Sectoral Crediting Mechanisms: An Initial Assessment of Electricity and Aluminium
There is much interest in addressing broad sectors and extending the scope of the project-based mechanisms established under the Kyoto Protocol, both pre and post-2012. As a contribution to this debate, we explore how a sectoral crediting mechanism (SCM) could work in the electricity and aluminium sectors and present preliminary insights on the pros and cons of such designs. Both the importance and potential reductions of GHG emissions from power generation are well-known. Fuel combustion for electricity generation is the largest emitting sector, and in 2002 accounted for 39% of fuel combustion emissions, almost 9.5 billion tons of CO2. Aluminium brings other interesting aspects, although its importance to global GHG emissions is much lower than that of power generation: it is internationally traded; and its production processes emit non-CO2 greenhouse gases.
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.
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.
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.
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.