Ghana

1
Ghanas Programmatic CDM Proposal for Energy
Efficiency Standard for Room Air Conditioners
A.K. Ofosu Ahenkorah Energy Foundation COP/MOP
12 Nairobi 2006
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CDM Project Objectives

• Make Mandatory Room Air Conditioner Standard
  enforceable in Ghana by building a modern testing
  Laboratory at the Ghana Standards Board.
• Reasons
• The removal of the least efficient air
  conditioners from the Ghanaian market will save
  significant amounts of energy
• Reduce growing dependence on imported energy
• Reduce cost of electricity for consumers

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Basis of Standard Room Air Conditioner Survey
2001 Analysis

• Objectives of Survey
• To establish the basis for a proposed minimum
  energy efficiency standard for Room Air
  Conditioners (RAC)

4
Findings

• Purchase price increases w/ cooling capacity
• Wide range of prices within capacity categories
• Prices may not increase with efficiency
• Wide range of efficiency within capacity
  categories
• Most expensive not necessarily most efficient!

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All UnitsPurchase Price vs. Efficiency
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The Proposed Standard

• Require that the minimum air conditioner have an
  Energy Efficiency Ratio or EER of 2.8 or
  higher.
• The EER is the amount of electricity required per
  unit of cooling, expressed as watt/watt or
  Btu/hr/watt. Cooling Capacity is the maximum
  amount of cooling that a unit can provide,
  expressed as Btu/hr or kW.
• Any AC units below this standard cannot be sold
  in the Ghanaian market.
• A testing lab would be required to enforce the
  standard.
• The goal is to stop the dumping in Ghana of
  inefficient units that cannot be sold in the West

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Potential Energy Cost Savings

• The RAC Standard will save Ghanaian consumers an
  average of 64 million annually in energy bills.
• Payback on the initial incremental investment in
  efficiency by consumers is less than 9 months.
• The average price of RAC may go up by about 3
  for the proposed standard, however, the new RACs
  will use about 9 less energy, paying off the
  investment very quickly.
• Carbon dioxide emissions will be reduced by about
  2.8 million tons over 30 years (104,890 tons per
  year).
• A 2003 compliance with the standard would have
  immediately freed up 13 megawatts of generating
  capacity and by 2014 will be saving the
  equivalent of a 150MW generating plant. By 2020,
  this standard alone will be saving about 950GWh
  per year, freeing up nearly 250MW of generating
  capacity at net negative cost to the economy.
• In contrast, the 400MW Bui hydropower plant is
  being constructed at a cost of nearly US600
  million.

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National Energy and Consumer Cost Savings
Energy Savings (2.8 EER) High growth, high electricity prices low interest rates. Low growth, low electricity prices, high interest rates
up to 2010 1,453 GWh 1,200 GWh
up to 2020 8,522 GWh 6,764 GWh
up to 2030 19,497 GWh 15,109 GWh
(Dollar savings to consumers, NPV, 2010) 245.10 million 116.64 million
Emission reduction, up to 2010 0.2 mt of CO2 0.16 mt of CO2
up to 2020 1.2 mt of CO2 0.9 mt of CO2
up to 2030 2.8 mt of CO2 2.1 mt of CO2
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(No Transcript)
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Why Would Standards be a CDM Project?

• Although Mandatory Standards relate to Policy and
  Legislation issues EE standards face a number of
  barriers
• Enforcement, testing labs, public awareness,
  etc.  Major upfront analysis as well and all
  these have costs that need to be paid for
• CERs are a good way to attract investors for
  upfront costs, such as a testing lab.
• CERs are a good way to pay for monitoring and
  enforcement, which can also be expensive.
• In the case of Ghana, without CERs, there is no
  way this standard can be implemented.

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From the CDM Perspective

• This is a unique kind of project a government
  policy itself being the CDM project
• Energy Foundation and QualityTonnes submitted
  this project as NM0072 to the Meth Panel. MP
  requested guidance from CDM EB.
• CDM EB could not agree on whether mandatory
  government policies can count for CDM until
  COP/MOP 2005-Montreal

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Issues Raised

• Ownership of CERs who owns the credits for such
  a dispersed project? Proposal in this case
  Ghanas Energy Commission The Energy Regulator
• Additionality need to show that the policy
  itself could not be implemented without CDM.
  This is possible in the case of Ghana but may be
  tricky in other cases. May require an additional
  level of proof by the project developer beyond
  the current additionality test tool.
• Monitoring Methodology requires sampling of key
  variables (hours of use, etc.). Method proposes
  sampling to a margin of error of less than 5 --
  then discounting ERs by the margin of error to be
  conservative. Sampling is allowed in CDM.

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Issues (cont)

• Double-Counting in the case of this project, no
  one should be able to claim credit from buying a
  new AC unit whether its retailers, distributors
  or individuals. Ghana DNA can enforce through
  approval process.
• Free Riders Could be a problem with other types
  of programmatic CDM (eg a voluntary EE program).
  The mandatory standards avoids that problem by
  making only one entity the Government Energy
  Regulator the sole holder of CERs.
• Leakage No additional leakage should occur in
  this case but again, could be an issue in other
  types of policy-CDM programs.
• Decision http//unfccc.int/meetings/cop_11/items/3
  394.php in the document called "Further guidance
  relating to the clean development mechanism",
  para. 20. now clears the way for programmatic
  CDM

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Additionality

• The Ghana air conditioner standard depends on the
  construction of a modern testing laboratory.
• This is an expensive piece of equipment,
  difficult to maintain and require a trained
  staff. Few developing countries have
  government-run testing labs, because of these
  barriers.
• There are no plans to build a testing lab in
  Ghana, and thus according to the policy of the
  Government and to avoid unnecessary litigation,
  the standard will only be voluntary without the
  testing lab, the primary means of enforcement and
  monitoring. As such, the standard will most
  likely be worthless in terms of getting the least
  efficient models dropped from the market.
• Only with carbon investment is the testing lab
  likely to get built and the standard with all
  of its benefits likely to be implemented.

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Investment Requirements and Sources

• Development Cost US0 (much of analysis has
  been completed)
• Installed cost of equipment US1.4million
• Other Costs US0.625million (25k one time
  investment for Staff training, staff cost per
  yearUS60k/yr for 10 years625k)
• Total Cost US2.025million
• Ghana Govt contributionUS684,110
• Carbon Finance US1,240,890 over 10 years
• Indicative CER/VER unit priceUS5/tonne CO2.

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Project Risks

• the economy has a severe recession or political
  instability disrupts economic growth. In that
  case, fewer room air conditioner units would be
  sold. However, given Ghanas political stability
  over the years, this seems like a modest risk.
• The monitoring of the CO2 reductions will provide
  a challenge as sales numbers (important here will
  be import data which is publicly available),
  surveys on use of air conditioners and other data
  will need to be performed as much as every year
  or two.
• The monitoring costs of the project will be
  higher than single-site projects and will depend
  on high-quality, statistically significant survey
  data. This risk is mitigated somewhat by the
  amounts of technical assistance provided to Ghana
  already from USAID and the UN Foundation. This
  work has already led to voluminous amounts of
  data and built capacity.

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Current Status Next Steps

• Legislative Instrument enforcing standards passed
  by Parliament, under Act 541 in November 2005
• Public Education to Commenced September, 2006
• Mandatory Labeling to commence November 30, 2006
• Testing Facility to be built expected
  completion date????
• Testing and Full enforcement after completion of
  Test Facility
• Refrigerator, Deep Freezer Standards being
  developed

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Ghana Air Conditioner Label
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Appliance Standards Worldwide

as of 1999
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Thank you www.ghanaef.org