Update on Methodological Issues

Annual Meeting of the Host Country Committee

Köln, May 2006

Contents

• Status of JI • Status of CDM • Goals for improving CDM • Trends in Project Methodologies• Review of changes to Procedures

– Methodology submission – Methodology revisions – Project registration – Project Review

• Summary

Status of JI

• JI Track 1 – not countries applied yet.

• JI Track 2 - COP/MOP 1 established the Joint Implementation Supervisory Committee (JISC). – 1st meeting Feb 06. Work has begun to develop

procedures and guidance for JI projects – JI projects can refer to CDM methodologies or can

develop independent JI specific methodologies – IEs to approve methodologies for JI. – Goal of JISC to have process in place to enable JI

project registration by the end of 2006.

Key Issues JI

• IEs– COP/MOP1 adopted decision (10/CMP.1) which states that

DOEs may provisionally act as AIEs

– Re-accreditation or some benefits if already accredited under CDM?

• Early Movers– Need to reformat PDD?

– If a project has already been verified, must it be verified again?

• EU legislation– Acquis Communataire

– EU Emission Trading Scheme

• Dominance by high GWP gases. 41% N20 and F gas.

• 12 projects > 3 million CERs per year

• 17 % renewables

Status of CDM projects

CDM Status - Approved CDM Meths by Sector

Agriculture. , 6

Afforestation and Reforestation , 1

Waste Handling and Disposal , 23

Fugitive Emissions from Fuels , 5

Metal Production , 0Mining/Mineral Production , 1

Solvent Use , 0

Fugitive Emissions from HFCs &SF6, 2

Transport , 1Construction , 0

Chemical Industries , 5

Energy Industries , 18

Energy Distribution, 1

Energy Demand , 6

Manufacturing Industries , 11

CDM Status - Regional spread of Projects

Note:

23 % of all annual credits in 2008-2012 come from 6 Chinese HFC23 incineration projects.

Source OECD

COP/MOP1 Call for Improvements to CDM

Results of COP/MOP1 for CDM:

• Adaptation of the Marrakesh Accords.

• EB to collect public inputs on new additionality tools (report the outcome to MOP2).

• Call to improve regional distribution of CDM.

• Call for technical expertise on the issues of a) incineration of HFC23 at new HCFC 22 facilities can be included under the CDM and b) how to accomodate carbon storage projects under the CDM.

• Activities under a program accepted under the CDM.

Trends in Project Methodologies

• Expanding applicability of new methodologies. 9 more ACMs and more methods cover existing and new facilities.

• New methodology approved for Afforestation /Reforestation projects.

• Standardization ie wide application of elements within from approved methodologies.

Positive Trends

Trends in Project Methodologies

• Sector bias not yet addressed. 2/8 AMs for energy sector, 2/8 AMs for waste sector, 3/7 ACMs energy sector, all 4 small scale (SSC) methods for waste sector.

• Tendency to be more conservative in some technical aspects e.g Definition of non-renewable biomass for SSC and ACM0009 leakage.

• Ambiguity regarding some decisions e.g. relevance of national policies.

Less Positive Trends

Upcoming Sectors

• High CER Generation sectors, with methodologies undergoing evaluation: – Carbon storage – Gas-fired power generation – Transport

• Other potential sectors (but no proposed methodologies to date):– Clean coal (electricity production) – HFC23 reduction from new facilities

Procedure: Key changes to Submission of New Methodologies

• DOEs to complete a pre-screening

• A submission fee of USD 1,000 (not SSC or A/R)

• Timeframe for Technical Clarifications by Project Participants Extended from 10 days to 4 weeks.

• The EB can retain methodologies once submitted

• DOEs can submit queries regarding how to apply new methodologies 6 wks before Meth meeting

• B case methodologies may only be resubmitted once.

Procedures – Project Registration

Changes since EB 19• Registration Fee =“the

share of proceeds x expected average annual ERs over its crediting period.”

• Grace Period – Projects registered within 8 wks of revision are not affected.

Request for Deviation by DOE (EB 20 - NEW).

Documentation Submission

Payment of Registration Fee. Acknowlege Registration request

Registration 8 weeks (4 wks SSC) after Request for Registration

(Request for review can occur in this time)

Procedures – Project Review

• Since EB 19 clarification of project review process provided.

• 9 of 167 registered projects reviewed.

• 2 rejected due to incomplete documentation.

EB consider review Request.

If review accepted, EB will designate registration team. Review publicly

announced.

Registration team ask DOE/PP for clarifications. 5 days to send info.

Recommendation made to EB by

Registration team.

EB decide whether to accept or request revisions or reject the project

Key Findings

• JISC has ambitious work programm and is likely to build on CDM experience but with adaptations to suit JI market.

• Increasing experience with CDM has resulted in submission of more projects and submission of new methodologies.

• Methodologies increasingly adopting standardised components. E.g. combined margin, additionality tool.

• However - Sector and regional bias remains in CDM• Procedural changes are likely to reduce the work load and

therefore speed up the time required for registration.• Project review process has been a useful tool in

understanding how methodologies should be interpreted.

THANKYOU FOR YOUR ATTENTION

FOR MORE INFORMATION CONTACT

fspors@worldbank.org

• Dominance by high GWP gases. 41% N20 and F gas.

• 12 projects > 3 million CERs per year

• 17 % renewables

Status of CDM

CDM Status - Regional Distribution of CERs

CERs CO2 Emissions from

Combusion

CDM Status - Credit Allocation a/c to Sector

• Dominance of High GWP gases

• 12 projects > 3 million CERs per year.

• 17% renewables, declining share of total credits. Approx. 50% of all projects

• CH4 reduction is 16% of total

Source: OECD 2006

Procedures – Revisions to Meths

EB considers recommendation at its next meeting. Revisions applicable to projects registered after the date the revision took effect (Grace Period)

Submit draft revised method and PDD to DOE.

DOE checks submits to Secretariat.

Secretariat checks and submits to Meth. Panel

Meth Panel consider review and if accept send to EB

IF EB consider revision request Meth panel to make recommendation no later than second meeting of EB after date EB has requested recommendation.

Public inputs may be invited for a period of 15 days

2 Meth Panel members draft recommendations. Panel agrees on revisions.