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11
FAO/UNEP/UN-Energy Bioenergy Decision Support Tool -
MODULE 4: Project Screening
Table 3: Principles for sustainability assessment for bioenergy initiatives
Source: COMPETE, 2009
Principle
Environment Social
Economic
Policy
1.
Good agro-ecological and forestry practices
(biodiversity, soil)
2. Not affecting water supply and quality
3.
No land use change that detrimentally affects
food security
4. Community participation (from planning)
5. Women’s participation (from planning)
6. Skills transfer (management, business, agriculture)
7.
Community inclusion in business or economic
model (Contract with investor or NGO)
8.
Added value in the community (individual, money,
assets, land, co-products)
9.
Improvement in services and infrastructure(energy
supply, health) reinvestment of revenue within the
community
10.
Compliance with National and/or guidelines for
bioenergy policy in place
11.
Compliance with Local programmes, regulations
and/or plans in place
12. Respect land rights and avoid displacement
edgeable and balanced group of evaluators. Table 3 provides a
sustainability principles checklist that was developed, with special
reference to projects in sub-Saharan Africa. This checklist can be
used in a fexible manner; depending on the scale of the project,
the 12 questions might be expanded. For smaller projects, a
simple ranking or points system might be used.
RISK MITIGATION OPTIONS
If the analysis suggests that signifcant negative impacts could
be expected in one of the impact categories, the project
proponent should be invited to identify appropriate mitigation
options, in consultation with relevant local and national experts.
Risk mitigation options include good practices in farming and
forestry, or industrial processes and integrated systems that
may mitigate negative environmental consequences
<Mod8:
Evaluating Impacts>
. Other risk mitigation options might inclu
de
innovative business models and implementation mechanisms to
manage social risks, for instance contract farming
<Mod6: People
and Processes>
. Where negative effects cannot be mitigated,
compensation options should be explored, in line with national
legislation and international best practice.
The adequacy of the mitigation measures should be assessed or
led by the Project Task Force, taking into account existing regula-
tory processes, such as EIA. In case they are judged inadequate,
then the project should not receive the go-ahead until more
effective mitigation measures are explored. In view of the need to
assess possible impacts throughout project implementation, the
consultation process should also identify options and approaches
for participatory monitoring of project impacts and procedures to
address grievances. It is also important to note that even impacts
that are overall positive—such as signifcant economic returns—
can call for some type of (risk) mitigation action, for example to
avoid windfall profts for one business or group of actors, so that
the benefts of the project are more equitable and in line with
policy objectives.
Financial Viability
The project proponent must assess the fnancial viability of the
proposed project, taking into consideration possible additional
costs related to the implementation of mitigation options or
compensation payments. A promising technology with low overall
costs may end up requiring major fnancing arrangements due to
high start up costs, or an effcient technology or feedstock may
require training that is hard to obtain locally or even nationally, thus
creating additional costs and possibly increasing expenditures
of hard currency. Investments in sub-Saharan Africa often must
consider the effect of additional infrastructure costs (COMPETE,
2009b). Investment risks, GHG mitigation projects and related
types of fnancing are briefy summarised below.
INVESTMENT RISK
In the case of bioenergy, the most signifcant cost is almost
always the feedstock supply. Where there are large-scale conver-
sion facilities involved, they may give rise to signifcant upfront
investment costs. However, since the feedstock costs and supply
are more uncertain in comparison to the costs of facilities (i.e. the
cost of facilities is more predictable), more of the investment risk
falls under the feedstock supply; some key examples of feedstock
supply investment risks are given in Box 3. In some cases, the risk
associated with feedstock supply can be mitigated in a fashion
similar to mitigating other impacts. For example, a bioenergy
system that can be adapted to several different feedstocks is
more robust in climatic and economic terms, although these
advantages most be weighed against the additional costs
associated with developing and deploying systems for multiple
feedstocks.
The other key component of investment risk that is rather different
from other energy markets lies with the demand for the fnal
products. Bioenergy products are not always uniform in quality