Source: http://www.docstoc.com/docs/67920865/Annex--Price-Transparency
Timestamp: 2013-12-22 01:28:18
Document Index: 405630674

Matched Legal Cases: ['Art. 6', 'Art. 6', 'Art. 6', 'Art. 5', 'Art. 7', 'Art. 6']

No: 2000-3150, rev. 02
TECHNICAL REPORT, ANNEX 1
Draft Validation Protocol
The attached draft validation protocol was developed as a working tool for the desk-study
validation of the PCF Liepaja Regional Solid Waste Management Project. The protocol should
be regarded as a first draft in an effort to document applicable requirements for PCF JI projects
for the purpose of a validation audit. The validation exercise and subsequent discussions with
PCF have confirmed that the protocol is a useful starting point in developing such a tool.
However, for cost effective and systematic validation audits of PCF projects, an updated audit
protocol as well as guidance for its use, should be worked out.
In order to fulfil PCF&#39;s requirement for transparency, both the original comments in the draft
validation protocol (submitted with the draft validation report) as well as the final comments
made following discussions with PCF and updating of PCF&#39;s project documents have been
included. The latter appear in italic as amendments in the Comment section of the protocol.
/ca3a0875-4fa5-429e-b51d-258793c5d8c4.doc
DRAFT VALIDATION PROTOCOL: PCF LIEPAJA REGIONAL SOLID WASTE MANAGEMENT PROJECT
Item                                                                               Reference   MoV      Comment                                                                                                  Concl.       Cross
1. Political and Legal Obligations
1.1.    UNFCCC/Kyoto Protocol
1.1.1.     KP Art. 6.1.a – Approval of Parties
1.1.1.1. Letter of endorsement between                                   /9/         Doc.     Letter of endorsement dated 21.09.98 from the MOEPRD to PCF has been reviewed.                           OK
Latvia and PCF?
1.1.2.     KP Art. 6.1.b – Reduction in GHG
emissions must be additional
1.1.2.1. Is the JI project environmentally                               /1/         Doc.     Would the GHG reductions planned take place in the absence of this project?
/15         review                                                                                                            F1           1.2.2
/16/                 The project would go beyond the standards set in NSWMS. Also, LFG capture will not be                    OK           1.3.3
required in Latvia before 2013 provided the EU, in accession negotiations, accepts this                               3.2.2.1
(see also 1.2 and 1.3).
On the other hand, Latvia with a Kyoto cap must put in place policies and measures for
GHG reduction and demonstrate progress by 2005. One of Latvia&#39;s GHG reduction
priorities is the capture of LFG from landfills. Finally, it is a stated priority in Latvia&#39;s
energy policy to utilise this indigenous energy resource.
The EU directive that must be transposed, the high priority awarded to GHG reductions
from landfills and the priority of energy use from LFG capture all indicate that Latvia, in
the absence of the project activity, would put in place some measures relating to LFG
capture and utilisation.
Thus, a baseline assuming no action on LFG capture until 2013 seems unrealistic.
The Liepaja project will convert “hot air” (surplus AAUs) into real reductions: AAUs will be
transferred for real reductions achieved before the commitment period, which reduces the amount
of hot air that can enter the market in the commitment period.
Having development priorities does not imply that the related projects and activities can actually
be afforded by the country at this point in time.
The critical issue is whether Latvia would use and pay for LFG collection in the case of Liepaja
and when this would happen. The PCF will only claim emission credits for the period in which
Latvia would not prevent LFG emissions from occurring.
Latvian municipalities can be expected to put in place LFG recovery measures when
(i) this becomes mandatory, or (ii) when LFG use becomes a profitable activity.
Good indicators for when this happens are now included in the MVP.
Item                                                                               Reference   MoV      Comment                                                                                                   Concl.       Cross
1.1.2.2. Is the JI project financially additional:
1.1.2.2.a. In relation to ODA in the PCF                             /10/        /JH/     As PCF will invest in CDM projects all investor money would have to come from non-                        OK           1.3.9
financing?                                                                ODA sources. This was the case for AIJ projects. The no-ODA requirement is not stated
as a requirement in PCF documents.
According to PCF it has been highlighted in discussions with potential investor countries.
For later CDM projects this issue should be clarified.
Since this is a JI project the ODA requirement has not been investigated further.
ODA additionality is presently not a requirement for JI projects.
1.1.2.2.b. Is the PCF funding additional to other                  /9/         /AH/     Would other financing be available for co-financing the WB project without PCF, i.e.                      OK
funding sources?                                     /1/, p.82            could PCF money crowd out other sources of funds?
The PAD states that “Additional concessional financing would not be available
without support from PCF” This has been confirmed by the Bank Task Manager.
1.1.2.2.c. Does the JI project have a lower NPV                    /3/         Doc.     With the baseline alternative selected in the Baseline study, the profitability of the project            OK           3.1
/IRR than the baseline without ERUs?                             review   is lower than the baseline. See, however the concerns related to baseline selection in
Section 3 of the protocol.
The financial analysis (sometimes called “financial additionality”) is only one possible way to
establish environmental additionality. The baseline case and the project case have been
compared without considering the value of ERUs in both cases.
