Multi-project baselines for potential clean development mechanism projects in the electricity sector in South Africa

The United Nations Framework Convention on Climate Change (UNFCCC) aims to reduce emissions of greenhouse gases (GHGs) in order to ''prevent dangerous anthropogenic interference with the climate system'' and promote sustainable development. The Kyoto Protocol, which was adopted in 1997 and appears likely to be ratified by 2002 despite the US withdrawing, aims to provide means to achieve this objective. The Clean Development Mechanism (CDM) is one of three ''flexibility mechanisms'' in the Protocol, the other two being Joint Implementation (JI) and Emissions Trading (ET). These mechanisms allow flexibility for Annex I Parties (industrialized countries) to achieve reductions by extra-territorial as well as domestic activities. The underlying concept is that trade and transfer of credits will allow emissions reductions at least cost. Since the atmosphere is a global, well-mixed system, it does not matter where greenhouse gas emissions are reduced. The CDM allows Annex I Parties to meet part of their emissions reductions targets by investing in developing countries. CDM projects must also meet the sustainable development objectives of the developing country. Further criteria are that Parties must participate voluntarily, that emissions reductions are ''real, measurable and long-term'', and that they are additional to those that would have occurred anyway. The last requirement makes it essential to define an accurate baseline. The remaining parts of section 1 outline the theory of baselines, emphasizing the balance needed between environmental integrity and reducing transaction costs. Section 2 develops an approach to multi-project baseline for the South African electricity sector, comparing primarily to near future capacity, but also considering recent plants. Five potential CDM projects are briefly characterized in section 3, and compared to the baseline in section 4. Section 5 concludes with a discussion of options and choices for South Africa regarding electricity sector baselines