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UEA/Gwangju Approach to Low-Carbon Green City

UEA/Gwangju Approach to Low-Carbon Green City. Discussion Paper for the joint UNEP and UNFCCC workshop for Urban Methodologies for the Built Environment, UNFCCC Headquarters, Bonn, Germany 27-28 March 2014. Urban Environmental Accords(UEA) Secretariat. In collaboration with.

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UEA/Gwangju Approach to Low-Carbon Green City

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  1. UEA/Gwangju Approach to Low-Carbon GreenCity • DiscussionPaperfor thejointUNEP and UNFCCC • workshop for Urban Methodologies for the Built Environment, UNFCCC Headquarters, Bonn, Germany 27-28 March 2014 Urban Environmental Accords(UEA) Secretariat In collaboration with

  2. Research Team • Supervision and Coordination : • Kwi-Gon Kim, Ph.D., UEA Secretariat • Lead authors : • Kwi-Gon Kim, Ph.D., UEA Secretariat • Byoungchull OH, Ph.D., UEA Secretariat • Seung-Ho Seo, UEA Secretariat • Young-Du Choi, UEA Secretariat • Administrative : • Jung-Sam Lee, Gwangju Metropolitan City • Sang-Kap Kim, UEA Secretariat • Nam-Ghiu Park, UEA Secretariat • Advisory Group : • International Inter-Agency Advisory Group for the Urban Environmental Evaluation Index and Urban CDM In Collaboration with: • UNEP • UNFCCC • World Bank • KEI

  3. UEA/Gwangju Approach to Low-Carbon Green City Table of Contents Ⅴ GHG Projection•Diagnostics Program(GPD) and Carbon Banking System : A Voluntary Approach to Carbon Financing Ⅵ Expanded PoA Ⅶ Conclusions & Suggestions Ⅷ Proposal on New Initiative for Urban CDM - Development of a Compensation Model for Carbon Financing Ⅰ Introduction Ⅱ Components of Framework for UEA/Gwangju Approach to Low-Carbon Green City Ⅲ UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM and NAMAs Ⅳ Urban CDM Program : A Mandatory Approach to Carbon Financing

  4. 4 | 71 Ⅰ Introduction • We live in the era of global warming which causes severe extreme weather events. Human beings are experiencing the events right now in the every corner of the planet. • It has been proven that conventional urban planning fails to meet requirements and demand for the safe and comfortable globe. We, therefore, need ceaseless planning innovation. Comprehensive carbon-centered (3Cs) should be the mainstream of planning to combat climate change at the city-scale. • The past decades were important time in terms of sustainability from low-carbon emission to carbon-neutral city in Gwangju. Gwangju has devotedly worked in this field with national and international partners and like-mind organizations and people. • This paper highlights the initiatives and projects of Gwangju/UEA to reduce greenhouse gas (GHG) emissions towards low-carbon Green city which is one of Gwangju/UEA priority agendas.

  5. 5 | 71 Ⅱ Components of Framework for UEA/Gwangju Approach to Low-Carbon Green City UEA/Gwangju Approach to Low-Carbon Green City Theoretical model ofUrban CDM Feasibility Study Theoretical model of Urban CDM Development Urban GHG Accounting City Climate Planning Carbon Financing GPD & Carbon Banking System Expanded PoA Urban CDM Feasibility Study Outcomes of Urban CDM Urban Methodology Urban CDM Handbook Urban CDM Toolkit Co-development of City Climate Planner Creditation Program

  6. 6 | 71 Ⅲ UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM and NAMAs 3.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM 3.2 UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs

  7. 7 | 71 3.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM • Note: 1) GPD : GHG Projection & Diagnostics Program • 2) CBS : Carbon Banking System

  8. 8 | 71 3.2 UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs • Stepsto a NAMAs • Fig. 1 Step to a NAMAs • Source : Nationally Appropriate Mitigation Actions(NAMAs), Steps for Moving a NAMA from Idea towards Implementation Ver. 9.0, giz

