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Two new ideas on Standardised Baselines

Two new ideas on Standardised Baselines. Randall Spalding-Fecher CDM EB Joint Workshop: “current developments in standardised baselines” 13 March 2011 Pöyry Management Consulting. Two new ideas. Mandatory vs voluntary SBLs: the relationship with stringency and environmental integrity

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Two new ideas on Standardised Baselines

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  1. Two new ideas on Standardised Baselines Randall Spalding-Fecher CDM EB Joint Workshop: “current developments in standardised baselines” 13 March 2011 Pöyry Management Consulting Spalding-Fecher: Jt Workshop 2011 - SBLs

  2. Two new ideas Mandatory vs voluntary SBLs: the relationship with stringency and environmental integrity “Normative” service level benchmarks: suppressed demand and providing for basic human needs Spalding-Fecher: Jt Workshop 2011 - SBLs 2

  3. Voluntary vs mandatory SBLs: stringency and environmental integrity Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  4. Voluntary vs mandatory SBLs: stringency and environmental integrity Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  5. Project approval under traditional approach to additionality   Source: Poyry  Spalding-Fecher: Jt Workshop 2011 - SBLs

  6. Project approval under SBL set below industry average       Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  7. Voluntary SBLs could inflate credits even if set at industry average – must be mandatory       Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  8. Implications of lack of stringency – CER volume, not just approved projects      Source: Poyry  Spalding-Fecher: Jt Workshop 2011 - SBLs

  9. “Normative” service level benchmarks are the best way to address suppressed demand for basic household services • Suppressed demand, due to lack of access and high unit cost of services, means historical energy use is not a reasonable baseline • E.g. switching from kerosene hurricane lamp to CFL gives 40 times the light for 2% of the unit cost! • SSC WG have noted cases where this happens, and issues around how it could be addressed • Project activity service level has major limitations – difficult to measure service directly – and may not initially reflect “satisfied demand” • “Normative” service level benchmark is defined as minimum of level of service household should have and sets cap on service as well • Convert this to emissions by identifying baseline technology • Eliminates the need to monitor baseline while providing reasonable, objective baseline • Not appropriate for all sectors/technologies and still have to agree the level Spalding-Fecher: Jt Workshop 2011 - SBLs

  10. “Suppressed demand” means historical energy use is not a reasonable baseline • Includes both an “income effect” and “price effect”, but the latter is much more important • Lack of access and high cost of energy services relative to household budget suppresses demand for energy services • Access to project technology dramatically increases energy service • “satisfied demand” = minimum level that households would demand given reasonable price • Project may not realise “satisfied demand” right away Spalding-Fecher: Jt Workshop 2011 - SBLs

  11. Understanding suppressed demand – energy service demand Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  12. Understanding suppressed demand – energy consumption Source: Poyry Spalding-Fecher: Jt Workshop 2011 - SBLs

  13. “Normative” standardized approach • Use “reasonable, adequate” service level as baseline activity level – reflect social view of development needs (i.e. MDGs, minimum water and energy requirements) • Example: minimum lighting needed per day, minimum ambient indoor temperature for comfort, minimum potable water requirements • Convert service level to energy and emissions using technology choice that is accessible to poor household – the next technology step (e.g. kerosene pressure lamps, not diesel generators) • Advantages • No monitoring necessary for certain services because baseline is fixed • No baseline energy survey needed for these services • Recognises need for adequate services – no penalty for being poor • Does not require exhaustive data gathering process to establish SBL • Challenges • How to define minimum service (both units and level) – still need some form of stakeholder input and policy decision • How to define baseline technology to deliver that service Spalding-Fecher: Jt Workshop 2011 - SBLs

  14. Possible service standards for household energy services Spalding-Fecher: Jt Workshop 2011 - SBLs

  15. Thank you! Spalding-Fecher: Jt Workshop 2011 - SBLs

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