DET NORSKE VERITAS VCS METHODOLOGY ELEMENT ASSESSMENT REPORT. Methodology for Weatherization of Single and Multi-Family Buildings

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1 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Methodology for Weatherization of Single and Multi-Family Buildings REPORT FOR: VCS ASSOCIATION DNV report number Revision 02 DET NORSKE VERITAS

2 ERROR! REFERENCE SOURCE NOT FOUND. Date of first issue: Project No.: 14 November 2010 PRJC CCS-USA Approved by: Miguel Rescalvo Santandreu Regional Manager, North America Organizational unit: Sustainability and Innovation Climate Change and Environmental Services DET NORSKE VERITAS CERTIFICATION AS Climate Change Services Veritasveien 1, 1322 HØVIK, Norway Tel: Fax: Org. No: NO MVA Client: Client ref.: Voluntary Carbon Standard Association Bret Bronner Name of Methodology: Methodology for Weatherization of Single and Multi-Family Buildings Version: 3.6 Assessment Phases: Desk Review Follow up interviews Resolution of outstanding issues Assessment Status Corrective Actions Requested Clarifications Requested Full Approval by DNV Rejected In summary, it is DNV s opinion that the proposed VCS methodology element Methodology for Weatherization of Single and Multi-Family Buildings, as described in version 3.6 of 23 November, 2010, meets all relevant VCS requirements for VCS methodology elements. DNV thus recommends the methodology element for approval and requests that VCSA to approve the methodology element. Report No.: Date of this revision: Rev. No. Key words: Report No.: Subject Group: Environment Indexing terms Report title: Methodology for Weatherization of Single and Multi-Family Buildings Work carried out by: Weidong Yang, Jim Arends Work verified by: John Warmerdam, Shruthi P Bachamanda Date of this revision: Rev. No.: Number of pages: 30 November Key words VCS Methodology Element Assessment Validation Clean Development Mechanism No distribution without permission from the client or responsible organisational unit free distribution within DNV after 3 years Strictly confidential Unrestricted distribution 2009 Det Norske Veritas AS All rights reserved. This publication or parts thereof may not be reproduced or transmitted in any form or by any means, including photocopying or recording, without the prior written consent of Det Norske Veritas AS. Assessment Report for New/Revisied Methodology under VCS V1-2009

3 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 Abbreviations ASHRAE CAR CDDCF CDM CL DNV ECM ECF EDF GJ GWP HDDCF HLF IPMVP IRR ME MED NPV PD RECS USDOE VCS VCSA VCU American Society of Heating Refrigerating and Air-conditioning Engineers Corrective action request Cooling degree days correction factor Clean development mechanism Clarification request Det Norske Veritas Energy conservation measures Electricity correction factor Electricity Demand Reduction Factor Giga Joule Global warming potential Heating degree days correction factor Heat Load Reduction Factor International Performance Measurement & Verification Protocol Internal rate of return Methodology element Methodology element documentation Net present value Project document Residential Energy Consumption Survey United States Department of Energy Voluntary Carbon Standard VCS Association Voluntary Carbon Unit Page i

4 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 TABLE OF CONTENTS VCS METHODOLOGY ELEMENT ASSESSMENT REPORT... 1 REPORT FOR:... 1 VCS ASSOCIATION ASSESSMENT STATEMENT INTRODUCTION METHODOLOGY Desk Review of the New Methodology Follow-up Interviews Resolution of Outstanding Issues Internal Quality Control Assessment Team 4 4 ASSESSMENT FINDINGS Applicability Baseline Approach Additionality Project Boundary Emissions Reductions Monitoring Data and Parameters Data Quality Management Adherence to the Project-level Principles of the VCS Program Comments by Stakeholders 9 Appendix A: Resolution of Corrective Action and Clarification Requests Page ii

5 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev ASSESSMENT STATEMENT Det Norske Veritas Certification AS (DNV) has performed an assessment of the proposed Voluntary Carbon Standard (VCS) methodology element, Methodology for Weatherization of Single and Multi-Family Buildings. The assessment was performed on the basis of VCS criteria for methodology development. The review of the methodology element documentation and the subsequent follow-up interviews has provided DNV with sufficient evidence to determine the fulfillment of the stated criteria. The methodology element (ME) was prepared based on the requirement of VCS and VCS Program Normative Document: Double Approval Process, v1.0. The methodology element belongs to the sectoral scope of energy demand. In summary, it is DNV s opinion that the methodology element Methodology for Weatherization of Single and Multi-Family Buildings, as described in the methodology element documentation (MED) of version 3.6 of 23 November 2010, meets all relevant VCS requirements for VCS methodology elements. DNV thus recommends that VCSA approve the methodology element for approval and requests that VCSA approve the methodology element as a VCS methodology element. Page 1

