UEA/Gwangju Approach to Low-Carbon Green City

Urban Environmental Accords(UEA)Secretariat

In collaboration with

Discussion Paper for the joint UNEP and UNFCCC workshop for Urban Methodologies for the Built

Environment, UNFCCC Headquarters, Bonn, Germany

27-28 March 2014

Research Team

Supervision and Coordination : Kwi-Gon Kim, Ph.D., UEA Secretariat

Lead authors : Kwi-Gon Kim, Ph.D., UEA Secretariat Byoungchull OH, Ph.D., UEA Secretariat Seung-Ho Seo, UEA Secretariat Young-Du Choi, UEA Secretariat

Administrative : Jung-Sam Lee, Gwangju Metropolitan City Sang-Kap Kim, UEA Secretariat Nam-Ghiu Park, UEA Secretariat

Advisory Group : International Inter-Agency Advisory Group for the Urban Environmental Evaluation Index and Urban CDM

UNEP

UNFCCC

World Bank

KEI

In Collaboration with:

UEA/Gwangju Approach

to Low-Carbon Green City

Table of Contents

Ⅰ Introduction

Ⅱ Components of Framework for UEA/Gwangju Ap-

proach

to Low-Carbon Green City

Ⅲ UEA/Gwangju Approach in the Context of Modali-

ties &

Procedures of CDM and NAMAs

Ⅳ Urban CDM Program :

A Mandatory Approach to Carbon Financing

Ⅴ GHG Projection•Diagnostics Program(GPD) and Car-

bon

Banking System : A Voluntary Approach to Carbon

Financing

Ⅵ Expanded PoA

Ⅶ Conclusions & Suggestions

Ⅷ Proposal on New Initiative for Urban CDM

　 - Development of a Compensation Model for Carbon

Financing

4 | 71

Ⅰ Introduction

We live in the era of global warming which causes severe extreme weather events. Human beings are experiencing the events right now in the every corner of the planet.

It has been proven that conventional urban planning fails to meet requirements and demand for the safe and comfortable globe. We, therefore, need ceaseless planning innovation. Comprehensive carbon-centered (3Cs) should be the mainstream of planning to combat cli-mate change at the city-scale.

The past decades were important time in terms of sustainability from low-carbon emission to carbon-neutral city in Gwangju. Gwangju has devotedly worked in this field with national and international partners and like-mind organizations and people.

This paper highlights the initiatives and projects of Gwangju/UEA to reduce greenhouse gas (GHG) emissions towards low-carbon Green city which is one of Gwangju/UEA priority agendas.

Ⅱ Components of Framework for UEA/Gwangju Ap-proach to Low-Carbon Green City

5 | 71

UEA/Gwangju Approach to Low-Carbon Green City

Theoretical model of Urban CDM

GPD & Carbon Banking Sys-tem

Outcomes of Urban CDM

Expanded PoA

Urban CDM Feasibility Study

Urban Methodology

Urban CDM Handbook

Urban CDM Toolkit

Theoretical model of Urban CDM Development

Co-development of City Cli-mate Planner Creditation

Program

Feasibility Study

Urban GHG Accounting

City Climate Planning

Carbon Financing

Ⅲ UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM and NAMAs

6 | 71

3.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM

3.2 UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs

7 | 71

3.1 UEA/Gwangju Approach in the Context of Modalities & Proce-dures of CDM

Contents Conventional CDM Urban CDM GPD & CBS Expanded POA Others

Inventory

• Selection of inven-tory year• Selection of scope of GHG (direct/indirect emissions)• Measurement with Equipment

• Calculation• Modeling Estimation by situation analysis

• Billing System

• Selection of inven-tory year• Selection of scope of GHG among expanded projects (direct/indi-rect emissions)• Combination of Mea-surements with Equipment

Standardized Baseline

• Constant level of emission

• Considerations for population and eco-nomic growth, etc.

ReductionActivities

• Prioritizing reduction projects

• By project• By sector• By Multi-Sector• Expanded or Com-bined

• By project• By sector• By Multi-Sector• Expanded or Com-bined

Modelling & Regression

• Use of existing methods approved by UNFCCC

• Use of existing methods approved by UNFCCC• New methodology

• Analysis on projected GHG emission by using GPD• Development of pro-jection equation through analysis of electricity/city gas/drinking water con-sumption

• Use of existing methods approved by UNFCCC• New methodology Approach in the as-pect of urban aggre-gation

Accounting• Carbon markets im-plemented at the na-tional or regional level

• Carbon markets to be implemented at the city level - Compliance Market - Voluntary Market

• Preparation for the access to carbon mar-ket

Additionality• Additional initial cap-ital investment

• Additional initial cap-ital investment

• Additional initial cap-ital investment

• Additional initial cap-ital investment

MRV

• Submission of MRV report• Verification/certifica-tion

• Submission of MRV report• Verification/certifica-tion

• Submission of MRV report• Verification/certifica-tion

• Submission of MRV report• Verification/certifica-tion

Note: 1) GPD : GHG Projection & Diagnostics Program 2) CBS : Carbon Banking System

8 | 71

3.2 UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs

Steps to a NAMAs

Source : Nationally Appropriate Mitigation Actions(NAMAs), Steps for Moving a NAMA from Idea towards Implementa-tion Ver. 9.0, giz

Fig. 1 Step to a NAMAs

Ⅳ Urban CDM Program : A Mandatory Approach to Carbon Financing

9 | 71

Urban CDM, which was coined by Professor Kwi-Gon Kim, is a holistic forward-looking planning tool that integrates the elements of GHG analysis maximizing livability and quality of life for the people in broad terms.

