Ministry of Energy and Petroleum. Ministry of Environment, Natural Resources and Regional Development Authorities

Transcription

1 Ministry of Energy and Petroleum Ministry of Environment, Natural Resources and Regional Development Authorities Republic of Kenya Kenya s Intended Nationally Determined Contribution (INDC) Energy Sector Analysis Welcome and Introduction Meeting of Energy Expert Group 09:00-13:00, 5 th May 2016 Laico Regency Hotel Meeting Report Eng. Benson Mwakina, Ministry of Energy and Petroleum (MOEP), representing Eng. Isaac Kiva, Director, Renewable Energy Department, MOEP, welcomed and introduced speakers and participants. Overview of INDC Sector Analysis Ms. Deborah Murphy, Technical Assistance Component, StARCK+ Programme provided an overview of the Interned Nationally Determined Contribution (INDC) sector process, noting the sector meetings aimedto clarify how Kenya would achieve its INDC, including adaptation goals and the 30% greenhouse gas (GHG) emission reduction target. The analysis would be undertaken in seven sectors over a sixmonth period, with the United Kingdom s Department for International Development (DFID) providing support and technical expertise at the request of the Climate Change Secretariat, Ministry of Environment, Natural Resources and Regional Development Authorities (MENR&RDA) acting on advice of the Intended Nationally Determined Contribution (INDC) Task Force. The analysis from the seven sectors to be brought back to the INDC Task Force, which would examine priorities and actions to meet the Kenya s INDC with a cross-sectoral perspective. The energy sector analysis is expected to be be completed within three months, by mid-july The analysis will result in a briefing note explaining the energy sector s contribution to the INDC and an implementation framework. It was noted the the PS Energy has indicated his support for the analysis and looks forward to learning about outcomes of the analysis. Kenya s INDC and Update on Climate Change Dr. Pacifica F. AchiengOgola,Director, Climate Change Secretariat, MENR&RDA, noted the importance of the INDC sector analysis process to develop an implementation plan for Kenya. The analysis will assist with priority setting, and build on the good work that had been undertaken by the sector. Kenya signed the Paris Agreement (whose overall goal is to reach a global peak of emissions as soon as possible) on April 22, By signing, Kenya has expressed its willingness to consent to the 1

2 text of the Paris Agreement, but is not legally bound to the treaty until ratification. Cabinet and National Assembly approval are required for ratification. When depositing the instrument of ratification, Kenya may decide to submit its INDC as its first Nationally Determined Contribution (NDC). Countries are expected to submit a new NDC in 2020 when the Paris Agreement enters into force, and this new and each subsequent NDC must represent an increase in ambition. Parties are legally obligated to communicate on their NDCs every five years, detailing the action they have taken to achieve the target. Under the Paris Agreement, the emission reduction targets are not binding, but the communication of the targets is binding. The Paris Agreement includes provisions for mitigation, adaptation, loss and damage, carbon trading (under cooperative mechanisms including Internationally Transferable Mitigation Outcomes (ITMOs) and a Sustainable Development Mechanism), finance, technology and enhanced capacity buildingframeworks, and transparency (monitoring, reportingand verification). Kenya s INDC includes mitigation and adaptation actions, and its implementation is wholly conditional on provision of external finance, investment, capacity building, and technology transfer. Kenya s mitigation contribution is a 30% emission reduction by 2030 from a business as usual scenario. 30% is a high mitigation target, and the energy sector will need to make a large contribution. While there is significant potential for emission reduction in the geothermal sector, and the possibility of developing nuclear energy, Kenya needs to consider what is practically possible considering the five-year cycles of the NDC process. Kenya needs to consider if it will submit the 2015 INDC as its first NDC, if it will submit a more ambitious NDC, or if it needs to make a case for a lower target in the first five years that fits within the overall 30% by Lastly, a structured and organized approach tokenya s INDCis needed; and we need to be realistic in terms of the overall, as well as the specific sector, target. Comments and Questions Update on the climate change bill: the bill was poised to be signed into law (confirmation of the same coming out on Friday May 6, 2016). The fact the INDC targets are not legally binding does not imply that there is room for countries not to undertake any action towards meeting the targets. The targets are nationally determined on a voluntary basis and countries are unlikely to voluntarily indicate they would take an action if they do not intend to do so. In addition, a country s consideration of its image or standing in the community of nations is also a compelling factor to have it meet its target. Under the Paris Agreement, countries are legally obligated to report on their actions to meet the INDC. The Loss and Mechanism provision in the Paris Agreement takes care of those climate change impacts that are so severe that they leave in their wake permanent or significantly damaging effects. Carbon trading is not a lost opportunity within the Paris Agreement. The second phase of the Kyoto Protocol is underway, running out in 2020, and offers opportunity to continue the trading of carbon, although carbon prices are very low. Cooperative (market and non-market) mechanisms are presented in the Paris Agreement, although the exact modalities are to be negotiated. Kenya s INDC: Implications for the Energy Sector Tom Owino, ClimateCare, noted that the baseline projectionfor the energy sector was developed under the National Climate Change Action Plan (NCCAP) process and updated for the Second National Communication. The baseline or reference case out to 2030 is primarily based on the Updated Least 2

