Case Study: “Renewable energy projects replacing part of the electricity production of one single fossil fuel fired power plant that stands alone or supplies to a grid, excluding biomass projects” – Baseline Methodology
Selected approach from paragraph 48 of the CDM modalities and procedures
“Existing actual or historical emissions as applicable.”
Applicability
This methodology is applicable to:
• Proposed project activities where electricity production from the zero-emission renewable energy sources: wind, geothermal, solar, run-of-river hydro, wave and/or tidal projects that displaces electricity production from an identified, individual, plant;
• New hydro electric power projects with reservoirs having power densities (installed power generation capacity divided by the surface area at full reservoir level) greater than 4 W/m2.
• Where the identified baseline plant has sufficient capacity to meet the increase of demand expected during the crediting period.
Project activity
The project activity involves the construction of a renewable energy power plant (excluding biomass).
Overall description
When applicable, the methodology can be applied through the following five steps:
- Step 1 – Demonstrate that the proposed project activity only displaces the electricity of one identified, individual power plant,
- Step 2 – Demonstrate that the proposed project activity is not the business as usual scenario,
- Step 3 – Determine the Carbon Emission Factor of the existing power plant,
- Step 4 – Calculate project emissions,
- Step 5 – Calculate baseline emissions and emission reductions of the proposed project activity.
Step 1 – Demonstrate that the proposed project activity only displaces the electricity of one identified, individual power plant
- Background Description: The proposed project should start by giving a brief description of the project sector and its context. This is essentially an introduction to the project, providing information about the industry or area it’s focused on.
- Displacement of Electricity: The project must demonstrate that it will only displace the electricity generation of a single power plant, and this specific power plant should be identified. In other words, the project should not lead to multiple power plants being affected.
- Unlikelihood of New Plants: The project should explain why it’s unlikely that other power plants, apart from the one specified, would be constructed during the crediting period. This explanation needs to be well-documented. The Designated Operational Entity (DOE) should assess the validity of this explanation, ensuring that it’s a reasonable assertion.
- Technical and Economic Lifetime: The remaining technical and economic lifespan of the existing power plant that will be affected by the project should be equal to or longer than the crediting period of the proposed CDM project. This means that the power plant should continue to operate for at least as long as the project intends to generate carbon credits.
- Refurbishments: If there is a possibility of refurbishments or upgrades to the identified baseline power plant during the crediting period, the project can still be eligible for this methodology. However, any improvements resulting from these refurbishments should be estimated in a conservative and transparent manner. These efficiency improvements should also be factored into the baseline calculations (in Step 3 of the CDM process).
In summary, this passage outlines specific criteria and requirements that a project must meet to be eligible for the CDM under the Kyoto Protocol. It emphasizes the need to ensure that the project doesn’t have unintended side effects on other power plants, that the identified power plant has a sufficient remaining lifespan, and that any potential improvements to the baseline plant are accounted for accurately and transparently.
Step 2 – Demonstrate and assess additionality
To demonstrate that the proposed project activity is additional project participants shall use the latest version of the “Tool for the demonstration and assessment of additionality” agreed by the CDM Executive Board.
Additionality: Additionality is a crucial concept in carbon offset programs like the CDM. It means that a project should result in emission reductions or removals that are additional to what would have occurred in the absence of the project. In other words, the project should go beyond business-as-usual practices and contribute to genuine emissions reductions.
Tool for the Demonstration and Assessment of Additionality: This is a standardized tool or methodology that has been agreed upon and established by the CDM Executive Board. It is used by project participants to assess and demonstrate that their proposed project activity is indeed additional. In other words, it helps project proponents determine whether their project will result in emission reductions that wouldn’t have occurred naturally or as part of regular operations.
The proposed project activity meets the requirement of additionality, project participants must use the latest version of the CDM’s approved tool for this purpose. This tool likely includes a set of guidelines, calculations, and criteria that project participants should follow to evaluate and demonstrate that their project qualifies as additional. By using the CDM’s standardized tool, the assessment process becomes more consistent and transparent, ensuring that only projects with true additional benefits in terms of emissions reductions or removals are approved for carbon credits or offsets within the CDM framework.
Step 3 – Determine the Carbon Emission Factor of the Existing Power Plant
Assuming that the proposed project activity meets the applicability criteria for this project, the existing performance and fuel consumption of the plant that will be displaced by the project activity can be used to calculate the Carbon Emission Factor (CEF).
To determine the CEF of this plant, collect data on fuel consumption of the plant. The data available for the average of the three most recent years for which the performance data of the plant are complete and accurate should be used.
CEF calculation formula:
The CEF for the individual power plant can be calculated using the following formula:
EFbl = COEFbl,y * Fbl /GENbl (1)
Where,
EFbl = Emission Factor for the electricity produced by the identified plant that will be displaced by the project activity (as identified under Step 1);
Fbl,y = is the fuel consumption (in a mass or volume unit) of the identified baseline plant during the year y;
COEFbl,y = is the CO2 emission factor coefficient (expressed as tCO2 per mass or volume unit) of the fuel consumed by the identified baseline plant;
GENbl,y = is the number of MWh produced by the identified baseline plant in year y.
