Course5 Baseline

8/3/2019 Course5 Baseline

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Course 5Course 5

CDM Baseline MethodologiesCDM Baseline Methodologies

NN YuvarajYuvaraj DineshDinesh BabuBabu

The Carbon Rating AgencyThe Carbon Rating Agency

IDEAcarbonIDEAcarbon, Singapore, Singapore

The views expressed in this presentation are the views of the speaker and do not necessarily reflect the views or policies of theAsian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee theaccuracy of the data included in this paper and accepts no responsibility for any consequence of their use. Terminology used

may not necessarily be consistent with ADB official terms.


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Is CDM for you?


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CDM Project Development

Stage 1: Project Screening will the project mitigate / sequester GHG emission?

will the project result in real, measurable, additional emission reduction?

Could the project have been undertaken as a result of normal business investmentlogic?

Stage 2: Project Development

Determine real emissions reductions:

Choose project boundary

Select project baseline

Set crediting period

Calculate emissions reductions

Prepare Project Design Document

Develop emissions monitoring and verification protocol

Stage 3: National Approval

Conduct stakeholders consultation

Submit PDD & PCN to DNA and present the project to DNA (India)

Obtain host country approval


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CDM Project Development

Stage 4: Validation and Registration Designated Operational Entity (DoE) evaluates and validates project

Designated Operational Entity (DoE) host the project in the website forGlobal StakeHolder Consultation for 30 days

Registration of the project with CDM- Executive Board

Stage 5: Implementation and Monitoring Implement project

Monitor emissions and key parameters

Stage 6: Verification and Certification

DoE verifies emissions reduction Executive Board certifies project and issues CERs

Stage 7: Trading & CERs Delivery

Identification of a suitable buyer (during project cycle also)

Delivery of CERs to Buyers


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Section A

Title of the project

Title

Version

Date

Project description Project Participants

Project details

Emission reductions

Sustainable development

Location

Exact location Maps

Technical Description

Design specifications

Emission reductions

As per PDD guidelines

CDM Project Design Document Development

Section B

Title of methodology Version Date

Reference

Justification of choiceof methodology Tabular format

Baseline Additionality Data available at validation

Monitoring plan Monitoring structure Metering Schedules

Calibration Monitoring parameters

Section C

Project start date

How to choose a startdate

Date format Project lifetime

How to address Choice of crediting period

Fixed / Dynamic Start date of crediting period

Section D

Environmental Impact

Assessment Refer EIA notification

Analysis of positive andnegative impacts


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PDD Development

Project DesignDocument

General write upof PDD

EmissionReductions

Stakeholderconsultation

details

Project description/

Important datesetc

Baseline EmissionData

Stakeholdermeeting

Additionality

Generaldiscussion

on identificationof

Barriers

Project EmissionData

Leakage DataFinancial Data

Ideal step by step approach for a PDD


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Baseline Concept

The Marrakech Accord defines the

baseline for a CDM project activityasthe scenario that reasonablyrepresents the anthropogenicemissions by sources ofgreenhouse gases that w ouldoccur in the absence of the

proposed project activity .

Baseline : refers to level or quantityof GHG emissions of an activity orsource of emission in the baselinescenario.

Baseline Scenario : defining likelyactivities / sources of GHG emissionsin the absence of a CDM projectactivity

Support : UNEP RISOE


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Before calculating baseline emissions, it is necessary to identify baselinescenarios.

A baseline (emissions) shall cover emissions from all gases, sectors and sourcecategories within the project boundary.

A baseline (scenario and emissions) shall be established:

(a) based on approved and new methodologies;

(b) transparent and conservative manner ( approaches, assumptions,methodologies, parameters, data sources, key factors and additionality, andtaking into account uncertainty)

(c) project-specific;

(d) simplified procedures : small-scale CDM project activities

(e) analyse relevant national and/or sectoral policies and

circumstances - sectoral reform initiatives, fuel details, power plans

and project economic situation

Baseline Scenario

Source : IGES CDM in Charts


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Different scenarios may be elaborated as potential situation existing before the proposed CDM

project activity :- continuation of a current activity

- implementing the proposed project activity

- others options

Baseline methodologies needs narrative description of all reasonable baseline scenarios.

