1. Standardized Approaches An overview
Anja Kollmuss, head of consulting

2. Content Framing the issue Main points of standardization
Learning from existing experience

3. Context: Keeping warming below 2°C
About 75% probability, if cumulative CO2 emissions between are kept below 1000 gigatons of CO2 and comparable reductions are made in non-CO2 GHGs.
Figure shows recent emissions (1990 – 2009), our “representative 350 ppm pathway “ (2010 – 2050) and, for comparison, business-as-usual pathway that’s consistent with the International Energy Agency’s standard “no climate policy” projections.
Source: Sivan Kartha, SEI

4. Context: Where are we at?
Consumed between : nearly one-third of the 2°C budget (330 out of 1000 gigatons CO2)
Global emissions currently about 50 gigatons CO2e per year
Expected CERs 1.4 gigatons Remember: CDM currently zero sum
Source: Sivan Kartha, SEI

5. New Better Bigger We need… Scaling-up mitigation
Building and preserving capacity for post 2012 mechanisms
Going beyond offsetting: beyond zero-sum
New Better Bigger
Ensure environmental integrity
Ensure equity between rich and poor
Improve efficiency: e.g. reduce transaction costs
Ensure attractiveness for investors
Improve regional and sectoral distribution ….

6. The lofty goals of standardization
Improved efficiency: e.g. reduce transaction costs and streamline procedures for project implementation Greater objectivity, consistency and predictability at project implementation stage. Reduced transaction costs at project implementation stage  reducing barriers for project implementation Improved regional and sectoral distribution  access to underrepresented areas (e.g. LDCs) and sectors (e.g. transportation and buildings)  Ensured environmental integrity and attractiveness for investors

7. What can be standardized?
Offset Programs
Baseline emissions and/or
Additionality determination and/or
Certain parameters for project emission calculations
Standartization can also be used in other contexts (e.g. allowance allocation, voluntary programs)

8. Terms, definitions, types
Examples
Standardized approaches
Catch all term that includes performance related standards and non-performance related approaches.
Non-performance standard: e.g. ‘not mandatory by law’;
e.g. ‘does not generate non-carbon related revenue’
Performance related: examples below
Benchmark or
Performance standard
Emission rate/intensity per unit of output, input, or throughput or
market penetration rate
Applied to baseline and/or additionality determination
Emissions rate: 0. 8 tons of CO2 per ton of cement
Market Penetration rate: Technology penetration of less than 20%
Default Values
Used to calculate baseline and/or project emissions
IPCC 2006 Guidelines
98% methane flare efficiency
Positive Lists
Usually a technology specific list that deems all projects of that technology additional.
The underlying rationale is usually performance based
Agricultural methane destruction
Small scale hydro
Solar PV
In practice, the terms “performance standard” and “benchmark” tend to be used rather interchangeably. Both refer to a measure of environmental performance in terms of a quantity of emissions per unit of output, input, or throughput, and both are often based upon actual measured performance of equipment or facilities. While the term “performance standard” is often associated with a strict regulatory or accounting framework, “benchmark” is often used more broadly, as in voluntary industry initiatives.

9. Terms, definitions, types
Examples
Standardized approaches
Catch all term that includes performance related standards and non-performance related approaches.
Non-performance standard: e.g. ‘not mandatory by law’;
e.g. ‘does not generate non-carbon related revenue’
Performance related: examples below
Benchmark or
Performance standard
Emission rate/intensity per unit of output, input, or throughput or
market penetration rate
Applied to baseline and/or additionality determination
Emissions rate: 0. 8 tons of CO2 per ton of cement
Market Penetration rate: Technology penetration of less than 20%
Default Values
Used to calculate baseline and/or project emissions
IPCC 2006 Guidelines
98% methane flare efficiency
Positive Lists
Usually a technology specific list that deems all projects of that technology additional.
The underlying rationale is usually performance based
Agricultural methane destruction
Small scale hydro
Solar PV
In practice, the terms “performance standard” and “benchmark” tend to be used rather interchangeably. Both refer to a measure of environmental performance in terms of a quantity of emissions per unit of output, input, or throughput, and both are often based upon actual measured performance of equipment or facilities. While the term “performance standard” is often associated with a strict regulatory or accounting framework, “benchmark” is often used more broadly, as in voluntary industry initiatives.