1.1.3.     KP Art. 6.1.c – Compliance with Art. 5                           KP 5&amp;7      N/A      Investor countries must comply with rules on e.g. inventories and reporting for acquiring                 OK
ERUs. Verifying this is outside the scope of validation.
and Art. 7
1.1.4.     KP Art. 6.1.d – Project must be                                  /16/        N/A      Investor countries must implement domestic actions for GHG reductions. Verifying this is                  OK
outside the scope of validation.
supplemental to domestic actions
1.1.5.     Emerging UNFCCC Requirements
1.1.5.1. Have any emerging UNFCCC JI                                                 /JH/     No emerging UNFCCC requirements of relevance for validation have been identified by                       OK
PCF at start of validation.
requirements of relevance per March 2,
2000 been identified?
No relevant emerging UNFCCC requirements have been identified by DNV.
Item                                                                               Reference   MoV      Comment                                                                                                 Concl.       Cross
1.1.5.2. Could any of the AIJ criteria be                                /16/        Doc.     The URF developed for AIJ projects requires reporting of calculated GHG reduction for                   F2           1.1.2.2
review   the specified AIJ component and the corresponding costs. From the documents received                    OK           1.3.10
applicable to the project?                                                           it is difficult to clearly identify the JI component and the corresponding costs.
Depending upon the final JI project boundaries, ODA financing may be included in the JI
The JI project boundaries are the project boundaries. According to PCF, a distinction is not
possible, nor intended. The PCF financing is for purchasing of ERUs only, so costs can only be
established in retrospect. See also 2.1.1.
1.2.        Host Country Requirements
1.2.1.     Latvian National and Local Legislation
1.2.1.1. Is the project in line with current Latvian
1.2.1.1.a. Environmental and sustainable                             /1/ p. 4    Doc.     Improved waste management is one of five priorities in NEPP.                                            OK
development goals?                                   &amp; An 11,    review
1.2.1.1.b. Waste management priorities and                         /1/ p. 4    Doc.     NSWMS addresses closing &amp; upgrading of disposal sites and emphasises regional                           OK
strategies?                                          &amp; An 11,    review   solutions.
National Energy Strategy highlights indigenous energy sources.
1996 Law on Solid waste management has provisions for LFG capture.
Energy Law has provisions for LFG capture with subsidised prices.
GoL has declared the project its highest priority in the environmental sector.
Regulation No. 56 of February 11, 2000 has amended the Latvian waste management law and has
introduced a transition period for LFG utilization up to 31.12.2012.
1.2.1.1.c. Latvia&#39;s response to UNFCCC/KP                          /1/         Doc.     Capture of LFG is one of GoL’s priorities for GHG reduction. DNV has not reviewed                       OK           3.2.2.1
review   Latvia&#39;s strategies and plans for follow-up of UNFCCC and KP in detail.
1.2.1.2. Is the project in line with current Latvian                     /1/         Doc.     The project is in line with the applicable laws in the waste and energy sectors as well as              OK
review   Latvia&#39;s GHG reduction strategy.
1.2.1.3. Is the project in line with current Latvian                                 /IA/     No specific Latvian JI rules exist.                                                                     OK
JI criteria?
Item                                                                               Reference   MoV      Comment                                                                                                     Concl.       Cross
1.2.2.     EU Legislation
1.2.2.1. Is the project in line with current EU                          /1/         Doc.     Project meets relevant directives, in particular CD 75/442/EEC and 1999/31/EC of                            OK
review   260499 on Landfill of waste.
1.2.2.2. Is the project in line with current EU                          /1/, /15/   Doc.     Latvia has been accepted as a candidate country about to start negotiations. Latvia&#39;s                       OK
review   stated goal is accession by 2003. EU will require the full transposition of EU
policies and plans for accession?
environmental legislation, but length of transitional periods will be negotiated.
By 2000, progress on transposition of environmental &quot;Acquis&quot; and implementation of
relevant legislation with timetables for specific directives should be in place. For directive
EC of 260499 on Landfill of waste a timetable for compliance has been set (2013).
The date must be regarded as preliminary, since the final date for full compliance is likely to be
subject to negotiations between the EU and Latvia. Should the directive be implemented sooner,
the MVP ensures shifting of the baseline.
1.3.        PCF Requirements
1.3.1. Consistency with the WB’s CAS?                                       /1/         Doc.     The CAS calls for:                                                                                          OK           1.2.1.1
p. 3-4      review   Improved institutional capacity at regional level for local infrastructure and environmental
Promote private sector involvement in e.g. waste management.
1.3.2.     Complementarity with and no competition                          /9/         Doc.     According to PCF, the project has been reviewed by GEF and a no-objection from GEF                          OK
review   has been confirmed.
with GEF?                                                                    /JH/
A GEF memorandum dated 13.03.2000 on no-objection has been reviewed.
1.3.3.   Contributes to sustainable development:
1.3.3.1. Supportive of national and local                               /1/         Doc.     The project will remediate existing sites, enable treatment of leachate, recycle and better                 OK           1.2.1
p. 9        review   utilise wastes and utilise LFG.
environmental goals; Reduce local
1.3.4. Provides learning potential and                                      /9/         Doc.     The project is similar to the WB waste project in Riga. However, the JI project has                         OK
review   learning potential for all parties.
demonstration effects?
In particular, the project will demonstrate the feasibility of a market in ERs which is a strategic
objective of PCF.
1.3.5.     Promotes transfer of environmentally                             /9/         Doc.     Energy cells and LFG capture can be considered environmentally sound technology.                            OK
sound technology (EST)?
1.3.6.     Equitable sharing of benefits and risks?                         /9/         Doc.     The details of this are to be negotiated. A fair process where both parties have the same                OK
review   information is planned.
/JH/     PCF makes up-front payment to Latvia and thus assumes most of the risks including the
KP risks. The price for ERUs has been agreed. The benefits to Latvia include EST
transfer, social and environmental benefits.
