Fw : [CDM Watch Network]- Why coal projects do not belong in the CDM
Paryavaran Mitra
To bring you a round-up of the CDM news over the past days we focus on some of the reactions that followed the release of a brand new study carried out by Stockholm Environment Institute on Coal Power plants in the CDM. The full SEI report (previously posted on this network) can be downloaded here
ENDS Europe: Further doubts over CDM-funded coal plants
Bloomberg : Coal to Get Millions of ‘Artificial’ CO2 Credits, CDM Watch Says
Point Carbon: Coal plants could earn 300 mln bogus CDM credits: report
Huffington Post : End the Coal for Carbon Credits Scandal
You can download our Coal Policy Briefing which outlines the impacts of coal use, explains why coal projects do not belong in the CDM and offers concrete policy solutions for the Parties of the Kyoto Protocol, the CDM Executive Board or the European Union.
CDM Watch is campaigning for the removal of this project type from the CDM and we are looking for network members to support this campaign. Please get in touch with us if you would like to join!
Andrew
Further doubts over CDM-funded coal plants
ENDS Europe – 3.11.2011
The methodology used to award emissions reduction credits to coal-fired power plants under the UN’s clean development mechanism (CDM) is flawed and will give them too many credits, according to the Stockholm Environment Institute (SEI).
In a report published on Friday, the SEI suggests there may be no way to create a watertight methodology and questions whether coal should be receiving CDM credits at all.
“Using much-needed climate finance to support construction of these plants, even if it leads to slight increase in the efficiency of some coal plants, may undermine the overall objective of limiting dangerous climate change,” says the report.
The expert panel that advises the CDM’s executive board has already raised doubts about the coal methodology and has been asked to suggest improvements. The issue will be discussed at the board's next meeting on 21 November.
To qualify for CDM credits, project developers have to show emissions reductions are ‘additional’ and would not otherwise have taken place.
SEI says none of the 32 coal plant projects in India approved under the CDM or applying for approval are additional. The same applies to China’s 13 plants. Both countries have already been introducing low-carbon technologies, it says.
The flaws in the methodology also mean the projects could get 250% more emissions credits than they deserve, the report says. Using the current methodology, the 45 projects appear to save 451 million tonnes of carbon dioxide; the actual reduction is close to 132Mt, it says.
It may be impossible to create a suitable methodology because of the range of factors that can influence emissions and because potential uncertainties are quite large as a proportion of total emissions, the report says.
It suggests that sectoral crediting systems or carbon trading would be better at encouraging improvements in power plant emissions.
Follow-up:
SEI study and executive summary. See also press release from CDM Watch
Bloomberg : Coal to Get Millions of ‘Artificial’ CO2 Credits, CDM Watch Says
By Mathew Carr
Nov. 3 (Bloomberg) -- Coal-burning plants may earn 451 million metric tons of “artificial” United Nations emission credits through 2020 unless regulators ban them from the world’s biggest greenhouse-gas offsetting market, CDM Watch said.
UN regulators should stop coal plants from being eligible for credits under the Clean Development Mechanism, the Bonn- based environmental lobby group said today in a statement, citing a study by the Stockholm Environment Institute, a research organization backed by the Swedish government and the European Environment Agency.
“Coal technologies are not dependent on CDM financing but are being rapidly adopted due to price pressures and numerous Indian and Chinese government policies that mandate higher efficiency technologies,” the lobby said in its statement.
CDM projects must prove that they need the revenue from selling carbon credits in order to survive, a test known as “additionality.”
European benchmark coal prices have surged 50 percent since the end of 2009 to trade today at $130.15 a metric ton, as global demand increased. That boosts the incentive to use the fuel more efficiently. The potential credits would be worth 2.9 billion euros ($4 billion) at current CDM-credit prices of 6.50 euros a ton on the ICE Futures Europe exchange in London.
“It is essential to re-evaluate whether an offset-based, incentive-only system such as CDM should support coal investmen;ts at all,” the institute said in its study, which was commissioned by CDM Watch.
In September, the Executive Board of the CDM refused to suspend the methodology that grants emission credits to efficient coal-fired power plants in developing nations, as it dealt with registration requests.
“We felt we could manage the risks” of continuing to process requests under the methodology, Martin Hession, chairman of the executive board, said at the time.
There are 39 new coal projects lining up to register under the program, CDM Watch said in its September newsletter.
Coal plants could earn 300 mln bogus CDM credits: report
Coal-fired power stations could earn around 300 million bogus carbon credits from the U.N.'s biggest offset market, a report by an influential research institute said Thursday.
The claim by the Stockholm Environment Institute comes a week before U.N. experts meet to discuss changing the rules of the Clean Development Mechanism (CDM) in order to cut the number of offsets coal-fired power stations can earn.
The report claimed that some Indian developers had inflated the environmental benefits of upgrading power plants to earn more carbon credits that they can then sell to companies in the EU emissions trading scheme.
“I was frankly surprised at the extent to which there appear to be deep and systematic flaws in the crediting rules, both in design and practice,” said Michael Lazarus, the main author of the study.
He added: “These flaws call into question whether the methodology can be made sufficiently robust to address the issues discussed in the report.”
Some coal-fired projects have been registered under the CDM, but the U.N. expert Methodologies Panel this week has been discussing whether to alter calculations that determine how many credits power stations can get in future.