3 Cost Power Development Plan (ULCPDP). The sharp increase in emissions is primarily because of expected increased electricity generation from coal and other fossil fuels. This is the trajectory that needs to be addressed. In general, the baseline is very conservative because it consists of only those projects in the ULCPDP that were deemed to be realistic (based on certain factors such as projects that had reached financial closure by mid 2013). It is for this reason that nuclear is not included in the baseline (considered, together with other projects as aspirational). In regard to mitigation options to bend down emissions, 12 options were presented. It was noted that full implementation of the geothermal electricity generation option (about 5000 MW by 2030) and improved cook-stoves (energy efficiency with efficiency levels of 10% above the baseline efficiency, i.e. 20% totalbeing considered) could exceed the expected contribution of the energy sector towards the INDC emission reduction target of 30 percent. But it may not be possible to realize the full potential of the options. However, considered in totality, the energy sector is likely to meet its target and there is a lot of flexibility in the sector in terms of the options that can be pursued to meet the sector s target. Considerations: Geothermal total generation goal up to 2017 is about 1,500 MW. Hydro Potential for large hydro has most likely been exhausted and given the expected climate change impacts on hydrology, hydro generation is not a very good option. What remains are micro and small hydro projects(up to 5 MW) opportunities that do not necessarily feed into the grid. It is understood that the High Grand Falls Project was dropped on environmental impact ground, but this information needs to be verified. Solar Opportunitiesexist for solar(several counties and independent power producers [IPPs] talking of projects ranging from 20 to 50 MW). Impact of coal on the emissions profile To meet the mitigation target with the improved cook-stoves and geothermal as described above, fossil fuel generation should not exceed 7,000 MW by Clean coal technology could be considered as an option with the possibility of seeking/receiving international support for the same. However, it is understood that the proposed 1000 MW coal generation plant in Lamu will use ultra super critical technology (i.e., clean coal), although this information needs to be verified. Nuclear energy could be considered as an option if it is considered difficult to realize the expected mitigation potentials of the other proposed options. Cookstoves achieving a 10% improvement would require a minimum of 20% penetration of improved cookstoves that are 50% more efficient by Presently, there are cook-stoves that are 40% more efficient. Increased efficiency for cook-stoves could lead to reduction in numbers of stoves, and therefore the expected reduction in emissions. We are looking at a household penetration target of 25%, i.e. 2 million households nationally in order to deliver the required results. Adaptation and sustainable development benefits of improved cook-stoves should be included in the next draft of the analysis. Efficient lighting the options replaces inefficient incandescent lighting or T8 fluorescent lighting with more efficient compact fluorescent light (CFL) or light-emitting diode (LED) alternatives. For adaptation, the main action is to enhance the energy generation mix in a way that increases resilience of the energy sector. This means carefully considering hydro that has demonstrated vulnerability to drought, and ensuring investments in energy infrastructure are climate proofed, or able to withstand expected changes in precipitation and extreme weather events. On-going adaptation actions in the energy sector include the use of stronger concrete poles (more robust and able to withstand storms and flooding) to replace wooden poles for transmission lines; afforestation and re-afforestation 3