PCF states that a schedule of payment and transfer of emission reductions will be agreed, as well
as sharing of emission reductions in excess of an agreed minimum.
1.3.7.     Designed to produce “high quality” ERUs?                         /9/         Doc.     High quality ERUs are defined by PCF as meaning likely to comply with UNFCCC                             OK
review   requirements.
Provided that risks and findings identified in this validation are satisfactorily addressed,
and the planned process of verification and certification is adhered to, the ex-post
certified ERUs will likely be accepted by the UNFCCC.
1.3.8.  Technological Risks
1.3.8.1. Is the technology well tested                                   /1/         Doc.     The technology is well tested and commercially available.                                                OK
p. 17       review
(commercially available)?                                                            Experience from similar project in Riga.
1.3.8.2. Does necessary competence exist in                              /1/         Doc.     Experiences and resources from similar project in Riga to be used.                                       OK
the Host Country?
Additional capacity building has been included in the project.
1.3.9.  PCF financing
1.3.9.1. Are the underlying project and the PCF                          /1/, /2/    Doc.     It is not clear how PCF money and money from the other financiers will be used.                          F2           1.1.5.2
project separated?                                                      review   According to the PCF the &quot;PCF project&quot; cannot be physically separated from the overall                   OK           1.3.9.2
/AH/     project.                                                                                                              2.1
At this stage it is not possible to identify the JI project or the JI component of the project.
Similarly, the GHG components are at this stage not defined in financial terms.
To identify what components are financed from which funds is also relevant as much of
the financing in the project is ODA.
According to PCF, a matching of project components with PCF funds is neither possible nor
intended. The PCF will not pay for specific project components but for ERUs. The JI project and
the Liepaja project are the same project. The non-ODA requirement is not presently included in
Item                                                                               Reference   MoV      Comment                                                                                                    Concl.       Cross
1.3.9.2. Have the costs of ERUs been presented in                       /2/         Doc.     The cost of ERUs are the (incremental) costs of the GHG components or the JI project                       F2
transparent manner (emission abatement                      #33&amp;56      review   divided by the number of tonnes of GHG abated. From the discussion in 1.3.9.1 it is not                    OK
/AH/     possible to identify the cost of ERUs at this stage.
costs)?
The PCF financing is for purchasing of ERUs only, so costs can only be established in retrospect.
Establishing the costs of ERUs is not a KP 6 requirement.
According to PCF, what can be identified are the incremental costs of the project, which is the
cost differential between the proposed project and the baseline project. In the case of Liepaja, the
incremental costs are the financing gap that the PCF funds will close. The incremental costs
between the various waste management options have been elaborated in Table 4 of the baseline
1.3.9.3. Has the expected price of ERUs been                            /9/         Doc.     The price of ERUs has been agreed at USD 20,-                                                              OK
presented in transparent manner?                                        review   According to the PCF:
/AH/,    The price may differ substantially from costs and will be negotiated with the Latvian side.
/JH/,    Important factors are: (a) the costs of converting the project and the expected emission
/CS/     reduction yield, (b) arrangements for sharing risks and possibly ERs, (c) the expected
market price for carbon, (d) possible arrangements for credit sharing.
The carbon purchase agreement is not yet completed and has not been reviewed.
The price of ERUs will be negotiated. A schedule of payment and transfer of emission reductions
will be agreed, as well as sharing of emission reductions in excess of an agreed minimum.
1.3.9.4. Is the project in line with PCF portfolio                      /9/         N/A      This is the first PCF project.                                                                             OK
criteria?                                                                           As no portfolio of implemented projects exists, compliance with the 6 criteria for the PCF&#39;s
portfolio can presently not be verified. The project however, is not in contradiction with any of
these 6 criteria.
1.3.10. Conflict of interest situations
1.3.10.1. Are there possible conflicts of interest                      /9/         Doc.     The WB is supporting CEE countries in their accession strategies, see WB web pages                         F3           1.1.5.2
p. 41-42    review   and 1999 Accession Partnership document for Latvia from the EU.                                            OK           1.3.9.1
between the PCF financing component                                                                                                                                                                        1.3.10.2
and the WB Underlying Project?                                                     Caio K. Koch-Weser, Managing Director, WB in: &quot; World Bank Support To The EU
Accession Process&quot;, World Economic Forum, Salzburg, June 22, 1998:
&quot;we are financing specific projects that help countries meet EU norms and directives. In the
environment, we are financing [ ] a solid waste management project in Latvia to fulfil the
requirements of the framework waste directive and landfill directive.&quot;
A possible conflict of interest exists between the objectives of EU, as supported by WB,
and the non-compliance with the landfill directive that constitutes the baseline.
Implementation of the LFG capture requirement would invalidate the baseline and the
basis for ERU generation.
According to the PCF, the conflict of interest issue addresses the question of whether the World
Bank could claim to finance a “dirtier” (higher emission) baseline than it would normally finance
if PCF funds were not available. This problem has been realized and discussed extensively in the
process of developing the PCF. The problem is not unique to the PCF and is not materially
different from setting the baseline in any JI/CDM project, since the parties to such a deal will
always have an interest in setting a high emission baseline. The problem is systemic: it cannot be
avoided and must be tightly managed through transparency and validation/verification etc.
Further, Latvia’s incentives for negotiating a long grace period for compliance with EU’s new
waste directive are reduced by the fact that most PCF funds are disbursed up-front.
