Creating a new methodology using CDM-NM

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Where a designated operational entity (DOE) determines that a project activity intends to use a new baseline or monitoring methodology, it must forward the proposed methodology together with the project design document (PDD) to the Executive Board for review:

If the designated operational entity determines that the project activity intends to use a new baseline or monitoring methodology, as referred to in paragraph 37 (e) (ii) above, it shall, prior to a submission for registration of this project activity, forward the proposed methodology, together with the draft project design document, including a description of the project and identification of the project participants, to the Executive Board for review (3/CMP.1, Annex, paragraph 38).

The latest procedure for the creation and submission of a new methodology are contained in EB 37, Annex 1. Project participants are required to prepare:

... the current methodologies forms for baseline and monitoring methodologies (CDM-NM) along with a draft project design document (CDM-PDD) and as a minimum, complete sections A to C, including relevant annexes, following its respective current guidelines (EB 37, Annex 1, paragraph 5).

In order to propose a new methodology, project proponents must complete the Proposed New Baseline and Monitoring Methodologies form (CDM-NM). The latest version of this form (version 3) is contained in EB 38, Annex 6 (replacing version 2 at EB 32, Annex 17). The latest revision changed the structure of the CDM-NM to reflect the structure of a standard approved methodology. Guidelines on completing the form are set out in EB 25 Annex 16 (Version 2).

If an approved methodology already exists that is similar to the proposed methodology, the proponent must justify how the two differ:

In accordance with paragraph 38 of the CDM modalities and procedures and further guidance provided by the Board, a newly proposed methodology with a similar applicability as an already approved methodology, including a consolidated methodology, may be submitted for consideration of the Board at any time. Proponents need to provide justification on how such a methodology differs from an approved methodology and that its accuracy and completeness is comparable to that of the approved methodology (EB 15, paragraph 9).

This section sets out the rules on how to complete CDM-NM. The form also contains some general guidance, which is set out at the bottom of this page.

Section I: Summary and applicability of the baseline and monitoring methodology

Step 1: Methodology title (for baseline and monitoring)

Proponents are required to create a title for the methodology. The title must be unambiguous and must reflect the project types to which the methodology applies, but must not be project-specific:

Provide an unambiguous title for the proposed methodology. The title should reflect the project types to which the methodology is applicable. Do not use project-specific titles. Please indicate the following:

The title of the proposed methodology;

The version number of the document;

The date of the document (EB 25 Annex 16, Part III, Section B, paragraph 1(a)).

The methodology may be entirely new, or based on a previously submitted methodology, or a deviation from an approved methodology. The form should clearly state which of these is the case:

State whether the proposed methodology is based on a previous submission or an approved methodology and, if so, explain briefly the main deviation(s) and their rationale. Where the methodology references other approved methodologies, the following guidance should be followed:

The new methodology should clarify whether a section of an approved methodology is used verbatim, or rather as the basis for the proposal.

If the section is used verbatim, then no additional text is needed in the methodology proposal other than a reference to the sections and paragraphs of the approved methodology (including version number).

If the original text is modified in the proposal, then the entire text should be repeated (EB 25 Annex 16, Part III, Section B, paragraph 1(b)).

Step 2: Selected baseline approach from paragraph 48 of the CDM modalities and procedures

Proponents must select the baseline approach (from the three approaches listed in 3/CMP.1, Annex, paragraph 48) that most closely reflects the chosen process for calculating baseline emission rates.

Developers of a new baseline methodology shall select the approach from paragraph 48 of the CDM modalities and procedures that is most consistent with the context of applicable project types, and most consistent with the underlying algorithms and data sources used in the proposed baseline methodology, and justify the choice on this basis EB 25 Annex 16, Part III, Section B, paragraph 2(a)).

These approaches are set out in 3/CMP.1, Annex, paragraph 48:

In choosing a baseline methodology for a project activity, project participants shall select from among the following approaches the one deemed most appropriate for the project activity, taking into account any guidance by the Executive Board, and justify the appropriateness of their choice:

Existing actual or historical emissions, as applicable, or

Emissions from a technology that represents an economically attractive course of action, taking into account barriers to investment, or

The average emissions of similar project activities undertaken in the previous five years, in similar social, economic, environmental and technological circumstances, and whose performance is among the top 20 per cent of their category (3/CMP.1, Annex, paragraph 48).

