SSC-PoA on CFL distribution in India:

Transcription

1 Perspectives: Competence, Solutions and Best Practice in GHG-Reduction Markets SSC-PoA on CFL distribution in India: Scaling up demand-side energy efficiency improvements through programmatic CDM Daisuke Hayashi 9 th May 2008 Perspectives GmbH, Hamburg Zurich Expert Talks in the German Pavillion at Carbon Expo Expertiences with Programmatic Approaches in Practice -

2 Overview of the presentation Our motivation: Compact Fluorescent Lamps (CFLs) Power shortage in India and CFLs as a DSM option Our approach: General description of the Small-Scale Programme of Activities (SSC-PoA) with Bureau of Energy Efficiency (BEE), India Baseline and monitoring approaches issues in sampling Organizational overview of SSC-PoA Conclusions --- Back-up slides: Policy issues for improvement to operationalize programmatic CDM

3 Our motivation: Compact fluorescent lamps (CFLs) CFLs: energy-efficient & cost-effective lighting Much longer lifetimes (5,000-25,000 hours) compared to incandescent light bulbs (ILBs) (1,000 hours) Consume 1/4th to 1/5th of the energy used by ILBs Significantly higher initial costs (20 times more expensive than ILBs), but lower life-cycle costs (less than 1/3rd of ILBs) Source: Lefèvre et al. (2006) Barriers to technology diffusion: The case of CFLs

4 Power shortage in India and CFLs as a DSM option Power shortage in India The average energy and peak shortage in India in 2006 was 8.3% and 12.3% respectively Lighting accounts for 20% of the total electricity demand in India and contributes almost fully to the peak load CFLs as a demand-side management (DSM) option Replacing ILBs with CFLs would reduce not only the energy requirement but also the peak demand However, the share of CFLs in lighting in the residential sector is still very low (~3%), while ILBs are dominant (~80%) The major barriers to CFL dissemination are e.g. (i) high initial costs, (ii) lack of awareness of energy saving potential, (iii) lack of quality assurance in case of manufacturing defects

5 Our approach: SSC-PoA with BEE, India General description of SSC-PoA Programme boundary: the entire political boundary of India Discounted sales of CFLs to grid-connected households at prices equal to or lower than ILBs (less than Rs. 15 or USD 0.40) Households receive CFLs upon return of currently used and functioning ILBs The returned ILBs must be destroyed to avoid leakage (e.g. resale of ILBs) CFL distribution and ILB collection must be conducted: directly at each household; and/or at dedicated distribution/collection points

6 Baseline and monitoring approaches AMS-II.C (demand-side EE activities for specific technologies) Key challenge is how to estimate lighting power consumption Source: UNFCCC (2007) AMS-II.C version 09

7 Sampling is indispensable can t monitor every single CFL! CPA area Population Random sampling Project Sample Group PSG & Project Cross Check Group PCCG Use of random sampling to select a sample group that is representative of the entire population 1. Continuous remote monitoring of PSG (data to be transmitted to the central server) 2. Spot-check of PCCG (every six months) Main monitoring items: CFL utilization hours Functionality of measurement equipment Main monitoring item: Functionality of distributed CFLs 3. Power consumption calculation 4. Emission reductions calculation = (# of functioning CFLs) x (Power rating) x (Utilization hours) (MWh) Estimated from PCCG Estimated from PSG = (Power savings, MWh) x (Grid emission factor, tco2/mwh) (tco2)

8 Important issues in sampling Statistical treatment is indispensable because it is cost prohibitive to monitor every single exchange of lamps Need to consider perfect vs. good enough sampling methods It remains to be seen if alternatives to a random sampling method (on a perfect side) can pass the EB scrutiny Emission reductions are adjusted by Conservative sides of 68% confidence intervals for baseline and project power consumption estimation (note: 95% for large-scale) Smaller sample size leads to a higher margin of error (although it reduces transaction costs) Hence, a trade-off exists between: Sample size (i.e. transaction costs), and CER volume

9 Organizational overview of SSC-PoA

10 Conclusions Monitoring requirement is heavy and associated costs and risks are likely to be high A trade-off exists between sample size and CER volume Need to contemplate the optimal sample size to maximize CER volume under the transaction costs constraint SSC-PoA coordinator plays pivotal roles If monitoring is not conducted properly, the program will get problems at the verification stage Advantages of the government-led SSC-PoA BEE covers the monitoring costs until March 2012 BEE supervises local public entities (e.g. DISCOMs) Government-led PoAs could play an important role in scaling up demand-side energy efficiency improvements (which normally involve high costs and risks in monitoring)

11 Current PoA rule Back-up slide: Policy issues for improvement No.1 A PoA is restricted to one baseline and monitoring methodology Policy recommendation Permit application of multiple methodologies Reasons: Bundling rule does allow for application of multiple methodologies There are sufficient number of DOEs that can validate/verify all possible combination of sectoral scopes It gives disproportional disadvantage to certain sectors that the programmatic CDM is expected to promote, among others: (Demand-side) energy efficiency improvements (Distributed) methane recovery (e.g. animal waste, waste water treatment) Small-scale projects with power generation/savings (AMS-I.D is a methodology, while Tool to calculate the emission factor for an electricity system for large-scale projects is exempted from the single-methodology rule?)

12 Back-up slide: Policy issues for improvement No Agricultural Bagasse residues cogen Biogas flaring BiogasCompostingEE food EE EE service Palm oil power industryhouseholds waste Multiple methodologies Share of projects using multiple methodologies for selected project types (%) Source: Own calculation based on UNEP RISOE (2008) CDM project pipeline, April 2008

13 Back-up slide: Policy issues for improvement No Multiple methodologies Share of projects using multiple methodologies by host country (%) Source: Own calculation based on UNEP RISOE (2008) CDM project pipeline, April 2008

14 Current PoA rule Back-up slide: Policy issues for improvement No.2 A PoA-DD shall be revised, revalidated by a DOE and approved by the EB at each revision of the methodology applied Policy recommendation A PoA-DD should be updated only once every 7 years Reasons: It is in line with the 7-year renewable crediting period of the conventional CDM projects Given the high frequency of methodology revisions, this will lead to an enormous workload for PoA coordinators, validators and the EB For example, AMS-II.C has been revised 8 times since its initial adoption in 2002 (on average, a revision every 7 months). With this revision frequency, there would be 48 revisions during a 28-year crediting period of a PoA!

15 Current PoA rule Back-up slide: Policy issues for improvement No.3 At any time after inclusion of a CPA to a PoA, the CPA can be challenged by one EB member. In case the EB decides to exclude the CPA, the validator has to provide CERs to cover all CERs issued for the excluded CPA Policy recommendation Option 1: The EB should be allowed to challenge a CPA only during a limited period after its addition (e.g. 6 months) Option 2: The EB should register CPAs without imposing the high liability on validators Reasons: Validators have not been willing to take up the high liability, or asked PoA coordinators to provide insurance coverage (i.e. increased transaction costs) (For Option 2): Some DOEs predict that CPA validation will not be as simple as commonly expected anyway