Analysis and optimization of carbon trading mechanism for renewable energy application in buildings

Renewable and Sustainable Energy Reviews 73 (2017) 435–451

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Renewable and Sustainable Energy Reviews journal homepage: www.elsevier.com/locate/rser

Analysis and optimization of carbon trading mechanism for renewable energy application in buildings

MARK

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Zhaoxia Wang, Jing Zhao , Meng Li School of Environmental Science and Engineering, Tianjin University, Tianjin 300072, China

A R T I C L E I N F O

A BS T RAC T

Keywords: Carbon trading mechanism Volume verification method Programmatic clean development mechanism Renewable energy applications in buildings Solar energy and geothermal energy technologies

In order to keep sustainable development, the Chinese government has issued series of policies to reduce CO2 emissions. Renewable energy technologies applied in building field, mainly including solar energy and geothermal energy technologies, are recommended because of advances of energy efficiency, environmental protection and economic sustainability. Carbon trading has been widely accepted as an effective market approach, but it hasn’t covered the renewable energy application in building projects in China as yet. Reasonable solutions should be proposed to encourage building projects to participate in the carbon trading market. This paper aims at establishing a feasible mechanism to help improve the carbon market for renewable energy application in buildings. To attend this goal, this paper introduces and analyzes the status of carbon trading market and the position for building projects in China. By comparing the present mechanisms, Programmatic CDM with building portfolio is considered appropriate for building projects with renewable energy application. Volume verifying method, the core of the mechanism, is modified to fit the building projects. Then five different specific cases are studied to prove the practicality and reasonableness of the methodology. Programmatic CDM with modified verifying method is concluded as the proper mechanism for renewable energy application in buildings in carbon trading market.

1. Introduction Climate, energy and economy are inextricably linked. It is a fact that all goals should be met under the premise of acknowledging and confronting it [1]. Considering that the major part of greenhouse gases (GHG) is carbon dioxide, there is a global concern of reducing carbon emissions. In addition, major energy consumer countries are looking for alternative energy sources to avoid the impact of high fossil fuel prices and political instability [2]. Therefore, renewable energies are considered to be the new outlet to offset carbon footprint for the advantages of cleanness, renewability, recyclability, and infinite reservation [3]. The building sector has been considered as one of the three major energy consumption and carbon emission industries in China [4]. The Chinese government pays high attention to the development of renewable energy application in buildings, such as supporting demonstration projects by the national government [5,6]. Carbon trading is a global market mechanism to promote GHG emissions reduction. The basic principle of carbon trading is that one party pays the other to obtain permits for GHG emissions according to contract. The buyer can use the purchased emission credits to offset the carbon footprints and achieve its emission reduction targets. Among

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the measures promoted in Copenhagen Climate Conference 2009, Clean Development Mechanism (CDM) is the only international recognized carbon trading mechanism and suitable for all the emission reduction plans worldwide [7]. In 2009 Copenhagen Climate Conference, the Chinese government made a political commitment to reduce China's carbon emissions by 40% in 2020 compared with 2005 [8]. Since then, China has witnessed the prosperous development of carbon trading, especially CDM. 1503 CDM projects have been registered with the annual emission reduction of 334 million tCO2e. Among the registered CDM projects, new energy and renewable energy application projects accounted for 80.73% and the emission reduction accounted for 46.48% [9]. However, no building projects with renewable energy application were approved or registered. These phenomena are opposite to the application trend of renewable energy in buildings. The economic benefit of buildings applied with renewable energy cannot be fully achieved. So establishing a suitable carbon trading mechanism in building field to support enterprises or projects participating in the carbon trading market is of significant necessity. The most important technological part involved in the carbon trading mechanism is verifying the carbon trading volume. However, scientific and feasible method appropriate for

Corresponding author. E-mail address: [email protected] (J. Zhao).

http://dx.doi.org/10.1016/j.rser.2017.01.094 Received 19 January 2016; Received in revised form 13 December 2016; Accepted 15 January 2017 Available online 01 February 2017 1364-0321/ © 2017 Elsevier Ltd. All rights reserved.

Renewable and Sustainable Energy Reviews 73 (2017) 435–451

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which were far from the target characters [11]. The average ratio of cumulative trading volume to carbon emission cap in the pilot cities was only 1.42%. The trading volumes were very low, even no deals, for most of the time. Second, the trading price fluctuated. The maximum, minimum and average trading prices from July 2013 to November 2016 are shown in Fig. 2. The prices differ a lot from 2 USD/t to 18 USD/t. The unstable prices are harmful to setting up a nationwide mechanism. Third, the industries and enterprises were limited [26]. Many enterprises or projects are inappropriate to take part in carbon trading mechanism. All these phenomena reflect the low efficiency of China's carbon trading market in current stage.

buildings with renewable energy is absent at present. This paper reviewed the problems of China's carbon trading market and analyzed the reasons for little market share of building industries. In order to solve these problems, the proper mechanism should be studied. To prove the feasibility of attracting building projects with renewable energy application into carbon trading market, the status quo of renewable energy applied in buildings and the CDM verifying methodologies were overviewed. Programmatic CDM was designed as the suitable mechanism for buildings projects. Then a comprehensive methodological framework for the verification of carbon trading volume of building projects with renewable energy application was established by modifying the CDM methodologies of renewable energy. Chinese cases of solar energy and geothermal technologies, namely solar photovoltaic system, solar water heater and ground source heat pump respectively, were studies in detail to show the feasibility and reasonability of the method.

2.1.3. Imperfect mechanism design The carbon trading market in China is designed differently with the European Union Emission Trading Scheme (EU ETS) and California's Cap-and-Trade program (CA CAT). The Chinese Certified Emission Reductions (CCERs), which promotes voluntary emission reductions to offset the compliance obligation, is the main mechanism in the seven carbon trading pilots. As the carbon emission quota mechanism in the developing China, the specified quota allocation method of CCERs should be proposed with the consideration of production expansion and economy development. So Beijing, Shenzhen, Guangdong and Hubei have decided their quota as separated ones for existing facilities, production expansion and potential adjustment respectively. Shanghai and Tianjin divided the quota into two parts, namely existing facilities and new production. Only the quota in Chongqing are allocated to existing facilities. However, the CCERs quota only allocated for enterprises or organizations for the convenience of proprietorship, no projects based quota have been proposed in current stage. It makes the carbon emission verification difficult for some projects. For one thing, the verifying and pricing method should be designed based on the practical information of different industries. For example, in some industries reducing carbon emission is very easy while it may be very difficult in others. Under this condition, if the carbon trading price is the same, the difficult industries will not participate in carbon trading. For another, the verifying method should be established based on not only macro requirements but also the practical projects. The lack of reasonable verification method makes traders lose confidence on Chinas’ carbon trading market.

2. Difficulties for building projects to access the carbon trading market 2.1. Problems of China's carbon trading market and mechanism 2.1.1. Low position in the international market The global carbon trading market has been increasing explosively since the “Kyoto Protocol” officially took effect in 2003. According to the World Bank, the total global carbon trading market has increased from 96.77 billion USD in 2008 to 148.88 billion USD in 2012, with the transactions increasing from 4.81 billion tons in 2008 to 10.42 billion tons in 2012. However, the growth in 2013 was not really obvious because of the downturn in European market and the low price of global carbon trading. In 2013, China launched the first carbon trading pilots in Shenzhen, Guangzhou, Shanghai and Beijing, and soon become the second largest market worldwide. Because of the booming market in China, Australia and other economic entities, the carbon trading market is considered to be the most promising commodity trading market. The total carbon trading amount is predicted to reach 3500 billion USD in 2020. At the same time, only 10% of CO2 was emitted by the EU. China made the largest emission of 720 million tons in the world in 2012. Chang and Wang's research has shown that China's total carbon emissions have accounted for approximately 1/3 of the global market, ranking first in the world in 2010 [10]. So the success or failure of China's carbon trading market will determine the fate of the international carbon trading market in the future. However, China doesn’t have the same position with its important potential in carbon trading market. The carbon trading currency and financial instruments are formed by developed countries. China is not in the pricing party for now. Low carbon economy and development is both opportunity and challenge for China. Innovation and acceleration of the carbon trading market is urgent for Chinese government to achieve high position in the international market and largest national interests.

