How to Apply for Carbon Credits

Carbon credits (CER) are negotiable instruments traded in the form of certificates to offset legally binding emission targets agreed to under the Kyoto Protocol. The agreement created the clean development mechanism (CDM), under which companies that shift to cleaner technologies and save their energy consumption are subsidized in the form of carbon credits. These credits can be sold to the companies in developed nations for offsetting their emissions reduction targets if they find it cheaper to purchase carbon credits than to clean up their own emissions. Applying for carbon credits requires various approvals and conditions to be fulfilled.

Things You'll Need

• Project identification note
• Project design document
• Design operational entity

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Instructions

• 1

  Develop a project information note using preliminary information about the project owner, content of the project, anticipated financing plan, and a first estimate of GHG emission reductions. Then prepare a project design document (PDD) having comprehensive information about the CDM project activity including baseline study, monitoring plan proving additionality of the project, crediting period, the average annual GHG emission reduction and the total CER (expected) during crediting period. Additionality refers to what would have happened in the absence of the proposed project.

• 2

  Submit project identification note (PIN) to the host government, and obtain consent in the form of a letter of endorsement or letter of no objection. This will help you decide whether to continue or to stop the CDM project activity. After PIN approval, submit a project design document along with a letter of no objection of PIN to the designed national authority, and get CDM project approval along with authorization in the form of a no-objection letter.

• 3

  Appoint a design operational entity (DOE) for registering the project under the CDM executive board. Before registration, the DOE will validate the project by accessing local stockholders' comment, environmental impact analysis, baseline and adopted methodology, quality of emission reduction and sustainable development priorities. If validation holds credible, the DOE will submit all relevant documents to the CDM executive board and request for registration. You need to submit a registration fee depending on annual CO2 emission reduction potential. No fee is required to be paid if emission is below 15,000 tons of CO2 equivalent.

• 4

  Design operational entities will conduct systematic surveillance of project performance by periodically visiting the project site. It will analyze and compare the data collected from the project and the submitted monitoring plan in the PDD. The previously defined monitoring plan in the project design document must match with the actual performance, and if not, results in registration failure.

• 5

  A new design operational entity will be contracted by the CDM executive board for project revalidation. This is done to avoid misrepresentation and fraud. The new entity will access the actual data and monitoring plan for CER validation/registration. The DOE may spot-check the data and conduct instant interviews with the project owners to determine the credibility and performance of the project. If everything holds good, the DOE will pass a request along with a verification report to the CDM executive board for issuance of carbon credits to the project owner.