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UPDATE
THAILAND MARKET READINESS PROPOSAL (MRP)
PA 6 – Barcelona, 27-28th May 2013
Outline of Presentation
Overview • MRP Objective(s) and Focus • MRP Development Process Market Readiness Proposal • The Big picture and Country context • Conceptual design of Energy Performance Certificate Scheme (EPC) • Conceptual design of Low Carbon City Program (LCC)
MRP Objective(s) and Focus
General objective: to prepare readiness of Thailand in developing Voluntary Mitigation Market Mechanism Specific objectives: To design Market Mechanism to reduce energy consumption and GHG in Energy sector with the view to transform to Emission Trading if required To design new methodology and standard to assist local municipalities and communities to implement GHG mitigation actions in achieving sustainable development and low carbon society goals . To develop MRV and registry system for Market Mechanism proposed To implement PILOT Market Mechanism proposed
MRP Development Process
Task Team
Study and conceptual design of Energy Performance Certificate scheme
ICF LLC
Study and conceptual design of Low Carbon City program
Factor CO2 + Asian Institute of Technology + ICLEI South-East Asia
Development of Thailand Market Readiness Proposal
Energy for Environment Foundation
Project management and coordination
TGO
MRP Development Process
Data collection
Draft Conceptual
design of EPC and LCC
Consultation with related ministries
and local municipalities
Grant agreement
signing
Draft MRP development
Informal presentation
at PA6
Sep 2012 – Feb 2013 Jan - Mar 2013 Sep 2012 – Feb 2013 Mar 2013 Mar - May 2013 May 2013
Consultation with local municipalities in 4 more regions
(Central, Northern, Southern &
Northeastern)
Country visit Presentation of
draft MRP at PA7
Submission of Draft MRP to Secretariat
Consultation with related ministries and private sector
May - June 2013 June – July 2013 Oct 2013 Aug 2013
Rationale for postponing formal presentation to PA7
To implement PILOT Market Mechanism proposed, more details in
conceptual design are discussing.
To make a good and solid proposal that can engage private sector and local municipality to
participate in voluntary market mechanisms, more stakeholder consultations are needed.
Sep 2013
GHG emission in 2000-2009 (Mt CO2e)
Increase 3.9% per year
241.14 257.37
268.32 281.61
298.78 307.42
312.28 319.79 320.49 326.43
Big picture & Country context
Thailand’s GHG emission trends
National Climate Change Policy
Ministry of Energy Ministry of
Transport
Ministry of
Industry
Ministry of
Agriculture and
Cooperation
Energy Efficiency Development Plan
2011-2030
Alternative Energy Development Plan
2008-2022
National transport
Master Plan
2011-2020
National Industrial
Development
Master Plan
2010-2014
Draft Strategic Plan
on Climate Change
in the Agricultural
Sector
11th National Economic and Social Development
Plan 2012-2016
Government Policy of the Prime Minister
Ms. Yingluck Shinawatra
Ministry of Natural Resources and Environment (MoNRE)
National Environment Quality Management
Plan 2012-2016
Nation
al P
olic
ies/P
lans o
n
Clim
ate
Cha
nge
an
d
En
viro
nm
ent
Sp
ecific
Pla
n
Draft National Strategic Plan on climate change
2011-2050
Thailand Power Development Plan
(PDP2010 : Revision 3) 2012 – 2030
Thailand’s Voluntary Carbon Market
Energy Performance Certificate (EPC) Scheme
• To incentivize large energy consumers to set their energy conservation Targets and commitment To create demand for the voluntary carbon market
• To support Energy Efficiency Development Plan (EEDP 2011 – 2030) by preparing infrastructure as well as the large energy consumers to be ready for mandates in the future.
• EEDP 2011 – 2030: : Determination of the Energy Efficiency Resource Standards (EERS), or the minimum standards for large energy businesses … with a penalty clause
• Energy Conservation Promotion Act – Energy Conservation Promotion Fund & Powers to impose compulsory measures on large energy consumers classified as Designated Factories & Buildings
Multi-sector approach for green low-carbon cities
Source: NESDB & World Bank, 2011
Low Carbon City (LCC) Program
• To incentivize local municipalities and communities to implement mitigation actions.
• To support 11th National Economic and Social Development plan in achieving sustainable development and low carbon society goals.
• To promote small and micro Renewable Energy projects under Green City as part of Alternative Energy Development Plan (2008-2022).
