Annex 4 - CiteSeerX

Initial Evaluation of CDM type projects in Developing Countries Annex 4 - Sustainable Development Aspects of Projects March 2000

By Dr K.G. Begg Project Coordinator

Centre for Environmental Strategy, University of Surrey, UK

Dr S.D. Parkinson


Dr Y. Mulugetta


Dr R. Wilkinson

Intermediate Technology Consultants, UK

Dr A. Doig

Intermediate Technology Development Group, UK

Dr T Anderson

Formerly Intermediate Technology Consultants

Contact Point:

Dr K. Begg, Centre for Environmental Strategy, University of Surrey, Guildford, Surrey GU2 7XH, UK Tel: +44 1483 876687 Fax +44 1483 876671 Email [email protected]

This document is an output from the project R7305 funded by the UK Department for International Development (DFID) for the benefit of developing countries. The views expressed are not necessarily those of the DFID.

Initial Evaluation of CDM type projects in Developing Countries

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Annex 4: Sustainable Development Aspects of Projects From the start of Joint Implementation activities under the UNFCCC there have always been reservations about how the mechanisms such as JI and the CDM could work in practice. Especially with the CDM where development goals may be ignored in the quest for certified emission reductions. How CDM projects will be implemented to safeguard the host country development aims, be sustainable, and maximise social economic and environmental benefits has not been defined in the Convention, though these are the aims of the mechanism. Host countries must approve all projects and are seeking capacity building to be able to assess projects proposed and to have a portfolio available to investors. To be able to perform these tasks it will be important to be able to assess project types both in terms of GHG reduction potential and costs but also the development and sustainable aspects of projects. For donors, it will be equally important that they are aware of the social and environmental implications. Annex 3 has already looked at the first climate related aspects. In this Annex, the projects are examined according to project type against a series of aspects of sustainability which are relevant to the CDM and development context. A4.1 Choice of Aspects There are many indicators discussed and used to try to define what is meant by sustainability (UNDP 1999, Azar et al 1996).. Many of these are at a national level that is not appropriate in this study. The choice of aspects contributing to sustainability of projects and of the host country has been influenced by the CDM context of the study. Those selected are •

Technology transfer,

•

Poverty Alleviation,

•

Capacity Building,

•

Environmental Effects,

•

Country Priorities and

•

Initiation of projects.

This range of aspects covers the concerns encompassed in the sustainable livelihoods approach which includes natural assets, social aspects, economic, political, human and physical assets and entitlements. These are discussed in detail for each of the aspects in turn in the following sections. A4.1.1 Structure of the Annex Projects are grouped according to type and examined under each of the aspects. Conclusions are drawn for each type under each aspect. This involves a comparison of the project type within and across countries. The numbers of projects analysed have been restricted by the level of detail which needs to be gathered for each project and the limited time available for Centre for Environmental Strategy, University of Surrey


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the study, and a larger database will be required for further work. Nevertheless there is a great deal of information that forms the basis for the comparisons made. A4.2 Technology Transfer Technology transfer is a key aspect of the UNFCCC. Developing countries are keen to make sure that they do not lose out on the gains to be had with the CDM and this is seen as a key factor. Technology transfer has been considered in this study in terms of the success of the transfer to the people. As discussed above the concept has been split into several different components, some of which are relevant to other key components such as economic impact, which is relevant to both technology transfer and poverty alleviation. Some emphasis has been placed on quantifiable indicators where possible but it is difficult with these alone to get an overall idea of the performance on key issues and the data quality and availability makes the numbers uncertain at this stage. The combination of components of technology transfer which are considered important in the process for the assessment of projects includes; • • • • • • • • • • •

initiation imported technology local technology energy needs met cultural needs met affordability training Quality Control participation of locals subsidy access to credit, /stability of income

A4.2.1 Technology Transfer of Solar Homes Systems Introduction Solar Homes Systems are comprised of imported Photovoltaic (PV) panels which can be amorphous or crystalline which then have different output strengths and lifetimes with the crystalline version being better but more expensive. They require a deep discharge battery or batteries , charge controllers, invertors and other equipment but once installed are relatively low maintenance, mainly for the battery. The battery is charged up in the day and provides lighting in the home preferably with low energy bulbs such as compact fluorescent bulbs (CFLs). If there is sufficient power then other devices such as cassettes, TVs , fridges and HIFIs can also be run. In the cases examined, Kenya and Zimbabwe, the Kenyan systems were sufficient only for the provision of lighting and some TV. The electric lighting replaces kerosene lamps for part of the time. These general aspects are summarised in Table 2.1 and the technology transfer aspects in Table 2.2.