Good GHG accounting is a pre-requisite for good carbon planning.

Urban CDM is an economic tool which helps financial analysis in a holistic manner. Urban CDM is all about return of investment, offset and benefits.

What is the Urban CDM?

Urban CDM is a mechanism which gives financial incentives and provides Certified Emission Reductions (CERs) as much as amount of emission reduction at the city-scale compared with baseline emissions at the city level.

Therefore, it can be used as a political carbon decision support system both for green growth and economy and for urban planning and management.

Rationale behind the Urban CDM - A tool for carbon financing: market-based mechanism - A tool for urban GHG accounting: urban metabolism-based mechanism - A tool for 3Cs (Carbon Centered Comprehensive) planning: land-use based mechanism

10 | 71

Why is the Urban CDM needed urgently?

Cities are main sources of global GHG emissions and a major pollutant

- 50% of the world's population now lives in cities. By 2050, three out of four people are expected to live in ur-ban areas, due to urban migration

- Urban areas currently use 67% of the world's energy and accounts for over 71% of global GHG emissions. (World Bank, 2011)

Less than 1% of projects registered with the CDM are credited to cities.

- Interrelated Cross-Sectoral approaches are not implemented, even in the case of reduction activities of methodologies approved by UNFCCC.

Efforts to reduce GHG emissions: The impact is marginal

- Due to financial vulnerability of developing countries, efforts to reduce GHG emissions and investment in environment protection are economic burden for cities in developing countries

This is time to look at the CDM for the whole city.

11 | 71

Objectives of the Urban CDM

To develop Urban CDM methodology to be registered in the UNFCCC

To develop carbon accounting that can be used in the compliance market (CDM), the voluntary market, etc.

To develop carbon reduction emission strategies

To develop a low-carbon green city planning system module (3Cs)

To mainstream low-carbon green city development into urban planning in a holistic way

12 | 71

Audience/Partners

The Urban CDM model seeks to provide a user-friendly communication in

comprehensive analysis of a very wide spectrum of large-scale integration possibilities,

as seen in Figure 2. Therefore, the UEA has been working closely with UNEP, Korea

Environment Institute (KEI), and UEA member cities, in collaboration with UNFCCC and

the World Bank.

13 | 71

Conceptual model of the Urban CDM

Here is our conceptual model for developing the Urban CDM. How we have arrived this model is a reflection process of analyzing and validating documents, which have been conducted.

This model is very useful to understand inter-relationships between energy suppliers and consumers, and between built form, urban infrastructure, and CDM and technology mechanism for them, in a total holistic manner.

Fig. 2 Integrated total Urban CDM model

TotalUrbanSystem

Residence

Land

Engineering

Renewable Energy

Industry

Solid wastemanagement

Water &Water waste

Urban Facility

Building

Transport

TotalUrbanSystem

Residence

Land

Engineering

Renewable Energy

Renewable Energy

Industry

Solid wastemanagementSolid waste

management

Water &Water waste

Water &Water waste

Urban Facility

Building

TransportTransport

TotalUrbanCDM

CDM forLow-Carbon

Building

CDM forLow-Carbon

Factory

CDM forLow-Carbon

Homes

CDM forLow-CarbonLand use and

Spatial Planning

Renewable Energy

Transportport

Urban Ecology

Solid Waste

CDM forLow-CarbonConsumer

Water and Waste water

TotalUrbanCDM

CDM forLow-Carbon

Building

CDM forLow-Carbon

Factory

CDM forLow-Carbon

Homes

CDM forLow-CarbonLand use and

Spatial Planning

Renewable Energy

Transportport

Urban Ecology

Solid Waste

CDM forLow-CarbonConsumer

Water and Waste water

<Urban Smart Grid System>

<Integrated Urban Planning and Management>

<Total Urban CDM Model>

Super-SmartGrid System

Feedback

Feedback

Individual CDM Project1

14 | 71

Main features of the Urban CDM model include:

The Urban CDM model is a new type of CDM with the combination of different categories/sectors for more than one country. It is a cross-sectoral approach to climate change.

The model includes the combination of a very high number of different technologies that are relevant for urban energy grid systems.

The model has a coherent documentation on the basic of procedure and standard of the UNFCCC CDM and seeks to provide a user-friendly communication in project descriptions.

The model aims for calculating the cost and carbon benefits of the total system at the city-scale, which can be divided into investment costs, operation costs, and taxes, such as CO2 emissions trading costs and financial benefit such as CDM, in the course of CDM documentation. Thereby, the model can create data for further analysis of socio-economic feasibility studies, such as expanded cost-benefit analysis, including balance of payment, job creation, industrial innovation, and so on.

15 | 71

Urban CDM is a business case. The methodology of financial

modeling of the Urban CDM incorporates the basic project ap-

proach of firstly identifying the carbon reduction solutions and

quantifying the associated emissions, and then modeling the iden-

tified additional cost (additionality) to be credited with the Urban

CDM and benefits, regulatory and macroeconomic influences.

