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
Largest Potential for GHG Emission Reduction in Buildings
Highest GHG reduction potential
Most cost effective
Source: IPCC 4th Assessment Report
Largest Potential Resides in Developing Countries
Source: IPCC 4th Assessment Report
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Score Card for Building Projects in CDM
2008
6 vs. 2700
Score Card for Building Projects in CDM
2011
31 vs. 5935
2 vs. 80
Existing Building Related CDM Methodologies
AMS-II.E. Energy efficiency and fuel switching
measures for buildings
31 2
AMS-III.AE Energy efficiency and renewable energy
measures in new residential buildings
0 1
AMS-II.J. Demand-side activities for efficient lighting
technologies (deemed savings)
41 5
AMS-II.K. Installation of co-generation or tri-generation
systems supplying energy to commercial
buildings
0 0
AMS-II.C Demand-side energy efficiency programmes for
specific technologies
27 8
AM46 Distribution of efficient light bulbs to households
2 0
AM70 Manufacturing of energy efficient domestic
refrigerators 1 0
AM71 Manufacturing and servicing of domestic
refrigeration appliances using a low GWP
refrigerant 0 0
Underlying causes for low CDM and EEB uptake
Long-tail characteristics of the sector- small saving, big effort
Fragmentation of sector / uncoordinated stakeholders
Insufficient R&D 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
Old CDM’s 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
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CDM’s 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
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
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CDM’s Bottom-up Support for Long-Tail Building Projects
CDM’s 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
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CDM’s Bottom-up Support for Long-Tail Building Projects
CDM’s 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
• CDM’s 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
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The Avenue Forward…….
Short-term Challenge
• Establish facilitating methodologies based on industry and CDM’s
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
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