6 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev INTRODUCTION VCS Association has commissioned Det Norske Veritas Certification AS (DNV) as the second validator to perform an assessment of the methodology element Methodology for Weatherization of Single and Multi-Family Buildings. This report summarizes the findings of the assessment of the methodology element, performed on the basis of VCS criteria for methodology elements. VCS criteria refer to VCS and the subsequent VCS Program Normative Documents /2//3/. 3 METHODOLOGY The assessment consisted of the following three phases: 1. A desk review of the new methodology. 2. Follow-up interviews. 3. Resolution of outstanding issues and the issuance of the final assessment report and opinion. The following sections outline each step in more detail. 3.1 Desk Review of the New Methodology The documentation that was reviewed during the assessment is shown below: /1/ Maine State Housing Authority, Methodology element documentation Methodology for Weatherization of Single and Multi-Family Buildings, version 3.2 of 28 June 2010, version 3.5 of 3 November 2010, version 3.6 of 23 November 2010, /2/ VCSA, Voluntary Carbon Standard /3/ VCSA, VCS Program Normative Document: Double Approval Process, v1.0. /4/ CDM Executive Board, Tool for the Demonstration and Assessment of Additionality, version 5.2. /5/ First Environment, Inc., Methodology Validation Report for Maine State Housing Authority, June Follow-up Interviews Date Name Organization Topic /6/ July September 2010 /7/ July September 2010 Cathy Lee Lucy Van Hook Lee International MaineHousing 1. The methodology element s eligibility criteria. 2. The baseline Page 2

7 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 /8/ July September 2010 /9/ July September 2010 /10/ July September 2010 Dale McCormick Sandra Greiner Bamshad Houshyani MaineHousing Climate Focus Climate Focus approach and additionality. 3. Project boundary. 4. Emissions, including leakage. 5. Monitoring, data and parameters. 3.3 Resolution of Outstanding Issues The objective of this phase of the assessment was to resolve any outstanding issues that needed to be clarified prior to DNV s positive on the methodology element. The assessment findings relate to the methodology element as documented and described in the initial methodology element documentation (MED) /1/. In order to ensure transparency, the issues raised and the ME developer s response are documented in Appendix A. Findings established during the assessment can either be seen as a non-fulfillment of VCS criteria or where a risk to the fulfillment of ME objectives has been identified. Corrective action requests (CAR) are issued where: Mistakes have been made with a direct influence on methodology application. VCS specific requirements have not been met. A clarification request (CL) may be used where additional information is needed to fully clarify an issue. Table 1 - Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests If the s from the draft assessment are either a CAR or a CL, these should be listed in this section. Summary of methodology element developer response The responses given by the methodology element developer during the communications with the assessment team should be summarized in this section. Assessment This section should summarize the assessment team s responses and final s. 3.4 Internal Quality Control The assessment report underwent a technical review before DNV approved the methodology element. The technical review was performed by a qualified technical reviewer in accordance with DNV s qualification scheme. Page 3

8 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev Assessment Team Listed below are the members of the assessment team, their roles, and the nature of their involvement. Type of involvement Role/Qualification Last Name First Name Project Manager Yang Weidong GHG auditor Yang Weidong Technical Reviewer Warmerdam John Technical Reviewer P. Bachamanda Shruthi Sector Expert Arends Jim Desk review Interviews Reporting Supervision of work Technical review Expert input Page 4

9 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev ASSESSMENT FINDINGS The findings of the assessment are stated in the following sections. The final assessment findings relate to the methodology element as documented and described in the revised MED. 4.1 Applicability The applicability criteria for the methodology element are clearly defined in the MED. DNV was able to confirm that the eligibility criteria were appropriate and that adequate requirements for the project technology, resulting changes due to project activities, existing operation conditions prior to project activities, project industry sector, and project geography are all defined clearly and properly. The applicability criteria were defined as shown below /1/: Applicable to weatherizing whole buildings, replacing mobile homes or implementing individual energy efficiency measures within existing dwellings. Any dwelling or measures included in any project shall meet the defined eligibility requirements, which are clearly and properly described in the MED. Four categories of project are defined in the MED, including: o Category A - All energy retrofit. o Category B - Efficiency enhancement of the building envelope and central heating and/or cooling system only. o Category C - Replacement of appliances currently in service. o Category D - Replacement of a mobile home currently occupied. The categorization is proper and furthers the application of the MED. 4.2 Baseline Approach The respective baseline scenarios for the four project categories are directly defined in the MED (Part B 2. Baseline Scenario) and the defined baseline scenarios are proper. The approach for determining the project baseline is deemed by DNV to be appropriate and adequate. 4.3 Additionality For project activities in category A, B, or C, the additionality for project activities can be assessed using either the Project Test or the Performance Test. For project activities in category D, the additionality for project activities can only be assessed using the Project Test. The requirements for the tests are properly specified in the MED. Test 1 Project Test The latest version of the CDM Tool for the Demonstration and Assessment of Additionality is required to be applied for the test. In addition, the MED provides helpful guidance for applying barrier analysis including investment barrier, technological barrier, and institutional barrier. DNV can confirm that this approach is proper. Page 5

