Clean Development Mechanism (CDM)
The CDM allows crediting from afforestation and reforestation (A/R) projects, but excludes REDD+ and other forest carbon activities. A/R projects hold a very minor share of the CDM market, in part due to the temporary credits issued for these project types, but also because of their exclusion in the European Union Emissions Trading System. A/R credits through June 2013 comprise only 0.5% of total credits issued under the CDM.
Standard components, methodologies, terms, and procedures are all defined in detail in the CDM modalities and procedures adopted by the Parties to the Kyoto Protocol. The ‘standard’ for CDM is comprised of a range of decisions including relevant sections of the Kyoto Protocol, as well as methodologies and tools approved by the CDM Executive Board.
Afforestation and reforestation.
Baselines generally are based on “business-as-usual” scenarios. Small-scale A/R projects can use a continuation of pre-project land use (e.g. the assumption that existing carbon stocks are constant throughout the crediting period) as a baseline.
The CDM requires the demonstration of additionality. It has developed two tools for assessing the additionality of different project types, the ‘Tool for the Demonstration and Assessment of Additionality in A/R CDM Project Activities’ and the ‘Combined Tool to Identify the Baseline Scenario and Demonstrate Additionality in A/R CDM Project Activities’ (see External Links). The methodology used determines the tool chosen. Additionality can be demonstrated via barrier analysis, investment analysis, and common practice analysis.
Approved project methodologies must provide information on how the project intends to estimate leakage, have operational and management structures to monitor leakage, and measures to be implemented to minimise potential leakage. A procedure for the periodic review of implementation of activities and measures to minimise leakage, if required by the approved methodology, must also be documented in the project design document.
Risk of non-permanence for afforestation and reforestation projects is managed through the use of “temporary CERs” (tCERs) and “long-term CERs” (lCERs). Both types of CERs require verification every 5 years – tCERs periodically expire and new tCERs are issued for the amount of carbon stored in the forest at a particular verification, whereas individual lCERs are re-verified and only cancelled during the crediting period if there has been a reversal. All tCERs and lCERs issued by a project must also be replaced at the end of the project crediting period, irrespective of the status of the forest. In addition, approaches for addressing non-permanence are to be documented in the project design document.
The project design document for A/R CDM includes a section on “Socio-economic impacts of the proposed A/R CDM project activity”. Analysis of significant socio-economic impacts, including outside the project boundary, and in accordance with procedures required by the host country is required. If any negative impact is considered significant by the project participants or the host Party, a socio-economic impact assessment is required, along with planned monitoring and remedial measures to address such impacts.
The Kyoto Protocol (Decision 5/CMP.1) requires A/R projects to document environmental impacts, including on biodiversity and natural ecosystems, and impacts outside the project boundary area. The analysis should also include information on hydrology, soil, fire, pests and disease. If any negative impact is considered significant by the project participants or the host Party, an environmental impact assessment is required in accordance with procedures required by the host country and a description of planned monitoring and remedial measures to address such impacts.
The project design document for A/R CDM includes a section on Stakeholders’ comments that includes a description of how comments by local stakeholders have been invited and compiled, a summary of comments received, and a report on how due account was taken of any comments. However, there is no formal right of review process for decisions made by the CDM Executive Board.
Monitoring is defined in the CDM Glossary of Terms as “collecting and archiving all relevant data necessary for determining the baseline, measuring anthropogenic emissions by sources of GHGs within the project boundary, and leakage, as applicable”. Projects are required to implement a monitoring plan that sets out the methodology to be used by project participants for the monitoring of the amount of reductions or removals achieved. The Monitoring Plan includes a proposed monitoring frequency and quality control/quality assurance procedures for data monitored. The results of any monitoring activities are reported in a Monitoring Report and verified by a Designated Operational Entity (an accredited third party organisation responsible for validation and verification of projects), which periodically verifies the emission reductions once every five years.
CERs may be issued into the national registry accounts of Annex I countries established under the Kyoto Protocol. Non-Annex I countries do not have national registries under the Kyoto Protocol. If a developed country registry able to receive CERs has not been identified when they are issued, CERs may be issued into the CDM Registry before they are forwarded onto a buyer’s registry account. The CDM Registry is an electronic database established and maintained by the CDM Executive Board. The UNFCCC Secretariat is the administrator responsible for implementing and operating the Registry. The purpose of the CDM registry is to ensure the accurate accounting of the issuance, holding, transfer and acquisition of CERs by countries not included in Annex I. It is also connected with the registries of Annex I countries.
Projects must either use an approved A/R methodology, or propose a new one to the Executive Board for consideration and approval when seeking registration. The project cycle for CDM projects include: (1) development of a project design document, making use of approved baseline and monitoring methodologies; (ii) securing a letter of approval from the Designated National Authority; (iii) project validation, i.e. an independent evaluation of a project activity by a designated operational entity (DOE) against the requirements of the CDM; (iv) registration or formal acceptance by the Executive Board of a validated project, (v) monitoring, (vi) verification and certification, i.e. the independent review of the monitored reductions in emissions and written assurance that the project activity achieved the emissions reductions as verified; and (vii) issuance of tCERs or lCERs.