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Opportunities and Challenges in Promoting Energy Efficiency Under the
Clean Development Mechanism
by
Lando Velasco
Experts Group Meeting on Industrial Energy Efficiency, Cogeneration and Climate Change
Vienna, Austria, 2-3 December 1999
COP1 decision recognized energy efficiency as immediate and short-term measure to limit GHG emissions.
‘No regrets’ measure for rapidly growing developing countries.
CDM provides opportunity for private sector participation in GHG mitigation
There is a need to set in place enabling institutions and policies for CDM to take place.
BackgroundBackground
Energy Development ObjectiveEnergy Development Objective
Energy policies will be geared to support the market-friendly and pro-poor policy of the government and the restructuring of the energy sector. The objective for the energy and sector is to ensure the availability of competitive, affordable, and reasonably priced energy supply through socially and environmentally compatible energy infrastructure.-Medium-Term Philippine Development Plan, 1999-2004-
Energy Mix, 1999-2004Energy Mix, 1999-2004(in million barrels of fuel oil equivalent, MMBFOE)(in million barrels of fuel oil equivalent, MMBFOE)
0
20
40
60
80
100
120
140
160
1999 2000 2001 2002 2003 2004
Oil
Coal
Gas
Hydro
Geo
NRE
Cumulative Installed Generation Capacity Cumulative Installed Generation Capacity 1999-2004 (in Megawatts, MW)1999-2004 (in Megawatts, MW)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Others
NRE
Nat. Gas
Geo
Hydro
coal
oil
Source: Philippine Energy Plan (1999-2004), DOE
1994 Philippine GHG Inventory1994 Philippine GHG InventorySECTOR CO2 Emissions
(Gg)Energy 53,482Industry 10,603Agriculture 33,482Waste 7,198
TOTAL 104,765
Waste7%
Agriculture32% Industry
10%
Energy51%
Source: Manila Observatory,1999
GHG Emissions in the Energy SectorGHG Emissions in the Energy Sector
Sub Sector CO2 Emissions(Gg)
Power Generation 14,199Residential 5,260Industries 13,072Agri/Fishing/Forestry 789Transport 15,720Commercial 455Others 3,752Fugitive Emissions 234
TOTAL 53,482
Manila Observatory, 1999
Fugitive Emissions
0%
Others7%
Power Generation
27%
Commercial1%
Transport30%
Agri/Fishing/Forestry
1%
Residential10%Industries
24%
Manila Observatory,1999
Climate Mitigation OptionsClimate Mitigation Options
Implementation TimeFrame
GHG AbatementInitiative
Potential GHGEmissions
Reduction (milliontons of CO2equivalent)
Cost ofReduction
(US$ per ton ofCO2)
Energy Supply Side:Short to Medium Term System Loss Reduction 69.7 (-) 17.20Short to Medium Term Heat Rate Improvement 157.7 (-) 5.10Short to Long Term New and Renewable
Energy Wind 7.3 (-) 1.64 Solar 3.7 1.36 Biomass 3.7 0.27
Medium to Long Term Natural Gas 55 2.40
Energy Demand SideShort term Use of CFL 33 (-) 26.30Short to Medium Term Hi-eff Air Con System 44 (-) 6.10Short to Medium Term Hi-eff Refrigerators 11 (-) 5.40Short To Medium Term Hi- Industrial Motors 7.3 (-) 13.70Short to Medium Term Hi-eff Boilers 11 (-) 26.00
TransportMedium to Long Term Hi-eff Transport System 40.3 (-) 2.90
Portal, UNDP-CDM Study, 1999
OpportunitiesOpportunities Legislative and policy measures are in place
- Demand-Side Management Regulatory Framework
- Passage of Clean Air Act
- Proposed Electric Power Industry Restructuring
- Proposed Energy Conservation Act
Climate change provides additional (global) benefits to national development priorities.
Promote energy efficiency in rapidly growing cities and rural areas
- Integrate energy efficiency in local development planning process
- Establish energy efficiency standards for mass housing projects
Accelerate transfer of climate-benign technologies and in-flux of investments
- projected investment requirement for energy efficiency (1999-2004)
is US$150 million.
ChallengesChallenges Excess capacity (abt. 2000 MW) until 2004
Institutional arrangements
Enabling policies
- e.g. green pricing, subsidy removal, incentives, etc.
Bureaucratic process in approving CDM applications
- Flexibility to achieve balance in project development timeframe and consensus-building within the government.
Monitoring, evaluation, reporting and verification
- transparency
- capacity-building
- rules and procedures