Carbon Market Watch

For fair and effective climate protection.

Coal in the CDM – the Saga Continues (Newsletter #19)

08 May 2012

The CDM Executive Board will discuss a revision of the coal methodology at its upcoming meeting. We described the shortcomings of the revisions in a technical note to the Board. Despite the proposed, more stringent rules, many CDM coal projects will still result in credits that do not represent real emission reductions. In addition, they will all severely harm climate goals without delivering any sustainability benefits. The proposed changes to the rules will also not apply to the six projects that are already registered.

The CDM Executive Board suspended the coal crediting methodology (ACM0013) in late 2011 after the UNFCCC’s Methodologies Panel presented evidence in a report that coal power projects in the CDM are severely over-credited. The Methodologies Panel has now revised the methodology and the Board will decide what to do with ACM0013 at its next meeting. Currently, 45 coal projects are in the CDM pipeline, located in India (32 projects) and China (13 projects). Six of these projects have already been registered.[1] These projects will therefore not be affected by the revision and will still receive credits based on the flawed, newly-suspended methodology. These six projects alone could generate 89 million credits. Once a methodology revision has been approved, the remaining projects that are currently in the pipeline will have to conform to the new rules and can then apply for registration.

How Good is the New Revision?

The Methodologies Panel has issued a call for input on the revisions. Aided by the Stockholm Environment Institute (SEI) we carefully examined the proposed changes. SEI made several key observations on why the methodology revision is still problematic. For example, issues such as the small efficiency gains, the large project emissions, the impact of other variables on plant efficiency, and the lack of data quality are still not sufficiently addressed. If you want to read up on the technical details and also read what other submissions say, go here.

Along with the technical issues, the following broader issues remain:

  • Using CDM finance for large, new and long-lived coal plants directly undermines the 2°C objective. Coal plants are the highest-emitting electricity resource. Using much-needed climate finance to support construction of these plants (even if it leads to slight increases in the efficiency of some coal plants) undermines the overall objective of limiting dangerous climate change.
  •  The focus on incremental change and the long-term lock-in of emissions are particularly troubling as the window of limiting warming to 2°C is closing. The 45 coal projects in the CDM pipeline will lock in over 400 million tCO2 in annual emissions – as much as the annual CO2 emissions of developed countries such as France, Spain and South Africa. The International Energy Agency has repeatedly warned that the continued development of coal power will make it impossible to hold global warming to safe levels.
  • Coal projects do not deliver sustainability benefits. Instead, they inflict severe toxic burdens on local populations and ecosystems.

What Will Happen at the Upcoming Board Meeting?

At the upcoming meeting, the Board has several options. They can:

  1. Approve the methodology as is
  2. Make changes to the methodology themselves and then approve it (we think that given how technical this subject matter is, this is unlikely)
  3. Send the methodology back to the Methodologies Panel so that the Panel can take the comments submitted in response to the call for inputs into account and then provide additional guidance to the Board.

Given that the Methodologies Panel has not yet had the opportunity to address these comments, we think that the Board should choose option three to ensure the integrity of the participatory process and, more importantly, to take advantage of the knowledge of and ideas from all stakeholders.

CDM Watch urges the CDM Executive Board not to approve a revision of ACM0013, unless it can be proven beyond doubt that the new revisions are able to address all issues of this project type that currently undermine the goals of mitigation and sustainable development.

 


[1] A seventh coal project (Chinese project 5027) slipped through to the registration stage just before the ban took effect. CDM Watch and Sierra Club provided detailed comments to the Board on why the project is not additional. Three Board members have initiated a request for review.