CDM Pipeline

The update of the CDM Pipeline gives an overview of CDM implementation as of 15 August 2023. The main change compared to the prior version is the inclusion of Programmes of Activities (PoAs) and the corresponding Component Project Activities (CPAs). Previously, the database only contained Project Activities (PAs).

The continued focus of the analysis is 1) which and how many CDM activities can be transitioned to the new Article 6.4 mechanism without applying new methodologies and 2) which and how many Certified Emission Reductions (CERs) issued under the CDM until the end of 2020 can be used to fulfil Nationally Determined Contributions (NDCs) under the Paris Agreement.

The decisions at the last Supervisory Body’s meeting clarified the conditions for transitioning. Both the transition standard and the procedure are published and can be accessed here.

• Article 6 eligible: registered or provisional PAs, PoAs and CPAs eligible for transition to the Article 6.4 mechanism of the Paris Agreement. The criterion is: crediting period active as of 1 January 2021.
• First NDC eligible: registered PAs and PoAs with certified emission reductions (CERs) eligible for compliance with first or first updated NDCs (most of which end by 2030). The criterion is: registered on or after 1 January 2013.

With this month’s update we introduce a new indicator to estimate the potential number of emission reductions from transitioned activities with CDM methodologies:

• Potential A6 Reductions (ktCO2e): planned reductions from CDM activities (PAs and CPAs) that can transition to Article 6 (as defined above). Starting in 2021, the maximum duration is until the end of 2025; if the crediting period that was active on 1 January 2021 ends before 31 December 2025, that represents the alternative cut-off point for the calculation. Any renewal of crediting periods after 1 January 2021 will need to apply new methodologies and are therefore excluded here. All calculations are based on originally estimated annual reductions; they do not account the new global warming potentials (GWP) or actual project performance to date.

The graphs and tables below give an overview the CDM’s potential impact on arrangements under the Paris Agreement (i.e., NDCs and Article 6). For further analysis, the Excel database is freely available and the tables in the Analysis sheet can be easily adapted to the user’s needs.

Analysis of the eligibility for Article 6 transition and CER use towards countries’ first NDCs.

While there are significantly more registered Project Activities (7,866) than Programmes of Activities (363) and their associated Component Project Activities (2,827), the respective shares of how many of those are eligible for transitioning to Article 6 are similar (between 42 and 46%).

The share of PoAs eligible for using CERs for the first NDC (39%) is higher than the corresponding share of PAs (9%), because PoAs generally have later registration dates.

Table 1. Number of PAs, PoAs and CPAs (as of 15 August 2023)

Notes:

• This is a theoretical exercise to estimate the projects that are eligible for the Article 6.4 mechanism. It represents the potential (maximum) number of PAs and PoAs (as of 15 August 2023). The same applies for the activities that are eligible for issuing CERs that can be used towards the first NDC.
• For PAs, the deadline for submitting a renewal request has expired. Therefore, there will be no additional registered CDM project activities that will qualify for transition to Article 6.4 mechanism.
• For PoAs, there is no deadline for requesting renewal. Therefore, the number of PoAs eligible for Article 6.4 mechanism may increase in future.
• The actual numbers of PA, PoAs and CPAs that will be transitioned to Article 6.4 remain uncertain.
  • The deadline for project participants to submit a request for the transition is 31 December 2023.
  • The deadline for the host country to approve the request is 31 December 2025.
  • Many countries have not yet published criteria indicating which requests they would approve.
• Host Parties may decide to approve eligible CDM projects to transition to the Article 6.4 mechanism (for issuances after 2020), to use CERs (issued between 2013 and 2020) towards the first NDC, or none of the options.
• CERs that can be used towards first NDC fulfilment do not require Corresponding Adjustment. However, Article 6 credits when traded internationally for NDC fulfilment do.

Table 2 presents the number of Article 6 eligible PAs (and the associated yearly reductions) by type of project:

• For the following types 100% of PAs are eligible for Article 6.4 transition: afforestation, agriculture, reforestation and tidal. However, the absolute number of such projects is low compared to other types.
  • Note: It is not clear whether and how afforestation and reforestation project would be able to transition. The Supervisory Body has postponed decisions around this and awaits guidance from the next Conference of the Parties (COP28).

The following types have the lowest share of PAs eligible for Article 6.4 mechanism: cement (13%), HFCs (14%), PFCs and SF6 (27%), biomass energy (31%).

• Out of the total annual emission reductions of 982 mtCO2e from all registered PAs, Article 6 eligible project activities make up around 439 mtCO2e or 45%.
• The project types with the highest A6 eligible reduction potential are hydro (114 mtCO2e/yr), wind (100), N2O (34).
• The project types with the lowest A6 eligible reduction potential are agriculture (8 mtCO2e/yr), mixed renewables (76), CO2 usage (82).

Table 2. Number of registered Projects Activities and Emission Reductions (ktCO2e/yr) that are and are not Article 6 eligible – by Type

The highest share of PAs eligible for Article 6.4 transition can be found in the following regions: Middle Africa (86%), Eastern Africa (81%), Southern Africa (75%). In absolute terms, the highest number of A6 eligible PAs are in Eastern Asia (1,300) and Southern Asia (1,060).

Table 3. Number of registered Project Activities and Emission Reductions (ktCO2e/yr) that are and are not Article 6 eligible – by Region

Table 4 also shows the regional distribution of projects. However, it shows only Article 6 eligible projects and additionally includes Component Project Activities. Instead of annual reductions this data shows the cumulative emissions until 2025.

• The total emission reductions under Article 6 from projects with CDM methodologies are more than 1.5 billion tCO2e.
• Most originate from activities in Southern (34%) and Eastern Asia (29%).
• Notably, many CPAs are set in Africa, whereas PAs are predominant most of the other regions.

Table 4. Number of Article 6 eligible Projects (Pas and CPAs) and Potential A6 Reductions until 2025 (ktCO2e) – by Region

Table 5 shows the issuances (as of 15 August 2023) from the PAs and PoAs that are eligible for using CERs towards the first NDCs (registered after 2013, the start of the 2nd Kyoto commitment period) by types and by regions. Out of 78 MCERs issued (by first NDC eligible PAs and PoAs between 2013 and 2020), 44 MCERs occurred in Asia. By type, the largest amounts of issuances occurred within projects for hydro energy (19 MCERs) and energy efficiency in households (18 MCERs).

Table 5. Issuances from PAs and PoAs that are eligible for fulfilling first NDCs (during 2013 – 2020) in kCERs