Portfolio analysis of standardized approaches under the CDM

As explained in the section on technical dimensions, standardized baselines are most frequently mentioned although the standardization agenda is more encompassing. An important distinction is between a standardized baseline, and a standardized methodol-ogy, in which a broader set of technical elements is standardized. In addition, the most recent procedure formally distinguishes between top-down and bottom-up standardiza-tion (UNFCCC 2013a). First, examples for standardized methodologies and their relev-ance for sectoral approaches will be introduced, followed by an assessment of currently available portfolio of bottom-up sector-specific SBs.

Top-down standardization

This aspect of standardization concerns mainly streamlining of existing methodologies, as well as development of new methodologies for desired sectors and contexts. As per the mandate of the CDM these efforts have mainly focused on small-scale interventions that are applicable to LDCs. A key advantage is that they are globally applicable, which is more efficient in terms of transaction costs. However, a challenge is that sometimes de-fault values are overly conservative (although there are also examples of loose

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sions that result in weak integrity). Table 2 uses rural electrification as an example of a sector in which most methodological progress has been made.

Table 2: Selected standardized CDM methodologies for rural electrification CDM

Methodology Degree of

standardisa-tion Eligibility conditions

Country-specific standardisation potential

Number of Projects / PoAs AMS-I.L.

Electrifica-tion of rural communities using renew-able energy

Default baseline emis-sion factors of 6,8 – 1,3 – 1,0 tCO2e/MWh for different catego-ries of end-users (e.g.

households) for off grid or mini-grid

75% of end-users shall be households End-users are not electrified, supplied with efficient light-ing,

Equipment meets quality standards

Default factors considering suppressed de-mand

Country-specific end-user

weighting

0/1

AMS-III.BB Electrifica-tion of com-munities through grid extension or construction of new mini-grids

Baseline emissions are the sum of emis-sions associated with new and existing con-sumers.

Same default values as in AMS-I.L.

Limited to communi-ties with no access to a national or re-gional grid

At least 75% of the end-users (by num-ber) shall be house-holds.

Default factors considering suppressed de-mand

Project emis-sions and lea-kage

0/1

AMS-III.AR Substituting fossil fuel based light-ing with LED/CFL lighting sys-tems

Default values for baselines emissions (lamp emission factor, fuel use rate, utiliza-tion rate, annual utili-zation, fuel emissions factor), resulting in emission reductions per lamp of

0,092tCO2/lamp).

Crediting period dependent on perfor-mance standards

Lamp life must be certified by manufac-turer

(5,000/10,000h), which affects credit-ing period (2 or 7 years)

Max. 5 lamps per household

Higher level of suppressed de-mand, minimum service level, fuel emissions factor.

1/13

AM0103 Renewable energy power generation in isolated gr-ids

Emission factor of the isolated grid

(t CO2/MWh), based on the composition of the isolated grid, if data are available

Use of one of the following sources:

hydro, wind, geo-thermal, solar, wave or tidal power.

Specific conditions for hydro power apply.

Limited 0/0

Source: own illustration

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In part this standardization has happened because there is a lot of experience and data in the energy sector, but also because such project types with high sustainable develop-ment impacts which are applicable especially in LDCs fit well with the political priori-ties of the standardization reform programme. It can clearly be seen in Table 2 that the methodologies that are applicable to rural electrification in a narrower sense have not been implemented at scale yet. Still, they are a particularly noteworthy element of the CDM toolkit, as there has been a lot of recent progress on a methodological level, e.g. by introducing default values that eliminate the critical barrier of lack of data availability.

In addition, the concept of suppressed demand is gradually being introduced, with quan-tified estimates of minimum service levels, e.g. for household electricity consumption, which are then translated into baseline default values. Concepts such as suppressed demand are often absent from the discussion on sectoral mechanisms, which tend to focus on more advanced developing countries. Yet, even in China and India, there are still vast regions and populations to whom these concepts are relevant. The review of the historical debate and the political drivers for introducing both PoAs and SBs indicate that such demands will be raised also for new mechanisms. The increasingly compre-hensive operationalization of these concepts e.g. in SBs is therefore potentially relevant both for the CDM as well as for new market mechanisms. Beyond rural electrification, top-down development of new methodologies and standardization of existing ones is a key aspect of the EB work programme in the coming years.

