Call for Proposals for JCM Model Projects

Guidelines for Submitting Proposals(Tentative translation)

8 April 2016
Global Environment Centre Foundation

1. Purpose
Japan establishes and implements the Joint Crediting Mechanism (hereinafter referred to as“JCM”) in order both to appropriately evaluate contributions from Japan to GHG emission
reductions or removals in a quantitative manner achieved through the diffusion of low carbon
technologies, products, systems, services, and infrastructure as well as implementation of mitigation
actions in developing countries.
Starting from Mongolia in January 2013, Japan has established the JCM with 16 partnercountries (Mongolia, Bangladesh, Ethiopia, Kenya, Maldives, Viet Nam, Lao PDR, Indonesia, Costa
Rica, Palau, Cambodia, Mexico, Saudi Arabia, Chile, Myanmar and Thailand) at this moment.
In order to support the implementation of candidate JCM projects, Ministry of the Environment,
Japan (hereinafter referred to as “MOEJ”) has launched the “JCM Model Projects (hereinafterreferred to as “model project”),” which includes collaboration with projects supported by the Japan
International Cooperation Agency and other governmental-affiliated financial institution.
The purpose of this model project is to financially support the implementation of projects which
reduce GHG emissions by utilizing leading low carbon technologies in developing countries, and in
return seeks to acquire JCM credits for achievement of Japan’s GHG emission reduction target.

2. Contents(1) Overview
Participants in the model project shall implement projects to reduce GHG emissions utilizing
leading low carbon technologies in developing countries with which Japan has established or has
been consulting to establish JCM, and also shall conduct the measurement, reporting and verification(MRV) of GHG emission reductions.
The model project will finance part of an investment cost, as premises for seeking to deliver
JCM credits (at least half of issued credits) to the Government of Japan. The finance will be
provided to a Japanese representative participant in an international consortium composed of aJapanese participant(s) and a JCM partner-country participant(s) which shall efficiently promote theimplementation of projects (hereinafter referred to as “international consortium”).

Participants shall conduct the following procedures of their relevant project.
(a) Application for registration as JCM Project:
Participants shall apply their relevant project to be registered as a JCM project, as well as
cooperate with a Third Party Entity (TPE) which implements validation of their relevant
project. The application for the registration shall be conducted within 1 year from the start ofthe operation of the facilities introduced by the project in principle. In order to apply for theregistration of JCM project, it is necessary to develop an appropriate JCM methodology(ies)approved by the Joint Committee. Participants shall cooperate with JCM methodologies

developers, by providing information necessary for the development of JCM methodologies
applicable to the relevant project, etc.
(b) Monitoring
Participants shall conduct monitoring to quantitate the effects of the facilities on GHG
reductions, and report the results to MOEJ each fiscal year until the end of legal durable
years of the facilities as stipulated by the Japanese law.
(c)Request for Issuance of JCM Credits
Based on the monitoring results mentioned in (b), participants shall request for the issuanceof the JCM credits and deliver at least fifty percent of the issued JCM credits to the Japanese
government.

(d) Issuance Period
Participants shall request for the issuance of the JCM credits for emission reductions
achieved during the legal durable years (Only for the period that bilateral documents arevalid. Participants are not prevented from requesting for the issuance of JCM credits beyond
the legal durable years. In this case, participants are required to deliver at least fifty percentof the issued JCM credits to the Japanese government.)(e)

When to Request for Issuance
The first request for the issuance shall be conducted within 1 year from the registration of
the JCM project in principle. After the first request, participants may request at once for theissuance of the JCM credits for emission reductions achieved during several years, but theyshall request by the end of 2021 for the issuance of the JCM credits for emission reductions
achieved by 2020, and by the end of 2031 for the issuance of the JCM credits for emission
reductions achieved from 2021 to 2030.

