Globally, buildings were responsible for 9.18 giga tonnes of greenhouse gas emissions or 19% of global emissions in 20102 (Lucon et al., 2014). Especially in developing and emerging economies, rapidly growing and urbanising urban populations will require a large increase of housing and infrastructure expansion. At the same time, radical improvement of the building sector is an ur-gent challenge that must be overcome in order to meet the temperature objectives of the Paris Agreement. Though the challenge is large, much of this can be done at low or even at negative costs (Lucon et al., 2014). For the building sector this means that to limit global warming to 2 de-grees Celsius, global emissions from the building sector need to fall by 77% by 2050 compared to 2010; to limit global warming to 1.5 degrees Celsius, emissions need to fall by up to 90%
(Climate Action Tracker, 2016a).
Colombia is no exception to the global trend. With economic opportunity concentrated in urban areas, Colombia also faces challenges of rapid urban growth and an associated housing shortage.
At the same time, Colombia must address these needs while meeting its commitments under the Paris Agreement. As new OECD member, this means Colombia must rapidly move towards rapid decarbonisation of the building sector, both for new buildings and the existing building stock (Climate Action Tracker, 2016a). In addition to domestic efforts, international cooperation may present options to steer the Colombian building sector towards a more climate compatible and sustainable growth. International cooperation can take place through international climate fi-nance and possibly also through the opportunities presented through Article 6 of the Paris Agreement.
The Paris Agreement marks a new milestone in the fight against climate change, particularly with regard to the development that all parties have agreed to contribute to the global effort to reduce GHG emissions. Article 6 of the Paris Agreement includes provisions for international co-operation through market mechanisms, most notably Article 6.2 which provides for cooperative approaches; and Article 6.4 for a new mechanism to promote mitigation and sustainable devel-opment. International rules governing Article 6 are currently the subject of intense negotiations in the United Nations Framework Convention on Climate Change (UNFCCC).
Colombia has a long track record in ambitious climate change planning and policy making. It has demonstrated regional leadership with regard to a number of climate measures, including the development and implementation of domestic and international carbon pricing and market-based instruments. Colombia introduced a carbon tax of approximately $5 per tonne CO2
through a policy reform in 2016, which came into effect in January 2017. It was also relatively successful as a host country for projects developed under the Clean Development Mechanism (CDM) and shows a high-level of engagement under World Bank’s Partnership of Market Readi-ness (PMR) programme on carbon pricing.
Colombia submitted its Intended Nationally Determined Contribution (INDC) in September 2015. The INDC provides for an unconditional, single year target of 20% emission reduction across all sectors by 2030 compared to a business as usual (BAU) scenario. Colombia has said they may increase the target to 30% with international support. The INDC notes the option to use market-based mechanisms – in line with principles of transparency and environmental in-tegrity – for the achievement of its emission reduction target.
Article 6 could potentially provide an avenue for international cooperation on a sectoral basis to enhance mitigation efforts. The concept of sectoral approaches has historical precedence in the
2 Excluding agriculture, forestry, and land use (AFOLU)
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Bali Action Plan, which was adopted at COP13 in 2007. Proposals made in this context included ideas for a sectoral CDM, a sectoral crediting mechanism based on no-lose targets, and emissions trading based on sectoral targets. However, none of these have any consensus in current negoti-ations.
This report focuses on exploring options for sectoral GHG mitigation in Colombia’s residential building sector with a focus on social housing and how to move the sector towards deep decar-bonisation. We focus on the operational emissions in the sector, including both direct emissions (e.g. from cooking, heating) and indirect emissions (e.g. electricity use). Embedded emissions of materials and in the construction of the house, as well as household appliances are not consid-ered, although future research must assess impacts and mitigation options from a lifecycle point of view. Emissions from leakage of refrigerants are also an important source of greenhouse gas-ses from the residential sector but are not a focus of this study, considering an ongoing NAMA activity focussing on the issue.
We discuss the financial aspects of various measures, their potential impact, financing options, as well as the potential options and trade-offs of using reductions for domestic efforts for the Co-lombian INDC or transferring generated credits towards commitments under the Paris Agree-ment. It is a conceptual study that covers selected aspects relevant for ambitious emission re-ductions in Colombia’s building sector, looking, in particular, at benchmarks and their potential in market-based and market-compatible approaches, including barriers to such an approach and circumstances under which such an approach would make sense. In the building sector, bench-marks are traditionally used as indicators of (energy) performance of buildings.
