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Saturday, July 23, 2011

REDD - Reducing Emissions from Deforestation and Forest Degradation

One of the most controversial issues in the climate change debate. The basic concept is simple: governments, companies or forest owners in the South should be rewarded for keeping their forests instead of cutting them down. The devil, as always, is in the details.

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1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Case Studies
8. Companies/Organizations
9. Links

  • Deforestation and forest degradation, through agricultural expansion, conversion to pastureland, infrastructure development, destructive logging, fires etc., account for nearly 20% of global greenhouse gas emissions, more than the entire global transportation sector and second only to the energy sector. IPCC estimates that land-use change conversion of forest into agricultural land) contributes a net 1.6 ± 0.8 Gt carbon per year to the atmosphere. For comparison, emissions from fossil fuel combustion and cement production amount to 6.3 ± 0.6 Gt carbon per year.

  • In order to constrain the impacts of climate change within limits that society will reasonably be able to tolerate, the global average temperatures must be stabilized within two degrees Celsius. This will be practically impossible to achieve without reducing emissions from the forest sector, in addition to other mitigation actions.

  • In the 1997 global climate agreement, the Kyoto Protocol, policies related to deforestation and degradation were excluded due to the complexity of measurements and monitoring for the diverse ecosystems and land use changes and concerns about countries losing sovereignty over
    their natural resources.

    At the 2007 Bali UNFCCC meeting (COP-13), an agreement was reached on “the urgent need to take further meaningful action to reduce emissions from deforestation and forest degradation”

  • The 2010 Cancun Conference (COP-16) recognized the much broader contribution of forest-related activities in efforts to limit climate change. Specific recognition was given to the reduction of deforestation and degradation through such initiatives as REDD and REDD+. This means that forests will be included in any future agreement with the possibility of generating international credits from these activities.

    Measurement of forest carbon will occur at the national level, thus enabling programmatic approaches. This measure is expected to encourage greater geographic diversification

  • Reducing Emissions from Deforestation and Forest Degradation (REDD) is an effort to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development. “REDD+” goes beyond deforestation and forest degradation, and includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.

    It is predicted that financial flows for greenhouse gas emission reductions from REDD+ could reach up to US$30 billion a year. This significant North-South flow of funds could reward a meaningful reduction of carbon emissions and could also support new, pro-poor development, help conserve biodiversity and secure vital ecosystem services
  • Governments in developing countries with tropical forests hope to be able to reduce their deforestation rates without being financially disadvantaged, through a system of positive financial incentives. There are now a number of other proposals on the table as well, and some of these suggest financial mechanisms other than carbon credits with which to fund a REDD mechanism. All are also based on the idea that Northern countries are responsible for providing financial support to Southern countries’ climate change mitigation and adaptation activities; and seek to generate a significant level of compensation or economic incentive to outweigh the income generated through deforestation.

  • Source: Intergovernmental Panel on Climate Change 2000 Report:

2. Acronyms/Definitions

UNFCCC Glossary

  1. Afforestation - The process of creating forests on land that was previously unforested, typically for longer than a generation. In some places, forests need help to reestablish themselves because of environmental factors. For example, in arid zones, once forest cover is destroyed, the land may dry and become inhospitable to new tree growth. Other factors include overgrazing by livestock, especially animals such as goats,cows, and over-harvesting of forest resources. Together these may lead to desertification and the loss of topsoil; without soil, forests cannot grow until the long process of soil creation has been completed - if erosion allows this. In some tropical areas, forest cover removal may result in a duricrust or duripan that effectively seal off the soil to water penetration and root growth. Mechanical breaking up of duripans or duricrusts is necessary, careful and continued watering may be essential, and special protection, such as fencing, may be needed.

  2. A/R Project - CDM Afforestation and Reforestation Project. Deforestation, particularly in Brazil, Indonesia and parts of Africa, account for about 20% of greenhouse gas emissions. Deforestation can be avoided either by paying directly for forest preservation, or by using offset funds to provide substitutes for forest-based products.

