march 28, 2014 h.w. lee, korea environment institute & h.j. moon, h. lee, efconsulting

Urban CDM efforts undertaken by KEI and UEA :Urban Carbon Offset Methodology tool-kit Developing ProjectMarch 28, 2014

H.W. Lee, Korea Environment Institute & H.J. Moon, H. Lee, EFCon-sulting

Contents01/ Project Background02/ Project Process03/ Project Progress - Literature Review - Tool-kit Framework

Setup04/ Project Result - Tool-kit Building05/ Conclusion

3

Project Background – Importance of Urban Area

More than 50% of the world’s population dwells in urban areaMore than 70% of the world’s carbon emissions come from urban area

Urban Rural0

20406080 71

29

GHG Emissions

50%50%

World’s Population 2010

UrbanRural

75%

25%

World’s Population 2050

UrbanRural

Importance of Urban Area Getting Growth

Source: World bank, IEA

4

Project Background - Urban Base CDM Projects

The amount of CERs from urban area take less than 1% of total CERs issued Most CERs come from CDM projects from non-city area

Carbon emissions reduction performance from urban area is very limited

0.940%

99.060%

Registered CDM Projects*

urban rural 0.159%

99.841%

Issued CERs**urban rural

World’s Carbon Emissions Fraction

Source: CDM Pipeline, UNEP

* Number of registered and CERs issued CDM project clearly declared its city base in project title/project info

** Amount of CERs issued from the CDM project of * above

5

Project Background - Urban Base CDM Projects

Limited GHG emission reduction performance from urban area rooted from various reasons

Complicated Adminis-trative

Procedures

Complicated Methodologies

Less AttractiveIncentives

Long ProjectTime Period

Limited Emission Reduc-

tionPerformance

︙

Complicated methodologies amplifyproblems come from limited ownership

UrbanContext

Specialty(Limited Owner-ship)

- Continuous progress in administrative procedures could be an issue for munic-ipal ownership change

- Project performance may not be realized in a single municipal period

- For the municipal gover-nor or organization, projects are less attractive

6

Project Background – Project Goal

Developing a carbon offset methodology tool-kit for expanding urban carbon emis-sion reduction projects by utilizing existing CDM methodologies

Modifications1. Easier usabil-

ity2. Improved ur-

bancontext suit-ability

︙

Methodology Tool-kit Development

Item Modification

Applicable Conditions Provision of Simplified approach

Additional-ity Provi-sion

Allowing external aidsExcluding partial processIntroduction of simplified approach

Baseline Selection Provision of Simplified approach

Monitoring Process Provision of Simplified approach

︙ ︙

Descrip-

tive

- Concept of urban CDM Urban- CDM methodology selecting ap-

proach- Barriers of implementing urban

CDM projects

Project Process – Project Flow

8

UNEP early works on urban CDM

Tool-kit developmentframework setup

Tool-kit development

CDM related literatures

Tool-kit method format setup

Summarizing projects implementa-tion barriers

Revising methodology selective approach

Methodology selection for tool-kit development

Expert verification in progress

Literature Review Framework setup Tool-kit Development

- Barriers of implementing general CDM projects

- Revise UNEP methodology selec-tive approach for methodology se-lection

- Summarize implementation barri-ers for tool-kit building frameworks

- Tool-kit framework setup for the tool-kit development

- Tool-kit development

9

Literature Review – UNEP Urban CDM Work(1)UNEP’s work provides a basic concept of a urban carbon emissions and range of urban carbon emission reduction

Priority Sector

Major Emission Sources/Origin in the Urban

ContextTypes of

GHGs

Residential/Commercial

Buildings, energy demand for heating/cooling, appliances CO2

Transport Individual transportation CO2

Waste Landfills, waste handling and management CH4(CO2)

Energy Power generation, energy supply CO2

Industrial(excl. heavy

industry)

Inefficient use and supply of process heat; inefficient appliances

CO2

Typical emission sources in citiesPriority sectors, emission origin and GHG type

Source: UNEP

10

Literature Review – UNEP Urban CDM Work(2)UNEP’s work provides criteria of specifying suitable CDM methodologies for urban area and the list of proper CDM methodologies for urban area

1. CDM feasibility (5points in total)

General sector applicability(‘priority sectors)Methodology is not in priority sec-

tor In priority sector0 1

Existence of a project utilizing the methodology Project not exist Project exist0 1

Number of time the methodology utilized 1~5 5~20 20~1 2 3

2. Urban Context Applicability(10points in total)Applicability for the urban context Not applicable Applicable

0 1

Comprehensiveness Temporary change Technological Improve-ment

Fundamental im-provement

1 2 3Applicability of the methodology in multiple priority sectors

Not applicable Applicable0 1

Existing combination with other methodologies Combination not exist Combination exist0 1

Municipality or city based companies involved in existing projects

Municipality/companies not exist Municipality/companies exist0 1

Scalability / city wide approach(PoA/Bundle)

PoA not applicable(in general) PoA applicable(in general)0 1

Bundle not applicable(in general) Bundle applicable(in general)0 1

Existing PoA PoA not exist (CDM Pipeline) PoA exist (CDM Pipeline)0 1

11

Literature Review – UNEP Urban CDM Work(3)UNEP’s work provides criteria of specifying suitable CDM methodologies for urban area and the list of proper CDM methodologies for urban area　 CDM feasibility Urban context applicability

Approvedmethodol-

ogy

General sec-tor

applicability('prioritysectors')

Has themethodol-

ogybeen ap-

plied?