  9. 9 | 71 Ⅳ Urban CDM Program : A Mandatory Approach to Carbon Financing •  Urban CDM, which was coined by Professor Kwi-Gon Kim, is a holistic forward-looking planning tool that integrates the elements of GHG analysis maximizing livability and quality of life for the people in broad terms. •  Good GHG accounting is a pre-requisite for good carbon planning. •  Urban CDM is an economic tool which helps financial analysis in a holistic manner. Urban CDM is all about return of investment, offset and benefits. • What is the Urban CDM? •  Urban CDM is a mechanism which gives financial incentives and provides Certified Emission Reductions (CERs) as much as amount of emission reduction at the city-scale compared with baseline emissions at the city level. •  Therefore, it can be used as a political carbon decision support system both for green growth and economy and for urban planning and management. •  Rationale behind the Urban CDM - A tool for carbon financing: market-based mechanism - A tool for urban GHG accounting: urban metabolism-based mechanism - A tool for 3Cs (Carbon Centered Comprehensive) planning: land-use based mechanism

  10. 10 | 71 • Why is the Urban CDM needed urgently? • Cities are main sources of global GHG emissions and a major pollutant • - 50% of the world's population now lives in cities. By 2050, three out of four people are expected to live in urban areas, due to urban migration • - Urban areas currently use 67% of the world's energy and accounts for over 71% of global GHG emissions. (World Bank, 2011) •  Less than 1% of projects registered with the CDM are credited to cities. • - Interrelated Cross-Sectoral approaches are not implemented, even in the case of reduction activities of methodologies approved by UNFCCC. •  Efforts to reduce GHG emissions: The impact is marginal • - Due to financial vulnerability of developing countries, efforts to reduce GHG emissions and investment in environment protection are economic burden for cities in developing countries • This is time to look at the CDM for the whole city.

  11. 11 | 71 • Objectives of the Urban CDM •  To develop Urban CDM methodology to be registered in the UNFCCC •  To develop carbon accounting that can be used in the compliance market (CDM), the voluntary market, etc. •  To develop carbon reduction emission strategies •  To develop a low-carbon green city planning system module (3Cs) •  To mainstream low-carbon green city development into urban planning in a holistic way

  12. 12 | 71 • Audience/Partners • The Urban CDM model seeks to provide a user-friendly communication in comprehensive analysis of a very wide spectrum of large-scale integration possibilities, as seen in Figure 2. Therefore, the UEA has been working closely with UNEP, Korea Environment Institute (KEI), and UEA member cities, in collaboration with UNFCCC and the World Bank.

  13. 13 | 71 • Conceptual model of the Urban CDM •  Here is our conceptual model for developing the Urban CDM. How we have arrived this model is a reflection process of analyzing and validating documents, which have been conducted. •  This model is very useful to understand inter-relationships between energy suppliers and consumers, and between built form, urban infrastructure, and CDM and technology mechanism for them, in a total holistic manner. • Fig. 2 Integrated total Urban CDM model

  14. 14 | 71 • Main features of the Urban CDM model include: •  The Urban CDM model is a new type of CDM with the combination of different categories/sectors for more than one country. It is a cross-sectoral approach to climate change. •  The model includes the combination of a very high number of different technologies that are relevant for urban energy grid systems. •  The model has a coherent documentation on the basic of procedure and standard of the UNFCCC CDM and seeks to provide a user-friendly communication in project descriptions. •  The model aims for calculating the cost and carbon benefits of the total system at the city-scale, which can be divided into investment costs, operation costs, and taxes, such as CO2 emissions trading costs and financial benefit such as CDM, in the course of CDM documentation. Thereby, the model can create data for further analysis of socio-economic feasibility studies, such as expanded cost-benefit analysis, including balance of payment, job creation, industrial innovation, and so on.

  15. 15 | 71 • Financial modeling of the Urban CDM Urban CDM is a business case. The methodology of financial modeling of the Urban CDM incorporates the basic project approach of firstly identifying the carbon reduction solutions and quantifying the associated emissions, and then modeling the identified additional cost (additionality) to be credited with the Urban CDM and benefits, regulatory and macroeconomic influences.

  16. 16 | 71 • The following Figure 3 shows multi-layers of finance modeling by different GHG emissions sources. It involves development of cost, supporting regulatory and funding environment including CERs and credit points and macro economic scenarios. • Financial calculations include internal rates of return (IRR), payback periods, net present value, cash flows and cost-effectiveness analysis. • This model can be used for solution for reduction actions viability decision. If the costs of reducing CO2 emissions from the traditional technology is included in the cost calculations, an environmentally better solution would be more cost-effective than the traditional one from an economic point of view in the long run.

