CDM board sends coal methodology back for further revision
The executive board of the UN's clean development mechanism (CDM) has postponed its final decision on whether to reinstate a controversial offset project methodology for coal-burning power plants. If the UN lifts the suspension, the methodology will yield millions of certified emission reductions (CERs) per year.
There are 38 such projects in the CDM pipeline, together worth 28.6m CERs/year, according to the CDM secretariat. In addition, six projects together worth 9m CERs/year have already been registered.
A heavily revised version of the coal plant methodology - suspended since last November - was presented at a meeting of the executive board in Bonn on Wednesday.
But the executive board decided the revised version was not ready for adoption, and asked the panel to make further revisions and clarifications on several points before the next board meeting in July.
The board has also asked for public submissions made by power companies and NGOs in relation to the methodology to be considered by the methodology panel. These submissions were not taken on board in the revision process discussed on Wednesday.
The methodology in question, "Construction and operation of new grid-connected fossil fuel-fired power plants using a less greenhouse gas intensive technology", awards tradable CER credits for each tonne of CO2 eliminated by building a cleaner coal-fired plant than may, hypothetically, have been built had no CDM finance been available.
Deputy chairman of the board Martin Hession told the meeting that clarification is needed on how exactly CDM finance acts as an incentive in such scenarios.
"I have a particular concern in the area of additionality," Hession said. Additionality measures how many tonnes of CO2 are avoided by implementing the projects and decides how many credits it can earn.
"We are crediting the incremental difference between the coal plant that would have been built and the improved plant and the question is whether that improvement was incentivised by CDM. But these projects are massive and they are financed as a whole, so I would like to understand what CDM comprises in the total financing," Hession said.
Among the key revisions proposed by the methodology panel was that project applications should include feasibility studies for both the baseline (hypothetical, non-CDM-assisted plant) and project plants. These feasibility studies should specify the operational efficiency of the plants, as well as estimates of the cost and specifications of the fuel-type to be used.
In the previous version of the methodology, the plant in the baseline scenario was determined through an investment analysis. This meant there was little consistency and a lack of justification of assumptions about the baseline, according to a presentation from the secretariat. VF
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