CDM allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol to implement an emission-reduction project in developing countries. Such projects can earn sellable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

The introduction of Programs of Activities into the CDM (as programmatic CDM) can better promote sustainable development and emission reductions in developing countries – with energy efficiency and particularly residential energy efficiency playing the leading role.

Energy efficiency

Energy efficiency improvements could contribute to half the world’s potential emission reductions by 2020 according to the IPCC. Energy efficiency is severely underrepresented in the CDM.

Just five of the 1,226 registered standard CDM projects by December 2008 were for energy efficiency in commercial buildings. However, of the four projects that have reached validation in programmatic CDM, three are for residential energy efficiency.

The promise of programmatic CDM

Rather than one-off, large scale industrial and renewable energy projects, residential energy efficiency through programmatic CDM can facilitate dispersed enduse activities that change the energy consumption of millions of households over a wide geographic area.

Emissions reductions, aggregated over the lifetime of such energy efficiency measures can equal the abatement from large scale industrial projects.

The impact is rapid. Residential energy efficiency – in the first instance energysaving lighting such as compact fluorescent lamps (CFLs) and in more developed markets other energy-saving devices and measures – takes immediate effect at the point of installation.

Residential energy efficiency also has proven ability to change consumer behaviour. Programmatic CDM projects can provide significant public education and energy efficiency awareness through large and well targeted media campaigns.

Moreover, programmatic CDM domestic energy efficiency can be applied broadly in the developing world.

It cuts energy use and can reduce pressure on supply and infrastructure in parts of the developing world where improved living standards are driving energy consumption. And in less developed countries – including Africa, South Asia and the Middle East where the CDM has been limited – energy savings can lead to significant poverty alleviation.

An important step for programmatic CDM has been the Mexican Government’s recent approval of its first residential energy efficiency project.

Cool nrg’s planned CUIDEMOS Mexico (Campana De Uso Intelegente De Energia Mexico) will cut Mexico’s carbon emissions by 8 million tonnes of CO2 over ten years and save households an estimated $US165 million.

The program will distribute one million free energy-saving light bulbs to low and middle income households in its first year in the state of Puebla, aiming to deliver 30 million bulbs across Mexico over the program’s lifetime.

In Mexico, for the poorest 40 per cent of the population, changing four lights to CFLs saves around one week’s income in reduced power bills.

And it is estimated the program could save the Mexican government $US585 million in electricity generation infrastructure costs.

Needing workable methodologies

Despite the promise of CUIDEMOS Mexico, there are a low number of residential energy efficiency projects in the CDM pipeline because of the lack of viable, widely applicable methodologies.

At present CDM is too focused on technical details that impose impractical monitoring and verification requirements. This is restricting the ability of projects participants to provide sustainable development and emissions reduction.

For example, CUIDEMOS Mexico will use small scale methodology AMS II C for demand side energy efficiency. But onerous monitoring of energy savings makes up some 35 per cent of total project costs.

Revisions to AMS II C approved at the 41st meeting of the CDM Executive Board may make future residential energy efficiency programs unlikely. These revisions include a baseline penetration rate for existing energy efficient technologies. This revision discounts the CERs and limits CDM’s capacity to undertake market transformation through programmatic activities and is counter to the programmatic CDM goal of facilitating a market transformation through energy efficiency.

Delivering on the potential of programmatic CDM

The Executive Board has committed to greater programmatic CDM and supports the ‘bottom up’ development of methodologies for energy efficiency projects that use practical and conservative calculations for emission reductions.

Most recently, the board approved Small Scale Methodology II.J for energy efficient lighting technologies, originally proposed by the World Bank in October 2007. This methodology deems savings based on equipment specifications and conservative assumptions rather than impractical monitoring of each piece of equipment. The methodology is an exciting prospect.

However, revisions to II.J before its approval by the Executive Board may prove a retrograde step and call into question the utility of the new methodology.

Such revisions could include the previously mentioned baseline penetration requirement and allowing CERs to be earned only for the rated lifetime of efficient lighting equipment rather than with actual lamp survival. So no credits can be given for 50 per cent of the light bulbs expected to remain in operation beyond their rated lifetime.

There is a clear need for pragmatism over unpractical precision for programmatic methodologies and greater energy efficiency expertise in the CDM administration. Failing this, CDM will be unable to deliver the emissions reduction and sustainable development potential of residential energy efficiency.