10 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 Test 2 Performance Test The respective calculation methods for the performance standards of Categories A, B, and C are described, based on the characteristics of the available data (whether the data follows the normal distribution or not). The equations and the parameters included are clearly explained for easy application. The assumptions used in the calculation methods are justified in the MED and can be confirmed as reasonable and conservative by DNV. 4.4 Project Boundary The project s physical boundary is clearly and properly defined as the building envelope of the dwelling(s) and its heating/cooling equipment. The sources and types of gases included are also clearly and properly defined in the MED /1/; the justification to include or exclude certain type of gases is reasonable. 4.5 Emissions Reductions Five approaches to calculating emission reductions are determined and their applicability to the four categories of project is clearly defined, as described in Table 2. Table 2 - Applicability of Different Approaches to Each Category of Project Category of Project Approaches Category A Category B Category C Category D 1. Adjusted consumption approach Yes Yes Yes 2. Pre- and post-retrofit audit approach Yes Yes 3. Control group approach Yes Yes Yes 4. Deemed savings approach Yes 5. Mobile homes approach Yes DNV checked all the assumptions used in the different approaches and was able to confirm that they are acceptable. All the equations and parameters under each approach can also be confirmed as being proper and are discussed below Adjusted Consumption Approach The basis of this approach is to correct measured energy consumption pre-retrofit (the baseline consumption), for changes in electricity demand over time and adjusted for heating/cooling degree days using an Electricity Correction Factor (ECF) and Heating Degree Day Correction Factors or Cooling Degree Day Correction Factors (HDDCF or CDDCF) as applicable. The emission reductions from reduced electricity and fuel consumption are calculated by multiplying the reduced electricity from the project activities by the corresponding emission Page 6

11 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 factor of the electricity consumed, plus the reduced fuel from the project activities multiplied by the corresponding emission factor of the fuel consumed. The reduced electricity is calculated by subtracting the project consumption from the baseline consumption, which is estimated from the consumption prior to the project activity adjusted by the ECF and CDDCF. The electricity project consumption will be estimated from the electricity bills of the project activities, while the baseline consumption will be estimated from the electricity bills of the same activities prior to the project implementation. The reduced fuel is calculated by subtracting project consumption from the baseline consumption, which is estimated from the consumption prior to the project activity adjusted by the HDDCF. The fuel project consumption will be estimated from the fuel bills of the project activities, while the baseline consumption is to be estimated from the fuel bills of the same activities prior to the project implementation. Two types of leakage are considered: 1) leakage from continued operation of appliances, and 2) leakage from improper disposal of refrigerators or air conditioners. Equations are properly defined for the two types of leakages and the parameters used in the equations are described clearly for easy understanding and use. The emission reductions are estimated by the emission reductions from reduced electricity and fuel minus leakage Pre- and Post-Retrofit Audit Approach The basis of this approach is to calculate Electricity Demand Reduction Factor (EDF) and Heat Load Reduction Factor (HLF) based on the data generated by a pre- and post- retrofit energy audit for a sample of the dwellings. A pre-retrofit audit shall take place once before project implementation for EVERY dwelling and a post-retrofit audit shall take place once after the retrofit has been completed for a sample of the dwellings. The emission reductions from the reduced electricity consumption will be calculated by multiplying the baseline electricity consumption by the EDF, ECF, CDDCE and the emission factor of the electricity. Similarly, the emission reductions from the reduced fuel consumption will be calculated by multiplying the baseline fuel consumption by the HLF, HDDCF and the emission factor of the fuel. The sampling requirement related to the sample size and sample selection is defined properly and will ensure that the samples are representative. The leakage identified for the approach is the same as in the adjusted consumption approach. The emission reductions are estimated by the emission reductions from reduced electricity and fuel minus leakage. Page 7

