Det Energipolitiske Udvalg 2010-11 (1. samling)
EPU Alm.del
Offentligt
Final Version of 17 November 2008
Guidelines on a common understanding of Article 11b (6) of Directive2003/87/EC as amended by Directive 2004/101/EC(non-paper)
Objective: To harmonize the procedure in relation to large hydropower projectsunder Article 11b(6) so as to give the market and the Member Statesconfidence when using and accepting CERs/ERUs under the EU ETS.
I. Introduction1. This document stems from an attempt to reach an agreement among the MemberStates and the Commission on the interpretation and application of Article 11b(6)of the Linking Directive.
2. The document establishes a common understanding of the meaning of certainaspects of the text of Article 11b(6) relating to its scope (see Section III.1.:“Scope”, below) and on the means whereby project proponents can establish thattheir projects meet the relevant requirements (see Section III.2.: “DemonstratingCompliance”, below). Although the final decision regarding the acceptance of aproject as meeting the aforementioned requirements remains the responsibility ofthe Member State approving the project activity, agreement on these principlesensures that the competent DNAs/DFPs use the same criteria specified in theCompliance Report Template1
when assessing similar hydropower project
activities. This is aimed to ensure that project proponents receive fair and equaltreatment regardless of which Member State they apply to for approval, thusgiving clarity to the carbon market.
3. By adopting these guidelines, and the Compliance Report Template throughnational procedures by 1 April 2009, Member States aim at creating a levelplaying field for proponents of hydroelectric project activities. The agreement toabide by these guidelines is a voluntary agreement by the Member States. Itspurpose is to facilitate a harmonised approach to the implementation of Article11b (6) across the EU and to give Member States confidence in accepting"Compliance Report assessing application of Article 11 b (6) of the Emissions Trading Directive tohydroelectric project activities exceeding 20MW", see Annex 1 to the "Guidelines".1
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CERs/ERUs from these projects for use in the EU ETS. It does not compromisethe sovereign authority of the DNA/DFP of each Member State to decide whichproject activities to approve.
4. According to Article 11a of the Directive, “MemberStates… may allow operatorsto use CERs and ERUs from project activities in the Community scheme”.TheDirective stipulates that a decision which CERs and ERUs can be used is left toMember States, with the exception of carbon credits that are excluded from use inthe EU ETS.2Since participation in JI and CDM project activities is voluntary, andthe directive ultimately lets Member States decide whether to allow the use ofcarbon credits from project activities in the Emissions Trading system,“companiesshould be encouraged to improve the social and environmentalperformance of JI and CDM activities in which they participate”.3In the case ofhydroelectric projects with generating capacity above 20 MW, these requirementsare defined in Article 11b(6) which states: “Inthe case of hydroelectric powerproduction project activities with a generating capacity exceeding 20 MW,Member States shall, when approving such project activities, ensure that relevantinternational criteria and guidelines, including those contained in the WorldCommission on Dams November 2000 Report “Dams and Development – A NewFramework for Decision-Making”, will be respected during the development ofsuch project activities.”The interpretation of this article currently varies amongMember States and so has led to fragmentation of the carbon market anduncertainty for its participants.
5. Member States have agreed to accept in principle common guidelines forapproval of large hydropower project activities, which may also constituteguidance for Member States on which carbon credits to accept for compliance.
6. A document entitled “Compliance Report Assessing Application of Article 11b(6)of Emissions Trading Directive to Hydroelectric Project Activities Exceeding 20MW” (further referred to as the Compliance Report Template) sets out theassessment criteria selected by Member States. These criteria will be applied by
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Carbon offsets from nuclear project activities and temporary credits from the LULUCF projects.Recital 15 in the preamble to the Directive 2004/101/EC
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DNAs/DFPs to select large hydro project activities that will generate carbonoffsets allowed in the Community trading scheme.
7. Once a project activity has received a Letter of Approval (LoA) from an investorcountry upon the submission and positive assessment of a validated Article11b(6) Compliance Report, all Member States agree to accept CERs/ERUs fromthis project for use in their national registries under the EU ETS.
8. Credits from all hydro project activities approved by Member States before 1 April2009 can also be surrendered for compliance in the national registries of MemberStates. In this regard, in line with Article 11a of the Directive, Member States mayexercise their sovereign right to decide which carbon offsets to accept forcompliance. If so decided by a Member State, the acceptance of those credits forcompliance in its National Registry may be conditional on submission to itsRegistry Administrator of a validated Article 11b (6) Compliance Report, oranother validated report accepted by another DNA/DFP in a Member State anddemonstrating that 7 strategic priorities set out in the World Commission on DamsNovember 200 Report "Dams and Development – A New Framework forDecisions-Making" have been respected during development of that project. Thevalidity of CERs/ERUs from such projects for use in the registries of otherMember States is not thereby questioned.
