The Cement Sustainability Initiative

BENCHMARK APPROACH TO CDMs

Marco BedoyaCorporate Sustainability Manager - CEMEX

COP11/MOP 1Montreal, December 2005

BACKGROUND

Initiated in 1999 / Sector project of WBCSD

Committed to incorporate SD and influence cement industry with SD-oriented thinking

17 companies

25%of global cement volume / 50% excl. China

Operations in more than 80 countries

Climate Change Task Force + 5 TFs

Commitment to monitor and publish KPIs

CSI is highly representative of global cement industry

THE CDM CHALLENGE FOR CEMENT INDUSTRY

Major emitter of CO2

Major companies operating in CO2-regulated markets

Significant potential to reduce emissions in non-Annex 1 countries

Small participation in CDM process

GAP to be bridged with effective CDM streamline the process

simplifying the additionality assessment using the current EB tool

using a performance based approach

cement industry benchmarks

CEMENT INDUSTRY EXPERIENCE IN USING CDMs / LESSONS TO DATE

~1 to 3 years spent in methodology and project development

no cement CDM project registered

high transactions costs

additionality tool unsuitable

uncertainty of achieving CDM primary objectives

Migrate towards a system rewarding performance instead of intention/motivation

cement industry benchmarks

companies discouragement

HOW WOULD BENCHMARKS WORK

The benchmarks would then determine:

A-priori additionality

Baseline emissions level

CI suits well the application of benchmark concept:

Single manufacturing process

Agreed measurement protocol

Few CO2 reduction drivers

Key issues must be addressed to define benchmarks:

stringency

time and geography boundaries

aggregation

validation/acceptability

confidentiality

Multistakeholder Process

Some benefits of benchmarks

transparency in baseline determination / limit gaming/free riders

reduce transaction costs / increase participation

accelerate registration

positive to countries with limited capacity

HOW DO BENCHMARKS BASELINES FIT THE CURRENT CDM FRAMEWORK

Generic methodologies not allowed benchmarks only allowed to set baselines for individual projects (CDM M&P para45,p36)

The baseline is the scenario that would occur in the absence of the project (M&P para44.p36)

A baseline methodology shall (EB08 Rep Anx1 para1-2):

explain how the baseline has been chosen

explain the rationale for algorithms/formulae

explain how it addresses the determination of project additionality

specify type of variables used

spacial level of data

project boundary

data sources and and assumptions

THE WAY FORWARD

In-depth analysis of benchmarking concept; develop recommendations for rules and procedures

Dialogue with interested stakeholders

Decisions by COP/MOP and EB to make benchmarks with a-priori additionality eligible within CDM framework