1.3.10.2. Are there possible conflicts of interest                       /9/         Doc.     EU ISPA financing is earmarked for assisting accession countries to become compliant                     F3           1.3.10.1
p. 41-42    review   with EU environmental laws. This could be a conflict of interest as baseline hinges on                   OK
between the participants?
non-implementation in Latvia of the LFG capture provision of the EU LF directive.
The GHG components will ensure compliance with the said directive.
The PCF informs that the EU contribution requires a co-financing component from Latvia made
possible by PCF’s pre-payment for ERUs. The project assists in achieving compliance with EU’s
LF directive.
2. JI Project Description
2.1.    Project Boundaries
2.1.1.     Are the waste management project                                 /1/ &amp; /5/   Doc.     Yes                                                                                                      OK
Review   The project is the JI project. The boundary is the Liepaja region.
spatial boundaries clearly defined?
2.1.2.     Are the JI Project system boundaries                             /1/, /3/,   Doc.     The two GHG components are described (methane gas capture and electricity                                F2           1.3.9.1
&amp; /5/       Review   generation) but the actual JI component(s) or project is not clearly defined.                            OK
clearly and properly defined?
The boundaries for the GHG components are drawn around sources of emissions. Thus, the
boundary of the LFG component is the Liepaja region. The boundary of the electricity component
is the international grid Latvia shares with its neighbours. See also 3.2.2.2.
2.1.3.     Are the JI Project temporal boundaries                           /1/, /3/,   Doc.     The PCF desires to receive credit for GHG emission reductions from 2002 to 2012. The                     OK
&amp; /5/       Review   JI crediting period is currently set for 2008 – 2012. ERUs generated prior to 2008 will be
clearly and properly defined?                                                /J.H./   transferred to PCF as Parts of Assigned Amounts following an agreement. Possible
ERUs generated after 2012 will be decided later.
The PCF will negotiate the right to parts of emission reductions generated by the project after
2012. Whether such credits will materialize is monitored by appropriate indicators for baseline
cut-off date in the MVP.
2.2.        JI Project Design
2.2.1.     Does the project engineering reflect                             /1/, /5/,   Doc.     The landfill with the methane capture component reflects current engineering best                        OK
/6/, /18/   Review   practices and it would meet existing EU directives.
current best practices within solid                              &amp; /19/
2.2.2.     Does the project engineering reflect                             /1/, /5/,   Doc.     Specific design information regarding the electricity component is not included beyond                   OK
&amp; /6/       Review   stating the basic concept and components. However, this is a well tested concept and
current best practices for energy                                                     should pose no problems in detailed planning.
2.2.3.     Have the identified social and                                   /5/ &amp; /6/   Doc.     The EIA identifies potential social and environmental impacts and these are used to                      OK           1.3
Review   select the project alternatives or are mitigated in the selected project design.
been addressed in the project design?
2.3.        Predicted JI Project GHG Emissions
2.3.1.     Are the GHG calculations documented                              /1/, /3/,   Doc.     The calculations for the methane production are done by using a decay function. This is                  OK
/5/, /18/   Review   a fairly standard approach. However, none of the important factors which the decay
in a complete, transparent, and                                  &amp; /19/               function requires are listed. The predicted methane production or the associated
conservative manner?                                                         /J.H./   emissions reductions for the project based upon the information given in the
The confirmation of GHG quantities is not a prerequisite for PCF validation.
The updated baseline document presents conservative estimates of ERs. The MVP procedures,
correctly applied, should result in conservative calculation of ERUs.
2.3.2.     Are uncertainties in the GHG emissions                           /1/, /5/,   Doc.     Some uncertainties in the predicted GHG emissions for the project are discussed in the                   OK
&amp; /6/       Review   documentation but they are not accounted for in the estimates nor are any sensitivity
estimates properly addressed in the                                                   analysis or different scenarios presented.
documentation?                                                               /J.H./
Item                                                                               Reference    MoV      Comment                                                                                                    Concl.       Cross
2.3.3.     Leakage
2.3.3.1. Are potential positive and negative                             /1/, /3/,    Doc.     A proper assessment of leakage is not contained in the project documents.                                  F4           4.4.1.3
/4/, /5/,    Review                                                                                                              OK
leakage effects properly identified and
&amp; /6/                 In the updated baseline document leakage has been analysed for both the LFG capture and
addressed?                                                                            electricity generation.
2.3.3.2. Has leakage been properly accounted                             /1/, /3/,    Doc.     A proper assessment of leakage is not contained in the project documents.                                  F4           4.4.1.3
for in the quantitative GHG emission                            &amp; /6/                 In the updated baseline document leakage has been analysed for both the LFG capture and
calculations?                                                                         electricity generation. No evidence that leakage could play a significant role has been found.
3. Project Baseline
3.1.    Baseline Selection Methodology
3.1.1.     Is the discussion and selection of the                           /3/          Doc.     Clear section detailing the selection methodology.                                                         OK
baseline methodology transparent?                                             Review
3.1.2.     Is the discussion and selection of the                           /3/          Doc.     It is not clearly described what alternative is selected. The Baseline Study should                        F5           3.2.2.1
Review   conclude with a clearly stated baseline and JI project description.                                        OK
chosen baseline transparent?
The selected baseline is well described in the updated baseline document.
3.1.3.     Does the methodology comply with                                 /3/, /8/ &amp;   Doc.     The method appears to follow the GEF’s “incremental cost methodology”. It is not                           OK
/12/         Review   possible to say whether this methodology will become an accepted standard for proving
existing best practices?                                                               JI or CDM baseline additionality.