10. Project-based vs standardized approaches
Can take project specific conditions into account (e.g. baseline, monitoring, additionality).
Common standards applied to all projects of a given type.
More subjective project evaluation
More objective project evaluation
Subjectivity during the design phase of the performance standard. (e.g. decisions on stringency levels)
Typically project specific additionality tests (e.g. investment and barriers analysis)
Additionality of a project easily determined
Expensive and time consuming for project developers and Evaluators
Costly to design
Simplified, more transparent and streamlined project approval process
avoid subjective evaluations at the project level, policy judgments are still required in establishing standardized criteria,
assumptions, and metrics.

11. Key Points
Subjectivity is not eliminated, but shifted from project registration process to the baseline setting stage.
Who decides?
Risks: One off decision, difficult / costly to reverse
Gaming with standard setting can lock in too lenient baselines / non-conservative parameters

12. Key Points
Cost is not lowered but shifted from project developer / project stage to standardization stage.
Who pays?
Are the ones who pay the ones who decide on stringency?
Much detailed data is necessary. Who will ensure reliability of such data? Who will pay to collect the data?
How will the data be checked for accuracy and conservativeness?
Data collection and analysis USD million
Design of Performance Standard: USD million
Cost estimates taken from: Hayashi, D., N. Müller, S. Feige and A. Michaelowa (2010). "Towards a More Standardized Approach to Baselines and Additionality Under the CDM." Perspectives Climate Change, May 2010.)

13. Key Points
Can efficiency and environmental integrity really be improved?

14. Output Average intensity Non-normal distribution of
BAU generation emission intensity
Emission intensity (tCO2 / t output)
Output
Average intensity

15. Output Average intensity BAU generation Free riders
Emission intensity (tCO2 / t output)
Output
Average intensity

16. Key Points
Can efficiency and environmental integrity really be improved?
BAU generation
Benchmark-induced generation
Uncredited Reductions
Free riders
Credited Reductions
Emission intensity (tCO2 / t output)
Output
Additionality benchmark and crediting baseline

17. Additionality Additionality threshold Crediting baseline
Emission intensity (tCO2 / t output)
Additionality threshold
Crediting baseline
Plant A: project emissions intensity lower than additionality threshold  receives credits up to baseline
Plant B: project emissions intensity higher than additionality threshold  receives no credits
Plant C: project emissions intensity higher than additionality threshold  receives no credits
Plant D: project emissions intensity lower than additionality threshold  receives credits up to baseline
Plant E: No project activity, BAU emissions intensity lower than additionality threshold  receives credits up to baseline
= emission intensity reductions due to project activity
= awarded credits
= project emission intensity
= BAU emission intensity
BAU intensity higher than crediting baseline
No change from BAU intensity
BAU intensity lower than crediting baseline
Additionality

18. Lessons learned from existing standardizations
CDM JI
Climate Action Reserve 18

19. Experience under the CDM
Large, concentrated emission sources
ACM13: Efficient fossil power generation
21 projects in pipeline since 2007 (mostly in China and India, where data is readily available)
Benchmark emissions: top 15% power plants (same fuel)
NM302: Cement sector
Methodology in evaluation since 2009
CSI database offers a great potential for scaling up
Challenge in determination of benchmark stringency levels
Small, dispersed emission sources
AM70: Efficient refrigerators for households
Average of top 20% of performers
No project since 2008 due to heavy data requirement
NM328: Whole-building energy efficiency and fuel switch
Methodology in evaluation since 2010
Data requirement may become extensive

20. Performance Standards under JI
Example: N2O abatement in Nitric and Adipic Acid Production
Baseline emissions benchmark:
nitric acid: 1.85 or 2.5 kg of N2O per t of nitric acid.
adipic acid: 90% abatement
 avoid risk of leakage

21. CAR Lessons Learned
To maintain environmental integrity, standardized baselines may need to be conservative
Use of standardized assumptions, emission factors, and parameters may lead to inaccuracy at the project level
Protocols generally compensate by adopting conservative assumptions, factors, parameters

22. CAR Lessons Learned
Standardized protocols work better for some project types than for others
Standardized baselines are more difficult with complex systems, where performance is subject to multiple drivers, or where multiple baseline alternatives are possible (e.g., forestry!)
All protocols rely on project-specific details and parameters to some degree

23. CAR Protocol Development
Internal research and scoping
Kick-off/scoping meeting
Multi-stakeholder workgroup formation
The Reserve drafts a protocol
Draft protocol considered by workgroup
Provides technical expertise and practitioner experience
Period meetings and individual consultation when needed
Revised draft released for public comment
Public workshop
Final version adoption by Reserve board in public session 23

24. Questions, questions, questions...
What data is available?
What should the stringency be?
Who should pay for what?
Which sectors should be targeted?
Who should develop standardized methodologies?
What role will DNAs play?
 What is the goal of standardization? And who decided what the goals should be?