Applicant entities / Designated operational entities Different checkpoints for new methodologies

1. Baseline Methodologies for LULUCF: OverviewB. Schlamadinger* Joanneum Research, Austriabernhard.schlamadinger@joanneum.atTraining Seminar for BioCarbon Fund ProjectsWashington, 12-14 September 2005

2. Contents • Applicant entities / Designated operational entities • Different checkpoints for new methodologies • Baselines and additionality • Results of methodologies submitted • Reasons for rejection; recommendations for the future • When are projects different? Classification of methodologies for BioCF projects

3. Methodology submission through AE or DOE AEs and DOEs submit new methodologies in the name of the project proponent. AEs and DOEs are obliged to check the completeness of the proposed methodologies BUT do not check the correctness of the new methodology – in contrast to the process later on in validation with respect to the PDD Hence, AEs and DOEs function more as a mailbox than being a first quality control. Source: M. Rumberg, Tuev-Sued

4. Role of DOE in Validation Definition: Assessment of project feasibility and chances to generate emission reductions. Basis: Project Design Document (PDD) Assessment of the following parameters: • Voluntary participation / DNA / Kyoto-Protocol Ratification • Project design • Additionality • Emission reduction: Baseline-Study (Choice and application, crediting period, leakage und project boundaries, calculation) • Monitoring • EIA • Stakeholder process Qualitative Assessment Source: M. Rumberg, Tuev-Sued

5. Different stages of checking methodologies • AE / DOE • CDM Team (UNFCCC Secretariat) • AR WG • Desk review by 2 external experts • 2 AR WG members compile reviews by experts and their own opinions into recommendation

6. AR WG checklist for baseline methodologies (no detailed checking, just compliance with 19/CP.9) • Helps projects save time if there are obvious deficiencies • Definitions – baseline removal by sinks, net removals, leakage, positive and negative • Eligibility of land • Determination of baseline (one of the three approaches) • Non CO2 correctly calculated • Project boundary • National policies • Additionality checked, quantitative and qualitative • Leakage properly treated/all sources covered • Conservative approach/assessment of uncertainties • Monitoring meth follows the baseline meth?

8. Rating per AR WG recommendation to EB • Preliminary rejection (after screening by AR WG member) is meant to help project proponents to avoid time loss. • A: accepted, further modifications exclusively by AR WG • B: project participants get 2 weeks to address open issues (can be preferable to A, as participants have control over modifications) • C: Resubmission necessary (can help the project in the long term to save time) • NMB can be approved even if NMM is rejected • NMM cannot be approved without NMB

9. ARNMBs proposed so far

10. “Baseline methodologies” are not only about baselines • Land eligibility (not forest in 1990) • Baseline scenario, and GHG emissions / removals • Project scenario, and GHG emissions / removals • Additionality of the project scenario over and above the baseline scenario • Leakage • Estimation of the net GHG benefits resulting from the project, taking into account the previous items.

11. Reasons for rejection of NMBs to date • Incomplete • Not following 19 CP9 requirements • IPCC Guidance not used • Language (drafting) problems • Scope and applicability (too broad/narrow) • Data, equations (errors, lack of quality, not possible to monitor) • Assumptions and parameters are not adequately chosen • QA/QC procedures and transparency

12. Reasons for rejection of NMBs to date (baseline methodology, I) • NMB was main stumbling block so far. (NMM had IPCC GPG to build on) • Process for selecting the most plausible scenario is not satisfactory • Baseline was assumed to contain no tree planting, but this was not substantiated (background rate of AR) • Baseline was solely based on activities occurring outside the project area • No additionality tool was used • additionality was understood as difference between project and baseline. Should be: project would not have occurred in absence of CDM funding. • Baseline included non-CO2 gases • baseline: control plots monitored during project, but model for determining baseline management not described • Conflict of interest when project participants manage control plots (for baseline estimation)

13. Reasons for rejection of NMBs to date (baseline methodology, II) • Land eligibility not assessed, or improperly assessed • Carbon pools not estimated separately • GHG emissions estimation from project not complete (e.g., N2O from fertilizers) • No prediction of baseline and project C stock changes • Self developed additionality tool not adequate • Uncertainties not assessed AND no conservative assumptions (at least one of the two is necessary) • Leakage from displacing agricultural activities not assessed • Positive leakage: must not be included (not a sole reason for rejection)

14. Some recommendations • Avoid any of the above, learn from these mistakes • Conservativeness may be easier to achieve than a detailed uncertainty analysis • Use standard additionality tool cdm.unfccc.int/Panels/ar/Inputs_Afforestation_Reforestation/AR_Additionality_Tool.pdf • New version coming soon! • Use standard “land eligibility tool” as soon as it is available • Consider EB clarifications on national / sectoral policies cdm.unfccc.int/EB/Meetings/016/eb16repan3.pdf • To meet Dec 2005 deadline, could use “top down” small-scale methodologies (draft available, even simpler version coming soon) • Keep the NMs short and concise, avoid repetition • Consider teaming up with other projects (internal review among projects)

15. What makes a baseline methodology different from another one? • Pre-project land use • Land eligibility test • Which carbon pools • Generic vs. project specific • Baseline approach (a, b, c) • Additionality tool (standard / project specific) • National policies addressed? • Control plots for baseline? (only approach b) • Way how leakage is addressed • Activity displacement

16. Possible classification of methodologies • Degraded lands with no attractive baseline use • Little vegetation, hardly any trees (not likely to become forest) • Lands in slash and burn cycle (could become a forest) • Examples: China, Moldova • Projects on grazing lands (special leakage assessment for activity displacement), trees suppressed • Examples: Albania, Ethiopia • Agro-forestry projects that avoid leakage by activity displacement • Projects which may appear attractive even w/o CDM funding (e.g., timber plantations; timber market leakage needs to be checked) • “Tree based” (rather than “ha based”) projects • Examples: TIST, Kenya

17. Steps for NMBs in BioCarbon Fund Projects • Screen the existing NMBs • If one is acceptable that is already published: use it (may require certain shortcuts, e.g., omit soil carbon, can save costs and reduce risk on methods development) • If one seems applicable but is not yet accepted  consider contacting the proponent and ask for permission to use it • If one is similar: use key concepts and ideas • Add modules as appropriate (more carbon pools, activity displacement, “background reforestation rate” for baseline • If none is similar: screen other upcoming projects and consider collaboration • If none of the above: new methodology

18. Projects should work together in drafting methodologies • Helps avoid future bottlenecks in CDM AR WG • Avoids future need of consolidation of methods • Increases the quality of methodologies • BioCarbon Fund projects of similar nature • Other AR projects

19. Other burning issues • Next NM submission deadline around 5 October • Current rules: projects not registered by end of 2005 loose all benefits of AR to date • Only possible cure: COP11 decision • Asymmetrical treatment of non-CO2 gases • A clarification may be forthcoming soon • EU ETS review, 15 Sept deadline: www2.perseus.com/mckinsey/prod/eu/eumain.htm