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The objective of the work on the project-based mechanisms is to assess design options for joint implementation (JI) and the clean development mechanism (CDM), focussing in particular on baseline design.
Carbon Capture and Storage in the CDM (December 2007)
Cédric Philibert (IEA), Jane Ellis (OECD), and Jacek Podkanski (IEA)
The possible inclusion of CCS projects under the Clean Development Mechanism (CDM) raises a number of issues, including how to deal with potential leaks of CO2 and associated permanence and liability issues, what an appropriate project boundary is, how to deal with CDM-“leakage” (i.e. emissions resulting from the project activity beyond its boundaries) and what the possible impact of including CCS would be on the broad CDM portfolio. In assessing these issues, this paper analyses various ways to effectively address the key issue of long-term liability and show the potential climate benefits of including CCS in the CDM.
Overcoming Barriers to Clean Development Mechanism Projects (May 2007)
by Jane Ellis (OECD) and Sami Kamel (UNEP Risø Centre)
The market for Clean Development Mechanism (CDM) projects is continuing to grow rapidly, with the current portfolio expecting to deliver 2 billion tons of CO2-eq greenhouse gas (GHG) emission reductions by 2012, equivalent to 17% of Annex I Parties’ base year GHG emissions. In total, governments and companies have earmarked over USD11 billion for CDM funding to 2012. This study analyses the various barriers to CDM market expansion in developing countries, and makes recommendations on how some of them can be removed or reduced. It also examines the distribution of CDM projects amongst regions and sectors.
Joint Implementation: Current Issues and Emerging Challenges (Oct 2006)
by Katia Karousakis
This paper reviews issues and challenges associated with implementing Joint Implementation (JI) under the Kyoto Protocol. The paper begins with an overview of the current JI portfolio and the existing market developments: who are the major buyers and sellers, what sectors are involved, and what are the current market prices for emission reduction units (ERUs). Though JI is currently only a small part of the developing carbon market, JI is developing rapidly.
Sectoral Approaches to GHG Mitigation: Scenarios for Integration (Oct 2006)
by Richard Baron
This paper offers a preliminary analysis of several scenarios for integration of sectoral approaches in international and national climate policy. It considers four broad types of sectoral approaches and how each of these options would integrate in the existing climate regime: 1) A global action, i.e. a unilateral move by industry to foster GHG improvements; 2) A global agreement between industry and Parties to the UNFCCC; 3) A series of national policies targeting a sector, with some intergovernmental coordination; 4) A sectoral crediting mechanism whereby reductions recorded at a sector level may be eligible for emission credits. The paper explores the possible interactions between these options and the existing climate policy regime.
The Developing CDM Market: May 2006 Update (May 2006)
by Jane Ellis and Katia Karousakis
Issues Related to a Programme of Activities under the CDM (May 2006)
by Jane Ellis
Sectoral Crediting Mechanisms for Greenhouse Gas Mitigation: Institutional and Operational Issues (May 2006)
by Richard Baron and Jane Ellis
Sectoral Crediting Mechanisms: An Initial Assessment of Electricity and Aluminium (Nov 2005)
by Jane Ellis and Richard Baron
The Developing CDM Market (Nov 2005)
by Jane Ellis and Ellina Levina
Exploring Options for "Sectoral Crediting Mechanisms" (May 2005)
by Martina Bosi and Jane Ellis
Market-based greenhouse gas (GHG) abatement mechanisms are likely to remain attractive in a future climate regime, as they offer flexibility to reduce emissions where most cost-effective. There are different ways market-based mechanisms may be designed and implemented in different countries and/or sectors. The aim of this paper is to explore different ways of designing “sectoral crediting mechanisms” that could encourage greater GHG-friendly investments in given sectors by generating emission credits. This paper is part of ongoing analytical work on market-based approaches undertaken under the auspices of the Annex I Expert Group on the United Nations Framework Convention on Climate Change (UNFCCC).
The CDM Portfolio: Update on Non-electricity Projects (Nov 2004)
by Jane Ellis and Frédéric Gagnon-Lebrun
The CDM portfolio is growing and changing fast. Current proposals for CDM projects indicate that they expect to generate 352 million credits prior to 2012: 91.3 million credits pre- 2008 and a further 52.3 million per year (equivalent to the amount of Denmark’s CO2 emissions in 1990) during 2008-2012. The aim of this paper is to provide an update on the composition of the CDM project portfolio, based on analysis of project-specific documentation for 201 proposed CDM projects, and to examine how additionality, baselines and co-benefits of proposed CDM projects have been treated. In particular, this paper focuses on proposed CDM project activities that mitigate greenhouse gas (GHG) emissions primarily through activities that do not involve electricity generation.
