Energy Efficiency – With or Without the CDM. Why Energy Efficiency? Renewables Nuclear Fuel switch...

Energy Efficiency – With or Without the CDM

Why Energy Efficiency?

Renewables

NuclearFuel switch

End-use energy efficiency

Panel Topics

Energy Efficiency… for climate mitigation and sustainable

development in the post-2012 climate regime promotion under the CDM

Block 1

Energy efficiency for climate mitigation and sustainable developmentPanelists

Brian Dawson, Climate Change & CDM Adviser, UNDP Karen Suassuna, Climate Change Officer, WWF Brasil Paul Kirai, GEF KMA Energy Efficiency Project

Issues How large is the EE resource? Which sectors/technologies have the greatest cost-

effective potential? Why is EE important for (sustainable) development? What are the main challenges to market

transformation?

Efficiency & Mitigation Potential

Possible to reduce global emissions to below 2000 levels by 2010-20 using demonstrated technologies (IPCC, 1996)

≥Half at no net cost

Miti

ga

tion

P

ote

ntia

l

Today Future

Physical

Technological

Socio-economic

Economic

Market potential

(achievedpotential)

Energy Efficiency and Development

Brian DawsonClimate Change and CDM Adviser

UNDP, New York

November 2006

Overview of Presentation

The potential of energy efficiency

Appliances/Buildings/Industry Transport is important but not discussed

UNDP Activities

What needs to done?

What is the potential of energy efficiency? Energy efficiency (EE) represents the most cost

effective emissions abatement option - much at negative cost

EE accounts for more than half of the cost effective emission reduction potential to 2050 - 2006 IEA study

Many additional benefits (energy security, economic competitiveness, local area pollution, comfort/adaptation)

Huge potential exists but there are many barriers (cheap energy, information constraints, lack of standards, access to technology)

EE is the most neglected sector and has weak policy framework

Appliance Energy Efficiency

Huge advances in appliance efficiency have been made over the past few decades - but inefficient appliances still sold in developing countries Large savings at negative costs – India has potential to save

500Mt by 2020 while cutting costs by $4.3 billion NPV (refrigerators, motors, transformers)

Refrigerator energy consumption fallen 70% since 1985 Substantial advances in washing machines, dryers, air-con,

computers, TVs Market penetration hampered by lack of standards/consumer

info 10% of OECD appliance electricity used in off-mode 90% of appliances operating in 2020 have not yet been made

Energy efficiency standards and labels offer the best and most cost effective Prevent dumping in developing countries – just ban them!!

Building Energy Efficiency

Buildings account for one-third of global energy GHG emissions By 2015 half of new buildings in developing countries Half China’s office buildings constructed since 1990 60% of people live in informal structures – this will change LCA would deliver 20-30% reductions

Building stock locks in energy consumption EE during construction better than retrofits Split incentives and lack of standards Many missed opportunities!!!

Energy Efficiency in Industry

Process heat and motors are large consumers

Huge potential exists Lack of information – many just not aware what can be saved Corporate decision making failures- low % of production costsEnergy subsidies

Motor programs have much to offer Standards are important

UNDP Energy Efficiency Activities

Primary focus has been on S&L Completed: Tunisia, China Refrigerator program, The efficient lighting initiative Underway: Andean region, Southern Europe, Commencing: Asian Region, India, Kenya, South Africa

Planning: Arab states, Algeria, Russia, Nigeria EE- Chiller replacement program Much more needs to be done

Building local institutional capacity

What do we need to do?

Transform markets Potential is very large and important contributor to

economic development Establish sound policy environment

building and appliance standards energy efficiency institutional capabilities legal and regulatory frameworks remove energy subsidies engage the private sector – industry associations ESCOs?