* Costs related to (a) through (e) are not covered by this model project. However, if MOEJ
considers it’s necessary, it may be covered by contract other than JCM model project by
MOEJ for development of methodologies, Project Design Documents (PDDs) and monitoring
reports, and validation/verification for the first credit issuance.
(2) Eligible Projects
A project eligible for the model project shall satisfy the requirements (a) to (d) listed below:(a)Projects that reduce energy-related CO2 emissions in developing countries with which Japan
has established or has been consulting to establish JCM, and that are expected to contributeto achieving Japan’s emission reduction target through the JCM;(b) Implementation of projects will not adversely affect the environment and society ofcountries where projects are implemented(c)Reduction of GHG emissions achieved by the projects can be quantitatively calculated andverified; and(d) Facilities installed by the projects do not receive any other subsidy by the Government ofJapan.
(3) Countries of Priority
The model project shall prioritize the following countries that have already established ordecided to establish the JCM (as of 8 April 2016):
Mongolia, Bangladesh, Ethiopia, Kenya, Maldives, Vietnam, Laos, Indonesia, Costa Rica,Palau, Cambodia, Mexico, Saudi Arabia, Chile, Myanmar, Thailand and Philippines(*If other countries establishes JCM subsequently, they shall be included.)(4) Who Is Eligible to Participate?
A participant which is entitled to request and receive financial support under the model project
shall satisfy the requirements (a) to (g) listed below:(a)

A representative participant of the model project shall be a Japanese entity which is:i.

a private company,ii.

an independent administrative institution,iii.

an incorporated association/foundation,iv.

a corporation established under the Japanese law, orv.

any organization admitted as appropriate by the Global Environment Centre Foundation(GEC) with approval from the Minister of the Environment, Japan(b) A participant described in (a) shall be the representative entity of an international
consortium.
Note 1: International consortium is an association (no legal personality) that consists of aJapanese entity mentioned in (a) and a foreign entity(ies), etc., with the objective ofeffectively implementing the project.
Note 2: Application for the model project shall be in the form of joint application by theinternational consortium, with the single Japanese entity to act as the representativeparticipant. Member(s) of the international consortium other than the representative
participant is called as a partner participant(s).
Note 3: Unless GEC approves, the representative participant and a partner participant(s)cannot be changed after the selection of project.
(c)

A participant shall have developed structure for the implementation of the eligible projectand have technical capacity to appropriately implement the eligible project;(d) A participant shall have a financial basis to bear costs necessary to appropriately implement
the eligible project;(e)

A participant shall have adequate management structures and handling capacity foraccounting and other administrative work related to the eligible project;(f)

A participant shall explain the contents, effect on GHG emission reductions, details of thecost, investment plan, etc. of the eligible project;(g) A participant shall take a pledge regarding the exclusion of boryokudan, or organized crimegroups.
(5) Requirements of International Consortium Members(a)Japanese entity as a representative participant of an international consortium is responsiblefor the followings:i.

Applying for the model project,ii.

Managing the progress in the project, developing the project implementation plan, andacting as the contact entity for accounting and other administrative work related to theproject,iii.

Introducing the leading low carbon technology,

iv.

Purchasing, installing and commissioning of the facilities during the construction period,and managing the facilities to be utilized according to the purpose of the model project
for the legal durable years of the facilities as stipulated by the Japanese law,v.

Return of the finance resulting from violations of the Financing Regulations by any ofthe partner participants.

(b) All members of the international consortium are responsible for the followings:i.

To cooperate with JCM methodology developers by providing information required todevelop a methodology applicable to the project for GHG emissions reduction;ii.

To cooperate with TPEs by providing materials and information required to efficiently
conduct validation of the abovementioned project and verification of GHG emission
reduction at the project site;iii.

To reduce, monitor and calculate GHG emissions utilizing the facilities;iv.

To estimate the GHG emission reductions by the project, and to report it to GEC orMOEJ annually until the end of the legal durable years of the facilities as stipulated by
the Japanese law, which is unique to each project;v.

To request the Joint Committee to issue credits and take necessary actions suchas application for the project registration by the Joint Committee set up or to be set up by
the Governments of Japan and JCM partner- country;vi.

