1. OECD Annex I Expert Group Forestry projects: lessons learned and implications for CDM modalities Jane Ellis, OECD Bonn, June 2003

2. OECD Annex I Expert Group Background and scope Modalities and procedures (M&P) for A/R projects to be agreed at COP9 Some experience gained to date with COP7 M&P for emission reduction projects Paper examined several A/R projects underway and made recommendations for additionality, baselines and leakage M&P Presentation will outline conclusions of paper

3. OECD Annex I Expert Group Experience with “additionality” COP7 definition of additionality for emission reduction projects has two interpretations: –Would a less-GHG friendly project have been implemented instead of the proposed project activity? OR –Would the proposed project activity have occurred even if it were not registered as a CDM project activity? Both interpretations have been used by CDM project developers.

4. OECD Annex I Expert Group Assessing additionality 13 CDM-type A/R project/project components studied Treatment of additionality very variable: –2 gave no additionality assessment –1 compared C sequestration with project to baseline –3 gave “persuasive argument” –3 gave economic/financial arguments –4 outlined a mixture of reasons

5. OECD Annex I Expert Group Why A/R activities are different Undertaken in large amounts under BAU Can result in emissions as well as removals Changes in carbon stocks can be naturally- occurring as well as human-induced Can have multiple environment, economic, social impacts CDM A/R activities are required to have multiple goals (SD, GHG, natural resources)

6. OECD Annex I Expert Group Defining “additionality” for A/R Definition of additionality in M&P will need to take into account differences between A/R and emission reduction projects Can be worded so as to reduce importance of free-riders Additionality tests or screens other than the baseline may also be needed These could be based on objectively verifiable data/information

7. OECD Annex I Expert Group Baselines used in different A/R projects

8. OECD Annex I Expert Group Baselines General approach similar for different projects –Identify current land use/land-use trends –Assess likely future land use without intervention –Calculate carbon stocks of likely land use –Assess whether any emissions from baseline land use, and whether these activities will be displaced as result of proj. –Assess if natural regeneration will occur on the site

9. OECD Annex I Expert Group Baselines (2) Definition will need to: –allow for the differences between A/R and emission reduction projects –ensure that baseline chosen will not result in credits for ineligible LULUCF activities Identifying the most likely prospective land use could be a promising approach

10. OECD Annex I Expert Group Leakage Different types of leakage possible from A/R projects, at different geographical scales Some types of leakage could be significant … but not all can be controlled by the project developer What is included in “leakage” influenced by definition of project baseline and boundary

11. OECD Annex I Expert Group Leakage (2) Little experience with quantifying leakage to date, although some projects have analysed the key indicators that cause leakage Leakage types under the control of the project developer are easier to control and reduce through project design

12. OECD Annex I Expert Group Conclusions Changes needed to definitions of additionality, baseline, baseline approaches, leakage “Additionality” could be defined to help reduce potential free-riders Separate additionality tests may be needed “Baseline”, “baseline approaches” need to allow for characteristics/eligibility of LULUCF in CDM Importance of leakage can be reduced through careful project design

13. OECD Annex I Expert Group Further information OECD/IEA information papers, including “Forestry projects: lessons learned and implications for CDM modalities” are available at: http://www.oecd.org/env/cc