A.K.Perumal, Team Lead,Programme Officer, Standard Setting Unit (SSU) of Sustainable Development Mechanism (SDM) programme UNFCCC secretariat NAMA in Building sector – MRV challenges Workshop on Urban Methodologies for the Built Environment 27/03/2014

2 Outline 1.Key aspects of NAMA and types of mitigation options 2.Planning,Design,Implementation cycle of NAMA and where it fits?? 3.NAMA types and MRV requirements and types of MRV 4.Reporting requirements in National communications and BUR 5.Domestic MRV as per WARSAW 6.Scope of evolving MRV requirements 7.Challenges of MRV – Macro level / Technical level 8.Key considerations of NAMA – MRV 9.Design element/variables should be considered in the process of baseline setting: 10.Baseline Approaches for determining baselines 11.Disaggregation 12.What could potentially be a better MRV for building sector 13.SMART principles 14.Embedding CDM MRV elements to NAMA / Leverage CDM MRV to FIT NAMA 15.Way Forward / Expected outcome

Key aspects of NAMA and Types of NAMA Mitigation Options A NAMA is a voluntary intervention by a developing country government a)Which is in line with national and/or local development priorities b)Which receives support from domestic and/or international sources c)Which has effect on reducing GHG emissions either directly or indirectly d)Which is measurable, reportable and verifiable (“MRV-able”) to ensure transparency of the NAMA outcomes 3

Planning, design and implementation cycle of NAMAs: where does MRV fit? 4

Planning, design and implementation cycle of NAMAs: MRV fits here? 5

NAMA Types and MRV requirements 6

Broad types of MRV MRV of Emissions - Estimation of emissions at national, regional, sectoral levels. MRV of NAMAS – Estimation of the impacts of mitigation policies and actions. MRV of Support - MRV of financial flows/technology transfer/capacity building and their impacts 7

Reporting requirements in National communications and BUR 8

Domestic MRV system as per WARSAW 9

Scope of Evolving MRV Source : GHG Mitigation Actions (MRV Issues and options); OECD

Challenges of MRV – Macro level Type of actions /commitments. 1.National emission targets (binding or non-binding) 2.Other forms of national commitments or actions (e.g. GHG-intensity or energy-intensity targets) 3.Sectoral emissions targets (binding or non-binding) 4.CDM and/or other crediting mechanisms 5.Domestic policies and measures (PAMs) or other non-crediting approaches. What,how often, who measure, report,how often and who Verify (Estimating emission reductions ; Emission levels and factors (inter vs local), transparency Technology deployment; Energy savings etc ; What scale (national, sector, policy, project); Up-front consideration of the MRV provisions for different types Capacity to Implement and capacity building Linking national and local MRV and its allied cost 11

Challenges of MRV – Technical level Geographical coverage, Accounting methods Defining what data to collect (Data availability) Processes for actually collecting the relevant data and availablity. ◦ Who needs to report (i.e. national governments, international institutions)? ◦ Where do they report (i.e. through which channels or fora)? ◦ How often do they report? ◦ What data are reported? ◦ Is information publicly available ◦ Level of accuracy required Quality assurance and quality control Reference level eg: historical emission levels and national circumstances; baselines projecting business-as-usual emissions versus crediting baselines. Non-carbon performance-based MRV 12

MRV challenges – NAMA context 13 Source:

Key considerations of NAMA – MRV NAMA proposal can be defined with a broad (national or sectoral) or narrow(specific activities) scope. The scope depends on the capacity and ambition of a country in the targeted area of activities. The covered activities: processes, space, product, technology, inclusion of all GHG emissions etc. Boundary A broad definition could be, for example, an emission baseline for an entire country or the whole of the sector linking to national plan and strategy and its mitigation potential. (temporal (short/medium/long-term), geographical, gases coverage) A narrowly –but clearly –defined NAMA can be more towards activity –based actions,such as implementation of set of technology interventions (e.g. Housing NAMA for energy efficient housing that includes solar hot water system, CFLs, efficient appliance, etc.) should be a part of a broader strategy (e.g. Urban NAMA) which provides a framework for the NAMA and ensures that actions are in line with national development strategies. 14

Design element/variables should be considered in the process of baseline setting: Establishment of correct indicators including co-benifits: – Process indicator (capacity and institution building, awareness, labelling schemes ),performance indicator (fiscal incentives), Baseline indicator (building codes, substitution) ; Absolute GHG or CO2 emissions; Relative GHG Emissions (e.g. emissions intensity); indirect indicators (e.g. MW of renewable energy capacity installed; Co-benefits: indicators for sustainable development (e.g. resource efficiency, social inclusion, economic viability) Reference period: a single time period (e.g. base year) or multiple time period, an average of several periods or time series of data Calculation of uncertainty levels (through regular uncertainty assessments of parameters like activity data, emission factors, GWP, methodologies, or of models, and sensitivity analyses,expertise,legislation), and consideration of leakages (esp. on a project level) Frequency of revision and updating (Purpose is key). The use of comprehensive data, which is consistent over time will improve the accuracy of the baseline. However, considerations of costs, simplicity and transparency need to be balanced with accuracy. 15