Financial modeling of the Urban CDM

16 | 71

The following Figure 3 shows multi-layers of finance modeling by different GHG emissions sources. It involves development of cost, supporting regula-tory and funding environment including CERs and credit points and macro economic scenarios.

Financial calculations include internal rates of return (IRR), payback periods, net present value, cash flows and cost-effectiveness analysis.

This model can be used for solution for reduction actions viability decision. If the costs of reducing CO2 emissions from the traditional technology is in-cluded in the cost calculations, an environmentally better solution would be more cost-effective than the traditional one from an economic point of view in the long run.

17 | 71

Fig. 3 Multi-layers of financial modeling by GHG emissions source

Multi-layers of GHG emissions source

Energy

Waste

Transport

Water

Buildings

Urban CDM(CERs)

Intersection point

Without additional initial capital investment and Urban CDM

Return of investment

30Years

Cost

0

With additional initial capital investment and Urban CDM

Note: 1) Blue line indicates the cost with traditional equipment 2) Dotted redline indicates the cost with additional initial capital investment and CERs.

18 | 71

Ⅴ GHG Projection•Diagnostics Program(GPD) And Carbon Banking System(CBS) : A Voluntary Approach to Carbon Financing

5.1 Background of GPD

5.2 Development process of GPD to date

5.3 Purpose of GPD

5.4 The GPD is being developed with the following objectives :

5.5 Procedure of GPD for low-carbon green city development

5.6 The application of the GPD to the Carbon Banking System

5.7 Draft GHG Projection • Diagnostics Expanded Version

5.8 Overall Timeline

19 | 71

Many GHG-related initiatives are based on Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC)

- To develop case studies of best practices targeting more than 30 cities

The first GHG accounting tool for Chinese cities was also developed based on the GPC.

Source: http://www.wri.org/news/release-launch-first-greenhouse-gas-accounting-tool-chinese-cities

It is expected that Gwangju/UEA GPD will be spread to UEA member cities and special invitees.

5.1 Background of GPD

20 | 71

Development of the Urban CDM commenced in April, 2011, as a result of memorandum of understanding between Gwangju and United Nations Environment Programme (UNEP)

Presentation of the initial draft in the 2013 UEA San Antonio Summit

Presentation of the Gwangju/UEA project at the World Bank City Climate Planner Certification Program Workshop

Development of GPD expanded version in 2014 with the financial support from the Ministry of Environment, Korea

Publication of the full version of the GPD in February, 2015

The purpose of this program is to propose the developed system to the international society

in order to seek for and utilize climate respond funds (e.g. GCF), so that wider range of GHG

reduction projects becomes available thus contributing global climate change response in an

active manner.

5.2 Development process of GPD to date

5.3 Purpose of GPD

21 | 71

To help cities prepare GHG inventory at a macro and aggregated manner at the city-scale

To help cities develop effective tools for baseline scenario through the use of statistical projection methods

To help cities have systematic planning and quantitative data support for low-carbon city development

To support cities to measure collective performance with systematic and credible monitoring over time; and

To facilitate access of cities to climate finance opportunities

5.4 The GPD is being developed with the following objectives :

22 | 71

As a first step, base year inventory puts its basis on a GHG inventory developed for GPD, which is made simultaneously with the typing of input data for development of project equation in the baseline scenario analysis without GHG reduction policy & projects.

The next step consists of a series of calculations that involve projected emissions reduction based on climate action plan and observed emissions reduction on the site.

Then the model is divided the in to a technical or market-economic optimizing.

Fig. 4 The GPD model for low-carbon green city development

5.5 Procedure of GPD for low-carbon green city development

23 | 71

The GPD program is an urban GHG accounting and carbon

planning tool which is being developed by the UEA/Gwangju and

disseminated to UEA member cities. These are the interim results

of the pilot-testing of the tool for the carbon banking system.

5.6 The application of the GPD to the Carbon Banking System

24 | 71

The Operating System of the Carbon banking

1) Carbon Points Calculation

Procedure

Energy SavingConversion of En-ergy Savings into

CO2 Reduction

Offer of Carbon Points which Equal

to US$ 560/ton-CO2eq

25 | 71

2) Phased-in-operation

〈 Pilot test 〉

a. Duration: July 2008 - December 2013

b. Participants: Households (single-unit/multi-unit residence)

c. Target areas: Electricity, city gas, drinking water

d. Grant points based on reduction of CO2 emissions to the participants (Credits granted by

Gwangju bank)

*Grant points can be used for purchase of green goods/discount in park, etc.

26 | 71

〈 Main project 〉

a. Grant points based on reduction of CO2 emissions to the participants

•Organization: Ministry of Environment (national)

•Operational support: Korea Environmental Corporation

•Program operation: Gwangju Metropolitan City

b. Carbon points are issued when there is more than 5% reduction in the average energy con-

sumption in the past 6 months (electricity, city gas, drinking water) compared to the aver-

age of the previous 2 years.

c. Benefits of the 'Green Card' issued to participants: (See Figure 5)

•Carbon points: incentives for reductions provided by the Ministry of Environment and the local

government

•Green consumption: when buying registered eco-friendly products with green card, can use the

carbon points and earn additional (1~5%) points.

•Discounted price in public sectors: 130 national parks, cultural facilities, art performances, etc.