To deliver at least fifty percent of the JCM credits of GHG issued corresponding toemission reduction achieved by the project for the abovementioned legal durable years
to the Japanese government;vii. To manage the facilities with due care of a prudent manager for their legal durable years
as stipulated by the Japanese law in order to realize their efficient operation inaccordance with the purpose of the financial support even after the completion of themodel project.
viii. To report to GEC in case that a constituent member is changed and to continue theabove obligations from i. to vii.
(6) Costs Eligible for Financing
The model project covers the following costs. Note that the financial support is limited only tothose costs that can be verified as having been spent for implementation of eligible projects.
(a)Cost of main construction work(b) Cost of ancillary work(c)

Cost of machinery and appliances(d) Cost of surveying and testing(e)

Cost of facilities (including monitoring equipment)(f)

Cost of administrative work; and(g) Other necessary costs approved by GEC[Costs NOT eligible for financing]
The following costs are not covered by the model project:(a)

Cost of removing existing facilities (including miscellaneous expenses related to removalcosts)(b) Consumable supplies and materials to be used for periodical maintenance during thecommercial operation(c)

Civil engineering work and building (excluding structures that directly contribute toenergy-related CO2 emission reductions)(d) Cost related to a “simple restoration of function,” such as restoring the function to the stateat the time of installation by updating existing facilities(e)

Facilities that could become a source of small amounts of CO2 emissions(f)

Peripheral facilities that does not contribute to CO2 emission reductions (excludingmonitoring equipment)(g) Spare items used for the repair or replacement of failed units(h) Cost related to writing reports(i)

Cost of setting up a forward exchange contract and bank transfer fee(7) Amounts of Financial Support
Maximum amount of financial support shall be calculated by multiplying the aggregate amountof eligible costs by the percentage listed in (8).
Actual amount of financial support shall be determined based on the cost which is verified asactually spent for implementation of the project and be indicated in a notice to a representative
participant. There is no disbursement prior to the spending of cost.
(8) Maximum Percentage of Financial Support
Please refer to “Categorization by applied technology type, Number of JCM model project byeach country” for actual number of already selected projects.

Number of already selected project(s) using a

Percentage of financial support

similar technology in each partner country
None (0)Up to 50% (determined by participants)

Up to 3 (1 – 3)

Up to 40% (determined by participants)

More than 3 (>3)

Up to 30% (determined by participants)(9) Implementation Period of Model Projects
The implementation period of the model projects (i.e. the period for installation of facilities)
shall be from the date indicated on the Notice of Contract of Finance until 31 January 2019. Contractor purchase order prior to or after this period is not covered by this model project.
(10) Schedule
Date

Items

Friday, 8 April, 2016

Call for proposals

Monday, 16 May (12:00 JST)

Deadline for submitting proposals
Evaluation of proposals and hearings (in Tokyo)

Around end of June, 2016

Selection of model projects
Informational meeting for participants of selected projects
Review of application documents (technical aspects andWithin 90 days from the dateof preliminary selectionprojects budget (including supporting documents for thebudget), etc.)
Notice of Contract of Finance issued to participants
Implementation of model projects

3. Evaluation of Proposals(1) Selection of Model Projects
GEC conducts call for request for proposals and evaluates them according to the “Evaluation
Criteria for selecting JCM Model Projects” (hereinafter referred to as “Evaluation Criteria”). Afterthe assessment and hearings, in consultation with MOEJ, GEC will select model projects within thebudget.
(2) Announcement of Selected Model Projects
GEC will issue a notice to participants of selected model projects, and the information about
these selected projects (name of Partner Country and representative participant, title of project, andexpected GHG emission reductions, etc.) are publicly posted on MOEJ and GEC’s websites.
GEC will also inform participants that their model projects are not selected. Please note that
result of evaluation or reasons for not selecting the projects cannot be disclosed.

