Two new ideas on Standardised Baselines 1Spalding-Fecher: Jt Workshop SBLs Randall Spalding-Fecher CDM EB Joint Workshop: “current developments in standardised baselines” 13 March 2011 Pöyry Management Consulting

2 Two new ideas 2Spalding-Fecher: Jt Workshop 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 3Spalding-Fecher: Jt Workshop SBLs Source: Poyry

Voluntary vs mandatory SBLs: stringency and environmental integrity 4Spalding-Fecher: Jt Workshop SBLs Source: Poyry

Project approval under traditional approach to additionality 5Spalding-Fecher: Jt Workshop SBLs Source: Poyry

Project approval under SBL set below industry average 6Spalding-Fecher: Jt Workshop SBLs Source: Poyry 

Voluntary SBLs could inflate credits even if set at industry average – must be mandatory 7Spalding-Fecher: Jt Workshop SBLs Source: Poyry 

Implications of lack of stringency – CER volume, not just approved projects 8Spalding-Fecher: Jt Workshop 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 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 9Spalding-Fecher: Jt Workshop 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 10Spalding-Fecher: Jt Workshop SBLs

Understanding suppressed demand – energy service demand 11Spalding-Fecher: Jt Workshop SBLs Source: Poyry

Understanding suppressed demand – energy consumption 12Spalding-Fecher: Jt Workshop 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 13Spalding-Fecher: Jt Workshop SBLs

Possible service standards for household energy services Energy Service Degree of Suppressed Demand Current appliance Current energy source Possible service standard LightingHigh hurricane lamp, candlekerosenelumens x rooms TVHighDC TV car battery, generator?hours/week RadioHighDC Radio dry call, car batteryhours/week CookingLow? none, or basic stove biomass, kerosene?? Water heatingMedsimilar to cooking biomass, keroseneLitres of hot water Space heatingMedsimilar to cookingbiomass Ambient temperature indoor 14Spalding-Fecher: Jt Workshop SBLs

Thank you! 15Spalding-Fecher: Jt Workshop SBLs