Sequencing of funding ODA, GEF, CDM Must avoid perverse incentives

Inefficient Products Museum

Sustainable Electric Agenda 2020 - Brazil

Scenario Study for an Efficient, Safe and Competive Electric Sector – Brazil

16 November 2006 - Climate COP/MOP2Nairobi, KenyaKaren Suassuna

Coordination:

• WWF-Brazil

Head of Researchers:

• Gilberto Jannuzzi, UNICAMP and IEI

Consultative Committee:

• ABRAVA, ABESCO, COGEN-SP, EÓLICA, IDEC, INEE, FBOMS, UNICA

Supporter:

• British Embassy in Brazil

Methodology

• The study was conducted in three phases, with discussions submitted to an specialist Consultative Committee

• Base Year Scenario 2004

• Two scearios for 2020:

• BAU Scenario based on official documents

• Sustainable Electric Scenario (SES)

Instaled Electricity Capacity - 2020BAU and SEC

CET:BAU and CES:SES

-

50

100

150

200

250

GW

Outros 2 15 9

Renovaveis 4 19 26

Fossil 17 48 16

HE 69 122 75

2004 BAU PSW

75%

60%

60%

24%

18%

5%

10%

13%

20%

7%

2%

7%

CET CES

92 GW

204 GW

126 GW

78 GW

72.230.022 tCO2

23.655.916 tCO2

21.665.119 tCO2

-

10.000.000,00

20.000.000,00

30.000.000,00

40.000.000,00

50.000.000,00

60.000.000,00

70.000.000,00

80.000.000,00

tCO

2

BAU

PSW

• The Sustainable Electric Scenario alouds:

• Generate 8 millions of new jobs, with 3,5 millions more then the BAU

• Reduction on the floaded areas

• Stablized the CO2 emissions on 20 million tons

The social-environmental bennefits

CESCET

220

230

240

250

260

270

280

290

BAU PSWB

illio

ns B

RL(

2004

)

• 12% plus economy with energy efficiency mesures.

• USD 14 Billions up to 2020

Quanto vai custar?

CET CES

Public Policy Recomendations for Energy Efficiency

• Energy Efficiency withing the planing policy phase:

• Auction of Energy Efficiency• Standards of Energy Efficiency for equipments and process/

services• Targets for compulsuary investments of energy facilities • Tecnological Public Aquisitions

What WWF is doing?

• WWF have a Climate Change Programe in Key Countries

• In Brazil: Working with partners to construct a brifing papper on Auction for Energy Efficiency

• 7-8 Dec 2006 Workshop on Gold Standards for Renewable and Energy Efficiency Projects

• Thank you!!!• www.wwf.org.br• [email protected]

• http://assets.wwf.org.br/downloads/wwf_energia_ebook.pdf

http://www.wwf.org.br/

mailto:[email protected]

http://assets.wwf.org.br/downloads/wwf_energia_ebook.pdf

ENERGY EFFICIENCY With or Without CDM

Paul KiraiNational Project Manager

GEF-KAM Industrial Energy Efficiency Project

COP12/MOP2 Side event

Nairobi 16th November 2006

Industrial Energy Efficiency Project - Kenya 25

Kenya Energy Scenario

•High dependence on imported petroleum products. Represents close to 30 % of Kenya’s total import bill. Meets 90% of

commercial energy demand

•Shortfall in hydro electricity generation resulting in increased thermal generation - Large Commercial and industrial consume 60% of electricity generated.


Kenya Energy scenario

•Wastage of energy ranges between 10% and 40% of primary energy input

•Little uptake of energy saving measures.

• Savings of up to 40% energy bills have been registered


Energy saving potential in industry

108,200 toe per annum

14% of industrial energy consumption p.a

CO2 Savings 325,000 tons p.a.

