Energy efficiency in buildings - Renewables Made in Germany

Energy efficiency in buildings - Renewables Made in Germany

Energy Efficiency and JI/CDM/GS-CDM

or VER ( e.g. GS-VER or VCS ) with

Focus on Buildings


Montpellier, France

German Day, 10 December 2009

Kurt Seidel

TÜV Rheinland Immissionsschutz und Energiesysteme GmbH

List of Contents

• Global Background for Need of Action

• Untapped Potential of Energy Efficiency for Climate Change


• Importance of Building Sector for Climate Change Mitigation

• The ESCO Concept

• Small Scale CDM Categories with Focus on Energy Efficiency

• Programme of Activities

• Challenges and Opportunities

Kyoto Protocol and Flexible Instruments






scale CDM

< 15 MWe

( 45 MWth )

< 60 GWh/a

(180 GWh/a therm.)

* see AMS-II.G.

< 60 kt CO 2 /a



small scale




small/large scale



of Activities













RE and EE projects in % of total projects

Percentage share of the total number of projects of 4 largest CDM categories in numbers







CH4 reduction & Cement & Coal


Energy Efficiency

Fuel switch






Source: UNEP RISOE, 2009

RE and EE projects in % of issued CERs

Source: UNEP RISOE, 2009

JI’s sectoral distribution

194 JI projects in total

Secoral scope 3: Energy demand

Number of projects in total: 11 projects;

among them in building sector: 4 projects ( District Heating )

Secoral scope 2: Energy distribution

Number of projects in total: 5 projects;

among them in building sector: 3 projects ( District Heating )

Source: UNFCCC JISC, 01/10/2009

Reducing emissions requires action

across many sectors

Source: UNFCCC 2007

Energy Efficiency Definition

There is no single definition, But …

Doing the same with less

Energy efficiency measures are designed to

reduce the amount of fuel/energy consumed

without losing any of the value of the product or


Improving energy efficiency is a technological

means to reduce emissions of greenhouse gases

without increasing production costs.

Source: UNFCCC

illion dollars (2000)

Benefits of Demand Side Investments

1 000



- 500



Additional demand-side


Avoided supply-side





-1 000


-1 500

-2 000

Additional investments on the demand side are more than offset by

lower investment on the supply side

Source: IEA

Obstacles to Energy Savings

1. The cost of energy consumption is only 0.5-3 percent of total costs

in a typical industry; which is why they do not command

management attention.

2. These firms do not employ energy specialists.*)

3. *) But: Implementation of EN 16001 “Energy Management

System”; EU-EPBD

4. Lack of finance as energy saving investments compete with other

investment priorities (investments in “core competence” will win

over “ancillary/support service” activities)

5. Reluctance of financing institutions to lend to EE

Source: W. Mostert, INOGATE Seminar: “Energy efficiency, demand-side

management, and renewable energy - The sustainable way”

15-16 April 2008 – Brussels

First Conclusions

Energy efficiency presents a huge under-exploited costeffective

GHG saving opportunity

It merits being the single greatest focus of GHG

abatement strategies in near-term

If mined effectively it allows economic growth with net

reductions in GHG emissions in developed economies

and much slower growth in GHG emissions in rapidly

developing economies

CDM / JI or others mechanisms has to make EE projects

a major focus

Source: IEA

IPCC Conclusions (5/2007)

Buildings have the largest savings potential of any sector

29% of buildings-related global CO2 emissions can be cut

cost-effectively by 2020

Developing countries have the largest cost-effective

potential -- up to 52% of building-level emissions

transition economies and industrialised countries have

cost-effective potentials up to 37% and 25% .

Energy-efficient lighting is the most attractive measure

worldwide both reduction potential and cost-effectiveness.

