Carboncredits.nl

1
Carboncredits.nl

• Baseline Methodologies
• Dispatch Analysis
• Gerhard Mulder
• Project Officer

2
Senter Internationaal

• Agency of the Dutch Ministry of Economic Affairs
• Programme implementation, for example
• CO2-reductionplan (domestic)
• Emerging markets
• Export Finance
• Staff of approximately 760
• Annual budget EUR 1.000 million

3
Senter Internationaal Carboncredits.nl

• Carboncredits.nl is the team within Senter that
  executes the JI/CDM mechanism for the Dutch
  government
• 6 project officers, one programme manager
• Supported by a group of technical and financial
  experts
• 3 ERUPT tenders (total 70 projects - JI)
• 1 CERUPT tender (total of 80 projects - CDM)
• Look at www.carboncredits.nl

4
Senter Internationaal Procurement rules

• Carboncredits.nl implements the programme conform
  EU procurement rules. Public tender with two
  phases
• selection phase focus on the supplier
• contract awarding phase focus on the proposal
• There is no negotiation, and there is no
  preference for companies
• Procurement rules are published in the Terms of
  Reference (ToR)
• Advantage one rules are published, they stand
  firm
• Disadvantage limited flexibility, bureaucratic

5
Introduction History of JI/CDM

• Dutch Government started with first AIJ projects
  in 1997
• First ERU-Procurement Tender (ERUPT) for Joint
  Implementation in 2000
• Describe baseline methodology in ToR
• Input from national and international experts
• Today ERUPT- 2 and 3, plus CERUPT-1 have
  resulted in over 150 PINs, and approximately 50
  Baseline studies

6
Introduction Goals Baseline study

• What is the goal of a baseline study?
• Article 44 the baseline for a CDM project
  activity is the scenario that reasonably
  represents the anthropogenic emissions by sources
  of GHG that would occur in the absence of the
  proposed project activity
• Baseline emissions -/- project emissions /-
  leakage emissions reductions

7
Introduction Elements of the Baseline

• Principle of Control
• Project boundary
• Account for Leakage
• Fixed period
• For 7-year renewable or 10-year non-renewable
• Provides confidence to investors
• Marrakech Accords criteria Conservative,
  Transparent, Reasonable
• Not one-size-fits-all
• Reality is very complex
• Scenario Analysis

8
The Dutch Baseline Methodology

• Strong emphasis on using conservative assumptions
• The ToR allows for more than one baseline
  methodology
• Scenario Analysis
• Investment Analysis
• Simplified Baselines for Small Scale CDM

9
Scenario Analysis

• Definition A future emissions scenario
  (baseline) is constructed by identifying barriers
  and risks in a key-factor analysis, using
  currently delivery system as a starting point
• Which MA approach is umbrella for scenario
  analysis methodology (art. 48)?
• A. Existing or historical emissions
• B. Barriers-to-investment approach
• C. Build Margin/Benchmarking

10
Scenario Analysis Steps

• Step 1 Describe current delivery system to
  develop baseline emissions
• E.g. how many MWs of what type is installed, fuel
  use, etc
• Step 2 Establish which emissions can be
  controlled or influenced by the project
  participants
• One step upstream, one step downstream
• Step3 Develop Key Factor Analysis
• Sectoral reform initiatives, local fuel
  availability, power sector expansion plans, and
  the economic situation in the project sector
• Step 4 Determine CEF
• Various techniques to calculate displacement

11
Scenario Analysis Take your pick

• While Scenario Analysis is guiding principle, it
  can be implemented in more than one way
• Depending on the sector/project
• Depending on the preference of the project
  participant
• Of the approximately 25 PDDs we received for
  CERUPT, we identified several different ways to
  implement our baseline guidelines
• Dispatch Analysis
• Alternative Investment Analysis
• Ex-ante calculation of CEF of existing plants
• All methodologies are conform MA reasonable,
  conservative, and transparent

12
Dispatch Analysis An Overview

• Dispatch Analysis simulates the electricity
  sector for a period of time
• It calculates generating costs per plant in each
  hour, and then optimises the dispatch for the
  system
• The model calculates the electricity generated
  for each power plant for the whole crediting
  period
• Knowing the carbon content of the fuels, you can
  calculate the emissions generated
• You run the model with and without the proposed
  CDM project, and you can calculate how much
  electricity and emissions your project has
  displaced

13
Dispatch Analysis Advantages

• Approximates reality closest
• Uses reality as starting point
• Combines short term and long term effects
• Works best if National Expansion Plans exist
• But has element of Alternative Investment
  Analysis
• Data input can be evaluated easily and
  objectively
• DOE must evaluate input
• Focus is on displacing electricity rather than
  capacity
• CEF is based on how much electricity the proposed
  CDM project is expected to generate

14
Dispatch Analysis Disadvantages

• Dispatch Model may not always be available
• Models are often used by National Grid Operator
• Data may not always be available
• Some data may be proprietary

15
Peñas Blancas Case Study

• Operational details of the PB hydroelectric
  facility in Costa Rica
• 35.4 MW
• 169 GWh/year
• Construction starting date August 2000
• Costa Rica is committed to developing renewable
  resources 75 percent of installed capacity is
  hydro
• ICE is the vertically integrated state-owned
  utility
• Official national expansion plan foresees in
  development of more hydro, as well as fossil
  fired units

16
Peñas Blancas Case Study
Average CEF 0.46 tCO2/MWh)
17
Peñas Blancas Case Study

• How was Costa Rica conservative in establishing
  the baseline?
• Assumes no imports
• Did not include scenario of regional integration
• Average fuel prices
• Heat rates of existing fossil plants
• Demand projections
• Used National Expansion Plan
• Furthermore, all assumptions meet the criteria
  that the baseline must be transparent and
  reasonable

18
Next Steps

• Meth Panel rejected 14 of 15 New Methodologies
• Could not reach consensus on Dispatch Analysis
• Investment additionality appears to be back as
  the most important criteria for project
  eligibility
• Executive Board must provide guidance on how to
  move the CDM ahead