NATIONALLY APPROPRIATE MITIGATION ACTION (NAMA) CONCEPT IN RESIDENTIAL
ENERGY EFFICIENT LIGHTING IN GRENADA
Executive summary made by OLADE of the consulting work carried out by
Per Wretlind and Federico Canu of UNEP DTU Partnership
Luis Guerra
Environmental Engineer with a M. Sc. in Renewable Energy Management. He
is currently working as a consultant for the Latin American Energy
Organization (OLADE) on projects related to mitigation and adaptation
to climate change. luis.guerra@olade.org
Received: 31/08/2018 and Accepted: 06/09/2018
ENERLAC. Volume II. Número 2. Diciembre, 2018 (52-71).
ABSTRACT
Grenada joined ranks with the world’s nations and signed the Paris
Agreement in New York in April 2016. The NDC includes energy efficiency
as this has large potential development and mitigation benefits. For
this a NAMA Concept is proposed with the objective of achieving energy
savings and GHG emission reductions through increased accessibility to
energy efficient lighting technologies in the residential sector. Two
different scenarios were forecasted for this NAMA, where both scenarios
result in decreases in electricity use and GHG emissions, but of
varying degree. Scenario 1 results in a GHG reduction of 16,883 tCO2
emissions, while Scenario 2 reaches a reduction of 29,976 tCO2
emissions. Furthermore, an identification of barriers was followed by
the proposal of a NAMA action plan, for which the total estimated cost
is 120,000 USD, that would serve to overcome the identified barriers,
including the economic and financial.
Keywords: Climate Change, Efficient Lighting, Nationally Determined
Contributions, National Appropriate Mitigation Action, Grenada.
RESUMEN
Granada se unió a la iniciativa que ya fue apoyada por de las naciones
del mundo y firmó el Acuerdo de París en Nueva York en abril de 2016.
El NDC incluye la eficiencia energética, ya que tiene un gran potencial
de desarrollo y beneficios de mitigación. Para ello se propone un
concepto de NAMA con el objetivo de lograr el ahorro de energía y la
reducción de las emisiones de GEI a través de una mayor accesibilidad a
las tecnologías de iluminación energéticamente eficiente en el sector
residencial. Se pronosticaron dos escenarios diferentes para este NAMA,
donde ambos escenarios resultan en disminuciones en el uso de
electricidad y emisiones de GEI, pero en diferentes grados. El
Escenario 1 da como resultado una reducción de GEI de 16.883 tCO2,
mientras que el Escenario 2 alcanza una reducción de 29.976 tCO2.
Además, a la identificación de los obstáculos siguió la propuesta de un
plan de acción sobre el acceso a los mercados para los productos no
agrícolas, cuyo costo total se estima en 120.000 dólares de los EE.UU.,
que serviría para superar los obstáculos identificados, incluidos los
económicos y financieros.
Palabras Clave: Cambio Climático, Iluminación Eficiente, Contribuciones
Determinadas a Nivel Nacional, Acciones Nacionales de Mitigación
Apropiadas, Granada.
INTRODUCTION
Grenada joined ranks with the world’s nations and signed the Paris
Agreement in New York in April 2016. The action of signing the
agreement signified that Grenada had ratified it, and the Intended
National Determined Contribution (INDC) of Grenada thus became the
National Determined Contribution (NDC). The focus is thus on
implementation.
The NDC includes energy efficiency as this has large potential
development and mitigation benefits. One study made by United for
Efficiency (U4E), a UN Environment initiative, states that if policies
are implemented to promote energy efficiency broadly in Grenada, the
construction of 20 MW generation capacities can be avoided until 2030.
Electricity consumption would be reduced by 14.2 GWh by 2030, whereof a
considerable part would be due to efficiency gains in lighting
(En.lighten & U4E, 2015).
The development of this proposal for a National Appropriate Mitigation
Actions (NAMAs) should be seen in the light of the implementation of
Grenada’s NDC. The focus on energy efficiency lighting within the
residential sector will not be sufficient for Grenada to meet its
commitments, but it is a good start. Furthermore, the experience gained
of formulating and discussing a NAMA builds the capacity of Grenada,
enabling further mitigation actions.
This document presents the NAMA proposal in the following way. First,
the focus area of energy efficient lighting in the residential sector
alignment with Grenada’s development and climate change plans is
presented. This is followed by a brief run-through of the existing and
previous projects in Grenada, to ensure that this builds on what they
have uncovered. A technological analysis follows, determining which
technological options Grenada has to choose from. This is followed by
the start of the development of the NAMA, introducing an institutional
structure, the objectives and targets, and the baseline and NAMA
scenarios. Upon this, the barrier analysis and the proposed NAMA Action
Plan is presented.
