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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 Project. March 28, 2014 H.W. Lee, Korea Environment Institute & H.J. Moon, H. Lee, EFConsulting. 01/ Project Background 02/ Project Process 03/ Project Progress - Literature Review

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March 28, 2014 H.W. Lee, Korea Environment Institute & H.J. Moon, H. Lee, EFConsulting

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  1. Urban CDM efforts undertaken by KEI and UEA :Urban Carbon Offset Methodology tool-kit Developing Project March 28, 2014 H.W. Lee, Korea Environment Institute & H.J. Moon, H. Lee, EFConsulting

  2. 01/ Project Background 02/ Project Process 03/ Project Progress - Literature Review - Tool-kit Framework Setup 04/ Project Result - Tool-kit Building 05/ Conclusion

  3. Project Background – Importance of Urban Area More than 50% of the world’s population dwells in urban area More than 70% of the world’s carbon emissions come from urban area 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 World’s Carbon Emissions Fraction * 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 Source: CDMPipeline, UNEP Carbon emissions reduction performance from urban area is very limited

  5. Project Background - Urban Base CDM Projects Limited GHG emission reduction performance from urban area rooted from various reasons UrbanContextSpecialty (Limited Ownership) Complicated AdministrativeProcedures - Continuous progress in administrative procedures could be an issue for municipal ownership change Complicated Methodologies Limited Emission ReductionPerformance Long ProjectTime Period - Project performance may not be realized in a single municipal period Complicated methodologies amplifyproblems come from limited ownership Less AttractiveIncentives - For the municipal governor or organization, projects are less attractive ︙

  6. Project Background – Project Goal Developing a carbon offset methodology tool-kit for expanding urban carbon emission reduction projects by utilizing existing CDM methodologies Methodology Tool-kit Development Modifications Easier usability Improved urbancontext suitability ︙ Descriptive

  7. 01/ Project Background 02/ Project Process 03/ Project Progress - Literature Review - Tool-kit Framework Setup 04/ Project Result - Tool-kit Building 05/ Conclusion

  8. Project Process – Project Flow Literature Review Framework setup Tool-kit Development UNEP early works on urban CDM Revising methodology selective approach Tool-kit development • Tool-kit development • Concept of urban CDM Urban • CDM methodology selecting approach • Barriers of implementing urban CDM projects Methodology selection for tool-kit development Summarizing projects implementation barriers • Revise UNEP methodology selective approach for methodology selection • Summarize implementation barriers for tool-kit building frameworks CDM related literatures • Barriers of implementing general CDM projects Expert verification in progress Tool-kit developmentframework setup Tool-kit method format setup • Tool-kit framework setup for the 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 sectors, emission origin and GHG type Typical emission sources in cities 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

  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

  12. Literature Review – UNEP Urban CDM Work/OtherWorks UNEP’s work and other literatures provides idea of potential obstacle factors of implementing urban carbon offset projects

  13. 01/ Project Background 02/ Project Process 03/ Project Progress - Literature Review - Tool-kit Framework Setup 04/ Project Result - Tool-kit Building 05/ Conclusion

  14. Framework Setup – Methodology Selection UNEP’s approach of selecting CDM methodologies for urban area considers project feasibility and urban context applicability Feasibility constraints may exclude the methodologies fitting to urban context, but has not been implemented UNEP Approach Revised Approach Select the methodologies with urban context applicability score over 6 (over 5 in transport sector for its special characteristics: Representativeness of public transportation) Select the methodologies with overall score over 10(excepting 2 methodologies irrelative to urban context)

  15. Framework Setup – Methodology Selection Selection result changed in waste/transport/energy sectors

  16. Framework Setup – Methodological Barriers Tool-kit development framework building based on results of literature reviews on CDM projects implementation barriers Implementation Barriers in Literatures Methodological Barriers Extended project period A. Difficult additinality proof procedures/non-economic obstacles B. Monitoring requirement in facility unit Redundant procedures (validation/verification) C. (PoA) Identical methodology should be applied in all sub-activities Strict data management requirement D. Monitoring cost increase from dispersed end-users Difficulties in additionality proof E. Difficulties in proper baseline setup and proof of properness Constraints in utilizing external financial aids F. Separation of GHG reduction results from external financial aids G. Excessive data management requirements in monitoring procedures Difficulties in baseline selection/proof