Centre for Environmental Strategy, University of Surrey


Table 2.1 General Aspects of SHS General Aspects Kenya SHS 50Kshs=$1 Programme size 150000HH 17W peak average PV;50000 last 5 y Capital cost of SHS to 250-500USD (12-20W) consumer Target customer group rural middle income, urban middle and high income Timescale 1984 to date Lifetime 10y (amorphous silicon) replacement of kerosene 25%-50% replacement approx for lighting price kerosene 35Kshs=0.7US$ per litre Direct/Indirect effects better quality of light for study/teacher prep, extend working time, economic activity at home fridges for medicines, TVs less indoor pollution less fire risk less GHG jobs some replacement dry cells for cassette players etc


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Zimbabwe SHS 10Z$=1US$ (1997) GEF 9800 rural areas (households, schools, clinics, SMEs) ave size: 45Wp 530-790USD ave 45W ZESA subsidies 350USD high and middle income 1993-1999 20y (crystalline silicon) 100% replacement approx 0.2US$ per litre (1997) better quality of light for study/teacher TVs fridges for medicines less indoor pollution less fire risk less GHG some replacement dry cells for cassette players etc scares away witches status


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Table 2.2 Technology Transfer for SHS Kenya SHS

50Kshs=1US$

Zimbabwe SHS 10Z$=1US$ (1997)

Technology Transfer initiation timetable imported technology Local technology

Energy needs met Cultural needs met Affordability

Training

Private co then development orgs internal and external 1984-to date solar panels/invertors battery, charge controllers, electronics, tube assemblers local industry created 20 component companies (cos) 15 supplier cos 150-200 jobs direct 50 jobs sales and marketing 20 jobs servicing TOTAL 270 jobs TV servicing, video shows, room rentals limited, 12-20Wp, 60Wh/day/HH lighting and few other devices eg TV No info repayment costs US$7/mth (10-40%??) 65L kerosene costs replaced=3.8USD/mth/HH battery replacement unknown cost time left not repaying capital cost? 5y? 25%-50% replaced kerosene initially private company then donor funded for maintenance and installation training and commercial training 40 technicians 90% men


UNDP GEF to private cos 1993-99 PV modules 10 new for manufacturing and assembling solar components 40 installers (were 50) 600 jobs created

250Wh/day/HH capable of powering many other devices Provides status, scares witches repayment costs estimated at Z$17/mth =4% upper income, 11% middle income, 43% poor income (ie poor cannot afford them) ZESA Z$10/mth= 6% middle, 25% poor income training only half way through project. in companies, installers, manuals


Kenya SHS

50Kshs=1US$

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Zimbabwe SHS 10Z$=1US$ (1997)

Technology Transfer ctd Quality Control

NONE problem 3 inspectors 30% not working, 30% no charge controller so installers problem defaulting battery problems more inspection teams and resources needed smuggled sets giving bad reputation Fault rate 20% 70% repaired in 3 months, mainly batteries and controllers Participation of locals commercial demand generated by demo projects not at start only govt and industry, then trade fairs, in schools etc schools, mass media and leaflets Subsidy Tax exemptions from GEF project and exemption from import tax (about 150%) Future development none planned, depends on commercial forces; depends on commercial success would need more/larger panels and network of batteries Access to credit /stability Poor HH benefit from recent pilot for loans from GEF credit at 15% and 15% deposit, 3y of income COOP bank of Kenya and Kenya Rural ZESA scheme for rural poor over 10y Enterprise programme



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Discussion From Table 2.2 above, it can be seen that in both these country programmes there is considerable experience with many SH systems. The size of system is quite different in each country however with the GEF project system 3 times the size of the Kenyan one (17Wp ave).

Initiation In the Kenyan Case the SHS projects are commercial but the market has been developed and driven by donor funded aid projects. NGO and donor agencies have funded education and demonstration projects which have helped develop the market. The starting point was in 1984 with one small private company. The injection of funding from donor agencies helped to establish the main market and the small private enterprise for small systems benefited from that. In contrast, the Zimbabwe project started as a multilateral donor funded project (GEF/UNDP) at government level which strove to set up a thriving commercial sector before withdrawing funding. However due to the large import tax in Zimbabwe, which did not apply to the donor programme, many companies set up under the GEF are facing a bleak future and the continuing commercial success of SHSs is in doubt. In most cases the main factors cited which influence success are • Availability of credit • Quality control • Stability of income

Rural/Urban/Poor In Kenya and Zimbabwe the population which buys the systems are mainly middle income households in rural areas and middle and upper in urban areas (buying for rural). There are programmes in both countries to target the poor with preferential loan schemes. The cost is therefore high for these systems and they are just beginning to reach the poor. There is discussion that that there will be a trickle down effect from rich to poor but there is no sign of that happening yet.