2.2. Little market shares of building projects in carbon trading market in China The main carbon trading markets in China are the seven pilots. The involved industries are shown in Table 1. As shown in Table 1, the most common industries involved in seven pilots market are high carbon emission industries, including iron and steel, power, cement, petrochemical, oil and gas. Building industries are involved in Beijing and Shenzhen markets and hotels are involved in Shanghai market. However, no practical carbon trading of building projects has been conducted for now. The market share of building projects is zero. Moreover, not much attention has been paid for building projects and the position for building projects in carbon trading market is low. The reasons are mainly the following three aspects:

2.1.2. Low efficiency of current domestic carbon market China's carbon trading market is stimulated by the government. The developing plan of domestic carbon trading market, shown in Fig. 1, is formulated by the central government. As shown in the roadmap of implementing domestic carbon trading market, China is stepping into the expanding stage. The results of pilot stage show that the rate of compliance is higher than 95% and all the covered enterprises have experienced the carbon trading process. However, the pilot effects are not satisfied. First, the trading volume, embodied not only in the cumulative trading volume and total turnover, but also in the ratio of cumulative trading volume to carbon emission cap, is low. The cumulative trading volume was 13.80 million tons by October 2014 with the total turnover of 75.38 million USD,

(1) High development cost for a single project. The development cost of CCERs projects is counted by the project number instead of the emission quantity. The emission quantity of each building project is generally low, accordingly the development costs are relatively high compared with other high emission industries. (2) Unsuitable quota-based mechanism for building projects. Building is a comprehensive system including occupants, equipment, lamps, heating and cooling units, etc.. The energy consumption and emissions of buildings varies with the climate conditions, func436

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Fig. 1. Road-map of China's carbon trading market.

Maximum

Minimum

20

Average

Different ratio of maximum and minimum price

82.25

90

79.95

Carbon trading price (USD/t)

18

80 66.07

16

59.99

57.08

14

60

12 10

70

50

42.84

40

32.81

8

30

6 4

20

2

10

0

0 Beijing

Shanghai

Guangdong

Tianjin

Shenzhen

Hubei

Chongqing

Pilot city Fig. 2. The carbon trading prices of pilot cities (July 2013- November 2016).

Based on the above analysis, both China's total carbon trading market and buildings’ market part have problems, ending in the low position of building projects in China's carbon trading market. So attracting building projects into carbon trading market not only help stimulating building energy efficiency but also contribute to improve China's carbon trading market.

tional features and operation and management. Even the same building's emissions are different with different occupants. So the fixed emission quota is difficult to be established scientifically. Specially, the energy consumption and emission data is unclear in China, which makes quota establishment even difficult. (3) The lack of specific verifying methodology. Among seven pilot markets, only Shenzhen released guidelines about verification, quantification and reporting of building greenhouse gas emissions [12,13]. In the guidelines, the verifying process and contents in reports are requested in detail. The calculation methodologies are rough, generally based on emission factors without considering the building system variation.

3. Feasibility analysis of building projects with renewable energy application participating in the carbon trading market It is essential and possible to attracting building projects into carbon trading market based on reasonable mechanism design. This section discusses the necessity and feasibility based on two aspects. To start with, buildings are paid great attention to reduce energy consumption and improve energy efficiency. One prominent action is

Because of the above reasons, the building projects generally not participate in current carbon trading market.

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Table 1 Industry and emissions covered in seven pilots. Region

Emission covered

Industry involved

Beijing Tianjin Shanghai Chongqing Hubei Guangdong Shenzhen

40% 50–60% 57% 39.5% 33% 58% 40%

Heat generation and supply, thermal power generation, cement, petrochemical, building industries, etc. Iron and steel, chemicals, electricity and heat, oil and gas, petrochemical industries Power, Steel, chemicals, nonferrous metals, paper, rubber, airport, airlines, hotels, etc. Electrolytic aluminum, calcium, caustic soda, cement and steel industries. Electricity, steel, cement, chemicals, plastic, chemical fiber, medicine, food & drinks and other 12 industries. Iron and steel, cement, power and petrochemical industries. Power industries and building industries, etc.

(2) Renewable energy application in buildings has been promoted from demonstration projects to demonstration cities and towns by the government since 2009. Through this transformation, largescale, integrative and systematic technology architecture was established and standards and regulations were improved. The mechanism of government leading combined with market promotion was formed. 72 demonstration cities and 146 towns were determined until 2011. These demonstration cities and towns were centrally over costal regions, Northern China and Southern China. The application area of GSHP and solar combined GSHP were 130 million m2 and 65 million m2 respectively by the end of 2011. (3) The renewable energy application in buildings was promoted further by the government in 2012. Key demonstration projects were launched in each province in China. It meant that contiguous promotion was expanding.

replacing fossil energy with renewable energy gradually. Renewable energy has been widely adopted in the building projects and keeps increasing. The application scale is described in Section 3.1. If carbon trading is conducted, the benefits will be impressive. Additionally, renewable energy has already played significant role in the carbon trading market at present. The trading mechanism for renewable energy is trending to maturity. The existing mechanism can be adopted after optimizing and modifying to fit the practical building projects. For example, CDM has methodologies for carbon trading volume verifying of renewable energy projects in power industry. After defining the boundary and input information, the methods can be adopted in the building field. So buildings, especially renewable energy applied projects, are feasible to enter the carbon trading market. The two aspects are described as the follows in detail. 3.1. Review of renewable energy application in buildings

At the same time, the industry of renewable energy application in buildings has been developed and become a strong driver for renewable energy applying in large-scale. The distribution of solar PV industry, solar water heater industry and GSHP industry are shown in Fig. 4. Because of high investment and long payback period, the application is mainly promoted by the government and market is out of function at present. Market mechanisms are expected to realize sustainable development of renewable energy application in buildings. If carbon trading is conducted, the benefits will increase. So carbon trading is considered as a hopeful measure. The development of solar energy technologies and GSHPs applied in buildings are summed up respectively in detail.

Under the circumstance of dealing with climate change, energy shortage and environmental pollution, renewable energy is being paid great attention and applied widely worldwide. In 2013, the proportions of renewable energy in primary energy demands for the G7 countries were Canada (8.20%), France (1.88%), Germany (3.02%), Italy (2.17%), Japan (2.47%), the United Kingdom (1.05%), and the United States (10.58%). The share of fossil fuels in global primary energy consumption is expected to decline to 82% in 2035 from 87% in 2012 [14]. It has been predicted that China consolidates its position as the world's largest energy consumer in the coming 20 years. By the end of 2035, 70% more energy than the United States is estimated to be consumed in China, even though, China's per capita demand is still less than half the level in the United States [15]. Based on this condition, the Chinese government has been paying great attention to the development of renewable energy by considering it as an important measure to ease the rigorous problem of a sustainable, reliable energy supply and reduce the serious climatic effects of GHG emissions [16]. The main renewable energies applied in building sector are solar energy [17] and geothermal energy [18]. The application of renewable energy in buildings has been promoted by the government since 2006. The development of renewable energy application in buildings can be divided into three stages: (1) project demonstration stage (2006–2008), (2) cities and towns demonstration stage (2009–2011) and (3) provincial key demonstration stage (since 2012) (Fig. 3). The demonstration scope and applied building areas are expanding gradually. The characteristics of each stage are described as follows in detail.

