Zsolt Lengyel SenterNovem Carboncredits.nl Bonn , 9 th March 200 6

1. Session 4.2. Criteria for baseline setting and monitoringDealing with methodological matters in the ERUPT programme Zsolt Lengyel SenterNovemCarboncredits.nl Bonn, 9thMarch 2006

2. Outline • Key challanges for pioneers • The solution: ERUPT Operational Guidlines and capacity building activities • Insights: relevant cases with baseline and monitoring lessons • Meeting the criteria of the Appendix B of Decision -/CMP.1 on “Criteria for baseline setting and monitoring” UNFCCC Technical Workshop on Joint Implementation

3. Key challenges for pioneers UNFCCC Technical Workshop on Joint Implementation

4. Key challenges for pioneers • Doing JI before the rules of the game are defined by: • Envisaging future rules • Relying on CDM (but not before EB decisions!) • Being conservative and strict • Learning by doing: • Regular updating and amending of the operational guidlines and learning from own mistakes • Facilitating knowledge dissemination: • Difficult due to general novelty of concept and conflicting prioroties such as EU accession (NS and candiate countries) and other complex issues (Russia and Ukraine) UNFCCC Technical Workshop on Joint Implementation

5. The solution: ERUPT Operational Guidlinesand capacity building activities (1) ERUPT Guidlines: • provides a step-wise guidance to JI project developers for baseline determination and the monitoring of the project results • contains the elements that were also required by the Marrakech Accords for the CDM-PDD (even before the EB decision in 2002 August) • describes how to: • develop a baseline study with the estimation of the amount of ERUs and a monitoring plan, • guarantee opportunities for stakeholder comments, • analyse the environmental impacts of the project as required by local regulations UNFCCC Technical Workshop on Joint Implementation

6. The solution: ERUPT Operational Guidelines and capacity building activities (2) Guaranteing compliance with evolving Kyoto rules: • Public Procurement with compulsory rules as a mean of learning and knowlege distribution • Regular independent review of rules and guidance • Independent review of actual project documentation prior to ERPA decisions UNFCCC Technical Workshop on Joint Implementation

7. Insights: relevant cases with baseline and monitoring lessons (1) • cef (single or multi-project) • - the development of multi-project baseline/benchmark values for the electricity sectors in potential JI host countries incorporating the requirements of EU Accession and the treatment of low variablecost power capacity. Solution: hard work with fix/ variable cost analisys and establishing trends towards EU BAT • inflated baselines • Even with standard, country specific grid based carbon emission factors there were attempts to inflate the baseline especially in retrofits. Solution: very thourough knowledge of the technology used and PDD revision UNFCCC Technical Workshop on Joint Implementation

8. Insights: relevant cases with baseline and monitoring lessons (2) • project boundaries and treatment and monitoring of indirect emissions • Indirect emission sources due to the project must be included in the calculations of the project’s own actual emissions and must be part of the monitoring procedure for the project. Solution: insistence on monitoring plans that include a thouroug reporting of indirect emissions • monitoring - seen as a continous development process until crediting period starts • for many projects that are in the design stage at the time of validation, it is difficult to give a detailed account of monitoring procedures even if approved CDM methodology exists • Solution: JI SC to elaborate on the Paragraph 5 in Appendix B on re-determination related to the revisions to the monitoring plan to improve monitoring’s accuracy and/or completeness of information UNFCCC Technical Workshop on Joint Implementation

9. Meeting the criteria of Decision -/CMP.1 on the “Guidelines for the implementation of Article 6 of the Kyoto Protocol”, Appendix B on “Criteria for baseline setting and monitoring”, paragraph 2. • Criterion 1. A baseline shall be established on a project-specific basis and/or using a multi-project emission factor. • The Guidelines contains an extensive explanation of how for individual projects, project-specific direct emission sources must be explored as well as sources outside the project boundary (indirect sources) in addition, where possible it contains multi-project emission factors. • Criterion 2. A baseline shall be established in a transparent manner with regard to the choice of approaches, assumptions, methodologies, parameters, data sources and key factors. • standard, transparent format (similar to CDM-PDD) and justification with supporting, repeatable underlying calculationsfor key factor analysis. UNFCCC Technical Workshop on Joint Implementation

10. Meeting the criteria of Decision -/CMP.1 on the “Guidelines for the implementation of Article 6 of the Kyoto Protocol”, Appendix B on “Criteria for baseline setting and monitoring”, paragraph 2.. • Criterion 3. A baseline shall be established taking into account relevant national and/or sectoral policies and circumstances, such as sectoral reform initiatives, local fuel availability, power sector expansion plans, and the economic situation in the project sector. • All these key factors have been included in the ERUPT Guidelines • Criterion 4. A baseline shall be established in such as way that ERUs cannot be earned for decreases in activity levels outside the project activity or due to force majeure. • The baseline scenario is constructed by multiplying the GHG emissions factor with the annual project activity level UNFCCC Technical Workshop on Joint Implementation

11. Contact details SenterNovem Carboncredits.nl Juliana van Stolberglaan 3 Postbus 93144 2509 AC Den Haag Web: www.carboncredits.nl E-mail: z.lengyel@senternovem.nl Tel: +31 70 373 5672 UNFCCC Technical Workshop on Joint Implementation