Bottom up standardized baselines

Standardization allows countries to develop sector-specific standardized baselines, which aim at taking into account specific country circumstances. Due to the prominent political mandate for standardization, a relatively elaborate regulatory framework has been emerging over the last two years, to operationalize the bottom-up development of country-specific, consistings mainly of the following documents, as well as a number of related forms and standards:

Table 3: Procedures and Guidance for sector-specific standardized baselines

SB-specific CDM EB proce-dures and guidance doc-uments

▸ Procedure: Development, revision, clarification and update of standar-dized baselines. Version 03.0 (EB 75, Annex 33)*

▸ Guidelines for Quality Assurance and Quality Control of Data used in the Establishment of Standardized Baselines. Version 01.0. (EB 66, Annex 49)

▸ Guidelines for the Establishment of Sector Specific Standardized Base-lines. Version 02.0. (EB 65, Annex 23)

▸ Establishment of standardized baselines for afforestation and refore-station project activities under the CDM Version 01.0 (EB 70, Annex 10) Further

rele-vant CDM EB procedures and guidance which contribute to standardization

▸ Guidelines for determining baselines for measures. Version 1.0 (EB 69, Annex 21)

▸ Guidelines on the demonstration of additionality of small-scale project activities. Version 09.0. (EB 68, Annex 27)

▸ Guidelines on the consideration of suppressed demand in CDM Metho-dologies. Version 02.0. (EB 68, Annex 2)

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▸ Development, revision and clarification of baseline and monitoring methodologies and methodological tools (EB 70, Annex 36)

Source: Own illustration, based on CDM website

However, the applicability of these procedures has only been tested scarcely, as there are not too many practical examples so far. Table 4 lists all approved and proposed SBs that are available have been approved by or proposed to the CDM EB.

Table 4: Approved and proposed sector-specific standardized baselines

Refe-rence Sector Title Submitted by

(applicable count-ries)

Submi tted

Approval Da-te/Status Approved Standardized Baselines

ASB-0001 Power Sector

Grid emission factor for the Southern African Power pool

Botswana (Demo-cratic Republic of the Congo (DRC);

Lesotho; Mozam-bique; Namibia;

South Africa;

Swaziland; Zam-bia; Zimbabwe)

21 Aug 2012

31 May 2013

ASB-0002

Charcoal production for consump-tion in households and SMEs

Fuel switch, tech-nology switch and methane destruc-tion in the charcoal sector of Uganda

Uganda

16 May 2012

31 May 2013

ASB-0003 Power Sector

Grid emission factor for the Republic of Uzbekistan

Uzbekistan 31 Jan

2013 7 Oct 2013 Proposed Standardized Baselines

PSB-0002 Cement

Standardized base-lines for clinker production in Ethi-opia

Ethiopia 24 Jul

2012

Initial assessment

PSB-0004

Rice mill sector

Standardized base-line of energy use in rice mill sector of Cambodia

Cambodia

27 Sep 2012

Initial assessment successfully concluded

PSB-0006 Power Sector Grid emission factor

of Belize Belize

23 May 2013

Initial assessment successfully concluded Source: Own illustration, based on CDM website

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It is clear that the SB portfolio has mainly focused on sectors which have already been taken up quite comprehensively under the CDM, such as energy and cement. Other sec-tors with less CDM experience have not yet begun to develop SBs. Therefore, at least in the initial phase, SBs can be seen as a consolidation of existing experience. Other sec-tors such as transport, agriculture or forestry have not yet been taken up, although spe-cific guidelines for such SBs are anticipated or already under development. The first sector-specific guidance has been published for SBs for afforestation and reforestation (CDM EB 70, Annex 10).

In terms of geographical scope, it is clear that SBs are mainly developed in so-called un-der-represented countries such as LDCs, which is in line with the political guidance by the CMP. To which extent the concept can be integrated into NMMs, where the discus-sion focuses on higher-income countries, still needs to be seen in practice, although the available guidelines are fully applicable to all sectors in all potential host countries.

Some of these sectors with relevance for the economies of more advanced developing countries have been explored on a conceptual basis (see chapter 2.1).

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