3.1.1. Application of solar energy in buildings Solar energy technologies can be classified as passive technology and active technology roughly [19]. Passive solar energy technology merely collects the energy without converting the heat or light into other forms, for example, maximizing the use of day light or heat through building design. In contrast, active solar energy technology needs to store or convert the solar energy for other applications, which can be broadly classified into PV technology and solar thermal technology. Passive solar energy technology is adopted combined with existing buildings retrofits or energy-efficiency design of new buildings in China, so the emission reductions cannot be measured separately. This paper only discusses active solar energy technologies, including PV technology and solar thermal technology. (1) PV technology Two types of PV systems are currently available in the market, including grid connected or centralized systems and off-grid or decentralized systems. Germany, Italy, Spain and the United States lead the development of centralized PV systems. Grid-connected PV connects with the grid and supplies the power to electricityconsuming equipment, if having surplus, inputs the power to national or regional grid [20]. Due to large rural populations, conventional off-grid systems (e.g., solar home systems) are favored in China. Off-grid PV system supplies electricity entirely based on solar cells and the source is only the power generated by

(1) Four series of renewable energy building application projects were collected by the government between 2006 and 2008. 386 projects were determined as demonstration projects, in which 291 projects were GSHP projects with the demonstrated area of 33 million m2. 36 provinces and municipalities were included. This stage was recognized as the foundation of expanding application scope of renewable energy in buildings. 438

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Fig. 3. Promotion process of renewable energy in buildings.

solar thermal electric. The applications of the former include solar water heaters, thermal storage walls, solar cooling systems, solar cookers etc. The latter uses solar heat to produce steam for electricity generation, also known as concentrated solar power (CSP). Four types of CSP technologies are currently available in the market, including parabolic trough, Fresnel mirror, power tower and solar dish collector [23]. For solar thermal non-electric system, three types of solar collectors are found in the market, including unglazed, glazed flat-plate and evacuated tube. In China, solar water heaters are most widely applied in building field. It is one of the earliest renewable technologies applied in buildings. China has witnessed the rapid expansion and stable evolution since 1998. The annual production and installed building areas of solar water heaters are shown in Fig. 7. As depicted in Fig. 7, the production and building installation of solar water heaters has been continuously increasing during the past 15 years. The increasing rate transition was around 2010. Before 2010, the increasing rates of both production and building installation were 20% in average. However, the increasing rate declined sharply in recent years. The main reason of production

solar cells. It can be used for off-grid buildings and consumption products (e.g. solar lighting etc.) [21]. The annual global installed capacity of PV system of 2013 was 40,000 MW, in which China accounted for 31.2% with the installed capacity of 12,920 MW [22]. The annual and accumulated installed capacity of PV system in China is shown in Fig. 5. The application of PV system in buildings has been increasing with the accumulated capacity, as indicated in Fig. 3. However, the proportion was declined. The development of PV technology in buildings was slower than other fields. The phenomenon has great relationship with the market stimulation, such as carbon trading. The building area with PV system is shown in Fig. 6. As shown in Fig. 6, the building area with PV system was continuously increasing. The amplification of density was even sharper than building area, nearly 50 times in 2014 based on that of 2008. However, the amount was only 934.69 W/million m2. The PV technology applied in buildings has large promotion spaces. (2) Solar thermal technology Solar thermal technology uses solar heat for heat energy or electricity generation. It comprises solar thermal non-electric and

Fig. 4. Distribution of solar energy and GSHP industrial bases.

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40000

50 Annual installed capacity (MWp)

35000

45

Accumulated installed capacity (MWp)

40

Propoertion of building PV system 35 29.79

25000

28.73

30

25.98 24.18 23.78

20000

23.40

25 19.25 20

15000 13.72 13.51

13.67 11.13

10000

Proportion (%)

Installed capacity (MWp)

30000 34.21

Accumulated installed capacity in building field (MWp)

15 10.13

7.89 8.72

10

5000

3206.00 5 1100.00 95.00 19.00 17.20 18.00 41.00 390.00 1875.00 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 10.20

6.50

7.00

11.00

13.20

16.50

Year Fig. 5. Annual and accumulated development of PV system.

4000

1000 Existing building area (million m2)

900

3500 210

800

550

Density (W/million m2)

700

2500

600

310 2000

500 670 3220

1500 2700

301 1000 500

147

1480

322

400 300

2150

Density (W/million m2)

Building area (Million m2)

New building area (million m2) 3000

200 1032

1179

2009

2010

100

710

0

0 2008

2011

2012

2013

2014

Year Fig. 6. PV system applied in building field.

Annual production (million m2)

Installed building area (million m2)

Production increasing rate (%)

Installation increasing rate (%) 40

450 400

30 20

300 250

10

200

0

150

-10

100 -20

50

-30

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Fig. 7. Development of solar water heater in building field.

440

Increasing rate (%)

Area (million m2)

350

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70

450

Annual increasing building area (million m2)

400

Accumulated building area (million m2)

60

Increasing rate (%)

350

50

300

40

250 30

200 150

Increasing rate (%)

Building area (Million m2)

500

20

100 10 50 0

0 2006

2007

2008

2009

2010

2011

2012

2013

2014

Year Fig. 8. Development of GSHP in building field.

sources for fossil energy.

rate was export subsidies. Unstable operation effect, supplydemand imbalance and long payback period were the main reasons for restricting the solar water heaters applied in buildings [24].

3.2. Review of CDM methodologies of renewable energy projects The core of carbon trading mechanism is verifying the trading volume. CDM provides methodologies of calculating the emission reduction of small-scale projects [29], which can be adopted as the technical support for verifying the carbon trading volume for building projects [30]. At present, 8 relevant methodologies about solar energy technologies have been approved by CDM Execute Board. Three methodologies, Electricity generation by the user (AMS-I.A.) [31], Renewable electricity generation for captive use and mini-grid (AMS-I.F.) [32] and Grid connected renewable electricity generation (AMS-I.D.) [33], have been applied to actual small-scale solar photovoltaic (PV) projects. The three methodologies describe the calculation process in detail for their eligible projects. Their applicability is listed in Table 2. Moreover, there are two approved small-scale methodologies about PV projects, shown as follows:

3.1.2. Application of geothermal energy in buildings GSHP is the most widely used system of geothermal energy. GSHP technologies include ground coupled heat pumps, ground water heat pumps and surface water heat pumps. GSHPs exchange heat between soil/water and indoors via the piping systems which are buried around the building. The soil or water is used as heating source in winter and cold source in summer. The coefficient of performance (COP) of GSHPs is generally 4.5–6.0 in summer and 4.5–5.0 in winter. Through years of exploration, proper types for various buildings in different climate regions are designed and operated [25,26]. Based on the statistics in 2015 World Geothermal Congress, the annual thermal energy used of GSHPs was 327136TJ in 2014, which increased 39.8% and 83.4% over 2009 and 2004 respectively. The installed capacity was 39129MWt in 2014, which was 1.46 and 1.76 times of 2010 and 2005 data respectively [27,28]. In China, the building area with GSHPs during 2006 and 2014 are shown in Fig. 8. As shown in Fig. 8, the building area with GSHPs was more than 460 million m2 in 2014, which was 14 time over the data in 2006. GSHPs are applied in various buildings, shown in Fig. 9. The distribution in Fig. 9 was obtained from surveys of 163 GSHP projects. GSHP has been widely accepted as a stable system for heating and cooling, supporting geothermal energy as alternative energy

Electrification of rural communities using renewable energy (AMSI.L.) [34] is applicable to electrification of a community achieved through installing new, renewable electricity generation systems that displace fossil fuel use. The applicability is limited to facilities and energy consumers that do not have access to any electricity distribution system/ network. Energy efficiency and renewable energy measures in new residential buildings (AMS-III.AE.) [35] is applicable to projects that lead to reduced electricity consumption in new, grid-connected residential buildings through adopting one or more of the following measures: efficient building design practices, efficiency technologies, and renewable energy technologies. It is not appropriate for commercial buildings or industrial buildings. For thermal energy production, 3 methodologies have been approved, as follows: Thermal energy production with or without electricity (AMS-I.C.) [36] is applicable to renewable energy technologies that supply users with thermal energy that displaces fossil fuel use. Combined heat and power (cogeneration) systems are eligible under this methodology. It describes the calculation process and lists the formulas in detail, but it does not distinguish the difference between connectedgrid electricity generation and off-grid electricity generation.