Potential CO2 Emission Reductions

IPCC Conclusions (5/2007)

mil tCO2

CO2 reductions from building efficiency





The cost of cutting carbon in different ways

The Vattenfall Philosophy

Marginal cost abatement, examples € / t CO 2

Measures below the line have a negative abatement cost,

Meaning they save money and cut emissions



Lighting systems

Insulation improvements


0 5 10 15 20 25 27

Sources: Vattenfall

Cellulosic ethanol


Fuel-efficient vehicles

Fuel-efficient commercial vehicles




Abatement potential, gigatonnes CO 2 / year in 2030



Carbon capture and storage

with enhanced oil recovery and

new coal-fired power stations

E.g. Lighting accounts for 19% of the worlds electricity use

Standard incandescent bulb costs 1 euro but uses 15 euros of electricity per year

Carbon capture and storage

in retrofitted coal-fired

power stations

CF bulbs cost 5 euros but uses only 3 euros per year; payback less than 1 year

Results are greater than implementation costs, resulting in negative cost of conserved CO 2

Source:Shankar Sastry, Dean of Engineering, University of California, Berkeley; Vattenfall’s Climate Map 2030; Mckinsey Report 2007

Switch from coal to gas

for power generation







Sectors with CO2 Reduction Potential

( GtCO 2 e, 2030 )


US +






incl. Russia)




Rest of




1.3 0.8 0.3 0.7 1.7 1.0 5.9


0.8 0.6 0.7 0.8 1.5 1.5 6.0


1.2 0.5 0.1 0.4 0.3 0.4 2.8


0.8 0.5 0.4 0.5 0.7 0.8 3.7


0.2 0 0 0 0 6.5 6.7


0.2 0.1 0.1 0.1 0.3 0.8 1.5


4.4 2.5 1.6 2.5 4.6 11.1 26.7

* Australia, New Zealand, Japan, Singapore, South Korea, Taiwan, UAE, Saudi Arabia, Qatar, Oman, Kuwait, Israel, Bahrain, Mexico

** Africa, South and Central America excl. Mexico, Asia excl. China and countries included in “Other industrialized” (see previous note)

Source: Vattenfall’s Climate Map 2030

Other benefits of building energy efficiency

Energy imports reduced

Economic benefits (costs can be lowered)

Health benefits (indoor air quality– particularly

important in developing countries)

Increased occupant productivity (11%

increases measured)

Increased comfort and occupant control

Energy Metering - Prerequisite for Success




Small houses Block of flats Other buildings

One meter for

the building

One main meter, the heating

bill is divided based on m2

Hot water sub-metering coming.

LT, LV: also sub-metering and

heat cost allocators in new bldg

One main meter, the heating

bill is divided based on m2

Sub-metering for tenants is used

but not as a common practise

FI: premises rented cold/warm


No metering

No metering

No metering in general.

FI: Oil flow meters and

kWh-meters used in

some large buildings


One meter for

the building

One meter per each flat

including cooking,

hot water and heating

One main meter for

the building, sub-metering

is being used for tenants


One meter for

the building

One meter per each flat

Electricity not common for

heating purposes. Metering

requirements for el. vary

depending on the amount/size

Source: Heikki Väisänen, Ministry of Trade and Industry, Finland

Steps for Technical Optimization in a Hotel

Step Investment Saving

1. Monitoring system for energy supply facilities

2. Own power generation and heat recovery

3. Optimizing of chíller / air conditioning

500 000 US$

1 140 000 US$

200 000 US$/a

460 000 US$/a

4. Optimizing of steam & domestic hot water generation

5. Optimizing of the ventilation system

305 000 US$

115 000 US$

110 000 US$/a

35 000 US$/a

6. Optimizing of the controls system for the fan-coil units

Requires a detailed technical examination and data assessment;

Savings of additional 300 000 US $ annually feasible.

Additional energy saving potential besides of technical optimization

throughout investments:

• Good housekeeping according to occupancy and utilization of rooms

• Good preventive maintenance and condition monitoring


Energy Savings potentials in the range of 30-48% in representative

numbers of buildings were evident ( PPP-Project in 2001/2002 in P.R. China )

Average investments for the realization of projects were in the range of

TEUR 300- TEUR 600 with payback periods of 3-5 years.