ALIGNMENT WITH GRENADA’S DEVELOPMENT, SECTORAL AND CLIMATE CHANGE
POLICY AND REGULATIONS
A NAMA is an action that brings both sustainable development and
mitigates GHG emissions. In advancing sustainable development, the
direction of this is decided by the country’s government. As these
priorities are already existent, the NAMA needs to align with the plans
and regulations concerning climate change, relevant sectors and
development in general. This section aligns the NAMA with the existing
plans and regulations concerning climate change, relevant sectors, and
development.
Climate Change Regulation
The climate change regulation of Grenada consists of a number of
policies and action plans. The main focus is on adaptation measures,
since Grenada is one of the countries in the world most vulnerable to
climate change (see e.g. Kreft, Eckstein, & Melchior, 2017).
Grenada has submitted a National Determined Contribution (NDC), as well
as developed a ‘National Climate Change Policy and Action Plan’ which
provides a roadmap for various mitigation actions.
National Communications and Biennial Update Report
In 2000, Grenada submitted its First National Communication to the
UNFCCC1. The document describes the framework for environmental
management as fragmented, and proposes a more systematic approach
towards mitigation policies, therein measures to promote energy
efficiency. The First National Communication calls for the introduction
of Compact Fluorescent Bulbs (CFLs), the adoption of standards for
certification of electrical appliances, as well as public awareness
campaigns for energy efficient equipment. One of the measures to
increase energy efficiency within the public sector is to retrofit
buildings, as well as the procurement of energy efficient lamps for
public offices.
National Climate Change Policy and Action Plan (2007-2011)
In 2007, the GoG launched the National Climate Change Policy and Action
Plan (2007-2011). The plan introduces eight strategies to address
climate change, with a focus on adaptation measures. In relation to
improving energy efficiency, the plan does not focus on energy
efficient lighting specifically but rather on comprehensive incentive
packages to promote energy efficiency. This plan suggests using
benchmarks for electricity generation equipment, reducing import duties
and taxes on energy efficient appliances, and stipulating higher
standards for the imported goods. This is to be coupled with, inter
alia, public education on reducing energy consumption. In addition, the
plan emphasises the importance of regional coordination within the
Organisation of Eastern Caribbean States (OECS) and the Caribbean
Community (CARICOM) in implementing energy efficiency measures (GoG,
2007).
There has been a reduction of import duties and the value added tax
(VAT) on energy efficient light bulbs. Currently, the general VAT
stands at 15%. In 2010, ‘energy saving bulbs’ was added to a list of
products exempted from VAT. The list does not define criteria for when
a bulb saves energy, making it difficult to apply in practices.
Moreover, light bulbs often arrive in fixtures rather than
individually, resulting in that this exemption does not apply to many
products.
In regards to customs, the coordination work to introduce reduction of
the customs service charge has yet to start. As the CARICOM region
imposes a common external customs charge, a coordinated approach among
the member countries is necessary.
Nationally Determined Contribution
Grenada’s INDC was submitted to the UNFCCC in September 2015, and now
that the country has ratified the Paris Agreement, which entered into
force in November 2016, its objectives have become the official NDC of
Grenada. It focuses mainly on adaptation, but also includes mitigation
measures. The NDC sets an unconditional target of reducing GHG
emissions by 30% compared to 2010, and a conditional target of 40% by
2025. A varied set of policy instruments are proposed to reach the
targets, including informative (public awareness campaigns), economic
(fiscal incentives) and regulatory (minimum energy performance
standards and building codes) measures. For example, within the
electricity sector, Grenada envisions two-thirds of emission reductions
to stem from improvements in energy efficiency, while the remaining
third is to be provided through increased renewable energy generation.
The NDC proposes to retrofit all buildings to improve their energy
efficiency, establish energy efficient building codes, and support the
implementation of energy efficiency pilot projects in hotels.
Sectoral Regulation
The sectoral regulation relevant for this NAMA is primarily regulations
for the energy sector, including energy efficiency regulation, as well
as the building sector.
National Energy Policy
The National Energy Policy from 2011 has as an overarching goal of
decoupling economic growth and energy use. To achieve this, the policy
suggests specific measures as well as the institutional set- up of the
energy related questions. It also calls for the adoption of energy
efficient building codes which should be mandatory for all public
sector construction. It suggests providing incentives to financial
institutions for them to offer their clients preferential rates for new
and retrofitted energy efficient homes. Public information campaigns
and education is also echoed as instrumental. All of these measures are
suggested to be incorporated into an Energy Efficiency Act (GoG, 2011).
The Energy Efficiency Act is currently in the making, and the first
draft is to be expected during the spring of 2017.
Targets for renewable energy are not set in the NDC, but in other
documents. The National Energy Policy specifies that by 2020, 20% of
total electricity and transportation energy should be generated from
renewable sources (GoG, 2011). The Grenada Vision 2030 sets a goal that
by 2030, 100% of all energy should be renewable (IRENA, 2012).
There are no nationwide energy efficiency targets expressed (Ochs,
Konold, Auth, Musolino, & Killeen, 2015). There are a few policies
in place to favour energy efficient appliances, including lighting. The
government provides an exemption of the 15% Value Added Tax (VAT) for
investments in energy efficient technology.