For different scenarios, different elements to be taken into consideration

- take into account national / sectoral policies and circumstances, ongoing technologicalimprovements, investment barriers, etc.

- a scenario where future GHG emissions are projected to rise above current levels, due tothe specific circumstances of the host Party.

Baseline Scenario



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Three approaches :

Existing actual or historical emissions, as applicable; or

Emissions from a technology that represents an economically attractive courseof action, taking into account barriers to investment; or

Average emission of similar projects activities undertaken in the previous 5years, in similar circumstances, and whose performance is among the top 20%of their category.

The three global CDM criteria as outlined in Paragraph 5, Article 12 of the

Kyoto Protocol are:

Participation in the CDM is voluntary

Real, measurable, and long term benefits in GHG reductions

The reductions in GHG emissions from the CDM project should be additional toany that would occur in the absence of the CDM (additionality).

Baseline Approaches


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Baseline Methodology Process

Source : World Bank


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Crediting Period


CERs issued only after the date ofregistration of a CDM project activity.

Crediting period options :

- A maximum of 7 years which may berenewed at most 2 times. (BL updatedafter 7 years)

- A maximum of 10 years with no

option of renewal.

Projects since 2000 eligible to claim CERs(subject to CDM rules)


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Technology / Measures project technology / measure to reduce GHG emissions

Project Boundary - physical / geographical site (project site)

Baseline emissions (current / business as usual fossil fuel emissions) BEy

Project Emissions (emissions from use of fossil fuels) PEy

Leakage LEy

Emission Reductions ERy : BEy PEy - LEy

All units in (t CO2e/y)

Monitoring (Measure, Estimate, Calculated or Default)

Baseline Key Parameters



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Baseline Key Parameter


GHG Impact Operations CDM Input supplied by PPoperations

Boundary


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Boundary : Schematic of existing situation at steel plant.

Existing situation

CDM Activity

Baseline Key Parameter


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GWP and Emission Factors emissions




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Establishing a Baseline Methodology

Source : UNEP RISOE


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Small Scale CDM Project : Definition

Preliminary Screening

Category (Type I, II and III )

Type I : Renew able Energy ;Type II : Energy Efficiency ; Type

III : Others Installed Capacity


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Baseline & M onitoring methodology selection

Check the sectoral scope

Check the methodologies within the sectoral scope

Correlate the project details with the applicability of the respective

methodologies

Check the data availability for calculating the baseline, project emissions and

leakage

Develop emission reduction calculation template

Discuss for additionality

Conduct stakeholder meeting

Conclude PDD

Small Scale CDM Project


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Additionality

Two options:

- Option 1:

- Tools for demonstration and assessment of additionality

- Option 2:

- Barrier analysis as per the Simplified

- Modalities and Procedures for Small Scale

- CDM Project activities



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Approved Small Scale Baseline MethodologiesProject types Small-scale CDM project activity categories Number PoAs

Type I: A. Electricity generation by the user 31 1

Renewable B. Mechanical energy for the user 4 1

energy projects C. Thermal energy production with or without electricity 326 3


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Approved Baseline Methodologies

Sectors Approved Methodologies

Afforestation and Reforestation

AR-ACM1, AR-ACM2, AR-AM1,AR-AM2, AR-AM3,

AR-AM4, ARA-M5, AR-AM6, AR-AM7, AR-AM8, AR-AM9, AR-AM10

Biofuels AM47

Biomass AM7, ACM3, ACM6, AM36, AM42,AM82

Cement ACM15

CO2 Capture AM27, AM63

Energy Distribution AM45, AM58, AM67

Energy Efficiency, Households AM46, AM70, AM71

Energy Efficiency, Industry AM17,AM18,AM38,AM44,AM54,AM60,AM68Energy efficiency, own generation (ofelectricity) ACM12,AM24,AM49,AM55

Energy efficiency, Supply Side ACM7,ACM13,AM14,AM48,AM52,AM61,AM62,AM76

Energy efficiency, Service AM20

Fossil Fuel Switch ACM9, ACM11,AM29, AM50

Fugitive Emissions From Fuels AM9,AM23,AM37,AM43,AM77,AM81

HFC AM1

Landfill ACM1, AM83

N2O AM21,AM28,AM34,AM51

PFC & SF6 AM30,AM35,AM59,AM65,AM78,AM79

Transport AM31

Zero Emission Renewables ACM2, AM26,AM19,AM72


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Typical baseline emission factors for grid power - India

Emission Reductions ERy : BEy PEy - LEy (t CO2e/y)BEy = Wind power generated (MWh)* GEF (tCO2/MWh)

ERy = BEy 0 0 (t CO2e/y)


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Monitoring (Measure, Estimate, Calculated or Default)

Monitoring methodology : used for collection and archiving all relevant datarequired for measuring and monitoring of emission reductions from the projectactivity.

