Points of departure for CDM SD and CDM

Points of departure for CDM • SD and CDM: CDM is the first trading mechanism insisting on SD article 12 of KP “…assist Parties not included in Annex 1 in achieving SD and contributing to the ultimate objective of the Convention…. ” • SD Race to the bottom? : Parties have by-and-large raced to the bottom in applying SD requirements through DNA (stringent SD should not be a barrier to FDI)? • Low hanging fruit: large quantities of low-cost emissions reductions from industrial chemicals and methane reduction crowding out high SD CO 2 projects.

Doing GEF in the South • SSN used maximum SD benefits as the starting point to maximise benefits to the South. • The GEF mitigation projects in Africa by-and-large are renewable energy with some efficiency projects • The projects with which we have experience all utilise solar energy for electricity or heat • Providing small quantities of electricity changes QOL enormously • Small amounts of electricity can be used to provide draft control in tobacco barns reducing impact on indigenous forest

Experience limited to the front end of the cycle

First project participant

Bellville South Reduced landfill gas to industry replacing LSO/HFO • 124000 CO 2 e tonnes/year

Lessons from a landfill • Public sector is slow to respond to opportunities, enable new institutions and procure services • Public sector is not the right institution to trade credits • Public waste management dept. is not used to receiving income • People who live near landfills hate them and distrust any attempt to prolong their life • Project architecture can increase SD benefits through designing local benefits into projects

Institutional arrangements to max SD

Socio-economic cobenefits of Bellville • Landfills are low hanging fruit with large emissions reductions but few SD benefits • Few jobs created • Reduction in particulate emissions if replacing other fuels • Odour reduction and leachate management • With income from CDM plus gas sales city can comply with licensing requirements • Could mean modernisation of landfills: capping and gas management • Using private funds saves on public funding of infrastructure that would otherwise tend to crowd out social spending

• Kuyasa low cost housing upgrades Insulated ceilings, solar water heaters and CFLs reduce electricity for services

2. 8 tonnes CO 2/house/year • 2. 8 tonnes CO 2 e/house/year • Total 6558 tonnes CO 2 e/year

A community learns Lwandle installed 300+ SWHs in hostels to homes project upgrade in 2001

Facilitators learned • Projects with many beneficiaries are process heavy but this capacity has security and ownership cobenefits • CDM can be used to leverage funds for new energy services, new classes of energy service and poverty reduction (while it is a novelty) (high hanging fruit) • CDM can avoid future emissions (current suppressed demand for energy services)

Accounting for Suppressed Demand An example of space heating in low income housing Outdoor ambient winter’s day temperature profile Thermal power required to reach 21 o. C Thermal energy required without insulated ceilings Suppressed demand for thermal energy Thermal energy required in houses with insulated ceiling Current level of space heating Morning Evening

co-benefits of Kuyasa low cost housing upgrade • Poverty reduction: New services and energy savings • Employment creation: demand management increases employment prospects (500 plus person years for 2309 upstream and installation) - more for maintenance • Prices and risk: use of renewable energy stabilises future fuel price and availability uncertainties • Spill over: large-scale procurement can drive economies-of-scale in price of technologies

co-benefits of Kuyasa low cost housing upgrade • Building on good practice: The poor are efficient managers of energy services within the constraints of the fuel and appliances they have access to. The projects builds on this • Replicability: 1 million new low-cost houses since 1994 in SA – most built without insulated ceilings or water heaters

Mondi Richards Bay biomass project Biomass replaces coal and methane avoided 122000 tonnes CO 2 e /year

Socio-economic cobenefits of Mondi projects • Prices and risk: use of renewable energy stabilises future fuel price and availability uncertainties • Cleaner practices: CDM is leveraging cleaner practices • Branding: Mondi leads in SA and sees possibility to re-brand itself as linked to cleaner production practices • Job creation: SMME entrepreneurs jobs created in sourcing and delivery of biomass to plant • Landfill longevity: Landfill space freed up extending its life • Replication: Champion created within Mondi

Doing CDM in the South • • CDM is not easy – it requires specialists… It results in no net emissions reductions It can result in a short term net increase of emissions CDM has very little to do with SD – sadly… unless… Attracting FDI appears to be higher priority that SD CDM can leverage technology leapfrogging CDM can address poverty: by improving affordability of energy services and creating employment on the demand side • The uncertain lifespan already slowing interest, but is a good stick for speeding project development • Possibilities exist for combined mitigation-adaptation projects in future

Conclusions of experiences • CDM and GEF GHG mitigation gives value to GHG mitigation • TREC monetizes value of renewables • Until SD given value in the market, benefits will remain incidental rather than sought after • SD benefits could be granted monetized value through Gold Standard if a premium is paid • CO 2 projects may increase SD benefits in general – perhaps argument for a premium for CO 2 or decreased GWP of other GHGs

Conclusions of experiences (cont. ) • SD remains merely a gate that may be shut if undesirable projects are promoted under CDM • So can socio-economic benefits really be driven in the CDM? Yes, but there is a need for a mechanism that enables a sustainable development dividend…