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Feb 2021

UER projects over performing

The DEHSt has released 9 verification reports confirming the actual reductions achieved by 4 projects during various periods in 2020. All of them delivered more reductions than what was announced at the start of the project. This should have an impact on the quota compliance for both 2020 and 2021. We release here the first results of our analysis, which will be completed in our next issues.

Our analysis shows that most of the UERs projects that already published verification reports delivered more reductions emissions than initially thought. The table below displays our results: in average, the 9 periods already verified saw 18% more reductions than what was announced by the leading partners at the start of the projects.

If these surpluses of reductions generated by the over-performance of UERs projects are all counted under the THG quota, it would constitute a bearish news for biofuels demand. Potentially, the actual reductions generated from UER projects in 2020 would cover a greater share than expected (0.4% based on the estimated yearly projections).

Local sources confirmed that the DEHSt, in charge of generating official reductions from UER projects, explained that it will apply the ”international rules of the CDM, which allow a deviation of up to 10%”. Above that limit, the lead partner of the project would have to start a new validation process for the additions to the project. According to the DEHSt, this would require too much resources (time + money) from the lead partner compared to the benefits, so it concludes this case shall not happen. Consequently, we can conclude that only 10% of the additional reductions compared to the initial estimation would be eligible for the THG quota, while the remainder of the surplus would be “lost” or may be eligible for other schemes. At this stage, several questions remain unanswered.

In case this 10% limit would be reached by all the projects delivering reductions for 2020, this would be equivalent to about 72’000 mt of CO2eq reduction, or what achieves 21 KT of HVO (80% savings).