The Meth Panel said its findings on the blueprint for cleaner coal projects will not be disclosed until an official report on the meeting is released by the U.N's climate secretariat next week.
Thursday's report from the Stockholm Environment Institute comes just a month after it was due to deliver a separate EU-commissioned study into the integrity of the CDM and will likely spark speculation about the content of that report.
INFLATED
Coal-fired plants can earn CDM credits (Certified Emission Reductions) if they prove they have cut emissions by displacing older, more polluting stations.
But SEI claims that developers have compared their plants with older, more polluting stations rather than newer plants.
“Specifications of technologies currently available in the market suggest the relative efficiency and emissions improvements are likely to be on the order of 2-4 per cent,” the report said.
“In contrast, these coal projects are claiming improvements on the order of at least 11 percent on average, the report added.
According to green group CDM Watch, which scrutinises U.N.-approved offset projects in developing countries, 45 projects are seeking 451 million U.N. carbon credits for emission reductions made by 2020.
SEI’s analysis finds these projects should only receive 132 million credits if project owners had to use a more conservative approach.
The report also questioned whether coal projects should get credits at all, citing the possibility that the CDM could end up providing 3-4 billion euros of finance to nearly 80 GW of new coal plants.
DOUBTS
The Meth Panel is expected to deliver its report from this week’s meeting to the CDM’s Executive Board later this month.
“It is going to be the next controversial thing,” said a government official with close knowledge of the matter.
If the meth panel acknowledges flaws in coal projects it could heap pressure on the EU to act.
Doubts that these projects need revenue from carbon offsets and the fact they burn coal prompted European parliamentarians in September to urge the European Commission to ban companies from using credits from the schemes in the bloc's carbon market.
The SEI, along with three other research groups, was due to deliver an EU study into the CDM integrity last month, but the European Commission has remained tightlipped about the report.
European companies are banned from using credits from most industrial gases after 2013, and the EU Climate Commissioner last month said the EU would "probably" ban more schemes from supplying credits to its cap-and-trade scheme.
The existence of the EU-backed study took many in the market by surprise, prompting a Commission official and spokesperson at the time to say the EU was not "currently considering" banning more project types.
End the Coal for Carbon Credits Scandal
The Sierra Club and CDM-Watch first broke the coal for carbon credits scandal occurring at the United Nations offsetting mechanism (the Clean Development Mechanism CDM) associated with the Kyoto Protocol back in July.
If you're unfamiliar with CDM - here's a definition from the UN:
The CDM allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol.
The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets.
The scandal discovered is that coal plants are arguing that using modern efficiency technology should be rewarded for producing less carbon than less efficient plants do. They are also arguing that without carbon credits they could not afford to install this technology.
Now, the Stockholm Environment Institute, has released the new report "Coal in the CDM" that underscores the need to put an end to this scandal. The report found (PDF) that CDM support has little to no bearing on whether projects opt for more efficient technology.
From page 7 of the report:
Project documents for Indian projects inflate the benefits of switching from subcritical to supercritical technology. Specifications of technologies currently available in the market suggest the relative efficiency and emissions improvements are likely to be on the order of 2-4%. In contrast, these coal projects are claiming improvements on the order of at least 11%, on average.
The obvious contradictions of coal and clean in the same sentence aside, this scam threatens to undermine the clean development mechanism as well as our broader climate efforts.
The original scam was caught by a United Nations panel in July, which recommended immediately suspending credits for new, more efficient, coal plants. Unfortunately, despite the recommendation, nothing has changed since then and new plants continue to receive carbon credits for spewing millions of tons of greenhouse gases into the atmosphere.
This new report from the Stockholm Environment Institute is just another reminder of the need for action.
The fact is the coal industry is trending towards more efficient coal plants for a number of reasons (skyrocketing coal prices being one of them) without CDM funding which is being used simply as a "new revenue stream" as one company put it. In essence, the CDM has become a "clean stamp" of approval as well as a new subsidy for dirty coal.
The report also calls into question a number of other flaws inherent to these projects. The report concludes that coal project flaws are: "simply too great to warrant application of a CDM methodology."
While these findings are important from a technical standpoint, our concern is far more basic: coal is neither clean, nor sustainable. To imply that dirty coal should be eligible for carbon credits is an Orwellian pitch that only our present batch of Tea Party Republican candidates could make with a straight face.
The problem is that 25% of all new coal plants are doing just that by applying for carbon credits. Worse, the CDM board has already doled out a windfall subsidy of $210 million. But that's only the tip of the iceberg. The total pipeline is 451 million carbon credits, worth roughly $3.1 billion dollars. That's billions of dollars from the "clean" development mechanism that will go to subsidizing new dirty coal, not clean energy.
Ridiculous as the situation may seem, this is a big problem. The world simply can't afford to continue to lavish the obscenely profitable dirty energy industry with yet more subsidies it doesn't need. It already has more than a 100-year head-start, and trillions of dollars of taxpayer money in its pocket. As the world's eyes turn towards the next round of climate negotiations in Durban, the United Nations must end this egregious abuse of climate finance. It must put an end to the Coal for Carbon Credits scandal.
Andrew Coiley
Project Officer
NGO Forum Environment & Development
Rue d'Edimbourg 26,
B-1050 Brussels, Belgium
Phone: +32 483 65 50 78
Email: and...@cdm-watch.org
Web: www.cdm-watch.org
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