Putting Standardized Baselines to the Test

April 2015 - Is the Standardized Baselines framework applicable to complex integrated production processes? A recently published study explores this question. The performance-penetration approach outlined in the “Guidelines for the Establishment of Sector-Specific Standardised Baselines” is put to the test by applying it to the Indonesian Cement sector.

The cement sector is a key industrial emissions sector, accounting for roughly 5 per cent of current global CO₂ emissions. The sector also typically accounts for about one seventh of a country’s industrial energy demand. Consequently, there is substantive potential for mitigation. In principle the concept of Standardized Baselines could help to realize this potential by providing an integrated approach; one which is also not only applicable to individual mitigation projects but for the sector as a whole. To date, a number of methodologies have been developed to harness mitigation potential of the cement sector, but these methodologies cover only components of the production process: energy efficiency, fuel combustion for heat, alternative raw materials (blending), etc.

In a recently published study, the authors explored to what extent it is possible to integrate these different methodologies in a Standardized Baseline using the performance-penetration. How is it possible to account for different combinations of the various mitigation options in the cement sector when determining baseline emission benchmarks? Is it possible to justify combinations of different technologies, fuels, and feedstocks to be automatically deemed additional under the CDM? The study tries to answer this question by developing three scenarios based on a varying degree of integration:

• Option A - Full Integration Only the specific emissions from the cement production are considered.
• Option B - Medium Level of Integration The production process is dis-integrated into two sub-processes: clinker production and blending. The combined benchmark emission factor is calculated on the basis of the specific emissions of clinker production and the Clinker to Cement Ratio (CCR).
• Option C - Low Level of Integration This approach divides the cement production in various sub-processes. This is done as detailed as possible considering the available data. The combined benchmark performance factor is calculated on the basis of separate performance benchmarks for the use of alternative fossil fuels, use of biomass and biomass residues, specific heat consumption, specific power consumption and the CCR.

The study shows that an approach based on a low level of integration is feasible, conditional to the availability of the required data, and that it produces a more conservative baseline as a highly integrated approach.

The research also shows that the performance-penetration approach is highly sensitive to the market concentration, i.e. the number of companies in the sector and their respective market shares. A very high concentration of the sector may be problematic. If the market share of the best performing company is too high, applying the performance-penetration approach and the default additionality/baseline emission thresholds outlined in the Standardized Baselines Guideline it maybe impossible to identify candidate technologies / fuels / feedstocks for a positive list for automatic additionality. Therefore, the authors propose to investigate alternative approaches to determining additionality within the CDM SB framework. As a way forward, they suggest to explore the idea of ’semi-standardised‘ approaches: Positive lists of mitigation activities are determined for some sub-processes. Only for the remaining sub-processes where this is not feasible, project proponents would be obliged to demonstrate additionality using conventional tool.

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