Two new ideas on Standardised Baselines

1 Spalding-Fecher: Jt Workshop 2011 - SBLs

Randall Spalding-Fecher

CDM EB Joint Workshop: “current developments in standardised baselines”

13 March 2011

Pöyry Management Consulting

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Two new ideas

2 Spalding-Fecher: Jt Workshop 2011 - SBLs

• Mandatory vs voluntary SBLs: the relationship with stringency and environmental integrity

• “Normative” service level benchmarks: suppressed demand and providing for basic human needs

Voluntary vs mandatory SBLs: stringency and environmental integrity

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Source: Poyry

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Voluntary vs mandatory SBLs: stringency and environmental integrity

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Source: Poyry

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Project approval under traditional approach to additionality

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Source: Poyry

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Project approval under SBL set below industry average

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Source: Poyry

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Voluntary SBLs could inflate credits even if set at industry average – must be mandatory

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Source: Poyry

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Implications of lack of stringency – CER volume, not just approved projects

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A B C D E F0

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Historical emissions

BAU emissions

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Source: Poyry

“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 level9 Spalding-Fecher: Jt Workshop 2011 - SBLs

“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

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Understanding suppressed demand – energy service demand

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Source: Poyry

Understanding suppressed demand – energy consumption

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Historical energy use

with income effect

with income and energy cost effect

Satsified demand

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Source: Poyry

“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

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Possible service standards for household energy services

Energy Service

Degree of Suppressed

DemandCurrent

applianceCurrent energy

sourcePossible service standard

Lighting Highhurricane lamp, candle kerosene lumens x rooms

TV High DC TVcar battery, generator? hours/week

Radio High DC Radiodry call, car battery hours/week

Cooking Low?none, or basic stove

biomass, kerosene ??

Water heating Med similar to cookingbiomass, kerosene Litres of hot water

Space heating Med similar to cooking biomass Ambient temperature indoor

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Thank you!

15 Spalding-Fecher: Jt Workshop 2011 - SBLs