Basics of CDM

1. Using forests to reduce GHG emissions Basics of CDM Thomas Dufour

2. Presentation development 1 – General basics 2 – Project cycle 3 – Methodologies 5 – Project design 6 – Dealing with non permanence 7 – Example of CDM project

3. General basics A bit of History… - 2001: COP6 part 2 (Bonn) – Carbon Sinks included in the Kyoto Protocol (CDM projects) - 2001: COP7 (Marrakech) – Modalities for CDM forest projects: only afforestation and reforestation activities (Dec.11/CP7) - 2003: COP9 (Milán) – Modalities for CDM forest projects: implementation of CDM forestry projects (Dec.19/CP9) - 2005, July 16th : Kyoto Protocol active

4. Generate GHG credits based on project activities that reduce GHG emissions and contribute to sustainable development in countries that have not taken an emission reduction commitment under United Nations Kyoto Protocol ; Help meet GHG emissions targets of companies and governments in countries like Japan, Europe, etc. General basics Goals of CDM…

5. Watch this level Annex 1 Total Host General basics Principle Emissions Before Project

6. General basics But Annex 1 country anticipates it will exceed its target Annex 1 Total Host

7. General basics CDM project initiated Annex 1 Total Host

8. General basics Transfer of carbon credits $ Atmosphere neutral Annex 1 Total Credit Host

9. The emission reductions are real, measurable, verifiable and attributable to project participants; The emission reductions are “additional”, i.e could not have happened without the support of the CDM project; The project is approved by the host country; General basics

10. The project is independently validated (DOE) and registered before it starts Emission reductions are credited against a “baseline scenario” and adjusted for “leakage”; GHG credits are issued after emission reductions are monitored, reported and independently verified; General basics

11. GHG credits are valid for 1 ton of carbon dioxide equivalent (tCO2-e); GHG credits are shared however project participants wish to; They are issued in electronic registries from where they can be traded; General basics

12. General basics Sectoral scopes for CDM project activities • Energy industries (1) • Energy distribution (2) • Energy demand (3) • Manufacturing industries (4) • Chemical industries (5) • Construction (6) • Transports (7) • Mining/Mineral production (8) • Metal production (9) • Fugitive emissions from fuels (10) • Fugitive emissions from production and consumption of halocarbon and sulphur hexafluoride (11) • Solvent use (12) • Waste handling and disposal (13) • Afforestation and reforestation (14) • Agriculture (15)

13. Usually commercial enterprises Often high rates of sequestration (e.g. 40+ t CO2e/ha/yr) Must be able to demonstrate additionality Leakage is possible through displaced land uses Best examples where the reforestation is part of a wider landscape project and/or is contribution to land rehabilitation General basics Forest plantations

14. Often community based Usually small plantings Complex monitoring issues; but we have examples Modest carbon contents (<20 t CO2e/ha/yr) Usually clearly additional Low leakage risk General basics Land rehabilitation

15. Must convert non-forest to forest Significant gains from carbon in the trees; sometimes from the under-crops; and usually from improved soil carbon Additionality usually based on barrier tests General basics Agroforestry

16. Good, biologically, economically, socially and in terms of GHG reduction Carbon sequestered in trees; methane emissions from cattle often reduced But complex to set up as they must be split into two projects because of Kyoto rules General basics Reforestation and pastoralism

17. 1 – General basics 2 – Project cycle 3 – Methodologies 5 – Project design 6 – Dealing with non permanence 7 – Example of CDM project Presentation development

18. Project cycle Life cycle of a CDM project activity Before implementation PP = Project Proponent DOE = Designated Operational Entity DNA = Designated National Authority EB = CDM Executive Board CER = Certified Emission Reduction After implementation

19. Validation: Process of independent evaluation of a project activity by a designated operational entity following the requirements of the CDM, on the basis of the project design document (PDD). Validation is a result of the review of : the eligibility of project activities; the approval of the host country; the baseline scenario; the monitoring plan; the analysis of social and environmental impacts; and the public consultation process. Project cycle

