1. Some open questions in power sector methodology Sandra Greiner Carbon Finance Unit The World Bank www.CarbonFinance.org World Bank methodology event Dehli, 22 October 2002

2. Contents I.How to establish grid emission factors? II.Ex ante or ex post emission factors? III.How to deal with supply shortage?

3. I. How to establish grid emission factors?

4. So far, different approaches have been developed and applied Average emission intensity of the grid Emission intensity of the marginal plants (operating margin) Emission intensity of plants to be added to the system (build margin) Average of operating and build margin (combined margin)

5. Also, different methods have been applied to determine plants operating at the margin Analysis of dispatch data –hourly monitoring (e.g. Chile Chacabuquito) –from historic dispatch Analysis of cost structure (incl. seasonal variations, peak/shoulder/base load) Weighted average of all plants excluding must-run facilities Identification of single plant most likely to be at the margin in different scenarios (proxy plant) Weighted proxy plant approach (depending on season and hour of day)

6. Resulting questions Project developers free to choose the approach? Does the first project in a country determine which emission factor has to be used? Different approaches to be used by small and regular projects? How can it be avoided that more than one project claims to displace the same marginal plant?

7. II. Ex ante or ex post emission factors?

8. Evaluation Transaction costs Accuracy Ex post EF Ex ante EF

9. Should the use of ex ante emission factors be limited? To certain project categories, e.g. small scale? Required recalculation after a certain (which?) time period / a certain event Conservative ex ante factors, i.e. factors should with a high level of confidence not overestimate the emission reductions

10. III. How to deal with supply shortage?

11. Project in a country with supply shortage time GWh demand supply project

12. Guidance needed … …whether projects not displacing emissions should earn credits for emission reductions? …on how to calculate credits for emission reduction

13. Answers? …or more open questions?