12 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev Control Group Approach The basis of this approach is to calculate emission reductions from the reduced electricity and fuel consumption by comparing the energy consumption in the control group and the sample group. The control group is comprised of dwellings from the Same Building Stock that are not, and shall not be weatherized. The sample group is comprised of dwellings that will be weatherized, or, in the case of mobile homes, replaced. The sampling requirement related to the sample size and sample selection is defined properly and can ensure that the samples are representative. To ensure conservative emission reduction calculations, a 90% confidence interval, with an alpha value equal to 10% (α =0.10) will be applied to the fuel and/or electricity consumption within the control group and the sample group. The leakage identified for the approach is the same as in the adjusted consumption approach. The emission reductions are estimated by the emission reductions from reduced electricity and fuel minus leakage The Deemed Savings Approach This approach is only applicable to Category C - Replacement of appliances currently in service. The emission reductions from reduced electricity consumption are calculated based on the difference between the electricity demand (rated capacity) of the appliance being replaced and of the replacement appliance, which will be determined from the nameplate, manufacturer s specification sheet, or direct metering. The difference in electricity demand will then be multiplied by the operation hours of the appliance(s), the number of appliances, and the emission factor of electricity, with a correction factor for failed operation of the appliance. The leakage identified for the approach is the same as in the adjusted consumption approach. The emission reductions are estimated by the emission reductions from the reduced electricity minus leakage The Mobile Homes Approach The same approach used in the deemed saving approach will be used to calculate emission reductions from reduced electricity consumption, if appliances are replaced at the same time the mobile home is replaced. The basis to calculate emission reductions from the reduced fuel consumption is shown below: Determine the heat load of the mobile home to be replaced and of the replacement home. Determine pre-and post-replacement size of the mobile home. Calculate emission reductions based on the difference between pre- and postreplacement heat load and pre-and post-replacement size of the mobile home, multiplied by the annual heating/cooling degree days and emission factor of the fuel. Page 8

13 VCS METHODOLOGY ELEMENT ASSESSMENT REPORT Report No: , rev. 02 The relevant determination methods are adequately described and deemed proper. 4.6 Monitoring The activity parameters to be monitored for each of the approaches to emission reduction calculations are defined appropriately and clearly listed in the MED, which will ensure that the emission reductions from the project activity will be estimated properly. Quality assurance measures have also been prescribed for the adjusted consumption approach and pre- and post-retrofit audit approach, to further ensure the accuracy and reliability of the emission reduction estimates. 4.7 Data and Parameters Both monitored and unmonitored data and parameters used in the emissions calculations are defined in the MED clearly and appropriately in order to make it possible for the emission reductions to be estimated and verified. 4.8 Data Quality Management Requirements for data sources and estimations are defined in the MED; these requirements are deemed proper by DNV for uncertainties related to reasonably reducing the emission reductions. 4.9 Adherence to the Project-level Principles of the VCS Program The MED was developed in line with the project-level principles of VCS , as elaborated above. It is also deemed by DNV that the principles of relevance, completeness, consistency, accuracy, transparency, and conservativeness are properly addressed in the MED Comments by Stakeholders DNV reviewed the comments and responses as described in the Methodology Validation Report for Maine State Housing Authority" by the first validator of the MED /5/ and was of the same opinion as described in the report, that is, MaineHousing has taken due account of all comments submitted and all the responses from MaineHousing are adequate Requests by VCSA The MED was revised based on VCSA s requests related to the Project Test and Technology Test. DNV revised the assessment report based on the revised MED. Page 9

14 APPENDIX A RESOLUTION OF CORRECTIVE ACTION AND CLARIFICATION REQUESTS Page A-1

15 CAR 1 General information Definitions should be provided for the following terms to ensure clear understanding and application of the methodology element (ME): Appliance. Building envelope. r-value of insulation in the floor, walls and ceiling. u-value and size of the windows. r-value of the skirting. Definitions for the terms below will be included in the ME in Part A, General Information Section 1, Technologies/Measures. Appliance: Appliance means a major or minor household appliance, which includes, but is not necessarily limited to, a refrigerator, microwave, dishwasher, clothes washer or dryer, space heater, and water heater. It does not include heating/cooling systems. An Appliance runs on electricity or another fuel source and is a discreet unit. It must be contained within the Building Envelope to be included in the Project activity. Building Envelope: The Building Envelope means the exterior thermal boundary of the physical structure of an individual building. Thermal boundary typically includes the ceiling/roof, wall, floor, attic floor, window, or door that separates the habitable, occupiable, and conditioned spaces from the outdoor weather. R-value of insulation in the floor, walls and ceiling: R- value means a measurement of thermal resistance as expressed by a recognized authority, such as the U.S. Department of Energy (USDOE), or the American Society of Heating Refrigerating and Air-conditioning Engineers (ASHRAE). The R-value of insulation in the floor, walls and ceiling will depend on the thickness and specific material of the installed insulation. U-value and size of the windows: U-value means the thermal conductance of a material or the total heat transmission in GJ per square meter per hour with a 1 C temperature difference between the inside and the outside. The U-value of the window is the inverse of the R-value, or 1/R. The U-value for the make and model of a window can often be found on a window The definitions are properly given and have been added to the ME. The CAR is closed. Page A-2

