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Purpose
and Outline
The
Fourth Session of the Conference of the Parties (COP 4) to the United
Nations Framework Convention on Climate Change held in 1998 adopted
the decision that the details of a concrete scheme for the flexible
mechanisms, known as “Kyoto Mechanisms”, shall be determined
by the end of 2000 (at COP 6). Among these mechanisms, the Clean
Development Mechanism (CDM) embraces many issues to be resolved
in future. Especially vital is the issue of setting a baseline,
that is the amount of greenhouse gas emissions in the absence of
the CDM project. Although baseline is essential for determining
emission reduction amount, or CDM credits, it can be highly intentional
and give a room for gaming. In order to reduce transaction cost,
which has been a bottleneck for many AIJ initiatives, some type
of standardization is anticipated.
Even
in researcher level, however, the opinions vary upon the potentials
of methodologies to be actuality applicable to broad-ranged and
highly diversified CDM projects, and hardly any definitive concept
has been established on methodologies. The Workshop, therefore,
focuses on the “Baseline Setting Issue” which is a bottleneck
for CDM designing, in order for us to deepen our understanding of
this issue through intensive discussions among participants of international
and national experts, as a kick-off of researches in this field,
especially in Japan.
Summary
and Thoughts
The
Workshop had intensive discussions focusing on technical and methodological
issues. The experts from overseas and domestic officials and researchers
commented on the fulfillment and success of the Workshop, quite
satisfying for hosting organizations.
The
theme of the Workshop “the issues of baseline setting”
addresses the problem of how to set emission trajectory in the
absence of the project and the credit amount generated is defined
as the difference between the baseline and actual emission trajectory.
Baseline is essentially virtual and principally cannot be
observed by definition.
In
CDM scheme, an operational entity, an independent institution, will
certify the emission reduction amount (CDM credit). If the baseline
setting methodology for similar projects differ from one
operational entity to another, it will reduce the credibility of
CDM scheme. Moreover, defining appropriate baseline for each single
project will increase (already high) transaction cost, which may
hinder the scheme development as a whole. Therefore, “how to
define the standardized baseline setting method” will
be critical for the success of CDM.
This
workshop focused on these technical and methodological problems.
First Dr. Matsuo (GISPRI/IGES), Dr. Heister (the World Bank), and
Ms. Kelly (CCAP) presented the reports on the overall layout of
issues, and studies on the solution menu. They were followed by
presentation on the case studies of AIJ (Activities Implemented
Jointly) pilot experiences by Ms. Ellis, energy project studies
by Mr. Takedahara (NEDO) and Dr. Mendis (AED), and forestry project
study by Dr. Trexler (TAA).
The
second day of workshop introduced the USIJI experiences presented
by Dr. Dixon (USDOE/IGES), and the result of EPA baseline studies
by Dr. Friedman. Succeeding these, Dr. Begg (Surrey University)
and Dr. Jepma (JIQ) pointed out the issue of uncertainties involved
in baseline, and summarized the overall issues. The workshop was
concluded by panel discussions among presentators and commentators
with Mr. Kimura (MITI) acting as a Chair.
Key
issues of baseline setting commonly acknowledged at this Workshop
were:
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Need
to ensure simplicity and transparency, as well as the verification/certification
of emission reductions by third party institution(s);
-
Need
standardization (for consistency, and reduced transaction cost);
-
Baseline
setting methodologies include benchmarking, technology matrix,
and macro-baseline (top-down method). It will be difficult to
get consensus on a single method (Among them, benchmark method
may have broader acceptance potential);
-
Important
to incorporate the time-dependent variable and scale economy
factor;
-
Need
to integrate (generalize) terminology;
-
Practical
to adopt learning-by-doing method;
-
Need
capacity building.
Conflict
of opinions were found in the issues of:
The
Participants did not reach consensus either on baseline setting
methodologies, addressing of indirect implications such as leakage,
or the issue of uncertainties.
In
the discussion, it was indicated that one of the possible methods
to proceed with international negotiation would be to broaden the
standardization framework step-by-step (start with case-by-case
on the condition of future standardization, and gradually establish
standardized method of each project type). Also indicated through
the discussion was to handle the issue of uncertainties by
establishing methodologies including the setting methods for various
parameters.
The
Workshop successfully clarified how far global discussion on baseline
issue has progressed. Major issues on baseline were identified,
as well as the methodological (at least conceptual) menu on measures
to resolve such issues. We may safely say that we were able to arrange
the way to address such issues in the future process of UNFCCC.
Overall,
ongoing AIJ experiences seemed to be useful to some extent, but
unsatisfactory in other aspects. The identification of issues and
classification of problems were elucidated at this Workshop. It
will be necessary to intensify practical discussion in preparation
for COP 5.
March
28, 1999
Naoki
Matsuo
GISPRI/IGES
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