The EFBL is a fixed EF per MWh and remains constant for every year in the crediting period. The EF should be calculated using a 3-year average, based on the most recent statistics available at the time of CDM-PDD submission. If the proposed project activity would opt for a renewable crediting period, the EFbl needs to be recalculated at the end of each crediting period to ascertain a conservative EFbl through the entire crediting period.
Step 4 – Calculate project emissions (if applicable)
For most renewable energy project activities, project emissions are zero. However, for following categories of projects, project emissions needs to be estimated:
(I) Geothermal project activities project participants shall account the following emission sources, where applicable:
• Fugitive emissions of carbon dioxide and methane due to release of non-condensable gases from produced steam; and
• Carbon dioxide emissions resulting from combustion of fossil fuels related to the operation of the geothermal power plant.
The data to be collected are listed in the associated monitoring methodology A (“Renewable energy projects replacing part of the electricity production of one single fossil fuel fired power plant that stands alone or supplies to a grid, excluding biomass projects”). Project emissions should be calculated as follows:
a) Fugitive carbon dioxide and methane emissions due to release of non-condensable gases from the produced steam (PESy):
PESy = (wMain,CO2 + wMain,CH4 * GWPCH4)*MS,y
where,
PESy = the project emissions due to release of carbon dioxide and methane from the produced steam during the year y,
wMain,CO2 and wMain,CH4 = the average mass fractions of carbon dioxide and methane in the produced steam
GWPCH4 = the global warming potential of methane;
a) if the power density of project is greater than 4W/m2 and less than or equal to 10W/m2:
MS,y is the quantity of steam produced during the year y.
b) Carbon dioxide emissions from fossil fuel combustion (PEFFy)
PEFFy =∑ F i,y * COEFi
Where,
PEFFy = the project emissions from combustion of fossil fuels related to the operation of the geothermal power plant in tons of CO2;
Fi,y = is the fuel consumption of fuel type i during the year y;
COEFi = the CO2 emission factor coefficient of the fuel type i.
Thus, for geothermal project activities, PEy = PESy + PEFFy
II) New Hydro electric power projects with reservoirs, project proponents shall account for project emissions, estimated as follows:
b) If power density of the project is greater than 10W/m2
PEy = 0
Step 5 – Calculate baseline emissions and emission reductions for the crediting period
The emission reduction ERy by the project activity during a given year y is the difference between baseline emissions (BEy), project emissions (PEy) and emissions due to leakage (Ly), as follows:
ERy = BEy – PEy – Ly
where the baseline emissions (BEy in tCO2) are the product of the baseline emissions factor (EFBL in tCO2/MWh) calculated in Step 3, times the electricity supplied by the project activity to the grid (Egy in MWh), as follows:
BEy = EGy * EFBL
This methodology, and the equation above, only holds if the deployed capacity at a given hour of the baseline plant (MWhh, BL) and the project plant (MWhh, P) are lower than the maximum capacity of thebaseline plant (MWhmax, BL) at all times during the crediting period.
MWhmax, BL should be provided in the CDM-PDD and (MWhh, BL+ MWhh, P).
The parameters (MWh, BL+ MWh, P) are to be monitored and are included in the associated monitoring methodology (“Renewable energy projects replacing part of the electricity production of one single fossil fuel fired power plant that stands alone or supplies to a grid, excluding biomass projects”).
Project boundary
A full flow diagram of the proposed project activity and system boundaries is presented in Figure below. The flow diagram comprises all possible elements for the development of a renewable energy project.
The following principles have been taken into account when defining the project boundaries:
- Project participants shall account only the following emission sources for the project activity:
– For geothermal project activities, fugitive emissions of methane and carbon dioxide from non condensable gases contained in geothermal steam and carbon dioxide emissions from combustion of fossil fuels required to operate the geothermal power plant;
– For new hydroelectric projects with reservoirs, the project boundary includes the physical site of the plant as well as the reservoir area.
– For the baseline determination, project participants shall only account CO2 emissions from electricity generation in fossil fuel fired power that is displaced due to the project activity.
2. Emissions related to activities one step downstream and one step upstream should included.
Assessment of uncertainties
The proposed methodology can lead to an erroneous baseline scenario if data on historic performance of the specific plant is included for one year only. This risk has been reduced by requiring the data used for the performance of the plant to be based on three years average rather than a one-year average.
Additionality
In Step 2 the baseline methodology refers to the use of the latest version of ”Tool for the demonstration and assessment of additionality” approved by the CDM Executive Board4 .In Step 3 above, the baseline methodology addresses the calculation of baseline emissions by an emission factor calculation formula. To determine the total amount of baseline emissions within the crediting period the emissions calculated for each year within the crediting period should be accumulated. This is done in Step 5.
Leakage
No significant sources of leakage are to be expected for renewable energy projects. The energy prices will not be reduced due to the addition of a renewable energy project and thus there is no risk that it will result in a higher consumption of electricity by the end-users. A possible source of leakage might be that the emissions during the construction phase of the proposed project activity turn out to be significant.
However, this is very unlikely to be higher than 1% and therefore considered to be insignificant and thus not a source of leakage.
Crediting period
The crediting period of the project activity shall not exceed the remaining technical and economic lifetime of the existing plant.