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Historic CDM / JI Ratings

CDM Country Rating January 2009

RankCountryRating(Previous rating)Climate institutionsInvestment climateProject potential and status
1 (1) India A- (A-)AA-B-AA-
2 (2) China BBB+ (BBB+)BBB-BBAA
3 (3) Chile BBB (BBB)A-BBB+BB
4 (4) Mexico BBB (BBB)A-BB-BBB-
5 (7) Brazil BBB- (BB+)BBB-BB-A-
6 (8) Peru BB+ (BB+)ABB-B
7 (11) Indonesia BB+ (BB)A-CCCBB
8 (9) Malaysia BB (BB)BBB-BBBB-
9 (5) South Africa BB (BBB-)ACCC-BB-
10 (6) Korea BB (BBB-)BBBB+BB-
11 (10) Morocco BB- (BB-)BBB+BCCC
12 (12) Vietnam B+ (B+)BBBCC+B
13 (15) Philippines B (B)BBCCC-B-
14 (16) Thailand B (CCC+)B-BB+
15 (13) Argentina B (B)BB-CCC+B-
16 (15) Egypt B- (CCC+)CCCBB

Point Carbon’s recent CDM country rating compared to the last update in June 2008 shows no considerable changes within the leaders of the rating but numerous reshuffle among the forerunners. The worldwide economic slowdown has brought changes to all investment climate scores but to a different degree; and although the economic and political conditions are only supplementary indicators for the CDM development, they are indeed influencing the final rating of the countries with respect to investments.

Overall, the CDM market has recently been suffering from the reduced governmental willingness and depletion of large and low risk projects. On the other hand, the market confidence has been enhanced by the increased attention towards programmatic projects, smoother approval processes and expanded CDM capacity.

India, China and Chile continue to keep the leading positions in the rating, in fact, leaving the other rated countries far behind. India and China have for a long time been – and they still are – walking side by side on the very top of the CDM country rating. India (A-) remains top CDM country with an elaborate and quite liberal institutional base, and a number of high quality CDM service providers. Although India has developed the highest number of registered – and at the same time rejected – projects, China (BBB+) continues to be the world leader in terms of project approvals and issued CERs. The pace however is slowing down, as the Chinese DNA has not been able to promptly react to the market dynamics and introduce relevant changes to the price floor which seems to have suspended project approval and introduced additional risks for market players. As a result, India’s straight-forward project development and approval environment helps it staying on top of the rating.

Chile is sharing the BBB score with Mexico, but remains third in the ratings. Chilean government continues to show permanent support to CDM, and has recently adopted a Climate Change Plan. Mexico’s CDM potential is limited by the energy monopoly as well as economic dependency on the US, though despite relative political instability it remains quite attractive for CDM investors. This might change in the future since Mexican government is mulling binding emission targets as well as voluntary domestic emission trading, which would definitely limit the room for CDM.

Almost all other countries show considerable changes in the ranking places with upgrades for Brazil, Peru, Indonesia, Malaysia, Philippines and Thailand and downgrade for all the three African countries, as well as for Korea and Argentina.

Brazil’s (BBB-) upgrade from the seventh to the fifth place is mostly due to the improvements in institutional conditions and governmental willingness to encourage CDM development. However the approval process remains to be cumbersome and bureaucratic. Brazil is followed by Peru which appears to be the country least affected by the economic slowdown in Latin America. Peru’s take-off to BB+ score is also justified by active CDM development in the country, especially within the renewable energy sources.

Indonesian institutional capacity, high-graded project potential and relatively stable economic climate contributed to the country’s change from eleventh to seventh place with the overall score improved from BB to BB+. The Malaysian (BB) step-up to eighths place is resulted from the smooth approval process and no evidence of complaints from project developers. However, economic situation in the country remains rather vulnerable and unstable. The last advanced review touched Philippines (B) and Thailand (B), which have now improved to thirteenth and fourteenth places respectively mainly as a result of good project approval processing.

