Why coal projects threaten the integrity of the CDM. Guest article by Sierra Club (Newsletter #15)
Guest article by Steve Herz, Justin Guay from Sierra Club
Update! CDM Executive Board called to suspend coal projects
The upcoming 62nd Executive Board Meeting is promising to be very exciting. Just as we finalised this newsletter, we found out that the CDM Methodology Panel is recommending to the CDM Executive Board that they suspend the super critical coal methodology on the grounds that it grossly inflates baseline emissions, leading to a potentially serious over-issuance of credits.
We are very happy about this because CDM Watch has long argued that super critical coal projects do not belong in the CDM. Firstly, they perpetuate the use of coal, fundamentally undermining climate mitigation goals. Secondly, all CDM coal projects we have examined are clearly non-additional (including the four already registered). The guest article by Sierra Club gives an overview of this issue. Thirdly, we have argued for a while that the methodology is flawed and leads to over-crediting. We welcome the Methodology Panel’s recommendation and strongly support a suspension of the super critical coal methodology.
The CDM Methodology Panel is recommending to the CDM Executive Board that it suspend the super critical coal methodology on the grounds that it grossly inflates baseline emissions, leading to a potentially serious over-issuance of credits.
The CDM Executive Board will discuss this issue at its upcoming 62nd meeting.
CDM Watch has long argued that super critical coal projects do not belong in the CDM.
We welcome the CDM Methodology Panel’s recommendation and strongly support a suspension of the super critical coal methodology.
Why is coal included in the CDM?
Coal is the world’s most carbon intensive fossil fuel. So, using massive investments in coal as a tool for reducing carbon emissions may sound like a joke. But with a slew of coal projects lining up for CDM support, no one is laughing. What matters for CDM purposes is that new more efficient coal projects may emit less carbon than if less efficient, outdated technology were used instead (never mind the hundreds of millions of tonnes of CO2 these projects will emit over the decades they will be in operation).
Project sponsors claim that these ‘emissions reductions’ can only be achieved if they are granted hundreds of millions of euros in CDM funding. So far the CDM Executive Board has approved four new coal plants (three in India, one in China), representing roughly 56 million CERs worth, which is about EUR 560 million at current market prices. With 32 more projects in the process of applying, hundreds of millions more non-additional CERs (worth billions of Euros in windfall profits) threaten the integrity of the CDM.
Coal Projects are non-additional
There are many reasons new coal plants should not be eligible for CDM support. Firstly, it is a contradiction in terms to call coal plants ‘clean’, regardless of their efficiency. They cause enormous environmental damage at the pithead, lock in decades of new carbon emissions and then poison their location and host community with a myriad of toxic pollutants. Moreover, CDM support for coal would lavish hundreds of millions of dollars on an already grossly profitable fossil fuel industry at a time when the world desperately needs to dedicate scarce climate finance towards new renewable energy.
In addition, CDM coal projects are non-additional: they don’t generate emissions reductions that wouldn’t have happened anyway. This is because super critical coal technology is the mainstream modern technology of choice in the coal industry, with over 500 supercritical units in operation, representing more than 20 per cent of units installed worldwide. Super critical and ultra super critical technology is increasingly preferred as dramatically rising coal prices worldwide provide a strong incentive to coal power producers to use more efficient technology.
In India, where the bulk of the CDM coal projects are originating, the government has declared that all new ultra mega power projects (UMPPs) “shall be based on supercritical technology” while the Planning Commission has decided that roughly 60 per cent of thermal power contemplated in the 12th Five-Year Plan will be supercritical, moving to 100 per cent of new coal-fired plants in the 13th Five-Year Plan. This move is a response to domestic coal shortages as well as coal prices that have nearly doubled since 2001 despite government price controls. Finally, nearly all projects in the pipeline are moving forward regardless of CDM funding. One project in Andhra Pradesh described CDM funding as merely “a new revenue stream for the Company”.
What’s being done to maintain the integrity of the CDM
Despite the fact that coal projects undermine climate protection goals the CDM Executive Board does not have the explicit mandate to exclude a technology on the grounds that it is non-sustainable. Such decisions have to be made by the Parties of the Kyoto Protocol (as was the case when nuclear was excluded). Yet, it is the CDM Executive Board’s mandate to ensure that only real emissions reductions are eligible for CDM credits.
So far the CDM Executive Board has a mixed record when it comes to coal projects. It correctly rejected the 3,960 MW Tata Mundra project (ref. 3020) but has approved four other non-additional projects. In the past month, the Sierra Club and CDM Watch have challenged the approval of three new Indian UMPP coal plants, including the previously rejected Tata Mundra project that is once again trying to get registered. Of these, the board has requested the review of one of the projects due to additionality concerns (ref. 4629). While this is a start, the CDM Executive Board must extend its review to all coal projects to properly determine additionality. It is imperative that the CDM Executive Board reject all projects where: super critical coal technology is already business-as-usual, financing is already secured, or project activities are currently underway, because such projects are obviously non-additional.
Sierra Club and CDM Watch continue to lobby against coal projects in the CDM. If you are interested in keeping up with our campaigns, please sign up to our network at
 Qingshan Zhu, 2005. Clean coal technology– Gasification vs. (pulverized coal) combustion, at 4. available at http://www.interacademycouncil.net/Object.File/Draft/10/338/0.pdf
 World Bank, 2008. Clean Coal Power Technology Review: Worldwide Experience and Implications for India, at 2. available at http://moef.nic.in/downloads/public-information/LCGIndiaCCTjune2008.pdf
 See, Central Electricity Regulatory Commission, Petition 128/2010; paragraph 22, 25, available at http://www.cercind.gov.in/2010/ORDER/July/signed_order_in_Pet_No_128-2010.pdf
 Planning Commission, 2011. Interim Report of the Expert Group on Low Carbon Strategies for Inclusive Growth at 37..available at http://moef.nic.in/downloads/public-information/Interim%20Report%20of%20the%20Expert%20Group.pdf
 International Energy Agency, 2011: Technology Development Prospects for the Indian Power Sector, at 47. available at http://www.iea.org/papers/2011/technology_development_india.pdf; Central Electricity Authority, Letter of 2 February 2010, available at http://www.cea.nic.in/more_upload/advisory_mop_sourcing_domestic_mfrs.pdf
 See for example: Hansen, J., Mki. Sato, P. Kharecha, D. Beerling, R. Berner, V. Masson-Delmotte, M. Pagani, M. Raymo, D.L. Royer, and J.C. Zachos (2008). “Target Atmospheric CO2: Where Should Humanity Aim?”. Open Atmos. Sci. J. 2 (1): 217–231. http://www.columbia.edu/~jeh1/2008/TargetCO2_20080407.pdf.
 Registrerd projects: 1,320 MW Tirora project (3225); 3,960 MW UMPP Sasan (3690); 2,000 MW Shanghai Waigaoqiao (3288); 1,320 MW Adani Mundra (2716)
 3,960 MW Tata Mundra (3020); 3,960 MW Jarkhand India (4629); 3,960 MW Andhra Pradesh India (4533); 660 MW Koradi plant in Maharashtra, India.
18 Sep 2017