9. Taking into account the desired harmonization of procedures, Member Statesagree to provide publicly accessible information on projects that have beenapproved as fulfilling the requirements of Article 11(b)(6) as well as indicating theentities accepted to carry out a validation of the Compliance Report4in eachMember State. This is aimed to secure transparency of the procedures and toprovide current information on the implementation of this voluntary agreement.
II. Background
1. Large hydropower projects can adversely affect development in certain regionsand have unwanted social and environmental impacts. On the other hand, they4
Compliance Report prepared in line with the Compliance Report Template which constitutes Annex 1 tothese"Guidelines".
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can also do much to promote human development in a way that is sociallyequitable, environmentally sustainable and economically viable. Deployment ofhydroelectric power production, if undertaken in a responsible and equitable way,can significantly contribute to lowering greenhouse gas emissions. However,adverse environmental and social effects of large hydroelectric projects couldundermine the positive impacts of these projects. By adopting Article 11 b(6) ofDirective 2004/101/EC, the European Union undertook to ensure thatdevelopment of hydroelectric projects respect relevant international guidelines,including those contained in the World Commission on Dams November 2000Report “Dams and Development – A New Framework for Decision-Making”.
2. The World Commission on Dams set two objectives: 1) to review the developmenteffectiveness of large dams and assess alternatives for water resources andenergy development; and 2) to develop internationally acceptable criteria,guidelines and standards, where appropriate, for the planning, design, appraisal,construction, operation, monitoring and decommissioning of dams.objectives comprise, but are not limited to, the following general aspects:•••••avoiding and minimising impacts on ecosystems, livelihoods, health andcultural (and religious) heritage,analysing needs and options on the basis of many different criteria (multi-criteria analysis),improving the livelihoods of people displaced and affected by projects,ensuring compliance with the compensatory measures,applying the principles of corporate environmental and social responsibilityand accountability, in accordance with recital 15 of Directive 2004/101/EC.5These
A harmonised approach should help ensure the sustainability and environmentalintegrity of the large hydropower project activities, approved by Member States.
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Since the aim of the Guidelines is both, to safeguard the obligations of MS under the UNFCCC and the KyotoProtocol AND to reflect the spirit of Article 11b(6) and relevant recitals in the preamble to the Directive2004/101/EC.
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III. Compliance with Article 11 b (6) of the Emissions Trading Directive1. Scope
1.Article 11b (6) applies to all hydroelectric power production project activities witha generating capacity exceeding 20 MW regardless of whether there is a daminvolved or not and regardless of the size of the dam6.
2.
When approving project activities, Member States have to ensure that everyproject involving hydroelectric power production facilities with generatingcapacity above 20 MW complies with Article 11b (6) during its development.
3.
In the case of improvements and extensions to existing installations, Article 11b(6) applies only where the CDM/JI project activity which is the subject of theapplication includes generating capacity which exceeds 20 MW. The capacity ofthe existing facilities is not relevant. So in the case of improvements andextensions to existing facilities, it is the improvement or extension which mustexceed 20 MW, unless the existing facility is already a CDM/JI project.
4.
Article 11b (6) applies to hydropower project activities exceeding 20 MW whichconsist of two or more smaller projects that are bundled as one projectaccording to the bundling rules of the CDM Executive Board.
5.
Where project proponents are applying for approval of several small hydropowerproject activities in one PDD, which add up to a combined capacity of 20MW ormore but there is no technical or environmental link between them7, Article11b(6) should not be taken into account.
1. Article 11b (6) refers to “relevant international criteria and guidelines, includingthose contained in the” WCD Report. The WCD guidelines were designed toreflect best practice on sustainability assessment. As such the WCD Report can6
Here the "Guidelines" refer to the interpretation of the scope of Article 11b (6).The Directive applies regardlessof the definition of a large dam as outlined by the International Commission on Large Dams. According to somestakeholders the WCD could be applied only to projects with a dam and with a dam higher than 15m. Article 11b (6) sets a different boundary which is defined in the above paragraph.7As defined in the Environmental Impact Assessment
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be assumed to be a fair reflection of the “relevantinternational criteria andguidelines”,without prejudging the possibility of considering as well other relevantcriteria and guidelines in the future, if such are accepted jointly by the MemberStates.
