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The Clean Development Mechanism (CDM):
Transportation Sector Opportunities
John Drexhage
Director, Climate Change and Energy
International Institute for Sustainable Development
January 15, 2003
In partnership with the Center for Clean Air Policy
Introduction to the CDM

One of 3 flexibility mechanisms of the Kyoto
Protocol
 Current status of CDM :
– Trades can happen now (after 2000)
– Marrakech Accords set rules for verification,
certification, baselines*
 Incentives for participation: Certified Emission
Credits (CERs)
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Introduction to the CDM
Project Cycle:
1.
2.
3.
4.
5.
6.
Preparation of the project design document (PDD)
 Key Aspects: baseline, project emission
reduction estimates, monitoring plan
Approval by designated national authorities
Validation
Registration
Monitoring and Verification
Certification and Issuance of CERs
(*CERs are calculated based on the difference between project and
baseline emissions)
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Introduction to the CDM
Baseline:

Is the scenario that reasonably represents GHG
emissions by sources that would occur in the
absence of the proposed project activity. It includes
all BAU activities and are calculated based on 1 of 3
approaches
Additionality:

A CDM project is additional if anthropogenic emissions
of GHGs by sources are reduced below those that would
have occurred in the absence of the registered project
activity
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The CDM and Transportation
Potential Projects:
Technology & Travel Demand/Behavioral Change


No explicit rule preventing new government policies (e.g., tax credits,
subsidies) from qualifying as CDM projects. Be careful of strong
policy “on paper” with limited implementation potential
Fixed technologies (e.g., hybrid buses) or infrastructure (e.g., metro
expansion, segregated busways, land use, pedestrian or bicycle) may
be higher “carbon” quality than policies and incentives that could
change over time
Scale of Project

Practicality of aggregating many small emitters
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The CDM and Transportation
Implementation issues
 Costs
–
–
No transportation project is done for GHG
reductions alone…without accounting for full
project benefits incremental costs may appear
high
Incremental Costs and Full Benefits Assessment

How to allocate costs across project benefits? (GHG, air
quality, economic development, etc.)
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The CDM and Transportation
Continued…
 Project Timeframe
– For how long should the baseline be valid?
– CDM offers a choice between 7 yr crediting period with
potential for renewal, OR, 10 yr period without renewal

Project Boundaries
– Which gases? (e.g. CO2, N2O, CH4, CFCs)
– Lifecycle versus direct emissions? (e.g. methane leaks
upstream, biofuel carbon sequestration upstream)
– Leakage?
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The CDM and Transportation
Monitoring
 Technology projects:
–

Track fuel sales/use, OR Calculate fuel use from
VMT & efficiency
Travel demand/behavioral policies:
–
Track VMT, mode split

–
Frequency & geographic scope of data collection may
be limited
Is it appropriate to use modeling results for
current or projected data?
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The CDM and Transportation
Developing Quantification Methodologies:
Baseline & Additionality Issues
 Technology projects
–
–

Set baseline as current technology
Set baseline as marginal, if different
For travel demand/behavioral policies
–
–
Compare to current mode split and VMT
Compare to projected mode split and VMT
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The CDM and Transportation
Investor Issues

Unilateral CDM
 Demand Side Measures
– What would investors fund?
• Incentives for transit-oriented development?

Potential roles for Official Development
Assistance?
 Capacity building
 Project scoping and pre-feasibility
10
CDM/Transportation Project Examples
Of the 80 projects currently in the CDM pipeline only 5 are
transportation…of those, none address travel demand
Projects:
1) Natural Gas Conversion Project, Bangladesh
 Convert 17,000 gasoline vehicles gasoline to CNG
 0.13 MTCO2e (10 years)
 Sponsor: Asian Development Bank’s (ADB) ALGAS program
2) Dhaka City Electric Vehicle Project, Bangladesh
 3,000 electric vehicles in Dhaka City
 0.010 -0.014 MTCO2e (10 years)
 Sponsor: Bangladesh Center for Advanced Studies under the
South South North project
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CDM/Transportation Project Examples
Continued…
3) Yogyakarta Urban Bus Project, Indonesia
 Retrofitting of 200 buses with cleaner engines
 0.021 MTCO2e (10 years)
 Sponsor: the South South North project
4) Ethanol fuel project, Brazil
 $43 million over 10 years to fund the production of 100,000 nonpolluting ethanol-fueled vehicles
 Sponsor: via agreement between Germany and Brazil
5) Gasohol project, India
• Use of gasoline mixed with Gasohol produced from ethanol that is
produced through biotechnology from sugar cane processing waste
• Sponsor: Japanese Ministry for Environment
Source: CDM Watch 12
CDM and Transportation in Chile
Project Partners: IISD, CCAP, CC&D, CGTS, CIDA






Explore the potential to reduce GHGs and promote
transportation CDM projects in Chile
Use of ODA for capacity building and project scoping
Prepare pre-feasibility studies on technology and travel
demand reduction projects
Advance local government sustainability agenda
Attract foreign investment in sustainable development
Potential for replication: help establish precedent for
assessing transportation CDM projects
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CDM & Transportation: Chile
Potential
Pre-Feasibility Studies
Technical
– e.g. electric trolleys,
improved vehicle
fuel efficiency
Travel Demand
– e.g. increase bus
ridership, transitoriented development
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Outlook
Issues for further consideration
 Technology and fuel related projects are going
to be first out of the block…but given the rapid
growth in VMT in developing countries it will
be vital to address travel demand reduction
– The Chile project and the GEF project are two
initiatives providing leadership in this area

Overall impact of the CDM will depend in large
part on the value of the CERs
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FOR MORE INFORMATION...
John Drexhage
Director, Climate Change and Energy, IISD
Tel: +1 (613) 238-9821
[email protected]
Ned Helme
Executive Director, CCAP
Tel: +1 (202) 408-9260
[email protected]
Eduardo Sanhueza
Director , CC&D
Tel: +56 (2) 209-1770
Email: [email protected]
Made possible with support from:
Canadian International Development Agency (CIDA)
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