On some of the buildings energy savings were possible by mere

adjustments of the controlling mechanisms of the system.

The willingness of building owners to finance investments is relatively low

due to unavailability of reference projects given the new business model

( especially if they are not building users too ).

Energy contracting ( ESCO ) is a viable financing option, given the saving

potentials, the need for replacement and maintenance and the operating life

of equipment.

Essential is upfront financing for reference projects: JI/VER Revenue could

be a solution.

energy costs

actual energy costs

new energy costs

Energy Savings Contracting



main contract phase

refinancing and profit

of contractor

profit of


start of


end of



One-Step-Approach for EPC (simplified)

Part 1: Project preparation

Approx. 2 – 4 months

Choosing of appropriate objects

1. Internet Energy Consulting Benchmarking

2. Initial Energy Consulting

Ascertaining of the Current Energy Situation

1. Evaluation of the Baseline

2. Determination of the Objectives ( e.g. minimum energy savings guarantee )

One-Step-Approach for EPC (simplified)

Part 2: Tendering Process

Approx. 6 – 9 months

Tendering documents

1. Preparing of tender documents

2. Announcement for tendering

Approx. 10 bidders

1. Bid selection

2. Walk-through-assessment

3. Rough analysis

Tendering process



1. Presentation of preselected bidders

2. Contract negotiations


ESCO Contract

2 – 4 bidders


Conclusion of Contract



incl. M&V P.

One-Step-Approach for EPC (simplified)

Part 3: Project execution

Approx. 5 – 12 years


Installation of the Energy Saving Equipments

1. Commissioning of Electrical and Mechanical Contractors

2. Construction Control

3. Approval of Installations

Contract Duration

1. Energy Savings Guarantee, Annual Check of Realized Savings

2. Monitoring

3. Operation and Maintenance







New concept: EPC + JI/VER

Share JI/VER Rev. Client

Share JI/VER Rev. ESCO

JI/VER Revenue


Source: Dr. Sam C M Hui

ASHRAE Hong Kong Chapter &

Department of Mechanical Engineering

The University of Hong Kong,

K. Seidel, TUV Rheinland Hong Kong Ltd. ( CDM )

First 7 Years

Second 7 Years

( Baseline Revue possible )

Typical Efficiency Measures

EE boiler technology

Installation of Combined Heat and Power Production (CHP)

EE improvements of industrial processes

Waste heat recovery

Cold and steam: optimized production, storage, distribution

Pressurised air

Building master-control systems and continuous energy control

through long-distance monitoring

Efficient motors and variable speed drives;

Hydraulic balance of distribution systems (heating, ventilation


Use of speed-controlled circulation pumps and ventilators

Optimized lighting technology

Thermal protection measures of the building surface are normally

not carried out by ESCOs since their payback period is longer than

the contract duration ( Financial additionality could be fulfilled ).

Source: W. Mostert, INOGATE Seminar: “Energy efficiency, demand-side

management, and renewable energy - The sustainable way”

15-16 April 2008 – Brussels

Barriers to ESCOs on Demand Side

Transaction costs (legal cost of contracts + fees for


Fear of loss of control when out-sourcing

Big energy consuming firms can do investments


Small firms have energy consumption too small to

justify costs of transactions for ESCO (minimum

€20.000 yearly energy costs, minimum

investment/customer €50.000)

Source: W. Mostert, INOGATE Seminar: “Energy efficiency, demand-side

management, and renewable energy - The sustainable way”

15-16 April 2008 – Brussels

Types of SSC CDM-project categories

(i) Renewable energy project activities with a maximum output

capacity equivalent of up to 15 MW;

( Cogeneration: 15 MWel / 45 MWth )

(ii) Energy efficiency improvement project activities which reduce

energy consumption, on the supply and/or demand side, by up to

15 GWh per year; or ( 60** GWh / a )/ (180*** GWh/a )

(iii) Other project activities that both reduce anthropogenic

emissions by sources and directly emit less than 25*) kilotonnes of

carbon dioxide equivalent annually. ( 60** kilotonnes CO2e )

