Carbon Credits potential of projects with Energy efficiency measures

Posted on April 8, 2011 by

Driven by the growing concern about the climate change and business risks and opportunities created by it, many industrial sectors are searching for the less GHG intensive methods for their operations. There are lot of opportunities in green house gas reductions that create quantifiable (and trade-able) carbon credits, under mechanisms such as Clean Development Mechanism (CDM) and Voluntary Carbon Standard (VCS).  The elaborate modalities and procedures for the carbon credit project however can sometimes make the understanding the carbon credit eligibility of the project slightly difficult.

This post explains the carbon credits opportunities in energy efficiency sector. Energy is one of the key cost driver for a number of industries. Organizations have recognized that energy efficiency measures and/or alternative methods of production and operation with energy conservation can increase profit. As a result, industries are more inclined towards energy efficiency measures to reduce and minimize wasteful fuel and electricity uses. In other hand, saving energy usage in preparation of raw material for manufacturing/production industry is becoming popular.

Within the broad field of energy efficiency, following activities can lead to GHG emission reduction. GHG emission reduction by itself can not generate certified carbon credits without demonstrating baseline and additionality as prescribed in carbon reduction standards like CDM.

Carbon credits potential of industries undertaking energy efficiency measures.

  1. Any energy saving activities like fuel and electricity saving in manufacturing/production/other industries
  2. Opting of such materials in manufacturing of products which further leads to energy savings. For example, use of recycled materials (Product from recycled material consume low energy as compared virgin material), use of high efficient and low carbon footprint materials in construction sector, use of thermodynamics techniques in cooling houses, etc.

Option 2 can be complex in terms of executing GHG emission reduction projects due to unavailability of approved baseline and monitoring methodologies under the CDM. Introduction of new methodology can be an option but needs considerable efforts and technical expertise.

Following criteria should be adhered with for emission reduction projects under the CDM/VCS

Baseline Scenario: The baseline scenario (Before the energy efficiency measures has been taken) should reasonably represent the anthropogenic GHG emissions (Quantifiable) by sources of greenhouse gases that would occur in the absence of the proposed project activity (after the energy efficiency measures has been opted). In energy efficiency project, GHG emission reduction can easily be measured through the difference of energy usage between the baseline and the project. A baseline for a CDM/VCS project activity can also be a hypothetical reference case, representing the volume of greenhouse gases that would have been emitted if the project were not implemented.

Additionality: GHG emission reduction by the project activity must be additional to that would have occurred in the baseline scenario. In CDM/VCS process, project must have quantifiable baseline and project emissions so that the actual GHG emission reduction can be calculated. But there is a requirement that the GHG emissions after implementation of a CDM/VCS project activity are lower than those that would have occurred in the most plausible alternative scenario to the implementation of the CDM project activity.

Approved CDM methodologies for energy efficiency projects

Sr. No Table 1: Available approved large scale methodologies
1 AM0017 Steam system efficiency improvements by replacing steam traps and returning condensate — Version 2.0
2 AM0020 Baseline methodology for water pumping efficiency improvements — Version 2.0
3 AM0038 Methodology for improved electrical energy efficiency of an existing submerged electric arc furnace used for the production of SiMn — Version 2.0
4 AM0044 Energy efficiency improvement projects: boiler rehabilitation or replacement in industrial and district heating sectors — Version 1.0
5 AM0054 Energy efficiency improvement of a boiler by introducing oil/water emulsion technology — Version 2.0
6 AM0056 Efficiency improvement by boiler replacement or rehabilitation and optional fuel switch in fossil fuel-fired steam boiler systems — Version 1.0
7 AM0061 Methodology for rehabilitation and/or energy efficiency improvement in existing power plants — Version 2.1
8 AM0062 Energy efficiency improvements of a power plant through retrofitting turbines — Version 2.0
9 AM0068 Methodology for improved energy efficiency by modifying ferroalloy production facility — Version 1.0

Sr. No Table2:  Available approved small scale methodologies
1 AMS-II.A Supply side energy efficiency improvements – transmission and distribution — Version 10.0
2 AMS-II.B. Supply side energy efficiency improvements – generation — Version 9.0
3 AMS-II.C. Demand-side energy efficiency activities for specific technologies — Version 13.0
4 AMS-II.D. Energy efficiency and fuel switching measures for industrial facilities — Version 12.0
5 AMS-II.E. Energy efficiency and fuel switching measures for buildings — Version 10.0
6 AMS-II.F. Energy efficiency and fuel switching measures for agricultural facilities and activities — Version 9.0
7 AMS-II.G. Energy Efficiency Measures in Thermal Applications of Non-Renewable Biomass — Version 2.0
8 AMS-II.H. Energy efficiency measures through centralization of utility provisions of an industrial facility — Version 2.0
9 AMS-III.X. Energy Efficiency and HFC-134a Recovery in Residential Refrigerators — Version 2.0
10 AMS-III.Z. Fuel Switch, process improvement and energy efficiency in brick manufacture — Version 3.0
11 AMS-III.AA. Transportation Energy Efficiency Activities using Retrofit Technologies — Version 1.0
12 AMS-III.AE. Energy efficiency and renewable energy measures in new residential buildings — Version 1.0
13 AMS-III.AP. Transport energy efficiency activities using post – fit Idling Stop device — Version 1.0

Some special methodologies;

Sr. No Table 3: Small scale methodologies
1 AMS-III.J. Avoidance of fossil fuel combustion for carbon dioxide production to be used as raw material for industrial processes — Version 3.0
2 AMS-III.AJ. Recovery and recycling of materials from solid wastes — Version 2.0
Large scale methodologies
3 AM0066 GHG emission reductions through waste heat utilisation for pre-heating of raw materials in sponge iron manufacturing process — Version 2.0
4 ACM0015 Consolidated baseline and monitoring methodology for project activities using alternative raw materials that do not contain carbonates for clinker production in cement kilns — Version 3.0

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