1. CLIMATE-KIC GHG MITIGATION ASSESSMENT TOOL INTRODUCTION Francisco Koch 1, Jon Hughes 2 and Martin Wattenbach 3 1 South Pole Advisory Technoparkstrasse 1 | 8005 Zurich | Switzerland 2 National Physical Laboratory | Hampton Rd | Teddington | Middlesex | UK | TW11 0LW 3 Helmholtz Centre Potsdam, GFZ German Research Centre For Geosciences,Telegrafenberg, 14473 Potsdam, Germany

2. Offers a stepwise approach to estimating your innovation project’s GHG mitigation impact potential Step 6 Leakage assessment Step 5 Calculate the estimated GHG Mitigation Impact Step 4 Describe the baseline scenario Step 3 Define the project unit and project boundary used for the assessment Step 2. Indicate the main GHG sources that will be reduced by the project Step 1 Describe how the proposed project reduces GHG emissions (GHG mitigation story) Innovation projects (Steps 1-6) Pathfinder projects Step 1 and 2 only GHG Mitigation Impact Assessment Tool

3. A good description of a KIC project will tell the reader......... What does your project do and how does it reduce GHG emissions? –Does it develop a new low carbon technology? –Does it enable something to be produced in a less carbon intensive manner? –Does it enable a service to be provided in a less carbon intensive manner? –Does it result in the development of tool that allows decisions to be taken that favour the implementation of lower carbon solutions? What are the main GHGs that are reduced and where do these gases come from –CO2 from a boiler, a heater, a car, etc –Methane from a landfill or a mine –etc. What would probably happen if your project is not implemented (baseline scenario), i.e. –How would the product have otherwise been produced? –How would the energy otherwise been generated? –How would the service have otherwise been provided? Step 1. GHG Mitigation Story

4. Step 2. Indicate the main GHG emissions sources GHG Mitigation measure (s) that result from your project’s implementation Targeted GHG Sources of GHG impacted by the measure Reduced Transportation emissions enabled by Advanced Low Carbon Transport planner CO2 Combustion of fossil fuels used for transportation with planes and lorries. Introduction of Combined Heat and Power Generators in SMEs CO2 Combustion of natural gas in boilers and fossil fuels used to run grid connected power plants Reduced Fertilizer Requirement enabled by low Carbon Fertilizer management tool CO2, N2O GHG emissions related to the production and transportation of fertilizer. Emissions linked to fertilizer application. Home Delivery of Groceries CO2Combustion of fossil fuels during car pick up of groceries.

5. Defining a project unit 1.What does the KIC project result in? Step 3. Define the project unit and its boundary KIC PROJECT Outcome New Technology (e.g. advanced Gas turbine, Home RE system Low Carbon product (e.g. Tomato, milk) Low -C decision making tools (e.g. Low C arbon Muncipal energy planning tool) Deployment of Existing Low C Technologies No emissions reductions Emissions reductions A project unit: -always results in direct emissions reductions -is not a decision tool, rather an example of the low carbon measures that are deployed as a result of low carbon decisions being made based on the use of that tool, i.e. “enabled” by it.

6. Defining a project unit 2. Give an example of what you think would be a typical application of what would result from your project AND ask yourself how GHG emissions are reduced? - A “typical application “ is e.g. A “demonstrator”, one that if successful, would be taken up by the market and used on a wide scale..... Step 3. Define the project unit and its boundary New Technology Low Carbon product or service Existing Low C Technologies (resulting from decisions taken as a result of the use of KIC Project developed tool Ultra High Efficiency Power GT Typical application: 1000 kWe GT power plant installed at a SME Chocolatier Turbine generates electricity at a lower C intensity than the grid thus reducing GHG emisisions. Industrial Heat Exchanger Inspection and cleaning service Typical application: Food & Drinks industrial plant Improved HT–exch anger performance resulting from optimum cleaning schedules means less fuel being burned to meet pocess heat loads and less electricity required to cool products down prior to storage Muncipal RE Self Generation Typical application: a Muncipality Solar heating/Power, Wind and LFG to power energy systems are installed. Electricity generated is electricity that no longer needs to be sourced from fossil fuel based power grid, thus reducing GHG emisisons. KIC Project outcomeProject Unit