National Building Code
Grenada’s building code, which was updated in June 2015, stems from the
Organization of Eastern Caribbean States’ (OECS) Code from 1992. It is
a common code for Grenada, St Vincent & the Grenadines, St Lucia,
and Montserrat (OECS, 2015). The main priority is to build structures
able to withstand natural disasters such as earthquakes and hurricanes,
as with a changing climate, Grenada has become more exposed to
especially hurricanes (GoG, 2007). The building code emphasizes natural
lighting in the first place to avoid unnecessary energy consumption -
all rooms need to have windows and/or skylights. The section regulating
artificial lighting, 1105a) requires lighting to be “in accordance with
the requirements of the electricity regulation in force” (OECS, 2015,
p. 161). It is thus the electricity regulation that takes priority in
relation to the scope of this NAMA targeting EE improvements in
residential lighting. The current electricity regulation in Grenada
does not address energy efficiency, but is to come with the Energy
Efficiency Act.
TECHNOLOGY ANALYSIS
This section introduces the technological options that exist for
lighting in Grenada as well as a cost- benefit analysis of the
different technologies.
Introduction of Technology Options
Within residential lighting, there are three relevant technological
options to be considered in the analysis in the Grenadian context.
These are incandescent lightbulbs (ICLs), compact fluorescent
lightbulbs (CFLs) and light emitting diodes (LEDs). The three chosen
technologies emit approximately the same number of lumens. The three
chosen products are also among the most commonly sold within the
respective technologies. The technological specifications are shown in
the table below.
Table 1. Technological specifications of the three types of
technologies for residential lighting
Source: Own elaboration
The technical specifications are taken from a report by the U.S.
Department of Energy, where it conducts a life-cycle analysis on LED
lights compared to CFLs and ICLs (U.S. Department of Energy, 2012). The
comparison in this publication is between lamps that carry out the same
function. The average use time per day is based on the Clean
Development Mechanism (CDM) methodology on residential energy efficient
lighting (UNFCCC, 2016b). The purchasing price of the lamps was
estimated to this by the participants in the workshop. Attempts have
been made to verify it with local suppliers, though without success.
Cost-Benefit Analysis of Technologies
The different technologies have different purchasing prices,
maintenance costs, and lifespans, resulting in different replacement
rates and operational costs. This allows for a payback period to be
calculated. The formulas for each calculation are specified below:
• Replacement rate [lamp/year]:
Lamp use per day × days in year
-------------------------------------------
Lifetime in hours
• Annual operational cost (XCD/year):
Replacement rate × price per lamp + (Watts × lamp use per day × days in
a year) × price of electricity
------------------------------------------------------
1000
• Payback period (years):
Annual operational costs
----------------------------------------
Annual operational costs (ICLs)
Table 2. Cost-Benefit Analysis of Technological Options
Source: Own elaboration.
The cost-benefit analysis shows that ICLs have the highest annual
operational cost of the three technologies, with CFLs having an
operational cost of less than a 1/3, and LEDs slightly more than a 1/9
of that of ICLs. If we look at the payback period of buying a CFL or
LED lightbulb instead of an ICL, a CFL pays back after 0.3 years, thus
roughly four months; the LED bulb is paid back already after a bit more
than a month. If the entire purchasing price is incurred in the first
year, the payback period does increase, especially for the LED as it is
considerably more expensive than the ICL. However, it only increases to
1.2 years, indicating that it is still a desirable investment to make.
INSTITUTIONAL ARRANGEMENTS
Appropriate institutional arrangements are key to make the NAMA
successful. The institutional arrangements delineate the different
roles and responsibilities of the key stakeholders in the design and
implementation of the NAMA, and establishes decision-making hierarchies
and communication channels. Having clear institutional structures in
place facilitates the implementation of the NAMA activities greatly.
NAMA Steering Committee
The NAMA Steering Committee’s task is to coordinate the relevant
stakeholders and make overall decisions regarding the NAMA and ensures
that the NAMA is being implemented. The following stakeholders are
proposed to take part in the NAMA Steering Committee:
Association of Electrical Engineers
Bureau of Standards Grenada
Chamber of Industry and Commerce
Grenada Customs & Excise Division
Department of the Environment
Economical and Technical Cooperation
Energy Division
GRENLEC
Inland Revenue Department
Ministry of Education
Ministry of Legal Affairs
Ministry of Trade
Ministry of Works (Electric Department)
Physical Planning Unit
Social Development and Housing
Solid Waste Management Authority
Statistics Division
Their selection is based on the suggestions that came out of the NAMA
Managing Entity (Energy Division), and through a consultation process
in a national workshop with the relevant stakeholders (17-18 January
2017).