Fig. 9. Distribution of GSHPs in building field.

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Table 2 Applicability of AMS-I.A., AMS-I.D. and AMS-I.F. [31–33]. Project type

AMS-I.A.

Project supplies electricity to individual households/users or groups of households/users (included in the project boundary) located in off grid areas Project supplies electricity to a national/regional grid Project supplies electricity to an identified consumer facility via national/regional grid (through a contractual arrangement such as wheeling) Project displaces grid electricity consumption (e.g. grid import) and/or captive fossil fuel electricity generation at the user end (excess electricity may be supplied to a grid) Project supplies electricity to a carbon intensive mini-grid system where in the baseline all generators use exclusively fuel oil and/or diesel fuel

√

By the end of 2015, no specialized methodologies about geothermal energy technology was approved by CDM Executive Board. As discussed above, there is no systematic and comprehensive methodology which can be directly applied in the building projects using solar and/or geothermal energy at present, resulting in insufficient drivers and economic benefits for renewable energy application in buildings in China. To solve this awkward situation, this paper established a practical method for verifying the carbon trading volume for renewable energy technologies in building field by modifying CDM methodologies. 4. Design of carbon trading mechanism of renewable energy application in buildings 4.1. Optimization of carbon trading mechanism for building projects with renewable energy application

Trading subjects Market mechanism

Emission quota Cap and trade mechanism Determined by the cap Buyers and sellers are balancing competed.

Carbon credit Baseline and credit mechanism

Available emission Market relationship

Emission source enterprises Third part

Generally energy consumption industry Little effect in emission reduction certification

√ √

As the reasons listed in Section 2.2, the emissions of single building projects are relatively small amounts. To solve a series of problems, the Programmatic CDM [44] is recommended. It offers a main framework, which is the aggregation of decentralized and time-wise disconnected activities. The emissions of small-scale or medium-scale projects can be calculated separately. Then these projects can be recognized as a polymerized formation to entry the carbon market. The proprietorship is a severe problem for Programmatic CDM. As for building projects with renewable energy application, two options can be selected, namely renewable energy portfolio and building portfolio. As for the renewable energy portfolio, the city government can combine all the distributed renewable energy for carbon trading. However, this portfolio is not proper in China, because the government's role in China's carbon trading market is the supervisor. If the government also plays the traders, cheating might happen. The building portfolio means accumulating the carbon emission reduction volume of building projects owned by the same owner. For example, the carbon emission reduction of all the Hilton Hotel buildings can be combined for carbon trading. The turnovers can be allocated by headquarter. However, individual investors and institutional investors may not belong to a large group. In this condition, the industry association and third party with well-deserved reputation can act as the leader to combine the individual and institutional investors. In this way, the market liquidity can be ensured and more investors will be attracted into the carbon trading market. So the building portfolio is suggested.

Table 3 Comparison of project-based market and quota-based market. Project-based market

√ √

4.2. Programmatic CDM

Carbon trading has been considered as a key market incentive mechanism. Clean Development Mechanism (CDM), Joint Implementation (JI) and Emission Trading (ET) are the three carbon trading mechanisms derived from the “Kyoto Protocol”. Based on these mechanisms, the current global carbon trading market mainly includes two types of markets. One is the quota-based trading market, with ET as the main form and the European Union Allowance (EUA) as the main transaction subject [39]. The other is the project-based market, with JI and CDM as the main forms and Emission Reduction Units

Quota-based market

AMS-I.F.

(ERU) and Certified Emission Reduction (CER) as the main transaction subjects [40]. The characteristics of the two markets are shown in Table 3. Based on the characteristics listed in Table 3, the quota-based market is appropriate for an enterprise or a city to encourage or enforce carbon emission reduction. For building projects, the project-based market is suitable. On one hand, the development of building energy efficiency field, renewable energy application included, are immature. The emission quota allocation is difficult because of variety of building projects and flexibility of a certain project. On the other hand, the building market is developing rapidly with increasing demand of housing and construction. Market mechanisms are effective drivers for building energy efficiency and sustainable development. Under this condition, the project-based trading market should be promoted. So the carbon trading mechanism in China should be transformed from quota-based market to project-based market in the building field gradually. CDM, as the most popular mechanism in the project-based market, is the terrific choice. China indorsed CDM in 2004 and has quickly become the dominant CDM carbon credit supplier, accounting for 43.25% of the world's CDM reduction potential, equivalent to the summed potentials of Latin America, Africa and the Middle East [41,42]. Among these registered CDM projects, building field takes little proportion, especially renewable energy projects [43]. So recovering the lacks on carbon trading process of building projects with renewable energy application by modifying CDM is reasonable and feasible.

Solar water heating systems (SWH) (AMS-I.J.) [37] is applicable to the installation of residential1 SWH systems and commercial SWH systems for hot water production. Cogeneration systems are not eligible under this methodology. It only draws a sketch of calculation process. Solar cookers for households (AMS-I.K.) [38] is applicable to the projects that introduce solar cookers to individual households for household cooking purpose (i.e. meal preparation, water heating and baking for household consumption). Its application is more strict than AMS-I.C., so less actual cases adopt AMS-I.K. compared with AMS-I.C..

Characteristic

AMS-I.D.

Emission from each projects Buyers and sellers have the common benefit: maximum compensation. Determined by detail projects Play an important role in credit baseline and quota certification

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considered. Because the annual emission reductions in building field are small, usually less than or equal to equivalent 60 ktCO2e, this study adopts fixed credit periods, comprising one period not exceeding 10 years.

5. Verification method of carbon trading volume In Section 4, Programmatic CDM with building portfolio is recommended as the proper carbon trading mechanism for building projects with renewable energy application. In order to adopt Programmatic CDM in building projects, the carbon trading volume verifying method of should be modified based on the methods for renewable energy projects. The proposed method includes calculation scope, input information, process and equations.

5.2. Calculation of the baseline emissions 5.2.1. Baseline emissions calculation of solar energy technology application in buildings Referring to present situation in China and relevant CDM methodologies, baseline scenario can adopt the following approaches:

5.1. Methodology framework

a) For PV technology, baseline scenario can adopt national/regional grid or captive power plants in buildings; b) For solar thermal technology, baseline scenario can adopt the most common water heating system at local or other comparable circumstance, such as natural gas fired boiler, oil fired boiler, coal fired boiler etc..

