ww.neprisoe.org CDM Methodologies Carbon Markets – CDM project development 8. August 2011 Jørgen Fenhann

ww.neprisoe.org COP/MOP EB Meth Panel SSC WG A/R WG It is the Meth Panel and the Small-Scale Working Group (SSC WG) that will evaluate your methodology proposal.

ww.neprisoe.org How long time does it take to get a new methodology approved?

ww.neprisoe.org Project developers have submitted 344 new methodologies (NM’s) to the Executive Board. Now the number of active approved methodologies are 181: 73 large-scale approved methodologies exist (AM’s) 17 large-scale consolidated methodologies exist (ACM’s) 71 small-scale approved methodologies exist (AMS’s) 11 large-scale afforestation methodologies exist (AR-AM) 2 large-scale consolidated methodologies exist (AR-ACM) 7 small-scale afforestation methodologies exist (AR-AMS) How many approved CDM methodologies exist?

ww.neprisoe.org 31% of the methodologies are never used!!, and 36% only 1-5 times

ww.neprisoe.org Content of an approved methodology Source, Approach Applicability Summary Identification of baseline scenario Additionality Project boundary Emission reduction formulas Leakage Monitoring methodology

ww.neprisoe.org Tool for the demonstration and assessment of additionality Combined tool to identify the baseline scenario and demonstrate additionality. Tool to calculate project or leakage CO2 emissions from fossil fuel combustion. Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site. Tool to calculate baseline, project and or leakage emissions from electricity consumption. Tool to determine project emissions from flaring gases containing methane. Tool to calculate the emission factor for an electricity system. Tool to determine the mass flow of a greenhouse gas in a gaseous stream. Tool to determine the baseline efficiency of a thermal of electric energy generation systems. Tool to determine the remaining lifetime of equipment Methodological tools (Lego system)

Additionality “The project activity is expected to result in a reduction in anthropogenic emissions by sources of greenhouse gases that are additional to any that would occur in the absence of the proposed project activity”. More than half of the 199 rejected CDM projects were rejected because of lack of additionality

Additionality tool:

Additionality for Small-Scale projects Show that the project would not have occured without CDM due to: Investment barrier Technological barriers Barrier due to prevailing practice Other barriers: Institutional, information, managerial, organizational capacity, financial, or capacity to absorb new technologies

Leakage “Leakage is defined as the net change in anthropogenic emissions by sources of greenhouse gases which occurs outside the project boundary, and which are measurable and attributable to the CDM project activity.” Example: A rice husk plant uses up the rice husk so that another rice husk plant has to switch to fossil fuel.

Project boundary “The project boundary shall encompass all anthropogenic emissions and/or removals of GHGs under the control of the project participants that are significant and reasonably attributable to the project.” What is does Materiality mean?

Emission factor for grid electricity: Operating Margin Operating margin (OM): Project affects the operation of current and/or future power plants Example approach: Weighted average emissions (in kg CO 2e /kWh) of all generating sources supplying electricity to the system (excluding low-cost/must-run sources (renewables, hydro)).

Emission factor for grid electricity: Build Margin Build margin (BM): Project replaces a facility that would have otherwise been built. Example approach: Weighted average emissions (in kg CO 2e /kWh) of recent capacity additions: Identify the five most recent installations in the system (according to date of commissioning).

Emission factor for grid electricity: Combined Margin If the total generation (MWh) of the recent five additions is less than 20% of the total system generation, then include more units until the total generation by the new generating units is at least 20% of the total system generation. Combined margin (CM): Average of OM and BM. New: For wind and solar projects the default weights are OM: 0.75 and BM: 0.25, owing to their non-dispatchable nature.

There are 6 types of small scale projects Type I: Renewable energy < 15 MW Type II: Energy efficiency < 60 GWh Type III. other types GHG reduction < 60 ktCO2/year For afforestation/reforestation projects: they must have a GHG reduction < 8 ktCO2/year and must be made in low- income communities. EB54 Annex 15 Guideline on no additionality test for Super-small-scale projects in LDCs/SIDs or in a special underdeveloped zone of the host country identified by the host country Government before 28 May 2010 for project: < 5 MW or < 20 GWh

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