Ding Li’s Blog: New Opportunity for Biodiesel under CDM?
The CDM EB adopted a ground breaking methodology (ACM0017) in 2010 which allows for biodiesel production (not consumption) to be registered as a CDM project (generating CER) under the UNFCCC framework. This is a break from previous regulations and big step forward in recognizing the potential role of biodiesel in combating climate change. Not surprisingly, biodiesel1 producers are optimistic about the positive impact of the new methodology in aiding the development of their industry.
The new methodology had various stringent criteria to ensure the GHG abatement potential of biodiesel from a life cycle perspective. Firstly, the feedstock for biodiesel production need to be from a new plantation on degraded/degrading land that has been dedicated to the production of biodiesel feedstock. Secondly, this methodology is only eligible for biodiesel produced and used within the host country and for vehicles; it must be a captive fleet. Lastly, stringent checks are expected at both the blending and consumption levels.
Looking deeper, the real benefit of the new methodology might not be as optimistic as most would have hoped for it to be. Dedicated plantations increase the business risks to plantation owners. Consumption criteria limit the market and stringent monitoring requirement add to business costs. The beneficiaries of this new methodology will most likely be biodiesel producers supplying to domestic public transportation, government vehicle fleets as well as hardy and locally consumed feedstocks that are more likely to grow on degraded lands such as jatropha. However, the eventual economic feasibility of this methodology in benefiting biodiesel production will depend on the relative cost of monitoring consumption and terra-treating of degraded land to achieve crop productivity and benefit that could be derived in the form of revenue from CER.
Furthermore, as this methodology is only applicable for blend levels above the mandated level in the host country, its adoption might somewhat have an impact on the implementation of biodiesel mandates in developing countries.
The Global Biofuels Center will analyze this issue further in its upcoming Special Report: Carbonomics 2 scheduled for release early 2010.
1) Biodiesel is defined as FAME produced by the esterification of vegetable and/or waste oil with alcohols from biogenic and/or fossil origin.
Tags: Biodiesel, CDM, clean development mechanism, FAME, fatty acid methyl ester, GHG, greenhouse gases
