Currently, DSM and GHG emission mitigation measures are implemented quite independently.
DSM measures are implemented primarily to assist and improve the operation of electricity systems. Any impacts (positive or negative) of DSM measures on climate change are only a minor consideration, if they are considered at all.
Efforts to mitigate GHG emissions from electricity production have focussed on improving the efficiency of both electricity generation and end-use. However, emission mitigation measures focussed on increasing end-use efficiency have usually not considered any benefits to the electricity system (eg peak load reduction) that might be gained through implementing the measures.
The overall aim of Task XVIII was to reconcile these two different approaches so as to identify circumstances in which DSM can contribute to mitigating GHG emissions and emission mitigation measures can achieve benefits for electricity systems.
Task XVIII then determined what is required to maximise the emissions reductions and electricity system benefits from these two types of measures.
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The objectives for Task XVIII were:
The Work Plan for Task XVIII: DSM and Climate Change comprised six Subtasks. All six Subtasks of Task XVIII have now been completed and the results are summarised below.
In Subtask 1, Task XVIII Experts identified in their countries DSM projects which may have mitigated greenhouse emissions, and emissions mitigation projects which may have delivered benefits to the electricity system. Case studies for 18 DSM projects and 13 emissions mitigation projects were prepared by the Experts and the Operating Agent and entered into two on-line databases.
In Subtask 2, an innovative methodology using marginal emissions factors was devised to estimate emission reductions from four Australian DSM projects. Subtask 2 concluded that calculations of the GHG emissions reductions from individual DSM projects will always be estimates, the accuracy of which depends on the assumptions made about events in the electricity market and about how various DSM measures operate. The level of resources expended on carrying out such calculations should be appropriate to the level of accuracy required. The required accuracy level is ultimately determined by the purpose for which the emissions reduction are calculated, ie how the estimates of emissions reductions are intended to be used.
Subtask 3 showed that changing DSM activities to better mitigate GHG emissions involves mainly electricity distributors, technically-achievable outcomes and reasonably familiar applications. In contrast, modifying emissions reduction measures to achieve benefits for electricity systems comprises a plethora of activities, driven by a multitude of stakeholders, usually without a deep appreciation of the technical parameters. Reconciling the two approaches involves aligning differing business and institutional perspectives and approaches.
The term “fungibility” means interchangeability, particularly of one financial instrument with another based on identical terms. In this context, fungibility refers to the ability to trade any GHG emission reductions that are achieved through DSM programs. Subtask 4 found that there are two types of legal instruments traded in carbon markets: allowances and project-based carbon credits. DSM projects may be eligible to create carbon credits. Emissions reductions from DSM projects must be subject to accreditation, measurement and verification (AM&V) processes before carbon credits can be created and traded in carbon markets. All carbon markets have rules about who may trade in the market and what may be sold; DSM projects must fit into these rules to be able to use carbon financing.
Subtask 5 concluded that time-varying electricity pricing is a blunt and not particularly effective mechanism to achieve GHG emissions reductions. The main purpose of time-varying pricing is to motivate customers to shift load from peak to off-peak periods; the effect on emissions depends critically on changes in the generation mix on the system at different times of the day. In designing time-varying pricing initiatives to achieve emissions reductions, attention should be given to the appropriate allocation of risk, social equity considerations and the inelastic nature of electricity pricing.
In Subtask 6, the Operating Agent provided information about the progress of the DSM and Climate Change Task to the Experts through a regular newsletter.
Task XVIII has now been completed. Participating in Task XVIII enabled countries and organisations to:
Countries and organisations interested in the results of Task XVIII may contact the Operating Agent:
Dr David Crossley
Energy Futures Australia Pty Ltd
11 Binya Close
Hornsby Heights NSW 2077
Tel: 02 9477 7885
Fax: 02 9477 7503
Mobile: 0411 467 982
DSM Projects Database
Emissions Reduction Projects Database