CDM Report from Day 1 in Katowice Poland

• By: AWMA
• On: 12/04/2018 14:26:26
• In: COP 24

by Mike DeBusschere

I am honored to be representing A&WMA at the United Nations Climate Change Conference (UNCCC) this year. Known as COP 24 (Conference of the Parties #24), the purpose of this year's meeting of thousand of delegates from around the world is to fine tune methodologies for attaining the reduction targets in greenhouse gases (GHGs) agreed upon in Paris two years ago. I will be attending the first week (December 3–7) and Michele Gehring, our President-Elect, will attend the second week.
 
My responsibility as an official Observer Delegate is to report to the membership with summaries of sessions that I've attended during my week. I've selected sessions that will discuss effects of GHG reductions on selected industrial and utility sectors with a focus on mechanisms that various countries and industries have found successful. It is a daunting task as there are many hundreds of presentations, hundreds of exhibiting countries, and several different technical tracks some of which are restricted in attendance. But I will have no trouble filling my week, and I don't think Michele will either.
 
Before I report on the first day's sessions, I would like to refresh the membership's understanding of the seriousness of the situation. Throughout the Earth's measurable ambient carbon dioxide history of some 400,000 years (according to NOAA), we are in incredible trouble. The graph below shows measurements of ice core data, then actual atmospheric data since the early 1900s.
 
You might say “So what?”. Look at the next graph.
 
Earth's atmospheric temperature—overall ocean and air temperature—tracks carbon dioxide concentrations ridiculously well. Which is ridiculously scary. If the bottom chart continues to track the top chart, we are in for the worst average temperatures the Earth has ever seen. Yes, there is evidence cyclical “breathing” by the Earth, but so far it hasn't reached the gasping level.
So, I am very pleased to be representing A&WMA at the only worldwide body of ministers, government heads, engineers, bankers, and environmentalists that meets each year to inch forward to help prevent catastrophe as we might know it in a few decades. The police limousine escorts are everywhere. The delegates look official. The exhibits are fantastic.

DAY 1 – December 3, 2018
Session Notes: Experiences Learned from CDMs (C Development Methods) 3:00 PM Monday Dec 3, 2018. The Clean Development Mechanism (CDM) is one of the flexible mechanisms defined in the Kyoto Protocol (IPCC, 2007) that provides for emissions reduction projects, which generate certified emission reduction units (CERs), and which may be traded in emissions trading schemes. In my work as an environmental consultant, almost 75% of my work is regarding GHG project and inventory verification. Whether it is mandatory (as in Canada and California, to name a couple of large geographic and populated areas) or not, GHG reduction projects are everywhere and being implemented using the official UN-based CDM methodologies, the Climate Action Reserve Protocols or the Verified Carbon Standard, among others. The sessions below discuss how effective these reduction methods have been since the Kyoto Protocol was established.
Margaret-Ann Splawn (CMIA), Program created per UNCCC COP Standardization Programme 17 Years Ago

• CDMs basically a voluntary carbon trading system (as are VCMs)
• Developers conform to existing CDMs to create GHG credit, which can then be sold to offset required reductions
• Over 8,000 CDM project implemented to date in 211 countries representing over US$304 billion in credits

Sandra Greiner (Climate Focus)

• CDMs no longer considered a backward approach and was reconfirmed as an essential component to achieve climate change goal of <2°C degree change
• European CDM participants use CDMs to meet compliance requirements to “Mind the Gap” expected by the year 2020, was projected at 39 euros originally
• Credits roughly worth 50 Euro per tonne at present and has been stable for quite some time
• Macroeconomic impacts to participating countries may be significant from foreign direct investment, encourage existing investment to remain in the country
• CDM credits transferable among countries around the world based on viable carbon market
• Over 200 methodologies have been developed mainly by private investment
• Demand is uncertain due to US withdrawal and uncertainty of the airline reductions, expect about 3.2 billion tonnes shortage compared to 3.2 billion CDMs and 800,000 VCMs
• European CDM participants use CDMs to meet compliance requirements to “Mind the Gap” expected by the year 2020, was projected at 39 euros originally
• Credits roughly worth 50 euro per tonne at present and has been stable for quite some time

• Macroeconomic impacts to participating countries may be significant from foreign direct investment, encourage existing investment to remain in the country
• CDM credits transferable among countries around the world based on viable carbon market

Mandy Rambharos (Eskom), Power of the CDM per the CDM Executive Board Report

• Most effective way to utilize the private sector
• Best way to establish innovative reduction methods
• Inspires action in others to voluntarily meet reduction standards
• Amount of electricity produced by CDMs equal to four countries and 200 million dollars
• CDMs stimulate investment potential by increasing return on investment as much as total offset of project costs, up front financing averages 30% of project costs, and offsets are sold in US$ or Euros currency creating a currency hedge of sorts
• CDMs stimulate investments from result-based payment, joint ventures and use of dedicated funds from such as the World Bank, Asian Development Bank
• Majority of CDM credits developed when prices were roughly US$20/tonne, and the expected price range to meet the Paris COP goals are US$40-80 and US$50-100 by 2030, and way up to US$690-2,700 by 2100
• Article 6 of the Accords to build upon the CDM program

Alexis Leroy (Allcot), Your Carbon & Sustainability Solution

• More than 8,300 projects , many in their third crediting period
• Total investment is over US$300 billion
• World Bank funds & from Denmark & Germany, then from the EU, also UN US$1.6 billion to developing countries
• Of 10,500 letters of approval for withdrawals more than half were in Europe
• New Zealand, Japan, and Canada also very active in trading
• New markets expected after 2020 involve eligibility to renew CDMs, and domestic initiatives by Brazil, Mexico, South Africa, Colombia and South Korea to advocate reduction strategies
• China is moving towards certified emission reductions
• Colombia has approved a carbon tax on 3.2 million tones from gasoline and oil emissions starting at US$15/tonne and rising to US$16.50/tonne by 2019, also plans to address emission from other industries
• Main challenges remain lack of incentives by governments, remote administrative CDM processes, cost of implementation could be higher than value of credits, and a lack of market direction or requirement for carbon taxes

Ricardo Esparta (Private Developer in Brazil with over 100 CDM projects and 5 new CDMs), CDM Monitoring Good and Bad Methodologies

• Portuguese version book on Brazil experiences with CDM Legacy to be published soon, 16 chapters, including sectorial impacts, COP agreement impacts, and energy sector experiences
• Energy sector experiences 1996-2005 & 2006-2015 include the following:
  • Out of 342 CDM projects 210 are energy sector, at about 20-30 projects/yr
  • 100 power plant CDM projects implemented, not so good for biomass projects due to complexity of the CDM
  • Some problems include grid allocation of emissions within the CDM, grid sector emissions were not known (do not have anything like the EPA eGRID emission factors)
  • MRV CDM was changed during the period and the CDM is case-by-case, and multiple baselines required  affected sugar cane reductions such that only 26 projects have been approved, only 2 after 2006, and zero emission reductions since 2006