Frequently Asked Questions

Is there any limit to the size of a loan under the CDM Loan Scheme?

Loans are generally covering costs for PDD development, validation, registration and verification. These costs vary from project to project and therefore there is no specific loan limit, as long as the estimated costs for the above are deemed reasonable.

Does the loan provide full financing of CDM development costs?

In principle loans will cover the full amount for PDD development, validation, registration and verification. However, in some cases loans may be extended for only part of the costs – for instance in cases where costs are considered excessive.

Do the loans carry any interest?

No, the loans are interest free

How are the loans paid out?

Loans amounts are paid out in instalments directly to the CDM consultant. Instalments relate directly to milestones as follows (the percentages are approximate):

Signing of loan agreement: 10% of the loan amount
Validation Start: 20% of the loan amount
Validation Completion: 15% of the loan amount
CDM Project Submission: 10% of the loan amount
Registration with the UNFCCC: 20% of the loan amount
1st issuance of CERs: 25% of the loan amount

5000 USD will be withheld as a deposit for the issuance of the loan document. The deposit will be repaid once the loan has been paid out in its entirety and the CDM process has been completed. In cases where the process has not been completed, the deposit may or may not be returned depending on specific circumstances as described in the loan document.

When are the loans to be repaid?

Loans are supposed to be repaid no later than 12 months after the first issuance of CERs from the project. Loans are supposed to be repaid in full. However, in cases where CER issuance does not generate sufficient income, loan repayment may succeed over a period up to a maximum of 36 months after the first issuance of CERs.

Can loans be granted without having identified a CDM consultant for writing the PDD?

No. As the CDM consultant will be a Party to the loan agreement, no loans can be extended for CDM development without having identified a CDM consultant.

Can CDM consultants be changed during the CDM development period?

In principle no. In cases where project development comes to a halt due to non-performance of a consultant, the loan will be put on hold and the CDM Loan Team will initiate proceedings for replacing the loan agreement with a new agreement. Such cases will be dealt with individually and according to procedures contained in the loan agreement.

What happens if the project is not registered with the UNFCCC?

If the project is not registered and therefore does not generate any CER revenues, it will be evaluated if the project, if still implemented, generates sufficient revenues as a basis for repaying the loan despite non-registration. In such cases loans may be repaid over up to 60 months after non-registration has been realized.