One fundamental flaw with the CDM is the need to prove the additionality of each project. A project is additional if it was built only because of the extra income from selling CERs – meaning that the project would not have happened if there was not extra CER income. If a project would happen anyway then its offsets do not represent any reduction in total emissions. This means that a CER buyer is offsetting domestic reductions with non-additional credits – and therefore adding emissions instead of reducing them. It is extremely difficult for regulators to assess developer’s claims of additionality. But there is ample evidence to suggest that a significant proportion, perhaps the majority of CERs, is generated by non-additional projects. Even the EB itself concluded in the summary of the major issues that trigger a request for review that “additionality is the primary area for which a full request for review of request for registration has been triggered. Within this category there are a range of differing root causes of requests for review, with the most common triggers relating to the validation of investment analysis and the validation of the prior consideration of the CDM”.
Until more effective additionality testing is designed, CDM Watch scrutinizes projects under consideration at EB meetings and gives recommendations in order to limit the harmful impact of ever more non-additional projects in the CDM.
Currently there are 13 projects under review at the CDM Executive Board. During this meeting the members will decide upon the registration or rejection of these projects. Another 37 projects will be discussed for which request of review has been submitted by either one of the parties involved and/or three Executive Board members. Members will also discuss requests for reviews of issuance of CERs.
Action to be taken by the Board: CDM Watch recommends the rejection of the following projects for the reasons as indicated. All of them relate to concerns about additionality:
2127: Waste Gas based Power Generation Project at Ankit Metal & Power Limited
Reason for rejection: The barrier test is not credible
Reason for rejection: The barrier test is not credible
2519: Bhushan Power and Steel Limited–Waste Heat Recovery based Captive Power Project
Reason for rejection: The barrier test is not credible
2471: Sintex 7.5 MW Natural gas based package cogeneration project, Gujarat – India
Reason for rejection: The benchmark value for internal rate of return (IRR) is unacceptably high
Action to be taken by the Board: CDM Watch recommends that the Board should agree to review the following projects. All of them lack clarity about additionality for the following reasons:
2118 Hunan Taoyuan Huirenxi Hydropower Project
Reason for review: Seriously underestimated plant load factor
2501Guizhou Kaiyang Nanjiang Hydropower Station Project
Reason for review: Seriously underestimated plant load factor, very high internal rate of return (IRR)
2561: Heilongjiang Wangkui 50MW Level Biomass Cogeneration Project
Reason for review: No serious prior consideration of the CDM, questionable barrier analysis
2565: Sichuan Tiejue 25MW Hydro Power Project
Reason for review: Project started much before CDM was even considered; argument that CDM was crucial for restart is not credible
2590: Sichuan Xiaolongmen Hydropower Project
Reason for review: Project started much before CDM was considered; argument that CDM was crucial for restart is not credible, auxiliary consumption overestimated
2601: Fujian Pingnan Liyudang Hydropower Project
Reason for review: Seriously underestimated plant load factor and overestimated auxiliary consumption
2668: Tianjin Zhenxing Cement Waste Heat Recovery for Power Generation Project
Reason for review: Barrier analysis not credible
2671: Xiangfan Huaxin Cement 7.5MW Waste Heat Recovery as Power Project
Reason for review: Faulty investment analysis
2675: Changzhou Panshi Cement Waste Heat Recovery for Power Generation Project
Reason for review: Faulty investment analysis
Action to be taken by the Board: CDM Watch recommends that the Board should agree to review the following request for issuance:
126: Yuzaikou Small Hydropower Station
Reason for review: Over performance of turbines beyond formally installed capacity