    CDM project activities can be categorized into “Emission reduction project” and “Sink project”. Sink projects are to absorb carbon through afforestation or reforestation activities.

  3. CCB Standards - Can be applied throughout the life of the project to evaluate the social and environmental impacts of land based carbon projects. The CCB Standards can be combined with many other standards, such as the Clean Development Mechanism (CDM), or the Voluntary Carbon Standard (VCS). The CCB Standards provide a basis for evaluating a project’s social and environmental impact, while the carbon accounting standard enables verification and registration of quantified greenhouse gas emissions reductions or removals. Using both standards together enables investors to select carbon credits with additional benefits, while screening out projects with unacceptable social and environmental impacts.

    The standards comprise fourteen required criteria and three optional "Gold Level” criteria. Once a project has been designed, a third-party evaluator will use indicators to determine if individual criteria are satisfied.

    As of December 2010, a total of 28 projects have completed validation, and 23 other projects have initiated the validation process. Of these 51 projects, 41 are in developing countries and represent exciting initiatives to stimulate investment, jobs, biodiversity conservation and many other social and environmental benefits. At least 100 projects are planning to use the standards, representing over 7 million ha of conservation and over 370,000 ha of restoration of native forests with total estimated annual emissions reductions of over 12.7 million tons annually.

  4. CDM - Clean Development Mechanism - Allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used by industrialized countries to a meet a part of their emission reduction targets under the Kyoto Protocol. The mechanism stimulates sustainable development and emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction limitation targets.

  5. CER - Certified Emission Reductions - A type of emissions unit (or carbon credits) issued by the Clean Development Mechanism (CDM) Executive Board for emission reductions achieved by CDM projects.

  6. HWP - Harvested Wood Products - According to the IPCC good practice guidance (2003) include wood and paper products. It does not include carbon in harvested trees that are left at harvest sites. Emissions and removals associated with forest harvesting and the oxidation of wood products are accounted for by the country in the year of harvesting (removal). The proposed method recommends that storage of carbon in forest products be included in a national inventory only in the case where a country can document that existing stocks of long term forest products are in fact increasing.

  7. IFM - Improved Forest Management - A suite of practices that reduce the social and environmental impacts of forestry activities while maintaining forest product supply These practices include:
    1. RIL - Reduced Impact Logging - An established set of timber harvesting practices designed to reduce the damage to the forest from timber extraction.
      Practices include:
      • Using innovative, low-impact logging equipment—such as the monocable winch system—that slide logs along the forest floor with long cables, reducing the damage to forests by bulldozers;
      • Improved design and construction of roads and skid trailc>s to minimize width and length required to access trees designated for harvest ;
      • Cutting trees so that they fall in a specific direction to minimize damage to other trees and maximize timber recovery (directional felling);
      • Cutting away vines that get tangled in the tree tops so that a cut tree does not bring several other non-commercial trees down with it;
      • Testing for hollow trees before they are cut down to avoid the wasteful destruction of trees that provide high ecosystem function but little or no timber value;
      • Proper identification of marketable species before cutting so that nonmarketable species are not cut down and abandoned; and
      • Construction of water bars (small ditches) across roads and skid trails to divert runoff and reduce erosion.

    2. Protection of conservation zones: IFM practices include the identification and special management of conservation zones, including:
      • Riparian buffer zones - areas where land meets streams or rivers, which are sensitive to erosion and have high plant and animal species diversity;
      • HCVF's - High Conservation Value Forests - Forests that contain concentrations of rare species, rare ecosystems, and/or areas of importance to local people;
      • Steep slopes sensitive to erosion; and
      • Corridors – forest areas that connect two or more larger blocks of forest.

