First-of-its-Kind and Common Practice

First-of-its-kind and common practice tests are part of the additionality test each prospective CDM projects has to go through.

First-of-its-Kind

The first-of-its-kind rule under the CDM states that a project is automatically deemed additional if:

(a) The project is the first in the applicable geographical area that applies a technology that is different from any other technologies able to deliver the same output and that have started commercial operation in the applicable geographical area before the start date of the project

(b) Project participants selected a 10-year non-renewable crediting period for the project activity.

The stringency of this rule depends on how ‘geographic region’ is defined and how a technology is defined as ‘different’ from similar technologies. If these definitions are too narrow, too many projects could potentially be defined as first-of-its-kind and automatically be deemed additional. For carbon capture and storage (CCS) projects for example, it would mean that every first CCS plant in a given country would be automatically additional, even if the investment decision would be made regardless of the CDM.

Common Practice

Common practice analysis is part of the additionality test and is intended as a credibility check to determine whether the proposed project type (e.g. technology or practice) has already become common practice in the relevant sector and region. The issue here is that the common practice test excludes from consideration any other project that is registered in the CDM or is applying for CDM approval.

If a majority of projects are non-additional, but all are nonetheless applying for CDM, the common practice test cannot serve as an effective credibility check, since all projects will pass even if few or none are additional. This is the case, for example, where a transition to more efficient technologies is already underway, for reasons other than CDM support (see for example coal power projects).

Addressing this weakness in the common practice test would require making a distinction between situations and project types where exclusion of CDM projects in the common practice test is warranted and where it is not.

For example, where the project technology is much less economically attractive than the baseline alternatives, the current rules of excluding CDM projects may make sense. However, where there are no decisive barriers that differ among the project and its baseline alternatives and only minimal differences in economic returns, CDM projects should be included in the baseline.

CDM Watch’s Submission to Call for Input on First-of-its-Kind and Common Practice (pdf-file, August 15, 2011)

Useful External Links:

Guidelines on additionality of first-of-its-kind project activities
Guidelines on common practice
UNFCCC guidelines to First-of-its-kind and Common Practice can be found here (external link)

Facebook
Twitter
LinkedIn

Related posts

Join our mailing list

Stay in touch and receive our monthly newsletter, campaign updates, event invites and more.