EPC-LCC Linkages
10
Thailand
Carbon
Market
EPC
Higher
Achieved
Lower
Achieved
EPC Participants:
Designated Factory &
Building
• Cement
• Ceramic
•Iron & Steel
• Petro-chemical
• Pulp & Paper
• Thermal Power Plant
• Large Commercial Building
Other buyers:
• Government
• CSR-oriented companies
• Foreign buyers: Mandatory
& Voluntary
Symbols:
• : Flow of Money
• : Flow of Credit
• EPC: Credit from energy efficiency activities
• GHC: Credit from other activities/schemes
• LCC unit: Credit from LCC program
LCC Participants:
Local municipality &
Community Energy conservation in
households, Gov. building
Small RE
Waste Management
A/R
Transportation
Other GHG Mitigation Activities : • CER • Energy Efficiency in Small- and
Medium- energy consumers • RE • Others
Investment Subsidies /
Grants for outputs that
can be MRV.
GHC
Fund
LCC
unit
Source of fund:
• Government
• CSR-oriented companies
• D F&Bs under EPC
scheme
• Donors
Agriculture
THE EPC SCHEME ….. Approach
Designated
Factories/Buildings
Establish Baseline
Detail Review of Present Energy Scenario &
Bandwidth
Development of Baseline Formats
with System Boundaries
Data Collection, Compilation & Analysis
Verification of Data
Set Targets for SEC Reduction,
Allocation of Certificate
Achieve the Target Technology Transfer, EE Technology,
R&M, R&D, Fiscal Incentive
Verification Protocol
Trade the EPC unit for higher achieved saving
13
THE EPC SCHEME ….. Key features
Features of the scheme
Nature of the scheme Voluntary
Participants Designated Factory and Building from energy intensive Factories in manufacturing sectors, Commercial building and Thermal power plant
Period Four years to achieve targets
Goal A part to achieve Energy Efficiency Development Plan that aim to reduce energy intensity 25% by 2030
Target for Participants Top-Down and Bottom-Up approaches (National target and Benchmarking with sectoral SEC)
Baseline year 2010-2012
Certificate issuance Ex-ante allocation of certificate
14
THE EPC SCHEME ….. Key features
Features of the scheme
Carry over of certificate Carry over is permissible only for EPC unit. Certificate will remain valid till next cycle.
Borrowing Not permitted
Higher achieved EPC unit can be traded
Lower achieved • EPC unit • CERs and TVERs • Fund—LCC unit Not less than 50%
Unit Reserve 80%
Up to 50%
Selection of Target Sectors : Criteria
Criteria • Contribution in GDP • Share of energy consumption per year
Criteria • Share of energy consumption per year
Criteria • Under Designated Buildings and Factories • Comparatively easy to verify & convince to participate • Good Saving potential
Criteria • Share of energy consumption per year
Step 1: Select the Economic
Sector
Step 2 (a): Select the Category
in Industry Sector
Step 2 (b): Select the Category
in Building Sector
Step 2(c) : Select the
Category in Power Sector
(Supply Side)
Selection of Target Sectors : Summary of Analysis
Sectors No. Of Probable
Designated Factories & Buildings
Estimated Annual Energy Consumption
(ktoe) Remark
EPC - PHASE-I
Food & Beverage and Textile may be added in
2nd Phase
1 Cement 39 1,744
2 Ceramic 23 290
3 Iron & Steel 97 844
4 Petro-Chemical 10 231
5 Paper 125 1,580
294 (7.5%) 4689 (20.64%)
6 Commercial Building 861 (40.2%) 1397 (28%)
(Dept Str+Hotel+Hospital)
Demand Side Sub-TOTAL 1155 (19.2%) 6086 (17.7%)
7 Thermal Power Plant 86 15500 Refinery in 2nd Phase
Supply Side-Sub-TOTAL 86 (85.15%) 15500 (93.0%)
TOTAL 1,241 (20.4%) 21,586 (32.2%)
Setting up of Target
Target already set by National Policy up 2030
Estimate the national target for selected sectors
Present SEC level (from Baseline Study)
World Benchmark / Thailand Benchmark level
Estimation of Potential in 4 years
Set Sectoral Target
Both TOP-DOWN and BOTTOM-UP APPROACH to be used for establishing sectoral target
Keep the national target in view as per long term energy policy (i.e. 25% energy intensity reduction by 2030) : About 11300 kTOE from manufacturing sector and 2300 kTOE from commercial building sector
Apportionment of national target to selected sub sectors
Establish % reduction per year
Estimate the Potential saving w.r.t. present SEC and benchmark SEC
Define the cycle period of EPC (4 years)
Adjust the sectoral target based on national goal, potential available and pay-back period of energy efficient technologies
18
Sector SEC reduction target (6.9% average in 4
years)