Number of times used CDM

scoring

Application

forthe urbancontext

Compre-hen-

siveness(avoid=3;shift=2;

improve=1)

Methodologyused in more

than onesector?

Exisitingcombinationwith othermethodol-

ogy

Municipality or

city companyinvovled in

projects

Scalability / city

wide ap-proach

ExitingPoA

(pipeline)

Urbancontextscoring

Overallscoring

1<5 6<20 >20 PoA Bundle

AM46 1 1 1 　　 3 1 1 　　　 1 　　 3 6AM70 1 1 1 　　 3 1 1 　　　 1 　　 3 6AM71 1 　　　　 1 1 1 　　　 1 　　 3 4AM91 1 　　　　 1 1 2 1 　　 1 　　 5 6AM94 1 　　　　 1 1 2 　　　 1 　　 4 5

AMS-I.I. 1 　　　　 1 1 2 　　　 1 1 　 5 6AMS-II.C 1 1 　　 3 5 1 1 1 1 1 1 1 1 8 13AMS-II.E. 1 1 　　 3 5 1 2 1 1 1 1 1 1 9 14AMS-II.J. 1 1 　　 3 5 1 1 1 1 　 1 1 1 7 12︙

Score over

10; 28

Score less 10;

106

Methodology scores

Urban; 134

Non-Urban;

45

Urban/Non-Urban Methodologies

No. PortionTotal Meth 179 100%Urban Meth 134 74,86%Non-urban Meth 45 25.14%

No. PortionUrban Meth 134 100%Overall score over 10 28 20.89%Overall score below 10 106 79.11%

12

Literature Review – UNEP Urban CDM Work/Other Works

UNEP’s work and other literatures provides idea of potential obstacle factors of implementing urban carbon offset projects

Materials Publication Sources Contents Characteristics

CDM Reform 2011 IGES Provision of various CDM improvement measures in general

A Reformed CDM UNEP Provision of CDM improvement measures focusing on improvement in procedures

10 Lessons from 10 years of CDM Climate Report Providing barriers of implementing CDM project focusing on CERs supply and demand of CERs

CDM Reform World Bank Analysis of CDM bottlenecks and provision of ideas related to standard procedures

Reforming the CDM for sustainable development Emily Boyd, etc. Analysis of CDM projects and provision of improving measures in academic

approachFeasibility Study on the Development of an Urban CDM for the United Nations Environment Programme

UNEP Considering urban characteristics in analyzing CDM projects barriers

14

Framework Setup – Methodology Selection

UNEP’s approach of selecting CDM methodologies for urban area considers project feasibility and urban context applicabilityFeasibility constraints may exclude the methodologies fitting to urban context, but has not been implemented

UNEP Approach Revised Approach

1. CDM feasibility ScoreGeneral sector applicability(‘priority sectors) 1Existence of a project utilizing the methodology 1Number of time the methodology utilized 3

2. Urban Context Applicability(10points in total) Score

Applicability for the urban context 1Comprehensiveness 3Applicability of the methodology in multiple priority sectors 1Existing combination with other methodologies 1Municipality or city based companies involved in existing projects 1Scalability / city wide approach(PoA) 1Scalability / city wide approach(Bundle) 1Existing PoA 1

1. CDM feasibility ScoreGeneral sector applicability(‘priority sectors) 1Existence of a project utilizing the methodology 1Number of time the methodology utilized 3

2. Urban Context Applicability(10points in total) Score

Applicability for the urban context 1Comprehensiveness 3Applicability of the methodology in multiple priority sectors 1Existing combination with other methodologies 1Municipality or city based companies involved in existing projects 1Scalability / city wide approach(PoA) 1Scalability / city wide approach(Bundle) 1Existing PoA 1

Select the methodologies with overall score over 10(excepting 2 methodologies irrelative to urban context)

Select the methodologies with urban context applicability score over 6

(over 5 in transport sector for its special characteristics: Representativeness of public transportation)

