CDM baseline standardization – key policy questions Axel Michaelowa Center for Comparative and International Studies (CIS), University of Zurich and ETH Zurich; Perspectives [email protected] , [email protected] Joint Workshop, Bonn, March 13, 2011
Mar 27, 2015
CDM baseline standardization
– key policy questions
Axel Michaelowa
Center for Comparative and International Studies (CIS), University of Zurich and ETH Zurich; Perspectives
[email protected], [email protected]
Joint Workshop, Bonn, March 13, 2011
Harnessing emissions reduction potential
Source: IPCC (2007)Potential 2030, bottom-up studies
CDM
CDM
CDM
CDM
CDM
CDM
CDM
Preventing emissions take-off
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
0 2 4 6 8 10
China
Korea
Singapore
Malaysia
Hong Kong
Ireland
Israel
Portugal
Spain
t CO2/capita
HDI
Critical
level
of HDI
Source: Michaelowa and Michaelowa (2009)
What can be standardized?
• Use of pre-defined values / parameters applicable to many projects at once
• Baseline setting• Additionality determination• Criteria, emission factors, calculation methods,
equations, models feeding into baseline methodologies
• Across project types• E.g. all electricity related projects
• Within individual project types• E.g. benchmark for N2O from adipic acid
Why standardization?
• Administrative improvements to the CDM:• Increased efficiency of registration process • Greater objectivity, consistency and predictability• Reduced transaction costs• Increased project flow
• Broader systemic improvements:• Guaranteeing and improving environmental
integrity• Improved distribution across host countries and
project types
•Trade-offs between these goals??• Careful implementation and regulatory oversight !
Potential risks
• Subjectivity is not really eliminated, but shifted from project registration process to the baseline setting stage
• One off decision, difficult to reverse• Gaming with standard setting can lock in too
lenient baselines / non-conservative parameters
• High costs for public administrations, especially if frequent updating• Aggregation level is crucial
• Too high: risk for environmental integrity, and of reaching all mitigation potential
• Too low: data confidentiality issues
Types of standards
• Emissions intensity benchmarks (add. /bl.)• X t CO2 / amount of product or service• Homogeneous products, large number of entities,
normal performance distribution
• Technology / practice standards (add./bl.)• Average of top X % performance• Reference technology that is common practice• Project technology that is highly innovative
• Market penetration rates (add.)• X percentage of installed capacity • Economies of scale and learning are important
• Model (add/bl)
Types of standards II
• Deemed savings defaults (emission reduction)• X t CO2 reduced per installation and year• Requires good understanding of usage patterns
• Utilization defaults (add.)• X % plant load factor / x hours average daily use• Limited variability of parameters influencing plant
load factor
• Positive lists (add.)• Technology• Applicable if no other revenues than CERs or if
technology clearly faces a cost gap to alternative technologies providing the same service
Key issues for benchmarks
Type of benchmark
e.g tCO2 / t output
Aggregation level
Process?
Product or service?
Vintage?
Geographic area?
Stringency level
Updating frequency
Average?
Best 20%?
Best used?
Best available?
Fixed improvement
factor?
According to data?
Decision on stringency
Emission intensity (tCO2 / t output)
Additionality benchmark
A
Baseline benchmark
BC
CERs
D
Plants
Greenfield vs brownfield
Vintages count!
Technology shifts
Benchmark development
Development of the benchmarking approach
(2) Identification of key performance indicator
(3) Selection of peers for comparison (Choice on the aggregation level)
(1) Definition of the system boundary
Initial feasibility study for the CDM benchmarking: How large is the expected emission reduction potential for a benchmarking-based
CDM? What is the level of complexity expected? Which efforts are needed regarding the data collection?
Decision on whether to develop a benchmarking based CDM for the sector/product
Choice of MRV procedures
Data collection (Monitoring, Reporting,
Verification)
Data collection
Benchmark development II
Selection of the stringency level
(2) Evaluation of the impact
(3) Decision on stringency levels
(1) Preliminary choice on stringency level
Approval of the CDM benchmarking:
Approval of benchmarking approach
Approval of the data adequacy
Approval of selected stringency level
Policy questions
• Which sectors and project types should be prioritized for standardization?
• Highly homogeneous, large-scale industries?• Small, dispersed emissions sources?
• How stringent should standardized approaches be to guarantee a sufficiently high environmental integrity?
• More stringent than project-based approaches?• Role of experts?
• What lessons can be drawn from existing use of standardization in offset programmes?
• US programmes (CAR, RGGI, CCX)
Policy questions
• Who should administer and develop standardized methodologies?
• CDM EB?• Project developers?• Should there be a Baseline Standard rulebook?
• How can we prioritize countries and regions?• Underrepresented regions?• Regions with highest potential?
• How can DNAs be enabled to decide whether to apply standardized baselines?
• Capacity building required• Can distortions be prevented?