NAMA OBJECTIVE AND TARGETS
The NAMA Objective and Targets presented below were discussed at the
workshop in Grenada with relevant stakeholders, including
representatives of what will form the future NAMA Steering Committee2.
The objective is to set the direction of the NAMA, whereas the targets
concretize the direction through setting specific measurable targets.
NAMA Scope
The scope of the NAMA is defined both in terms of focus area and
geography. The area of focus is lighting within the residential sector
of Grenada. The geographical scope is nationwide, encompassing all
three islands of Grenada.
NAMA Objective
The objective of the NAMA is as follows: Achieving energy savings and
GHG emission reductions through increased accessibility to energy
efficient lighting technologies in the residential sector.
NAMA Targets
The overall NAMA objective is accompanied by three targets which
specify the objective.
Target 1: Adoption of EE Lighting Technologies in The Residential Sector
• Target 1A: Increase Use of EE Lighting
The first target aims to increase the use of energy efficient lighting
in the residential sector by 30% by 2025 compared to the baseline of
2017.
• Target 1B: Phasing Out ICLs
In order to increase the accessibility to energy efficient lighting, it
is also important to make the alternative, ICLs, less attractive. This
is especially true given the initial price difference between the
technologies which constitutes a substantial barrier. The gap cannot
only be closed by decreasing the price of the EE technologies, but
needs to be coupled with price increases of the inefficient technology
as well.
• Target 1b: Phasing out ICLs by 2025
25% less use by 2018
50% less use by 2021
75% less use by 2023
100% less use by 2025
(Base year: 2017)
Target 2: GHG Emission Reductions & Energy Savings
Target two specifies that the emission reduction, as well as energy
savings, should be 30% by 2025 compared to the BAU scenario. As there
is a linear relationship between the GHG emissions and the energy
savings in this particular NAMA, the same development of both
parameters can be expected.
Target 3: Financial Savings
Target three specifies that the financial savings should be 25% by 2025
compared to the BAU scenario.
NAMA Baseline and Mitigation Scenarios
The following section presents the NAMA Baseline and Mitigation
Scenarios. The Baseline Scenario, also called the Business-as-Usual
(BAU) Scenario, is first presented. It builds on the current energy
system, and through a historical trend extrapolation approach through
which the future technological trends are sketched. The NAMA Mitigation
Scenarios are what is projected to happen if the NAMA is implemented.
There are two NAMA Mitigation Scenarios, Scenario 1 (S1) and Scenario 2
(S2).
Baseline Scenario
The baseline scenario builds on two components - the present energy
system and its projected development, as well as the technological
development and adoption rate of lighting technologies. The text below
first describes the energy sector with a strong emphasis on
electricity. Secondly, a set of key figures and assumptions are
presented from which the BAU scenario is drawn.
Energy and Electricity in Grenada
Energy generation in Grenada is, as in most Caribbean island states,
heavily dependent on imported diesel (Energy Transition Initiative,
2016; GoG, 2011). This has a direct impact on the price of electricity,
as more than 50% of the electricity price depends on the fuel price,
making the economy and households sensitive to fuel price fluctuations
(GRENLEC, 2016). Moreover, this makes the Grid Emission Factor (tCO2
emitted per MWh produced) high in an international comparison. The GoG
reports to the UNFCCC that its grid emission factor is 0.634 tCO2/MWh
on the island of Grenada, while it is slightly higher on Carriacou
(0.675) and considerable higher in the much smaller electricity plant
on Petit Martinique (0.890) (UNFCCC, 2016a).
Figure 1. Energy Generation Mix
Source: (Energy Transition Initiative, 2016)
Grenada has one utility company named GRENLEC. It was founded in 1961
as a public company, and was granted the sole and exclusive license to
generate, transmit, distribute and sell electricity in Grenada until
2041. In 1994, GRENLEC was privatised by the GoG selling 50% of its
shares to a Canadian company (GRENLEC, 2015).
The current installed capacity is 48.6 MW, and the peak load is 30.9
MW, making brownouts rare (GRENLEC, 2015). There is a very high degree
of access to energy, as Grenada has a 99.5% national electrification
rate. However, the high energy prices limit actual access as it becomes
unaffordable for many families (SE4All, 2012).
Figure 1 illustrates that there is currently a small portion of
renewable energy sources, mainly solar, followed by wind power. The
share of renewables is expected to grow in the future aligned with
efforts to diversify the energy matrix, improve energy security and
transition towards low carbon development. As was described above, the
goal set out in the National Energy Policy is that 20% of electricity
and transport energy should come from renewable sources in 2020. In the
workshop consultation held in Grenada, it was stated that this goal
will not be achieved - the current penetration rate of renewable energy
is 1.85%. Given that there is an uncertainty of this development, this
NAMA assumes that the Grid Emission Factor will remain the same for
this time period.
The second component rests on a number of figures and assumptions which
are specified below.