*) changed at EB 24 from 15 kilotonnes of carbon dioxide equivalent before

**) firstly recommended at EB 26 Report of 4 th of October 2006 according to a proposal of SC WG

***) see AMS-II.G. ( Project “Efficient Fuel Wood Stoves for Nigeria “)

Project types

Type i:


energy projects

Type ii:

Energy efficiency




•8 projects rejected

•1 project corrections

following review, finally


Type iii:

Other project


Categories for SSC CDM(JI)

EE Projects in Buildings face Problems

Project activity categories

A. Electricity generation by user

B. Mechanical energy for the user

C. Thermal energy for the user

D. Renewable Electricity generation for a grid E. Switch from Non-Renewable biomass for thermal appl.

A. Supply side energy efficiency improvements - transmission and distribution

B. Supply side energy efficiency improvements - generation

C. Demand-side energy efficiency programmes for specific technologies

D. Energy efficiency and fuel switching measures for industrial facilities

E. Energy efficiency and fuel switching measures for buildings ( 5 projects registered )*

F. Energy efficiency and fuel switching measures for agricultural facilities and activities

G. Energy efficiency measures in thermal applications of non-renewable biomass

H. Energy efficiency . measures through centralisation of utility provisions of an industrial facility

I. Efficient utilization of waste energy in industrial facilities

J. Demand-side activities for efficient lighting technologies * AMS-II.J.: 2 projects registered

A. Agriculture AE. Energy efficiency and renewable energy measures in new housing

B. Switching fossil fuels

C. Emission reductions by low-greenhouse gas emitting vehicles

E. Avoidance of methane production from biomass decay through controlled combustion

F. Avoidance of methane production from decay through composting

G. Landfill Methane Recovery H. Methane Recovery in Wastewater Treatment

I. Avoidance of methane production in wastewater treatment

through replacement of anaerobic lagoons by aerobic systems

J. Avoidance of fossil fuel combustion for carbon dioxide production

to be used as raw material for industrial processes

K. Avoidance of methane release from charcoal production

M. Reduction in consumption of electricity by recovering soda from paper manufact. process

N. Avoidance of HFC emissions in PUF manufacturing

O. , P., Q. Waste gas based energy systems, R., S.; T.; U.; V.;W.;X.;Y.;Z Source: UNFCCC

Category AMS-II.E.

Energy efficiency and fuel switching measures for


This category comprises any energy efficiency and fuel switching

measure implemented at a single building/ group of buildings,

commercial, institutional or residential. Primarily aimed at energy

efficiency: better insulation, optimal arrangement of equipments,

efficient appliances. Both for existing equipment or in a new facility.

Baseline: energy use for existing equipment or what would

otherwise have been used/grid loss times emission factor as in


Monitoring: metering the energy use of before and after or

calculation of savings.

New: Category AMS-III.E.

Energy efficiency and renewable energy measures

in new housing”

Measures include:

-Efficiency building design practices ( e.g. passive solar design, thermal

insulation )

-Efficiency technologies ( e.g. efficient appliances, high efficiency heating

and cooling systems )

-Solar energy technologies ( e.g. solar photovoltaic systems)

New methodology applicable only for savings in grid electricity

consumption in project residences as compared to baseline residences

New innovative option for monitoring: Calibrated computer simulation

according to International Performance Measurement and Verification



Project Bundling: The Concept

Project 1

Project 2

Project ..

What Is Bundling?




= ESCO ?