    3. Silviculture: IFM also includes practices to ensure regeneration of native timber tree species, which helps maintain native tree diversity and provide a long-term source of income and employment. Some of these practices reduce emissions (e.g. extended rotation times, reduced damage to crop trees) while others can increase emissions (e.g. larger canopy openings to regenerate shade intoleran timber species); thus, careful planning is often necessary to achieve both emissions reductions and sustainable timber supply.

  8. LULUCF - Land Use, Land Use Change and Forestry - Defined by the UN Climate Change Secretariat as "A greenhouse gas inventory sector that covers emissions and removals of greenhouse gases resulting from direct human-induced land use, land-use change and forestry activities." LULUCF has impacts on the global carbon cycle and as such these activities can add or remove carbon dioxide (or, more generally, carbon) from the atmosphere, contributing to climate change. . Additionally, land use is of critical importance for biodiversity.

  9. MRV - Measurement, Reporting and Verification - Monitoring systems that allow for credible measurement, reporting and verification of REDD+ activities are among the most critical elements for the successful implementation of any REDD+ mechanism. Both remote sensing and ground based data is needed to monitor forest carbon emissions. UN-REDD is collaborating with the Group on Earth Observation (GEO), INPE and Google in order to improve access to data and expertise on remote sensing.

    For example, While Mexico has implemented a 15-day early warning system and produces a five-year national assessment of land use changes, it currently lacks an operative satellite system to monitor annual land use changes. Therefore, in the short-term MRV activities will include the development and implementation of an operative satellite monitoring system to offer annual national activity data

  10. NFI - National Forest Inventory - Provide a single authoritative source of forestry data at the national level. Ensure the development of sound forest policies. Ensure the viability of forest industries and the development of effective forest conservation strategies.

  11. PES - Payments for Environmental Services - National PES schemes are intended to compensate those providing environmental services (forest owners, for example). Costa Rica’s well-known scheme is intended to compensate farmers for not deforesting their lands. It is not a purely commercial mechanism: to meet its objectives it has relied upon additional subsidies (from a gas tax) and regulation, including a moratorium on deforestation. PES schemes are designed with conservation in mind, not poverty alleviation.

  12. REDD - Reducing Emissions from Deforestation and Forest Degradation - A set of steps designed to use market/financial incentives in order to reduce the emissions of greenhouse gases from deforestation and forest degradation. Its original objective is to reduce green house gases but it can deliver "co-benefits" such as biodiversity conservation and poverty alleviation. Deforestation is the permanent removal of forests and withdrawal of land from forest use. Forest degradation refers to negative changes in the forest area that limit its production capacity.

    REDD is presented as an "offset" scheme of the carbon markets and thus, will produce carbon credits. Recent work shows that the combined contribution of deforestation, forest degradation and peatland emissions accounts for about 15% of greenhouse gas emissions, down from earlier estimates of 25% and about the same as the transportation sector. It is increasingly accepted that mitigation of global warming will not be achieved without the inclusion of forests in an international regime. As a result, it is expected to play a crucial role in a future successor agreement to the Kyoto Protocol.

  13. REDD+ - Goes beyond deforestation and forest degradation, and covers all activities that reduce emissions from deforestation and forest degradation including:
    • the role of conservation
    • sustainable management of forests
    • enhancement of forest carbon stocks.

  14. Reforestation - This process increases the capacity of the land to sequester carbon by replanting forest biomass in areas where forests have been previously harvested.

  15. REL - Reference Emission Levels - The amount of gross emissions from a geographical area estimated within a reference time period (REDD) RL - Reference Level -The amount of net/gross emissions and removals from a geographical area estimated within a
    reference time period (Conservation, SMF, EFCS)

    Once set they cannot be changed during an implementation period. A fixed reference is fundamental for incentivizing action. They are based only on historical data of land uses, GHGs emissions/ removals, socio-economic variables no projections and no forward looking baseline in to minimize uncertainty past decade of economic growth may overestimate upcoming decade.