Table 3. Key Figures and Assumptions
Source: (GRENLEC, 2015), except the USD price/kWh which comes from
(Energy Transition Initiative, 2016), and the GDP/ capita figure comes
from (UN Data, 2017)
According to the BAU, ICLs will be phased out completely by 2028. There
is a steady growth of CFL and LED use, with both types growing their
share at an equal pace. The technological development results in lower
energy use, GHG emission reductions and generates financial savings.
Comparing the final year to the base- year, these three parameters have
decreased by respectively 69% (for GHG emissions and energy savings)
and 68% (for financial spending).
Table 4. The Projection of Use of Different Lighting Technologies.
Source: Own elaboration.
As described in Table 4, the BAU is based on a number of assumptions;
these leaves room for further investigations and revisions to increase
the accuracy of the BAU scenario, as data is gathered during the NAMA’s
implementation. An additional implicit assumption has been built into
the model, namely that the number of lamps, and the light they produce,
is constant. The assumption disregards the risk of a “rebound effect”.
It has been documented in many different circumstances where financial
savings due to improved energy efficiency actually lead to a higher
energy consumption by users (see e.g. Greening, Greene, & Difiglio,
2000). Furthermore, a BAU scenario based on two observations transposed
from other countries does not constitute a robust basis for scenario
creation.
Mitigation Scenario
Based on the targets that are established for the NAMA, two mitigation
scenarios are presented below, and compared to the BAU scenario. The
two scenarios are created as there are uncertainties of the rate of
adoption of the two alternative more efficient technologies. The
creation of two scenarios illustrates potential future situations,
enabling decision makers to identify which future outcome is more
attractive, and devise actions to direct development towards the more
attractive end results.
Scenario 1 (see figure 2 below) is a scenario where actions introduced
by the NAMA lead to a phase out of ICLs by 2025, leading to a higher
adoption of CFLs and LEDs to fill the space of the phased out ICL. A
linear growth is assumed, resulting in both reduced energy use for the
same provision of light as well as the GHG emissions. This forecasts an
increased use of both CFLs and LEDs as a result of the NAMA, and a
corresponding decrease of ICLs. The scenario is continued to 2028 for
the sake of comparison with the BAU scenario. In 2025, when the ICLs
have been phased out, the distribution between CFLs and LEDs is assumed
to be constant for the foreseeable future, as the policies introduced
will benefit both technologies, even though it is expected that over
time, technological development and decreasing LED prices, LEDs will
slowly take shares of the CFLs.
Figure 2. NAMA Scenario 1. Illustration of the development of the
shares of the three technologies under the NAMA Scenario 1.
Source: Own elaboration.
Scenario 2 sees a quite different development for all three types of
technologies. The introduced measures are tougher on ICLs in order to
phase them out faster, and the support provided will be stronger
targeted to the most energy efficient technology, which thus excludes
CFLs. This results in a faster expansion of LEDs, and a faster decline
of ICLs. Furthermore, while the share of CFLs initially continues to
grow, the expansion of LEDs soon take shares from CFLs as well.
Figure 3. NAMA Scenario 2 - Illustration of the development of the
shares of the three technologies under the NAMA Scenario 2.
Source: Own elaboration.
The two NAMA scenarios result in decreases in electricity use and GHG
emissions3, but of varying degree. Figure 3 shows the aggregated GHG
emissions in the BAU and two NAMA scenarios. S1 results in a GHG
reduction of 16,883 tCO2, or 16% compared to BAU, while S2 reaches a
reduction of 29,976 tCO2, equivalent to a 30% reduction compared to the
BAU.
Figure 4: GHG Emissions by scenario
Source: Own elaboration.
The reduced energy use would also result in financial savings of a
similar magnitude. While the electricity cost accounts for the lion’s
share of the total cost, the cost of the lightbulbs is considered as
well. This means that in S1, there is a 15% financial saving while
there is a 28% financial saving in S2. Expressed in XCD, this
represents a saving of respectively 740 XCD in S1 and almost 1400 XCD
in S2 per household. It should be mentioned that this way of
calculating distributes the purchasing cost of the lamps over its
entire life-time, which does not accurately represent the reality faced
by households in the lower income strata as it is the high upfront
costs which prevent many from making the switch. There has been no
accessible data to calculate the decline of the ICLs for either
scenario. In general, one can say that the price elasticity of demand
of ICLs is a decisive factor, and also the cross-price elasticity of
demand to CFLs and LEDs. A brief search for data shows that the price
elasticity of demand for lighting is -0.6 (Fouquet & Pearson,
2011), which means that a 1% increase on the price of the light bulb
results in a 6% drop in demand.
Summarizing, the two NAMA Scenarios comply with different aspects that
the participants in the workshop identified as important. S1 keeps to
the time plan of phasing out the ICLs by 2025, as a faster phase-out
was perceived as unrealistic from some of the consulted stakeholders,
and also as potentially risky as it could result in residents hoarding
ICLs. S2 sets a tighter time plan for this, and is in line with
potential achievements expressed by other stakeholders, thus achieving
a GHG emission and increase in energy efficiency of 30%. The system is
intended to have a gradual approach, according to the implementation of
the NAMA. Thus, the MRV system can be equally applied to earlier phases
of the project and also fully operational ones.
