Concept note: Threshold for micro-scale CPAs

Transcription

1 Concept note: Threshold for micro-scale CPAs CDM EB 78 Bonn, Germany, 31 March to 4 April 2014 UNFCCC Secretariat SDM programme

2 Procedural background 3/CMP.9, paragraph 12 requested the Board to analyse the thresholds for component project activities (CPAs) to qualify as microscale activities in programme of activities (PoAs), taking into account regional circumstances while ensuring environmental integrity. PoA-CME micro-cpas 2

3 Purpose To provide a preliminary analysis of issues related to thresholds for CPAs to qualify as micro-scale activities and seek guidance from the Board on further work required. 3

4 Key issues Micro-scale thresholds are defined in Guidelines on demonstrating additionality of micro-scale project activities a) Project is automatically additional when some conditions are met. b) Current thresholds: 5MW installed capacity for Type-I; 20 GWh/y energy savings for Type-II; and 20kt CO 2 e/y emission reductions for Type-III. Micro-scale thresholds are currently applied at aggregate level of the CPA Cumulative size of units (e.g. solar home systems, household biogas systems) is considered. Size of individual units is not considered 4

5 Key issues Stakeholders state current definition of thresholds leads to creation of numerous small sized CPAs leading to high transaction costs and inefficiencies in the system ( 7 th CDM round table, inputs to EB 78 annos) a) Programmes for residential applications such as solar systems, cookstoves, water purification systems, biogas digesters in dispersed locations are designed to deploy a number of units over time to balance the cost of implementing the programme. b) Aggregating a precise number of units to micro-scale CPA thresholds poses challenges CPA transaction costs increase Time required to validate and include a CPA represents a significant portion of the lifetime of the technology/measure c) Stakeholders recommend using temporal (time dependent), geographical, technological criteria to define CPA threshold 5

6 Key Issues Issue 1: Whether the analysis of the thresholds be limited to micro-scale thresholds? EB 63 approved Guidelines on the demonstration of additionality of small-scale project activities with positive list of technologies for projects and CPAs of sizes up to that are automatically additional: a) 15 MW installed capacity for Type-I; b) 60GWh/y of energy savings for Type-II; and c) 60kt CO2/y emission reductions for Type-III Micro scale guidelines and positive lists define automatic additionality based on criteria such as: a) Location ( e.g. in LDC/SUZ, in off grid areas) b) End users ( e.g. households) c) Distributed nature of units in the project (e.g.5% of SSC thresholds) d) Penetration rates 6

7 Key Issues Issue 2: Should the analysis consider: Changing size thresholds at aggregate level of CPA; and/or Redefining the threshold: To consider the size of individual units within CPA; and/or Temporal or technological considerations (e.g. through specific provisions in the relevant methodologies); In any case higher thresholds will facilitate the design of PoA and the need for segmentation of the PoA will diminish However increasing cumulative thresholds may not necessarily result in equal treatment for all CPAs facing similar barriers: A CPA that is: an aggregation of numerous small units producing small emission reductions in distributed locations; v/s a single or a small group of facilities big enough to meet the threshold does not necessarily face similar barriers. 7

8 Key Issues Upon recommendation from the Board, 1/CMP.2 revised the threshold for small scale projects: a) Type-II and Type-III thresholds were changed from 15 GWh/year and 15 ktco 2 per year project emissions to 60 GWh/year and 60 ktco 2 per year emission reductions b) Microscale thresholds are a third of SSC thresholds Challenges to distributed unit projects have been communicated by stakeholders but need for changes of thresholds for other projects is not evident. 8

9 Key Issues Analysis of registered PoAs (109 in total) applying microscale guidelines and positive lists shows: a) Majority (>60%) are for residential applications ( e.g. biogas digesters, improved cook-stoves, solar water heaters, efficient lighting) in dispersed locations: Size of microscale units is on an average 0.022% of SSC threshold with a standard deviation of 0.054% Size of small scale units on an average is % of SSC threshold with a standard deviation of 0.34% =<1% SSC threshold for units qualifies for debundling check exemption b) Although positive lists were approved later there is greater share of PoAs applying positive lists as compared to micro scale Micro scale application is dominant only in one area i.e. Non domestic waste treatment c) No large scale PoA using microscale guidelines 9

10 Key Issues EB 73 considered stakeholder suggestions to simplify regulations for dispersed unit PoAs. Specifically EB 73 discussed: a) Eliminating micro-scale thresholds for dispersed unit CPAs; b) Developing large-scale methodologies for dispersed unit activities including positive list of technologies and default values. The Board chose option (b) at the time Under 2013 CDM MAP two large-scale methodologies developed top down a) EB 76 approved AM0113 (efficient lighting) and AM0086 (water purifiers) with provisions for automatic additionality and simplified monitoring requirements b) Limited experience with these methodologies 10

11 Key Issues Issue 3: Whether the analysis of thresholds taking into account regional circumstances while ensuring environmental integrity should be based on: A bottom-up approach (e.g. DNA submissions propose changes to threshold applicable in the host Party); or A top down approach (e.g. changes to the threshold apply to LDCs) Microscale guidelines uses both a bottom-up and top-down approach: a) geographical locations such as LDCs and off grid areas considered b) DNAs can submit microscale technologies to confer automatic additionality. 11

12 Recommendations to the Board The Board may wish to provide guidance on the following issues : Issues 1 Should the analysis of the thresholds be limited to micro-scale projects? Should the analysis of the threshold be extended to include smallscale projects? 2 Should the analysis consider: -Increasing/decreasing size of thresholds at aggregate level of CPA; and/or -Redefining the threshold so as to consider the size of individual units within CPA; and/or -Temporal or technological considerations (e.g. through specific provisions in the relevant methodologies); 3 Whether the analysis of the thresholds taking into account regional circumstances while ensuring environmental integrity should consider: -a bottom-up approach (e.g. DNA submissions propose changes to threshold applicable in the host Party); and/or -a top down approach (e.g. changes to the threshold apply to LDCs) Efforts Low Medium Low to Medium Medium to high 12