•Credit card function: for purchase of public transportation (bus, subway, train), in addition, earn

10-20%

d. The consumption of electricity, city gas, and drinking water are monitored through the re-

spective meters in each household (See photos 1, 2 and 3).

a. Card used in 2008-2013 b. New card to be used from 2014

Photo 1 Electricity meterPhoto 2 City gas meter

Photo 3 Drinking water meter Photo 4 Overview of Sinhyochon solar village, Gwangju

• Photos of green cards and measuring meters

Fig. 5 Green card

Source: photo 1, Taken at Sinhyochon solar village, Gwangju, by UEA, on 10 January, 2014 photo 2, http://blog.naver.com/mosechu?Redirect=Log&logNo=20191100381 photo 3, http://blog.naver.com/jimmy44?Redirect=Log&logNo=140165673316 

27 | 71

28 | 71

3) Operating System

The operating diagram (Figure 6) maps out main steps of carbon banking system to-

gether with the roles of main actors who are engaged in the carbon banking process. The

process starts with signing ceremony for agreement on the carbon-smart model city be-

tween central and local governments, and ended up with issuance of carbon points by

private banks.

It is a public-private partnership (PPP) project. This project has seen as a collabora-

tive and collective effort among many stakeholders including city government, private

consulting company, etc.

Fig. 6 The Operating System of the Carbon Banking System

29 | 71

Roles of main actors of the system

a. Households •Participate in carbon banking system •Save energy (in electricity, city gas, drinking water) •Use and accumulate carbon points

b. Gwangju Metropolitan City •Data analysis on the consumption of electricity, city

gas, and drinking water •Promotion of carbon banking system, and processing

new applications •Report on energy use reductions to the bank •Provision of related information to energy/city gas/

drinking waterworks companies •Expansion of affiliates businesses for more use of car-

bon points

c. Korea Environment Corporation : •Process data on Gwangju's electricity, city gas, and

drinking water

d. Korea Electric Power Corporation(electricity company) : •Report data on energy use to Gwangju and Korea Envi-

ronment Corporation

e. Gas company •Report data on energy use to Gwangju and Korea Envi-

ronment Corporation

f. Waterworks company •Report data on energy use to Gwangju and Korea Environment

Corporation

g. Billing company

•Issue bills for electricity, city gas, and drinking water

h. Green Start Network •Promote carbon banking system and encourage participation •Educate and promote green life, and organize green leader

consultative group

I . Education center •Promote carbon banking system •Operate green leader fostering course

j. Carbon bank(Gwangju Bank in 2008-2013, all local banks since 2014)

•Issue carbon points with green card

k. The Ministry of Environment (joined since 2014) •Organize and manage the carbon banking system •Offer carbon points, cash-back, and other incentives

30 | 71

31 | 71

Carbon banking inventory project

Method for carbon banking inventory project

(1) Selection of sectors

- Electricity, city gas, drinking water

(2) Selection of areas

- Household and expansion to commercial, industrial, public sector

(3) Data collection (main data)

32 | 71

- GHG emissions in Gwangju for electricity, city gas, and drinking water in household, commercial,

industrial, public sectors(2001-2012)

Results of carbon banking inventory project

33 | 71

Method for carbon banking system baseline project

(1) Selection of sectors

- The same as in the inventory project method

(2) Selection of areas

- The same as in the inventory project method

(3) Development of projection equation for baseline scenario - Multiple regression analysis - Projection period: 2001-2020

(4) Selected variables

- Independent variables

•Electricity avg. price •City gas avg.

price

•City gas use households •Drinking water

avg. price

•Drinking water leakage rate •Population

•Industrial production index •Temperature

•Rainfall •Heating degree

days

•Cooling degree days •Season dummy

•Year dummy

- Dependent variables

•GHG emissions

Carbon banking baseline project

34 | 71

Results of the carbon banking baseline project

〈 1st step 〉 Selection of variables & details for data analysis: electricity, city gas, drinking

water

35 | 71

〈 2nd step 〉 Results of the projection equation

(1) Data accumulation on temperature, precipitation, expenditure (electricity, city gas, drinking water), and population with actual measurement value of CO2

36 | 71

(2) Results of multiple regression analysis

- Development of projection equation

37 | 71

3rd step 〉 Gwangju pilot baseline scenario project for selected sectors:

- Application of the development projection equation

- GHG emissions projection results based on electricity, city gas, drinking water usage projection results (All applied sectors: household, commercial, industrial, public sectors)

•Shows GHG emissions according to usage projection from 2013~2020

38 | 71

Effectiveness of the carbon banking system (2008-2012) (targeted household sector : participating households)

To boost GHG emissions reduction at household level and save energy in daily life To raise public awareness for climate change, and enhance the city's brand (value)

image as a leading low-carbon green city.

39 | 71

Projection Equation estimates 973,188 tonCO2 of reductions by 2020 in the household sector: Carbon financing using the 'Carbon Banking System‘

* Assumption: All Gwangju households participate by 2020

Comparison of emissions with and without carbon banking system policy, and emissions reduction

GHG reduction projection scenario through the carbon banking system (2008-2020)

40 | 71

Carbon financing using the 'Carbon Banking System' in a graphic form

41 | 71

Basic

Basic+

Expanded

• Scope 1 : Inventory, Baseline Sce-nario

• Step 1 (Sector) : Electricity, Gas, Drinking water

• Step 1 (GHGs) : CO2

• Scope 2 : GHG Reduction Target Setting, etc.