Quality Control In both countries, quality control is a problem both for the specification of the system especially with smuggled sets and with those sold with no charge controller, and for the installation quality which is a market for ‘cowboys’. Lack of proper quality control systems and inspections are leading to high failure rates. Other projects which have paid attention to this aspect do not have these problems which would lead eventually to an overestimate of emission reductions.



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Imported/Local technology Solar Homes systems have the PV panels and invertors imported. Other components are manufactured locally. The nature of the mainly imported technology also leads to delays in repair. In the Kenyan case many more systems are installed per year than the Zimbabwe case but the market has had a longer time to develop. However in Kenya it seems to be more efficient as 270 new jobs achieve the far higher installation rate compared to 600 jobs in Zimbabwe. Both project have enabled a number of new companies to flourish but many installers in Zimbabwe are in towns and the support for the rural areas can be limited especially in the light of travel costs. Training There is a great deal of emphasis in both schemes on training. In the commercial case of Kenya the training which started off in company, is now to some extent donor funded through NGOs for maintenance and installation technicians. The wider community awareness was built up through demonstration projects and through an education programme donor funded. For Zimbabwe though not initiated from the start a training programme was also put in place though it is not clear how this will continue. Consultation In Kenya, the commercial aspect from the start did not have consultation with local people as a priority but as part of the marketing strategy school demonstration projects did involve the community. For Zimbabwe, a similar marketing strategy in schools and the use of trade fairs and mass media for interaction with the public have been used. Affordability and value In Kenya and Zimbabwe the monthly cost is roughly the same at 10-40% income (middle to low income range). However this is for a system in Kenya which is 1/3 of the size of the GEF system in Zimbabwe. Yet the capital costs seem to be comparable though higher for the size in Kenya. Either income levels in Kenya are much lower or the credit terms are very different or the subsidy of credit at 15% rather than 40% market rates provided by the GEF programme is distorting the comparison. The level of payment for the SHS in Kenya is about the same as for kerosene per month while in Zimbabwe where kerosene is subsidised and cheaper, the SHS repayments are significantly more expensive per month (x10). The price of kerosene in Kenya is 3 times that of Zimbabwe yet the replacement of kerosene for lighting in Kenya is only 50% compared to 80% in Zimbabwe. It would have been expected that the replacement would be greater in Kenya. There could be several reasons for this. The data may not be correct or the system size in Kenya is too small to meet all the lighting (and TV) needs. In Kenya the energy supplied is 60 Wh/day compared to 250 Wh/day/HH in Zimbabwe. The greater energy service provided in Zimbabwe means that in Kenya mainly lighting is supplied Centre for Environmental Strategy, University of Surrey


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while in Zimbabwe other appliances can be used simultaneously. For a household in Zimbabwe the system can support 3 x 12 W CFL bulbs for 4 hrs and a TV for 2 hours compared to 2 x 12W bulbs for 21/2 hrs in Kenya. In addition the system lifetime in Kenya is only 10 y compared to 20y for Zimbabwe so that there seems to be a poorer deal for Kenya with the commercial system. However as the GEF system was subsidised it would be interesting to compare on commercial prices. Conclusions There is a large variation in how the projects are initiated and implemented. The projects studied have different approaches to initiation, commercial and AID funded, but both are aiming to generate a commercial market. In both cases, training has been donor funded and there seems to be a constructive interaction between the two. Donor funding can inject financial help at crucial points enabling commercial success. Quality control and training are crucial not just for commercial success but also as part of a guarantee of emission reductions as they are important for reliability and maintenance. Import tax and other fiscal structures need to be geared towards encouraging commercialisation of projects. The technology transfer of SHS is not complete in the sense that the main component is imported and therefore the technology is not sustainable in either country. More effort is needed to transfer the whole of the technology. SHS are affordable only to middle and high income groups in the countries studied. More work is needed to identify peoples habits to find out why replacement is 50% or 80% and what is really being replaced. For example what are the arrangements regarding Compact Fluorescent Lights and their affordability. In-country lack of policies to prevent theft and smuggling of SHS sets is a problem. A4.2.2 Technology transfer for Improved Cookstoves Introduction At the opposite end of the technology spectrum is the improved cook stove. This is a simple device designed to improve on the traditional open 3 stone fire for cooking. It usually consists of one or two burners with an enclosed area for the firewood allowing more heat to be directed towards the pot and achieving an efficiency of about 25% compared to 10% for the open fire. There is a consequent reduction in firewood and fumes and a saving in cooking and wood gathering time. Mainly women benefit from these improvements though there is some evidence that the stoves allow more than one meal a day to be cooked thus benefiting the whole household. A more complete description is given in Annex 1. The design of the stoves is different in each country with Kenya being single burner with charcoal in urban areas and wood in rural areas, while in Sri Lanka only the wood stove is Centre for Environmental Strategy, University of Surrey