20. Registration: Formal acceptance by the Executive Board of a validated project as a CDM project activity = prerequisite for the verification, certification and issuance of CERs related to that project activity. Verification: Periodic independent review and ex post determination by the designated operational entity of the monitored reductions in anthropogenic GHG emissions that have occurred as a result of a registered CDM project activity during the verification period. Project cycle

21. Certification: Written assurance by the designated operational entity that, during a specified time period, a project activity has achieved the reductions in anthropogenic GHG emissions as verified. The certification report shall be used as a request for issuance to the Executive Board of emission credits equal to the verified amount of GHG emissions reduction. Project cycle

22. 1 – General basics 2 – Project cycle 3 – Methodologies 5 – Project design 6 – Dealing with non permanence 7 – Example of CDM project Presentation development

23. Methodologies Nothing is simple when dealing with CDM methodologies

24. DOE: control validation criteria No Approved methodology New methodology EB studies the new methodology Approbation of the new methodology DOE finish validation Yes EB Request for revision in 8 weeks Yesi EB reviewes and decide in 2 meetings EB registers the new methodology No Yes No EB registers the project Project approval Methodologies Design of project activity. Presentation of the Project Design Document (PDD) to the DOE

25. Methodologies • The forms used to asses new methodologies refer to Baseline and Monitoring methodologies. • However, these forms asses various additional technical issues, among them: • Project boundaries • Additionality • GHG emission sources • Uncertainties assessment • Leakage • Application of methodologies to different project or regions

26. 1 – General basics 2 – Project cycle 3 – Methodologies 5 – Project design 6 – Dealing with non-permanence 7 – Example of project Presentation development

27. The “project boundary” : project activity under the control of the project participants. It May contain more than one discrete areas of land. Each discrete area of land should have a unique geographical identification; The boundary should be defined for each discrete area and should not include the areas in between these discrete areas of land. Geographical boundaries

28. Is it really afforestation or reforestation activity? “Forest” is a minimum area of land of 0.05-1.0 hectares with tree crown cover (or equivalent stocking level) of more than 10-30 per cent with trees with the potential to reach a minimum height of 2-5 metres at maturity in situ. A forest may consist either of closed forest formations where trees of various storeys and undergrowth cover a high proportion of the ground or open forest. Young natural stands and all plantations which have yet to reach a crown density of 10-30 per cent or tree height of 2-5 metres are included under forest, as are areas normally forming part of the forest area which are temporarily unstocked as a result of human intervention such as harvesting or natural causes but which are expected to revert to forest; Land eligibility

29. Is it really afforestation or reforestation activity? “Afforestation” is the direct human-induced conversion of land that has not been forested for a period of at least 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources; “Reforestation” is the direct human-induced conversion of non-forested land to forested land through planting, seeding and/or the human-induced promotion of natural seed sources, on land that was forested but that has been converted to non-forested land. For the first commitment period, reforestation activities will be limited to reforestation occurring on those lands that did not contain forest on 31 December 1989; Land eligibility

30. Emission sources and carbon pools: stocks and flows

31. Carbon pools definition

32. Carbon pools definition

33. 1) above-ground biomass, 2) below-ground biomass, 3) litter, 4) dead wood, and 5) soil organic carbon. 1 3 4 2 5 Representation of carbon pools

34. Projects may exclude some carbon pools or emission source from the baseline scenario estimation and/or the monitoring: Transparently demonstrate that it is conservative, i.e. that it does not lead to an overestimation of the net GHG removals, Or grossly assess that these sources are not material (sum of neglected sources < 5% of total) Emission sources and carbon pools [2]

35. It is the scenario that reasonably represents the sum of the changes in carbon stocks in the carbon pools within the project boundary that would occur in the absence of the A/R CDM project activity. Derived using a(n approved) baseline methodology. Shall cover all carbon pools within the project boundary but project participants may choose not to account for one or more carbon pools… Baseline scenario

36. Different baseline scenarios may be elaborated as potential projections of the situation existing before the proposed A/R CDM project activity. (continuation of an existing activity, implementation of the proposed A/R CDM project activity, and many others) To elaborate the different scenarios, different elements shall be taken into consideration, including related guidance issued by the Executive Board. (national / sectoral policies and circumstances, ongoing technological improvements, past land uses and land-use changes, investment barriers, etc.) Baseline scenario [2]