Particular requirements apply to projects seeking to use approach (c) above:

Project participants wishing to select this approach shall elaborate in their submission of a proposed new baseline methodology, inter alia, on:

How they determine "similar social, economic, environmental and technological circumstances", and

How they assess the "performance among the top 20 per cent of their category" defined as greenhouse gas emissions performance (in terms of CO2equ emissions per unit of output) (EB 25 Annex 16, Section III, paragraph 2(c); taken from EB 8 Annex 1, paragraph 4).

Only one approach may be chosen, and in the event of overlap, the approach most closely linked to the baseline calculation process should be selected:

Proponents of methodologies have indicated some apparent overlap between approaches (a), (b), and (c) of paragraph 48 of the CDM modalities and procedures. Since paragraph 48 stipulates that only one approach should be chosen, developers are advised to select the one that most closely reflects the process used for calculating baseline emissions or baseline emission rates. The tool used in order to demonstrate additionality does not need to be linked to one of the three approaches of paragraph 48 of the CDM modalities and procedures (EB 25 Annex 16, Section B, paragraph 2(b); previously EB 10 Annex 1, paragraph B3).

Step 3: Applicability conditions

Proponents must identify the types of project activities to which the methodology may apply, and must list the conditions that must be fulfilled in order for the methodology to be applicable:

List the category(ies) of project activities to which the methodology may apply ... If no suitable category(ies) of project activities can be identified, please suggest a new category(ies) descriptor and its definition ...

List any conditions which a proposed CDM project activity must satisfy in order for the methodology to be applicable: (e.g. project technology, sectoral circumstances, region). Applicability conditions must pertain to the type of proposed project activity and sector in which it takes place. Conditions should not substitute for steps that are necessary parts of the baseline methodology, such as defining the baseline. In this regard, they should not be conditions on a presumed baseline scenario (e.g., it is not appropriate for an applicability condition to be "The plant would continue to use the same fuel at the same efficiency without the project activity" as this is not a condition on the project activity, but a result of baseline assessment.) (EB 25 Annex 16, Part III, Section B, paragraph 3).

If an approved methodology exists for the same conditions, this should be indicated (EB 25 Annex 16, Section III, paragraph 2(d)).

Step 4: Summary description of major baseline and monitoring methodological steps

The key elements of the proposed new methodology must be identified, separated into baseline and monitoring steps. Statements must be made on how the proposed methodology:

chooses the baseline scenario,

demonstrates additionality,

calculates baseline emissions,

calculates project emissions,

calculates leakage,

identifies and collects monitoring data,

calculates emissions reductions (EB 25 Annex 16, Part III, Section B, paragraph 4(a)).

This is a summary description only - the detailed explanation of the methodology is provided in sections II and III of the CDM-NM form.

Section II: Baseline methodology description

Step 1: Project boundary

This step requires proponents to establish a physical delineation of the boundary for the project and the gases and sources included:

Describe and justify the physical delineation of the project boundary (the phrase is taken from guidance provided in CDM-NM section of guidelines to complete CDM-PDD, CDM-NM) and the gases and sources included, bearing in mind that it shall encompass all anthropogenic emissions by sources of greenhouse gases under the control of the project participants that are significant and reasonably attributable to the project activity:

Explain the physical delineation. Use a figure or flowchart if it would be helpful.

Explicitly state all sources and gases included. Explain whether any sources related to the baseline or the project activity have been excluded, and if so, justify their exclusion. If possible use the table provided in the CDM-NM (EB 26, Annex 16, Part III, Section C, paragraph 1(b)).

Proponents must make conservative assumptions about the baseline scenario and emissions attributable to leakage:

When defining which emission sources should be considered in the project boundary, in the baseline scenario and in the calculation of leakage emissions, project participants should make conservative assumptions, for example the magnitude of emission sources omitted in the calculation of project emissions and leakage effects (if positive) should be equal to or less than the magnitude of emission sources omitted in the calculation of baseline emissions (EB 25, Annex 16, Part III, Section C, paragraph 1(b); taken from EB22, Annex 2 and EB 15, Annex 2, paragraph 11).

