Summary

This policy paper provides a brief overview of the current CDM framework for standardized baselines, identifies important shortcomings, assesses lessons learned on standardization from CDM methodologies, and recommends directions for the further development of standardized baselines. The paper reflects the views of researchers who have worked on standardization in offsetting mechanisms for over a decade.

For a long time, the Clean Development Mechanism (CDM) has been criticized for its cumbersome procedures and risks of weak environmental integrity. As a potential solution to both of these shortcomings, the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) called for the use of “standardized baselines” at the Cancun conference in late 2010.

While the current framework contains innovative ideas and proposals, our assessment and experience suggest that it may not achieve its objectives. It poses major practical challenges and could, at the same time, both discourage valuable and additional projects by under-crediting them and reduce environmental integrity by over-crediting others. It employs an approach that inadequately considers the circumstances, technologies and trends in the applicable sector by using the same (default) approach and performance thresholds regardless of the sector, project type, and location. The use of constant performance benchmarks over time may fail to reflect ongoing or expected trends. Practical challenges abound with regard to data availability. Furthermore, since the use of standardized baselines is proposed to be voluntary, only project developers that could achieve more credits than using a project-based baseline may choose them, weakening the environmental integrity of the system.

Drawing on the lessons learned from standardization in CDM methodologies and other schemes, the paper outlines a series of changes to the current approaches.