16 manufacturer s specification sheet, which is included with the window. R-value of the skirting: The R-value of any material means the measurement of thermal resistance as expressed by a recognized authority, such as the USDOE or ASHRAE. The R-value of the skirting will depend on the thickness and specific material of the installed insulation. CAR 2 Additionality The following items need to be addressed: Web linkage for CDM small-scale additionality barrier test needs to be provided in the ME; Justification for using the CDM small scale additionality barrier test needs to be provided in the ME; and CDM has a clear definition for small-scale projects. The ME also needs to clearly define small-scale project and the criteria to determine if a project is small scale. VCS rules require application of a VCS additionality tool. In addition to the Performance Test, the ME allows for application of the Project Test. Upon review of the proposed VCS rules and after further discussion, we have decided not to reference the CDM Small Scale Additionality Test in the ME. We will add new text to the ME specifying the detailed procedures that must be followed to demonstrate additionality. These are based on established concepts of additionality in the CDM, which also appear in VCS and Gold Standard methodologies and are not tied to the size of the Project. The 2011 proposed rules are still in draft form and within the public comment period and we are therefore not currently subject to them. However, we have been advised to and intend to comply with them as currently written by adding text to the methodology consistent with the language in the 2011 Consultation Document. The proposed 2011 VCS rules provide ME developers with several options for demonstrating additionality. The one we believe is most suitable for our ME is found in It calls for the ME developer to include a...detailed procedure for demonstrating and assessing additionality directly within the methodology. It follows below: The additionality assessment requirements for the ME have been thoroughly revised to meet all the requirements in VCS Considering the VCS 2011 will be implemented in early The revision is acceptable. The CAR is closed. Page A-3

17 Part B. ADDITIONALITY AND BASELINE 1. Additionality 1.1 A Project shall demonstrate additionality using either the VCS Project Test, a VCS Performance Test that incorporates the Performance Standard approved for the sector, or the VCS Technology Test The VCS Project Test: for demonstration of additionality under categories A, B, C or D, the following steps shall be satisfied: Step 1 Regulatory Surplus: The Project shall not be mandated by any systematically enforced law, statute or other regulatory framework. Laws, statutes, regulatory frameworks or policies implemented since 11 November, 2001 that give comparative advantage to less emissionsintensive technologies or activities relative to more emissions-intensive technologies or activities need not be taken into account. Laws, statutes, regulatory frameworks or policies implemented since 11 December, 1997 that give comparative advantage to more emissions-intensive technologies or activities relative to less emissionsintensive technologies or activities shall not be taken into account. Step 2 Implementation Barriers: The Project shall demonstrate that it faces one (or more) of the following distinct barriers compared to barriers faced by alternatives to the Project. The specific analyses listed below are examples of acceptable approaches to demonstrating the existence of the barrier, but the Project may adopt a different analysis provided it is appropriately justified. Investment barrier: The Project may demonstrate that it faces capital or investment return constraints that the VCU revenue stream can help overcome. Examples of an Page A-4

18 analysis a Project may use to demonstrate it faces an investment barrier that the VCU revenue stream can help overcome include, but are not limited to, a Capital or Investment Return Analysis or a Benchmark Analysis. In selecting financial indicators for these or any other analysis used, the indicators must be similar to or consistent with parameters relevant to the Project type and recognized in financial markets: Capital or Investment Return Analysis: The Project shall identify a financial indicator suitable for the Project type and demonstrate that the Project activity, without the VCU revenue stream, is not the most attractive scenario. Such financial indicators may include but are not limited to: Internal Rate of Return (IRR), Net Present Value (NPV), Cost Benefit Ratio, or Unit Cost of Service; Benchmark Analysis: The Project shall identify a financial indicator suitable for the Project type and demonstrate that the Project activity, without the VCU revenue stream, does not exceed a benchmark. The financial indicator could be, by way of example only, Internal Rate of Return. The benchmark shall be based on financial rates or some other financial indicator published, documented, referenced and/or utilized for investment decisions by government, commercial lenders, or any other financial institution, provided the indicator is appropriately justified. Technological barrier: The Project may demonstrate that it faces a technological barrier that the VCU revenue stream may help overcome. Such a barrier may result from a less technologically advanced alternative to the technology proposed for the Project activity, including an alternative that would lead to higher emissions. The lower risk could Page A-5

19 be due to the performance uncertainty or low market share of the new technology adopted for the Project activity and/or that the less technologically advanced alternative would have led to higher emissions. Examples a Project may use to demonstrate a technological barrier include, but are not limited to, non-availability of human capacity to operate and maintain the new technology, lack of infrastructure to utilize the new technology, unavailability of the new technology and/or a high level of technology risk. Institutional barrier: The Project may demonstrate that it faces financial, organizational, cultural or social barriers that the VCU revenue stream can help overcome. Such a barrier may be based on prevailing practices, institutional resistance to change, lack of adequate funds to offer effective incentives to engage in the Project activity or other factors that impede more effective Project implementation, monitoring or maintenance. Examples a Project may use to demonstrate an institutional barrier include, but are not limited to, absence of an existing trained and qualified workforce, absence of a strong central organization to manage the Project and/or perform the Project activities, absence of suitable tools for monitoring carbon emissions, and/or absence of incentives that can be shown to help stimulate the Project activity. Step 3 Common Practice: The Project shall demonstrate that: 1) The Project type is not common practice in the sector/region, compared with Projects that have received no carbon finance. 2) If it is common practice, the Project proponent shall identify barriers faced compared with existing Page A-6