BARRIER ANALYSIS
The following two sections, the Barrier Analysis and the Action Plan,
are heavily based on the workshop held in Grenada in January 2017. The
Action Plan, in particular, is crucial that it is well-grounded with
the stakeholders who are to develop and implement it.
Political Barriers
There are two sub-headings under Political barriers; one concerns the
institutional and organizational structures while the other focuses on
the framework created by policies and regulations. There are
considerable barriers in both groups.
• Institutional and Organizational Barriers
The barriers under this heading fall under two major categories - the
danger of missing political commitment and lacking coordination between
the ministries. There is a lacking coordination between different
ministries. For the purpose of this NAMA, the coordination and
cooperation between the Department of Environment (which pertain to the
Ministry of Education, Human Resources and The Environment) and the
Energy Division (that pertains to the Ministry of Finance and Energy)
is especially highlighted as a barrier due to its importance in
implementing this NAMA. Moreover, there is a complicated bureaucratic
process to approve regulations in Grenada, which burdens the process
further.
• Policy and Regulatory Framework
The policy framework constitutes a barrier in so far as that it is
mostly lacking to promote energy efficient lighting. There are no taxes
providing incentives for the energy efficient options, nor any
dis-incentivizing conventional lighting. This underlines what has been
mentioned above regarding the current VAT exemption for energy
efficient lightbulbs - that it is not sufficiently specific. There is
also a lack of quality assurance of the products that currently enter
the market. Furthermore, there is a general lack of enforcement of the
existing regulation which would constitute a challenge for new
regulation as well. There is lacking capacity within the Ministries.
This is both in regards to drafting new laws, as well as enforcing
existing ones. This also risks creating a so-called positive feedback
loop where the lacking ability to develop coherent regulation makes it
difficult to enforce them properly, which further strains resources,
making implementing new regulation even more difficult.
Economic Barriers
The subsections of the economic barriers are economic, financial and
market conditions. A similar pattern to the situation emerges here as
well, where its rather the lack of elements that constitute a barrier
than the opposite.
• Economic Barriers
The barrier identified is high upfront costs for the technology. As
described above, switching to more energy efficient lighting saves
costs as the energy use decreases considerably, but these come in
increments over time. The purchasing of the lightbulb, on the other
hand, occurs at one time. As the price of a more efficient light bulb
is substantially higher than for an ICL, and both satisfy the same
immediate need (providing light), many consumers opt for the ICL in the
purchasing moment.
• Financial Barriers
The participants perceive a lack of interest from
financial institutions regarding this issue, which results in a lack of
finance to solve it; this is especially true in relation to the upfront
cost mentioned above. There is currently only one financial institution
that offers a product that includes financing for energy efficient
lighting, and that is the Grenadian Development Bank (GDB) which
provides loans for energy efficient renovation of houses, within which
lighting can be a component. It is discussed if the lacking interest is
due to the very small scale of each investment, and whether it can be
bundled so as to achieve larger volumes.
• Market Conditions
There are several barriers nested within the market
conditions as well, many of which are related to the barriers mentioned
above. The price of light bulbs is a central barrier, which is
described above. Moreover, the lack of standards mentioned under the
“Policy and Regulatory Framework” also creates issues on the market, as
it becomes difficult to know with certainty that the products uphold a
certain standard. A related issue is that the labelling of the products
sometimes are in languages that are spoken by few in Grenada. This
further decreases the information that the consumer can access in the
purchasing moment.
Capacity Barriers
Capacity barriers are divided into two categories - “Human” and “Data
and information”. Similar to the barriers identified above, they most
often consist in the lack of capacity or systems.
• Human Capacities
The workshop participants identify that there are lacking human
capacities in many different aspects of the Grenadian society in
relation to EE lighting. This stretches from a lack of training of
technicians to install CFLs and LEDs instead of ICLs, to the personal
in stores where lighting is being sold as they are not aware of the
benefits of EE lighting for the customers. There is also a lack of
capacity within state institutions such as the Customs and Excise
Division to monitor imported products. There is also a lack of
knowledge within the Ministries to advice the political decision
makers. This adds to the issue raised above with a potential
unwillingness to champion this politically. If there is lacking
knowledge of the merits of these measures, it is even less likely that
it will be championed. The lacking human capacity is not limited to
lacking knowledge, but also to having sufficient staff resources.
• Data and Information
There is a general lack of data which makes the
justification as well as monitoring and evaluation of measures
difficult. This is related to lacking human and institutional
capacities in terms of establishing data collection routines and
reporting routes for the data.
