Understanding CDM Methodologies - SuSanA

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3. Additionality rules determined by EB EB drives Additionality Rules Barrier Test for Small- Scale Projects – Investment Barrier, Technological Barrier, Prevailing Practice Barrier Consolidated Additionality Tool Steps of Additionality Tool 3.1 Additionality tools Regarding additionality determination, the EB has been driving the rules, as COP/MOP has never been able to agree on a technical definition of additionality with the exception of the rules for small-scale projects. While COP/MOP has repeatedly stressed that the additionality rules defined by the EB are not mandatory, it did not cancel the rules specified by the EB. For small scale projects, additionality testing has been defined by EB 7 in January 2003 153 . Its aim is an explanation to show that the project activity would not have occurred anyway and enumerates four types of barriers used to prove additionality – investment barrier, technological barrier, barrier due to prevailing practice and other barriers. Investment barriers are defined as availability of a financially more viable alternative that would have led to higher emissions. The technological barrier requires existence of a less technologically advanced alternative that involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions. The prevailing practice barrier says that prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions. Other barriers include institutional barriers or limited information, managerial resources, organizational capacity, financial resources, or capacity to absorb new technologies Project participants have to demonstrate to a validator that the project activity would otherwise not be implemented due to the existence of one or more barriers listed. A short explanation of each barrier is provided. Subsequently, the EB decided that a baseline methodology has to demonstrate that a project activity is additional and therefore not the baseline scenario 154 . It added later that this could be done through a flowchart, a series of questions, a qualitative/ quantitative assessment of different potential options describing why the non-project option is more likely, a qualitative/quantitative assessment of one or more barriers facing the proposed project and proof that the project type is not common practice in the proposed area of implementation, and not required by recent/pending legislation/regulations 155 . As these options were seen as too broad, a consolidated additionality tool was agreed as a general framework for additionality testing, but with a voluntary character 156 . It contained a series of steps (see Figure 3): 0. (only applicable to early start projects): Evidence that the incentive from the CDM was seriously considered in the decision to proceed with the project 1. Identification of alternatives to the project 2. Investment analysis, with the aim to determine that the project is not the most economically or financially attractive, or 153 EB 7, attachment A to Annex 6, later confirmed by decision 4/CMP.1 154 EB 8, Annex 1 155 EB 10, Annex 1 156 EB 16, Annex 1 24
3. Barrier analysis, with the aim to check the existence of prohibitive barriers 4. Common practice analysis 5. Impact of CDM registration. Subsequently, the EB clarified that this step could be applied qualitatively 157 . The consolidated tool was revised in November 2005, which defined that step 0 would even be fulfilled if the project only could state the objective to mitigate climate change. In the second revision of the tool in February 2007 158 , step 0 and 5 were removed. Barriers that could be assessed under step 4 were described more clearly (see Box 6). Examples of Barriers Validators have to document the Additionality Check in Validation Report Serious Consideration of CDM Alternatives to Project Box 6: Examples of barriers that prevent project implementation • Similar activities have only been implemented with grants or other noncommercial finance terms • No private capital is available from domestic or international capital markets • Process/technology failure risk in the local circumstances is significantly greater than for other technologies It was also stated that if the CDM does not alleviate the identified barriers that prevent the project, the project is not additional. Moreover, it was added that DOEs should carefully assess and verify the reliability and creditability of all data, rationales, assumptions, justifications and documentation provided by project participants and document conclusions transparently in the validation report (see also discussion about validation and verification standard in section 2.2.3). Figure 3: Steps in the consolidated additionality tool and changes over time Early start projects only Serious consideration of CDM Investment or Barrier Analysis All projects Identification of alternatives to the project Investment analysis Barrier analysis Common Practice Analysis Common practice analysis Impact of CDM registration 157 EB 17, para 17 158 EB 29, Annex 5 25
Page 1 and 2: Understanding CDM Methodologies A g
Page 3: Introduction The success of the Cle
Page 7 and 8: 1. Introduction Climate Change is a
Page 9 and 10: Aim of Guidebook This guidebook wil
Page 11 and 12: Special Status of the Marrakech Acc
Page 13 and 14: Small Scale Thresholds over Time Cr
Page 15 and 16: Transparency, Conservativeness, Con
Page 17 and 18: Role of DOEs - Absence of Accredita
Page 19 and 20: Figure 2: The CDM project cycle CER
Page 21 and 22: EB Decision Making and the Role of
Page 23 and 24: While COP/MOP has provided that Lar
Page 25: Verification Regarding verification
Page 29 and 30: Rejections due to Lack of Additiona
Page 31 and 32: 4. Methodologies Methodology Case L
Page 33 and 34: Figure 9: Fuel switch family tree M
Page 35 and 36: Interpretation of top 20% in Approa
Page 37 and 38: 4.1.4 Leakage Unclear Definition of
Page 39 and 40: Top-down Methodology Development fo
Page 41 and 42: Table 4: Methodology revisions 2005
Page 43 and 44: 5. Key elements and application of
Page 45 and 46: Two Methodologies added Nitric Acid
Page 47 and 48: Methodological Concept Power Genera
Page 49 and 50: Box 13: Exclusion of immaterial par
Page 51 and 52: Build Margin Build Margin: newest P
Page 53 and 54: Box 16: OM/ BM calculation where th
Page 55 and 56: Project Emissions With the exceptio
Page 57 and 58: Applicability Conditions Grid has t
Page 59 and 60: Leakage Leakage: Transfer of Equipm
Page 61 and 62: Box 20: Sufficient natural gas supp
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Page 65 and 66: Industrial Gas Methodologies 5.3 De
Page 67 and 68: No Additionality Problem Another co
Page 69 and 70: In a second step, it is tested whet
Page 71 and 72: Determination of the Emission Facto
Page 73 and 74: Baseline scenario and additionality
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5.4.2 Basic concept Emissions Reduc
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Default Cogen Plant Efficiency 90%
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5.4.4 AMS-II.D Project Description
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5.4.5 AM0046 This methodology warra
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• Information on any changes made
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Displacement of Natural Gas in Pipe
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Landfill gas capture and flaring ac
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Ex post: The main parameters that n
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Box 31: Deviation of monitoring met
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Box 32: Measurement of the flare ef
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Expanding of Applicability Conditio
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Seven-Step Procedure for Measuremen
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Project boundary Transport of Waste
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Biomass Leakage: Proving that there
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5.6 .3 ACM0008 Description of the c
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• Methane used for electricity an
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Applicability conditions Definition
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or retrofit. This baseline holds fo
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• For biomass-fired projects, a s
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A handful of projects have submitte
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Submission of further Baseline Scen
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Heat only Projects Baseline Scenari
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• Quantity of steam diverted from
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