South Africa (BB), Morocco (BB-) and Egypt (B-) have all been downgraded in the January review. Not being directly affected by the current financial crunch Egypt has, however, dropped to the very bottom of the rating due to little CDM activity and restricted capacities within the country. Moroccan inability to attract new projects has contributed to country’s demotion to the eleventh place. South Africa experiences a significant drop, being down from the fifth to the ninth place mainly due to larger improvements of the other countries.

Korea (BB) has also dropped a lot: from the sixth to the tenth place because of the recent suspension of the project approval, expected DNA changes, and severe economic slowdown. Moreover the future of CDM in Korea is to a large extent dependent on the future domestic trading scheme and post-2012 emission targets.

Argentina (B) was downgraded to the fifteenth place as CDM support in the country has not been sufficient. On the contrary Vietnam (B+), despite the economic downturn and rocketing inflation, continues to keep the twelfth place.

JI/AAU country ratings (January 2009)

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CDM Country rating June 2008

RankCountryRating(Previous rating)Climate institutionsInvestment climateProject potential and status
1 (2) India A- (A-)AABAA-
2 (1) China BBB+ (A-)BBBBBAA+
3 (3) Chile BBB (BBB)BBBABB-
4 (4) Mexico BBB (BBB)A-BB+BB+
5 (6) South Africa BBB- (BBB-)ABB+
6 (8) Korea BBB- (BBB-)BBBBBBBB-
7 (5) Brazil BB+ (BB+)BBBBBBB+
8 (9) Peru BB+ (BB)ABB-
9 (7) Malaysia BB (BB)BBB-BBBB
10 (10) Morocco BB- (BB-)BBB+CCC+CCC
11 (11) Indonesia BB (BB)BBBCCC-BB
12 (13) Vietnam B+ (B+)BBB-CCCB-
13 (12) Argentina B (B)BB-BCCC+
14 (14) Philippines B (B)BBCCC-B-
15 (15) Egypt CCC+ (CCC+)CCCCCCB-
16 (16) Thailand CCC+ (CCC)CCCB-B-

CDM rating comment

India and China have for a long time been –and they still are – struggling almost side by side on the very top of Point Carbon’s CDM country ratings. In this June update, India surpasses China and claims the leading position. One of the triggering events making this shift happen is the large earthquake that hit the Sichuan province last month, which is expected to have negative effects on current and future Chinese CDM projects. The other decisive factor triggering a slight downgrade of China is that the DOE squeeze is even more serious than previously known. Some DOEs have even temporarily stopped contracting new projects for validation.

While India’s approval process remains straight-forward, the Chinese procedure has become less transparent over the last months. China continues the world leader in terms of issued CERs. Although India has developed the highest number of registered projects, the Indians have also the highest number of rejected projects, while China has none. All in all, China scores higher than India on both project status and potential, as well as investment climate.

On the institutional side, India has a wide base of CDM service providers, which facilitates project development. Meanwhile, China still posesses the fastest growing project portfolio. However, capacity constraints with DOEs cause huge delays in getting projects registered and CERs issued from Chinese projects.


Chile remains on third place on the ranking, before Mexico. However, Chile risks being downgraded if the DNA does not manage to meet project developers’ expectations of high project approval pace. The DNA has been under pressure from project proponents after a personnel shift within the DNA, and Chile’s continued high rating on institutional conditions entirely depends on the DNA’s future performance.

The ratings of Brazil and Malaysia remain unchanged but due to improvements in project status and investment climate in South Africa and Korea, Brazil fell down from fifth to seventh place and Malaysia from seventh to ninth.

Peru climbed from ninth to eighth position and got its rating improved from BB to BB+ as a result of significant growth of its project portfolio and improvements in the investment climate of the country.

Argentina has seen no change in its overall ratings, but it has been surpassed by Vietnam, which has improved its project portfolio somewhat.

Thailand remains last on the ranking, but its rating has been upgraded slightly, from CCC to CCC+, after the DNA set up a website in English and Thai, which provides a detailed description of its rules.