20 Projects. 3) Demonstration that the Project is not common practice shall be based on guidance in The GHG Protocol for Project Accounting which states in pertinent part: Common practice refers to the predominant technologies or practices in a given market, as determined by the degree to which those technologies or practices have penetrated the market (defined by a specified geographic area). Collecting data on all baseline candidates within the geographic area and calculating a relative percentage for each different technology or practice will give the level of penetration for each technology or practice. This percentage could be based on the number of sites using each technology or practice. In determining whether a particular practice or technology is common practice, the calculation shall be done based on the Same Building Stock within a selected category in the ME. 1.3 Performance Standard (already included in the ME) 1.4. The Technology Test: For demonstration of additionality under categories A, B C and D, the following steps shall be satisfied: Step 1 Regulatory Surplus: The Project shall not be mandated by any systematically enforced law, statute or other regulatory framework. Laws, statutes, regulatory frameworks or policies implemented since 11 November, 2001 that give comparative advantage to less emissions-intensive technologies or activities relative to more emissions-intensive technologies or activities need Page A-7

21 not be taken into account. Laws, statutes, regulatory frameworks or policies implemented since 11 December, 1997 that give comparative advantage to more emissions-intensive technologies or activities relative to less emissions-intensive technologies or activities shall not be taken into account. Step 2 Technology Benchmark: The Project shall use a less emission-intensive technology that meets specific technology and performance criteria, which results in crediting up to a pre-determined threshold (e.g., market penetration) and ensures that the Project is not business as usual. Projects that meet such eligibility criteria would also be deemed additional using the Project Test. Page A-8

22 CAR 3 Additionality Performance Standard Justification needs to be provided that the electricity bill is an appropriate and accurate data source to measure the efficiency improvement specifically related to the Project activities (i.e., how do you distinguish between Project and non-project savings from a single electricity bill?). If the dwelling unit has one meter and the unit has been split to rent to multiple tenants, there needs to be a methodology for splitting the utility usage on a square footage basis. Also, it needs to be demonstrated how increased usage of consumer electronics (not appliances, in the normal definition) in the dwelling may counter-influence the effect of efficiency improvements, and how this counterinfluence will affect the appropriateness of the benchmark being used in the calculation of the performance standard. The electricity bill may be used when calculating emission reductions. In such cases, the ECF is applied. The ECF is taken from a recognized authority and reflects the general trend in electricity consumption. It corrects for overall changes in electricity consumption from non-project activities. It should also be noted that during the Project, some dwellings might utilize efficient appliances not covered under the Project while others might utilize inefficient appliances. While these behaviors would offset each other, the ECF will ensure correction for the change in overall electricity consumption in a large population. Therefore, the approach in the ME is conservative. If multiple dwellings within a single building are served by a single meter, this will be dealt with in the ME through a requirement to modify the equations to use the consumption unit kwh/m 2 multiplied by the area of each individual dwelling. This requirement will be added as a footnote in the ME. When calculating the Benchmark in the Performance Standard, any increase in energy efficiency will be captured by comparing the utility or fuel bills from the same household over a period of the three most recent years for which data are available. The utility and/or fuel bills are used as a proxy for energy consumption. There are three ways in which the issue raised in CAR 3 may be addressed. 1) The percentage increase in electricity due to the increase in electronics may be ignored since the percentage of electricity consumed to run electronics is an insignificant fraction of that used to heat or cool the conditioned space. Other household electronics is defined by the USDOE s The justification for using electricity bill is reasonable and is hence accepted. The additional requirement for multiple dwellings is also reasonable. The justification for the benchmark determination approach is acceptable and the additional measures to correct for any potential increase in electricity consumption due to an increase in electric appliances will make the benchmark determined more conservative. The CAR is closed. Page A-9

23 Residential Energy Consumption Survey (RECS) as everything except TVs and computers and represents only 3% of the electricity used to heat and/or cool a dwelling. For example, in the case of a 20% decrease in consumption due to efficiency improvements, and a doubling of the number of household electronics, excluding televisions, this would equate to a 3% reduction of the savings. This example is based on USDOE reporting for the year The RECS survey can be found at: figs.html#4. 2) In homes that use fossil fuel for heating, the increase in electronics may be ignored because the metric of fuel consumption used to determine the benchmark value would not include electricity consumption. 3) To correct for any potential increase in electricity consumption due to an increase in electric appliances, the statewide percent increase in electricity consumption, as reported by the USDOE or other recognized authority, will be added to the value of the Benchmark to make the Performance Standard even more rigorous and conservative if such electricity consumption data is reasonable and available and it is feasible to do so. The value of the increase in regional electricity consumption in the U.S. may be obtained from the following website: n.cfm. Page A-10

