A PoA provides the organizational and methodological framework for component project activities (CPAs) with the same stated goal to operate within a single registered CDM program activity. PoAs operate at two levels: the program level and the CPA level. The program level provides the organizational structure governing the eligibility, operation, monitoring and crediting of individual CPAs included within the PoA. The CPA level consists of individual CPAs which are the specific measures through which emissions reductions are generated. Multiple CPAs can be included under a PoA at the time of registration and additional CPAs can be added at any point in the life of the PoA. This registered PoA will consider CPAs within the geographical boundaries of South Africa to be added for the length of the PoA which is twenty eight years without undergoing the complete CDM project cycle.
Compared to regular CDM project activities, this programmatic approach has many benefits, particularly for less developed countries or regions.
The main benefits of a PoA are:
1. Independent platform that is structured for the maximum benefit of the underlying CPAs.
2. Transaction costs, investment risks and uncertainties for individual CPA participants are reduced.
3. PoAs are managed on a regional level which speeds up the approval process.
4. Access to the CDM is extended to smaller projects which would not be viable as stand-alone projects.
5. Direct engagement of individual project developers in the CDM process is not required.
6. Emission reductions can be continuously scaled up after PoA registration, since an unlimited number of CPAs can be added at a later stage.
7. Many technologies with high co-benefits, e.g. on the household level, are supported by PoA.
8. Specific regional policy goals can be effectively supported by accessing carbon finance through PoA.
9. Monitoring and verification can be undertaken on a collective basis by utilizing a sampling approach.
10. No registration fee is due for each CPA included after registration. Registration fees are based on the expected average emission reductions of the "actual case" CPAs submitted at the PoA registration.
The PoAs are managed by a Management Committee constituted in terms of an Operational agreement.
A PoA is distinct from a bundle of small-scale projects, because it is possible to add new CPAs to a PoA without undertaking the validation process afresh. However, there is a process for adding a CPA to a registered PoA which involves an inclusion fee. The commercial terms of inclusion of a new CPA must be agreed upon between the owner of the new CPA and the management committee of the PoA. Each new CPA will sign an inclusion deed.