JI/AAU country ratings (October 2008)

RankCountryRating(Previous rating)Climate institutionsInvestment climateProject potential and status
1 (1) Ukraine BBB+ (BBB+)BBB+BBA
2 (2) Romania BBB (BBB+)BBB+BBBBBB
3 (6) Poland BB+ (BB)B+ABBB-
4 (3) Russian Federation BB (BB+)BB-ABB-
5 (7) Bulgaria BB (BB)B-BBBBBB+
6 (5) New Zealand BB (BB)BAAA-B
7 (8) Czech Republic BB (BB)B+A+B+
8 (4) Hungary BB (BB)B-ABB
9 (9) Estonia BB (BB)BAB
10 (10) Belarus CC+ (CC+)CCC+CCCC

The October JI country ratings update has seen few major changes since the previous update in June 2008. Ukraine – the top ranked country – has kept its positions followed by Romania and Poland. Due to the continuous delays in the JI project approval issuance, the Russian Federation has been downgraded to fourth position. Having achieved some promising institutional developments recently, Moscow might however improve its position in future ratings. Poland has replaced the Russian Federation at the third position, which is the best country’s achievement for the last two years.

The Ukraine’s project status were somewhat downgraded, revealing delays in the issuance of LoEs. The project backers disclose their concerns that the Designated Focal Point (DFP) scrutinizes the projects too thoroughly. In fact this leads to constant delays in the project processing and endorsement. However, the minor change in the project status, has not affected the overall score at BBB+. The country continues improving the JI legal framework, and on 20 August 2008 the Government approved the new fashioned JI procedures. The procedures formalise Track 1 in Ukraine and reconfirm the possibility of early crediting. Though Ukraine hosts very few JI projects started before the Kyoto period, the country’s willingness to utilize all possible instruments under Kyoto should strengthen the buyers’ confidence in the market. The document also establishes a new option for JI projects – late crediting. This allows the projects applying for the credits to be generated beyond the first crediting period. We expect that the new regulations will contribute to increased carbon credits supply from Ukraine, in particular from the projects starting in the end of the Kyoto period, and reinforce therefore its position in the JI market.

Romania keeps its second position in the JI country ratings, despite the lack of the sufficient project portfolio. Bucharest successfully launched the Track 1 in late July 2008. One early-mover project has already passed the public comment stage. The enacted regulation will most likely not boost the projects to approval pipeline since the decreasing country’s potential remain fully dependent on the restrictive double counting rules under the EU ETS. The Romania’s score therefore has been reduced from BBB+ to BBB. The decrease, however, has been somewhat balanced with the progress in LoE issuance, allowing Romania to keep its position.

Poland has climbed to third place, which is the highest ranking the country has ever succeeded. Warsaw has finally complied with a basic requirement under JI Track 2 through submitting the JI procedures to the UN FCCC. The country has only submitted the temporarily operational procedures, but the JI projects that were already given the approval will be able to proceed throughout the Track 2 cycle and receive the final determination.

The Russian DFP closed the window for JI project submission in the end of May due to a reshuffle within the key ministries following the presidential election. Russia reopened the project submission only in the late September 2008. The four-month delay has materialized in the decrease of the institutional conditions score and country is downgraded to fourth position in the ranking. It appears in the short term that Russia will keep the slow pace in the project processing and approval. Thus far, only one out of 16 projects submitted to the DFP has passed the first stage under the Russian JI guidelines by receiving a positive feedback from the federal executive agency assigned for an initial project screening. Since the DFP cannot accelerate the review process by the federal agency, the time of the project processing might be an issue. This negative signal has been somewhat balanced with the institutional readiness of the DFP to proceed with the project consideration - the MED approved a list of the Commission members thereby setting up the key agency under the Russian JI guidelines on 23 September 2008 (Please, see the Analyst Update ‘Russian JI project approval in November?’ from 17 October 2008).