The following table should be used to specify the gases and sources included in the project boundary (EB 25, Annex 16, Section C):

Step 2: Selection of the baseline scenario

The baseline scenario is the most plausible alternative scenario to implementation of the project activity. A number of possible alternative scenarios may exist, including continuation of the status quo, implementation of the project activity in the absence of carbon finance, and so on. The baseline scenario is the one which would be most likely to occur.

The following general guidance is provided on the selection of the baseline scenario:

The baseline is the scenario that reasonably represents the anthropogenic emissions by sources of greenhouse gases that would occur in the absence of the proposed project activity. Different scenarios may be elaborated as potential evolutions of the situation existing before the proposed CDM project activity. The continuation of a current activity could be one of them; implementing the proposed project activity without registration as CDM project activity may be another; and many others could be envisaged.

Provide a systematic, step-by-step procedure for determining the most likely baseline scenario. Explain in the "explanations/justification" section why the proposed procedure for determining the baseline scenario is appropriate for the project type and applicability conditions.

This procedure should describe a process for identifying the options to be considered as plausible candidate baseline scenarios. Justify that the range of options to be considered as plausible baseline scenarios is sufficiently comprehensive. The options to be considered should not exclude plausible options that, if included, might result in the determination of a different baseline scenario. Baseline methodologies shall require a narrative description of all reasonable baseline scenarios.

Highlight the key logical assumptions and quantitative factors underlying the procedure for determining the baseline scenario. Clearly explain the logical and analytical steps that must be followed in ascertaining the most likely baseline scenario from among the candidate baseline scenarios. State clearly which assumptions and factors have significant uncertainty associated with them, and how such uncertainty is to be addressed.

Ensure consistency between baseline scenario derived by this procedure and the procedure and formulae used to calculate the baseline emissions (below). The baseline scenario determination procedure should indicate for which baseline scenarios the overall methodology is applicable. This situation would occur when baseline emissions section (below) does not include algorithms and/or parameters relevant to the baseline scenario identified by the procedure (EB 25, Annex 16, Part III, Section C, paragraph 2.1).

In relation to national and/or sectoral policies relating to emissions, the Executive Board has clarified that in general:

A baseline scenario shall be established taking into account relevant national and/or sectoral policies and circumstances, such as sectoral reform initiatives, local fuel availability, power sector expansion plans, and the economic situation in the project sector (EB 25, Annex 16, Part III, Section C, paragraph 2.2; taken from EB 22, Annex 3, paragraph 4).

The following types of national and/or sectoral policies are relevant to the determination of baselines:

National and/or sectoral policies or regulations that give comparative advantages to more emissions-intensive technologies or fuels over less emissions-intensive technologies or fuels [so-called Type E+ policies].

National and/or sectoral policies or regulations that give comparative advantages to less emissions-intensive technologies over more emissions-intensive technologies (e.g. public subsidies to promote the diffusion of renewable energy or to finance energy efficiency programs) [so-called Type E- policies] (EB 25, Annex 16, Part III, Section C, paragraph 2.2; EB 22, Annex 3, paragraph 6).

At EB 16, the Executive Board had originally identified two other types of national and/or sectoral policies (Type L+ and Type L-), but this guidance was replaced at EB 22 with new guidance that distinguished only between Type E+ and Type E- policies.

The Executive Board has confirmed that there are some restrictions in relation to Type E+ policies:

Only national and/or sectoral policies or regulations under paragraph 6 (a) that have been implemented before adoption of the Kyoto Protocol by the COP (decision 1/CP.3, 11 December 1997) shall be taken into account when developing a baseline scenario. If such national and/or sectoral policies were implemented since the adoption of the Kyoto Protocol, the baseline scenario should refer to a hypothetical situation without the national and/or sectoral policies or regulations being in place (EB 25, Annex 16, Part III, Section C, paragraph 2.2; EB 22, Annex 3, paragraph 7(a)).