Social Barriers
The social barriers are within two categories: “cultural” and “public
awareness”. In general, there is no focus on energy efficiency within
the communities in Grenada; it is not considered to be one of the more
important topics. The lacking human capacity identified above goes hand
in hand with this, as if it is not seen as a prioritized area, there is
no need to build capacity in it. This is coupled with a general
negative perception of new (and expensive) technology, as well as that
many already have experience with low quality energy efficient light
bulbs; these experiences have left traces, as many in the population
are skeptical of it. Moreover, the participants describe that there is
not a large openness to change in Grenada, especially not if there is
not a concrete reason to do so. The negative perception is further
fueled by the fact that there are issues surrounding the handling of
the disposed bulbs. As CFLs contain harmful chemicals, this is labelled
on them. However, as there is a general low level of public awareness
surrounding this, the harmful chemicals in CFLs easily become perceived
as harmful chemicals in all energy efficient lights.
Prioritization of Barriers
The following step in the workshop was to prioritize the identified
barriers (see below).
If one sees the top barrier, high-up front cost, as a consequence of
lacking incentives for EE lighting/dis-incentives for ICLs, then the
majority of the most important barriers are due to lacking
institutional or regulative measures. This underlines the importance as
well as the potential that this NAMA has, as the only actor to can
address these barriers is the GoG. The political as well as
institutional commitment is decisive for this to happen, and the
measures presented below are contingent on this.
NAMA ACTION PLAN
The action plan lists the specific measures proposed to address the
prioritized barriers above. The Plan also specifies who is responsible
for carrying out the action, and the estimated cost. The total
estimated cost is 120,000 USD, the responsibilities, timeline and costs
for each measure are listed in table 5.
High upfront costs
The high upfront costs are above identified as the top barrier. In
order to overcome these, the introduction of a temporal lowering of the
Value Added Tax (VAT) on the energy efficient lightbulbs is proposed.
An important distinction between the two scenarios need to be made
here, as in S2, the lowering would only apply to LED lights. The time
period of the lowering should be announced before-hand, and be between
9 months to 1 year.
The reasoning behind this measure is that a temporal lowering of the
VAT would change the price structure to favor the energy efficient
lights, but also ensure that the residents make the necessary
investment in this time period, rather than wait. There are also other
measures that can be taken. These goods can also be exempted from the
Customs Service Charge (CSC) of 6%. A longer process includes lowering
the Common External Tariff of 20%. However, as this is common for the
CARICOM region, it is not the prerogative of the GoG, but a joint
decision needs to be taken at the Ministerial Meeting of Trade
Ministers.
Lack of adoption/enforcement of standards for imports of EE lights
The representative from the Customs and Excise Division points to that
when energy efficient light bulbs are imported into Grenada, they
sometimes arrive in fixtures. The current VAT exemption described above
does only apply to individual light bulbs - a further differentiation
of the categories of imports is needed. This categorization, however,
is made on the CARICOM level, and is thus connected to the same
time-line that is described above for the exemption of the Common
External Tariff.
Lack of Awareness on Benefits and Costs of EE Lighting
Given the lack of public awareness of the benefits and costs of EE
lighting, a public awareness campaign needs to be launched. This is to
be developed and implemented by the government official.
Institutional and organization structure for coordination
The way forward here is to establish the NAMA Steering Committee, which
is described above. The Committee is to oversee the development and
implementation of this NAMA, but the structure could also be used for
other NAMAs, though with other relevant actors.
Lack of policies and regulation to promote EE lighting
The Energy Efficiency Act that is currently being worked on will be an
important tool to promote EE in general - it is within in this act that
measures to regulate EE likely will be found. A first draft of the EE
act is to be expected this April - if there is a consultation process,
actors should suggest to include measures relevant for this NAMA. The
gradual decrease would be equal to what is suggested in target 1b.
Lack of Human Capacity and Equipment
There is a general agreement that this is a central issue, and that
special training of the personal is necessary. The earlier projects
have increased the capacity, but more is needed. This proposal suggests
for key personnel within selected ministries to get access to funds and
resources, including time, to seek out training in the areas they deem
necessary. This should be done according to a pre-determined plan
agreed on with the supervisor. The cost to develop a plan could be
financed as part of this NAMA.
Lack of Finance to Implement the NAMA
The workshop participants perceived this as a barrier as to how to pay
for the technology, and its distribution, especially to low-income
households. The issue of this is that no actor responsible for such a
coordination – purchasing of the bulbs, distribution and also finding
ways to retrieve payments from the households - was identified. This
way forward is thus not examined further in this proposal.
Lack of Capacity in the Public and Financial Sector
The role of the financial institutions is in focus here, and what role
they potentially could play. As the investment for lightbulbs does not
concern large sums, financing these with bank loans is implausible as
the transaction costs simply would be too much. However, a proposal
could be to collaborate with micro-credit organizations, which are used
to handling loans with small sums. A possibility could be to create an
incentive for the micro-credit organizations to add an extra loan
on-top of their usual loan for investments in energy efficient lighting.
