Should the use of standardized baselines in the CDM be mandatory?

Abstract

There has been considerable debate on the merits of standardized baselines (SBLs) in the clean development mechanism (CDM), and how such baselines could reduce transaction costs for CDM projects. It has not been considered whether the voluntary versus mandatory use of SBLs by CDM project developers can affect the environmental integrity of the CDM. An example is given in which SBLs are applied to a homogeneous output industry in order to illustrate how the voluntary use of SBLs could lead – even with relatively stringent benchmarks – to over-crediting of emission reduction credits.

Keywords:

• additionality
• benchmarking
• clean development mechanism
• standardized baselines

Acknowledgements

We would like to acknowledge the valuable discussions with Lambert Schneider, Daisuke Hayashi, and Nicolas Müller, as well as helpful comments from three anonymous reviewers.

Notes

The SAT level is essentially what is referred to as Xa% and Ya% in the CDM EB's guidelines (UNFCCC, 2011b). The SBE level is equivalent to Xb% and Yb%, as referred to in the same document.

See Note 1.

See www.carma.org.

See, e.g. the repeated attempts by the European Commission to achieve a more stringent additionality regime. These have led to the EU and CDM Watch (2012) proposal of a sectoral mechanism to replace the CDM in all countries other than the LDCs.