GUIDELINES ON:(A) COMMON PRACTICE(B) ADDITIONALITY OF FIRST-OF-ITS KIND

SDM JOINT COORDINATION WORKSHOP

Bonn, Germany, 24-25 March 2012

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Background

• The CMP requested the Board to develop guidance on “First of its kind” and “Common practice”

• Draft guidelines were developed and, following a call for public inputs, adopted by EB63 in September 2011

• EB65 revised the “Additionality tool” and the “Combined tool” to incorporate the provisions contained in the guidelines

• CMP7 requested the Board further improve the guidelines on the use of “first-of-its-kind” and the assessment of common practice, on the basis of the application of those guidelines to project activities

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“Guidelines on common practice” (EB 63, Annex 12)

• Define the terms “Applicable geographical area”, “Measure”, “Output”, and “Different technologies”.

• Identify all plants in the applicable geographical area which have a capacity in the range defined by the project plant capacity 50% (NALL)

• Out of these plants, identify the plants that apply “different technologies” from the project technology (NDIFF)

• Calculate the share of “similar technologies”: F = 1 – NDIFF/NALL

• The project activity is common practice if (i) F > 0.2, and (ii) NALL – NDIFF > 3

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“Guidelines First-of-its-kind project activities” (EB 63, Annex 11)

• Define the terms “Applicable geographical area”, “Measure”, “Output”, and “Different technologies”.

• A project activity is “First-of-its-kind” if: (i) it is the first in the applicable geographical area; (ii) applies a “different technologies” from other activities that deliver the same “output” and that had started commercial operation before the start date of the project; and (iii) opts for a crediting period of “a maximum of 10 years with no option of renewal”

• A proposed project activity that is “First-of-its-kind” is additional (i.e. it does not require barrier analysis, financial analysis or common practice analysis).

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Concerns raised by stakeholders (1)

• The new guidelines on common practice, instead of clarifying the steps of existing common practice analysis, introduce a completely new approach

• The data to apply the concept is not always publicly available

• Registered CDM projects may in the future be included for the purpose of defining the common practice threshold

• The strict criterion of “first” does not recognise barriers faced by the early adopters of new technologies; if there is more than one plant using a technology, it does not mean that the barriers are not there.

• The concept of first of its kind should not be linked to a 10 year crediting period

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Concerns raised by stakeholders (2)

• The term “measures” is used in two different ways in the revised combined tool and additionality tool which allows for two interpretations

• The definition of “different technologies” fails to encourage development of new technologies. For example, a switch from biomass combustion to biomass gasification would require the adoption of a new technology but according to the definition it would not be different since the fuel remains the same.

• The definition of “applicable geographical area” is less clear than before

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Next steps

• The Board and the UNFCCC secretariat will evaluate the comments from stakeholders and the practical application of the concept in project activities

• An information is planned to be prepared for EB69

• Revised tools, improving the concept, are planned to be adopted at EB70