    There are three possible technical approaches that potentially support three different REDD implementation approaches
    1. Simplified: only gross emissions from forest land converted to other land uses. Gross carbon stock change (∆C) in areas deforested (ADEF) during the reference period. In this case the carbon stock concept could be further simplified and be related only to some carbon pools (e.g. above ground biomass) (Deforestation) -- Category 2
    2. Complete: gross GHGs emissions related to decreases in forest carbon stocks Gross carbon stock changes (∆C) in areas deforested (ADEF) during the reference period plus net decrease of carbon stocks (∆C) at national level in degraded forest land (ADEG) and non-CO2 gases emissions during the same period (Deforestation and degradation) – Category 3 / IPCC GPGS.

      If forest lost is matched by expanding plantations, this strategy could allow a country to benefit from increased revenue from both plantations and REDD credits.
    3. Sector: full GHGs balance from the whole Forest estate - Sum of all carbon stock changes (∆C) occurring in forest land (AFL) during the reference period, due to:
      - Conservation/SFM of Forest land (forest land remaining forest land)
      - Forest land conversion to other land uses (DEF)
      - Land Conversion to forest land (A/R) plus non-CO2 gases emissions during the same period (CH4, N2O)
      (Deforestation, forest degradation, SFM, conservation) -- Category 3

  16. RMU - Removal unit On the basis of land use, land-use change and forestry (LULUCF) activities such as reforestation. Equal to one tonne of CO2 can be traded and sold under the Kyoto Protocol’s emissions trading scheme.

  17. SMF - Sustainable Forest Management - SFM can cover a wide range of very different forest management strategies from conversion of native forest to plantation to maintenance of old growth native forest in order to maintain it in a pristine condition. SFM is a term commonly used by the forest industry to cover these two extremes and everything in between.

  18. Sustainable Land Management - With nearly two times as much carbon in soil than in the atmosphere, small changes in the level of carbon in soils can drive large changes in atmospheric carbon concentrations. Sustainable land management projects that increase the carbon content of soils represent a “triple win” for society: development, climate change resilience, and climate change mitigation.

    Healthy and fertile croplands increase the productivity of farms and the incomes of farming communities. In addition, cropland management techniques promote resilience to variations in climate, encouraging stability and food security. Finally, the sequestration of carbon in soils is a viable and quantifiable way to reduce atmospheric carbon. The sequestration of carbon in soils is currently a neglected part of the climate solution, yet it is important for mitigation, adaptation, and rural communities

Current carbon stocks are much larger in soils than in vegetation, particularly in non-forested
ecosystems in middle and high latitudes  Source: Intergovernmental Panel on Climate Change 2000 

3. Business Case
  • A significant development was achieved at the Cancun Conference (COP 16). For the first time, the importance of stemming the loss of tropical forests for mitigating global climate change with financial support from the industrialized world was enshrined in an international agreement. The Kyoto Protocol’s Clean Development Mechanism has only allowed incentive payments to be made for afforestation and reforestation in developing countries, and only at the level of projects. With COP 16 decision, entire jurisdictions (including countries themselves) could receive incentives, subject to verification that emissions have been reduced against a reference level. All developing country activities referred to as “REDD+” are now eligible for financial support.
    They are as follows:
    • Reducing emissions from deforestation (actions to diverge from the reference level by reducing the conversion of forest to nonforest);
    • Reducing emissions from forest degradation (diverging from the reference level by reducing the gradual loss of biomass because of activities under the canopy);
    • Conservation (continued good stewardship of forests);
    • Sustainable management of forests (reducing emissions through harvesting activities with lower impact); and
    • Enhancement of forest carbon stocks (enhanced sequestration, for example, through reforestation)

  • The meteoric rise of REDD’s market share (+500% from 2009 to 2010) can be attributed to formal international recognition for REDD and conservation-based REDD+ as critical for climate change mitigation as well as likely pre-compliance interest in the project type under California’s emerging cap-and-trade program. At the same time, REDD gained market standing on the platform of the first REDD project methodologies approved for use by the Verified Carbon Standard (VCS) and through forest-focused third-party standards like Brasil Mata Viva (BMV).