7. Defining the project unit’ s boundary – e.g. high efficiency Gas Turbine power plant in an SME installation 3. Drawing a sketch helps visualize The area in which the GT is deployed and its area of GHG emissions influence ( i.e. the area within which its GHG impact is felt) How the implementation of the project’s outcome changes the energy supply configuration of the site Step 3. Define the project unit and its boundary SME installation Process Power Plant Grid connected (lower efficiency) Power plants) Ultra high EE Turbine-generator Nat gas SME installation Process Power Plant Grid connected (lower efficiency) Power plants) CURENT CONFIGURATIONNEW CONFIGURATION

8. Defining a project unit’s boundary – cont. 4. Identify the sources of GHG emissions that are used to calc. the project unit’s GHG emissions reductions and which are under the control of the entity responsible for the project’s operation (e.g. the SME installation operator): Existing GHG emission sources that are impacted by the project unit New GHG sources that result from the deployment of the project unit Step 3. Define the project unit’s boundary E Ultra high EE Turbine- generator (1 MWe) Nat gas SME installation Process CO2 from Gas Turbine (DIRECT EMISSIONS) Power Plant Grid connected (lower efficiency) Power plants) CO2 from grid connected power plants (INDIRECT EMISSIONS) Project Unit Boundary Elect. consumption

9. Define what is the output or service that the project unit provides and which would have also been provided in the absence of the KIC project. –Project unit electrical output: 3500 MWh/yr Ask yourself: “How would the output or service that the KIC project provides have been otherwise produced or provided” –i.e How would those 3500 MWh/yr been otherwise supplied to the process? Possible answers to the question (baseline scenarios) –The common practice in the relevant sector, that delivers outputs or services (e.g. electricity, heat or cement) with comparable quality, properties and application areas –Continuation of the current situation –Where relevant, the “proposed project undertaken without Climate KIC funding” undertaken at a later point in time (e.g. due to existing regulations, end-of-life of existing equipment, financing aspects). Step 4. Define the baseline scenario

10. Possible answers (baseline scenarios) - examples a) 3500 MWh/yr would have been sourced from the grid. SMEs find it too complicated to run their own power plants. b) 3500 MWh/yr would have been generated by gas fired genset. Electricity prices have been rising substantially over the past year and there is a trend for SME to install Gas fired gensets Rationale behind the choice of the Baseline Scenario needs to be provided by you –Scenario a) or b) ? –Each option associated to different levels of GHG emission.....therefore important to substantiate the choice Supporting evidence may include: –Market research to determine what is common practice in sector which the KIC project targets –Peer reviewed literature –Government data –Independent reports –Others that the project proponents feels helps substantiate the choice of the most likely baseline scenario But when in doubt be conservative (choose a baseline scenario that results in lower baseline emissions) Step 4. Define the baseline scenario

11. –GHG mitigation impact of the project is to be determined ex ante (at proposal stage) –Carried out by the project proponent based on the defined project unit’s characteristics and boundary, and presented in tonnes CO2 eq. yr-1 and Aggregate Tonnes CO2 eq. over the lifetime of the measure. –The assumptions underpinning the GHG emissions reductions shall be described and referenced with independent sources of information if available. Where: ERy = Emission reductions in year y, resulting from the Project Unit (tCO2eq. Year-1) BEy= Project Unit Baseline Emissions in year y (tCO2eq. year-1) PEy= Project Unit Project Emissions in year y (tCO2eq year-1) Step 5. Calculate the GHG Mitigation Impact

12. Estimating GHG Emissions Reductions –In the absence of the project it is assumed that the project units’ output (in this case electricity ) is entirely sourced from Power Grid connected power plants (based on the assumed Baseline scenario) –As a result of the project part of this electricity (3500 MWh) is now sourced from the GT Step 5. Calculate the GHG Mitigation Impact -cont Ultra high EE Turbine-generator (1 MWe) Nat gas SME Installation Process SME Installation Process Power Plant Grid connected (lower efficiency) Power plants) Power Plant Grid connected (lower efficiency) Power plants) 8000 MWh 4500 MWh 3500 MWh

