Piloting standardised CDM
methodologies in LDCs
Sarah Love, Economic Advisor
Climate and Environment Department, DFID
24 March 2010
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Outline
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What are standardised approaches?
Benefits of standardisation
Overcoming challenges
DFID pilot project
– Aims and objectives
– Progress so far
What are standardised approaches?
• A means of improving the efficiency and objectivity of the CDM approval
process
• Not a new concept – standardised elements are permitted in the CDM
and form part of several meths – but are only used to a limited extent
Increasingly standardised
Project specific
baseline &
project specific
additionality
test
Technology
penetration rates
Grid emission
factors
Industry-wide
performance standards
Standardised
additionality test
• Scope for greater use of standardisation, including for additionality test
• The greater the use of standardisation, the greater the potential benefits
but the greater the challenges
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What are standardised approaches?
An example: performance standards
a. CDM (most current projects)
Emissions
Baseline determined on
a project-by-project
basis
BAU =
baseline
credits
b. CDM (standardised approach)
Emissions per
unit output
Credits issued against a
performance standard
Actual
emissions
Time
Performance
standard
credits
Actual
emissions
Time
Under both approaches, credits are issued after emissions reductions have
been verified and are sold to carbon markets by the project developer
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What are standardised approaches?
Benefits of standardisation
Standardised approaches can help improve:
• Efficiency: Lower costs, complexity and
uncertainty for project developers
• Environmental effectiveness: Consistent
additionality test
• Equity: Improve geographical distribution by
reducing costs and complexity and potentially
making smaller-scale projects more attractive
→
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Could also help build capacity for new market
mechanisms
Benefits of standardisation
Overcoming challenges
• Standardised approaches are not a “quick fix”
• There are challenges in terms of data requirements, particularly in LDCs
 Likely to be greater upfront costs in meth development
• Need to decide on many parameters e.g. level of aggregation etc.
• Setting the standard at the ‘right’ level will need expert judgement =>
need strong regulatory oversight to maintain environmental integrity
• CDM decision in Cancun gives a broad range of
organisations a mandate to
develop standardised methodologies,
prioritising underrepresented countries
 Gives encouragement for those interested in
testing the concept…
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Overcoming challenges
DFID pilot programme
In December 2010 DFID launched a project to develop and pilot standardised
methodologies for project types particularly suitable for LICs
Objectives:
1. to develop three new standardised CDM methodologies in sectors with
high relevance to LDCs
2. To work with DNAs and local institutions to adapt/apply each
methodology in three developing countries
• Project team: consortium of Perspectives, Poyry, South Pole, GERES
• Group of expert peer reviewers to assist Steering Group
• Project is expected to complete in June 2011 with the submission of three
methodologies to the Meth Panel
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DFID pilot programme
Progress so far…
• First phase involved short-listing project types and countries
• The following project types were selected following discussion with
Steering Group and Expert Panel:
3 project types selected:
…to each apply in 3 developing countries:
• Charcoal
Cambodia, Zambia, Mali
• Water purification
Zambia, Benin, Laos
• Rural electrification
Cambodia, Tanzania, Benin
• Countries were selected on the basis of DNA interest in participating and
project team capacity on the ground
• Team are presenting initial findings at DNA Meeting in Bonn (10/11th April)
• Draft methodologies due mid April
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DFID pilot programme
Questions for discussion
• Do you agree that greater standardisation could be of benefit to
LDCs?
• Are you aware of others doing work in this area?
• Do you have ideas for next steps?
 Systematic revision of existing
methodologies?
 Targeting particular project types?
 Focus on more ‘challenging’ project
types e.g. transport/building
efficiency?
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