Accreditation and designation
Overview of the accreditation and designation process
Accreditation and designation is the process by which operational entities are authorised as validators and verifiers of CDM project activities. The process is set out in the Procedure for Accrediting Operational Entities by the Executive Board of the Clean Development Mechanism, contained in EB 56, Annex 2.
In summary, operational entities are accredited (or "provisionally designated") by the Executive Board on a recommendation by the CDM Accreditation Panel, which is advised by a specially constituted CDM Assessment Team, and then designated by the COP/MOP.
The accreditation procedure in EB 56 Annex 2 is Version 10.1, revising EB 48 Annex 3 and replacing earlier versions contained in EB 46 Annex 3, EB 34 Annex 1, EB 32 Annex 2, EB 29 Annex 1, EB 27 Annex 1, EB 26 Annex 1, EB 23 Annex 1, EB 7 Annex 2, and EB 5 Annex 2. In this guidance document:
- "Entity" is used to describe an entity prior to application;
- "Applicant entity" (or "AE") is used to describe an entity once its application has been duly submitted or whose application is subject to a procedure contained in this document; and
- "Designated operational entity" refers to the entity after it has been designated by the COP/MOP.
The latest version of the Procedure for Accrediting Operational Entities by the Executive Board of the Clean Development Mechanism (Version 10.1) will come into effect on 17 November 2010 (EB 56, paragraph 13).
Bodies involved in the accreditation process
According to 3/CMP.1, Annex, paragraph 20, accreditation of applicant entities and related functions are the responsibility of the Executive Board:
The Executive Board shall:
- Accredit operational entities which meet the accreditation standards contained in appendix A below;
- Recommend the designation of operational entities to the COP/MOP;
- Maintain a publicly available list of all designated operational entities;
- Review whether each designated operational entity continues to comply with the accreditation standards contained in appendix A below and on this basis confirm whether to reaccredit each operational entity every three years;
- Conduct spot-checking at any time and, on the basis of the results, decide to conduct the above-mentioned review, if warranted (3/CMP.1, Annex, paragraph 20; previously 17/CP.7, paragraph 20).
However, 3/CMP.1, Annex, paragraph 25 confirms that the Executive Board may delegate these accreditation functions:
The Executive Board may seek assistance in performing the functions in paragraph 20 above (3/CMP.1, Annex, paragraph 25; previously 17/CP.7, Annex, paragraph 25).
The Executive Board has delegated most of the accreditation functions to a team of bodies. The role of each of these bodies is set out in EB 56, Annex 2, paragraph 3:
The responsibility of each actor in this scheme...is as follows:
- The COP/MOP designates operational entities, or withdraws their designation, based on a recommendation by the EB;
- The EB takes the decision whether or not to accredit an AE and recommend it to the COP/MOP for designation, and to fully or partially suspend a DOE, or to withdraw accreditation of a DOE;
- The CDM accreditation panel (CDM-AP) serves as the technical panel of the EB in accordance with its terms of reference and makes recommendations to the EB on effective implementation of the CDM accreditation process;
- A CDM assessment team (CDM-AT), in accordance with the CDM accreditation procedure and under the guidance of the CDM-AP, undertakes the assessment of an AE and/or DOE, to identify the level of conformity to the CDM accreditation requirements and reports to the CDM-AP;
- The secretariat supports the implementation of the CDM accreditation procedure;
- The AE/DOE submits all required documentation through the official communication channel established for that purpose.
The power of the Executive Board to accredit operational entities is derived from Section D of the modalities and procedures (3/CMP.1, Annex, Section D). Each of the rules in this section is discussed below. The provisions of this section apply equally to afforestation and reforestation (A/R) project activities:
All provisions of section D of the CDM modalities and procedures, contained in the annex to decision 17/CP.7, shall apply mutatis mutandis to afforestation and reforestation project activities under the CDM (5/CMP.1, Annex, paragraph 5).
Standards for accreditation
In order to become accredited as an operational entity for the CDM, an operational entity must meet the criteria contained in 3/CMP.1, Annex, Appendix A. These criteria include basic organisational criteria (paragraph 1) as well as operational criteria (paragraph 2).