Grid “emissions factor" for Kenya is, 0.718 Kg CO2-equivalent /KWh generated


Energy saving potential

050

100150200250300350400450500

Ksh

s m

illio

n

Food Textile Paper Tea HotelIndustry type

Estimated annual savings for different types of industry

ElectricityFuel OilWood


Energy Saving Options

Technology Upgrade

Fine Tuning

Three Approaches

Capacity Utilization


Fine tuning – Boiler excess air control

Boiler no.13000 lbs/hr

Furnace oilTemp: Above 120 degC

AirTemp: 30 Deg C

Feed WaterTemp: 85 Deg C

SteamPr: 7 bar. G

Flue GasesTemp: 247 Deg

C%O2; 11.8%CO2: 6.7

CO: 1100 ppm

Boiler efficiency: 75.4%Excess air: 120%

Dry Flue gas losses: 17.8%Moisture losses: 5.2%Radiation losses: 2 %

Blowdown losses: 0

Issues:Very high Excess air (90-100%)Very high flue gas temperature

Very high CO percentageHigh FO temp

Before adjustment


Capacity Utilization- Drying Ovens

FiltersAir

Damper

Hot air

Exhaust gas @ 140 DegCFlue gas @ 310 DegCExcess air: 15-20%

The primer drier can accommodate 2 trolleysIf size is reduced, it can accommodate 3

11000 mm

3500 Size of the drier

For the present operation, only one ovenOut of 3 ovens will be sufficient

Savings in IDO: 22%


Technology Upgrade - Waste heat recovery

Boiler-13 TPH

Boiler-23 TPH

Boiler-23 TPH

F.O

Steam to process

Steam to process

Steam to process

Flue gas at 230 to 270 Deg C



RecoverWaste heat from the flue gases• FG temp can be at 170 Deg C• Hot water may be generated

•For use in processSavings potential:

1.2 million KSh per year (6%)Investment: 0.6 million KSh

Pay back: 6 months


OIL CONSUMPTION ANALYSIS

0.19

0.20

0.18

0.20

0.16

0.14

0.15

0.15 0.14

0.13

0.18

0.23

Jan-03

Feb-03

Mar-03

Apr-03

May-03

Jun-03

Jul-03

Aug-03

Sep-03

MONTH

LT

S/K

GS

PR

OD

.

EnergyAudit Conducted in April 03

Fine Tuning - Fuel Savings

Lowering of energy intensities in a textile plant in Kenya


Benefits of Energy Efficiency in KenyaBusiness Level

Lower Energy Costs

Improve Productivity and Profitability

Increase Ability to Compete in regional and Global Markets

Corporate responsibility

Country Level

Reduce Foreign Exchange Expenditures

Strengthen the Industrial Sector

Keep and Create Jobs

Contribute to Poverty reduction

Lower environmental impacts


Project Benefits

Energy Savings

1,198 GWh in 5yrs – worth US$22m

CO2 Savings estimates

5 years - 580,000 tonnes @ $5.50 per tonne,

15 years - 5.27 million tonnes @US$ 0.6 per tonne


Challenges for CDMSize of projects too small – low CER

Very Specific projects

Few approved methodologies –

Block 2

Energy efficiency in the post-2012 climate regimePanelists

Rick Bradley, Head of Division, Energy Efficiency & Environment, International Energy Agency

Issues Have UNFCCC/KP been effective in promoting EE? How much can EE contribute to post-2012 climate

mitigation (5-yr, 15-yr horizon)? What types of policies, frameworks and partnerships

are needed? Do we need a "Protocol on Energy Efficiency for Development"?

What are Annex I Parties and the private sector actually doing?

INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE

© OECD/IEA - 2006

The Contribution of Energy Efficiency Beyond 2012

Richard A. Bradley, PhDHead, Energy Efficiency and

Environment DivisionInternational Energy Agency


Have the UNFCCC and Kyoto Protocol stimulated market

transformation and investment in energy efficiency or have

policies and measures to promote energy efficiency

taken a back seat?


