Climate change

OECD work on Project-Based Mechanisms (published prior to 2004)


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.

Major publication:

Emission Baselines: Estimating the Unknown

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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