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available and it is twin burner. The amount of wood saved with the twin burner seemed much greater than the single burner. Most of these stoves are in rural areas where what is saved is biomass and time to collect wood rather than money. In the Kenya case the charcoal stoves save money. The general aspects of the projects studied are given in Table 2.3 and the technology transfer aspects in Table 2.4 .



Table 2.3: General Aspects of Improved Cookstoves General Aspects Kenya ICS 50Kshs=$1 Two types of stove: woodstove and charcoal stove SINGLE POT DESIGN rural HH size = 8, urban HH size = 6 size 500000 rural, 1.62m urban Capital cost of ICS to 300Ksh consumer Target customer group rural/urban households Timescale 1983 to date Lifetime 2-3y replacement of fuel 4134Kg/y/HH down to 3307Kg/HH/y = 827Kg/y/HH (firewood) 0.7Kg/day/cap reduced to 0.4Kg/cap/day = fuel savings 876Kg/HH/y (charcoal) price firewood if bought 9Ksh/Kg mainly rural price charcoal if bought 40Kshs/Kg mainly urban Direct/Indirect effects less firewood/ charcoal used less fuel cost more meals less indoor pollution (if Firewood) less eye infections (if Firewood) less chest infections (if Firewood) cleaner kitchen (if Firewood) freed time from cooking, washing and collecting wood (if Firewood) less carrying and back trouble (if Firewood)


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Sri Lanka woodstove TWO POT DESIGN HH size = 4 1m 90-120 SLRs rural/urban households, rural poor in tea plantations 1996 3-4y but traditionally replaced annually 0.8-1.8Kg saved/cap/day=1197-1898Kg/HH/y

less firewood/ charcoal used less fuel cost more meals less indoor pollution less eye infections less chest infections cleaner kitchen freed time from cooking, washing and collecting wood less carrying and back trouble more boiled water on second burner


Table 2.4 Technology Transfer Aspects of ICS Technology Transfer Kenya ICS 50Kshs=$1 ICS Two types of stove: woodstove and charcoal stove SINGLE POT DESIGN rural HH size = 8, urban HH size = 6 initiation MERD/USAID/GTZ and others timetable imported technology Local technology

Energy needs met Cultural needs met Affordability

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Sri Lanka woodstove TWO POT DESIGN HH size = 4 IDEA mainly NGO phase1 and with other partners phase 2 1983-to date 1991 none none large and small scale urban ceramic industries Local potters trained (50) and artisans Rural artisans through women’s groups and individual potters and get kiln, moulds and workshops Local potters trained , now commercial better cooking less time and less pollution better cooking, less time, less pollution No change No change ave 10% income on fuel in urban • Stove costs 90-120 SLR incl installation • Phase 1 commercial outlets only affordable only • charcoal savings 876Kg/HH/y saved by middle and high income group (payback 3 =US$700/a/HH months) • firewood in rural areas normally gathered by • Phase 2 where local partner operates revolving poor. Where paid for 827Kg/y/HH saved fund for poor at 2.5% over 6 months for cost of =US$150/HH/y stove for poor • 50% stoves bought by those on US$1/day in • 1197-1898 Kg firewood saved /HH/y rural areas • firewood in rural areas normally gathered by • In urban areas it is more middle and high poor. income groups who can afford stove The stove is 3-5 times traditional stove costs



Technology ICS ctd Training

Quality Control

Transfer Kenya Training for rural potters in liner production and in business management and marketing 5000 rural 1000 urban 65/35 women/men 9 organisations involved including MERD KENGO and other NGOs

NONE and is becoming a problem

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