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6.4.1. Methodological Issues
Several characteristics of projects have implications for reporting. Many of
these characteristics are unique to projects but are omitted from the Guidelines.
Chapter 5 describes these characteristics in more detail,
but we briefly discuss the reporting implications here:
Comprehensive carbon accounting. For comprehensive accounting, an extension
beyond the Workbook methods may be required if additional carbon pools are to
be credited.
Baselines. The Guidelines can be used to report carbon stock changes
in a given year, not for estimating baselines. In the Guidelines, the change
in stock is simply derived from estimates of stock at two points in time; this
approach may not be sufficient, however, to capture the features discussed in
Chapter 5. For example, if the GHG benefits of a project
are to be estimated relative to a baseline, further development of the Guidelines
would be required. To develop such methods, the Parties would have to decide
whether to apply a baseline and, if so, how this baseline would be calculated.
The use of baselines in the Guidelines-such as business-as-usual-would deviate
from the basic principles of the Guidelines, but it would be technically feasible.
Leakage (off-site impacts). The Guidelines do not currently address
issues related to off-site impacts or leakage of GHG benefits. Leakage in LULUCF
projects can occur as a result of inappropriately defining project boundaries
for estimation; inappropriately defining the lifetime of monitoring activities
for the project; forestry and non-forestry sector policies implemented by national/international
governments, industry associations, or other entities; market effects; and activity
shifting. Such off-site impacts (leakage) may be more difficult to quantify
than on-site impacts. Because estimating changes in carbon stock can sometimes
be difficult, the level of precision and confidence levels associated with such
impacts may also need to be reported. The Guidelines may need to incorporate
off-site changes to facilitate estimates of net changes in carbon stocks. Addressing
leakage is one of the most challenging issues of significance to project-based
activities. Section 5.3.3 discusses several approaches
(e.g., benchmarks, risk co-efficients, etc.) to account for and monitor leakage.
Each of the approaches implies a differing level of complexity for accounting
and reporting.
Permanence. The permanence of carbon sequestration is potentially important
for reporting projects. Chapter 2 discusses options for
developing a time equivalence factor for reporting permanence. If one of these
options were adopted by Parties, there would be implications for reporting:
the timeline of a project-how the endpoint of a project is defined (indefinite,
100 years, 50 years, or variable-left up to each Party); accounting for time
and the use of discounting; the appropriate carbon accounting methods (carbon
stock method, average stock method, and ton-C year); and liability and allocation
of responsibilities for ensuring compliance. Many of the foregoing options extend
beyond the approach in the Guidelines.
Sustainable development. The CDM may introduce a new set of project-level
issues-namely, assessment of net environmental and socioeconomic impacts (Chapter
5). Such issues are not addressed in the current Guidelines. One option
is for Parties to take a decision on developing new guidelines for these issues.
The absence of such guidelines may result in inconsistent responses to the Protocol
and cause projects to be favored in areas with less stringent regulations. Guidelines
could be developed to ensure consistency for assessing and reporting for net
environmental and socioeconomic impacts; developing a common set of criteria
may be difficult, however.
Uncertainties. The ranges of uncertainty of GHG emissions and removals
of projects and national inventories are likely to differ. Because the national
inventory and projects may be combined in a common reporting framework, however,
these differences in uncertainty should be addressed. There is concern that
changes in carbon stock at the project level may not be detectable at the national
level because the former are too small and fall within the error bounds of a
national inventory, or they occur in geographic areas that are not recorded
in a national GHG inventory. In the first case, project reporting should be
kept in perspective because it may be unnecessary to identify impacts in detail
when national and global measurements are much less precise. A concern arises
only if the absolute uncertainty around GHG estimates of projects is greater
than that of the national inventory. To assess the importance of this issue,
reporting of uncertainties of GHG estimates is crucial.
Double-counting/crediting. There are key questions about double-counting/crediting
the impacts of projects, as with other sectors. Double-counting/crediting can
be separated into three distinct types and can occur between:
- Two sectors-Reduced fossil fuel emissions from a bioenergy project should
not be credited within both the LUCF and the Energy sectors of the Guidelines.
- Two Parties-Emissions reduction may be claimed by both host and investor
in the reporting of credits. This double-counting could be avoided easily
if each project had an identification number, enabling an auditor to locate
a corresponding credit/debit on another Party's inventory.
- National GHG inventories and projects-For Article 6 projects, credits and
associated emissions reductions could be double-counted in the national inventories
of Annex 1 countries.
The Guidelines were not designed for reporting of these features or for features
such as project locations and boundaries, additionality, and biodiversity. The
Guidelines do provide a basis, however, for reporting changes in carbon stocks
for projects in a single year. To avoid double-counting, projects and national
inventories should be reported a consistent way in space and time. Ideally,
national reporting for the Protocol and the UNFCCC could be integrated.
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