Bulgaria has reached the top-five after the Bulgarian registry finally became operational and one JI Track 2 project was registered by the JISC. However, the overall score has remained unchanged at BB. The Bulgaria’s upgrade has been mainly entailed by the lack of progress in other countries, rather than Sofia’s progress in JI issues.

The other ranked countries have seen no changes in their scores. Hungary has approved eight Track 1 projects with a total volume of 8.3m over 2008 – 2012, therefore keeping its previous score the same as in the previous ratings update. However, the project potential is gradually dropping. Although Belarus remains on the tenth position, the country has made the next step towards adopting the necessary legal base as the National Program on Climate Change for the 2008-12 period has been approved. Czech Republic and Estonia are rather reluctant on moving forward with the JI and will likely focus their efforts on the GIS implementation.

AAU ratings

Despite the fact that Hungary has been downgraded in the JI ratings since the previous June update, a first AAU deal upgrades the country to the second position in the AAU country ratings. Belgium and Hungary has sealed the contract on 2 million of hard-greened AAUs in the late September 2008. No price and conditions were disclosed. The deal has strengthened the country’s position as one of the most attractive seller, increasing the Hungary’s advantages over the other AAU countries. Ukraine - the leader in the AAU ranking – is also rapidly developing a necessary infrastructure for the GIS launch. Ukraine has signed a Memorandum of Understanding (MoU) with Japan, covering also AAU trading issues. Moreover, Kiev is actively negotiating MoUs with Spain and Italy. In addition, several other countries – Czech Republic, Latvia, and Hungary - have signed the MoUs with Japanese Government that seems to be the most active player in the AAU market.

EU countries’ registries were connected to the ITL on 16 October 2008 and therefore became fully ready for AAU transfer. This has enhanced the AAU scores for all countries except Russia and Ukraine. The Russia’s registry is already connected to the ITL. The connection of the Ukraine’s registry is scheduled on 28 October 2008. While the JI ratings comment was being written, Ukraine connected the national registry to the ITL and transferred the first tranche of early credits (AAUs) to the Zasyadko coal mine project. This change will be reflected in the next JI rating to be published in the mid-January 2008.

CDM Country rating March 2008

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JI/AAU country ratings (April2008)

RankCountryRating(Previous rating)Climate institutionsInvestment climateProject potential and status
1 (1) Ukraine BBB+ (BBB+)A-BB+A+
2 (2) Romania BBB (BBB+)BBB+BBBBBB
3 (3) The Russian Federation BB+ (BB+)BB-ABB
4 (4) Hungary BB (BB+)BABB
5 (5) Bulgaria BB (BB)B-BBBBBB
6 (7) New Zealand BB (BB+)B+AAA-CCC
7 (6) The Czech Republic BB (BB)BA+B
8 (9) Poland BB (BB)CCC+ABB
9 (8) Estonia BB- (BB)BAB
10 (10) Belarus CC+ (CC+)CCCCCCC

Ukraine keeps its leading position in Point Carbon’s JI and AAU host countries ratings.

The April JI country ratings update has only been through a few minor changes since the previous update in the February 2008. The two largest suppliers - Ukraine and the Russian Federation - have kept their positions on the first and third places respectively. Ukraine is for the second time ever rated the best country for doing JI projects. Russia has also remained at the third position, which is a result of the enormous potential for emission reductions and the number of efforts towards setting up JI procedures. Central and Eastern European (CEE) countries face minor changes, but Estonia and Poland still remain outsiders in the Point Carbon ratings.

Kiev has made no visible progress in the overall rating within the last two months. The only slight improvement has been made in number of project approvals issued the same grade of BBB+. However, due to Romania’s modest progress Ukraine could save the leader’s position. Ukraine’s Designated Focal Point (DFP) has issued six new Letters of Approval (LoAs) since the February update, responding to negative feedback from the project proponents. Total number of issued LoAs reached 18 since the beginning of the year 2006. The hosts complained about the slow approval process impeding the submission of Track 2 JI projects to the next stage within international approval process - ‘final determination’. However, a lot of hosts are looking forward to submitting the projects for approval under the domestic Track 1 procedure. There are thus some uncertainties whether Ukraine will be able to set the operational procedures for a whole project cycle if the country has no capacities to issue LoAs on the regular basis.