  17. 17 | 71 • Fig. 3 Multi-layers of financial modeling by GHG emissions source • Note: 1) Blue line indicates the cost with traditional equipment • 2) Dotted redline indicates the cost with additional initial capital investment and CERs.

  18. 18 | 71 Ⅴ GHG Projection•Diagnostics Program(GPD) And Carbon Banking System(CBS) : A Voluntary Approach to Carbon Financing 5.1 Background of GPD 5.2 Development process of GPD to date 5.3 Purpose of GPD 5.4 The GPD is being developed with the following objectives : 5.5 Procedure of GPD for low-carbon green city development 5.6 The application of the GPD to the Carbon Banking System 5.7 Draft GHG Projection • Diagnostics Expanded Version 5.8 Overall Timeline

  19. 19 | 71 5.1 Background of GPD •  Many GHG-related initiatives are based on Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC) • - To develop case studies of best practices targeting more than 30 cities • The first GHG accounting tool for Chinese cities was also developed based on the GPC. • Source: http://www.wri.org/news/release-launch-first-greenhouse-gas-accounting-tool-chinese-cities •  It is expected that Gwangju/UEA GPD will be spread to UEA member cities and special invitees.

  20. 20 | 71 5.2 Development process of GPD to date • Development of the Urban CDM commenced in April, 2011, as a result of memorandum of understanding between Gwangju and United Nations Environment Programme (UNEP) • Presentation of the initial draft in the 2013 UEA San Antonio Summit • Presentation of the Gwangju/UEA project at the World Bank City Climate Planner Certification Program Workshop • Development of GPD expanded version in 2014 with the financial support from the Ministry of Environment, Korea • Publication of the full version of the GPD in February, 2015 5.3 Purpose of GPD • The purpose of this program is to propose the developed system to the international society in order to seek for and utilize climate respond funds (e.g. GCF), so that wider range of GHG reduction projects becomes available thus contributing global climate change response in an active manner.

  21. 21 | 71 5.4 The GPD is being developed with the following objectives : • To help cities prepare GHG inventory at a macro and aggregated manner at the city-scale • To help cities develop effective tools for baseline scenario through the use of statistical projection methods • To help cities have systematic planning and quantitative data support for low-carbon city development • To support cities to measure collective performance with systematic and credible monitoring over time; and • To facilitate access of cities to climate finance opportunities

  22. 22 | 71 5.5 Procedure of GPD for low-carbon green city development • As a first step, base year inventory puts its basis on a GHG inventory developed for GPD, which is made simultaneously with the typing of input data for development of project equation in the baseline scenario analysis without GHG reduction policy & projects. • The next step consists of a series of calculations that involve projected emissions reduction based on climate action plan and observed emissions reduction on the site. • Then the model is divided the in to a technical or market-economic optimizing. • Fig. 4 The GPD model for low-carbon green city development

  23. 23 | 71 5.6 The application of the GPD to the Carbon Banking System The GPD program is an urban GHG accounting and carbon planning tool which is being developed by the UEA/Gwangju and disseminated to UEA member cities. These are the interim results of the pilot-testing of the tool for the carbon banking system.

  24. 24 | 71 •  The Operating System of the Carbon banking • 1) Carbon Points Calculation Procedure EnergySaving Conversion of Energy Savings into CO2 Reduction Offer of Carbon Points which Equal to US$ 560/tonCO2eq

  25. 25 | 71 • 2) Phased-in-operation 〈Pilot test〉 a. Duration: July 2008 - December 2013 b. Participants: Households (single-unit/multi-unit residence) c. Target areas: Electricity, city gas, drinking water d. Grant points based on reduction of CO2 emissions to the participants (Credits granted by Gwangju bank) *Grant points can be used for purchase of green goods/discount in park, etc.