Before estimating the amount of the annual emission reductions, some surveys should be finished, including basic information of target buildings, the type of technology etc., and then the cumulative emissions reductions need to be calculated to the end of the credit period [45]. The spatial extent of the project boundary comprises main equipment (GSHP units, solar PV modules or solar thermal collectors), auxiliary equipment, power grid, pipeline network and all energy consumption facilities physically connected with grid or network. To simplify calculations, this study only considers the emissions generated by the main equipment, as shown in Fig. 10. The calculation scope of CO2 emissions should guide the specific calculation process, which is indicated as dotted lines in Fig. 11. For the calculation of the emission reductions, the key issue is the baseline emissions, which are the theoretical emissions that would have occurred in absence of renewable energy technologies. The technologies adopted in the baseline scenario should be implemented in typical buildings most widely, excluding the solar energy technologies and GSHP technology, at local or at other sites with comparable circumstances. Assuming that the electricity or heat generated in baseline scenario is equal to that generated in the project, the energy consumption quantity of projects can be calculated in baseline scenario. The baseline emissions are expressed as the quantity of energy consumption multiplying by CO2 emission factor in a transparent and conservative manner. The project emissions are calculated according to actual monitoring records. The equipment is generally new, so leakage emissions can be considered as 0. If the main equipment is transferred from other projects, the leakage emissions should be counted then. The calculation framework is shown in Fig. 11. The emission reductions earned by the project are calculated as the difference of baseline emissions and project emissions, leakage emissions, as follows:

ER y = BEy − PEy − LEy

Baseline emissions are the quantity of CO2 emissions in case of the quantity of energy supply in the baseline scenario being equal to that in the project. They are expressed as the quantity of energy supply multiplies by an emission factor, as the follows:

BEy = EGP, y × EFy

Where EGP, y is the quantity of net energy supply (electricity or heat energy) as a result of the implementation of the project activity in year y (MWh or kJ);EFy is CO2 emission factor of solar energy technology in buildings in baseline scenario in year y (tCO2e/MWh). (1) Determination of EGP, y For PV technology, EGP, y is the quantity of net electricity supplied to the grid produced by PV systems, which can be obtained from the metering equipment on site or in the control room, as follows:

EGP, y = EGfacility, y

EGP, y =

The emissions are not included in calculation. Storage battery

Power-consuming equipment

Solar thermal collectors

Auxiliary electric heater

Domestic water devices

Auxiliary heating/cold source

Air-conditioning/heating terminal devices

Energy supply side

(4)

a) Use documented manufacturer's data; b) Conduct a representative number of sample measurements of ηBL of similar boiler types (e.g. new coal-fired boilers) at the sites with comparable circumstances and then calculate conservative values combining with the regression analysis according to measurement result; c) Use the data provided by national or regional relevant standards; d) Use the default values in Ref. [46] (Table 4).

SGHP units

Water pumps, cooling towers etc.

c × m × Δt ηBL

where ηBL is the efficiency of the heat source in baseline scenario (%);c is the specific heat at constant pressure of water (J/kg °C), the default value is 4.184×103 J/kg °C; m is the quantity of hot water supply per day (kg/d); Δt is rising temperature of hot water produced by solar heating system (°C). For solar thermal technology, if the baseline scenario is national or regional grid, ηBL can be considered as 100%, referring to Tool to determine the baseline efficiency of thermal or electric energy generation systems [46]. If baseline scenario is the boilers consuming fossil fuel, ηBL can be determined using the following approaches:

Where ER y is the emission reductions in year y (tCO2e/y);BEy is the baseline emissions in year y (tCO2e/y);PEy is the project emissions in year y (tCO2e/y);LEy is the leakage emissions in year y (tCO2e/y). Referring to cases approved by CDM Execute Board, a credit period, including updatable credit period and fixed credit period, should be

Solar PV modules

(3)

where EGfacility, y is the quantity of net electricity supplied to the grid produced by PV system of the project in year y (MWh). For solar thermal technology, EGP, y is the thermal energy produced by solar heating system in the project as follows:

(1)

The emissions are included in calculation.

(2)

Energy consumption side

(2) Determination of EFy

Fig. 10. Calculation scope of CO2 emissions.

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Building characteristic

Energy system in project

Spatial extent of project Survey typical buildings at local or at other sites with comparable circumstances

Monitor operation condition of energy system in project

Determine the technology adopted in baseline scenario

Operation time

Quantity of energy supply

Quantity of energy consumption

Calculation scope of emissions

Calculate quantity of energy consumption in baseline scenario Leakage emissions

Baseline emissions

Project emissions

Emission reductions Fig. 11. Methodological framework of building projects with renewable energy application. Table 4 Default value of ηBL [46].

Table 5 Emission factors for diesel generator systems (in kgCO2/kWh) for three different levels of load factors [32].

Heat supply technology

Default efficiency

New natural gas fired boiler New oil fired boiler New coal fired boiler

92% 90% 85%

Referring relevant CDM methodologies, for PV technology, the determination of EFy is different for national or regional grid and separated power plants. A. CO2 emission factor analysis based on electric energy supplied by national or regional grid Referring to Tool to calculate the emission factor for an electricity system [47], the emission factor of power grid can be expressed as combined margin emission factor (EFCM ), which is the weighted average value of operating margin emission factor (EFOM ) and build margin emission factor (EFBM ). The value of EFOM and EFBM of Regional Power Grids in China refer to 2011 Baseline Emission Factors for Regional Power Grids in China provided by National Development and Reform Commission [48]. For solar photovoltaic technology, the weighted average value of EFOM is 0.75 and that of EFBM is 0.25. B. CO2 emission factor analysis based on electric energy supplied by separated power plants in buildings Large-scale public buildings or industrial buildings may install separate power plants. The electric energy can be supplied through mini-grid in buildings and does not supplied to national or regional grid. For a mini-grid system where all generators use exclusively fuel oil and/or diesel fuel, the baseline emissions is the annual electricity generated by the renewable energy unit times an emission factor for a modern diesel generating unit of the relevant capacity operating at optimal load, as given in Table 5 [32].

Cases

Mini-grid with 24 h service

1. Mini-grid with temporary service (4–6 h/day); 2. Productive applications; 3. Water pumps

Mini-grid with storage

Load factors (%) < 15 kW 15~35 kW 35~135 kW 35~200 kW > 200 kW

25% 2.4 1.9 1.3 0.9 0.8

50% 1.4 1.3 1.0 0.8 0.8

100% 1.2 1.1 1.0 0.8 0.8

Intergovernmental Panel on Climate Change (IPCC) [49]. For solar thermal technology, if adopting electric boiler in baseline scenario, the emission factor is expressed as EFCM , as discussed above. With one difference, the weighted average value of EFOM is 0.5 and that of EFBM is 0.5. If adopting other technology using fossil fuel, the emission factors refer to 2006 IPCC Guidelines for National Greenhouse Inventories Volume 2 Energy [49]. 5.2.2. Baseline emissions calculation of GSHP technology application in buildings Due to no specific methodology approved by CDM Execute Board, this section describes the calculation process of baseline emissions and project emissions for GSHP technology based on Energy efficiency and fuel switching measures for buildings [50] and Thermal energy production with or without electricity [36]. The spatial extent of the project boundary comprises all the facilities and power plants affected by the project, as shown in Fig. 12. Baseline scenario adopts the most conventional air-conditioning system at local or other comparable circumstances, excluding GSHP. In the study, baseline scenario can adopt the following approaches: a) Public buildings, such as office buildings and commercial buildings, can adopt electric water chillers for cooling and boilers for heating (Adopt gas fired boilers preferentially, and then choose oil burning boilers or electric boilers). b) Residential buildings can adopt unitary air conditioners for cooling and boilers for heating (Adopt gas fired boilers preferentially, and

If baseline scenario adopts combined fuel, the emission factor is computed as a weighted-average factor, which is depended on the quality of energy consumption and emission factor of fossil fuel. The emission factors refer to 2006 IPCC Guidelines for National Greenhouse Inventories Volume 2 Energy, issued by the

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Table 7 Minimum requirement of refrigeration performance coefficient for electric water chillers in residential buildings [52].