Recent Action

2005 IEA Ministerial2005 G8 Gleneagles Plan of Action2006 EU Energy Efficiency Plan of

ActionWorld Bank Investment Framework


Energy Efficiency Policies Energy Efficiency Policies – –

2006 Sectoral Examples2006 Sectoral Examples• Appliances: Japan Top Runner Program for

Efficient Appliances Expanded to 21 Products• Buildings: EU Energy Performance of

Buildings Directive (EPBD)• Industry: France White Certificates Trading• Transport: New Zealand Fuel Consumption

Information Project - Online Consumer Guide• Multi-sectoral Framework Policy: UK Energy

Review

For further detail: http://efficiency.iea.org© OECD/IEA 2006


Many countries have stated that energy efficiency is crucial and

therefore a high priority. How large will the contribution of energy efficiency to post-2012 climate mitigation be (next 5

years, next 15 years)? What specifically are Annex I nations

considering to promote the uptake of energy efficient technologies going

forward?

© OECD/IEA - 2006

Alternative Policy Scenario: Global Savings in Energy-Related CO2 Emissions

Improved end-use efficiency of electricity & fossil fuels accounts for two-thirds of avoided emissions in 2030

Alternative Policy Scenario

Reference Scenario

Increased nuclear (10%)Increased renewables (12%)Power sector efficiency & fuel (13%) Electricity end-use efficiency (29%)

Fossil-fuel end-use efficiency (36%)

26

30

34

38

42

2004 2010 2015 2020 2025 2030

Gt o

f CO

2


© OECD/IEA - 2006

Claude Mandil, Executive DirectorPaul Waide, Senior Policy Analyst

International Energy Agency

Light’s Labour’s LostPolicies for Energy-efficient

Lighting


What can be saved cost-effectively?

0

1000

2000

3000

4000

5000

6000

1995 2000 2005 2010 2015 2020 2025 2030

Lig

hti

ng

ele

ctr

icit

y c

on

su

mp

tio

n (

TW

h)

No Policies

Current Policies

LLCC from 2008745 TWh = 15%

1635 TWh = 38%


Projected additional potential Projected additional potential savings savings

by end-use for IEA-Europeby end-use for IEA-Europe

Projected additional potential Projected additional potential savings savings

by end-use for IEA-Europeby end-use for IEA-Europe

0

50

100

150

200

250

300

350

400

1990 1995 2000 2005 2010 2015 2020 2025 2030

Other uses

Circulation pumps

PCs

Standby

Television

Dishwashing

Clothes-drying

Clothes-washing

Refrigeration

Lighting

Cooking

Water heating

Space cooling

Space heating

TWh/year


What types of policies, frameworks and partnerships are needed to overcome

barriers and capitalize on opportunities to promote energy efficiency? Do we need a dedicated "Protocol on Energy Efficiency

for Development" for the post-2012 regime?


Policy Instruments in the OECD

Planning and zoning lawsPlanning and zoning lawsBuilding codesBuilding codes

New, retrofits, existingNew, retrofits, existingRating, accreditation schemesRating, accreditation schemes

Labeling, disclosureLabeling, disclosureEquipment standardsEquipment standards

Lighting, motors, standby, etcLighting, motors, standby, etcR&D, demonstrationR&D, demonstrationMarket transformation initiativesMarket transformation initiativesVoluntary initiativesVoluntary initiatives

There are great There are great examples of examples of each from each from around the around the

OECD, but no OECD, but no one country ‘has one country ‘has

it all’it all’


What mechanisms are needed to enable non-Annex I

countries to lower their energy intensity?

Block 3

Energy efficiency promotion under the CDMPanelists

Klaus Oppermann, World Bank Carbon Finance

Issues Status of EE promotion under the CDM What are the major barriers to EE promotion under the

CDM? What changes are needed to make the CDM more

supportive of EE? Is a dedicated "Energy Efficiency Working Group" needed?

Energy Efficiency and the CDM

Klaus OppermannCarbon Finance Unit, The World Bank

November 2006COP/MOP2 Nairobi

Energy Efficiency and the CDM: current status

• UNFCCC project pipeline: less than 10% of total CERs out of energy efficiency.

