World Bank, Carbon Fund

1. Workshop on CDM Methodologies and Technical Issues Associated with Power Generation and Power Saving Project Activities World Bank, Carbon Fund Review of approved and proposed energy efficiency projects and methodologies and identification of gaps Pedro Maldonado Programa de Estudios e Investigaciones en Energía Universidad de Chile Montreal, December 3rd, 2005

2. Approval process status of CDM EE projects

3. Energy Efficiency: a valid option for CDM projects? • Insufficient EE methodologies submitted • Not approved EE methodologies exceed their relative importance in connection with the methodologies submitted • Are PP submitting EE Meth less rigorously than those submitting energy renewable projects? • Exists any bias against the EE projects affecting the methodologies reviews? • Is it more complex to develop Baseline and Monitoring methodologies in the case of EE CDM projects? • The CDM philosophy from the very beginning was to make easy the technological transference through joint venture. EE is one of the best ways of accelerate the technological transfer.

4. Not approved CDM EE projects • Type of projects • DSM in the Commerce Sector • EE improvements in the Industrial Process • EE improvements in the Electric Power System • EE retrofitting of District Heating • EE programs (electric motors) • Power factor improvement in a water utility

5. Justification for not approval of EE CDM projects’ methodologies • Reasons for non-approval of proposed methodologies applicable to any type of CDM projects • Reasons for non-approval of proposed methodologies in the case of EE CDM projects • Insufficiently developed BL methodologies • Insufficiently developed monitoring methodologies

6. General reasons for non-approval • The information used to assess project additionality should be in the public domain • Monitoring Methodology is inconsistent with the proposed Baseline Methodology • It is not clear that the baseline scenario is a conservative one. • In the process of BL determination it should be shown how the subsidized fuel prices are addressed • Scope of the Meth is too broad, involving the DOE in methodological tasks • Barriers are not adequately identified or the way in which CDM projects will trigger the overcoming of barriers

7. Specific reasons for non-approval of EE CDM project Methodologies • Baseline Methodology • On the one hand, PP usually proposes only one BL scenario, which is normally the keeping of facility operation, which also shows deteriorating performance. On the other hand, if several BL scenarios are identified, the Meth doesn’t specify how the BL scenario has been chosen • A service increase is not adequately considered in the BL scenario. Similarly, the project might increase production or displace production in other facilities • Projects related to generation or energy transport could be affected by autonomous DSM measures, but usually DSM is ignored in scenarios development • In some cases it is needed measurements and estimation of dozens of mass and heat flow variables, which is extremely complex

8. Specific reason for non-approval of EE CDM project Methodologies • Baseline Methodology • Uncertainties are not always adequately considered, which is particularly central when EE improvements are reduced • In cases like the electric motors program, the methodology doesn’t address properly the variable load. It should be considered different sub groups assuming different operating hours, loads, remaining life and baseline efficiency. Sample definitions • Usually no free riders are considered • When the product mix change, specific energy consumption need to be adjusted, normally the Meth ignores this adjustment

9. Specific reason for non-approval of EE CDM project Methodologies • Baseline Methodology • In the case of District Heating CDM project activities, it should be noted that: a) individual heating devices impact is insufficiently considered neither in the BL nor in the project scenario, b) the same goes for insulation standards affecting new buildings, c) BL should consider the demand increase due to the replacement of individual heating devices by DH. • Default efficiency values are not a conservative approach, measurements is suggested specially in the case of boilers • Additionality assessment is not sufficiently covered. Investment barriers and not-common-practices are insufficiently justified

10. Specific reason for non-approval of EE CDM project Methodologies • Monitoring Methodology • It is not always clear how key parameters should be collected and monitored, even, some key data is missing in the Meth • QA/QC procedures need to be strengthened • Leakage is ignored. This is unacceptable if the low efficiency equipment is transferred to another activity • The data items to be monitored should be adequately linked with their use in the calculation of the ER

11. CDM EE project activities options • Improved efficiency of Electrical Power System • Improved District Heating System • Demand-Side energy efficiency programs for specific technologies (lamps, ballasts, motors, refrigerators) • Demand-Side energy efficiency in the industrial and mining sectors • Energy Efficiency Standards for new state-subsidized dwellings

12. Energy Efficient Motors: a key program-based CDM project activities

13. The energy-efficient motors: an interesting option for a CDM program • New projects or expansion of existing installations • Replacement of existing motors about out of order

14. Energy Savings estimation at year 2010 (GWh/year)

15. Some examples of Demand-Side energy efficiency in the industrial and mining sectors • Energy intensity reduction in the Chilean copper industry • Use of frequency converters in underground mining ventilation • EE improvement through operation control at the concentration area • EE improvement in flotation cells • Replacement of motors with inefficient performance and subject to a high probability of flaw

16. Evolution of energy intensity in the Chilean copper industry

17. Operation control at the concentration area

18. Power consumption versus air flow

19. Multi pole motors for flotation cells

20. Ventanas Potrerillos Caletones Chagres Paipote Chuquicamata

21. Conclusions • The CDM philosophy, from the very beginning, was to make easy the technology transfer through joint venture. EE projects fill up properly with this requirement in a wider scope of activities • There is a lot of EE opportunities to be developed as CDM project activities, conducting to GHG emissions reduction and technology transfer • In order to implement those opportunities it is possible to ask ourself if: • The PDD and Methodology forms could be more friendly designed? • Is there any bias against EE projects suspicious of having financially attractive options? • Could the PP develop more proper Baseline and Monitoring Methodologies?

22. Conclusions (2) • EE CDM projects should be based mostly on homogeneous and simple to monitor technologies • So, there is an urgent need for a comprehensive summary of information available and for centralized recommendations aiming to minimize the rejection of CDM EE projects.