  • The principles or objectives of the Cancun decision will still need to be operationalized. The Subsidiary Body on Scientific and Technological Advice (SBSTA) is expected to develop modalities on the setting of Reference Emission Levels and the design of measurement, reporting, and verification systems (MRV) and to propose guidance on the establishment of information systems by developing countries to report on safeguards. Even though the magnitude of finances required for
    REDD+ calls for the involvement of the private sector, the role of markets in mobilizing funding for REDD+ still needs to be discussed under the UNFCCC.

  • The rules governing the treatment of land use, land-use change and forestry for the second commitment period are currently being renegotiated as part of the Bali Action Plan under the Ad-Hoc Working Group on Further Commitments for Annex 1 Parties under the Kyoto Protocol (AWG-KP). The most recent options for rule changes under consideration are summarized in a "Non-Paper" the co-chairs of the contact group on LULUCF (as of June 12)

4. Benefits
  • As stated in the background, in order to constrain the impacts of climate change within limits that society will reasonably be able to tolerate, the global average temperatures must be stabilized within two degrees Celsius. This will be practically impossible to achieve without reducing emissions from the forest sector, in addition to other mitigation actions.

  • Cost Effective Carbon Abatement - The creation of low-cost offsets through a scheme, such as REDD+, offers import countries considerable opportunities for cost-effective abatement. The cost containment opportunities justify the considerable work needed to develop offset schemes.

5. Risks/Issues
  • Structural Issues - How the system will work? What will be the unintended consequences?
    • Baseline - Will it be based on current emissions levels or historical deforestation rates, a business-as-usual scenario? Will countries with different forest covers and historic deforestation rates hold different interests in the way the reference levels are constructed?

      A further critical element of the baselines debate concerns whether to measure standing carbon stocks instead. This approach is favored by countries that are still heavily forested and may have made considerable efforts to remain so. If they are excluded from REDD, the benefits would go only to the most prolific deforesters.

      Natural changes, such as forest fire and dieback, cannot be excluded (although it could be argued that these are no longer entirely natural, because of the impacts of climate change on weather patterns and forest health.

      Solutions that have been proposed to these difficulties include:
      • Countries being rewarded for reductions relative to historic emissions and on the basis of reductions below an agreed global baseline; and supported by a combination of marketand fund-based financing (Strassburg, 2008).
      • The use of a Target Band or Range Approach instead of a baseline, which allows countries to increase the financial benefits they accrue per credit the closer they get to their upper targets. However, this approach could make it difficult to generate full-value credits and to identify leakage.

    • Measuring Forest Degradation - There is no consensus on the definition for forest degradation. If degradation is not included in REDD, great quantities of carbon could be lost without the system recognizing it. In some countries, such as those in the Congo Basin, losses from degradation tend to be much higher than those from deforestation. However, the fact that degradation data may be less reliable – and is more expensive to acquire – is likely to discourage carbon finance investors, which may mean negotiators choose to exclude degradation in order to accommodate carbon trading.

      Even if methodologies are deemed sufficient, cost could still be a stumbling block, because:
      • Satellite imaging is expensive
      • ‘Ground truthing’, is costly, which is particularly important if degradation is to be included (still a contested point, for precisely this reason);
      • Installing monitoring and verification systems are up-front costs, whereas income through carbon financing is likely to be ex-post; and
      • Associated technical documents will be inaccessible to local communities without advice from external consultancies

    • Measuring Emissions of Methane (CH4) and Nitrous Oxide (N2O)
      These gases are influenced by land use, land-use change, and forestry activities (e.g., restoration of wetlands, biomass burning, and fertilization of forests). Hence, to assess the greenhouse gas implications of LULUCF activities, changes in CH4 and N2O emissions and removals — the magnitude of which is highly uncertain — would have to be considered explicitly. There are currently no reliable global estimates of these emissions and removals for LULUCF activities.