The basic criteria for accreditation, set out in 3/CMP.1, Annex, Appendix A, paragraph 1, are as follows:
An operational entity shall:
- Be a legal entity (either a domestic legal entity or an international organization) and provide documentation of this status;
- Employ a sufficient number of persons having the necessary competence to perform validation, verification and certification functions relating to the type, range and volume of work performed, under a responsible senior executive;
- Have the financial stability, insurance coverage and resources required for its activities;
- Have sufficient arrangements to cover legal and financial liabilities arising from its activities;
- Have documented internal procedures for carrying out its functions including, among others, procedures for the allocation of responsibility within the organization and for handling complaints. These procedures shall be made publicly available;
- Have, or have access to, the necessary expertise to carry out the functions specified in modalities and procedures of the CDM and relevant decisions by the COP/MOP, in particular knowledge and understanding of:
- The modalities and procedures and guidelines for the operation of the CDM, and relevant decisions of the COP/MOP and of the Executive Board;
- Issues, in particular environmental, relevant to validation, verification and certification of CDM project activities, as appropriate;
- The technical aspects of CDM project activities relevant to environmental issues, including expertise in the setting of baselines and monitoring of emissions;
- Relevant environmental auditing requirements and methodologies;
- Methodologies for accounting of anthropogenic emissions by sources;
- Regional and sectoral aspects;
- Have a management structure that has overall responsibility for performance and implementation of the entity's functions, including quality assurance procedures, and all relevant decisions relating to validation, verification and certification. The applicant operational entity shall make available:
- The names, qualifications, experience and terms of reference of senior management personnel such as the senior executive, board members, senior officers and other relevant personnel;
- An organization chart showing lines of authority, responsibility and allocation of functions stemming from senior management;
- Its quality assurance policy and procedures;
- Administrative procedures, including document control;
- Its policy and procedures for the recruitment and training of operational entity personnel, for ensuring their competence for all necessary functions for validation, verification and certification functions, and for monitoring their performance;
- Its procedures for handling complaints, appeals and disputes;
- Not have pending any judicial process for malpractice, fraud and/or other activity incompatible with its functions as a designated operational entity (3/CMP.1, Annex, Appendix A, paragraph 1).
Basic criteria for accreditation for afforestation and reforestation project activities
The same basic criteria apply to DOEs seeking accreditation for afforestation and reforestation activities, except that DOEs are required to have knowledge and understanding of:
- Environmental and socioeconomic issues relevant to validation, verification and certification of afforestation and reforestation project activities under the CDM;
- The technical aspects of afforestation and reforestation project activities under the CDM, including expertise in the setting of baseline net greenhouse gas removals by sinks and monitoring of emissions and removals; and
- Methodologies for accounting of greenhouse gas emissions by sources and removals by sinks (5/CMP.1, Annex, Appendix A).
These criteria replace paragraphs (1)(f)(ii), (iii) and (v) in the basic criteria for non-forestry projects above.
The applicant entity must also meet the operational criteria set out in 3/CMP.1, Annex, Appendix A, paragraph 2:
An applicant operational entity shall meet the following operational requirements:
- Work in a credible, independent, non-discriminatory and transparent manner, complying with applicable national law and meeting, in particular, the following requirements:
- An applicant operational entity shall have a documented structure, which safeguards impartiality, including provisions to ensure impartiality of its operations.
- If it is part of a larger organization, and where parts of that organization are, or may become, involved in the identification, development or financing of any CDM project activity, the applicant operational entity shall:
- Make a declaration of all the organization's actual and planned involvement in CDM project activities, if any, indicating which part of the organization is involved and in which particular CDM project activities;
- Clearly define the links with other parts of the organization, demonstrating that no conflicts of interest exist;
- Demonstrate that no conflict of interest exists between its functions as an operational entity and any other functions that it may have, and demonstrate how business is managed to minimize any identified risk to impartiality. The demonstration shall cover all sources of conflict of interest, whether they arise from within the applicant operational entity or from the activities of related bodies;
- Demonstrate that it, together with its senior management and staff, is not involved in any commercial, financial or other processes which might influence its judgement or endanger trust in its independence of judgement and integrity in relation to its activities, and that it complies with any rules applicable in this respect;
- Have adequate arrangements to safeguard confidentiality of the information obtained from CDM project participants in accordance with provisions contained in the present annex (3/CMP.1, Annex, Appendix A, paragraph 2).