24 CAR 4 Emission reduction calculations - 1 The performance standards used in the additionality assessment establish how a benchmark is determined. The benchmark is the annual average percent savings in weather normalized energy consumption in dwellings from the Same Building Stock over the three most recent years for which data are available. The benchmark is used to represent the efficiency improvement in the baseline scenario without project implementation. In the equations used to calculate emission reductions (i.e., Equation 6), ECFy (Electricity correction factor for year y to be applied to the baseline) is used to represent the efficiency improvement in the baseline scenario without project implementation. Justification needs to be provided for these two different approaches used in the additionality assessment and emission reduction calculations. These two approaches serve different functions, as explained below: The Performance Test is applied to determine whether the percent savings achieved through the Project activity is sufficient to consider the dwelling to be additional. The Performance Standard is calculated based on the energy consumption levels reported from dwellings to determine if homeowners are installing energy efficiency measures on their own. Establishing this energy efficiency threshold allows the Project to employ a Performance Standard based on the established change in energy efficiency that can be used to assess additionality in grouped Projects. The application of the electricity correction factor (ECFy), when calculating emission reductions, serves a different purpose than the Performance Standard. Within the U.S., manufacturers of appliances and electronics must comply with energy efficiency regulations. These regulations require that the appliances and electronics produced either increase in energy efficiency or decrease in energy consumption over time. In the future, the result of these regulations will be that as appliance efficiency improves, the appliances in the household will consume less electricity. This is based on an assumption that the only appliances available in the market will be high-efficiency appliances. This increase in efficiency is accounted for in the ME by removing the emission reductions as a result of increased electricity efficiency from the baseline. To further ensure conservativeness, the ECFy is only applied when the value is negative, thus The response gave detailed explanation and justification for the two approaches. The explanation was reasonable and hence accepted. The CAR is closed. Page A-11

25 CAR 5 Emission reduction calculations - 2 In the equations used to calculate emission reductions, ECFy is used to represent the efficiency improvement for electricity consumption in the baseline scenario without project implementation. Justification is needed to explain why no similar correction factor is used for the efficiency improvement from fuel consumption. In Table 5, the baseline consumption is sourced from Electricity bills for 12 months preretrofit. Bills for a sample of the dwellings in the Same Building Stock shall be monitored, or bills may be collected for all dwellings in the Project. The specific requirements for Bills for a sample of the dwellings in the Same Building Stock to be monitored need to be defined in the ME. representing an increase in efficiency. In response to the first question, there is no similar correction factor for fuel consumption because the timeline for replacement of central heating/cooling equipment is very different from the timeline for replacement of appliances. Appliance manufacturers are required to increase the efficiency rating of appliances available in the market, so as appliances are replaced throughout the life of the Project, the baseline will shift downward in a manner that is represented by the ECFy. The rate of increased efficiency in boilers and furnaces is much slower than the rate of increased efficiency in appliances for several reasons: 1) boilers and furnaces already function at a high efficiency, 2) boilers and furnaces are replaced much less frequently than appliances and 3) boiler and furnace replacement is largely supplier driven, unlike the appliance replacement market, which is consumer driven. Boiler and furnace replacement is supplier driven because when a boiler or furnace is replaced it is typically in an emergency situation, and therefore the homeowner has no option but to accept the particular model and make of boiler/furnace that the repair person has in stock, or can order, receive and install quickly. Therefore, the number of boilers/furnaces that must be replaced is much smaller. Replacement of a central heating/cooling system is an eligible measure covered by the ME, so such replacements that occur as part of the Project activity will be monitored and accounted for, making a correction factor unnecessary. Below are several websites that contain information supporting the statements made above. 1. Boilers are already very efficient: The justification for not including similar correction factor for fuel efficiency improvement is confirmed by reviewing the supporting evidences. Determination of sample size and the approach to choose samples can be confirmed acceptable. The CAR is closed. Page A-12

26 =1769&zone=1&first _cooling/index.cfm/mytopic= Energy Star boilers have a very high thermal efficiency range (85~97%) ist.xls 3. Boilers are replaced much less frequently: a. The lifetime of boilers can be up to 30 years: b. The average replacement age of boilers is years: ma2000%5c1997%5cp31.pdf c. All samples within the ME must meet the requirements outlined in section 1.9 of the ME, which states: When sampling, the minimum number of dwellings or appliances to be sampled shall be the square root of the total number of dwellings, i, or appliances included in the Project 5. Statistically sound sampling approaches shall be used. When the control group approach is utilized, the size of the control group shall be the square root of the total number of dwellings in the Project, but need not exceed 100 dwelling. The equation for determining the minimum sample size number was taken from IAF Guidance on the Application of ISO/IEC Guide 66 Issue 4 IAF GD: Page A-13