Taking Stock of Progress under the Clean Development Mechanism (June 2004)
by Jane Ellis, Jan Corfee-Morlot and Harald Winkler
This paper looks at the achievements of the CDM to date in the context of wider private and public flows of investment into developing countries. The paper also raises some questions about the ability the CDM to act as a bridge towards achievement of cost-effective GHG mitigation across different countries and regions over time while also advancing sustainable development objectives in developing countries.
Evaluating Experience with Electricity-Generating GHG Mitigation Projects
This paper outlines the current portfolio for proposed Clean Development Mechanism or CDM-type electricity-generating projects and examines the ways in which additionality and baselines have been assessed for these projects. The projects examined in this paper use widely differing methods and arguments to demonstrate additionality.
Forestry projects: lessons learned and implications for CDM modalities
This paper examines how additionality, baselines and leakage have been assessed for several afforestation/reforestation (A/R) projects currently underway. It identifies trends and draws lessons from this experience that could be useful when agreeing on the modalities and procedures for including A/R projects into the CDM for the first commitment period.The paper concludes that the risk of free-rider projects can be significantly reduced by incorporating relatively small changes into the definitions of additionality, baseline and baseline approach that are set to be agreed for A/R CDM projects at COP9. The importance of leakage can be reduced through careful project design and siting.
Road-Testing Baselines for Greenhouse Gas Mitigation Projects in the Electric Power Sector
This paper tests the "combined margin" methodology for grid-connected electricity generating projects for Brazil, Chile and South Africa. The paper outlines all the steps involved in the implementation of the baseline recommendations, to provide as much transparency as possible to facilitate observers' assessment of the methodology and its implications.
Developing Guidance on Monitoring and Project Boundaries for Greenhouse Gas Projects
This paper explores issues related to monitoring the greenhouse gas impacts of climate mitigation projects and on defining project boundaries. Drawing on lessons from project monitoring experience and guidance to date, it identifies key questions whose answers set the ground rules for specific monitoring guidance and makes recommendations for how these questions should be answered.
Practical Baseline Recommendations for Greenhouse Gas Mitigation Projects in the Electric Power Sector
This paper constructs a three-category decision framework that can be applied to all electricity projects and identifies workable baseline methodologies for these projects. The report identifies standardised, streamlined approaches to reduce transaction costs where feasible, yet relies on more detailed methods that are more rigorous for those classes of projects for which preserving environmental integrity is more likely to be an issue.
Forestry Projects: Permanence, Credit Accounting and Lifetime
Also available in French
If the carbon stored in an afforestation or reforestation project is re-released, e.g. as a result of fire, the climate benefits of that project risk being reversed. This paper identifies the different physical risks to carbon stock reduction in forestry projects and options by which these physical risks, and associated economic risks, could be managed by project participants. This paper also examines eight different regimes that could be established to allocate credits generated by forestry CDM and JI projects. How these different crediting regimes are designed can determine whether credits generated by forestry projects represent real, measurable and long-term benefits and can also influence the economic impacts of premature carbon release from a project.
Fast-tracking Small CDM Projects: Implications for the Electricity Sector
Also available in French
This paper outlines possible elements of a fast-tracking procedure, analyses the potential environmental impact that this could have, and explores the economic consequences for small electricity generation projects, focussing on renewables. The paper presents information and insights that may be useful for the completion of negotiations on the CDM and, hopefully, the successful implementation of its fast-tracking provision. As a starting point for the analysis, the current situation for small power plants in developing countries is examined. The paper also examines four potential options for grid-based electricity baselines. These options reflect a broad range of possible country-based examples. The paper compares four different small projects (wind, small hydro, advanced oil, and advanced natural gas) to demonstrate the different volume of CERs that could be earned annually under different types of baselines.