3.1.4.     Is the baseline selection methodology                            /3/          Doc.     That there exists economic data which can be used with the baseline selection                              OK
compatible with the data availability?                                        Review   methodology is an acceptable assumption.
3.2.        Baseline Determination
3.2.1.     Are the necessary financial indicators                           /3/          Doc.     A key constraint that is mentioned in the Baseline Study is the waste collection and                       F5
Review   disposal tariff connected with the different alternatives. It is stated as being “politically              OK
needed for determining the baseline                                                    unacceptable” to increase this tariff more than 50%. However, the alternative comparison
presented for the alternatives?                                                        fixes the tariff price instead of showing a comparison of it. The tariff price represents the
inhabitants’ willingness to pay for local and global environmental benefits. The necessary
tariff increases for the alternatives should be included in the comparison table for the
alternatives, since it is the strongest justification for the baseline choice.
Item                                                                               Reference   MoV      Comment                                                                                                       Concl.       Cross
The baseline report says (page 23) that “the tariff for waste collection, treatment, and disposal:
1.5Ls/m3....” when it should be only the disposal fee, not the tariff.
According to PCF, the analysis in the cost table and the PAD have done a sensitivity analysis
with the disposal fee. This will be corrected in the baseline study and the results of the sensitivity
analysis included.
The PCF states that an IRR ranking requires that the user fee is kept fixed over all projects to be
compared. The use of tariffs has been better explained in the updated baseline study.
3.2.2.     Baseline Boundaries
3.2.2.1. Are the chosen baseline boundaries                              /3/, /4/    Doc.     Some confusion exists regarding the baseline choice and the baseline components                               F2
versus the JI project components. The documents are unclear and in several places in                          OK
clearly defined?                                                            Review
the Baseline Study Skede is named as the baseline.
3.2.2.2. Do the baseline boundaries sufficiently                         /3/         Doc.     The electricity generation component baseline boundary is defined as Latvia. This is not                      F6           3.3.1
a probable boundary based upon the fact that Latvia is a net importer of electricity.                         OK           4.4.2.2
cover the sources of the baseline                                           Review
emissions?                                                                           The power grid, which Latvia shares with its neighbours, is the correct boundary for calculating
baseline and project emissions. This is reflected in the updated baseline study and is part of the
MVP. ERs generated outside Latvia will not be claimed by the project.
3.2.3.     Baseline Risks
3.2.3.1. Have the major risks to the baseline                            /3/,        Doc.     Economic, technical, and legal constraints are presented and discussed. However, the                          F5           1.1.2.1
/20/, &amp;     Review   Latvian response to their KP commitments have not been included in the analysis and                           OK           3.2.3.3
/21/                 we also question why the Latvian plans for the other 10 - 12 regional landfills are not
According to PCF, the Latvian plans for the other 10-12 regional landfills may provide important
clues as to what would happen without PCF funding. An analysis of Latvia’s response to the
Kyoto Protocol and Latvia’s implementation of its waste management strategy has bee included
in Section 4.1 of the updated baseline study. The MVP has good indicators for monitoring
baseline validity. The risks are thus well identified and monitored.
3.2.3.2. Would the chosen baseline project be                                                 The baseline project would meet existing Latvian legislation. It would not meet the EU                        OK
accepted by national or other relevant                                           legislation regarding municipal waste management once it is adopted in Latvia.
3.2.3.3. Is the chosen baseline project realistic?                       /3/         Doc.     A “sanitary landfill without LFG capture” is not listed as an option in Latvia’s “Strategy for             F5
Review   the Management of Municipal Waste, 1998 – 2010”. However, LFG utilisation is                               OK
identified. The selected prototype sanitary landfill for the planned sanitary landfills in
Latvia contains a gas capture component.
None of the reference documents identify existing or planned sanitary landfills which
have been built as a “sanitary landfill without gas capture”.
It can be questioned whether it is correct to use the term “Sanitary Landfill” for the baseline
landfill without LFG capture.
No government funding is presently available for implementing the government’s desired LFG
strategy. If landfills in Latvia would start utilising LFG for any reason, the baseline validity
indicator monitored as part of the MVP would necessitate an analysis to redefine the baseline.
3.3.        Baseline GHG Emissions
3.3.1.     Are the GHG calculations documented                              /1/, /3/,   Doc.     The predicted baseline emissions for the project are difficult to verify based upon the                    OK           2.3.1
/5/ &amp;       Review   information given in the documentation. The baseline methane emissions would be the
in a complete, transparent, and                                  /13/                 same as the JI project methane emissions. The choice of heavy fuel oil for the electricity
conservative manner?                                                         /J.H./   generation baseline is most likely incorrect since other fossil fuels are also used in the
The methodologies employed in the MVP should ensure that ERUs are correctly calculated.
3.3.2.     Are uncertainties in the GHG emissions                           /1/, /5/,   Doc.     Some uncertainties in the predicted baseline emissions for the project are discussed in                    OK
&amp; /6/       Review   the documentation but they are not properly accounted for.
estimates properly addressed in the
documentation?                                                               /J.H./   The confirmation of GHG quantities is not a prerequisite for PCF validation.
Possible uncertainties regarding baseline emissions have been reviewed and the discussion of
baseline emissions and recoverable LFG has been strengthened in the updated baseline study.
