RESIDE0NTIAL SOLAR WATER HEATING AS A POTENTIAL CLEAN DEVELOPMENT MECHANISM PROJECT: A SOUTH AFRICAN CASE STUDY

Abstract

A community-based Clean Development Mechanism (CDM) project – asolar water heating project in a low-income community in South Africa –is analysed to illustrate the methodological and policy challenges that faceimplementation of the Kyoto Protocol to the United Nations FrameworkConvention on Climate Change. We evaluate four baseline options, andthree potential CDM interventions. The emissions reductions range from –670 to +5 929 Mg CO2 per year, with all option but oneshowing positive emission reductions. Using metered solar water heatingwith liquefied petroleum gas back-up as the CDM intervention, and electricstorage geysers as the baseline, the annual emissions reductions are 5686 Mg CO2. The cost-effectiveness from the national perspective,which is the incremental life cycle costs divided by the lifetime emissionsreductions, is –$18 per Mg CO2 From the perspective of theCDM investor, however, the cost-effectiveness is $5.2 per mgCO2, assuming that the investor receives all of the carbon credits forproviding the incremental capital investment. From our analysis, weconclude that using the current technology (kerosene stoves) as a baselineis probably not appropriate because it does not reflect likely future trendsand also penalises the community for their poverty and current lack ofinfrastructure. We also highlight the importance of credit sharing, and howit affects the cost-effectiveness of the project from the CDM investor'sperspective. The lessons from this analysis are important for the currentinternational policy debate on how to preferentially treat small-scale CDMprojects.