2. Entities seeking the approval of a project by Member States should provideevidence demonstrating compliance of the project with the requirements of Article11b (6).
3. To demonstrate compliance with Article 11b (6), the project proponent shouldsubmit a separate Compliance Report with the application documents to theDNA/DFP of the Member State or an entity designated by the Member State tofulfil this function.
4. The Compliance Report (based on documents, visits and interviews and followingthe outline provided in the Compliance Report Template8) may be prepared eitherby one of the participants in the project or by a third party on behalf of theparticipant (an outside consultant/expert, or a DOE).
5. The Compliance Report should be validated by a Designated Operational Entity(DOE) or an Accredited Independent Entity (AIE) licensed for that particularSectoral Scope, or other qualified independent third party accepted by theMember State, hereafter referred to as “Independent Validating Entity”.
6. The final decision on whether the project complies with Article 11 b (6) is taken bya Member State DNA/DFP.
7. “Development of a project” includes the following stages:•••needs and options assessment,project preparation,andproject implementation.
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See Annex 1 to the "Guidelines".
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The quality standards set out in the World Commission on Dams November 2000Report “Dams and Development – A New Framework for Decision-Making” can onlybe verified at a more advanced stage of project development, once the needs andoptions have been assessed. So a LoA may be issued to a large hydro project asdefined in Article 11b (6) at the earliest at the project preparation stage.
8. The compliance in the implementation phase is deemed to have been respectedonce mitigation and compensatory measures have been put in place andmonitored and, where possible, once decommissioning plans have beendeveloped.
9. Where a project is at the preparation or implementation stage, Member Statesmay issue a LoA, with parallel requirements regarding monitoring of theimplementation of compensatory measures and other undertakings.
Content of the "Article 11b (6) Compliance Report"
The Compliance Report Template establishes a standard for presenting theinformation required to confirm that the relevant international criteria andguidelineswererespectedduringdevelopmentofprojectactivities.(See Annex 1)
2.
Member States agree to accept the Compliance Report Template as thestandard template for providing information necessary for demonstratingcompliance with Article 11b (6).
3.
The Compliance Report includes an undertaking by an Independent ValidatingEntity that, in their assessment, the project respects the seven strategicpriorities, outlined in the World Commission on Dams November 2000 Report"Dams and Development– A New Framework for Decision-Making "
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4.
The complexity and level of detail of the Compliance Report should becommensurate with the scale of the project and its impacts.9
5.
The
Compliance
Report
is
modelled
on
Chapter
8
of
the
WCD
recommendations, consisting of seven strategic priorities for good practice, asexplained in the introduction above.
6.
For the purpose of validation, the project proponent should provide for theIndependent Validating Entity objective evidence presented according to bestauditing practice. Best practice for preparing a Compliance Report and making alegal declaration on compliance with Article 11b (6) involves:•Interviews and public involvement:Where possible, interviews should beconducted. The key documentation (e.g., social and environmental impactassessments) should be made public/made available to the relevantstakeholders such as the project owner, the technical advisors, the relevantlocal authorities, and the people affected;•Site observation:This entails studying the physical location and other activitiesrelated to the construction and management of the hydroelectric projectactivity as defined in Article 11b (6). Site observations should be conductedwith the purpose of confirming what is proposed and approved in the designdocuments and what the DOEs/DFPs/ independent validating entities affirm inthe compliance report based on a desk analysis.•Document review:This is essential in order to assess documents such as:othe Environmental Impact Assessment,oany other supporting material for the information listed under section Dof the PDD and approval from the relevant environment authority,oplanning documents (e.g. feasibility studies),ooption assessment documents10,odocuments concerning stakeholder consultation.
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The requirements as to the depth and extent of the report should be commensurate to the characteristics of theproject in question. For example, a 20MW run-of-river- project that does not include resettlement requires muchless attention than a 1000 MW dam project with a large reservoir and 5000 people resettled.As specified in the Compliance Report Template
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7.
Where applicable, further documents may be requested such as compensation,resettlement, development and financing plans. If is not possible to gather allthe documentation required, a site visit is necessary.
8.
Member States may jointly assess and modify the content of the ComplianceReport Template and the recommendations in these "Guidelines" from time totime to ensure the desired level of harmonisation as regards compliance withArticle 11b (6).
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