The note is a follow-up to a recent SEI working paper that examined several concerns with awarding offset credits (CERs) to coal power projects under the Clean Development Mechanism. The paper found that systematic flaws in the ACM0013 CDM methodology and its application lead to significant over-estimation of emission reductions, and outlined reasons why such CERs may not be real, measurable, and additional.

Subsequently, the CDM Methodologies Panel released its own in-depth review of ACM0013, coming to many of the same conclusions while using different analytical methods. Both assessments found that over half of the CERs issued to coal plants are likely to be the result of systematic overestimation. In response, the CDM Executive Board, at its 65th meeting, agreed to put ACM0013 on hold, and requested the Meth Panel to provide a draft revised methodology to address its concerns.

The authors review key concerns with CDM coal power projects, list potential remedies for each concern, and comment on whether these remedies are likely to prove feasible and adequate. They identify three problems with no clear possible solution: a low signal-to-noise ratio; the ineffectiveness of additionality assessment in the context of multi-billion-dollar coal power projects; and the contradiction of using climate finance in support of long-lived emissions-intensive infrastructure that could undermine the ability to meet 2°C climate stabilization objectives.