4. Procedure after Announcement of Selection(1) Application for Contract of FinanceParticipants of selected model projects shall submit application documents for Contract ofFinance between the participants and GEC within 90 days since their selection was announced. Ifthese documents are not fully developed and not submitted within 90 days, their applied project may
be regarded as difficult to be implemented, and the selection may be cancelled.
(2) Conclusion of Contract of Finance
GEC shall examine the contents of the submitted documents (such as technical aspects andprojects budget, including supporting documents for the budget), and conclude Contract of Financewith the participants when these documents are appropriately completed. It should be noted by theparticipants that it will normally take 30 days for the examination by GEC. Hence, participants arerecommended to complete their documents at least 30 days before starting their model projects.
(3) Points to be Considered for Starting Model Projects
Starting a model project is possible only after the Contract of Finance is concluded. Participants
should note the following points to be considered.
(a) For the contracts which are necessary to implement the model project between participants
and other entities, the date of concluding contracts must be later than the date of concluding
Contract of Finance.
(b) For the abovementioned contracts, participants should select other entities throughcompetition principle as long as it’s applicable.
(c) For the abovementioned contracts, payments to other entities should be completed by end ofeach fiscal year.

(4) Changes in Implementation Plans
When significant changes stipulated in the Financing Regulations will occur, participants shallseek an approval of changes in the implementation plan by GEC, and be approved prior to theoccurrence of the changes.
(5) Cost
For the cost covered by the model project, participants shall prepare and maintain account books.
The books shall separate other costs which are not covered by the model project, and record amountof income, expense and its usage, attached with relevant evidences of such income and expense.
The account books and evidences shall be stored for 5 years after the model project is completed.
(6) Reports to be Submitted and its Review(a) Reports by each end of fiscal year
Participants shall submit reports by each end of fiscal year to GEC by 10th April(b) Report for completion of model project
Participants shall submit a report for completion of model project within 30 days from thecompletion of model project, or 10th March, 2016. All payments by participants to otherentities in line with respective contracts shall be completed by the submission of report forcompletion of model project.
(c) Reports on monitoring
Participants shall conduct monitoring to evaluate GHG reductions, and report the results eachfiscal year. Please refer 2 (1) b. for details.
(7) Reimbursement of Finance
GEC will pay financial support to the representative participants in response to the request for
reimbursement submitted by the participants at end of each fiscal year. The request is based on thecompleted portion of the model project by the end of each fiscal year. GEC will conduct on-site
visits for reviewing submitted requests.
(8) Management of Acquired Property
Participants shall prepare a property ledger for the property acquired or gained its value throughthe model project (hereinafter referred to as “property”), in order to properly manage such property.
When participants plan to use, sell, exchange, lend, pledged as collateral or dispose property (limitedto equipment or facility etc. with more than 500,000 JPY) for the purpose other than the modelproject, participants shall seek an approval by GEC prior to these actions taken for the property. Notethat such actions may result in return of finance.
When participants plan to use, sell, exchange or lend property among members of theinternational consortium in line with the purpose of the model project, participants shall report toGEC prior to these actions taken for the property. In this case, participants shall not earn profit
through these actions.
All of the equipment, facility, etc. installed through the model project must have a sticker
showing that it is part of the JCM Model Project by MOEJ.
(9) Changes in Members of International Consortium
In case when the name or address of the participants are changed, or the participants are mergedwith other entities within 5 years from the completion of the model project, the representative
participants shall report it to GEC without delay.
(10) Cancellation of Contract of Finance
When participants corresponds to one of the following actions, Contract of Finance may becancelled fully or partially. Participants shall return whole or part of the received finance.
(a) Violate relevant Laws, Financing Regulations, or order by GEC(b) Use the finance to other purpose that are not relevant to model project(c) Act inappropriately(d) Need to implement the model project is vanished due to the changes in the circumstances ofparticipants(11) Penalty for Injustice Acts
When false application, receiving of other subsidy by the Government of Japan, or any violations
to other Laws are identified, Contract of Finance may be cancelled and/or return of finance may beordered.