Carbon Finance Project Cycle

• The Facility screens project against Kyoto Protocol and the Facility’s eligibility criteria

• Project Company and the Facility sign letter of intent, and prepare project summary
• Project Company obtains Letter of Endorsement from host country government
• Conditional commitment to purchase emission reductions for selected project

• Project Company (with the Facility’s assistance) submits Project Design Document to independent auditor for project validation and registration as CDM project (after baseline study and monitoring plan are prepared and public comments received)
• Project Company obtains Letter of Approval from host country government

• The Facility appraises project to confirm project strength, and determine the preferred structure for an emission reduction purchase agreement
• Environment and Social Review for non-IFC projects

• Project Company and the Facility negotiate key terms for purchase of emission reductions
• Project Company and the Facility sign final emission reduction purchase agreement

• Project Company generates emission reductions, and commissions periodic verification and certification of emission reductions
• Reductions are issued and transferred to the government of the Netherlands

Timing

Initial Screening. Once a project company submits the required documentation on its project to the Facility, the Facility will conduct a quick initial screening to determine its potential interest in the project. The initial screening is expected to take 2-3 weeks.

Processing. If the Facility is interested in the project, the time required to reach closure is expected to be a few months. The need to interact with several other parties (for example, to have the project design validated by an independent auditor and to obtain host-country approval) is likely to lengthen the total time needed for the Facility to process a project to about 6-8 months. Any delays in external processing and approvals could further extend the timeline, as could delays in reacing financial closure on the project itself.