Carbon Market Watch

For fair and effective climate protection.

Sneak Preview: New Study on Grid Emission Factors (Newsletter #11)

25 Nov 2010

At the next meeting, the EB will consider new rules that would require CDM host countries to hire a CDM auditor (DOE) to validate their default grid emissions factors. CDM Watch welcomes such rules for the following reasons:

Currently CDM projects that replace grid electricity (e.g. a wind farm or a hydro dam) can use the default grid emissions factors (EFs)[1] to calculate emissions from the electricity grid. These EFs are published by the Designated National Authority (DNA) in each country. DNAs are governmental institutions in the host country of CDM projects which are responsible for approving CDM projects.  

Why are average grid emissions factors (EFs) important? The EFs define how much CO2 per kWh produced would be emitted if the project was not built. The EF is used, together with the project emissions, to calculate the number of CERs a project can get. The higher the EF, the more credits a project can receive (and the more revenue a country will make if it taxes CERs, as is the case in China, for example).

Here is an example to illustrate the effects of inflated EFs: if a grid emission factor is stated to be 800 kg of CO2 per MWh but in reality the number is more like 750 kg of CO2 per MWh, each renewable energy project would earn 50 CERs more per 1000 MWh it produces than it actually should. This adds up: in this example, a wind farm that produces 20,000 MWh of electricity per year would earn 1000 more CERs because the EF is inflated.

It is therefore crucial that the EFs used are accurate! CDM Watch has commissioned a study that looks at the reliability of grid emissions factors published by DNAs. Preliminary results show that the EFs may be inflated in some countries either because of data availability issues or potentially because the country is trying to maximise the number of CERs projects can generate. Stay tuned for an update!

[1]  Think of EFs this way: when a family calculates their carbon footprint from their electricity use they need to know how many kWh they have consumed and they also need to get an EF from their utility so they know how much CO2 is emitted at the power plant for each kWh they consume — it is about 860 g of CO2 per kWh if the electricity is produced with coal, 600g for natural gas, and less than 50g for renewable power such as wind, hydro and solar.