No. of Probable
DF&Bs
Annual Energy Consumption
(ktoe)
Saving as per National Target of 6% reduction in 4 years (ktoe)
100% participation
Cement 6.8% 39 1744 105 119
Ceramic 7.8% 23 290 17 23
Iron & Steel 6.8% 97 844 51 57
Petrochemical 6.4% 10 231 14 15
Paper 6.8% 125 1579 95 107
Commercial Building
6.8% 861 1397 84 95
Thermal Power Plant
6.8% 86 15500 930 1054
Total 1241 21586 1295 1470
Saving above National Target 175
Estimation of Energy Saving
Roadmap for EPC implementation
Finalization of participating sectors
Analysis and Stakeholder consultation
Data collection, Database development, Target fixation of these sectors
Baseline study, Data verification, Energy Audit
Scheme design
EPC consultation document
Preparation of EPC design document
Scheme notification after consultation
Accreditation of EPC participants (factories , buildings)
Implementation of M&V system
Empanelment of EPC verifiers (Energy Auditors), Registry
Annual Monitoring and Verification
Capacity Building ( all stakeholders)
• In case of lower achieved
saving, participants will transfer money to the fund and receive LCC unit for compliance
Conceptual design of LCC program
Fund
LCC
unit
Source of fund:
• Government
• CSR-oriented companies
• D F&Bs under EPC
scheme
• Donors
Designated Factory & Building
• General criteria:
o Geographical balance
o City size
o Degree of socio-economic development
• Specific selection criteria:
o Green governance leadership
o Readiness to prepare GHG inventory
o GHG emission reduction goal/target
o Institutional strengths
Participation in LCC program
Some
municipalities will
be selected in pilot phase
24
Scope
CO2
CH4
SF6
PFCs
HFCs
N2O
Energy Efficiency
Waste Management
Renewable Energy
Agriculture
A/R
Transportation
• Indoor lighting • Street lighting • Air conditioning • Refrigerator
• Solar PV
• LFG to energy • Waste water to
energy
• Urban green area • A/R
• Fertilizer • Animal manure
management
• Bio-fuel
25
Baseline Setting: Area-based approach
1 • GHG Inventory preparation
2 • Evaluation of GHG mitigation potential
3 • Identification of GHG mitigation activity
4 • Project Design Document preparation
5 • Evaluation of GHG emission in city
6 • Evaluation of GHG emission reduction in city
7 • Implementation of GHG mitigation activity in city
8 • Monitoring of GHG emission reduction
9 • Verification of GHG emission reduction
10 • Issuance of credit
GHG database
Implementation
Evaluation & analysis
Mu
nic
ipal
ity/
Co
mm
un
ity
Verifier
TGO
LCC Process
Evaluation & analysis
27
THE LCC PROGRAM…Key features
Key features
Participation Local municipality and community
Scope EE, RE, Waste, A/R, Agriculture and Transportation
Type Small scale, Micro scale and PoA
Base year Recently available
Boundary Setting Area-based, Inventory concept
Methodology Baseline: sector-based, standardization concept Emission reduction: project-based
Verification Third party auditor
Registry LCC registry separated from EPC registry
Carbon pricing and Incentive
Set floor price for carbon credit generated from LCC program and investment subsidy to be supported to participants using analysis from MAC and co-benefits
28
Tracking and registry system
• The EPC Registry and the LCC Registry will be developed separately
(different accounting unit, toe vs. tCO2e).
• LCC Units (=1 tCO2e) will be not tradable among EPC participants but
retired by the LCC Registry on behalf of EPC Buyers.
• The LCC Registry will consist of crediting accounts and a domain of
public information.
EPC Registry
LCC Registry
LCC Unit Crediting Accounts
Buyers of LCC Units (EPC)
Sellers of LCC Units (LCC)
Project Information
CENTRAL ENTITYMinistry of Natural Resources and Environment
COORDINATING AGENGYThailand Greenhouse Gas Management Organization (TGO)
CROSS-MINISTERIAL TASKFORCENational Climate Change Committee
Ministries of Natural Resources and Environment, Energy, Industry, Agriculture and Cooperatives, Public health, Transport, Information and Communication Technology, and Finance
CONSULTANTSAGENCIES(DEDE, PEA, etc.)
ASSOCIATIONSNMT
COORDINATING AGENGYThailand Greenhouse Gas Management Organization (TGO)
DIRECT STAKEHOLDERS Municipalities and Communities
PRIVATE SECTOR (Business Associations, Political Parties, NGOs, Universities, think-tanks, media)
SOCIETY
CONSULTANTSAGENCIES(DEDE, PEA, etc.)
ASSOCIATIONSNMT
Stakeholder consultation
