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Energy Efficiency – With or Without the CDM
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Why Energy Efficiency?
Renewables
NuclearFuel switch
End-use energy efficiency
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Panel Topics
Energy Efficiency… for climate mitigation and sustainable
development in the post-2012 climate regime promotion under the CDM
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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?
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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)
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Energy Efficiency and Development
Brian DawsonClimate Change and CDM Adviser
UNDP, New York
November 2006
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Overview of Presentation
The potential of energy efficiency
Appliances/Buildings/Industry Transport is important but not discussed
UNDP Activities
What needs to done?
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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
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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!!
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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!!!
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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
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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
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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
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Inefficient Products Museum
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Sustainable Electric Agenda 2020 - Brazil
Scenario Study for an Efficient, Safe and Competive Electric Sector – Brazil
16 November 2006 - Climate COP/MOP2Nairobi, KenyaKaren Suassuna
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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
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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)
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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
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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
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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
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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
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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
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ENERGY EFFICIENCY With or Without CDM
Paul KiraiNational Project Manager
GEF-KAM Industrial Energy Efficiency Project
COP12/MOP2 Side event
Nairobi 16th November 2006
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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.
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Industrial Energy Efficiency Project - Kenya 26
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
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Industrial Energy Efficiency Project - Kenya 27
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
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Industrial Energy Efficiency Project - Kenya 28
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
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Industrial Energy Efficiency Project - Kenya 29
Energy Saving Options
Technology Upgrade
Fine Tuning
Three Approaches
Capacity Utilization
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Industrial Energy Efficiency Project - Kenya 30
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
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Industrial Energy Efficiency Project - Kenya 31
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%
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Industrial Energy Efficiency Project - Kenya 32
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
Flue gas at 230 to 270 Deg C
Flue gas at 280 to 300 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
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Industrial Energy Efficiency Project - Kenya 33
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
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Industrial Energy Efficiency Project - Kenya 34
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
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Industrial Energy Efficiency Project - Kenya 35
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
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Industrial Energy Efficiency Project - Kenya 36
Challenges for CDMSize of projects too small – low CER
Very Specific projects
Few approved methodologies –
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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?
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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
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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?
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
Recent Action
2005 IEA Ministerial2005 G8 Gleneagles Plan of Action2006 EU Energy Efficiency Plan of
ActionWorld Bank Investment Framework
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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?
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© 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
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
© OECD/IEA - 2006
Claude Mandil, Executive DirectorPaul Waide, Senior Policy Analyst
International Energy Agency
Light’s Labour’s LostPolicies for Energy-efficient
Lighting
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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%
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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?
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
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’
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INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE
What mechanisms are needed to enable non-Annex I
countries to lower their energy intensity?
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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?
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Energy Efficiency and the CDM
Klaus OppermannCarbon Finance Unit, The World Bank
November 2006COP/MOP2 Nairobi
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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).
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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.
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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.
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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).
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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
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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.
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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
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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.
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Thank You
Klaus Oppermann
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
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Open Discussion
Energy Efficiency… for climate mitigation and sustainable
development in the post-2012 climate regime promotion under the CDM