4 projects in catchment areas (MoEP, KenGen and other sector institutions involved); as well as the use of weather and climate information in sector planning and project implementation. Discussion / Key Issues General Comments 1) Concern raised on whether the figures used for the baseline determination were based on installed capacity or actual power dispatch data. The current practice is to dispatch mainly from renewable sources. It was confirmed that dispatch data from Kenya Power dating back 15 years was used (the information includes the sources of power). The installed capacity is only a proxy for projecting the future, and projections are built on what is known, and what is known is the actual dispatch data, which has been used for baseline determination. On this note, it was agreed that future reports should cite the source of the information used in the report, e.g. Kenya Power dispatch data for a particular period of time for the baseline determination. 2) Mainstreaming of climate change issues at the national and county levels: at the national level and specifically for the energy sector, the process of mainstreaming climate change has begun. Key stakeholders from the energy sector, treasury and planning have been involved in climate change capacity building and awareness fora. Does the INDC reflect reality on the ground? 1) Baseline The group agreed that use of the ULCPDP in determiningthe baseline is acceptable, particularly given that it has taken a very conservative approach (inclusion of only those projects that by mid had reached financial closure). 2) National development is the priority Implementation in the energy sector needs to take into consideration Kenya s needs and priorities, in line with the UNFCCC principle that actions on climate change should not compromise or override a country s development needs. This means that a lower INDC target (perhaps in the range of 15-20%) should be considered in order to provide for flexibility in deploying different technologies (even fossil fuel generation) while still meeting the target, because ultimately, it is the country s needs and priorities that matter. In the energy sector, this means the sector prioritizes least cost options and not climate benefits. 3) Nuclear energy Giventhe need for a stable base load, climate change considerations, and that the INDC target can only be reached with no more than 7,000 MW fossil fuels by 2030, nuclear energy is necessary. It is also realistic given that we are talking about long term. Between 2025 and 2030, Kenya plans to generate about 1000 MW of electricity from nuclear. 4) A concern that was raised on whether climate change was real or not; perhaps requires more capacity building and awareness raising on climate change. 5) Factors considered or to be considered in the baseline and future projections: a. Oil and gas likely to be extracted by 2022, or perhaps earlier (2018). Current projections are around 600 million barrels of oil, but the projected extraction quantities/figures can be sought later from the MOEP. Generally, it is not foreseen that oil and gas will be a contributor (or a major contributor) to electricity generation in the forecast period. b. In the event that Kenya generates significant amount of natural gas, it is prudent to consider its use to generate electricity. While the construction of a natural gas electricity generating plant was cancelled; this is understood to be a delay and the plant is still in the plans. 4

5 c. The proposed 1,000 MW coal power plant in Lamu is to be clean coal (super critical technology), but this requires confirmation. The MOEP reports that the trend is to use the best technology available in terms of efficiency. d. A consultant is working on a long-term plan to guide the energy mix for the mid and long terms, and a final draft of the report has been developed and delivered to MOEP. The figures in the report are quite different from the ULCPDP, which is the basis of the future projections / reference case in the INDC analysis. This report can be obtained from MOEP. e. Figures in the 5000 MW by 2016 Programme to be availed by Mr. Joshua Were of KenGen. Some of the projects in the programme may have been put on hold (not discontinued), e.g. LNG (for an opportunity to use the country s own exploited resource rather than import) and the Kitui Coal Power plant (to focus first on developing the Lamu project). f. The analysis needs to consider the contribution of power back-up systems (petroleum and diesel gensets) g. The groups recommended that the baseline and the 30% INDC target remain unchanged. Mitigation technology options (including those in other sectors but with a bearing on the energy sector) and other considerations 1) Potential mitigation and adaptation options to be considered in the analysis: a. The use of concrete poles for power lines by Kenya Power (although whether concrete poles have mitigation benefits over wooden poles can only be proven through a life cycle analysis); b. Transport of oil in pipelines, replacing trucks and associated emissions. c. Upgrading of the grid by KETRACO to enhance the system s resilience to storms. 2) Waste to energy through the use of advanced technologies, e.g. plasma gasification. Approximately 1000 MW can be harnessed from several waste streams available in the country (for instance all the major urban centres have slaughterhouses, sewage systems) based on a proposal that has been put forward to the Ministry by a potential investor. Could be for consideration under the waste sector. 3) Domestic and industrial energy conservation these are small projects/opportunities that cumulatively generate significant results. 4) Eco-labeling of energy consuming goods based on their efficiency levels as a way of encouraging consumers to choose more energy efficient goods. However, an example was given of the light bulb technology where awareness itself of the existence of efficient varieties did not result in behavioral change. The price of a product still plays a significant role. It has to be a policy directive, e.g. a ban on incandescent bulbs. 5) Geothermal Continued use of geothermal well head technology, considerably a trend even into the future. This has a bearing on the projections in that you are bringing online power earlier than it was initially projected. The use of geothermal steam and geothermal waste water for different applications including in manufacturing. This requires locating the steam users in close proximity to the steam source. 6) Transport sector: encouraging the use more fuel efficient vehicles and perhaps a rebate programme for those adopting the technology. A recent review of the excise tax regime where older second hand, low engine capacity cars (which dominate the car import market) attract 5

