Minimum Project Requirements

Type of Project

• Greenhouse gases targeted should be those covered under the Kyoto Protocol (CO2, CH4, N2O, HFCs, PFCs, and SF6); and
• The Carbon Finance Unit, in accordance with the Marrakesh Accords, can support afforestation and reforestation projects in non-Annex I countries, and a whole range of land use, land-use change and forestry projects in Annex I countries.

Adequate Emission Reductions (ERs) Volume

• The ER volume must be big enough to make a project viable under the CDM -- for example, a small-scale project should generate a minimum threshold of 50,000 tCO2e/year.

Demonstration of Additionality and Determination of Baseline Scenario and Emission Reductions

• Why the project should not happen on its own? (does project have significant barriers, or is not the most economically attractive)
• What could have happened in the absence of the project?
• Sources of emission reductions and total ER volume

Competent Project Participants and Clear Institutional Arrangement

• Technically experienced and sound project developers with clear division of functions.
• Demonstration of sound legal arrangement -- for example, who owns, who operates, and what type of agreement between project participants as well as with third party (e.g. power purchase agreement, ownership agreement, water right)

Viable Business and Operation Model that Helps Reduce Transaction Costs

• Potential for scale-up
• Involvement of intermediaries who can invest, bundle, and implement project-related CDM services locally

Ratification of Kyoto Protocol by the Host Country

• Has the host country ratified the KP or expressed its intention to ratify the KP in due course?
• Project should identify specific locations for its implementation.

Expected Schedule

• Project should be operational before January 2008.

Financing Sought

• The World Bank Carbon Finance Unit will not provide debt and/or equity finance for the baseline component of the project. The baseline component of the project should be financed by other sources;
• Payment on delivery of Emission Reductions.

Sound Financing Structure

• Sound financial health of project sponsors and co-financiers.
• The sooner the project can achieve financial closure, the better the chances of selection are

Technical Summary of Project

• Project should be replicable and/or facilitate technology transfer for the country;
• Technology to be applied must be an established and commercially feasible one in somewhere other than the country in consideration; and
• Project proposal should contain sample cases of the technology applied in the past in order to show its commercial feasibility.

Expected Environmental Benefits

• Evidence should be given that the project is additional to the baseline or reference scenario, which represents the most likely or business-as-usual scenario in the country.

Safeguard Policies of the World Bank Group

• The Bank Group has a body of well-developed, mandatory Safeguard policies which apply to all World Bank operations, as well as an extensive set of good practices. These are applied to CFU operations to ensure that they are environmentally and socially sound, whether baseline financing is from the Bank Group or from a third party project supplier. The project must be consistent with these safeguard policies and the host country's overall sustainable development framework.

Contribution to Sustainable Development

• As defined by the host country. For some end-of-pipe type of projects, contribution to sustainable development can be manufactured through re-investment in host community of some revenues from carbon finance.