• Step 2 (Sector) :Transportation, Build-ings, Land use, Waste, etc.

• Step 2 (GHGs) :CH4, N2O

• Full coverage of

- Scopes- Sectors- GHGs

5.7 Draft GHG Projection • Diagnostics Expanded Version

42 | 71

July 2013 :Draft GPD Scope 1/Step1(Sector/GHGs) Version

January 2014 :Consultant Selection

June 2014 :Draft GPD Scope 2/Step 2 (Sector/GHGs)Version

July 2014 :Advisory Committee Meeting

Feb 2015 :Final GPD Expanded Version

5.8 Overall Timeline

43 | 71

We wanted to take a bottom up approach. Carbon banking starts with households, which is important be-cause household and commercial activities account for 39% of greenhouse gas (GHG) emissions in Gwangju. It also helps to raise public awareness for climate change, enhancing the city’s brand as a low-carbon leader.

Resource:http://www.worldbank.org/en/topic/urbandevelopment/publication/urban-innovations-series-conversations-on-green-inclusive-resilient-competitive-cities 

http://blogs.worldbank.org/sustainablecities/carbon-banking-helps-families-reduce-co2-emissions-gwangju

For more information : The World Bank Series “Urban Innovations”

44 | 71

45 | 71

Ⅵ Expanded PoA for Urban CDM

6.1 UEA/Gwangju Approach in the Context of Modalities & Proce-dures of CDM

6.2 Case of Iloilo City, the Philippines

6.3 Future Plan

46 | 71

6.1 UEA/Gwangju Approach in the Context of Modalities & Proce-dures of CDM

1) CDM Reform

Increased standardization

Multiple methodology approach

Improved interaction of UNFCCC with stakeholders

In general

Emission reduction in specific “priority sector”

Usually dispersed projects comprising different technologies

Multiple stakeholders, beneficiaries

Strong interrelation/mutual interference between sectors, institutions

Cities rather follow holistic and policy related approach to reduce emission, “Non-technical”

projects with large mitigation potential (e.g. urban planning, policy and carbon governance)

Limited experience/number of CDM projects so far

The urban context

47 | 71

2) Summary of Comparison of Conventional CDM and Urban CDM New Methodology

Contents Conventional CDM Urban CDM new methodology

Theoretical underpin-

ningsIsolated standalone view Holistic, Integrated, Smart view

Context Singular project development framework Urban planning and development framework

Scope Technology and products-oriented systemExtension of CDM to include policy, planning,

and Governance

Methods Use of existing method approved by UN-FCCC Combination of existing and new Method

Baseline sce-nario Constant level of emission Considerations for population and economic

growth. etc.

Measurement or calculation Measurement Measurement and estimation (or Calculation)

CertificationTradable certified emission

reduction(CERs) at single CDM project level

Aggregated tradable certified emission re-duction

(CERs) at the city-scale and between cities

MarketCarbon markets implemented at the nation

at regional level

Carbon markets to be implemented at the city level

Tool for urban planning Tool for disconnected infrastructure

Tool for 3Cs(Carbon Centered Comprehen-sive)

planning, Land-use based mechanism

Effectiveness analysis Project cost-benefit analysis Carbon balance sheet analysis

48 | 71

3) Conceptual Framework for the Urban CDM Methodology

Project Description : Flow Diagram

Conventional CDM Urban CDM

AM0042 grid-connected electricity generation using biomass from newly developed dedicated plantations

** Ref. Kim`s UNESCO Report

Urban SmartGris System

Electricity

City Gas

Oil

Coal

Electricity

CO 2 발생

49 | 71

Conceptual Model

Conventional CDM Urban CDM

※ Plantation: straws, reeds, banana peel, corns *Ref. UNFCCC CDM Methodology Booklet (Information including EB 66 May 2012)

• This Urban CDM Model is based on the Urban Smart Grid System and Integrated Urban Planning and Management. It can be scaled up into the Su-per Smart Grid System.

Comparison of Baseline Scenario of Individual CDM Project and Urban CDM PoA Scenario

TotalUrbanSystem

Residence

Land

Engineering

Renewable Energy

Industry

Solid wastemanagement

Water &Water waste

Urban Facility

Building

Transport

TotalUrbanSystem

Residence

Land

Engineering

Renewable Energy

Renewable Energy

Industry

Solid wastemanagementSolid waste

management

Water &Water waste

Water &Water waste

Urban Facility

Building

TransportTransport

TotalUrbanCDM

CDM forLow-Carbon

Building

CDM forLow-Carbon

Factory

CDM forLow-Carbon

Homes

CDM forLow-CarbonLand use and

Spatial Planning

Renewable Energy

Transportport

Urban Ecology

Solid Waste

CDM forLow-CarbonConsumer

Water and Waste water

TotalUrbanCDM

CDM forLow-Carbon

Building

CDM forLow-Carbon

Factory

CDM forLow-Carbon

Homes

CDM forLow-CarbonLand use and

Spatial Planning

Renewable Energy

Transportport

Urban Ecology

Solid Waste

CDM forLow-CarbonConsumer

Water and Waste water

<Urban Smart Grid System>

<Integrated Urban Planning and Management>

<Total Urban CDM Model>

Super-SmartGrid System

Feedback

Feedback

Individual CDM Project1

50 | 71

Procedures for PDD(Project Design Document)

Step & activities of conventional CDM Urban CDM

Step Activities Step ActivitiesStep 1 :Using existing single project methodology orDevelopment of single project methodology

1. Project Overview2. Baseline Methodology3. Set duration of project implementation and of CERs issuance4. Monitoring methodology5. Calculation of GHG emissions6. Environmental effect evaluation7. Comments from stakeholders

Step 1 : Development and Registration of New Methodology for Urban CDM

Standardization of Urban CDM methodology and registration to UNFCCC as a CDM project(This requires development or aggregation of methodologies available to use at a city-scale.)

