Originally proposed at COP 15 in Copenhagen, the loan scheme is designed to finance CDM related development costs, such as generating Project Design Documents (PDDs) and validation documentation. The Loan Scheme is specifically targeted at development costs –which are often difficult to finance – and will not crowd out funding directed at other components of emissions reduction projects.
The UNFCCC has decided to implement the loan scheme by a consortium consisting of UNEP Risø Centre (URC) and the United Nations Office for Project services, through a website linked to the CDM Bazaar (cdmbazaar.org). The new website, www.CDMloanscheme.org explains how the Loan Scheme operates and offers an electronic loan application system. Individual loan applications will be uploaded to the website and then assessed by the consortium, who will select eligible candidates based on criteria to be announced at the ACF launch. The final decisions regarding loans will be made by an independent board of experts.
The Loan Scheme has already attracted significant interest among project developers, even before its official launch. UNOPS and URC advise restraint: “It is a loan scheme, not a grant scheme,” says Søren E. Lütken of URC, one of the developers of the implementation model. “That means that loans are only extended to projects that are likely to be able to pay back the loans.” To keep track of project development, PDD consultants will be made contract partners and will be accountable for specific performance criteria under the loan agreements. “If all goes well, we will be able to sign 100 loan agreements in countries with less than 10 registered CDM activities during the Loan Scheme’s first five years,” says Lütken.