1. Emission Reduction Opportunities in the Energy Sector The World Bank March 2007

2. CDM and the Energy Sector  75% of global greenhouse gas emissions come from the energy sector  47.4% of the 1,500 projects in the UNFCCC portfolio are in the energy sector (registered, registration requested or at validation phases)  CDM opportunities - Improvements in the efficiency of energy production, transport and consumption

3. Supply Side – Facilitating Efficiency in Energy Production and Transport  Power Sector Opportunities Rehabilitate, modernize and increase efficiency in power generation Optimize power generation Make use of cleaner fuels such as natural gas Use waste heat or burn waste gases to generate power for gird or in-house use Convert from single cycle to combined cycle power generation Increase share of renewable technologies Improve efficiency of power transmission and distribution

4. Multiple Benefits - Recycling Waste at a Combined Heat and Power Plant Source: A guide to the Climate Change Convention and the Kyoto Protocol,UNFCCC 2005 revised edition

5. Example – Walbrzych Coke Oven Gas, Poland  Excess coke-oven gas from coke plant will be used for power generation up to 50 million m3 per year of gas will be sold to enable production of 54 GWh of electricity Merkury Energia – special purpose company – has contract with coke plant Allowing station demands and transformation losses – sales of 30 GWh per year to local electric distribution company Overall costs – US$ 6.9 million  Benefits: Around 260,000 tonnes CO2e/ year from 2007-12 Diversify energy sources in Poland Revenues to coke plant Raise profitability of coke production

6. Example – Hydropower Rehabilitation, Ukraine  Rehabilitation of 46 hydro units at 9 sites on the Dnipro River Some units commissioned > 70 years ago Increasingly lower efficiency replace equipment including gates, turbines, generators and control systems  Benefits Increase electricity generation capacity Improve efficiency of rehabilitated plants Displace thermal generation during peak periods  ERs estimated at ~ 1 million tonnes CO2e from 2006-12

7. Supply Side – Facilitating Efficiency in Energy Production and Transport  Oil production and refining Introduce more efficient technologies Minimize emissions – venting or flaring of associated petroleum gas Reduce fugitive emissions at tank farms  Gas production, storage, transportation and distribution Introduce more efficient technologies Minimize emissions – losses from corroded pipelines, leaks at compressor, booster and distribution stations  Municipal Sector Rehabilitate and improve efficiency of District Heating Systems  Mining Reduce methane emissions – coal bed methane and coal mine methane capture Introduce more efficient technologies and promote energy conservation

8. Example – Danilovsk Associated Gas Production, Russia  Oil production yields Associated Petroleum Gas (APG) Vented as methane (21 time GWP of CO2) Flared as CO2 and methane if combustion is not complete  Danilovsk use of APG that would otherwise be flared to produce electricity used for re-injection pumping in oil fields ERs around 163,000 tCO2e per year Sale 70% expected ERs (2008-12 vintage) @ $6.6 tCO2e Returns > 12% total investment cost Post 2012 sales not clear but validated project could qualify for another 15 years of sales – return would then be around 50% of investment cost

9. Example – Kursk Gas Distribution System, Russia  Reduce gas losses in distribution: 7,000 km of Pipelines 229 Regulator Stations 1,431 Pressure Reduction Stations 6,200 Valves, 18,500 Flanges  Annual throughput 1.9 billion cubic meters  Benefits Annual ERs ~ 321,500 tonnes CO2e/ year Annual sales value @$6.00/MT = US$ 1.9 million May cover close to total project costs for inspection, monitoring, leak repairs and replacements

10. B1 B2 BNBN Challenges - Opportunities at Multiple Facilities, May Require Bundling Gas Coal Fuel Oil Biomass Fuel Supply Heat Production Primary Distribution Secondary Distribution BuildingsEnd User Space Waste Heat Boiler House Steam Hot Water Space Process Tap Water Residential / Mixed Commercial Large Loads (> 2,500 GJ) Flats (# occ, m 2 ) SF Homes (# occ, m 2 ) Commercial (# occ, m 2 ) Large (# occ, m 2 ) Ex-Plant Delivery LossesEnd User ? Measurement Standards AB C District Heating: (i) Production (Boiler Efficiencies/Fuel Choices, CHPs); (ii) Delivery System Loss Reduction; (iii) End User (Metering, Control, Insulation, Windows)

11. Example - Czech Umbrella Project  Umbrella Concept Czech Energy Agency is the intermediary CEA to aggregate similar projects Bundled Program For 16 Small Hydro Projects – Evaluated individually using common methodology  Role of CEA Active support programs and Energy Audit Programs – Future State funding on year to year basis Trained to screen and monitor projects and provide limited support  Developed validated standard baselines – Czech Electric Sector District Heating Projects Campus Type EE Projects

12. Demand Side – Facilitating Energy Conservation  Industry and Services – efficiency in production and consumption  Households – more efficient appliances, lighting, building insulation, heating and cooling  Transport – more efficient engine and vehicle types, fuel switching, improved fleet management and driver training, road maintenance and repair  May require a programmatic approach

13. Example - Efficient Lighting, Ghana  Electricity Company of Ghana (ECG) objective: to address power shortages and affordability High-quality Compact Fluorescent Lamps (CFL) – can withstand voltage fluctuations 190-260 V Customer purchases up to 4 CFLs per household at the price of a standard incandescent lamp Incandescent lamps returned to ECG are destroyed Approximately 4 millions CFLs introduced per year on a sustainable basis.  Estimated energy savings ~150 MW per year (@ 27% transmission and distribution losses, and 0.5 power grid factor)  Proposed as a programmatic CDM project ~122,000 tCO2e annually

14. Summary  Many opportunities to reduce GHG emissions  Carbon finance can help but not eliminate financing barriers particularly for EE and RE projects  Bundling can help to manage transaction costs for smaller projects  Programmatic approach can help with DSM projects

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