Step 2 : Planning1. Formation of Project Team2. Capacity building/training for cities

Step 3 :Project Design (Being Planned)

3. Identification of participating cities4. Establishment of baseline scenario5. Calculation of the emissions expected without PoAs6. Development of Multiple PoAs7. Formulation of policy actions and development plans at the city scale8. Preparation of PoAs management plans9. Establishment of monitoring methodology to measure the actual level of emissions with PoAs10. Establishment of aggregation methodology11. Establishment of quantification and estimation methodology for cumulative volume of the emissions reduced with appropriate levels of aggregation12. Preparation of Project Design Document(PDD)

*Note: Procedure for CDM project using existing methodology

*Note: Procedure for registration of new methodology

51 | 71

Step & activities of conventional CDM Urban CDM

Step Activities Step Activities

Step 2 :CDM National Approval& Validation

Step 4 :National Approval

13. Approval of PDD by designated national authority(DNA)

Step 5:Validation

14. Validation of designated operation entity (DOE)15. Request for registration

Step 3 :CDM Registration

2. Apply for registration of CDM project to CDM Executive Board (CDM EB)3. Registration fee for CDM project varies projected average annual emission reductions. ※ (Maximum fee is US$ 350,000, excluding CERs issuance fees which needs to be paid even fee-free cases)

Step 6 :Registration

16. Registration of PDD by CDM Executive Board (CDM EB)

Step 4 :Financial Resources

Step7 :Construction & Operation

Step5 :Monitoring

4. MRV (Monitoring, Report, Verification) by CDM project implementing body or the third party (for certification). ※ Submit monitoring report to CDM Designated Operation Entity(DOE)

Step 8 :Monitoring

17. Monitoring of GHG reduction activities18. Aggregation of monitoring results of PoAs19. Quantification or estimation of the cumulative volume of the emissions reduced, compared with the BAU baseline level of emissions20. Preparation of monitoring report (MR)

Table Continues

52 | 71

Table Continues

Step & activities of conventional CDM Urban CDM

Step Activities Step Activities

Step 6 :Verification & Certification

5. The purpose of verification of CDM project is to identify achievements of actual GHG emissions reduction.6. CDM Designated Operation Entity (DOE) carries out evaluation of per-formance outcomes such as consis-tence between project design docu-ment and monitoring report, method used for monitoring, identification of GHG reduction amounts, project re-sults, etc.7. CDM DOE request for issuance of Certified Emission Reductions (CERs) in accordance with certified amount of GHG reductions.8. CDM DOE documents a certification report based on the submitted verifi-cation report.

Step 9 :Verification & Certification

21. Verification/certification of monitoring report by DOE & request for issuance

Step 7 :Issuance of CERs

9. CDM EB receives MRV report and issues CERs unless objections are made in 15 days.

Step 10 :Issuance of CERs

22. Issuance of CERs by CDM EB

Step 11 :Publication

23. Publication of the report on Urban CDM Joint Program

Step 12 : Post PoA Management & Evaluation

24. Selling and trading of CERs

25. Post-PoA management

26. Periodic evaluation

27. Final Project Reporting

53 | 71

Expanded PoA is new type of format with the combination of dif-

ferent categories/sectors that is a format of Urban CDM which UEA

seeks to develop eventually. (UNFCCC, unpublished paper, 2013)

Urban CDM in the form of multi-dimensional programmatic CDM (Expanded or Combined

PoA)

4) Development of Expanded PoA towards the Urban CDM

Definition of Expanded PoA

54 | 71

- Two options are considered to combine different sectors depending on the availability of methodologies approved by UNFCCC. Option 1 is to add a new CDM program of activities (CPA) to an existing CPA. On the other hand, Option 2 is to combine two new CPAs and more.

- As an example, a LED project and a solar panel project are in the same category of activities, i.e. renewable energy, but a LED project and a geothermal heating project are in the different categories.

Expanded PoA

Existing CPA (CDM project activities) 1

New CPA (CDM project activities) 2

Multiple project activities

CPA 11(Residential)

CPA 12(Public)

CPA 13(Commercial)

CPA 14(Industrial)

CPA 21(Residential)

CPA 22(Public)

CPA 23(Commercial)

CPA 24(Industrial)Cross-sectors

Option 1:Add a new CPA to an

existing CPA

+

Expanded PoA

New CPA (CDM Project Activities) 1

New CPA (CDM Project Activities) 2

Multiple project activities

CPA 11(Residential)

CPA 12(Public)

CPA 13(Commercial)

CPA 14(Industrial)

CPA 21(Residential)

CPA 22(Public)

CPA 23(Commercial)

CPA 24(Industrial)Cross-sectors

Option 2:Combine new CPAs

+

Conceptual Framework

Linkages between the Selected Components

Components of Framework for the Expanded PoA

55 | 71

The case of Iloilo City is designed to analyze possibilities of

option 2, combining two new CPAs (Solar panels and Geothermal

heating) as a pilot-testing project. It is important to note that

once a PoA for LED + geothermal is registered, the boundary can

be expanded to cover new cities and countries. Letter of Approval

(LoA) from each of the country where the country is expanded will

be needed. Also the PoA for more than one country can be regis-

tered if the LoA is available from all the countries (UNFCCC, un-

published paper, 2013).