In relation to Type E- policies, the Executive Board has also confirmed that some restrictions exist:

National and/or sectoral policies or regulations under paragraph 6 (b) that have been implemented since the adoption by the COP of the CDM M&P (decision 17/CP.7, 11 November 2001) need not be taken into account in developing a baseline scenario (i.e. the baseline scenario could refer to a hypothetical situation without the national and/or sectoral policies or regulations being in place) (EB 25, Annex 16, Section C, paragraph 2.2; EB 22, Annex 3, paragraph 7(b)).

The objective of these policies was described as follows:

As a general principle, national and/or sectoral policies and circumstances are to be taken into account on the establishment of a baseline scenario, without creating perverse incentives that may impact host Parties' contributions to the ultimate objective of the Convention (EB 25, Annex 16, Part III, Section C, paragraph 2.2; EB 22, Annex 3, paragraph 5).

Step 3: Additionality

The methodology must provide a systematic, step-by-step procedure for determining whether a proposed project activity using that methodology is additional:

Provide a systematic step-by-step procedure for determining whether or not the project activity is, or is part of, the baseline scenario, and thereby determining whether the project activity is additional. The methodology should clearly state what the methodology user must do and what information must be presented in the resulting CDM-PDD in order to make a logical and well-substantiated case for the project's additionality.

Present the procedures in each step in as much detail as needed, but avoid repetition that is not needed for reasons of clarity (EB 25, Annex 16, Part III, Section C, paragraph 3.1).

The appropriateness of the proposed procedure must be justified:

Justify in the "explanations/justification" section why the proposed procedure is an appropriate procedure for establishing the project's additionality. Highlight the key logical assumptions and quantitative factors underlying the procedure for demonstrating the project activity is additional. State clearly which assumptions and factors have significant uncertainty associated with them, and how such uncertainty is to be addressed. If relevant, explain how national and/or sectoral policies and circumstances are taken into account by the methodology (EB 25, Annex 16, Part III, Section C, paragraph 3.1).

A number of tools may be used to demonstrate the additionality of a project activity, including:

A flow-chart or series of questions that lead to a narrowing of potential baseline options; and/or

A qualitative or quantitative assessment of different potential options and an indication of why the non-project option is more likely; and/or

A qualitative or quantitative assessment of one or more barriers facing the proposed project activity (such as those laid out for small-scale CDM projects); and/or

An indication that the project type is not common practice (e.g. occurs in less than [x%] of similar cases) in the proposed area of implementation, and not required by a Party's legislation/regulations (EB 25, Annex 16, Part III, Section C, paragraph 3.1(b); from EB 10, Annex 1, paragraph 2 - 3).

The Tool for the demonstration and assessment of additionality (the additionality tool) may also be used, although this is not mandatory:

The use of the "Tool for the demonstration and assessment of additionality" is intended to facilitate the process of submitting methodologies, and that the use of the tool is not mandatory for preparing methodologies (EB 25, Annex 16, Part III, Section C, paragraph 3.1(a); from 12/CP.10, paragraph 9; 7/CMP.1, paragraph 28; and EB 18, paragraph 20).

Project participants are encouraged to suggest further details on how to implement this tool to specific project types covered by the proposed methodology. If project participants suggest such further details, in the proposed methodology, they should refer to the tool and reproduce only the section(s) of the additionality tool, they propose to modify, clearly highlighting the proposed changes and/or additions to the tool (EB 25, Annex 16, Part III, Section C, paragraph 3.1(b); from EB 18, paragraph 20).

Using the additionality tool does not remove the need to establish a baseline, and the baseline scenario and additionality calculations must be consistent:

The use of this tool to assess and determine additionality does not replace the need for the baseline methodology to provide for a stepwise approach justifying the selection and determination of the most plausible baseline scenario alternatives. Project participants proposing new baseline methodologies shall ensure consistency between the determination of additionality of a project activity and the determination of a baseline scenario (EB 25, Annex 16, Part III, Section C, paragraph 3.3; originally EB 17, paragraph 16; since re-stated in EB 29, Annex 5, paragraph 3).

