Base Line Methods Developing Forestry and Bioenergy Projects with CDM Quito, Ecuador March, 2004.

Base Line Methods

Developing Forestry and Bioenergy Projects with CDM

Quito, EcuadorMarch, 2004

Joanneum Research Woodrising Consulting Inc.

2

Overview

• Fundamentals

• COP-9 Decision

• GHGProtocol Approach

• Example

• Project Length and Size


3

Fundamentals• Baseline Scenario

– represents what would have occurred in the absence of the project.

• Baseline Emissions– emissions related to the baseline scenario.

• Emissions and Removals

t

Bk

Δ

ΔEmission -<=>


4

COP-9 DecisionBaseline for LULUCF

22. In choosing a baseline methodology for an afforestation or reforestation project activity under the CDM, project participants shall select from among the following approaches the one deemed most appropriate for the project activity, taking into account any guidance by the Executive Board, and justify the appropriateness of their choice:

(a) Existing or historical, as applicable, changes in carbon stocks in the carbon pools within the project boundary;

(b) Changes in carbon stocks in the carbon pools within the project boundary from a land use that represents an economically attractive course of action, taking into account barriers to investment;

(c) Changes in carbon stocks in the pools within the project boundary from the most likely land use at the time the project starts.


5

Scenario Identification

• Geographic Area• Temporal Range• Candidates

– Status quo– Project– Abandonment– Other use– Performance standard– Later implementation


6

Energy Project

Project

Time

CO

2e

q / O

utp

ut

Status Quo

Performance Standard

Later Implementation


7

LULUCF Project

Project

Time

Bio

mas

s

Status Quo

Abandonment

Later Implementation


8

Scenario EvaluationGHGProtocol Approach

• Barrier Test

• Investment Ranking Test

• Performance Standard

• Most Conservative Scenario– Lowest emissions– Highest biomass


9

Barrier Test

• Identify Barriers– Legal– Financial

• capital, investment risk, opportunity costs

– Technological• knowledge, training, equipment

– Market structure– Social structure– Resource availability

• Qualitatively Evaluate Barriers


10

Barrier Test ExamplePlantations on Cropland

Status Quo Abandon Ranching Project

Legal XFinancial X XTechnology X XMarket XSocial

Resources X X


11

Investment Ranking Test

• Financial Analysis– Capital requirement– Internal rate of return (IRR)– Payback– Sensitivity to Assumptions


12

Investment Ranking ExamplePlantations on Cropland

Status Quo Abandon Ranching Project

Capital without CDM

$500 0 $250 $1500

Capitalwith CDM

$750

IRRwithout CDM

35% 0% 40% 26%

IRRwith CDM

45%

Paybackwithout CDM

1 year 1.5 years 12 years

Paybackwith CDM

12 years


13

Performance Standard

• Existing Installations

• Historical Land Use Change– Deforestation rates– Reforestation rates– Probability of reforestation

• Geographic Area and Temporal Range


14

Existing Installations

Rank

CO

2e

q / O

utp

ut

Weighted-average

20th percentile

10th percentile

Best practice

Best technology

From GHGProtocol Project Quantification Standard, Road Test Draft, September 2003


15

Probability of Reforestation

( ) ppT

p

T 1--1= yearin ionreforestat of Prob

forest-Non of Area

Reforested AreaAnnual=


16

ProjectPinus radiata

Biomass

0

200

400

600

800

1000

1200

2004 2014 2024 2034 2044 2054 2064 2074 2084 2094 2104

Year

ton

nes

/ h

ecta

re

Cons Landfill

WW Landfill

LLP

SLP

Other Veg

Trees

AG Litter

BG Litter

Roots

Soil


17

Status Quo BaselineGrassland (steady-state)

Biomass

0

50

100

150

200

250

300

350

400

2004 2014 2024 2034 2044 2054 2064 2074 2084 2094 2104

Year

ton

nes

/ h

ecta

re

Cons Landfill

WW Landfill

LLP

SLP

Other Veg

Trees

AG Litter

BG Litter

Roots

Soil


18

Status Quo BaselineGrassland (cleared in 1989)

Biomass

0

50

100

150

200

250

300

350

400

1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Year

ton

nes

/ h

ecta

re

Cons Landfill

WW Landfill

LLP

SLP

Other Veg

Trees

AG Litter

BG Litter

Roots

Soil


19

Probabilistic BaselineReforestation rate = 0.01%

Biomass

0

50

100

150

200

250

300

350

400

2004 2014 2024 2034 2044 2054 2064 2074 2084 2094 2104

Year

ton

nes

/ h

ecta

re

Landfill

LLP

SLP

Other Veg

Trees

AG Litter

BG Litter

Roots

Soil


20

Project Length and Size

• Energy Projects– 7 years, renewable twice– 10 years

• LULUCF Projects– 20 years, renewable twice– 30 years

• Small Scale– Energy projects– LULUCF projects

Base Line Methods Developing Forestry and Bioenergy Projects with CDM Quito, Ecuador March, 2004.

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