CER Buyer






Project x


Bundle < 15MW

or 60 GWh/a or 60 kt CO2/a

Source: Factor, 3rd UNEP ECA Workshop in London

Programme of Activities (PoA)


• Voluntary coordinated action

by a private or public entity

implementing any policy/measure

or stated goal





•PoA constitues of individual

CDM project activities (CPAs),

with no limits on CPAs under a


Action of PoA leads to GHG emission reductions or increase net GHG removals

by sinks that are additional to any that would occur in the absence of the PoA,

Source: UNFCCC 2007

Design Frame of PoA

‣ Can extend to one or more countries

– Letter of approval from each host country and AI country

– Letter of approval states a PoA and, hence, each CPA under it

contributes to SD of host country

‣ CPA are similar project activities that

– Apply the same package of approved baseline and monitoring


– Involving one type of technology or set of interrelated measures

in the same type of facility/installation/land.

‣ Duration of 28 years

– Renewed every 7 years as per “Procedure for renewal of

crediting period of registered CDM project activity”

Source: UNFCCC 2007

CDM-Reference Projects PoA

No. Title Host Country AM/AMS Comments

01 Installation of Solar Home*

Systems in Bagladesh

02 New Energies Commercial Solar Water Heating Programmes in

South Africa*

Bangladesh AMS-I.A 04.12.2007

South Africa AMS-I.C 04.07.2008

03 Solar Water Heater Programme in Tunisia * Tunisia AMS-I.C. 30.01.09

04 Promotion of Energy-Efficient lightning using Compact

Fluorescent Light bulbs in rural areas in Senegal**

Senegal AMS-II.C. 03.12.08

05 Masca Small Hydro Programme* Honduras AMS-I.D. 16.12.08

06 Methane Capture and Combustion from Animal Waste

Management Systems of the 3S Program Farms of the Sadia


Brazil AMS-III.D 22.02.2008

07 CUIDEMOS Mexico – Smart Use of Energy** Mexico AMS-II.C 16.07.2008

08 Uganda Municipal Waste Compost Programme Uganda AMS-III.F 24.09.2008

*Scope 1 - Energy industries (renewable - / non-renewable sources).

**Scope 2 – Energy demand

Source: UNFCCC CDM data from, March 2009

Niche sectors for EE projects and PoA

Current Status:

EE projects are under-represented in the CDM pipeline. Project developers

could take advantage of the PoA (pCDM) and develop projects that could be

accepted under the improved PoA CDM rules.


Suitable for small to medium-size units that are geographically dispersed

Large number of potential owners can participate in the programs for EE


Number of committed owners can be unknown exante i.e at the onset

Owners can be rolled onto the EE programmes as the local situations evolves

EE improved technology does not typically occur on an individual basis but

rather on large number of individual households and small industrial firms –

thus CDM programmes open the benefits to many users.


Conceptual distribution of EE projects


Main JI-Reference Projects PoA

No. Title Host Country Start comments

01 Energy efficiency increase through

replacement and modification of low

efficient heating boiler by highly new

ones with and without fuel switch

Germany 21.08.2008

02 Energy efficiency increase through

replacement and modification of low

efficient steam boiler by highly new ones

with and without fuel switch

03 Bayerngas Ökobonusprogramm Gewerbeund

Industriekunden, steam boiler

Germany 21.08.2008

Germany 14.10.08

04 RWE Climate Bonus Project Heat Pumps Germany 29.08.2008

Source – UNEP RISO Centre , March 2009

Approved Programmatic JI Projects in Germany

“RWE Climate Bonus Project Heat Pumps”

gives private home owners an incentive to replace their heating

system with an electric heat pump before the technical lifetime of

the old boiler expires or they are obligated to replace it by law.

“Pilot Programmatic Joint

Implementation Project in North-

Rhine-Westfalia (JIM.NRW)”

supports energy efficiency measures in

SMEs which are not covered by the EU-

ETS. The measures comprise

modernization or preterm exchange of

steam and central heating boilers with or

without fuel switch.