An Initial View on Methodologies for Emission Baselines: Transport Case Study
Also available in French
The main purpose of this report is to identify opportunities to standardise baselines in the transport sector. The discussion clearly focuses on ways that this can be done within the current framework of the Kyoto Protocol. However, the baseline work done for this report is not specific to this framework and could be used whenever there is a need for projections of greenhouse gas emissions from the transport sector. The report outlines two types of baselines that could be used for transport CDM and JI projects: subsector baselines and regional baselines. Subsector technical baselines are estimated using base year emissions data along with projections of future emissions based on technological parameters of the relevant part of the transport sector. This type of baseline is expected to be used most for fuel efficiency and fuel switching projects. Subsector historical baselines are estimated by continuing existing emissions and other relevant trends forward. These baselines may be used for any project that mainly touches only one subsector of transport.
Framework for Baseline Guidelines
This framework paper discusses the main methodological issues for baseline setting. It explores some insights that could be valid for all sectors on the key elements needed for baseline determination. These insights are drawn from the different baseline case studies undertaken by the OECD and the IEA on cement, electricity, energy efficiency, iron and steel and forestry. This paper is intended to help Parties identify the basic elements that might be included in baseline guidelines that could be adopted at COP6.
Potential and Implications for Multi-Project Emission Baselines: Iron and Steel Case Study
This study explores how emission baseline methodologies could be standardised for iron and steel production, and explores the impacts of different assumptions on likely project numbers and the environmental effectiveness of individual projects. It concludes that standardisation for each of the major production routes is possible, recommending that the intermediate product (crude steel) be used for making additionality judgements.
An Initial View on Methodologies for Emission Baselines: Cement Case Study
Cement manufacture is both widespread and highly GHG-intensive. There are many ways to reduce the GHG-intensity of cement. This paper explores the different types of JI/CDM project that could be undertaken in the cement sector, assesses whether or not standardisation of emission baselines is feasible and desirable for these different project types, and indicates potential standardised baseline levels or methodologies for selected project types.
An Initial View on Methodologies for Emission Baselines: Electricity Generation Case Study
Electricity generation accounts for approximately a third of energy-related emissions in Annex I countries, and both capacity and emissions are rapidly growing in non-Annex I countries. This study outlines potential baseline assumptions and spatial aggregation levels that could be appropriate for electricity generation projects, and explores the impacts of these different assumptions and methodologies on potential baseline levels. It concludes that the average GHG-intensity of new capacity additions is an appropriate standardisation level in many cases, and that differing spatial aggregation levels, e.g. country, sub-country and multi-country, could be appropriate in different cases.
An Initial View on Methodologies for Emission Baselines: Energy Efficiency Case Study
This case study explores how emission baseline methodologies could be standardised for two types of electricity-efficiency projects (lighting and motors). It offers indications to where standardised methodologies could be drawn up to determine some baseline parameters (e.g. number of operating hours).
Options for Project Emission Baselines
Project emission baselines are used to estimate what would have happened in the absence of greenhouse gas emission-reducing projects and to assess the "additional" emission reductions resulting from investment in these projects. This paper examines possible options for project emission baselines. It identifies three main approaches - project-specific, multi project and hybrid - and assesses the data, reporting and monitoring needs as well as the cost, transparency and environmental implications of each of these three approaches. The paper also presents quantitative examples that indicate the influence of different assumptions, baseline approaches and national circumstances on the level of an emissions baseline and emission credits.
Publication
Emission Baselines: Estimating the Unknown
November 2000
Climate change is one of the key challenges facing the international community. The world's industrial countries and those with economies in transition have, under the 1997 Kyoto Protocol, collectively agreed sharp limitations of their greenhouse gas emissions. Innovative provisions in this Protocol offer potentially cost-effective ways to meet these pledges. They allow investors - nations, as well as companies - to credit emission reductions they accomplish in foreign countries against their own commitments. The two schemes, Joint Implementation and the Clean Development Mechanism, will encourage investment in climate-friendly projects worldwide, especially in developing countries. So far, however, no detailed rules have been adopted to govern the new mechanisms or to evaluate just how many emission credits a particular project should generate. Rigorous methodological analysis is required before any decision can be taken. This book provides that analysis, examining issues in the development of emission baselines in four key sectors: electricity; cement; energy efficiency; and iron and steel. This book moves the debate from the theoretical to the practical. It provides insights on how to develop credible, workable and transparent baselines from which to quantify the mitigation effects of projects initiated under the "Kyoto mechanisms". In so doing, it sails uncharted waters. It attempts, indeed, to "estimate the unknown".
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