Lack of Data and Data Management
The solution to this barrier will go hand-in-hand with the MRV system,
and will thus be further elaborated there.
Lengthy and Complicated Decision-Making Process
This is an institutional issue that will not be solved easily. Such an
approach would require coordination between the different departments,
potentially through the Steering Committee.
Table 5. Responsibilities, timelines and costs for the measures to
overcome the prioritized barriers
Source: Own elaboration.
MRV ACTION PLAN
The proposed MRV system builds on existing structures, and is aimed to
be simple and limited in what it encompasses. There are several
benefits of this, primarily that it can become operational fast.
Moreover, a simple MRV system does not overburden the NAMA with a
bureaucratic system that demands considerable resources to be
operational. This is especially important in a NAMA with a smaller
scope such as this one.
Monitoring
The essential parameter to monitor is the change of use of
light bulbs in the country. As it is not feasible to measure this
directly, a proxy is to track the different type of light bulbs which
are imported into the country. The Customs and Excise Division already
records the import of different goods, meaning that this should not
constitute a significant extra expense.
Reporting
The reporting line of the NAMA is simple: it is illustrated in the
figure above. The Customs and Excise Division provides the number of
imported lightbulbs to the Energy Division. The Energy Division uses
this input to calculate which percentage of the households have adopted
energy efficient lightbulbs, the progress on phasing out the ICLs, as
well as the energy and financial savings and the GHG emission
reduction. These calculations build on the expertise and information
the Energy Division have. The information flow also adds the
opportunity for the Energy Division to overview how the situation
develops over time, and, as the main implementing actor, tweak or
suggest additional measures if needed. The final reporting step is to
the NAMA Focal Point, which is the Permanent Secretary of the Ministry
of Environment. The office is responsible for coordinating the
reporting to the UNFCCC.
Verifying
The verification process needs to check that the population is actually
using the imported energy efficient lightbulbs in their homes. As the
Central Statistical Office of Grenada has as an objective “to generate
social and environmental indicators for the formulation, pursuit and
evaluation of the policies that government can execute” (Central
Statistical Office of Grenada, 2017), this lies squarely within their
area of competence. When conducting household surveys, it could be
possible to include questions regarding the type of lighting they use
at home and their average use time.
SUSTAINABLE DEVELOPMENT CO-BENEFITS AND CONCLUSIONS
Increasing the energy efficiency of lighting is not only motivated by
the mitigation potential, but also by its sustainable development
impact. This goes hand-in-hand with the ambitions of the GoG.
Within the current Growth and Poverty Reduction plan of 2014-2018,
increasing energy efficiency is seen as a priority area to develop a
sustainable energy system, which in turn is seen as important to reduce
poverty and stimulate growth (Antoine, Taylor, & Church, 2014).
Target 3 of the NAMA is to generate 25% financial savings compared to
the BAU scenario within residential lighting. This will have an impact
on all income segments, but it will likely have a stronger impact in
the lower segments. This is for various reasons.
The cost of electricity makes up 3% of the GDP per household. While
increasing energy efficiency does not affect the unit cost of, in this
case, electricity, it does decrease the overall spending on
electricity. This increases the disposable income for all households,
but as energy costs form a proportionally larger part of the disposable
income for low-income segments, increased energy efficiency has the
potential to decrease the vulnerability of these households.
The NAMA will contribute to gender inequality as well, which
constitutes another focus in Grenada’s Growth and Poverty Reduction
Strategy (Antoine, Taylor, & Church, 2014). 44% of female-headed
urban households are within the bottom three quintiles, as opposed to
18.6% of the male-headed households. Other sustainable development
impacts are within the economic sphere. The National Energy Policy
describes high energy costs as threats to the economic growth (GoG,
2011); lowering these would free resources for other consumption and
strategic investments. Managed well, an increased economic growth could
lead to sustainable development. Another threat mentioned is the high
dependency on fossil fuel imports which compromises energy security.
Increased energy efficiency reduces the depen- dency as fewer imports
are needed.
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1 Grenada is currently working on its Second National Communication. As
a small island developing state, Grenada can submit a biennial update
report (BUR) at its own discretion. Up to this point, Grenada has not
submitted a BUR.
2 The stakeholders present at the workshop were the following:
Representatives from the Policy Unit, Technical Cooperation and Energy
Division under the Ministry of Finance. Representatives from the
Environment Division under the Ministry of Agriculture Lands, Forestry,
Fisheries and the Environment. Representatives from the Grenada Bureau
of Standards, Customs & Excise Division, GRENLEC, UNDP Regional
Office, GIZ-CIM, the RCC of the UNFCCC, OLADE and UNEP DTU Partnership.
3 As the energy use, GHG emissions, and the cost of electricity are
linearly correlated in this NAMA, as neither the grid emission factor
nor the electricity price changes no matter how much electricity that
is consumed, the changes in one of these parameters are reflected 100%
in the other.