27 2006. As described in footnote 5 above, statistically sound sampling approaches shall be used. Statistically sound sampling encompasses the option for the Project to limit the control group sample size to 100 dwellings. Statistically sound sampling approaches are standard, and are described in many texts, but the specific approach will depend on the size and variability of the population included in the Project. Therefore, the various approaches need not be specifically defined in the ME. Bills for the sample of dwellings is defined as the utility bills for a dwelling included in the Project that reports electricity or another directly metered energy source consumed within the Building Envelope. Bills shall be from an established utility. In any sampling approach, the following conditions must be met: 1) The sample shall be statistically valid, and may be one of the following: a. Simple random sample. b. Systematic sampling. c. Stratified sampling within the Same Building Stock. d. Cluster sampling. 2) The sample must be representative of the population 3) The data must come from an approved source, i.e., a certified energy auditor or a nationally recognized data source. 4) Actions that may bias the control group sample Page A-14

28 shall be avoided. Sampling shall include dwellings that are dispersed geographically. For each defined Building Stock included in the Project activity, sampling shall occur. Criteria include region, dwelling type, and income. CAR 6 Monitoring The monitoring requirements focus on energy bills, which are important for the emission reduction calculations. However, the following items need to be properly monitored and recorded to ensure the emission reductions are the result of the project activity: What improvement was implemented for each dwelling included those in the project activity? Affirming the continual operation of the improvement. The measures installed and actions taken as part of the Project activity will be recorded in a centralized database for each uniquely identified dwelling. This information must be recorded and stored for any functioning program as it is used to check invoices and pay contractors, energy auditors, and inspectors. A monitoring parameter for the continued operation of the installed measures will be added to Table 5 and will be monitored in the sample of dwellings selected for quality assurance monitoring. Table 5 includes monitoring electricity (Elecp,y,i) and fuel consumption (Fp,y,i,j) on an annual basis. Monitoring these measures will enable the Project to confirm the continued operation of the installed measures. The specific procedures for conducting the quality assurance tests may be determined at the Project level, and need not be specifically defined within the ME. As part of the quality assurance procedures, a statistically significant sample of dwellings will be monitored in accordance with Table 5 to ensure the continued operation of the installed measures throughout the Project crediting period. The total number of weatherized dwellings I, shall be monitored and updated annually as provided in Table 5. The establishment of a centralized database for each uniquely identified dwelling and adding a monitoring parameter for the continued operation of the installed measures can be confirmed as reasonable measures to address the CAR. The CAR is closed. CAR 7 See Response to CAR 5 for information on choosing The responses were Page A-15

29 Quality assurance control group The following description is on page 16: The control group shall measure the emission reductions resulting from the change in energy consumption. In case of a discrepancy between emission reductions calculated according to the approach and emission reductions calculated from the control group, the adjusted baseline consumption approach shall be calibrated accordingly. The method used to measure the emission reductions, the term discrepancy, and how/when the adjusted baseline consumption approach shall be calibrated need to be fully described. The sample size is properly defined for the control group. However, the approach used to choose representative dwellings for the control group needs to be fully defined. CAR 8 Emission calculations Parameter I is used in Equations 12, 13 and 14. A definition for the I used in each equation should be given. The parameter I used in Equation 12 and 13 has a different meaning from the parameter I in Equation 14. A different parameter name should be used to avoid confusion. representative dwellings. See Response to CAR 9 for information on the meaning of discrepancy. I and I in equations 12 and 13 will be replaced by S and s to refer to the number of sample dwellings. Accordingly, the definitions for S and I will be added to the ME. reviewed and confirmed as acceptable. The ME was revised accordingly. The CAR is closed. The changes made can address the issues raised in the CAR properly. The ME was revised accordingly. The CAR is closed. CAR 9 Quality assurance The following description is on page 21: When using the pre- and post-audit approach, The ME requires that the Quality Assurance procedures be applied every time emission reductions are calculated. In equation 14 on page 21, ERy means ER for year y. So, when ERy is calculated, the quality The time to perform quality assurance by checking precision and calculation is Page A-16

30 electricity and fuel bills shall be collected for one year pre-retrofit and compared with electricity and fuel bills consumption data postretrofit in a sample of dwellings. When and how often the comparison should be performed needs to be defined. The following description is on page 21: In case of a significant discrepancy between the calculated reduction in energy demand from the post-retrofit audit and actual reduction in consumption calculated from electricity and fuel bills The term significant discrepancy needs to be defined. The sample size is properly defined. However, the approach used to choose representative samples needs to be defined. assurance procedures shall be applied, thus ensuring precision in calculating ERy. The term significant discrepancy will be defined in the ME. In order to determine if a significant discrepancy exists, the Project proponent will be required to perform a t-test to compare energy demand using the pre- and post-audit information with the actual metered electricity consumption, or in the case of nonmetered fuels, an acceptable alternative measure. The results require a 90% confidence level. See Response to CAR 5, which addresses your question about choosing representative samples. proper. Using t-test to determine significant discrepancy is a common practice. The ME was revised accordingly. The CAR is closed. Page A-17