    • Ex-Post Payments and Liability Contracts - Carbon finance is also likely to disadvantage smaller players. Payments may be made ‘ex-post’, which means that the project is paid after the delivery of emissions reductions, because of the uncertainty associated with REDD. This would be difficult for smaller projects because they would have to fund upfront and operational costs from other sources. Alternatively, projects may have stringent risk assessments and contractual liability arrangements attached to them, meaning that the seller bears the risk of project failure. Both scenarios would be particularly onerous for smaller projects run by local communities.

    • Carbon Leakage - Negotiators are also concerned that REDD projects may halt deforestation at one site, but that illegal logging practices could be shifted elsewhere. Will the programme actually slow deforestation or will loggers just move to areas not covered by the scheme? A project-level approach could mean that deforestation activities simply shift to another area in the same country (depending on the specific causes of deforestation in that country). One approach to this predicament is to focus efforts at the national level and to involve as many countries as possible. Even so, a question still remains about possible leakage from tropical forests to boreal and temperate forests. Norway is working on a project with Guyana to avoid leakages that would lead to deforestation pressures moving to countries with currently low deforestation, like Guyana, when current high deforesters start to reduce their rates. Ultimately, the only real solution is to remove the underlying causes of deforestation.

      Commercial agriculture, including large-scale cattle ranching, is the predominant driver of deforestation in Latin America and Northern Dry Africa; and commercial crops, including for biofuels feedstocks, predominate in some South-East-Asian countries. On the other hand, commercial timber extraction is a more influential driver in South-East Asia as a whole. Commerical fuelwood extraction has also been identified as an emerging driver in ‘forest-poor’ countries with rapidly expanding urban centers , although it is important to bear in mind that much fuel wood collection is probably of fallen dead wood or offcuts from industrial felling.

    • Additionality - Accounting for reductions in deforestation that might have happened anyway (akin to the concerns about whether CDM projects are really additional). For example, Indonesia and Malaysia had very high rates of deforestation in the 1980s and 1990s, and deforestation is now likely to focus on highland areas. This means that deforestation rates can be expected to decrease anyway, for ‘mechanical’ reasons. Some countries are therefore proposing that baselines account for ‘anticipated trends in deforestation.’

    • Forward Selling - Trees reach maturity over a course of many decades. Project developers and offset retailers typically pay for the project and sell the promised reductions up-front.

    • Permanence - Forests, or at least trees, are impermanent by nature, and forest fires, disease, climatic changes, natural decay and timber harvesting could impede reductions in deforestation rates. Human causes clearing, burning, or mismanagement From an investor’s point of view this is a significant challenge to guaranteed profit-generation and the reason why ex-post payments are likely to be preferred.

      In other systems, this is resolved by the use of short-term and long-term temporary credits (tCERs and lCERs respectively), which have to be renewed at the end of a given period or if forest stocks disappear for any reason. Thus the liability for the project rests with the purchaser (although purchasers can also insure against credits expiring unexpectedly). However, temporary credits generate less income, so the sellers may prefer to shoulder liability themselves and sell more expensive permanent credits.