CDM accreditation standard for operational entities
EB 46 introduced a CDM Accreditation Standard for Operational Entities, revised by Version 1.1 from Annex 2 to EB 48 and Version 2 from Annex 1 to EB 56. The purpose of the accreditation standard is to facilitate and promote common understanding and consistent implementation of the CDM accreditation requirements by providing users with a compilation of all the CDM accreditation requirements in a single document. AEs and DOEs do not have to comply with Version 2 of the Accreditation standard until 17 March 2010 (EB 56, paragraph 12)
The CDM accreditation standards described in Appendix A to Decision 3/CMP.1 (CDM M&P) specify the requirements applicable to AEs and DOEs. An AE/DOE shall also comply with the requirements described in other sections of the CDM M&P and in the decisions and/or clarifications issued by COP/MOP and the CDM EB (EB 56, Annex 1, part II).
The accreditation standard covers the following areas:
- Legal issues;
- Human resources and competence;
- Liability and finance;
- Process requirements;
- Information management;
- AE's/DOE's organisation;
- Quality management system;
- Handling complaints, disputes and appeals;
- Pending judicial process;
- Safeguarding impartiality; and
- Confidentiality management.
A detailed overview of the accreditation standard is provided here.
Scope of accreditation
The 'scope of accreditation' consists of sectoral scopes as applied by the entity and in which the entity has demonstrated its competence for performing validation and verification/certification functions. An accredited entity shall be allowed to carry out validation and verification functions in specified sectoral scope(s) (EB 56, Annex 2, paragraph 10). The Executive Board has established a list of sectoral scopes for accreditation, available electronically on the UNFCCC CDM website (Annex B to EB 56, Annex 1).
In order to undertake validation or verification/certification of a project activity, a designated operational entity must be accredited for all sectoral scopes to which the project relates (EB 18, paragraph 15). However, 'grouping' of sectoral scopes is allowed, so that a favourable assessment of one activity may establish the eligibility of the applicant entity to be accredited for more than one sectoral scope (EB 9, Annex 2, paragraph 3).
Applying for accreditation in an additional sectoral scope
A DOE may at any time apply to be accredited for additional sectoral scopes. The standard procedural steps for accreditation apply. The DOE shall submit to the secretariat, along with its application, the application documentations (set out in EB 56, Annex 2, Appendix 1). The accreditation for additional sectoral scopes will only be valid until the expiry of the existing accreditation. (EB 56, Annex 2, paragraph 147).
Accreditation and designation process
The accreditation procedure is set out in detail in EB 56, Annex 2, paragraph 13:
The accreditation process comprises the following main steps:
- An application for accreditation by an entity;
- A completeness check of the application documentation by the secretariat;
- Consideration of the application by the CDM-AP;
- A desk review by a CDM-AT of the documentation provided by the AE;
- On-site assessment by the CDM-AT at the central office of the AE and/or at any other site where the CDM functions are to be undertaken;
- A recommendation on accreditation or rejection of application by the CDM-AP to the EB;
- A decision by the EB on accreditation or rejection of application of the AE;
- Recommendation for designation to the COP/MOP by EB (EB 56, Annex 2, paragraph 13).
The following sections will discuss each of these steps in detail.
Step (a)-(b): Application for accreditation and completeness check
- In order to apply for accreditation, an entity must:
submit a completed application form (F-CDM-A) and related application documentation (EB 56, Annex 2, Appendix 1) to the secretariat of the CDM Executive Board (EB 56, Annex 3, paragraph 15). These must include a legal statement indicating that there are no legal impediments to the applicant entity operating as a DOE arising from applicable domestic law or applicable law/statutes (EB 17, paragraph 7); and
- pay, or have paid, a non-refundable application fee (EB56, Annex 2, paragraph 16). The application fee is currently US$15,000 (EB 4, paragraph 2(8); EB56, Annex 2, Appendix 5, paragraph 2), but applicant entities from non-Annex I Parties may pay, or have paid, 50% of this fee if they are unable to pay the full fee at application (EB 6, paragraph 3(f); EB 56, Annex 2, Appendix 5, paragraph 3).
