The Global Community for Sustainable Energy Professionals
The flexible mechanism known as Clean Development Mechanism (CDM) has a built-in mechanism for failure. It systematically favours energy-supply over efficiency improvements. Small luck that it is renewable supply. Remember the recent words from the CEO of Shell: "What is the point of producing ever more energy if we continue to waste most of it"?
In a study presented to UNIDO, it is shown that out of 563 registered CDM projects, only 3% (19) are dealing with end-use energy efficiency. The rest are variations on the theme of renewable and improved supply. To further put emphasis on how limited the use of CDM-financing is to promote energy efficiency globally, the majority of these 19 projects are in India. Good, but after all, India is one of the developing economies that are better equipped than many others to deal with energy economics. So, instead of making better use of the limited resources we have in the world, we are eagerly supplying more energy to waste!
Well, there might be hope. The problem has been identified and people in the World Bank staff are arguing for making use of CDM-resources to finance lighting projects. There are certainly problems with verification and many other things that have to be considered to prevent double-counting or delivery of "hot air", but there also simply has to be a solution, also!
We need the CDM as a mechanism for developing countries to "leap-frog" from bad technology to good, but we also need to make this where it makes the best use of resources overall.
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Benedikt: Your statement about renewables producing more emission credits per dollar invested surprises me. I would have expected that energy efficiency - an incremental investment, would be more efficient per dollar invested than renewables where you need to build a new system from scratch and have it connect it to the grid.
A few years ago, we've done the exercise for 4 technologies, investing 'on paper' 1 M$ in each. Obviously there are many assumptions about wind and solar availability, or duty cycle, but typically energy efficiency projects produce about 10 times more credits per $ invested.
It is important though to calculate the incremental investment, i.e. the cost of upgrading equipment when one has taken the decision to invest. If one approaches energy efficiency from the viewpoint of retiring existing assets, stopping operations, and bringing in new equipment, probably the situation will be the other way round. But this is not how the efficiency market operates for the moment.
The challenge of energy efficiency projects in the CDM context is different - while in renewables 1M$ could go into a single project, and produce sizeable emission reductions, the emission reductions from efficiency projects are spread over a great many projects. Monitoring even 5% of 7000 motors would make a project uneconomical.
In my view, the small size of individual projects, and the prove of additionality are the main barriers for efficiency projects in CDM.
In my point of view, to have reduction in demand and energy consumption, the user should be coached for better understanding of energy use and energy bill reduction.
There are two kind of changes that energy experts introduce: operational change and is technological change:
For energy experts it is essential to start both these changes simultaneously in a project.
The change is good and constructive, and should be consistant.
Thanks,