Elsevier

Energy Policy

Volume 35, Issue 11, November 2007, Pages 5526-5534
Energy Policy

Enabling optimal energy options under the Clean Development Mechanism

https://doi.org/10.1016/j.enpol.2007.05.031Get rights and content

Abstract

This paper addresses the cost effectiveness of renewable energy technologies in achieving low abatement costs and promoting sustainable developments under the Clean Development Mechanism (CDM). According to the results of our optimal energy option's analysis, at project scale, compared with a diesel-only energy option, photovoltaic (PV)–diesel (PVDB), wind–diesel (WDB) and PV—wind–diesel (PVWDB) hybrids are very cost-effective energy options. Moreover, energy options with high levels of renewable energy, including 100% renewables, have the lowest net present cost and they are already cost effective without CDM. On the other hand, while the removal of about 87% carbon dioxide emissions could be achieved at negative cost, initial investment could increase by a factor of 40, which is one of the primary barriers hindering wider renewable energy applications in developing countries, among others. Thus, in order to increase developing countries’ participation in the carbon market, CDM policy should shift from a purely market-oriented approach to investigating how to facilitate renewable energy projects through barrier removal. Thus, we recommend that further research should focus on how to efficiently remove renewable energy implementation barriers as a means to improve developing countries’ participation in meaningful emission reduction while at the same time meeting the needs of sustainable economic development.

Introduction

The Kyoto Protocol entered into force on February 16, 2005, after nearly 8 years of negotiations. Article 12 of the Protocol, the Clean Development Mechanism (CDM), is a flexible program for reducing emissions that is designed to achieve the dual objectives of providing cheaper emission abatement options to developed countries while assisting developing countries meet their national sustainable development objectives (UN, 1997; United Nations Climate Change Framework Convention (UNFCCC) Secretariat, 2002a, UNFCCC, 2002b). However, there are often tradeoffs between achieving low costs and promoting sustainable development. In this regard, in a competitive carbon market, CDM has not yet provided large-scale sustainable development benefits for developing countries in conjunction with cost-effective emission reduction options for developed countries (Olsen, 2005; Cosbey et al., 2005). In this paper, we examine the emission reduction potential and costs of village-level projects, including household electrification, seawater reverse osmosis, and ice-making plant projects. We also consider the barriers to such projects and the extent to which CDM may play a positive role.

To understand how CDM can contribute to sustainable energy projects at the village scale, we must first understand the tradeoffs, between project costs and sustainable development and emission reduction goals. To do this, this research examines three aspects of project-scale emission reductions: (1) Are there innovative project designs that maximize the delivery of energy services at the village scale and thus achieve direct sustainable economic benefits? (2) What is the marginal cost and supply curve for emission reductions at the project scale? And (3) how can CDM enable effective sustainable development investments, through CDM trades and system designs that remove project implementation barriers, enhance emission reductions, and increase the renewable energy fraction.

Section snippets

Background

The methodology is implemented by creating supply curves of sustainable development opportunities using a suite of possible development projects for a small village located in Eritrea, East Africa. The village, Bera’esoli, is located along the east coast of Eritrea, adjacent to the Red Sea, and has a population of a little over 100 households. The village of Bera’esoli is selected for two reasons. The first reason is that the village is part of a wind energy development project funded by the

Data

The primary electricity loads used in the analysis are hourly, daily, and monthly energy consumption computed at a project scale in Gilau's (2006) thesis paper including the household electricity load, seawater reverse osmosis, and ice-making electricity loads. In order to accommodate energy demand variability, 20% and 15% noise is added in The Hybrid Optimization Model for Electric Renewables (HOMER) (NREL, 2006), for daily and hourly loads, respectively. The average wind speed of the study

Comparative economic analysis for carbon dioxide emissions

According to the integrated renewable energy optimization model simulation results, there are eight feasible energy supply options arranged according to their total net present costs (with the high diesel price assumed, $1/l) (Fig. 1). Generally, the most expensive options consume the most diesel fuel (Fig. 2) and therefore emit more CO2 than the least cost ones. However, even though the most expensive options consume more diesel fuel, this does not always mean that a lower cost option uses

Conclusions

This study has shown that optimally designed and operated PVDB, WDB, and PVWDB hybrids can provide the energy supply for small communities and achieve substantial CO2 emission reductions at negative net present cost. Our results indicate that at negative marginal net present cost, CO2 emission could be reduced by about 87%, i.e. from about 300 t CO2/year to about 40 t CO2/year. On the other hand, while the economically optimal choice among these renewable energy options decreases the total net

Acknowledgments

Support for Asmerom Gilau and Mitchell Small was provided by the Carnegie Mellon University Steinbrenner Institute for Environmental Education and Research; the Vira Heinz Endowment and the H. John Heinz III Professorship in Environmental Engineering at Carnegie Mellon University; and the US Environmental Protection Agency, Office of Research and Development, Global Change Research Program (Cooperative Agreement R-83053301), through the Pennsylvania State University Consortium for Atlantic

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