The secretariat will check that all documentation and information submitted is complete and shall inform the entity if any information is missing (EB 56, Annex 2, paragraph 17). The following changes, made by an applicant entity (AE) or DOE during the accreditation process or following accreditation, may have some cost implications:
- Addition or subtraction to the list of sectoral scopes applied for before decision of the EB on accreditation;
- Changes in the legal status of the entity;
- Changes in ownership;
- Substantial changes in documentation (EB56, Annex 2, Appendix 5, paragraph 20).
The costs associated with this work will be paid as follows:
- If notified before CDM-AT members have signed confidentiality and non-disclosure agreements, no additional cost;
- If notified before the coordination of the on-site assessment, the equivalent of 2 days of the standard daily fee for CDM-AT members; and
- If notified any time after this, it will be considered as a new application and a new non-refundable application fee is payable (EB 56, Annex 2, Appendix 5, paragraph 21).
Any changes by a DOE will be considered by the CDM-AP and related costs will be decided on a case by case basis (EB 56, Annex 2, Appendix 5, paragraph 22).
Once the application documents are complete, the secretariat will publish the name of the applicant entity and the sectoral scope(s) applied for on the UNFCCC CDM website. Parties, accredited NGOs and other stakeholders then have 15 days to comment on the application (EB 56, Annex 2, paragraph 18).
The secretariat will then prepare an application file and send this to the CDM-AP, along with the comments and/or information received from the stakeholders (EB 56, Annex 2, paragraph 19).
Step (c): Consideration by the CDM-AP
Once the CDM Accreditation Panel has received the application file, it will conduct a preliminary review of the documentation (EB 56, Annex 2, paragraph 20). The CDM-AP Chair will select the CDM Assessment Team and team leader (EB 56, Annex 2, paragraph 21). The CDM Accreditation Panel must inform the applicant entity, through the secretariat, of the composition of the CDM Assessment Team, and the AE may object in writing within six days in the case of a conflict of interest (EB 56, Annex 2, paragraph 22). Members of the CDM Assessment Team are required to sign a confidentiality and non-disclosure agreement (EB 56, Annex 2, paragraph 23).
Steps (d) - (e): Assessment process
The assessment process, carried out by the CDM Assessment Team, consists of two main elements, as set out in EB 56, Annex 2, paragraph 4 - a desk review and an on-site assessment:
- Desk review by a CDM-AT of the adequacy of the documented system of AE to meet the CDM accreditation requirements and perform CDM validation and verification functions;
- On-site assessment by a CDM-AT to evaluate the implementation of the system, including the competencies and operational capability of the AE to comply with the CDM accreditation requirements. The on-site assessment shall take place at the central office of the AE and/or at any other site where the CDM functions are undertaken, as decided by the CDM-AP. The CDM-AP, in planning any on-site assessment, may decide that the impartiality committee meeting of an AE/DOE shall be observed. In such cases, the AE/DOE shall make necessary arrangements for undertaking this activity.
The desk review process is further described in EB 56, Annex 2, B.4. The CDM-AT will undertake the desk review of the documentation provided by the AE/DOE and prepare the draft desk review report within 20 days after receiving the application documentation from the secretariat.
If the CDM-AT identifies any non-conformities against the requirements, the AE/DOE will provide additional or amended documentation within 90 days, or 30 days for re-accreditation, of the receipt of the desk review report. The CDM-AT will prepare the desk review report on the basis of amended and additional documentation within 10 days of receipt of such documentation. Once the CDM-AT has finalised its desk review report, the CDM-AT will provide its final conclusion and recommendation to the CDM-AP (EB 56, Annex 2, paragraph 29).