The emissions are included in calculation. Buried pipes or various water sources

Terminal system

GSHP unit

Form

Performance coefficient COP (W/W)

Integrated part-load value IPLV (W/W)

Air-cooled Water-cooled

2.4 3.8

2.6 4.1

National or regional grid or other energy supply department

If adopt cold water chillers in baseline scenario, the power consumption of water pumps and cooling towers can be simplified as shown in Table 8. The power consumption of cooling towers can be calculated based on the rated power and operation time or refer to the default values provided by Glass fiber reinforced plastic cooling towerPart 1: Middle and small glass fiber reinforced plastic cooling tower [53]. This standard defines that the power consumption of cooling tower is no more than 0.035 kW/(m3/h) in the case of actual working current not exceeding the rated current. For boiler systems, the power consumption of water pumps can adopt same analysis as cold water chiller system. For unitary air conditioners, it is difficult to determine the IPLV for each air conditioner, so this paper adopts the energy efficiency ratio (EER), which is the COP provided by manufacturer equivalently. If not available, average COP provided by local government can be used as the second choice. If still not available, adopt the minimum requirement of the highest level of EER shown in Table 9 [54]. For the boilers in the baseline scenario, the efficiency can be determined as described in [54]. (2) Determination of EFi Net calorific value of fossil fuel (NCV) can refer to the data provided by fuel suppliers or adopt the default values, whose source is Chinese Statistical Yearbook 2008 [55]. The emission factors of fossil fuel (EFi ) adopt the default value in 2006 IPCC Guidelines for National Greenhouse Inventories Volume 2 Energy [56]. Power grid emission factor is defined as combined margin emission factor (EFCM ), as described in Section 3.1. The weighted average value of EFOM is 0.5 and that of EFBM is 0.5.

Spatial extent of the project boundary

Fig. 12. Boundary of GSHP technology projects.

then choose oil burning boilers or electric boilers). After determining baseline scenario, select equipment based on building cooling and heating load. Then estimate energy consumption according to selection result and operation time. Baseline emissions can be calculated as follows:

BEy =

∑ EGi,y × EFi

(5)

Where BEy is baseline emissions in year y (tCO2e);EGi, y is the quantity of type i energy consumption in baseline scenario in year y (MWh);EFi is the CO2 emission factor of type i energy used in baseline scenario in year y(tCO2e/MWh). (1) Determination of EGi, y The energy consumption EGi, y is the quantity of energy consumption in baseline scenario when assuming the heating/cold energy produced in baseline scenario is equal to that produced in project.

EGi, y =

Q × D × 24 ηb

(6)

Where Q is the building design cooling or heating load (kW);D is days of cooling/heating period (d);ηb is the equipment efficiency in baseline scenario (%). For electric boilers, referring to Tool to determine the baseline efficiency of thermal or electric energy generation systems [44], the default efficiency can be considered as 100%. For electric water chillers, the default efficiency adopts integrated part load value (IPLV) preferentially, which simultaneously considers the equipment efficiency affected by the fluctuation of cooling/heating load and cooling water temperature. The calculation method of IPLV refers to Water chilling (heat pump) packages using the vapor compression cycle-Part 1: Water chilling (heat pump) packages for industrial & commercial and similar application [51]. If lack the IPLV provided by the manufacturer or other relevant local departments, compare the minimum requirement of IPLV listed in Table 6 or Table 7 [52] and the COP provided by the manufacturer, and then adopt the larger one.

5.3. Calculation of the project emissions 5.3.1. Project emissions calculation of solar energy technology application in buildings For solar energy technology, the main equipment can be considered as zero emissions when operating. So the project emission of solar energy applied building is zero. 5.3.2. Project emissions calculation of GSHP technology application in buildings GSHP system does not consume fossil fuels and not burn or exhaust smoke, so there is no fossil fuel combustion. For GSHP projects, project emissions usually include two aspects as follows:

Table 6 Minimum requirement of IPLV for electric water chillers in public buildings. Form

Watercooled

Screw

Centrifugal

Rated refrigerating capacity (kW)

Integrated part-load value (IPLV) (W/W)

< 528 528~1163 > 1163 < 528 528~1163 > 1163

4.47 4.81 5.13 4.49 4.88 5.42

1) CO2 emissions generated from electricity consumption in the project; 2) Fugitive emissions due to the release of non-condensable gases from produced steam. So the project emissions can be calculated as follows:

PEy = PEele, y + PEFF , y

(7)

Where PEele, y is the project emissions generated from electricity consumption in the project (tCO2e/y);PEFF , y is the project emissions 445

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Table 8 Analysis of auxiliary equipment in the system. Equipment

Baseline scenario

Project

Analysis

Power consumption

Cooling water pumps Chilled water pumps Auxiliary cooling sources Cooling towers

√ √ Indeterminacy √

√ √ Indeterminacy ×

Be considered as identical Be considered as identical Be considered as identical Calculated separately

Ignore the difference Ignore the difference Ignore the difference As described below

tion before trading. During verifying, input information should be applied by traders and be supervised by the verification agency.

Table 9 The EER of unitary air conditioner [54]. Form

Energy efficiency ratio (W/W)

Air-cooled

With air pipeline Without air pipeline

3.2 2.9

With air pipeline Without air pipeline

3.6 3.3

Form

5.5. Case study To validate the feasibility of the proposed method, three actual cases of all general application kinds, including grid-connected PV system, household PV system, solar water system and GSHP in public and residential buildings, are studied in the follows. 5.5.1. Case study of solar energy technology

due to the release of non-condensable gases from the steam produced in the GSHP unit (tCO2e/y).

(1) Case 1—New grid-connected PV system project in Beijing The case is a grid-connected PV system in Beijing. The geographic parameter of the PV system is as follows: latitude of 39°56´Nl, longitude of 116°17´El. Azimuth angle is 0°, power output of PV arrays is 302.4 kW, each component output is 120 W, the number of components is 2520, efficiency of solar panels is 0.95 and efficiency of power regulator is 0.90 [59]. The spatial extent includes the PV system in the building, and all energy consumption facilities connected with the PV system through North China Grid. The CO2 emissions generated from PV modules should be considered. Baseline scenario assumes that North China Grid supplies electricity to the building. According to Table 13, the quantity of electricity supplied by PV system is 391,742.18 kWh annually. As described in Section 5.2.1, the emission factor of North China Grid is 0.895875 tCO2e/MWh. Based on Eq. (2), baseline emissions are estimated at 350.95 tCO2e. Project emissions can be considered as 0. So the annual emission reductions in the project are 350.95 tCO2e. The emission reductions are estimated at 3509.5 tCO2e in the 10-year credit period. (2) Case 2—Household PV system project in Sunan area This case is located in Sunan area. It is a stand-alone PV system. Sunan area includes Zhenjiang, Wuxi, Suzhou, Changzhou and Nanjing in south of Yangtze River. The geographic parameter of Sunan area is as follows: northern latitude of 30°47′~32°2′， east longitude of 118°47′~121°2′. Total area of the photovoltaic modules is 48.9 m2 and the number of modules is 30. The parameters of a single one are as follows: power: 260 W; working voltage at maximum power point: 32 V; working current at maximum power point: 8.12 A; area: 1.627 m2. The power-consumption equipment in the building mainly include lighting, refrigerator, washing machine, water heater and so on [60]. The spatial extent includes the PV system in the building and all energy consumption facilities connected with the PV system through the grid. The CO2 emissions generated from PV modules should be considered. Baseline scenario assumes that East China Grid supplies electricity to the building. According to Table 14, the quantity of electricity supplied by PV system in the building is 7709.0 kWh annually. According to the power of single module and the number of modules, the power generation capacity is estimated as 7.8 kW. Define the PV system supply electricity around the clock. So the emission factor is 2.4 kgCO2e/kWh. Then the annual baseline

(1) CO2 emissions generated from electricity consumption If the baseline scenario is electric water chillers for cooling and boilers for heating, project emissions PEele, y are all produced by heat pump units. If the baseline scenario is unitary air conditioners for cooling and boilers for heating, PEele, y are produced by heat pump units, and water pumps. PEele, y can be calculated as follows:

PEele, y = EGele, y × EFCM , y

(8)

where EGele, y is the power consumption in the project in year y, mainly obtained from monitoring, or determined according to the IPLV and operation time (MWh);EFCM , y is the emission factor of the grid in the project (tCO2e/MWh). (2) CO2 emissions due to the release of non-condensable gases Fugitive emissions due to well testing and well bleeding are not considered, as they are negligible. Project emissions PEFF , y are calculated as Eq. (9).

