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| CDM project cycle |
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| Baseline |
The baseline for a CDM project activity is the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases that would occur in the absence of the proposed project activity. A baseline shall cover emissions from all gases, sectors and source categories within the project boundary . A baseline shall be established:
- By project participants in accordance with provisions for the use of approved and new methodologies , contained in Marrakech Accord and relevant decisions of the COP/MOP.
- In a transparent and conservative manner regarding the choice of approaches, assumptions, methodologies, parameters, data sources, key factors and additionality, and taking into account uncertainty.
- On a project-specific basis.
- In the case of small-scale CDM project activities which meet the criteria specified in Marrakech Accord and relevant decisions by the COP/MOP, in accordance with simplified procedures developed for such activities.
- Taking into account relevant national and/or sectoral policies and circumstances , such as sectoral reform initiatives, local fuel availability, power sector expansion plans, and the economic situation in the project sector.
The baseline may include a scenario where future anthropogenic emissions by sources are projected to rise above current levels, due to the specific circumstances of the host Party.
The baseline shall be defined in a way that CERs cannot be earned for decreases in activity levels outside the project activity or due to force majeure.
In choosing a baseline methodology for a project activity, project participants shall select from among the following approaches the one deemed most appropriate for the project activity, taking into account any guidance by the executive board, and justify the appropriateness of their choice:
- Existing actual or historical emissions , as applicable; or
- Emissions from a technology that represents an economically attractive course of action , taking into account barriers to investment; or
- The average emissions of similar project activities undertaken in the previous five years , in similar social, economic, environmental and technological circumstances, and whose performance is among the top 20 per cent of their category.
Example of baseline (Figure source: GTZ )
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| Project Boundary |
| The project boundary shall encompass all anthropogenic emissions by sources of greenhouse gases under the control of the project participants that are significant and reasonably attributable to the CDM project activity .
Example of project boundary (Figure source: GTZ )
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| Leakage |
Leakage is defined as the net change of anthropogenic emissions by sources of greenhouse gases which occurs outside the project boundary, and which is measurable and attributable to the CDM project activity . Reductions in anthropogenic emissions by sources shall be adjusted for leakage in accordance with the monitoring and verification provisions.
The most frequently cited example of leakage is a forest protection project to reduce GHG emissions. The leakage concern is that forest protection could cause deforestation to move from the protected forest to a nearby forest, with no net GHG benefit. Although this example pertains to the forest protection sector, project activities in virtually all sectors of GHG mitigation (energy, transportation, etc) have the potential to cause leakage. |
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| Environmental impacts |
| Project participants have submitted to the designated operational entity documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts and, if those impacts are considered significant by the project participants or the host Party, have undertaken an environmental impact assessment in accordance with procedures as required by the host Party . |
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| Monitoring Plan |
Project participants shall include, as part of the project design document, a monitoring plan that provides for:
- The collection and archiving of all relevant data necessary for estimating or measuring anthropogenic emissions by sources of greenhouse gases occurring within the project boundary during the crediting period .
- The collection and archiving of all relevant data necessary for determining the baseline of anthropogenic emissions by sources of greenhouse gases within the project boundary during the crediting period.
- The identification of all potential sources of, and the collection and archiving of data on, increased anthropogenic emissions by sources of greenhouse gases outside the project boundary that are significant and reasonably attributable to the project activity during the crediting period.
- The collection and archiving of information relevant to the analysis of the environmental impacts of the project activity.
- Quality assurance and control procedures for the monitoring process.
- Procedures for the periodic calculation of the reductions of anthropogenic emissions by sources by the proposed CDM project activity, and for leakage effects.
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| Crediting Period |
Project participants shall select a crediting period for a proposed project activity from one of the following alternative approaches:
- A maximum of seven years which may be renewed at most two times , provided that, for each renewal, a designated operational entity determines and informs the executive board that the original project baseline is still valid or has been updated taking account of new data where applicable; or
- A maximum of ten years with no option of renewal .
Crediting periods and baseline renewal (Figure source: HWWA )
If a CDM project starts in 2001, it can choose either a crediting period until 2001 yielding a CER amount A+B+C or go for three crediting periods until 2022 with baseline updates. In the situation shown, in the third crediting period, the baseline emissions are below the project emissions and thus no CERs accrue from 2015. Overall CERs are A+C+D.
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