INTEREST STILL EXIST:

Step 2: Project Developer develops the Terms of Reference for feasibility study (see section 2.4 for detailed Terms of Reference).

Step 3: Carbon project development team and/or consultant(s) conduct a feasibility study.

Step: Approximate time: 3-6 months. Approximate Cost: US$15,000-US$50,000

IF CARBON OFFSET PROJECT DETERMINED FEASIBLE:

Step 4: Project Developer or broker markets project to potential investors.

IF FUNDING IS AVAILABLE INTIATE PROJECT DEVELOPMENT:

Step 5: Project Development

Approximate time: 10-14 months. Approximate Cost: US$50,000-US$500,000

Funding

Technical challenges

Social component

Legal component

Operational

Step 6: Project Implementation

Approximate time: 30-70 years. Approximate Cost: US$1 -15 million


Carbon offset projects Previous Next Page 4(11)