PEFF , y = wCO2 × MS, y

(9)

where wCO2 is the average mass fraction of CO2 in the produced steam (%);MS, y is the quantity of steam produced during the year y (tCO2e/y). Because the records of MS, y are very difficult to be monitored in general, project emissions can be determined in accordance with theoretical calculation results ignoring CO2 emissions due to the release of non-condensable gases. To validate the feasibility of the method, two actual cases are calculated in Section 5.2. The facilities in the project are not removed from other projects, so LEy can be considered as 0. 5.4. Input information The input data are listed in Table 10, Tables 11 and 12 for solar PV system, solar water heater projects and GSHP projects respectively. As shown in above tables, the input information is in large amount. Additionally, the input information should be obtained throughout the project process, so field research is necessary for calculation. Renewable energy system should be measured and recorded combined in the building monitoring system [57]. The measured period is suggested more than a year [58]. The accuracy of verified volume is directly determined by the input information. So a list of input information format is suggested to be applied to traders in public to help them prepare for volume verifica446

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Table 10 Input data for carbon trading volume of solar PV system. Input information

Unit

Record frequency

Obtain approach

NCV of fossil fuel

kJ/kg or kJ/ m3 kg or m3

Annually calculating

Offered by suppliers or national and local official data

Continuous monitoring with the frequency of 1 month at least Continuous monitoring with the frequency of 1 month at least Annually calculating

Monitoring data

Fossil fuels consumption of a certain year Quantity of net energy supply to grid of a certain year Energy consumption of users

MWh/y

Operation time

h

kWh

Continuous monitoring with the frequency of 1 month at least

Monitoring by electric energy meter, checking by calculation of total input and output Estimated by field research or data supplied by related officials Monitoring data

cold winter region. It involves one main building and two podium buildings. The floor area is 36,336 m2 and air conditioning area is 21,274 m2. The design cooling load is 3489 kW and design heating load is 2856 kW. The days of heating and cooling period are all 120. The daily operation time is 12 h in summer and 24 h in winter. The project adopts two ground-water heat pumps. The basic information of them is listed in Table 16. The number of pumping wells is 3 and that of recharge wells is 8 [62]. The spatial boundary comprises underground water heat pump units, Central China Region Grid and all physically connected equipment, including water systems, air conditioning systems, pipeline network systems and air-conditioning terminal systems etc. Baseline scenario adopts electric water chillers for cooling and boilers for heating. Baseline emissions involve the emissions generated from electricity consumption and nature gas burning in gas fired boilers. As discusses in Section 5.3.2, the power consumption of water pumps can be ignored when calculating the baseline emissions. According to the heating/cooling load, the equipment selection in baseline scenario is as follows: Winter: Two gas fired boilers which gas consumption is 156 m3/h and power consumption is 4.0 kW. The heat capacity is 1400 kW individually. Summer: Two electric water chillers. The cold capacity is 1718 kW and 1432 kW respectively and the power rated is 290 kW and 238 kW respectively. Two cooling towers whose power rated are 11 kW and flow is 350 m3/h. As described in Section 5.2.2, the emission factor of Central China Region Grid is 0.7244 tCO2e/MWh. As presented in Table 17, baseline emissions are estimated at 2480.15 tCO2e. The water source heat pumps can reduce the consumption of

emissions are estimated at 18.502 tCO2e according to Eq. (2). Project emissions can be considered as 0. So the annual emission reductions in the project are 18.502 tCO2e roughly. The emission reductions are estimated at 185.02 tCO2e in the 10-year credit period. (3) Case 3—New solar water heater project in Taizhou This case is in Taizhou Linhai City. Whole community has 13 villa commerce-residence buildings and 386 commodity houses. The community is highest-quality residential community in Linhai City [61]. The spatial extent includes the solar heating system and energy consumption facilities connected with the solar heating system through hot water pipes and the grid. The CO2 emissions generated from solar thermal collectors should be considered. The case is a new solar heating system. According to the common situation of local residential buildings, baseline scenario adopts household electric water heater for supplying hot water dispersedly. The Energy consumption and associated emissions are presented in Table 15. As described in Section 5.3.2, the emission factor of East China Grid is 0.74945 tCO2e/MWh. As shown in Table 15, the baseline emissions are estimated at 476.89 tCO2e. Project emissions can be considered as 0. So the annual emission reductions in the project are 476.89 tCO2e. The emission reductions are estimated at 4768.9 tCO2e in the 10-year credit period. The facilities in the project are not removed from other projects, so LEy can be considered as 0. 5.5.2. Case study of GSHP technology (1) Case 1—New GSHP project in public buildings This case is in Nanchang, which belongs to hot summer and Table 11 Input data for carbon trading volume of solar water heater projects. Input information

Unit

Record frequency

Obtain approach

NCV of fossil fuel

Annually calculating

Offered by suppliers or national and local official data

Fossil fuels consumption of a certain year

kJ/kg or kJ/ m3 kg or m3

Area of solar collector Quantity of heat production

m2 kg/d

Input water temperature

°C

Output water temperature

°C

Hot water consumption of users

kg/d

Continuous monitoring month at least Annually calculating Continuous monitoring month at least Continuous monitoring month at least Continuous monitoring month at least Annually calculating

Energy efficiency of solar heater

%

Annually calculating

Operation time

h

Continuous monitoring with the frequency of 1 month at least

with the frequency of 1

Monitoring data

with the frequency of 1

Determined in project agreement and calculation book Monitoring data

with the frequency of 1

Monitoring data

with the frequency of 1

Monitoring data

447

Estimated by field research or data supplied by related officials Offered by suppliers or relative standards, matching calculation is necessary Monitoring data

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Table 12 Input data for carbon trading volume of GSHP projects. Input information

Unit

Record frequency

Obtain approach

NCV of fossil fuel

kJ/kg or kJ/m3

Annually calculating

Fossil fuels consumption of a certain year

kg or m3

with the frequency of 1 month at

Total electricity consumption

MWh

with the frequency of 1 month at

Monitoring data

Building cooling and heating load Air-conditioning (heating) period Number of air-handling units Operation time

kW d

Continuous monitoring least Continuous monitoring least Annually calculating Annually calculating Annually calculating Continuous monitoring least Annually calculating Continuous monitoring least Continuous monitoring least Continuous monitoring least

Offered by suppliers or national and local official data Monitoring data

with the frequency of 1 month at

Determined in design description Monitoring data Determined in design description Monitoring data

with the frequency of 1 month at

Determined in design description Monitoring data

with the frequency of 1 month at

Monitoring data

with the frequency of 1 month at

Monitoring data

h 2

Building area Quantity of hot water production

m kg/d

Input water temperature

°C

Output water temperature

°C

Table 13 Quantity of net electricity produced by PV system [59]. Month

1 2 3 4 5 6 7 8 9 10 11 12

Radiation per day kWh/m2

2.54 3.35 4.48 5.22 6.19 6.12 5.19 4.82 4.59 3.54 2.56 2.19

Table 15 Energy consumption and associated emissions [61].