Step 4: Create formulae to estimate project emissions, baseline emissions and leakage effects

Algorithms and formulae must be developed to estimate or calculate emissions, including emissions due to leakage from the project. Usually the equation will take a simple form with three terms - baseline emissions, project emissions and net leakage, as in:

Emission reductions = baseline emissions - project emissions - net leakage

The following guidance is offered on the use of algorithms and formulae:

Elaborate all algorithms and formulae used to estimate, measure or calculate the project emissions, baseline emissions and leakage effects. Be specific and complete, so that the procedure can be carried out in an unambiguous way, replicated, and subjected to a validation and/or verification study:

Explain the underlying rationale for algorithm/formulae (e.g. marginal vs. average, etc.).

Use consistent variables, equation formats, subscripts, etc.

Number all equations;

Define all variables, with units indicated;

Justify the conservativeness of the algorithms/procedures; to the extent possible, include methods to quantitatively account for uncertainty in key parameters.

Elaborate all parameters, coefficients, and variables used in the calculation of baseline emissions, project emissions and leakage effects:

For those values that are provided in the methodology:

Clearly indicate the precise references from which these values are taken (e.g. official statistics, IPCC Guidelines, commercial and scientific literature);

Justify the conservativeness of the values provided.

For those values that are to be provided by the project participant, clearly indicate how the values are to be selected and justified, for example, by explaining:

What types of sources are suitable (official statistics, expert judgment, proprietary data, IPCC, commercial and scientific literature, etc.);

The vintage of data that is suitable (relative to the project crediting period);

What spatial level of data is suitable (local, regional, national, international);

How conservativeness of the values is to be ensured.

For all data sources, specify the procedures to be followed if expected data are unavailable. For instance, the methodology could point to a preferred data source (e.g. national statistics for the past 5 years), and indicate a priority order for use of additional data (e.g. using longer time series) and/or fall back data sources to preferred sources (e.g. private, international statistics, etc.). (EB09, Annex 3, Para 6).

Use International System Units (SI units - refer to http://www.bipm.fr/enus/3_SI/si.html). (EB09, Annex 3, Para 6).

Note any parameters, coefficients, variables, etc. that are used to calculate baseline emissions but are obtained through monitoring. Ensure consistency between the baseline and monitoring methodologies.

If the calculation of the baseline emissions is to be performed ex post, include an illustrative ex ante emissions calculation.

Ensure consistency between the elaboration of the baseline scenario (section 2) and the procedure for calculating the emissions of the baseline.

Explain in the "explanations/justifications" section any parts of the algorithm or formulae that are not self-evident. Justify that the procedure is consistent with standard technical procedures in the relevant sector. Provide references as necessary. Explain implicit and explicit key assumptions in a transparent manner (EB 25, Annex 16, Part III, Section C, paragraph 4.1).

Step 5: Re-assess baseline emissions for the 2nd and 3rd crediting periods

Proponents are required to review the baseline scenario if there are changes in national and/or sectoral regulations and as new data becomes available to revise baseline emissions.

It must be determined whether new regulations formed after the registration of the project activity, apply to existing plants. If the new regulation is in place to enforce the practice or norms or technologies that are used by the project activity, the continuing validity of the baseline must be assessed:

In assessing the continued validity of the baseline, a change in the relevant national and/or sectoral regulations between two crediting periods has to be examined at the start of the new crediting period. If at the start of the project activity, the project activity was not mandated by regulations, but at the start of the second or third crediting period regulations are in place that enforce the practice or norms or technologies that are used by the project activity, the new regulation (formulated after the registration of the project activity) has to be examined to determine if it applies to existing plants or not. If the new regulation applies to existing CDM project activities, the baseline has to be reviewed and, if the regulation is binding, the baseline for the project activity should take this into account. This assessment will be undertaken by the verifying DOE. (EB 25, Annex 16, Part III, Section C, paragraph 5(c)).