• Most CERs out of energy efficiency CDM projects: use of waste heat in power generation (ACM0004).

• Demand side energy efficiency projects: only a few projects in industrial energy efficiency (2 approved methodologies on process steam optimization)

• Households, service sector, small enterprises, transportation: marginal - despite approved AMS for small-scale activities (thresholds too low) and AM0020 (water pumps).

Regulatory barriers to energy efficiency under the CDM 1

• Sustainable development aspect of the CDM in context of EE not really understood:– In developing countries EE means in most cases

more output with given input (instead of less input to produce the same output): current CDM rules don’t allow to deal with the growth effect/development effect of EE projects.

– “Rebound effect” (income effect on energy demand resulting from savings on energy bills): not part of the CDM concepts but more and more requirement burdened on EE CDM methodologies.

– Very restrictive on leakage: crowding in/out of equipment.

Regulatory barriers 2

• Bundling too restrictive for micro EE activities (e.g.: lighting, appliances, cooking stoves, vehicles)

Bundle• Rather limited number of activities starting at the same

point in time• All individual activities know at the time of registration,

composition of activities is not changing over time• One investor representing all individual activities Example: A company replaces inefficient boilers at 3

different sites.

Solutions 1

• Allow for growing baseline emissions, general approach (analog to power generation projects): ER = Δ energy efficiency * project output (service)

• Rebound effects should not be part of CDM methodologies (as income effects are in general not part of the CDM rules).

• Realism on leakage: realities of markets for used equipment in development countries (supply of used equipment can be completely elastic - imports).

Solutions 2: CDM program

• Incentive schemes and measures like:– Loan programs for building rehabilitation– Grant programs for energy efficient equipment or for

the use of renewable energies – Labeling of energy efficient appliances

..... that use the CDM to finance the program.

• In CDM programs:– The program is the project– The program implementing entity (Government,

NGO, financial intermediary, industrial federation) is project participant

Program versus BundleProgram• Emission reductions are achieved by large number of multiple

actions executed over time: different starting points• Type, size and timing of the induced actions may not be known at

the time of registration• Program implementing entity is project participant, entities acting

under the program not Example: National program to replace inefficient light bulbs.Bundle• Rather limited number of activities starting at the same point in time• All individual activities know at the time of registration,

composition of activities is not changing over time• One investor representing all individual activities Example: A company replaces inefficient boilers at 3 different sites.

Emerging Rules for CDM Programs

[expected for EB28]• Eligibility: all types of incentive schemes,

implementation programs for policies and standards (by themselves they cannot be CDM projects).

• All rules on CDM methodologies apply, approved methodologies can be used for programs.

• Program can be put in place by any private or public entity that makes sure that the actors under the program won’t claim carbon credits by their own

• Program can cover a whole country and even several if all DNAs provide a Letter of Approval

General interest of CDM Programs

• Reach private households, small business, transport in bringing together a large number of small activities.

• Support and enable Governments, public sector entities, NGOs, ESCOs, financial intermediaries to implement incentive schemes or policies financed (in part) out of the CDM.

• Potentially generating revenues out of programs that can be reinvested (in particular for energy efficiency).

• Provide a missing link: cost centers for program implementation different from beneficiaries: with CDM revenues no more need of redistribution mechanisms

• Make energy efficiency bankable for commercial banks.

Thank You

Klaus Oppermann

[email protected]

Latest WB paper available:

Achieving GHG Emission Reductions in Developing Countries through End-User Energy Efficient Projects in the CDM - The Lighting Sector

www.carbonfinance.org

mailto:[email protected]

Open Discussion

Energy Efficiency… for climate mitigation and sustainable

development in the post-2012 climate regime promotion under the CDM

Energy Efficiency – With or Without the CDM. Why Energy Efficiency? Renewables Nuclear Fuel switch...

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