  26. 26 | 71 〈Main project〉 a. Grant points based on reduction of CO2 emissions to the participants •Organization: Ministry of Environment (national) •Operational support: Korea Environmental Corporation •Program operation: Gwangju Metropolitan City b. Carbon points are issued when there is more than 5% reduction in the average energy consumption in the past 6 months (electricity, city gas, drinking water) compared to the average of the previous 2 years. c. Benefits of the 'Green Card' issued to participants: (See Figure 5) •Carbon points: incentives for reductions provided by the Ministry of Environment and the local government •Green consumption: when buying registered eco-friendly products with green card, can use the carbon points and earn additional (1~5%) points. •Discounted price in public sectors: 130 national parks, cultural facilities, art performances, etc. •Credit card function: for purchase of public transportation (bus, subway, train), in addition, earn 10-20% d. The consumption of electricity, city gas, and drinking water are monitored through the respective meters in each household (See photos 1, 2 and 3).

  27. 27 | 71 • • Photos of green cards and measuring meters • a. Card used in 2008-2013 • b. New card to be used from 2014 • Fig. 5 Green card • Photo 4 Overview of Sinhyochon solar village, Gwangju Photo 2 City gas meter Photo 3 Drinking water meter Photo 1 Electricity meter Source: photo 1, Taken at Sinhyochon solar village, Gwangju, by UEA, on 10 January, 2014 photo 2, http://blog.naver.com/mosechu?Redirect=Log&logNo=20191100381 • photo 3, http://blog.naver.com/jimmy44?Redirect=Log&logNo=140165673316 

  28. 28 | 71 • 3) Operating System The operating diagram (Figure 6) maps out main steps of carbon banking system together with the roles of main actors who are engaged in the carbon banking process. The process starts with signing ceremony for agreement on the carbon-smart model city between central and local governments, and ended up with issuance of carbon points by private banks. It is a public-private partnership (PPP) project. This project has seen as a collaborative and collective effort among many stakeholders including city government, private consulting company, etc.

  29. 29 | 71 • Fig. 6 The Operating System of the Carbon Banking System

  30. 30 | 71 • Roles of main actors of the system a. Households •Participate in carbon banking system •Save energy (in electricity, city gas, drinking water) •Use and accumulate carbon points b. Gwangju Metropolitan City •Data analysis on the consumption of electricity, city gas, and drinking water •Promotion of carbon banking system, and processing new applications •Report on energy use reductions to the bank •Provision of related information to energy/city gas/drinking waterworks companies •Expansion of affiliates businesses for more use of carbon points c. Korea Environment Corporation : •Process data on Gwangju's electricity, city gas, and drinking water d. Korea Electric Power Corporation(electricity company) : •Report data on energy use to Gwangju and Korea Environment Corporation e. Gas company •Report data on energy use to Gwangju and Korea Environment Corporation f. Waterworks company •Report data on energy use to Gwangju and Korea Environment Corporation g. Billing company •Issue bills for electricity, city gas, and drinking water h. Green Start Network •Promote carbon banking system and encourage participation •Educate and promote green life, and organize green leader consultative group I . Education center •Promote carbon banking system •Operate green leader fostering course j. Carbon bank(Gwangju Bank in 2008-2013, all local banks since 2014) •Issue carbon points with green card k. The Ministry of Environment (joined since 2014) •Organize and manage the carbon banking system •Offer carbon points, cash-back, and other incentives

  31. 31 | 71 •  Carbon banking inventory project • Method for carbon banking inventory project • (1) Selection of sectors • - Electricity, city gas, drinking water • (2) Selection of areas • - Household and expansion to commercial, industrial, public sector • (3) Data collection (main data)

  32. 32 | 71 • Results of carbon banking inventory project • - GHG emissions in Gwangju for electricity, city gas, and drinking water in household, commercial, industrial, public sectors(2001-2012)

  33. 33 | 71 •  Carbon banking baseline project • Method for carbon banking system baseline project • (1) Selection of sectors • - The same as in the inventory project method • (2) Selection of areas • - The same as in the inventory project method • (3) Development of projection equation for baseline scenario • - Multiple regression analysis • - Projection period: 2001-2020 • (4) Selected variables • - Independent variables • •Electricity avg. price •City gas avg. price • •City gas use households •Drinking water avg. price • •Drinking water leakage rate •Population • •Industrial production index •Temperature • •Rainfall  •Heating degree days • •Cooling degree days •Season dummy • •Year dummy • - Dependent variables • •GHG emissions