ESTABLISHMENT OF BASELINE (BAU) Emission until A baseline scenario may be intended to be a “business as usual” projection, or can represent other scenarios referring to emission reduction targets and be based on different assumptions or conditions. It is important, however, that baselines take into account all UNFCCC gases (CO2, CH4, N2O, SF6, PFCs, HFCs, NF3) and use the GWP established by the IPCC. Depending on its purpose and the scope of information used for its development, a baseline can be defined on a project, sectoral or national level. There are no international requirements nor internationally recognized guidelines for the construction of a baseline and methodology to be chosen based on the desired level of detail, availability of data and technical expertise. 16

Approaches for determining baselines - ESTABLISHMENT OF BASELINE (BAU) Emission until Status quo Simply drawing a flat line from existing historical emissions Extrapolating current emission trends (what is level of extrapolation/supressed demand),impacts of existing policies, effect of planned or identified policy measures, a key issue when constructing baseline scenarios is whether or not to include the effects of pre-existing or planned emissions abatement policy in the baseline, their economic lifetime, macroeconomic and socio-demographic indicators, policy implications Control group method – benchmark of use patterns and energy performance of technologies - is very country specific Dynamic baselines Futuristic emission assumed continuation of historical emissions (project); continued rate of growth of emissions / emissions intensity (sector); modeling based on policies included in the baseline 17

Correct level of disaggregation, casual relations ship, interactiveness in building ??s The buildings sector can be decomposed into two large sub-sectors: ◦ Residential (single-family and multi-family buildings) and ◦ Commercial / Institutional buildings (covering Commercial and institutional accommodation; Entertainment and recreation; Office ; Food retails; Non-food retails ;Food service; Non-food service; Shopping malls; Warehouse / wholesale; Administration; Education; Health care; Public assembly). ◦ Buildings devoted to these different types of activities have very different energy intensity levels (defined as energy consumption per unit of floor space). ◦ Socio-economic factors, building types, climate zones,availability of resources,fuel types etc. ◦ Interaction between different measures and policies (entanglement of policies),technological and behavioural changes. Double counting and environmental integrity: Relation to carbon market(e.g. overlapping and double counting with CDM and other new market mechanisms Scope and boundary overlap : Setting the boundary ensures that no activity is doubly counted in evaluations. 18

What could potentially be a better MRV for building sector The first involves the need for dynamic baselines to accommodate fast moving changes in technologies that could potentially save energy and should be factored into MRV. The failure to build these changes into baselines will lead to significant overestimates in emissions. A second issue is rebound effects. Rebounds occur when energy efficient improvements in technologies result in greater usage rate, effectively offsetting emission reductions. This is likely to accompany shifts to more consumer- oriented lifestyles. A third issue is co-benefits. Policymakers may be more interested in the local development benefits (cleaner air and improved public health) attributable to energy efficiency reforms than GHG reduction. A final cross cutting issue involves lifecycle emissions. It will be increasingly important for infrastructure investments to trace emissions from extraction of raw materials to the end of the lifetime of the building. 19

What could potentially be a better MRV for building sector Factoring each of these considerations—dynamic baselines, rebound effects, co-benefits, and lifecycle emissions—adds greater complexity to the MRV. Cross-sectional comparison: a comparison of one group or region affected by a policy or action with an equivalent group or region that is not affected by that policy or action. Time-series comparison: a comparison of one group or region affected by a policy or action over time (e.g., before and after implementation). Robust approaches in three dimensions of MRV - 1) systems boundaries; 2) baseline setting; and 3) data requirements. 20

SMART -Appropriateness in showing whether an outcome has been achieved Specific: indicators should be defined precisely, so there is no room for interpretation, whether the target has been achieved or not; Measurable: it is possible to assess the value of the indicator during or after the implementation of the NAMA; Achievable: the target associated to the indicator can be realistically reached by the NAMA activities within the set timeframe; Relevant: the indicator is helpful in showing whether the desired outcome has been achieved; Timely: the indicator specifies the timeframe for reaching the target set. 21

Embedding CDM MRV elements to NAMA Governance Structure Accounting Structure (centralized system,registry & ITL, DOE etc.) Methodological standards – Comparable quality and fungible Ensure Environmental Integrity MRV provision (Program level assessment (poA) / bottom-up and top down approaches) Consistency in MRV requirements in most of the programs except verification levels. Transparency and Independence. QA/QC procedures empowerment of DNA 22

Leverage CDM MRV to FIT NAMA Flexibility in monitoring methods depending on Size and other socio,techno,economic parameters Strengthening assessment of non-GHG estimation and MRV Reduce complexity in MRV procedure. Further work on the sector wide approaches. Development of more ex-ante (up-stream) standardized approach and reduced ex-post MRV Reduce transaction cost (provide further top-down work in assessment of uncertainty,materiality, reduce monitoring procedures). 23

Way forward Illustrate which methods (bottom up or top down) are suitable for building sector. Develop pragmatic, non-intrusive, voluntary guidelines for establishment of baselines and data in building sector – facilitate international process for comparison of baseline scenarios. Develop a decision matrix on what mitigation actions to be included in baseline and what not (E+/E-) under what circumstances and scenarios. Selecting key drivers/indicators and steps to perform sensitivity analysis. Conduct situational analysis (static vs dynamic) in comparison to the purpose (international vs domestic targets) 24

Expected outcome 25

UNFCCC Secretariat UNFCCC secretariat, SDM programme THANK YOU! Team Lead,Programme Officer, Standard Setting Unit of SDM UNFCCC