June 2014 - Continuation of CDM and JI projects already in place has been thrown into question by the lack of demand for CERs and ERUs. Projects whose financing is either entirely or largely reliant on the sale of emission certificates are especially at risk.
The study commissioned by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) looks at the consequences for industrial gas projects (HFC23 and N2O) conducted under CDM and JI. It also takes account of the numerous new emissions sources emerging in addition to those covered by the Kyoto mechanisms.
The study concludes that emission reductions of around 7.5 Gt CO2e could be achieved at average costs of €0.47/t CO2e in developing countries, Russia and Ukraine. These activities alone would result in a 3 to 5 percent reduction in the 2020 global emissions reduction gap of 8-12 Gt CO2e.
Operating costs for existing HFC23 and N2O projects are extremely low, with technical reduction costs amounting to between €0.06 and €0.07/t CO2e. Overall potential reduction is estimated at 160 million t/CO2e, or one third of the reduction potential offered by this project type.
The findings of the study are encouraging in terms of emission reduction potential and project costs. How continuation of these projects might be secured should be made an agenda item in international climate change talks.