  34. 34 | 71 • Results of the carbon banking baseline project • 〈1st step〉 Selection of variables & details for data analysis: electricity, city gas, drinking water

  35. 35 | 71 • 〈2nd step〉 Results of the projection equation • (1) Data accumulation on temperature, precipitation, expenditure (electricity, city gas, drinking water), and population with actual measurement value of CO2

  36. 36 | 71 • (2) Results of multiple regression analysis • - Development of projection equation

  37. 37 | 71 • 3rd step〉 Gwangju pilot baseline scenario project for selected sectors: • - Application of the development projection equation • - GHG emissions projection results based on electricity, city gas, drinking water usage projection results (All applied sectors: household, commercial, industrial, public sectors) •  •Shows GHG emissions according to usage projection from 2013~2020

  38. 38 | 71  Effectiveness of the carbon banking system (2008-2012) (targeted household sector : participating households) • To boost GHG emissions reduction at household level and save energy in daily life •  To raise public awareness for climate change, and enhance the city's brand (value) image as a leading low-carbon green city.

  39. 39 | 71  GHG reduction projection scenario through the carbon banking system (2008-2020) • Projection Equation estimates 973,188 tonCO2 of reductions by 2020 in the household sector: Carbon financing using the 'Carbon Banking System‘ • * Assumption: All Gwangju households participate by 2020 •  Comparison of emissions with and without carbon banking system policy, and emissions reduction

  40. 40 | 71 •  Carbon financing using the 'Carbon Banking System' in a graphic form

  41. 41 | 71 5.7 Draft GHG Projection • Diagnostics Expanded Version Expanded • • Full coverage of • Scopes • Sectors • GHGs Basic+ • Scope 2 : GHG Reduction Target Setting, etc. • Step 2 (Sector) : Transportation, Buildings, Land use, Waste, etc. • Step 2 (GHGs) : CH4, N2O Basic • Scope 1 : Inventory, Baseline Scenario • Step 1 (Sector) : Electricity, Gas, Drinking water • Step 1 (GHGs) : CO2

  42. 42 | 71 5.8 Overall Timeline July 2014 : Advisory Committee Meeting January 2014 : Consultant Selection Feb 2015 : Final GPD Expanded Version June 2014 : Draft GPD Scope 2/Step 2 (Sector/GHGs)Version July 2013 : Draft GPD Scope 1/Step1 (Sector/GHGs) Version

  43. 43 | 71  For more information : The World Bank Series “Urban Innovations” We wanted to take a bottom up approach. Carbon banking starts with households, which is important because household and commercial activities account for 39% of greenhouse gas (GHG) emissions in Gwangju. It also helps to raise public awareness for climate change, enhancing the city’s brand as a low-carbon leader. Resource: http://www.worldbank.org/en/topic/urbandevelopment/publication/urban-innovations-series-conversations-on-green-inclusive-resilient-competitive-cities http://blogs.worldbank.org/sustainablecities/carbon-banking-helps-families-reduce-co2-emissions-gwangju

  44. 44 | 71

  45. 45 | 71 Ⅵ Expanded PoA for Urban CDM 6.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM 6.2 Case of Iloilo City, the Philippines 6.3 Future Plan

  46. 46 | 71 6.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM • 1) CDM Reform •  In general  Increased standardization  Multiple methodology approach  Improved interaction of UNFCCC with stakeholders •  The urban context  Emission reduction in specific “priority sector”  Usually dispersed projects comprising different technologies  Multiple stakeholders, beneficiaries  Strong interrelation/mutual interference between sectors, institutions  Cities rather follow holistic and policy related approach to reduce emission, “Non-technical” projects with large mitigation potential (e.g. urban planning, policy and carbon governance)  Limited experience/number of CDM projects so far

  47. 47 | 71 • 2) Summary of Comparison of Conventional CDM and Urban CDM New Methodology

  48. 48 | 71 • 3) Conceptual Framework for the Urban CDM Methodology •  Project Description : Flow Diagram

  49. 49 | 71 •  Conceptual Model • Comparison of Baseline Scenario of Individual CDM Project and Urban CDM PoA Scenario

  50. 50 | 71 •  Procedures for PDD(Project Design Document)

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