15

Framework Setup – Methodology Selection

Selection result changed in waste/transport/energy sectors

Waste Sector


ACM 1 ACM 1

AMS-III.G AMS-III.G

AMS-III.H AMS-III.H

AM25 AM25

AMS-III.E AMS-III.E

AMS-III.F AMS-III.F

Newly Included AMS-III.AO

Transport


AMS-III.C AMS-III.C

Newly Included

ACM16

AM31

AMS-III.U

Energy


ACM2 ACM2AMS-I.A AMS-I.AAMS-I.B AMS-I.BAMS-I.C AMS-I.CAMS-I.D AMS-I.DAMS-I.F AMS-I.FAMS-I.J AMS-I.JACM6 ACM6ACM18 ACM18AMS-I.E AMS-I.EAMS-II.G AMS-II.GACM12 ACM12

AMS-III.Q

Excluded AMS-II.BAM29

AMS-III.B

16

Framework Setup – Methodological Barriers

Tool-kit development framework building based on results of literature reviews on CDM projects implementation barriers

Extended project period

Redundant procedures (validation/ver-ification)

Strict data management requirement

Difficulties in additionality proof

Constraints in utilizing external finan-cial aids

Difficulties in baseline selection/proof

Implementation Barriers in Literatures

A. Difficult additinality proof procedures/non-economic ob-stacles

B. Monitoring requirement in facility unit

C. (PoA) Identical methodology should be applied in all sub-activities

D. Monitoring cost increase from dispersed end-users

E. Difficulties in proper baseline setup and proof of proper-ness

F. Separation of GHG reduction results from external finan-cial aids

G. Excessive data management requirements in monitoring procedures

Methodological Barriers

17

Framework Setup

Tool-kit development framework building based on results of literature reviews on CDM projects implementation barriers

A. Difficult additinality proof procedures/non- economic obstacles

B. Monitoring requirement in facility unit

C. (PoA) Identical methodology should be applied in all sub-activitiesD. Monitoring cost increase from dispersed end-usersE. Difficulties in proper baseline setup and proof of propernessF. Separation of GHG reduction results from ex-ternal financial aidsG. Excessive data management requirements in monitoring procedures

Methodological Barriers

1. Introducing concept of automatic additionality (CDM micro-scale automatic additionality)

2. Excepting municipal aids from investment analysis/common practice analysis in addition-ality proof procedures

3. Allowance of data monitoring in system unit (allowance of aggregated data monitoring)

4. Allowance of utilizing multiple methodologies in sub-activities in PoA projects

5. Allowance of using self-developed monitoring variables (with external validation)

6. Provision of default baseline scenarios

Tool-kit Development Framework Setup

18

Framework Setup – Solutions for the Barri-ers(1)

1. Introducing concept of automatic addi-tionality

(CDM micro-scale automatic additional-ity)

2. Excepting municipal aids from invest-ment

analysis/common practice analysis in additionality proof procedures

Introducing automatic additionality con-ditions: Projects satisfying following conditions are additional

- Renewable energy project with capacity less than 5MW

- Energy efficiency improvement project with emission reduction scale equal or less than 20GWh/year

- Other projects with emission reduction scale equal or less than 20,000tCO2e/year

Projects not satisfying automatic addi-tionality conditions should follow typical additionality proving procedures with following changes

- Except municipal financial aids from in-vestment analysis

- Except common practice analysis in typical additionality proving procedures

City/Urban area has higher probability of having dispersed components (dispersed participants/end-users) Difficulties in proving additionality is excessive in urban context

City/Urban area has higher probability of having dispersed components (dis-persed participants/end-users) Without municipal aids, projects have less chance to be implemented because of dispersed incentivesTechnology availability is limited in ur-ban contextless chance of prove projects’ unique-ness (difficulties in common practice analy-sis)

19


3. Allowance of data monitoring in system unit

(allowance of aggregated data monitor-ing)

4. Allowance of utilizing multiple method-ologies in sub-activities in PoA projects

In data monitoring process, allow data monitoring in system unit

: Previously prohibited in general CDM projects (data management must be performed in equipment unit)

City/Urban area has higher probability of having dispersed components (dispersed participants/end-users) Difficulties amplified in data control/monitor in equipment unit because of dis-persed ownership of facilities

For PoA projects, allow utilizing multiple methodologies for PoA component activ-ities(for small-scale methodologies)

: Previously prohibited in general CDM projects (every sub-activities composing PoA project should use identical methodologies)

City/Urban area has limitation in secur-ing similar sub-activities can utilize the same methodology for its limited terri-torial range More flexibility in methodology selec-tion may increase chance of carrying PoA like projects in urban context

20


5. Allowance of using self-developed mon-itoring variables (with external validation) 6. Provision of default baseline scenarios

Monitoring variables which are esti-mated by additional methodological tools can be substituted by self-esti-mated variables by project participants with external validation

: Previously prohibited in general CDM projects (In case of utilizing self-estimated vari-ables instead of variables provided by methodology, permission of UNFCCC EB is required)