4. Monitoring and Verification Protocol
4.1.   Is the MVP clear in terms of:
4.1.1.     Objectives and scope?                                            /4/         Doc.     Yes                                                                                                        OK
Item                                                                               Reference   MoV      Comment                                                                                                Concl.       Cross
4.1.2.     Usage (i.e. user friendly)?                                      /4/         Doc.     Yes, the MVP document and Excel tables and documentation appear to be user friendly.                   OK
4.1.3.     Giving references to all literature used?                        /4/         Doc.     Yes                                                                                                    OK
4.2.        Are the monitoring boundaries clearly
defined for the baseline’s and the JI
4.2.1.     Direct GHG emissions?                                            /4/         Doc.     Yes                                                                                                    OK
4.2.2.     Indirect GHG emissions?                                          /4/         Doc.     Yes                                                                                                    OK
page 2      Review
4.2.3.  Other indicators relating to:
4.2.3.1. Social and Environmental Issues?                                /4/         Doc.     Yes, if one assumes that the entire Liepaja region is the boundary.                                    OK
4.2.3.2. Baseline Validity Issues?                                       /4/         Doc.     No, the boundary for the “Economic or Financial Viability of Flaring or Power Production”              F5           4.4.3.2.b
Review   is not properly defined.                                                                               OK
The MVP has good indicators for monitoring whether LFG capture occurs in Latvia for legal or
other reasons ensuring the continued validity of the baseline.
The MVP states that should flaring be necessary at Grobina, all Skede MVP procedures for
estimating, measuring and collecting flare methane reductions (and carbon dioxide emissions)
must be applied at Grobina.
4.3.        MVP Methodologies
4.3.1.  Does the choice of methodologies allow
conservative, transparent calculation of the
ex post GHG emissions for the:
4.3.1.1. Methane Capture and Combustion                                  /4/, &amp;      Doc.     The methodologies described in the MVP are sufficient as long as only CH4 and CO2 are                  OK
the combustible components of the LFG. If other gases with a calorific value are part of
Component?                                                      /18/        Review
the LFG then the method could potentially estimate more methane than was actually
combusted/flared. Such a situation is very unlikely, however, and would possibly occur
before the methane production is stabilised, i.e. hydrogen/hydrogen sulphide is present
in the LFG. An analysis of the LFG would easily confirm the validity of the chosen
method. Furthermore, the final design might include cleaning of the LFG impurities prior
Bench testing of the generator is mentioned but it is not recommended as a check for the
nameplate rating, i.e. the efficiency of the IC engine could decline due to wear. On the
other hand, using the nameplate rating would be conservative since a lower efficiency
would burn more LFG per kWh.
The MVP section regarding “Potential Adjustments for Destruction of Methane Emissions
from Sludge” does not give any methodology or guidance for estimating the adjustments.
This issue is not important if the sludge is included in the baseline. However, one should
provide guidance for estimating what methane production comes from the sludge if it is
going to included in the MVP (pg. 26).
The MVP provides for an analysis of the collected LFG. Other combustible gases (hydrogen /
hydrogen sulphide) will be insignificant since they occur only at a level of parts per million.
The revised MVP discusses the bench-testing vs. name-plate issues.
Sludge is landfilled in the baseline scenario and therefore needs no separate treatment. The
updated baseline study contains a discussion and evidence that shows that the sludge baseline
scenario is plausible.
4.3.1.2. Flaring?                                                        /4/         Doc.     Methane flow rates and LFG calorific values are included for monitoring methane                            OK
Review   destroyed by flaring (Skede), but not for methane destroyed by electricity production in
the recommended procedure. It is unknown when the operator needs the LFG specific
data since flaring is irregular; but the same methane data is not supposed to be used for
methane volume estimates connected with the generator combustion. Both methods
would need to be employed simultaneously in order to cover both flaring and electricity
production. This would either: 1) produce more monitoring than needed, or 2) allow for a
check of the methane combusted by the generator and/or a check of the flow meters.
Neither issue is discussed.
Along with the above discussion, we question why the design for Grobina does not
include flares (or venting at the very least). However, this eventuality is covered in the
The consistency between the LFG volume and calorific value methods has been addressed by the
Possible flaring at Grobina is covered in the MVP.
4.3.1.3. Electricity Generation Component?                               /4/ &amp;       Doc.     A marginal emissions approach (WAMER) has been specified for the baseline                                F6           4.4.2.2.a
/13/        Review   monitoring method in the MVP. The problem with this methodology is that there are, at                    OK
the present time, no real candidates for marginal electricity production in Latvia. Latvian
energy production is composed of hydro and CHP facilities. The CHP plants do not have
condensing capability and therefore the electricity production is not related to demand
but to heat production. Latvia imports a large amount of electricity from Estonia and
In the Baltic region the marginal candidates do exist in Estonia and Lithuania. It is not
politically possible at this time for the project to claim or transfer emissions reductions
from either of those countries. This means that even though ERUs related to this project
may be verified, they cannot be claimed unless a bilateral agreement is in place.
Also, the sections mentioning net “metering/utility billing” does not describe the
methodology adequately. It is not clear that an analysis using off-site data could actually
differentiate between the “parasitic load due to methane capture” and the total landfill
consumption of electricity (pg. 12 and 22).
According to PCF, the lack of non-marginal generation in Latvia is not a problem for the GHG
emissions methodology options since a system average is mentioned. With Latvia moving away
from imported energy and the utility using economic dispatch modelling (as discussed by the
Energy Ministry representative to the MVP consultants) the WAMER may be feasible. Whatever
the case, marginal or non-marginal methods are described in the original and the revised MVP.
The PCF will not claim ERs that occur outside of Latvia as a consequence of the project.
The updated MVP clarifies the metering/utility billing issue throughout the guidelines for Grobina
and Skede. The MVP also re-clarifies how to single out any parasitic power load, due to the
operation of the energy cells and the generation of power, from the utility power sales.
