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FAO/UNEP/UN-Energy Bioenergy Decision Support Tool -
MODULE 4: Project Screening
A publicly funded investment project should clearly contribute to
national and/or regional strategic priorities for bioenergy develop-
ment. In the case of private investment for which licenses are
sought, the investment level assessment should aim to ensure
consistency with strategic policy objectives and create procedures
to analyse and mitigate risks. Governments should also consider
providing incentives to private investors for investments that are in
line with and help implement specifc identifed national priorities.
The various steps in the decision processes are discussed briefy
below.
In general the discussion here is aimed at medium to large-scale
bioenergy projects; the scale and depth of review, assessment
and organisation must always be commensurate with the scale of
projects in order to insure cost-effectiveness in using public and
private resources. Smaller projects will generally not require elabo-
rate organisational structures as they will not involve signifcant
quantities of land or water resources, their impacts will be limited,
and the relevant stakeholder group will be smaller. It is neverthe-
less important to note that small projects can have impacts
disproportionate to their scale, both positive and negative, based
on how well the bioenergy resources and system confguration
are matched to the local needs and environment
<Mod1: Techno-
economic>.
It should also be noted that smaller projects can be clustered
geographically or thematically and grouped within some larger
project or programme
<Mod3: Implementation and Operations>.
In such cases, the expenditure or more time and money in the
review process and in more sophisticated organisation may be
warranted; there can even be additional value-added from the
up-front investment in organisation, since similar projects can
be replicated and can rely on the same technical and fnancial
support systems.
Defining the Project Proposal
A specifc project proposal arises through public or private
channels. Private investors may be domestic or international, while
public investors may be national, regional, international or may be
associated with multilateral organisations such as development
banks. Some defnitions for the actors and processes are given in
Box 1.
Box 1: Defnitions of actors and processes
Source: WRI, 2009
Project Proponent: company, government agency, or other
entity responsible for developing and implementing the
project.
Local Communities: groups of people living near a project
who are potentially impacted by the project.
Stakeholders: In contrast to local communities, stakeholders
refer to the broader group of people and organizations with
some type of interest in the project.
Community Engagement: a process in which a proponent
builds and maintains constructive relationships
The project proponent (private or public) must provide a clear
defnition of the proposed project; the detail required naturally
increases with increasing project scale or scope. A high level of
detail and comprehensive analysis should also be required when
there are risks of irreversible ecological or environmental damages.
Some of the key issues to be covered in a bioenergy project
proposal are:
Intended location and size of the project;
Input or resource demands, including land, water, labour,
agro-chemicals, etc.;
Infrastructure required for transport, communication and
distribution;
• Conversion technologies and preliminary cost estimates;
Intended sectors, applications, end-uses and market scope
(local, domestic, international);
• The geographic coverage of energy services if provided
locally;
• Estimated project lifespan and assessment of fnancial
sustainability after the project lifetime;
• Proposed implementation scheme or business model;
• Envisaged contributions to local community;
• Potential ecological and environmental impacts.
There are more detailed questions during the project design that
will be the subject of analysis and discussion among bioenergy
project developers, stakeholders, and investors (IDB, 2008; IEA,
2007):
• Biomass resources: What types and amounts of biomass
resources are available in suffcient quantities and qualities in
close enough proximity to the project site? Can the identifed
biomass resources be produced sustainably in the areas
indicated?
• Competing Uses: Are there competing uses for this biomass
and would its use for energy purposes impact negatively or
positively on other demands or industries?
• Conversion options: Are the required bioenergy supply
chain and conversion technology options suffciently mature
but also effcient in the use of biomass resources?
• Environmental Impact Assessment: In terms of preparing
an environmental impact assessment in order to gain
planning approval, what impacts will the increasing use of
biomass in a region have on the local environment and on
water supplies?
<Module 8 – Evaluating Impacts>
• Socio-economic Impacts: Will benefcial social issues result
such as improved food security, employment, rural develop-
ment, social cohesion, improved health, equity and develop-
ment?
<Module 8 – Evaluating Impacts>
• Investment: What level of investment will be needed to
establish the proposed bioenergy project, not just for
plant construction, operation and fuel purchase but also
for obtaining the necessary consents and negotiating the
relevant legal contracts?
• Markets: What markets for bioenergy products and services
and co-products exist now or will be established in the
future?
• Investment risk: What is the level of investment risk,
including competition from other energy supply systems
(such as wind, geothermal and fossil fuels), and investments
in energy effciency measures that, if successful, could avoid
the need for additional energy supply?
There will also undoubtedly be various national and/or regional
procedures that require other types of information from the project
proponent. Furthermore, if the source of fnancial support includes
development banks, carbon fnance and other project-based