Options for continuing GHG abatement from CDM and JI industrial gas projects

[Translate to English:] City skyline at night — (Photo: BASF SE)

Background and Objective

Unlike many other types of CDM activities, industrial gas abatement projects incur ongoing costs. And the only revenue they accrue is from the sale of emission reduction certificates. If this revenue fails to materialise in times of a collapsed carbon market, the abatement activities are at risk of being stalled. The resulting damage to the climate would be tremendous. Against this backdrop, the German Federal Environment Ministry (BMU) funds the project “Options for Continuing GHG Abatement from CDM and JI Industrial Gas Projects” which focuses on the three project types with the greatest greenhouse gas (GHG) reduction potential: HFC-23 emissions from HFC-22 production, N20 emissions from adipic acid production and N20 emissions from nitric acid production.

Implementation

The project team, consisting of the Öko-Institut and Ecofys, first analysed the most important project types under the CDM and JI mechanisms in order to assess whether their mitigation activities were at immediate risk of being stalled due to the low market prices. In a second step, the emission reduction potential of industrial gas projects and their potential for generating emissions certificates were estimated for the period 2013 to 2030.

Results and Outlook

The findings of the study indicate that most project types are not at immediate risk. The risk, however, is considerably higher for industrial gas projects.
As regards the emission reduction potential, around one half of the estimated emission reductions could be achieved with HFC-23 abatement projects. Approximately one-third of the estimated potential falls to N₂O emissions from adipic acid production and the rest to N₂O from nitric acid production. Over the period in question, savings of around 7.5 gigatonnes of carbon dioxide equivalents (CO₂e) could be achieved.

The authors recommend finding a long-term solution which also addresses emissions from new facilities, either through regulation or integration into national emissions trading schemes. The industrialised countries could, in addition, provide short-term support to enable continuation and, where appropriate, an extension of projects to abate industrial gas.