Role of CDM Consultants

Approved loans shall not be disbursed to the loan applicant directly, but shall be disbursed to the service provider(s) delivering the services for which the loan is intended. In order to facilitate this process, the standard loan agreements are 3-party agreements in which the identified CDM consultant is established as co-signatory. The loan applicant shall signify that the loan can be disbursed to the co-signing consultant; the co-signing consultant shall signify acceptance to extend payments for services, as intermediary, with the received loan funds, and most importantly, shall confirm full understanding and commitment of responsibilities to perform the following tasks:

  • To prepare the PDD and revise it according to instructions by the Designated Operational Entity (DOE) until the DOE agrees to submit the project for UNFCCC registration;
  • To contract the DOE and channel loan proceeds to the DOE as payment for validation services;
  • To continuously monitor the progress of actual project implementation and report to UNOPS on the status of the project with specific focus on the chance of the project materializing as an operating asset;
  • To accept a staged milestone-based payment and a certain liability for disbursed funds in the event that PDD and validation activities continue despite lacking progress on actual project implementation.

These principle clauses shall ensure that the CDM consultant, who is established as close partner of the project owner during the project development period, is equally acting on behalf of UNOPS as the ‘feet on the ground’. S/he will be obliged to deliver milestone reports on all projects in the loan portfolio, implicitly ensuring that no proceeds are disbursed for CDM projects that have few or no chances to reach the level of actual implementation.
The CDM consultant shall remain in this central role also after the registration of a given CDM project. In the post-registration phase s/he will be instrumental in securing that all monitoring procedures are followed so as to protect the carbon value of the project. The selected CDM consultant will remain in the role as advisor to the project owner until the first verification report has successfully been submitted and the first CERs are issued.
To institutionalize the CDM consultant as an important factor in the entire set-up requires a pre-qualification of the most qualified and experienced consultants. Any interested entity is required to supply their credentials, which will allow UNOPS/URC to check any related details and background. In their own discretion, UNOPS/URC reserve the right to reject CDM consultants who do not comply with the set of minimum standards.
To be considered, a Consultant must have proven experience - i.e. a track record of minimum:

  1. three PDDs uploaded on UNFCCC’s website (the status of the PDDs shall be either “under validation”, “request registration” or “registered”)
    or
  2. one PDD that have been registered under UNFCCC  

Loan applicants are encouraged to establish an agreement, formal or informal, with a consultant on the list prior to submitting a loan application. The CDM consultant should usually assist the loan applicant in filling in the PIN format for the application, hence in all likelihood improving the quality of the applications.

Loan Cycle

Step 1: Subsequent to the basic pre-screening, due diligence, local verification  and technical assessment, the Technical Review Committee (TRC) approves a loan application. UNOPS enters into a standard loan agreement to be counter-signed by the approved loan applicant/project owner and the selected CDM consultant. 
Step 2: UNOPS processes payment to the designated CDM consultant (as stipulated in the loan agreement) in order to develop the related PDD.
Step 3: Once progress is validated in form of the registration of the ‘Project Design Document’ (PDD) with the UNFCCC, UNOPS processes payment to the pre-qualified ‘Designated Operational Entity’ (DOE) - through the CDM consultant - for the validation process. Similarly, UNOPS processes payment to the designated DOE - through the CDM consultant - for the verification process. This part starts with the formal launch of the CDM project (issuance of CERs) and ends 1 year after the initial CERs are issued.
Step 4: The loan recipient/CDM project owner repays UNOPS the entire loan amount at the latest 1 year after the first issuance of the ‘Certified Emission Reductions’ (CERs).