If no documents have been received from the AE within 90 days of the draft desk review report, the CDM-AT shall finalise the draft final desk review report indicating the missing elements, and/or the non-conformities, and provide its conclusion and recommendation to the CDM-AP (EB 56, Annex 2, paragraph 34).
For applications for re-accreditation different timelines for the application process apply. These timelines are specified in EB 56, Annex 2, B.4.
The CDM-AP, after considering the report from the CDM-AT, shall decide whether to:
- Recommend to the EB the rejection of the application of accreditation of the AE;
- Seek additional and amended documentation from the AE, providing submission and assessment deadline(s) andrequesting the CDM-AT to conduct an additional desk review in relation to the documentation; or
- Request the CDM-AT to proceed with the on-site assessment (EB 56, Annex 2, paragraph 36).
For re-accreditation or extension of sectoral scope(s), the CDM-AP may in addition decide to recommend to the EB the suspension of accreditation of the DOE (EB 56, Annex 2, paragraph 40).
The CDM-AP shall inform, through the secretariat, the AE of its decision to recommend the rejection of its application for accreditation. The AE shall have six days to appeal against the CDM-AP recommendation. The appeal shall be addressed to the Board in accordance with the provisions contained in EB 56, Annex 2, Appendix 2.
The Board shall then consider the recommendation of the CDM-AP and the report of the appeal panel (if relevant) and decide on one of the following options:
- Reject the application of accreditation of the AE;
- Request the CDM-AP to proceed with the on-site assessment;
- Refer the application to the CDM-AP for further work/reconsideration (EB 56, Annex 2, paragraph 39).
The on-site assessment process is further described in EB 56, Annex 2, B.5. Once the desk review process has been completed, the team leader (assisted by the secretariat) coordinates the date for the on-site assessment at the central office of the AE. The assessment process involves the following steps:
- The CDM-AT conducts the on-site assessment, in compliance with the CDM on-site assessment procedure.
- The CDM-AT prepares the on-site assessment report within 12 days of completion of the on-site assessment, which is sent to the AE for comments.
- From date of receipt of the on-site assessment report, the AE has 30 days to propose corrective actions to resolve the non-conformities identified.
- The CDM-AT assesses the proposed corrective action plan within 6 days. If the CDM-AT does not accept the proposed corrective action plan, or the proposed corrective actions are not submitted, the AE has an additional 15 days to propose further corrective actions.
- From the date of acceptance of the proposed corrective actions, the AE shall have 90 days to implement those actions and submit evidence demonstrating the implementation.
- Once the AE has submitted documentation demonstrating that it has implemented the approved corrective actions, the CDM-AT shall have 12 days to verify the implementation of all the corrective actions to address non-conformities, close the non-conformities and complete the draft final on-site assessment report. In case the non-conformities have not been adequately addressed through implementation of the corrective actions, the AE shall have 30 additional days to pursue implementation.
- The CDM/AT makes the draft final on-site assessment report and non conformance forms available to the AE. The AE has 6 days to provide comments on this.
- The CDM/AT has 6 days to complete the final assessment report taking into account the AE's comments.
- The secretariat submits the final assessment report to the CDM-AP for decision at its next meeting.
- The CDM-AP will decide one of the following options:
- Recommend to the EB the accreditation for all the sectoral scopes applied for by the AE;
- Recommend to the EB the accreditation for only some of the sectoral scopes applied for by the AE;
- Recommend to the EB to reject the application for accreditation;
- Seek additional corrective actions from the AE;
- Undertake any other appropriate action based on the reports
- The AE is informed of the CDM-AP's decision through the secretariat, and has 6 days to appeal against a recommendation of the CDM-AP. The appeal should be addressed to the EB.
- The EB shall make a decision to accredit the AE for all sectoral scopes applied for or for partial sectoral scopes, or the EB will reject the application for accreditation. The initial accreditation is valid for 3 years from the date of the accreditation decision by the EB.
For applications for re-accreditation different timelines for the application process apply. These timelines are specified in EB 56, Annex 2, B.5. For re-accreditation or extension of sectoral scope(s), the CDM-AP may in addition decide to recommend to the EB the suspension of accreditation of the DOE (EB 56, Annex 2, paragraph 58).