City/Urban area has higher probability of having dispersed components (dispersed participants/end-users) Because of dispersed ownership of equipment/facility, monitoring every detail data would ban project implementa-tion for limited data availability

Providing default baseline scenarios and simpler procedures for easier approach to selecting baseline scenarios

- Provide representative(default) baseline scenario

- Excluding procedures for exempting irrela-tive baseline scenarios

City/Urban area has higher probability of having dispersed components (dispersed participants/end-users) Dispersed components may lead to various project backgrounds: amplified diffi-culties in providing baseline scenario validity

21

Framework Setup – Tool-kit Method Format

Tool-kit format is composed with 8 items similar to components of regular CDM methodology

CDM Methodology Format Tool-kit Formats

Item ContentsProject Outline Typical project outlineProject Scope(Type) Types of relative projectsApplicability conditions Conditions for applying meth.

Project Boundary Physical boundary of method-ology implication

Baseline Scenario Representative baseline sce-nario

Additionality proof Additionality proving proce-dures

Emission Reduction Calculation

Measures of emission reduc-tion estimation

Major Monitoring vari-ables Major variables for example

Tool-kit format is defined for representing improvements from the tool-kit development framework

1. Introduction2. Scope, applicability, and entry into force

1. Scope2. Applicability3. Entry into force

3. Normative References1. Selected approach from paragraph 48

of the CDM modalities and procedures4. Definitions5. Baseline Methodology

1. Project Boundary2. Procedure for estimating the end of

the remaining lifetime of existing equipment

︙

6 Tool-kit Development Framework

22

Tool-kit Building: example

ACM 0001: Flaring or Use of Landfill GasProject Outline

• Capture of LFG and flaring and/or use to energy production and/or supply to customers through gas distribution network(trucks)

• GHG destructionProject

Scope(Type) • Projects capturing LFG for use/destruction

Applicability con-ditions

• Flaring captured LFG and/or• Utilizing captured LFG for energy production and/or• Supplying captured LFG to customers

Project Boundary • LFG capturing/Flaring facilities• Facilities utilizing captured LFG (Power plants/Heat plants, etc.)

Baseline Scenario

• LFG is directly emitted to atmosphere• LFG capturing/flaring is performed without carbon offset projectsWhen the project is not included in conditions above, following original procedures for determine baseline scenario of ACM 0001 without proving irrelativeness of non-proper scenarios

Additionality proof

• Projects satisfying following conditions are additional1. Renewable energy project with capacity less than 5MW2. Energy efficiency improvement project with emission reduction scale equal or less than 20GWh/year3. Other projects with emission reduction scale equal or less than 20,000tCO2e/year

• Projects not satisfying conditions above follows original procedures for proving additionality provided in ACM 0001 excepting:

1. Separation of parts from municipal financial aid during investment analysis 2. Common practice analysis

Emission Reduc-tion Calculation

• Follow original methodology given by ACM 0001; use of self-estimated variables substituting original variables estimated by additional methodological tool is allowed when proper external validation is performed

Major Monitoring variables

• MSW operation status• Fraction of LFG flared designated by regulation• Operation status of LFG utilization facilities(if any)• Amount of LFG utilized• Energy consumption in relative facilities Follow original methodology for details of monitoring method Aggregated data monitoring is allowed

1. Introducing concept of automatic additionality

2. Excepting municipal aids from investment analysis/common practice analysis

3. Allowance of data moni-toring in system unit

4. Allowance of utilizing multiple methodologies in sub-activities in PoA projects(only for small scale)

5. Allowance of using self-developed monitoring vari-ables (with external valida-tion)

6. Provision of default baseline scenarios

23

Conclusion: Tool-kit Utilization

Developed methodology tool-kit is a very first tool-kit developed based on existing methodologies; hence, the tool-kit would be utilized in various ways

Project Motivation Project Results Future Utilization

• Increasing importance of city/urban area in GHG emission perspective

• Limited performance of city/urban area based car-bon emission reduction projects

Expanding city/urban area based carbon emission reduc-tion projects by developing methodology tool-kit for city/ur-ban area projects

• Selecting city/urban suit-able CDM methodologies

• Developing methodology tool-kit framework

• Building urban methodol-ogy tool-kit

From improving previous works,

1) Selecting proper CDM methodologies for urban context2) Building tool-kit development frameworks3) Development of urban methodological tool-kit

Utilize as a starting material for improving CDM system for cov-ering city/urban area(administrative procedures, MRV requirements, etc)

For new city/urban area based carbon emission reduction projects or new carbon offset projects, developed tool-kit would be applied for project de-velopment

• With real case experiences of the tool-kit application and continuous feedbacks for tool-kit improvements

The end of document

march 28, 2014 h.w. lee, korea environment institute & h.j. moon, h. lee, efconsulting

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