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Challenges of CDM for Building Energy Efficiency

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Challenges of CDM for Building Energy Efficiency UNFCCC Workshop Buildings under UNFCCC Flexible Mechanisms Chia-Chin Cheng UNEP-SBCI Beihang University – PowerPoint PPT presentation

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Title: Challenges of CDM for Building Energy Efficiency


1
Challenges of CDM for Building Energy Efficiency
UNFCCC Workshop Buildings under UNFCCC
Flexible Mechanisms Chia-Chin Cheng UNEP-SBCI
Beihang University International Green Energy
Center Bonn, Germany March 24, 2011
2
Largest Potential for GHG Emission Reduction in
Buildings
  • Highest GHG reduction potential
  • Most cost effective

Source IPCC 4th Assessment Report
3
Largest Potential Resides in Developing Countries
Source IPCC 4th Assessment Report
4
Score Card for Building Projects in CDM
2008
6 vs. 2700
5
Score Card for Building Projects in CDM
2011
31 vs. 5935
2 vs. 80
6
Existing Building Related CDM Methodologies
7
Underlying causes for low CDM and EEB uptake
  • Long-tail characteristics of the sector- small
    saving, big effort
  • Fragmentation of sector / uncoordinated
    stakeholders
  • Insufficient RD and information for new EEB
    technologies
  • Insufficient EEB expertise and tools
  • High upfront and transaction costs for tech
    adoption in DC
  • Lack financing mechanism and interests for EE
    investments
  • Lack of awareness and general inertia restrict
    uptake

Source Cheng, et al., 2008
8
Old CDMs Rules Add to Difficulties
  • Complex rules and procedures
  • High transaction costs, long lead time, not
    enough payback
  • Technology based methodologies are tedious to
    validate, monitor and verify carbon performance
  • Difficulty in establishing baselines for new
    buildings
  • Combination of different methodologies is not
    allowed for programmatic CDM
  • Soft measures (energy management measures) are
    not taken into account, and difficult to prove in
    the current verification scheme
  • Lack of mechanism to support low income sector
  • CDM does not support mandatory national standards

9
CDMs Amazing Reform in Three Years
  • Complex rules and procedures ? further simplify
    SSM Cancun decisions
  • High transaction costs, long lead time, not
    enough payback ? programmatic CDM and
    institutional reform
  • Technology based methodologies are tedious to
    validate, monitor and verify carbon performance ?
    new methodologies use whole building and
    simulation approach
  • Difficulty in establishing baselines for new
    buildings ? standardized baseline
  • Combination of different methodologies is not
    allowed for programmatic CDM ? addressed in EB 47
  • Soft measures (energy management measures) are
    not taken into account ?new methodology with
    whole building approach
  • Lack of mechanism to support low income sector
    ?new scenario allowed
  • CDM does not FULLY support national standards

10
CDM has performed a substantial reform, but.
  • For a large-scale uptake of building sector CDM
  • CDM ALONE is NOT a sufficient incentive
  • The construction sector does not respond well to
    economic and voluntary incentives alone.
  • CDM ALMOST has to piggyback with other
    stronger and large- scale incentives
  • Directly clash with additionality rules
  • Possible two larger scale incentives in
    building sector
  • Government policies and standards are much
    stronger mechanisms to drive large-scale
    actions
  • Voluntary certification schemes started
    penetrating DC market
  • ? CDM needs to be ready to FULLY support
    government policies, building codes and NAMAs

11
CDM Complements Government Policies
  • Government policies is much stronger to overcome
    generic barriers
  • enforcing compliance from top down
  • mobilizing a large number of various stakeholders
  • creating a market demand and providing rules
  • kick starting RD of new tech. and deployment of
    existing tech.
  • creating incentives for co-benefits that do not
    have market value
  • CDM is a strong mechanism to support policy
    intervention
  • bottom-up approach to supplement top-down nature
    of government policies
  • provide necessary means and resources to help
    regulated entities comply
  • increase quality and depth of policy
    implementation, particularly in small business
    and individuals
  • SBCIs Assessment of policy instruments for
    reducing greenhouse gas emissions from
    buildings shows
  • The construction sector does not respond well to
    economic/voluntary incentives alone.
  • Successful policies need to combine regulatory,
    fiscal, economic and capacity building elements.
  • Experience indicates that regulatory tools (e.g.
    enforced standards) are most efficient and cost
    effective.

12
CDMs Bottom-up Support for Long-Tail Building
Projects
  • CDMs bottom-up approach to overcome difficulties
    in small scale investment with strong policy
    initiative in place
  • Project and program based approach is especially
    suitable for long-tail projects
  • individual mitigation opportunities are tackled
    one-by-one, project-by-project, CPA by CPA
  • Replicability makes scaling up of successful
    project modules easier
  • publicly available project documents and
    methodologies could facilitate project
    replication
  • programmatic CDM could potentially enable a large
    number of replications for small project
    activities
  • provide necessary means and resources to
    accelerate deepen compliance

13
CDMs Bottom-up Support for Long-Tail Building
Projects
  • CDMs quality assurance mechanisms to induce
    change of practice
  • built-in quality control mechanisms and strict
    MRV requirements could ensure long-term
    compliance
  • induce change of business practices and
    internalization of energy saving behavior are the
    most important co-benefit of the CDM
  • adopting CDM is already additional
  • maintain the benefit in simulation based
    methodology
  • Enhance private investment in EE buildings
  • reduce risks for small size projects by
    coordinated aggregation
  • CDMs built-in quality control measures reduce
    risks of project default and help to enhance
    project quality
  • enable life-cycle based financing
  • CDM revenue to pay for transaction and MRV
    management costs

14
CDM Regulatory Reform for Buildings
  • Core concepts for energy performance based
    methodology
  • energy performance based building codes, MRVs,
    methodologies and indicators- KWh/m2
  • Allow flexibility in building design and
    encourage renovation
  • Consistent regulatory logic, MRV method and tools
    for entire project life-cycle
  • Based on good benchmarking quantitative
    management tools
  • Suitable for long-tail, dispersed projects, e.g.
    buildings, SMEs, and rural
  • Making CDM facilitate implementation of building
    codes and regulations
  • set sector-wide standardized baselines for diff.
    buildings and climate
  • Implement performance based building standards
    and include CDM crediting for projects going
    beyond compliance requirements
  • maintain CDMs project and program based
    mechanism and allow CDM to help with
    implementation of mandatory standards
  • non-binding targets, easily acceptable by fast
    developing countries

15
Encouraging Signs in Current CDM Projects
  • Public policies provide strong incentive for
    CDM project uptake
  • Existing voluntary initiatives start to
    integrate with CDM
  • Strong interest and uptake of building related
    p-CDM projects when the methodology is made
    right
  • Internalization of EE behaviors and change of
    business culture in CDM projects

16
The Avenue Forward.
  • Short-term Challenge
  • Establish facilitating methodologies based on
    industry and CDMs good practices
  • Medium-term Challenge
  • Develop standardized baselines and benchmarking
    for DC
  • Performance based- SBCI common
  • carbon metrics
  • Revisit additionality rules for buildings
  • building codes- no additionality
  • benchmarked additionality
  • Long-term challenge
  • CDM to fully support policy and NAMAs

17
Coming Up
  • UNEP Risoe Working Paper
  • CDM, NAMAs and the Building Sector a Two-Track
    Financing Mechanism for Post-2012
  • SBCI Common Metrics
  • For More Information

www.unepsbci.org www.uneprisoe.org
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