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Hamburg Institute of
International Economics
PROGRAMME “INTERNATIONAL CLIMATE POLICY“
Neuer Jungfernstieg 21
20347 Hamburg
Germany
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Our ref.: ami
Date 28 06 2004
Comments on the draft consolidated baseline and monitoring methodologies for renewable
electricity generation and landfill gas capture
June 2004
Axel Michaelowa
General:
It is welcomed that baseline standardisation is undertaken by the EB as the consolidated
methodologies will reduce transaction costs, increase transparency and allow a consistent testing
of additionality. However, it has to be clarified
• whether the consolidated methodologies substitute previously approved methodologies for
the respective project types (unitary approach) or whether developers can choose between the
consolidated and the previously approved methodologies (menu approach)
• whether methodologies submitted but not yet dealt with by the Meth Panel for project types
covered by a consolidated methodology will still be approved
While the menu approach has the disadvantage of allowing developers the choice of the most
favourable (i.e. high) baseline, the unitary approach would be unfair to developers that have
invested a high amount of time and money in development of their methodology. I propose the
following compromise:
• Developers that have submitted a methodology for project types covered by a consolidated
methodology prior to an EB decision on a consolidated methodology have a right to get an
EB decision on that methodology and in case of approval can use this methodology for all
projects undertaken by them until 2012.
• Other developers have to use the consolidated methodologies, once agreed by the EB
1. Baseline methodology for renewable electricity generation
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Hydro projects should be allowed to use the methodology from the start. The decision on
methane and CO2 emissions from hydropower reservoirs does not have any impact on the
baseline, but only on project emissions.
Hamburg Institute of International Economics (HWWA), Neuer Jungfernstieg 21, 20347 Hamburg, Germany
Executive Board: Prof. Dr. Thomas Straubhaar (President), Prof. Dr. Hans-Eckart Scharrer (Vice-President), Dipl.-Kauffrau Angelika Knobloch (Administration)
Board of Trustees: Chair: Rolf Dräger, Ph.D., Hamburg Ministry of Science and Health
Scientific Advisory Board: Chair: Prof. Dr. Michael Funke, University of Hamburg Library Users‘ Board: Chair: Prof. Dr. Jürgen Krause, GESIS, Bonn
The HWWA is a member of the Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz (WGL)
Bank: HSH Nordbank AG; Account No. 101 709, IBAN-Code DE 60 2105 0000 0101 7090 00; SWIFT-BIC HSHNDEHH
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While the principle of the additionality test to show by “publicly available information” that
barriers are prohibitive is sensible, it is not specified. Principles for the additionality test
should include
- Project proponents have to determine IRR or costs (if no revenues accrue) and compare
them with at least one plausible alternative. If the project is more attractive than these
plausible alternatives, a barrier test is done. The barriers assessed are those listed in
Appendix B of the Small Scale Project rules. The assessment whether barriers are
prohibitive has to be done by an independent expert from the host country.
The assessment of the 50% generation threshold for low-cost/must-run plants is contradictory
as it may be that due to one very wet year, hydropower surpasses the threshold, even if the
long-term normal would have been below 50%. Moreover, due to climate change, the
hydrological normals of the last 30/50 years may not be a good indicator for the current
hydropower potential. Therefore, the actual hydropower production of the last five years
should just be averaged for assessment of the threshold.
The operating margin should only be calculated ex post, not ex ante. Otherwise,
environmental integrity of the CDM is jeopardised as developers would choose the ex-ante
approach, if the GHG intensity of the operating margin is expected to go down and the expost approach, if they expect a rising GHG intensity.
In the case of grids with >50% generation by low-cost/must-run plants construction of a
hourly load duration curve requires very detailed data that are not available for many
countries. There should thus be the possibility to opt for multiplication of the operating
margin by a default “adjustment factor” of 100 − x , with x being the percentage of generation
50
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by low-cost/must-run plants. At 50% low-cost/must-run plants it would be 1, at 75% 0.5 and
at 90% 0.2.
The build margin should not include plants under construction.
Leakage should explicitly specify discount factors for fuel production and processing to
avoid a full life-cycle analysis.
Monitoring should include laws that make application of project technology mandatory (e.g.
renewable portfolio standards). I support testing of additionality at the time of renewal of a
crediting period
2. Baseline methodology for landfill gas collection
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While obviously leading to a conservative estimate of emission reductions, the minimum
baseline collection factor of methane of 20% is essentially arbitrary
While the financial component of the additionality test to “demonstrate that project activities
would not be profitable without CERs” and the used indicators will guarantee a high degree
of environmental integrity, the assessment whether barriers are prohibitive should be done by
an independent expert from the host country.
The baseline methodology has to include an ex-post adjustment in case of introduction of a
regulation requiring (partial) capture of LFG
The monitoring methodology should include monitoring of regulation that triggers baseline
adjustment.
Hamburg Institute of International Economics (HWWA), Neuer Jungfernstieg 21, 20347 Hamburg, Germany
Executive Board: Prof. Dr. Thomas Straubhaar (President), Prof. Dr. Hans-Eckart Scharrer (Vice-President), Dipl.-Kauffrau Angelika Knobloch (Administration)
Board of Trustees: Chair: Rolf Dräger, Ph.D., Hamburg Ministry of Science and Health
Scientific Advisory Board: Chair: Prof. Dr. Michael Funke, University of Hamburg Library Users‘ Board: Chair: Prof. Dr. Jürgen Krause, GESIS, Bonn
The HWWA is a member of the Wissenschaftsgemeinschaft Gottfried Wilhelm Leibniz (WGL)
Bank: HSH Nordbank AG; Account No. 101 709, IBAN-Code DE 60 2105 0000 0101 7090 00; SWIFT-BIC HSHNDEHH