More on sectoral approaches and benchmarking

Today’s discussion of sectoral approaches at the Poznan Business Day brings to mind an example of benchmarking shared during IETA’s Carbon Finance Day at the side event, “Benchmarking and Project Based Mechanisms: Can they Work Together?” The example was of a French JI scheme targeting supermarket refrigerators. Refrigerators emit roughly 1/1000 of a tCO2e per year per supermarket. Because of this small scale, thousands of projects are needed to satisfy additionality requirements. Therefore, in this case, a reduction based on an industry-wide benchmark scheme is a wise solution. This project has a ratcheted benchmark: over time refrigerators must switch to HFCs with an increasingly lower level of GWP.

Many argue that sectoral approaches and benchmarking should be widely incorporated into the CDM. Already, one methodology with a benchmark approach was recently approved, and more are expected. Much progress has been made in the cement industry, and regional benchmarks are being implemented. To take into account country-specific circumstances, Michael Lehmann, of Det Norske Veritas, told me that national benchmarks are also being considered.

However, the CDM does not have the political mandate to determine target sectors and countries. Additional benchmarking may be challenging because it requires political involvement. A benchmark that is as general as possible—allowing for the maximum generation of credits—will be best for developing countries.