Use approved methodology or propose a new monitoring methodology.

Application of monitoring methodology

- List of data items to be monitored : Baseline emissions, Project emissions,Leakage , Emission reductions,

- Monitoring plan and organization / Quality assurance and quality controlmeasures



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Additional ity and CDM Project

Additionality tool developed by

CDM EB

Use of AT is not mandatory

Largely used by project

developers

Underwent several versions

CDM EB invites submission ofnew additionality arguments

Investment Analysis mostargued and controversial

Objective is to deny Business AsUsual projects, CDM benefits

Rejection rates higher due to AT

Scope sill exists to simplify andstreamline

Source : CDM EB and IGES, Japan


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Summary

A CDM project must use an approved CDM m ethodology.

- New methodology can be submitted if approved not applicable

A CDM methodology contains 2 major components :- baseline methodology (application of a baseline approach to an

individual project activity)

- monitoring methodology refers to the method for collection andarchiving of all relevant project performance data as per

monitoring plan The baseline methodology and monitoring methodology must be

used in combination

All information related to CDM m ethodologies (approved andunder approval by the CDM Executive Board are available on

UNFCCC CDM website)

Baseline Methodologies


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PDD Development : Resource documents

CDM-PDD Gu idelines (http://cdm.unfccc.int/Reference/Guidclarif/)/ http://cdm.unfccc.int/Reference/PDDs_Forms/PDDs/

CDM-Small Scale Methodologies (Simplified Modalities & Procedures)http://cdm.unfccc.int/methodologies/SSCmethodologies/approved.html and

http://cdm.unfccc.int/Projects/pac/ssclistmeth.pdf

Tools for assessment and demonst ration of additionality(http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf)and http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-02-v2.2.pdf

Approved Methodologies and Consolidated Methodologies w ith Deviationsand Revisions

(http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html) New methodologies under consideration by METH Panel and CDM EB

(http://cdm.unfccc.int/methodologies/PAmethodologies/publicview.html)

Main reference website : http://cdm.unfccc.int


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CDM Useful Websites

http://www.cd4cdm.org

http://www.iges.or.jp/en/index.html

http://www.cdmrulebook.org


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Thank you !


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Additionality Tool Simplified M&P

Investment Barrier Investment Barrier

Similar activities have only beenimplemented with grants or other non-commercial financial terms

A financially more viable

alternative to the project

activity would have led to

higher emissions

No private capital is available fromdomestic or international capital marketsdue to real or perceived risks associatedwith investment in the country where theproposed CDM project activity is to beimplemented.

-

Option 1 Vs Option 2



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Technological Barrier Technological Barrier

Skilled and/or properly trained

labour to operate and maintain the

technology is not available, which

leads to an unacceptably high risk of

equipment disrepair and

malfunctioning or other

Underperformance

A less technologically advanced

alternative to the project activity

involves lower risks due to the

performance uncertainty or low

market share of the new technology

adopted for the project activity and

so would have led to higher

Emissions

Lack of infrastructure for implementation andlogistics for maintenance of the technology

-

Risk of technological failure -

Technology is not available in the

relevant region

-



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Barrier due to preva iling pract ice Barrier due to prevailing prac ti ce

The project activity is the first of itskind

Prevailing practice or existing regulatory

or policy requirements would have led

to implementation of a technology with

higher emissions



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Addit ionality Tool Simplified M&P

Other barriers Other barriers

Methodology specific Without the project activity, for another

specific reason identified by the project

participant, such as institutional barriers

or limited information, managerial

resources, organizational capacity,

financial resources, or capacity to absorb

new technologies, emissions would havebeen higher


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