4.3.2.     Is a methodology included in the MVP for                         /4/         Doc.     No methodology or procedure is included. However, this issue is not considered a                         OK
Review   criterion for the PCF’s validation since the ex post baseline and project emissions are
updating the baseline and project                                                     updated due to the monitoring and reporting.
emissions forecasts during the project
The MVP includes methods for monitoring the validity of the baseline, in particular by defining a
Emission forecast updates during the operational phase of the project are currently not a project
4.3.3.     Are methods for determining and/or                               /4/         Doc.     Potential error and the accuracies attached to the different methods and procedures are                  OK
Review   not clearly addressed in the MVP. The alternative procedures do appear to be listed in
mitigating possible monitoring errors or                                              order of descending accuracy but no discussion exists for the relative decrease in
uncertainties addressed?                                                              accuracy.
The MVP has been amended to address the issue of monitoring error and/or uncertainty. The
issue will be further addressed during detailed design, if necessary.
4.3.4.     Do the methodologies comply with existing                        /4/         Doc.     The main methods do comply, but some alternatives lack sufficient description of the                     OK
Review   methodology.
According to the PCF, the GHG estimation equations for the MVP are based on an expanded,
modified version of the IPCC methodologies, using the most recent US EPA energy-production
based methods under the Voluntary Reporting guidelines. These latter guidelines are preferable
and more accurate than the IPCC waste-in-place based GHG estimation methods because of the
great uncertainties surrounding waste-in-place data. You have meters estimating energy sales,
and flaring. Waste-in-place is far more difficult to accurately measure and keep adequate audit
trails for over time. The revised MVP has been amended to include a sufficient description of
methodology where currently missing.
4.3.5.     Are the selected methodologies compatible                        /4/         Doc.     Yes, with the exception of the “Potential Adjustments for Destruction of Methane                         OK
Review   Emissions from Sludge” since none of the necessary data needs are mentioned.
with the data availability?
Sludge is landfilled also in the baseline scenario.
4.4.        Indicators/data to be monitored and
4.4.1.     JI project GHG indicators
4.4.1.1. LFG capture component
4.4.1.1.a. Are the choice of monitoring indicators                 /4/         Doc.     Yes, and this refers primarily to the first choice of monitoring alternatives given in the               OK           4.3.1.1
reasonable?                                                      Review   MVP. Some of the alternatives need further explanation and this is mentioned in other
places in this section.
4.4.1.1.b. Will it be possible to monitor the                      /4/         Doc.     Little guidance is given on how to establish, estimate or check the flare efficiency factor.             OK
specified indicators?                                            Review   The content of the LFG should be analysed at project start-up and/or at other intervals to
determine the calorific value, methane content, and levels of impurities.
The MVP has been amended to include guidance on how to establish/estimate/check the flare
efficiency factor. The updated MVP also includes more detailed guidance on analyzing LFG
content through taking gas samples at regular intervals by Class A meters. The revised MVP also
discusses recording and measuring the proper calibration of equipment.
4.4.1.2. Electricity generation component
4.4.1.2.a. Are the choice of indicators                            /4/         Doc.     Yes, the metering of the electricity production is appropriate.                                          OK
reasonable?                                                      Review
4.4.1.2.b. Will it be possible to monitor the                      /4/         Doc.     Yes, if metering is used. However, clarification of the “net metering/utility billing data”              OK           4.3.1.3
specified indicators?                                            Review   method is needed.
The updated MVP clarifies the metering/utility billing issue for Grobina and Skede.
4.4.1.3. Have indicators for GHG leakage been                            /4/         Doc.     Leakage has not been considered an issue thus far in the project design documents, so                    OK
no indicators are mentioned.
included?                                                                   Review
See also the updated 2.3.3.
4.4.2.     Baseline GHG indicators
4.4.2.1. LFG capture component                                           /4/         Doc.     No additional indicators are necessary for the baseline since the methane emissions for                  OK           .
Review   the baseline and the project are the same.
4.4.2.2. Electricity generation component, i.e.
Marginal Grid GHG Emissions
4.4.2.2.a. Are the choice of indicators                              /4/         Doc.     The choice of WAMER indicators are technically feasible, but the use of the methodology                  F6           4.3.1.3
reasonable?                                                      Review   will most likely not generate emissions reductions in Latvia.                                            OK
The methodologies for calculating ERs of the MVP appear reasonable. PCF will not claim ERs
outside of Latvia. See also 4.3.1.3.
4.4.2.2.b. Will it be possible to monitor the                      /4/         Doc.     Yes, a dispatch center exists for the Baltic region but it is not known if the joint company             OK
specified indicators?                                            Review   would release the data.
The fuel consumption and efficiency of the marginal plants could be collected if the
energy companies are willing to release the data.
PCF informs that data availability will be clarified during the design phase. The MVP will be
updated if it becomes necessary.
4.4.3.     Other Indicators
4.4.3.1. Sustainable Development Indicators
4.4.3.1.a. Are the choice of indicators                            /4/         Doc.     Yes, but a better description of the methodologies and procedure are needed if they are                   OK
reasonable?                                                      Review   to be operationalized.
The updated MVP includes a more thorough discussion of how to monitor and use the specified
4.4.3.1.b. Will it be possible to monitor the                      /4/         Doc.     Yes, but it may be difficult to isolate the project’s impact upon odor and noise.                         OK
specified indicators?                                            Review
The expected performance for odour and noise will be determined during detailed design.