  17. Framework Setup Tool-kit development framework building based on results of literature reviews on CDM projects implementation barriers Tool-kit Development Framework Setup Methodological Barriers 1. Introducing concept of automatic additionality (CDM micro-scale automatic additionality) A. Difficult additinality proof procedures/non- economic obstacles 2. Excepting municipal aids from investment analysis/common practice analysis in additionality proof procedures B. Monitoring requirement in facility unit C. (PoA) Identical methodology should be applied in all sub-activities 3. Allowance of data monitoring in system unit (allowance of aggregated data monitoring) D. Monitoring cost increase from dispersed end-users 4. Allowance of utilizing multiple methodologies in sub-activities in PoA projects E. Difficulties in proper baseline setup and proof of properness 5. Allowance of using self-developed monitoring variables (with external validation) F. Separation of GHG reduction results from external financial aids G. Excessive data management requirements in monitoring procedures 6. Provision of default baseline scenarios

  18. Framework Setup – Solutions for the Barriers(1) 1. Introducing concept of automatic additionality (CDM micro-scale automatic additionality) 2. Excepting municipal aids from investment analysis/common practice analysis in additionality proof procedures • Introducing automatic additionality conditions: 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 additionality conditions should follow typical additionality proving procedures with following changes • - Except municipal financial aids from investment analysis • - Except common practice analysis in typical additionality proving procedures City/Urban area has higher probability of having dispersed components (dispersed participants/end-users) Without municipal aids, projects have less chance to be implemented because of dispersed incentives Technology availability is limited in urban context less chance of prove projects’ uniqueness (difficulties in common practice analysis) City/Urban area has higher probability of having dispersed components (dispersed participants/end-users)  Difficulties in proving additionality is excessive in urban context

  19. Framework Setup – Solutions for the Barriers(2) 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 • For PoA projects, allow utilizing multiple methodologies for PoA component activities(for small-scale methodologies) • : Previously prohibited in general CDM projects(every sub-activities composing PoA project should use identical methodologies) • 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 limitation in securing similar sub-activities can utilize the same methodology for its limited territorial rangeMore flexibility in methodology selection may increase chance of carrying PoA like projects in urban context 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 dispersed ownership of facilities

  20. Framework Setup – Solutions for the Barriers(3) 5. Allowance of using self-developed monitoring variables (with external validation) 6. Provision of default baseline scenarios • Monitoring variables which are estimated by additional methodological tools can be substituted by self-estimated variables by project participants with external validation • : Previously prohibited in general CDM projects • (In case of utilizing self-estimated variables instead of variables provided by methodology, permission of UNFCCC EB is required) • Providing default baseline scenarios and simpler procedures for easier approach to selecting baseline scenarios • - Provide representative(default) baseline scenario • - Excluding procedures for exempting irrelative 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 difficulties in providing baseline scenario validity 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 implementation for limited data availability

  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 • Introduction • Scope, applicability, and entry into force • Scope • Applicability • Entry into force • Normative References • Selected approach from paragraph 48 of the CDM modalities and procedures • Definitions • Baseline Methodology • Project Boundary • Procedure for estimating the end of the remaining lifetime of existing equipment • ︙ 6 Tool-kit Development Framework Tool-kit format is defined for representing improvements from the tool-kit development framework

  22. Tool-kit Building: example ACM 0001: Flaring or Use of Landfill Gas 1. Introducing concept of automatic additionality 2. Excepting municipal aids from investment analysis/common practice analysis 3. Allowance of data monitoring 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 variables (with external validation) 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 GHGemission perspective • Limited performance of city/urban area based carbon emission reduction projects • Selecting city/urban suitable CDM methodologies • Developing methodology tool-kit framework • Building urban methodology tool-kit • With real case experiencesof the tool-kit application and continuous feedbacks for tool-kit improvements Utilize as a starting material for improving CDM system for covering city/urban area(administrative procedures, MRV requirements, etc) Expanding city/urban area based carbon emission reduction projects by developing methodology tool-kitfor city/urban area projects From improving previous works, 1) Selecting proper CDM methodologies for urban context 2) Building tool-kit development frameworks 3) Development of urban methodological tool-kit For new city/urban area based carbon emission reduction projects or new carbon offset projects, developed tool-kit would be applied for project development

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