6.2 Case of Iloilo City, the Philippines

56 | 71

(1) Iloilo model: An illustration of option 2

As a first step, optional combination of CPAs depends heavily on practical reality. Then, the combination can be expanded to cover more categories for the implementation of Figure 2. It means that the scoping process is necessary.

Expanded PoA

Solar Panels(New CPA)

Geothermal Heat-ing

(New CPA)

Residential: Expanded

(Parking Lots in City Hall,

etc.)

Public: Ex-panded

(Flats, Build-ings, etc.)

Residential: New/Ex-panded

(Buildings etc.)

Public: New/Expanded(Buildings

etc.)

+

Methods

57 | 71

(2) Identification of targets and project

plan

(3) Estimation of GHG emissions reduction by

each CPA

a. In the case of option 1 •CPA 11 (LED project 1) : Location, building #, size, investment plan, etc. •CPA 12 (LED project 2) : Location, building #, size, investment plan, etc •CPA 21 (Geothermal heating project 1) : Location, building #, size, investment plan, etc. •CPA 22 (Geothermal heating project 2) : Location, building #, size, investment plan, etc.

b. In the case of option 2 •CPA 11 (Solar panels project 1) : Location, building #, size, investment plan, etc. •CPA 12 (Solar panels project 2) : Location, building #, size, investment plan, etc. •CPA 21 (Geothermal heating project 1) : Location, building #, size, investment plan, etc. •CPA 22 (Geothermal heating project 2) : Location, building #, size, investment plan, etc.

a. In the case of option 1 •CPA 11 (LED project 1) : •CPA 12 (LED project 2) : •CPA 21 (Geothermal heating project 1) : •CPA 22 (Geothermal heating project 2) :

b. In the case of option 2 •CPA 11 (Solar panels project 1) : •CPA 12 (Solar panels project 2) : •CPA 21 (Geothermal heating project 1) : •CPA 22 (Geothermal heating project 2) :

58 | 71

(4) Introduced (Adopted) technology

On the basis of contained many examples in the UNFCCC

project descriptions, the following diagrams show the process of

converting traditional energy systems into renewable energy sys-

tems.

Option 2: Combine new CPAs

+ Energy Savings

Apply Factors

GHG Emissions Reduction

Source: CDM Methodology-AMS-I.J., UNFCCC

Solar Panels

Geothermal Heating

59 | 71

a. Monitoring

•Utilizing Meters

b. Expected Effects

•Reduce CDM-related transaction costs

•Enhance regional distribution (e.g. Asia, Africa)

•Consider interactions between project activities and sectors in aggregation and effectiveness of

the proposed expanded/combined PoA

c. Duration

•28 years (renewed every 7 years)

d. Implication

•Registered to UNFCCC by Gwangju, then distributed to other UEA Member Cities

60 | 71

Gwangju LED PoA

Expanded/Combined PoA as a format of Urban CDM

Urban CDM

Step 1

Step 2

Step 3

• Urban GHG Projection · Diagnos-

tics

program, GPD (Gwangju)

• The World Bank initiative

6.3 Future Plan

Phased-in-development of the Urban CDM

61 | 71

Spreading the expanded PoA to UEA member cities: to be introduced as an agenda at the next Iloilo UEA-Summit in 2015.

LED PoA:UEA City 1

LED PoA:UEA City 2

LED PoA:UEA City 3

LED PoA:UEA City 4

GwangjuLED PoA

Gwangju submits application to UNFCCC by Proxy of UEA

member cities

Exp. PoA:UEA city 1

Exp. PoA:UEA city 2

Exp. PoA:UEA city 3

Exp. PoA:UEA city 4

GwangjuExpanded(combined) PoA based on the existing LED

PoA

Gwangju submits application to UNFCCC by proxy

Step 1 Step 2

62 | 71

1) Expanded PoA in the Context of Modalities of CDM

CategoryInven-tory

Standard-ized

Baseline

Reduc-tion GHG

Projec-tion

Calcula-tion GHG

Addition-ality

MRV

Energy sector

Renew-able

energy

Solar en-ergy ○ ○ ○ ○ ○ ○ ○

Geother-mal

energy○ ○ ○ ○ ○ ○ ○

Energy

LED lamp ○ ○ ○ ○ ○ ○ ○

Electric-ity ○ ○ ○ ○ ○ ○ ○

City gas ○ ○ ○ ○ ○ ○ ○

Water Water Drinking water ○ ○ ○ ○ ○ ○ ○

Buildings

Transporta-tion

Land use

Waste

TotalN.B 1) Bottom-up approach(World Bank) 2) Top-down approach(UNFCCC, UNEP, Buildings) 3) Rationale when combined 4) Monitoring

63 | 71

2) The Application

Description of Projects(To be Selected)

Target Area : combination of a private house (or a multi-unit residence) and an office buildingTarget Project : e.g. a combination of solar panel project and geothermal energy project or a

combination of two (or more) renewable energy projects feasible to implement in the cityLocation : residential area and city hall buildingSize : (regarding amount of energy generation) to the extent which a project can be feasibleHow to measure : use measurement metersInvestment Plan

- Service Cost(Agency) : expenses for documentation to register a project to UNFCCC, and for a procedure

with DOE (designated operation entity), etc.

