Two new ideas on Standardised Baselines
Randall Spalding-Fecher
CDM EB Joint Workshop: “current
developments in standardised baselines”
13 March 2011
Pöyry Management Consulting
1
Spalding-Fecher: Jt Workshop 2011 - SBLs
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
2
Spalding-Fecher: Jt Workshop 2011 - SBLs
2
Voluntary vs mandatory SBLs: stringency and environmental
integrity
8
Historical
emissions
BAU emissions
7
Project
emissions
tCO2/unit output
6
5
4
3
2
1
0
A
B
C
D
E
F
Source: Poyry
3
Spalding-Fecher: Jt Workshop 2011 - SBLs
Voluntary vs mandatory SBLs: stringency and environmental
integrity
8
Historical
emissions
BAU emissions
7
Project
emissions
tCO2/unit output
6
5
4
3
2
1
0
A
B
C
D
E
F
Source: Poyry
4
Spalding-Fecher: Jt Workshop 2011 - SBLs
Project approval under traditional approach to additionality
8
Historical
emissions
BAU emissions
7
Project
emissions
tCO2/unit output
6
5
4
3
2
1
0
A
5
B
Spalding-Fecher: Jt Workshop 2011 - SBLs
C
D
E
F



Source: Poyry
Project approval under SBL set below industry average
8
Historical
emissions
BAU emissions
7
Project
emissions
tCO2/unit output
6
5
4
SBE(1)
3
SAT(1)
2
1
0
6
A
B
C
D
E
F






Spalding-Fecher: Jt Workshop 2011 - SBLs
Source: Poyry
Voluntary SBLs could inflate credits even if set at industry
average – must be mandatory
8
Historical
emissions
BAU emissions
7
Project
emissions
tCO2/unit output
6
5
4
SBE(1)
3
SAT(1)
2
1
0
7
A
B
C
D
E
F






Spalding-Fecher: Jt Workshop 2011 - SBLs
Source: Poyry
Implications of lack of stringency – CER volume, not just
approved projects
8
Historical
emissions
BAU emissions
7
tCO2/unit output
6
SBE(2)
Project
emissions
5
SAT(2)
4
SBE(1)
3
SAT(1)
2
1
0
8
A
B
C
D
E
F






Spalding-Fecher: Jt Workshop 2011 - SBLs
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
•
•
•
•
•
9
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
“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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Spalding-Fecher: Jt Workshop 2011 - SBLs
Understanding suppressed demand – energy service demand
2.4
relative energy service levels
2.2
2
Historical energy service
1.8
with income effect
1.6
with income and energy cost effects
1.4
Satisfied demand
Project service level
1.2
1
0.8
1
11
2
3
Spalding-Fecher: Jt Workshop 2011 - SBLs
4
5
6
Time
7
8
9
10
Source: Poyry
Understanding suppressed demand – energy consumption
2.4
relative energy consumption
2.2
2
Historical energy use
1.8
with income effect
1.6
with income and energy
cost effect
Satsified demand
1.4
Project energy use
1.2
1
0.8
1
2
3
4
5
6
7
8
9
10
Time
12
Spalding-Fecher: Jt Workshop 2011 - SBLs
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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Spalding-Fecher: Jt Workshop 2011 - SBLs
Possible service standards for household energy services
Energy Service
Lighting
TV
Current energy
source
Possible service
standard
hurricane lamp,
candle
kerosene
lumens x rooms
DC TV
car battery,
generator?
hours/week
High
DC Radio
dry call, car
battery
hours/week
Low?
none, or basic
stove
biomass,
kerosene
??
similar to cooking
biomass,
kerosene
Litres of hot water
biomass
Ambient temperature
indoor
High
High
Radio
Cooking
Water heating
Space heating
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Degree of
Suppressed
Demand
Med
Med
Spalding-Fecher: Jt Workshop 2011 - SBLs
Current
appliance
similar to cooking
Thank you!
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Spalding-Fecher: Jt Workshop 2011 - SBLs