13. Estimating GHG Emissions Reductions – cont –Calculate Baseline emissions: Were it not for the project unit being implemented, the amount of electricity that the project unit generates (3500 MWh) would have been sourced from grid connected power plants (assuming this is the baseline scenario). Step 5. Calculate the GHG Mitigation Impact –Baseline emissions SME Instalation Process Power Plant Grid connected (lower efficiency) Power plants) CO2 from grid connected power plants Baseline emissions scenario Elecricity sourced from grid (3500 MWh)

14. Estimating GHG Emissions Reductions – cont –Calculate Project Unit emissions: These are the GHG emissions that result from the implementation of the project unit. –In this case they result from the natural gas combusted in the gas turbine needed to generate 3500 MWh the process consumes Step 5. Calculate the GHG Mitigation Impact – Project Unit emissions Ultra high EE Turbine-generator Nat gas SME Process CO2 from Gas Turbine Project Unit Emissions 3500 MWh from Gas Turbine

15. Estimating GHG Emissions Reductions – cont Step 5. Calculate the GHG Mitigation Impact SME Instalation Process Power Plant Grid connected (lower efficiency) Power plants) BEy =tCO2/yr from grid connected power plants BL emissions BEy = Elec. (MWh/yr) x GEF Elecricity sourced from grid Ultra high EE Turbine-generator (1 MWe) Nat gas SME Installaton Process PEy =tCO2/yr from Gas Turbine PJ emissions PEy= Gas Cons. (GJ/yr) x Gas EF Elecricity sourced from GT

16. The GHG Mitigation indicator provides an indication of the extent to which a given GHG Mitigation Solution reduces the emissions associated with a given activity. GHG Mitigation Potential indicator = ERy / A where: ERy= Emission reductions in year y, resulting from the Project Unit (tCO2eq year-1) A = Activity metric (value for the actual project unit per year) e.g. – the quantity (e.g. tonnes) of low Carbon tomatoes that are produced by the project unit’s farm, – the amount of electricity (e.g. MWh) produced by the project unit low carbon power plant, – the size of the area (e.g.m2)of floor space that is heated or cooled by the project unit, – the total distance (e.g. km) travelled using a low carbon means that has been implemented as a result of a low carbon decision taken as a result of the use of a KIC developed tool and applied in an averaged size municipality in country X – etc. A is defined by the choice of Project Unit made by the Project proponent. The choice of A should be that which the project proponents feels would best assist an extrapolation exercise to estimate the mitigation impact that the wide scale uptake of the project ‘s outcome could have under various uptake scenarios. Step 5. Calculate the GHG Mitigation Impact- GHG Mitigation

17. Examples Step 5. Calculate the GHG Mitigation Impact- GHG Mitigation indicator KIC ProjectGHG Mit. Ind (tCO2 red./A) AExample of extrapolation escenario for a given uptake Ultra high EE Turbine tCO2 red. /MWh produced by GT MWh/yrXXXXX MWh of electricity used by SMEs could be provided by the Ultra High EE Turbine per yr resulting VVVV tCO2 reductions per yr Advanced Building Energy Management controls tCO2 red. /Sqft managedSqft/yrXXXXX Sqft of building area could be managed by the ABEM Controls leading to the VVVV tCO2 reduced per /yr Carbon Low Tomato tCO2 red. /tonne Tomato produced Tonnes of Tomatoes/yr XXXXX Tonnes of tomatos could be produced per year using the Low Carbon Tomato technology resulting in VVVV tCO2 per yr

18. Leakage = increase in emissions outside a project boundary as a direct result of the project Leakage is GHG emissions that are beyond the control of the entity implementing the project unit. Examples include: –A project whereby diesel is replaced by natural gas (leakage = CH4 that leaks from the T&D system till the point of delivery to the user) –A project that increases the use of biomass but creates a shortage or increases the market price, forcing others to use fossil fuel Project proponents are not required to quantify leakage However you should give thought to whether there is a risk that leakage may occur and if so, indicate this as part of your GHG mitigation impact self assessment KIC will then assess whether or not leakage requires further analysis, and communicate this to you if necessary. Step 6. Leakage

19. Training programme THANK YOU For further information on how to apply this tool please contact: Climate-KIC Mitigation Accounting Team: mitigation.accounting@climate-kic.org or visit https://sites.google.com/site/innovationstimeline2013/climate-accounting-miti