- Installation Cost(Equipment)

∙ Solar Panel (2 sets) and measurement meters

∙ Geothermal Energy Plant (1 set) and measurement meters

- Financial Resources : by submitting application(proposal) to ADB, USAID, GIZ, or GCF for collaborative

opportunitiesEffect

- A PoA needs to be registered only once by the CDM Executive Board of UNFCCC. After that, it can

include an unlimited and unspecified number of individual CPAs without recourse it to the CDM

Executive Board.

- The Expanded PoA is a pilot testing project developed by UEA in close consultation with UNFCCC.

It will be introduced at 2015 UEA Iloilo Summit and spread to UEA member cities over the globe.Timeline

- It aims to be registered to UNFCCC by the time of 2015 UEA Iloilo Summit

64 | 71

7.1 Conclusions

7.2 Suggestions

Ⅶ Conclusions & Suggestions

65 | 71

What I have presented in this paper is the 3 years' work of

UEA/Gwangju with international agencies for climate issues at the

city scale. One of the broad areas that are being highlighted in the

UEA/Gwangju program is climate change mitigation and related is-

sues at the city-scale, encompassing best practices, planning, pol-

icy, outreach (Governance) and all the other facets.

7.1 Conclusions

Low-carbon green cities will have big investment opportunities in cities both in developing and developed countries such as social overhead capital (SOC).

Gwangju/UEA are seeking to establish a world class carbon-free city

Two of main features of Gwangju low-carbon policies are:

Shifting from fossil-fuel oriented urban policy to new and renewable energy oriented urban

policy

Urban policies which are economically rational and can contribute to a global climate agenda

Urban CDM, GHG Projections•Diagnostics Program and Expanded PoA that UEA/Gwangju in collaboration with UNEP and World Bank are currently devel-oping will be utilized usefully not only as a tool for city carbon planning but also as for GHG accounting on different planning policy options and for eco-nomic tools.

The 'renewable energy grid system' and best management practices (BMP) that Gwangju is carrying out will become model cases that are also useful in an economical way.

The carbon banking system implemented in Gwangju is successfully operated due to active participation of involved actors, in particular, participating citi-zens.

66 | 71

This system was introduced at 2011 UEA Gwangju Summit and 2013 UEA San Antonio Summit. Many city representatives attending these Summits showed interest in the system and have requested Gwangju to disseminate it to their cities.

Therefore, it is expected that the carbon banking system, which is considered as a successful model case of the Korean green growth policy, shall be dis-seminated in order to contribute to the green economic development in the global society.

The Gwangju 100% renewable solutions makes clear that it is indeed econom-ically and technically viable to choose renewable energy system.

67 | 71

7.2 Suggestions

Through outreach programs, Gwangju and UEA are making efforts to contrib-ute to the international community by sharing accumulated programs, tech-nologies and experiences with cities wanting to be low-carbon green cities.

Gwangju and UEA are making endeavours to create a carbon-free city, and want to have UNEP, UNFCCC, the World Bank, and other related international organizations join these efforts. In particular, as a part of common duties for the GHG emissions reductions at developing country cities, not only ap-proaches including CDM and NAMAs but also opportunities for those cities to be funded by funding agencies need to be sought. Possible funding agencies could include USAID, KGGTF, GCF, and so forth. As a part of this effort, the next chapter suggests a proposal for a model of new carbon finance.

68 | 71

69 | 71

Ⅷ Proposal on a New Initiative for Implementation of The Urban CDM

　 - Development of a Compensation Model for Carbon Fi-nancing1. Objective

To develop and disseminate an easy, practical, simple Compensation

Model that can be implemented in line with existing CDMs, NAMAs,

and Other Carbon Financing systems.

To develop a Compensation Model in a format of Public-Private

Partnership(PPP), and of the 3rd sector: participation from central

government, local government, and commercial banks are required.

2. Possible Framework for the Compensation Model : Refinement of Gwangju's Carbon Banking Operating System(Figure 7)(to be Devel-oped)

3. Potential Partners : UEA, UNFCCC, UNEP, World bank, and varies fund agency

70 | 71

4. Source of Finance

E.g.)

The Korea Green Growth Trust Fund(KGGTF), World Bank - 1st year : USD 6,900,000 for 24 projects - 2nd year : USD 10,000,000 for projects to be invited

Other : GCF

- Development of business model in progress

5. Formation of Compensation Model Task Force

To prepare a concept note and the proposal on the development of a

compensation model for carbon financing

To submit them to the possible funding agencies in due course

71 | 71

Fig. 7 The Operating System of the Carbon Banking System

<Contact> Kim, Kwi-gon(Secretary General, UEA), Ph.D.(University of London) : kwigon@snu.ac.kr OH, Byoungchull(Senior Researcher, UEA), Ph.D.(The University of Tokyo) : obc9999@gmail.com www.ueama.org

Thank you very muchfor your Attention.