Electricity supply Quantity of electricity supply per day kWh/d

Day (d/m)

Quantity of electricity supply per month (kWh/m)

643.585 848.890 1135.232 1322.748 1568.546 1550.808 1315.146 1221.388 1160.106 897.036 648.704 554.946

31 28 31 30 31 30 31 31 30 31 30 31

19,951.14 23,768.92 35,192.20 39,682.44 48,624.93 46,524.24 40,769.53 37,863.03 34,893.18 27,808.12 19,461.12 17,203.33

365

391,742.18

Total

1 2 3 4 5 6 7 8 9 10 11 12

Radiation per day kWh/m2

56,341 60,391 123,899 123,977 141,731 109,689 160,488 119,685 139,117 116,148 74,984 43,581

Total

Electricity supply Quantity of electricity supply per day kWh/d

Day (d/m)

15,115 15,838 25,555 22,802 22,866 17,625 25,137 20,600 28,256 26,749 20,394 12,145

31 28 31 30 31 30 31 31 30 31 30 31

468.6 443.5 792.2 684.1 708.8 528.8 779.2 638.6 847.7 829.2 611.8 376. 5

365

7709.0

Unit

Value

Area Thermal energy generation capacity Heat capacity/unit area Rising temperature of hot water Radiant quantity Quantity of heat production per day Efficiency of coal fired boiler Baseline energy consumption per day Operation day Baseline annual energy consumption Emission factor Baseline emissions

m2 L/d L/ m2 °C MJ/ m2 6,276,000 kJ % kWh day kWh tCO2e /MWh 476.89 tCO2e

1000 50,000 50 30 4.7 100 1743.33 365 636,315.45 0.74945

Table 16 Type of water source heat pumps [62].

Table 14 Quantity of net electricity supplied by PV system [60]. Month

Parameter

Quantity of electricity supply per month (kWh/m)

Content

Parameter

1# water source heat pump Type Refrigerating capacity/kW Input power/kW Heating Capacity/kW Input power/kW The flow of water source/(m3/h)

30HXC-HP 1–500A 1914 320 2086 464 175

2# water source heat pump Type Refrigerating capacity/kW Input power/kW Heating Capacity/kW Input power/kW The flow of water source/(m3/h)

30HXC-HP 1–350A 1284 220 1388 320 118

1135.8 tCO2e. The annual emission reductions earned by the project are estimated at 907.41 tCO2e. So the emission reductions are 9074.1 tCO2e in the 10-year credit period. (2) Case 2—New GSHP project in residential buildings This case is located in Shanxi Province Xi'an City. The floor area of residential buildings in the community is 7390 m2 which having 120 residents. The design heating load is 464.03 kW and design cooling load is 819.7 kW. The operation time is 12:00~23:00 in summer. The system keeps 24 h running throughout the day in winter. The days of heating period are 90 and those

fossil fuels and protect the environment. The power consumption in project is obtained according to monitoring recording data. Project emissions are all produced by electric energy consuming. As presented in Table 18, project emissions are estimated at 448

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Table 17 Energy consumption and CO2 emissions in baseline scenario.

Operation time Building load (kW) Equipment efficiency Power consumption of units (kWh) Power consumption of cooling towers (kWh) Power consumption (kWh) Emission factor (tCO2e/MWh) Emissions from power consumption (tCO2e) Gas consumption Emission factor (kgCO2e/TJ) CO2 emissions from natural gas burning (tCO2e) Baseline emissions (tCO2e)

Table 20 Energy consumption and CO2 emissions in baseline scenario.

Winter

Summer

120 day×24 h/day 2856 0.92 0

120 day×12 h/day 3489 5.13 979,368.42

0

31,680

0 0.7244 0

1,011,048.42

Operation time Building load (kW) Equipment efficiency Power consumption (kWh) Emission factor (tCO2e/MWh) CO2 emissions generated form electric energy consuming (tCO2e) Gas consumption

732.41

8,940,521.74 kWh (32.19 TJ) 54,300 1747.74

Emission factor (kgCO2e/TJ) CO2 emissions of natural gas burning (tCO2e) Baseline emissions (tCO2e)

0

Summer

90 day×24 h/day 464.03 0.92 0 0.7926 0

120 day×11 h/day 819.7 3.2 338,126.25

1,089,461.74 kWh (0.94 TJ) 54,300 50.90

268.00

0

0

318.9

0

2480.15

Table 21 Energy consumption and CO2 emissions in project activity.

Table 18 Energy consumption and CO2 emissions in the project.

Operation time Power consumption of units (kWh) Emission factor (tCO2e/MWh) CO2 emissions from power consumption (tCO2e) Project emissions (tCO2e)

Winter

Winter

Summer

120 day×24 h/day 790,272 0.7244 572.47

120 day×12 h/day 777,652

Operation time Power consumption (kWh) Emission factor (tCO2e/MWh) CO2 emissions (tCO2e) Project emissions (tCO2e)

Winter

Summer

90 day×24 h/day 73,470 0.7926 58.23 153.60

120 day×11 h/day 120,324 95.37

563.33

6. Discussion

1135.8

In Sections 3–5, the Programmatic CDM with modified carbon trading volume verifying method is optimized as the suitable mechanism for building projects with renewable energy application at present. The method has been applied in practical cases and proved simple and feasible. It could be concluded based on the discussion in Section 2.2 that the Chinese government values behavior shaping for polluters more than achieving trading volume scale at present. So this period is an important stage to involve all the industries in the carbon trading market. Building sector is considered as one of the largest energy consumer and emitter. The position of building projects in carbon trading should be put into the overall map. Only theory support exists at present, while market pricing mechanism, scientific quota allocation, verification, legal system, regulatory authorities and potential changes are all lacking. It is important to design the carbon trading mechanism of building projects as a system engineering, considering both external environment (economy, environment, social, technology et al.) and internal factors (finance, law, practical situations et al.). Therefore, with a huge number of problems to be solved, the Chinese market is unlikely to be mature within short period. Three suggestions are proposed. First of all, the immature sectors, buildings projects with renewable energy application for example, are suggested to be paid more attention. For example, they can be encouraged to take part in the international market. It can improve China's market position at the same time. In addition, Programmatic CDM as a feasible solution is suggested to be vigorously promoted at home to accelerate the integration of domestic and international market. Finally, testing the different of domestic and international mechanisms and learning the failure and successful experiences of international market were suggested for China's carbon trading managers. It is quite early to draw conclusions about the success or failure of China's carbon trading market. The optimizing measures and useful suggestions should be encouraged. Much future work should be explored in-depth. To begin with, this paper considered CDM as the proper mechanism for building projects with renewable energy application. However, EU ETS and CCERs exist in the market and are

Table 19 Type of GSHP [63]. Content

Parameter

Type Refrigerating capacity/kW Input power/kW Heating Capacity/kW Input power/kW

MWH19000 652 122 485 138

of cooling period are 120. The basic information of GSHP unit in the project is listed in Table 19 [63]. The spatial boundary comprises GSHP unit, Northwest Power Grid and all physically connected equipment, such as including water systems, air conditioning systems, pipeline network systems and airconditioning terminal systems etc. Baseline scenario adopts unitary air conditioners for cooling and gas fired boilers for heating. Baseline emissions include the emissions generated from power consumption and nature gas burned by gas fired boilers. As discussed in Section 5.2.2, the EER of air-cooled air conditioners without connecting branched passage is 3.2. As described in Section 5.3.2, the emission factor of East China Grid is 0.7926 tCO2e/MWh. As presented in Table 20, the baseline emissions are estimated at 318.9 tCO2e. Project emissions are all produced by power consumption, ignoring the CO2 emissions due to the release of non-condensable gases. The power consumption in project is obtained from monitoring data. As presented in Table 21, project emissions are estimated at 153.60 tCO2e. The annual emission reductions earned by the project are estimated at 165.3tCO2. So the emission reductions are 3509.5 tCO2e in a decade credit period.

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