The Ukraine’s Government recently has requested for set of a minimum price for the JI projects. A decision has been evaluated by the stakeholders as a binding threshold for buyers, which apparently decrease a volume of ERUs to be generated from the projects located in Ukraine. After the series of negotiation with DFP and GIS-related institutions, the Government has suspended its decision at least to the end of the year 2008.

Romania has slightly approved its score, but could not overcome Ukraine in the JI country ratings. Bucharest was facing a continuous technical problem with the national registry, but it managed after all to connect to the Community Independent Transaction Log (CITL) in the beginning of April 2008. With the registry being a crucial part of the eligibility assessment, the country has finally got an opportunity to complete the in-country review of the Initial Report. Bucharest has issued two LoEs since February 2008, but the project type and volumes have not been disclosed.

The Russian Federation has kept the third place following some improvements in institutional conditions due to successful connection of the national registry to the International Transaction Log (ITL). The Russian DFP opened up for JI projects to submit LoA applications on 10 March 2008. Eight project applications have already been submitted to the MEDT. Four of these applications have been turned down for failing to submit all required documents. This could be signals of a bureaucratic approval process. However, since the Russian DFP has no experience in issuing LoAs, it is quite possible the requirements could get softer. As a response to the approval procedure launch, the Russian projects have increased its Track 2 pipeline with 16 projects out of 20 submitted to the JISC since the previous update.

CEE countries covered by the EU ETS have lower JI potential than the Russian Federation and Ukraine. CEE countries are strongly restricted not only by the EU ETS rules, but also by the community acquise. This imposes high requirements to the share of renewable energy production capacity installed in the new accession countries. To increase their capacity, Estonia has introduced a subsidy for the renewable energy projects. This definitely gives a negative signal to ERU supply from the country, since wind projects have been considered the most attractive JI project type additional incentives for the landfill gas utilization projects are under planning in the Czech Republic.

Bulgaria still experiences problems with the national registry and delays all other EU countries in connecting to the ITL. This also hampers the eligibility progress of Bulgaria and might downgrade the country in the next ratings update, if the country does not demonstrate any progress with its national registry set-up. The strict procedures for obtaining both endorsement and approval of projects are affected by increase uncertainties in the future of JI in these countries on the whole. Many of these potential JI hosts will support emission reduction projects through the Green Investment Scheme (GIS) instead of JI.

Belarus still remains the lowest ranked at CC+ due to the lack of changes in the ratification process – only four countries out of a required number of 132 have ratified the amendment on inclusion of Belarus into the Annex B. Meanwhile, the Government is investigating the opportunity of VER trading to provide some kind of certainty to project proponents in case the country does not get the eligibility status under the Kyoto Protocol.


AAU ratings

The AAU rating has faced minor changes in scores upgrading a few countries due to their notable progress with regards to eligibility status. Poland has improved from B+ to BB- after a series of negotiations with Japan on a first AAU deal. A contract is to be signed until the end of 2008. Warsaw is expected to focus on the GIS, given that the country remains very slow in setting the necessary JI legislation. The Czech Republic has also up-graded its score from BB- to BB. The country has published a draft GIS law being under development for almost a year. Although buyers usually prefer hard greening, the Czech Republic intends to invest the proceeds from the AAU trading in soft greening.

At the same time, the rating upgrades have not had a big impact on the overall ranking. Ukraine remains the most attractive country for GIS, leaving Hungary and the Czech Republic behind. Meanwhile, Ukraine has also improved its score due to its recent approval of the procedures for GIS projects consideration, approval, and monitoring. It is expected that this document will add certainty to AAU deals.

CDM Country rating October 2007

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