37. Existing or historical, as applicable, changes in carbon stocks in the carbon pools within the project boundary (a); Changes in carbon stocks in the carbon pools within the project boundary from a land use that represents an economically attractive course of action, taking into account barriers to investment (b); Changes in carbon stocks in the pools within the project boundary from the most likely land use at the time the project starts (c). 3 Baseline approaches to choose from

38. Additionality tool

39. Leakage is the increase in GHG emissions by sources which occurs outside the boundary of an A/R CDM project activity which is measurable and attributable to the A/R CDM project activity; Types of leakage: activity displacement, Demand/supply displacement, Market leakage may be ignored (recent ARWG decision) Leakage

40. Net GHG removals (net project balance) = CERs = Actual net GHG removals (increase in carbon storage minus GHG emissions) - Baseline net GHG removals (increase in carbon storage under the b. scenario) - Leakage Formulae

41. Stratification of project area into homogenous strata Sample size determination and sampling Measurements [= f (pools)] on control plots, permanent or not Carbon conversion Total tree carbon stock as a function of (, h) requires calibration of allometric function; Commercial wood volume as a function of (, h), then application of Biomass Expansion Factor, Root-shoot ratio, Basic density and Carbon content factor; Scaling up to whole project area Data from project implementation

42. Other data: Report on forest management activities Fuel consumption? Nitrogen fertilization? If dynamic baseline/leakage estimation, measurements on contrast plots? monitoring of land use statistics? Etc. Data from project implementation [2]

43. It is good practice to use locally/nationally established parameters whenever possible Or refer to IPCC default factors (www.ipcc.ch): IPCC 1996 Guidelines for GHG inventories, IPCC 2002 Good practice guidance for Land Use Land Use Change and Forestry, IPCC 2006 Guidelines for GHG inventories. Parameters for model calibration

44. All about accuracy, conservativeness and transparency; Uncertainty analysis; Quality assurance and quality control plan required. QA/QC plan should cover: collecting reliable field measurements; verifying methods used to collect field data; verifying data entry and analysis techniques; and data maintenance and archiving. More on monitoring

45. Simplified modalities and procedures for small scale project activities (<16,000 tCO2-e/yr, since Bali) ; New! “Programme of Activities” (PoA), ability to register an umbrella PoA and specific project activities to be described later; Voluntary market standards (e.g gold standard) Variations to standard procedures

46. CDM Modalities and Procedures (Decision UNFCCC 19/CP.9) Guidelines for preparing CDM AR PDDs and CDM AR new methodologies, inc. Glossary of CDM AR terms; Approved methodologies AR-AM0001 to AR-AM0010; Various tools to determine land eligibility, demonstrate additionality, etc. CDM AR PDDs of projects already validated; Reports of Meetings of CDM Executive Boards and its AR Working Group; Available soon: Tool to search all decisions of the CDM EB and its panels by keyword. For further info, check references @ http://cdm.unfccc.int/

47. 1 – General basics 2 – Project cycle 3 – Methodologies 5 – Project design 6 – Dealing with non permanence 7 – Example of CDM project Presentation development

48. 20 credits valid 5 years 20 credits valid 20 years 60 credits valid 5 years 40 credits valid 15 years 80 credits valid 5 years 20 credits valid 10 years 90 credits valid 5 years 10 credits valid 5 years Dealing with non-permanence CO2e CO2e 90 90 80 80 60 60 20 20 Crediting period 2012 2017 2022 2027 2032 250 credits tCERs 90 credits lCERs

49. Net CO2e Net CO2e lCERs invalid R V1 V3 V4 V1 V3 V4 V2 E V2 R E Dealing with non-permanence What happens if carbon (forest) is lost ? CO2e net Nothing CO2e net

50. On the project side, new temporary credits can be issued every five years after verification that the carbon remains stored. On top of these renewed credits, extra credits can be issued for newly sequestered CO2 tonnes. On the investor side, postpones by five years the responsibility for tonnes of GHG emitted. Practically, it means that an entity that uses a temporary credit for compliance is liable to provide a replacement unit 5 years after (on top of the credits/allowances it has to provide for recently emitted GHG tonnes).