If it is necessary to update a baseline after making an assessment as provided for in EB 25, Annex 16, Part III, Section C, paragraph 5(d), there must not be a change in the methodology for determining the baseline emissions:

For updating the baseline at the start of the second and third crediting period, there shall be no change in the methodology for determining the baseline emissions. However, new data available will be used to revise the baseline emissions. For example, if the "average of 3 most recent years data" was used to determine the baseline emissions for the first crediting period, the baseline shall be updated using the average for the 3 most recent years prior to the start of the subsequent crediting period (EB 25, Annex 16, Part III, Section C, paragraph 5(d)).

Although not necessary for baselines constantly monitored, emission factors determined ex ante shall be updated for the subsequent crediting period:

In the case of baselines where emission factors are determined ex ante (and not updated during a crediting period), the baseline emissions factor shall be updated for the subsequent crediting period. This shall not be necessary for baselines which are constantly updated. In both cases, the CDM project activities are not included in the revised estimation of the baseline emissions.

Project participants shall assess and incorporate the impact of new regulations on baseline emissions. (EB 25, Annex 16, Part III, Section C, paragraph 5(e) - (f)).

Project participants must provide a methodological procedure on how the issues of assessing the continued validity of the baseline and updating the baseline should be addressed. (EB 25, Annex 16, Part III, Section C, paragraph 5(b)).

Step 6: Data and parameters

Project proponents must bring together all data needed to calculate project emissions, baseline emissions and leakage emissions that remain fixed throughout the crediting period:

This section should include a compilation of all data needed to calculate project emissions, baseline emissions and leakage emissions that is not monitored throughout the crediting period but that is determined only once and thus remains fixed throughout the crediting period. This may include data that is measured or sampled, and data that is collected from other sources (e.g. official statistics, expert judgment, proprietary data, IPCC, commercial and scientific literature, etc.). Data that is calculated with equations provided in the methodology or default values specified in the methodology should not be included in the compilation. (EB 25, Annex 16, Part III, Section C, paragraph 6(b)).

Using the table in the CDM-MN the following information for each data should be provided:

Under "data / parameter", the variable used in equations in the baseline methodology.

The International System Unit (SI units - refer to http://www.bipm.fr/enus/3_SI/si.html).

A clear and unambiguous description of the parameter;

A description of data sources that should be used to determine this parameter. Clearly indicate how the values could be selected and justified, for example, by explaining:

What types of sources are suitable (official statistics, expert judgment, proprietary data, IPCC, commercial and scientific literature, etc.);

The vintage of data that is suitable (relative to the project crediting period);

What spatial level of data is suitable (local, regional, national, international);

How conservativeness of the values is to be ensured.

The procedures to be followed if expected data are unavailable. For instance, the methodology could point to a preferred data source (e.g. national statistics for the past 5 years), and indicate a priority order for use of additional data (e.g. using longer time series) and/or fall back data sources to preferred sources (e.g. private, international statistics, etc.).

A description of the measurement procedures or reference to appropriate standards (EB 25, Annex 16, Part III, Section C, paragraph 6; EB 9, Annex 3, paragraph 6).

The Executive Board provides the following example of a simple parameter (EB 25, Annex 16, Part III, Section C, paragraph 6(d)):

Documentation of the choice of data should be provided:

The actual choice of data and, where necessary, justifications for the choice should be documented in the CDM-PDD (EB 25, Annex 16, Part III, Section C, paragraph 6(e)).

Section III: Monitoring methodology description

Step 1: Monitoring procedures

This step requires proponents to set out the procedure for the development of a monitoring plan for the collection of relevant data. The methodology should also explain how the monitoring plan should be implemented and the responsibilities of various parties for data collection:

The monitoring methodology needs to provide detailed information on how to establish the monitoring plan related to the collection and archiving of all relevant data needed to:

Estimate or measure emissions occurring within the project boundary,

Determine the baseline emissions, and

Identify increased emissions outside the project boundary.

The monitoring methodology should reflect good monitoring practice appropriate to the type of project activity.

Explain how the monitoring plan should be implemented, the responsibilities of various parties, and the management and operational structure supporting monitoring by the project participant (EB 25, Annex 16, Part III, Section D, paragraph 1).