JISC has now also the mandate regarding

PoAs (-> Under JITrack possible*)

* Since JISC meeting 18, 19 with relevant guidelines

Approved JI Projects in France


Thermal oxidation of the gas effluents of the

Trifluoroacetic Acid generating station at the

Salindres factory (Gard)


Réduction additionnelle des émissions de N2O dans

les effluents gazeux provenant de l'installation de

production d'Acide Adipique de l'usine de Chalampé


Additionality for Small-Scale CDM-Projects

Project participants shall provide an explanation to show that the project activity would not have occurred

anyway due to at least one of the following barriers:

Investment barrier

• Technological barrier

• Barrier due to prevailing practice

• Other barriers: institutional, limited information, managerial

resources, organizational capacity, financial resources, or

capacity to absorb new technologies

Additional is a comprehensive Investment Analysis and Evidence for serious consideration of CDM at time

of Investment Decision requested also for Small-Scale CDM-Projects incl. Energy Efficiency Projects.

Energy Saving Measures implemented by ESCOs would be mostly non-additional under CDM with the

existing Additionality Tools and Guidelines!

New: 06th August – 03rd September 2008: UNFCCC CDM Secretariat

Special Call for Public Inputs: “Proposal for an enhanced barrier test for project activities that have a

potentially high profitability without CER revenues.”

EB 50 ( 16/10/2009 ): “Guidelines for objective demonstration and assessment of barriers”

New Methodology “Energy efficiency and renewable energy measures in new

residential buildings”

“Recommendation on regional distribution of Clean Development Mechanism Project


Other Options: Voluntary Emission Reduction Standards, using Technology Additionality ( e.g. VCS –

Technology Benchmarks and Positive List under development; Development of a new VER Methodology

under Gold Standard GS - VER )

Final Recommendations

ESCO as Aggregator of Bundles or PoAs

The ability of ESCOs to bundle similar projects together and shoulder the

technical and and performance risks of projects, sounds attractive to banks

To combine such projects under a Bundle or Program of Activities

with Joint Implementation / Clean Development Mechanism is a new opportunity to attract

foreign investments to France, Mediterranean and African regions and to execute

investments in energy savings measures ( Win-Win-Opportunity )

PoA allows now the application of more than one methodology

JI and CDM enables France and Mediterranean / African regions to kill three birds with

one stone, resulting in:

- more sustainable development

- mitigated global climate change

- and less acid rain

Alternatives ? Gren Investment Schemes (GIS) ? Voluntary Offsets ? Carbon Tax ?

To be answered at COP 15 in Kopenhagen ( December 2009 ) !

Final Recommendations

Energy efficiency also contributes to economic and social prosperity

Energy is a costly production factor in Europe’s economies.

Increased energy efficiency contributes to energy security and

makes us more competitive in an increasingly globalised world.

Energy efficiency provides us with the time needed to replace fossil fuels

and other non-sustainable energy sources with renewables in an ecological,

economic and socially responsible manner.”

Source: eceee - The European Council for an Energy Efficient Economy


Side Event COP15 on buildings!

Construction counts for climate

Date: 11 Dec 09; Location: Copenhagen, Denmark

Organiser: The Ministry of the Environment of Finland

and the Marrakech Task Force on Sustainable Buildings and Construction,

in co-operation with UNEP-SBCI, UNEP-FI and ADEME

Venue: EU- Pavilion, Room Schuman, Bella Center, Copenhagen

Focus Areas: “Energy efficiency in buildings”

Type of Event: Conference Friday 11 December, 2009 - 13.00 - 15.00

EU-Pavilion, Room Schuman, Bella Center, Copenhagen

A Buildings and Construction Toolbox for Low Carbon Strategies

Discussions will revolve around policy tools which national governments

are going to need to reduce CO2 emissions and save energy

in existing buildings and new construction.

Because almost 40 per cent of all energy is consumed in buildings,

the potential of the built environment in reducing CO2 emissions is huge.

The role of NAMAs and climate challenges to construction,

refurbishment and property management

will be discussed by policy makers and other experts.






Thank you for your attention!

Merci de votre attention!

Kurt Seidel

TÜV Rheinland Immissionsschutz und Energiesysteme GmbH


Tel. +49 221 / 806 4065


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