4.4.3.2. Baseline Validity Indicators
4.4.3.2.a. Are the choice of indicators                            /4/         Doc.     The listed indicators capture the major baseline additionality risks.                                     OK
4.4.3.2.b. Will it be possible to monitor the                      /4/         Doc.     “Economic or Financial Viability of Flaring or Power Production”. No guidance on how to                   F5           4.2.3.2
specified indicators?                                            Review   actually estimate such an indicator is given. It would be dependent upon other available                  OK
pg. 27               data which is not specified.
The legal indicators should be possible to monitor.
Baseline validity is also ensured by monitoring if and when LFG is captured at landfills in Latvia.
4.5.        Project Management
4.5.1. Is the authority and responsibility of project                       /4/         Doc.     The MVP identifies staff responsible for data collection and data keeping. Organisations                  OK
Review   responsible for the management and operation is identified in Chapter III. Responsibility
management clearly described?                                                         and authority to deal with day-to day management decisions, is identified in the table on
4.5.2.     Are there any possible conflicts of                              /4/ &amp; /7/   Doc.     &quot;Gaming&quot; is always a possibility as both investor and host could be seen as having                        OK
Review   incentives to exaggerate the emission reductions achieved. The MVP&#39;s provisions for
interest in MVP or later certification?                                               verification and PCF&#39;s planned procedures for ex post third party certification will take
4.5.3.     Do operational procedures cover:
4.5.3.1. Operator Training?                                              /4/         Doc.     Training needs for operators are addressed for critical tasks several places in the MVP                   OK
4.5.3.2. Contingency procedures?                                         /1/, /4/    Doc.     No contingency procedures identified . However, operations up-sets, unforeseen flaring                   OK
Review   etc. identified as issues to be dealt with in the MVP.
It is recommended to have procedures for dealing with emission incidents caused by
non-planned operational events, such as venting of methane as well as documenting of
the consequences for GHG emissions.
The amended MVP includes guidance on how to monitor non-planned operational events and
how such events would impact emission reduction calculations.
4.5.4.     Do quality control procedures cover:
4.5.4.1. Calibration of equipment?                                       /4/         Doc.     Requirements for calibration identified in the MVP. However, regular calibration intervals               OK
Review   are not included as a part of operations management.
4.5.4.2. Necessary factors for the monitoring of                         /4/         Doc.     Maintenance activities are identified in /2/, but not in the MVP. May be required to                     OK
expand MVP to identify key factors needed to maintain equipment to ensure that i.e. gas
the maintenance needs for the                                               Review
leakage are kept under control and the installations perform consistently over the project
equipment/installations?                                                             lifetime.
The MVP should not be expanded to become a general operations handbook for the project. This
will be developed during the detailed design of the project and will, inter alia, include the MVP
requirements. The relevant maintenance issues for emissions monitoring have been included in
the updated MVP.
4.5.4.3. Monitoring and Reporting procedures?                            /4/         Doc.     Clearly identified on critical tasks in the MVP                                                          OK
4.5.4.4. Daily operations records?                                       /4/         Doc.     Clearly identified on critical tasks in the MVP                                                          OK
4.5.4.5. Review of reported results/data?                                /4/         Doc.     Addressed in the MVP                                                                                     OK
4.5.4.6. Storage of records?                                             /4/         Doc.     Addressed in the MVP                                                                                     OK
4.5.5.     Are audits and reviews identified for:
4.5.5.1. Internal audits?                                                /4/         Doc.     Identified in table on page 34                                                                           OK
4.5.5.2. Performance reviews?                                            /4/         Doc.     Identified in table on page 34                                                                           OK
4.5.5.3. Procedures for corrective actions?                              /4/         Doc.     No specific procedures identified to improve operations when these are proved                            OK
Review   insufficient.
It is recommended to document such before project implementation.
PCF states that such corrective procedures/actions will be addressed during the detailed design
of the project. See also 4.5.4.2.
4.6.        Procedures for Management Review
4.6.1.     Is there established a procedure for review                                           On page 39 in the MVP it is stated that lessons learned from the verification audits must                OK
be incorporated into future audits.
of the project’s performance?                                                         A management review procedure ensuring that such finding are actually incorporated
into site management systems is however not explicitly stated and should be included.
Management review procedures are included in the amended MVP to improve the management
system and address audit findings of relevance.
4.6.2.     Are key assumptions for baseline and JI                                               Addressed in MVP page 38 as part of verifiers task.                                                      OK
project emissions regularly reviewed?
4.7.        External verification and certification
4.7.1.     Are the audit criteria clearly defined?                          /4/         Doc.     The MVP outlines the main audit criteria.                                                                OK
4.7.2.     Have the necessary records and                                   /4/         Doc.     Identified on page 37 in MVP.                                                                            OK
reports been identified?                                                     Review
4.7.3.     Is the frequency of verification and                             /4/         Doc.     MVP suggests minimum annually for the first three years, thereafter possibly bi-annually.                OK
Review   PCF documents suggests annual verification and certification.
certification defined?
4.7.4.     Is third-party verification competence                           /4/, /9/    Doc.     PCF expects this to be done by reputed international environmental auditing firms. The                   OK
Review   institution would have a proven track record in verification, waste management
and skills identified?                                                                engineering, and GHG estimation.
Annex, Price, Transparency
Deutsche Bank Price Transparency
ASSESSING THE EFFECTIVENESS OF TRANSPARENCY PROGRAMSPOTENTIAL Price Transparency
Annex IV Procurement Procedures Caribbean Export Price Transparency