6 higher excise duty charges is a starting point. Compulsory vehicle inspection every two years (a recently introduced policy directive) could also result in more efficient cars. 7) Rural electrification (both off-grid and grid connected) Almost all schools and centres have been connected either to the grid or with distributed solar systems for those that are off-grid under the Last Mile Programme. For the 2016/17 FY, the government through Rural Electrification Authority (REA) plans to roll out a mass home connectivity programme (any home which is less than 600 metres will be connected to the grid; the rest with solar). Consideration needs to be made for the likelihood of that programme to distort the distributed solar market.the meeting was however, informed that power connectivity does not necessarily result in the use of electricity for cooking, probably due to high electricity tariffs, so not much of a change can be expected in terms of reduction in the consumption of traditional cooking fuels (charcoal, biomass and LPG). 8) A programme or programmes that target(s) the lower cadre of the society, e.g. mass roll out of LPG (currently considered a luxury product by many). 9) Use of carbon credits How to account for emission reductions from plants/projects registered under the CDM? How to avoid double counting of emission reductions from CDM projects that have been registered for carbon credits to ensure they are not included in action to achieve the domestic targets? After 2020 when the CDM ceases, such projects and their emission reductions could be allocated to domestic NDC unless there is an incentive/mechanism to continue carbon trading. This issue requires investigation. Priority Areas Requiring Investment 1) Improved jikos (cook-stoves) The focus so far has been on efficiency (reducing the amount of biomass utilized) and perhaps there is a need to consider other critical factors, e.g. the right amount of heat output for cooking the Kenyan traditional/staple foods. Mass roll out will also require appropriate policy interventions as well as very appropriate technology (products). 2) Energy efficiency key areas are efficient lighting, efficiency in the manufacturing sector and targeting particularly the bigger consumers of power. Consideration of the involvement of KAM in such a programme. For efficient lighting, a policy shift that requires consideration at the building design and development stage may be necessary. 3) Geothermal Requires appropriate mechanisms and incentives to deal with the risks associated with geothermal power development: well drilling; dry well/uncertainties associated with steam supply; additional risk insurance to address incremental costs; and funding for explorationofmany potential areas/new fields. A special climate fund could address some of the risks, but the sub-sector already receives significant funding, so any additional funding proposal ought to be well structured. 4) Fuel switch a major programme targeting home cooking energy fuel switch, e.g. National Oil Corporation of Kenya s plan to roll out LPG. 5) Renewables focusing on hybridization and optimization of usee.g, combined hydro-solar systems, combined wind-solar, etc. which helps in enhancing the power system s resilience to climate change. 6) Nuclear may need to be considered in the event that the full potentials of the major mitigation options are not realized. 7) Co-generation estimated capacity of slightly less than 200 MW from all the current sugar plants. 6

7 Conclusion Next Steps The 30% INDC emission reduction target is achievable for the sector. The challenge lies in defining and refining the priority and realistic areas ofachieving it. This will be the basis of the Implementation Plan to be developed at the end of the exercise. The group agreed that use of the ULCPDP in determining the baseline is acceptable, particularly given that it has taken a very conservative approach (inclusion of only those projects that by mid had reached financial closure). The projected reference case needs to be revised to reflect the new long-term plan that guides the energy mix for the mid and long terms, The figures in the report are quite different from the ULCPDP, and the basis of the future projections / reference case in the INDC analysis should be based on this new plan. It is important to have buy-in for the selected mitigation options. For this reason, stakeholder engagement and civic education are required. 1) Update analysis based on input at the meeting and to be collected from MOEP and KenGen: - Information from MOEP: Final draft of the consultant s report on the long-term plan to guide the energy mix for the mid and long terms. Consultants to submit an official request for access to this report. Information on the technology used in the Lamu coal plant. Projections on oil and natural gas extraction. - Information from KenGen: Update on the 5000 MW by 2016 Programme, particularly information on those projects that have been put on hold for the next five years. CDM projects which projects are selling CERs and thus emission reductions not eligible for Kenya s INDC (at least to 2020). - Information presented at meeting Maintain the existing baseline (because conservative and consistent with information presented to the UNFCCC in the Second National Communication). Include nuclear as an option over the long term. Include references and citations in revised analysis. 2) Develop a draft implementation framework setting out priority actions. 3) Bring analysis back to energy sector expert group for review and approval by mid-june. 4) Take out to broader stakeholder group. 7