1. Opportunities and Challenges in Promoting Energy Efficiency Under the Clean Development Mechanism by Lando Velasco E xperts Group Meeting on Industrial Energy Efficiency, Cogeneration and Climate Change Vienna, Austria, 2-3 December 1999

2. u COP1 decision recognized energy efficiency as immediate and short-term measure to limit GHG emissions. u ‘No regrets’ measure for rapidly growing developing countries. u CDM provides opportunity for private sector participation in GHG mitigation u There is a need to set in place enabling institutions and policies for CDM to take place. Background

3. Energy Development Objective Energy policies will be geared to support the market- friendly and pro-poor policy of the government and the restructuring of the energy sector. The objective for the energy and sector is to ensure the availability of competitive, affordable, and reasonably priced energy supply through socially and environmentally compatible energy infrastructure. -Medium-Term Philippine Development Plan, 1999-2004-

4. Energy Mix, 1999-2004 (in million barrels of fuel oil equivalent, MMBFOE)

5. Cumulative Installed Generation Capacity 1999-2004 (in Megawatts, MW) Source: Philippine Energy Plan (1999-2004), DOE

6. 1994 Philippine GHG Inventory Source: Manila Observatory,1999

7. GHG Emissions in the Energy Sector Manila Observatory, 1999

9. Climate Mitigation Options Portal, UNDP-CDM Study, 1999

10. Opportunities u Legislative and policy measures are in place - Demand-Side Management Regulatory Framework - Passage of Clean Air Act - Proposed Electric Power Industry Restructuring - Proposed Energy Conservation Act u Climate change provides additional (global) benefits to national development priorities. u Promote energy efficiency in rapidly growing cities and rural areas - Integrate energy efficiency in local development planning process - Establish energy efficiency standards for mass housing projects u Accelerate transfer of climate-benign technologies and in-flux of investments - projected investment requirement for energy efficiency (1999-2004) is US$150 million.

11. Challenges u Excess capacity (abt. 2000 MW) until 2004 u Institutional arrangements u Enabling policies - e.g. green pricing, subsidy removal, incentives, etc. u Bureaucratic process in approving CDM applications - Flexibility to achieve balance in project development timeframe and consensus- building within the government. u Monitoring, evaluation, reporting and verification - transparency - capacity-building - rules and procedures

12. Recommendations Create multi-stakeholder agency that will process and monitor CDM projects. Establish guidelines for CDM applications and identify priority projects. Develop policy and fiscal packages for energy efficiency projects. Establish and enforce efficiency standards across sectors. Integrate energy efficiency in local development planning processes.