Public inputs on the
baseline standard
Axel Michaelowa
UNFCCC Practitioners Workshop
“Standards for baseline scenario identification and baseline emissions
calculation”
Bonn, March 4, 2011
www.perspectives.cc ·michaelowa@perspectives.cc
© 2009 Perspectives GmbH
Overview of submitters
Ref.
Submitter
Affiliation
Country
1
Jiwan Acharya
Asian Development Bank
Multinational organization
2
Ambachew F.Admassie
Ethan Bio-Fuels Ltd.
Ethiopia
3
Werner Betzenbichler
DOEs and Independent Entities
Association
Multinational organization
4
Bruce Brook
Lihir Gold Limited
Australia
5
Ana Carnal
Zero Emissions Technologies
Spain
6
Henry Derwent
IETA
Multinational organization
7
Stephan Hoch
Albert-Ludwigs-Universität Freiburg
Germany
8
Dessalegne Messfin
DNA Ethiopia
Ethiopia
9
Klaus Oppermann
World Bank
Multinational organization
10
Gareth Philips
Project Developer Forum
Multinational organization
11
Karun Hriday Sharma
Green Positive Consultants
India
www.perspectives.cc · michaelowa@perspectives.cc
Overview of comments
• Comments are rather critical, with most
commentators opposing the tools in their current
form
• Comments relate to
• Purpose of tools
• Structure of tools
•Some comments are off scope
• Default grid emissions factor for grids in LDCs /
below certain per capita energy supply
• CDM EB accountability for rule inconsistencies
www.perspectives.cc · michaelowa@perspectives.cc
Purpose of tools
• So far, tools treated specific aspects of
methodologies
• New tools want to generalize the baseline
section of all baseline methodologies.
• Are tools mandatory or optional?
• Most commentators prefer the latter
• Project developers could use own approach, if it is
more accurate
• Are the tools applied as package or can one pick
and choose?
www.perspectives.cc · michaelowa@perspectives.cc
Purpose of tools
• Are the tools independent methodologies or do
they serve as guidance on meth development?
• Commentators prefer the latter
• Approved methodologies override tools as per the
hierarchy of decisions and the tools thus could just
be seen as guidance
• Well-established guidance could be superseded
• All existing methodologies would have to be revised
• Generally, comments stress inconsistencies between
existing methodologies / guidance documents and
the tools
www.perspectives.cc · michaelowa@perspectives.cc
Structure of tools
• Very (“incredibly”) complex
• Fear that transaction costs of project developers
increase instead of decreasing
• Hurdle to recruit qualified auditors for DOEs
• Improve language and presentation
• Flow diagrams
• Annexes
• New terminology not always necessary
www.perspectives.cc · michaelowa@perspectives.cc
Tool for
baseline identification
• Tool addresses definition of project alternatives
and treatment of suppressed demand
• Introduces concept of five “Methodological
Approaches for Baseline Setting” (MABS)
• Commentators want to limit new terminology or
at least get an unambiguous definition
•General feeling that MABS 1 and 2 cannot be
separated for all project types
www.perspectives.cc · michaelowa@perspectives.cc
Tool for
baseline identification II
• Treatment of suppressed demand is generally
seen as too conservative
• delivery of goods supply to cover previously
suppressed demand should not be treated as
capacity expansion
• assumption that historical consumption will first be
displaced by other activities is problematic
• Commentators have difficulty with the
requirement to prove that developers would /
would not invest in an alternative
www.perspectives.cc · michaelowa@perspectives.cc
Tool for
baseline calculation
• Tool specifies approaches for benchmark setting
• Commentators call for
• better guidance on how to choose between
historical/actual emissions and the
benchmark
• coverage of greenfield plants
• special treatment of LDCs
www.perspectives.cc · michaelowa@perspectives.cc
Tool for
baseline calculation
• Commentators call for substantiation of
• choice of the number of 10 facilities for the
definition of the relevant area
• global level for the industrial gas benchmark
• differentiation of stringency level of benchmarks
across MABS
• Continuation of suppressed demand should be
covered
• Term “benchmark” needs to be defined
www.perspectives.cc · michaelowa@perspectives.cc
Tool for determination
of most attractive alternative
• Defines alternative scenarios to the CDM
projects, for which a barrier and then an
investment analysis is done
• Some commentators do not see a need for this
tool, as additionality tool is available
• Terminology problems
• Project ”under way“
•Criteria for area expansion if less that 10
comparable facilities are available
www.perspectives.cc · michaelowa@perspectives.cc
Tool for determination
of most attractive alternative
• Restriction of barrier analysis to those barriers
really relevant for the project
• One comment heavily opposes investment
analysis for all relevant alternatives due to
excessive cost for project developers
• compare the most profitable ways of increasing
production
• country or regional-level studies on marginal
production cost increase provided by the EB in a topdown fashion
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools
• Tool for baseline identification: include series of
flowcharts explaining
• Choice of MABS
• Treatment of suppressed demand
• Concept of MABS
• MABS 1: Use of baseline instead of project efficiency
might be appropriate in some cases
• MABS 2: Delete option without initial investment, or
engage in a discussion whether behavioural changes
should be included in the CDM
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools II
• Concept of MABS (contd.)
• MABS 1: Use of baseline instead of project efficiency
might be appropriate in some cases
• MABS 2: Delete option without initial investment, or
engage in a discussion whether behavioural changes
should be included in the CDM
• MABS 2 vs MABS 5: could overlap as energy efficiency
improvement inevitably leads to a reduction of the
emissions intensity of an output
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools III
• Concept of MABS (contd.)
• MABS 3 should not exclude new industrial facilities;
they could be covered by a benchmark stringent
enough to prevent perverse incentives
• GHG use avoidance related to cover gas alternatives
does structurally not fit into MABS 3, it would better
fit into MABS 4, as the cover gas avoided will not be
produced. MABS 3 also generally caps the CER
production level without assessing the incentives for
production increases
• Gas flaring reduction should belong to MABS 5
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools IV
• Concept of MABS (contd.)
• Gas pipeline leak reduction is not covered by any
MABS
• Mobile sources should not be excluded, as they can be
covered by MABS 1 and 2
• Disaggregation of projects into components can
be cumbersome; combinations of MABS might be
necessary
• Explain why combination of MABS 1 and 2 is not
allowed for greenfield plants
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools V
• Clarify why it is required to check whether
project developers would invest in the absence of
the CDM project
• Change sequence of paras 17-22, clarify that para 20
only applies to greenfield projects
• Make clear that this check is required to prevent
exclusion of all fossil power plant projects (AM 0029,
ACM 0013) that would otherwise have to apply a
benchmark under MABS 5 that they could not beat
• Discuss openly about suppressed demand
www.perspectives.cc · michaelowa@perspectives.cc
Options to
improve the tools VI
• Tool for baseline emissions calculation
• All equations that determine baseline fuel or energy
use contain a multiplicative term dividing project by
baseline efficiency. It only makes sense if the project
technology is less efficient than the baseline
technology
• Consider spatial instead of administrative geographic
delineation of markets
• Benchmark stringency should differentiated according
to common practice in host country and technoeconomical optimum of each project type
www.perspectives.cc · michaelowa@perspectives.cc
Summary
• Tools are a commendable attempt to increase the
consistency of baseline setting
• Stakeholders: need for substantial revisions
• Optional character of the tools preferred
• Key challenges relating to the tools
• disaggregation of projects into components,
• evaluation whether a project developer will invest in
the absence of the CDM project
• coverage of suppressed demand
• stringency of benchmarks
www.perspectives.cc · michaelowa@perspectives.cc