Step 2: Data and parameters

Proponents are required to provide a complete listing of the data that is to be collected in order to monitor project emissions and emission reductions according to the methodology.

The monitoring methodology should provide a complete listing of the data that needs to be collected throughout the crediting period for the application of the methodology. This may include data that is measured or sampled and data that is collected from other sources (e.g. official statistics, expert judgment, proprietary data, IPCC, commercial and scientific literature, etc.). Data that is calculated with equations provided in the methodology should not be included in the compilation. Data that is determined only once and remains fixed throughout crediting period should be considered under "Data and parameters not monitored" (EB 25, Annex 16, Part III, Section D, paragraph 2(a)).

Using the table in the CDM-MN the following information for each data should be provided:

Under "data / parameter", the variable used in equations in the baseline methodology.

The International System Unit (SI units - refer to http://www.bipm.fr/enus/3_SI/si.html).

A clear and unambiguous description of the parameter;

A description which data sources should be used to determine this parameter. Clearly indicate how the values are to be selected and justified, for example, by explaining:

What types of sources are suitable (official statistics, expert judgment, proprietary data, IPCC, commercial and scientific literature, etc.);

The vintage of data that is suitable (relative to the project crediting period);

What spatial level of data is suitable (local, regional, national, international);

How conservativeness of the values is to be ensured.

The procedures to be followed if expected data are unavailable. For instance, the methodology could point to a preferred data source (e.g. national statistics for the past 5 years), and indicate a priority order for use of additional data (e.g. using longer time series) and/or fall back data sources to preferred sources (e.g. private, international statistics, etc.).

A description of the measurement procedures or reference to appropriate standards;

A description of the frequency of monitoring (e.g. continuously, annually, etc);

A description of QA/AC procedures (EB 25, Annex 16, Part III, Section D, paragraph 2(b); EB 9, Annex 3, paragraph 6).

The Executive Board provides the following example of a simple parameter (EB 25, Annex 16, Part III, Section D, paragraph 6(c)):

General guidance on completing CDM-NM

In addition to the step-by-step guidance set out above, the Executive Board has provided the following general guidance on completing CDM-NM:

The CDM-NM and the CDM-PDD shall include in section A the version number and the date of the document. If sections of the CDM-NM and CDM-PDD are not applicable, it shall be explicitly stated that the section is left blank on purpose. Tables and their columns shall not be modified or deleted. Rows may be added, as needed.

Project participants shall refrain from providing glossaries or using key terminology not used in the documents of the Conference of the Parties (COP), the COP/MOP, the "Glossary of CDM terms", or the "Definitions relevant to CDM baseline and monitoring methodologies" (Annex 2 of this document), and they shall refrain from rewriting these instructions (EB 25 Annex 16, Section A, paragraph 1).

Proposals for new methodologies must be clearly drafted, complete and without unnecessary repetition. Proposals must also clearly specify the data required for use in the methodology:

Clearly specify data requirements and sources, as well as procedures to be followed if expected data are unavailable. For instance, the methodology could point to a preferred data source (e.g. national statistics for the past 5 years), and indicate a priority order for use of additional data (e.g. using longer time series) and/or fall back data sources to preferred sources (e.g. private, international statistics, etc.) (EB 9 Annex 3 paragraph 7).

Documents should only be submitted after comprehensive technical editing to reduce the number of iterations required and the workload of the Meth Panel (EB 13 paragraph 22).

Explanations and justifications

At several points in the CDM-NM, proponents are required to provide "explanations and justifications". These sections are used by the Meth Panel and the Executive Board in reviewing the proposed methodology, and should:

Provide the rationale for the procedures presented.

If the procedure draws from an approved methodology or tool, clearly note any changes to them or elaborations of them. Justify why such changes have been made.

Point out the key logical and quantitative assumptions, i.e., those assumptions that the results of the baseline methodology are particularly sensitive to.

Be clear about sources of uncertainty. Clearly point out which logical or quantitative assumptions have significant uncertainty associated with determining them. If the methodology makes a certain assumption in cases where there is uncertainty, explain why this assumption is appropriate.