Colombia continues to face a deficit of affordable housing for lower income groups. Tens of thou-sands of new housing units must be built with limited fiscal resources. At the same time, the building sector in Colombia, as elsewhere, presents a number of challenges for energy efficiency measures in general and especially for emission reduction crediting. These include, inter alia, a large number of stakeholders involved; fragmented market and institutional structures; chal-lenges of enforcing existing building guidelines; high heterogeneity with vast variances in build-ing practices through time. These are related to, cultural aspects and cognitive and behavioural patterns that differ between geographic regions and between construction firms. A large num-ber of measures would lead to fairly limited emissions savings given the relatively low emission electricity grid in Colombia. Other challenges include transaction costs; long investment payback periods; limited capital / access to financing; risk aversion; distorted tax regimes and energy consumption subsidies; patents and barriers to technology transfer; and a lack of information and awareness that hinder investments to be made. Further monitoring and verification of en-ergy performance and enen-ergy performance improvement pose challenges as well as high trans-action costs (Lucon et al., 2014).
These challenges made project-based crediting in the building sector impracticable in the CDM, both in Colombia and around the world. Most CDM projects in the household energy efficiency area concentrated on single interventions such as light bulb replacement or cookstoves but failed to bring about a transformational shift towards efficient building practices. A sectoral ap-proach may address some of these barriers but still presents a major challenge.
Further research into policy approaches to drive emission reductions in the building sector how-ever make sense for two reasons:
► There is an untapped global potential for cost-effective mitigation in the building sector. Accord-ing to the IPCC 2014 Assessment Report, the buildAccord-ing sector offers the opportunity to hold final energy use constant or even decline by mid-century, as compared to today’s levels, or a possible
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double or tripling in business as usual cases. This can be done purely with a broad diffusion of to-day’s cost-effective best practices and technologies (Lucon et al., 2014). Approximately 30% of all buildings-related emissions can be avoided at low cost by 2020 (Levine et al., 2007). Increased energy efficiency in the building sector is typically associated with economic gains and with posi-tive short- to medium-term returns on investment. Many opportunities for cost savings such that low-energy buildings can often be delivered at no extra cost. (Torcellini & Pless, 2012)
► The modernisation of energy access and energy efficiency in the building sector usually holds ma-jor synergies with other development objectives / co-benefits, including poverty alleviation, im-proved health, quality of life, employment creation, energy security, and facilitating parallel pro-gress on a country’s climate and development agenda.
This study is carried out on behalf of the German emission trading authority (DEHSt) at the Fed-eral Environment Agency (UBA) which receives funding from the German FedFed-eral Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU). DEHSt at UBA is the German Designated National Authority (DNA) in charge of implementing the flexibility mechanisms un-der the Kyoto Protocol, and also works continuously on the development of domestic and inter-national market-based approaches in Germany and its partner countries. Since the building sec-tor is complex in many regards (e.g. regarding owner structures, emission sources, monisec-toring, etc.), progress has been slow and the building sector is comparatively under explored in terms of mitigation policy research for markets or as a specific area of intervention in NDCs. The research presented here aims explore the challenge of increasing the energy efficiency of buildings in gen-eral, with a focus on social housing and proposes an innovative, ambition focused approach to promote Net Zero Energy Buildings in the social housing sector, along with a more comprehen-sive policy package for buildings in general.
The study is undertaken in close cooperation and collaboration with Colombian national stake-holders, including the government and other relevant actors and sector experts. Project activi-ties fit well with Colombia’s engagement in international market negotiations and its efforts to develop carbon pricing and market-based instruments also at the domestic level. Technical as-sistance under the project involves a detailed analysis of the status quo, the mitigation potential, and costs and options for reducing greenhouse gas (GHG) emissions in the building sector and its subsectors. This information can be of use to the country in the development of its broader climate and energy strategies, and can support the translation of the NDC into sectoral targets and related measures, particularly in the building sector. Project activities can furthermore ad-vance the agenda for the modernisation of the building sector with significant implications for related national development objectives.
The report is structured as follows: in the next section we review of Colombia’s climate policy and plans for NDC implementation (Section 2) followed by a discussion of current mitigation ac-tivities in the building sector (Section 3). Subsequently, two further sections explore the poten-tial of a market-based intervention through Article 6 of the Paris Agreement to incentivise fur-ther mitigation activity in the building sector (Section 4) and an overall discussion of policies re-quired to put the sector on a path towards decarbonisation (Section 5). We then investigate how to incorporate, harmonise, and maximise synergies of both a potential market-based interven-tion with a larger policy reform to drive ambitious emissions reducinterven-tions in the building sector are then explored (Section 6). A final section summarises the findings and provides general rec-ommendations and key messages (Section 7).
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