Explain how the methodology ensures conservativeness. Explain how the procedures and assumptions on which the procedures rely are conservative. In particular, explain how assumptions in the case of uncertainty are conservative (EB 25 Annex 16, Part III, Section A, paragraph 2(b)).

Methodology procedures

At several points the form requires an explanation of "methodology procedures". These refer to the way in which the methodology can be used for project activities. The guidelines for the presentation of methodology procedures are intended to ensure that methodologies adopt a consistent format for ease of reviewing and subsequent use in future projects.

Therefore, sections explaining the methodology procedures should:

Be completed in a fashion that can be readily used as an approved methodology. This requires use of appropriate format, tone, and level of specificity. Text shall be clear and succinct, well-written, and logically sequenced. It shall describe the procedures in a manner that is sufficiently explicit to enable the methodology to carried out by a methodology user, applied to projects unambiguously, and reproduced by a third party. It shall be possible for projects following the methodology to be subjected to a validation and/or verification study ...

Be generally appropriate for the entire group of project activities that satisfy the specified applicability conditions. A new methodology should, therefore, stand independently from the specific project activity proposed in the draft CDM-PDD with which the new methodology is being submitted. The methodology should not make direct reference to, or depend on characteristics of, the specific project activity being proposed in the draft CDM-PDD. It should not refer to specific project activities or locations, project-specific conditions or project-specific parameters. This project-specific information should be described in the draft CDM-PDD, however, it can be referred to in the explanation/justification section to help describe the methodology.

Present methodology steps as one might present a recipe. It should include all algorithms, formulae, and step-by-step procedures needed to apply the methodology and validate the project activity, i.e. calculating baseline, project, and leakage emissions. The completed form shall provide stand-alone replicable methodologies, and avoid reference to any secondary documents other than EB-approved tools and methodologies.

Indicate precisely what information the project proponent must report in the draft CDMPDD and/or in monitoring reports.

Support important procedures and concepts with equations and diagrams. Non-essential information should be avoided.

Refer by name, reference number and version number to approved methodologies and tools if they are used - in whole or in part - in this methodology. Relevant sections can be cited specifically, but should not be repeated. Any proposed modifications and/or additions to approved tools and methodologies need to be clearly highlighted.

Provide instructions for making any logical or quantitative assumptions that are not provided in the methodology and must be made by the methodology user.

Include instructions to assist in implementing the methodology in a conservative manner where logical or quantitative assumptions have to be made by the methodology user, particularly in cases of uncertainty (EB 25 Annex 16, Part III, Section A, paragraph 2(a)).

Using variables in equations

The following principles apply to the use of variables in equations:

Use the nomenclature of variables contained in Annex 1 to these guidelines. Variables not contained in the standard nomenclature should be named with two or three upper case letters that are first letters of each key word describing variable (e.g. stack height = SH).

All variables that are reported or estimated annually should have a y subscript for year (e.g. BEy).

Variables should use the i subscript to denote multiple pieces of equipment, fuel types, processes, sites or measuring locations (e.g. Fi = flow rate at different measuring points i). If two summations are required (e.g. fuel type and equipment piece), the subscripts i and j should be used.

No name should be used more than once for different variables in the same methodology.

Where necessary, the subscripts BL and PJ should be used to distinguish between the project and the baseline (e.g. EGBL, EGPJ).

Where a variable refers to a gases, the formula of the gas should be indicated as a subscript (e.g. BECO2,y) (EB 25 Annex 16, Part III, Section A, paragraph 2(c)).

Development of CDM-NM and related guidance

Version 2 of CDM-NM (in EB 32, Annex 17) replaces Version 1 contained in EB 24, Annex 17. At EB 24, the Executive Board agreed to combine the forms for proposing new baseline methodologies (CDM-NMB) and the form for proposing new monitoring methodologies (CDM-NMM) into a single form (CDM-NM). Earlier versions of CDM-NMB and CDM-NMM were contained in EB 20 Annex 4, EB 19 Annex 14 and EB 14 Annex 6, but these forms are no longer in use.

The current guidelines on completing CDM-NM (Version 2, in EB 25 Annex 16) replace earlier guidance in EB 24 Annex 16 (Version 1).