    • Transaction Costs - REDD carbon credits might be so complex and have such high transaction costs that only gthe largest companies operating to economies of scale are able to participate. because of the uncertainties associated with deforestation projects (because of storms or forest fires, for example) project managers are likely to find themselves saddled with the projects’ risks and liabilities. They may also find themselves responsible for finding upfront funding and operational costs to tide them over until they are paid at the end of the project period. Either way, larger and richer organisations operating to economies of scale can deal with these difficulties much more easily, than Indigenous Peoples and local communities, who may therefore find themselves in a poor negotiating position right from the start. They may also have to address language barriers and hire or find assistance to deal with the technical complexities involved in establishing, monitoring and verifying REDD projects.
    • Monopsony Structure - Largely due to the limited number of organisations capable of verifying carbon measurements to IPCC standards. Commodities markets are already unfavorable to producers and privilege intermediaries, largely because of the inherent nature of commodities themselves. Moreover, REDD’s global reach and scale suggest that intermediaries will obtain monopsony positions relative to projects.This results in the homogenisation of prices offered by the credit buyer to a project developer. More importantly, it also diverts the benefits of REDD+ away from communities and towards the middle men, in contrast to REDD+’s stated developmental objectives, whilst increasing the costs of REDD+.

    • Poor Transaction Structure - Transactions in REDD are structured as over-the-counter (OTC) arrangements, a fact that impedes REDD’s developmental goals and leads to a serious misallocation of resources. Forest carbon is a commodity. It is sourced – and may even be traded – “over the counter” (OTC), meaning outside of an exchange trading process. It is then aggregated and traded by intermediaries. The first transaction, where a project sells its carbon to an intermediary, is referred to as the “primary” market. Secondary markets are where the intermediary places that carbon with other parties – end users of credits, governments, speculators, private investors and the like. The primary-secondary structure is not a choice. It is inherent to REDD’s design because the people generating the asset are neither qualified nor inclined to trade their assets on a market.

      The problem is that there is no need for OTC flexibility in forest carbon. The end asset is largely the same regardless of its source, which makes bilateral, OTC-style contracts completely unnecessary. Why does this matter? Because OTC contract negotiations have their own peculiar dynamic, one that creates other types of risks, both for the individual parties and for the market as a whole:
      • Default. OTC contracts are bilateral, so that the counterparties are subject to market risk as well as default risk from their counterparty. This is more dangerous in REDD, where forest projects in OTC deals are completely dependent upon a single, controlling counterparty and may be completely ruined by a default. Also, because projects have very little interaction with each other, multilateral default protections do not exist.
      • Pricing Power - Active participants may have significantly better knowledge of market conditions and contract terms than occasional participants. This most especially disadvantages forest communities and REDD project managers, for whom an OTC carbon “trade” is a once-in-a-lifetime decision. The result will be that REDD projects will receive lower prices for their carbon, forcing them to cut operational costs.
      • Complexity  - Derivatives contracts are complex legal documents and firms with more experience are also more skillful in structuring them to their advantage. This is compounded by the difficulty of creating support systems for these businesses – due to the complexity of the requirements, the pricing and risk management systems that support these markets frequently do not completely match the actual contract terms. Again, this will represent a major disadvantage for REDD projects, who will be forced to either muddle through these issues or engage expensive outside help.
      • Oversight - This asymmetry of information applies to regulators in these markets as well. They cannot observe systemic risks building until those risks have already had a negative impact, and regulatory actions must be prescriptive rather than preventive.
    • Poorly Defined Assets - From a trading point of view, the process which forest creates carbon is ill defined to the point of being unacceptably risky. It contains a vague, poorly defined and scientifically unreliable process for creating forest carbon. 

    • Unsolvable Clearing Problems - As a consequence, pushing these commodities through the derivatives trading framework will prove impossible. This will either cause the trading system to not be created in the first place, or (as seems more likely) will result in the creation of a substandard, risky and ultimately destructive forest carbon market

  • Economic Risks -
    • Reduced Emission Reductions - To what extent can large emitting nations be allowed to use credits as a substitute for internal efforts to reduce emissions? Will REDD credits flood carbon markets and drive down prices making them a more attractive option than emission cuts?

      Leading conservation groups opposed the inclusion of forestry credits in the Kyoto Protocol due to fear that cheap carbon credits would flood the carbon market, thereby stalling other climate change mitigation programs. Allowing countries with carbon intensive lifestyles to continue consuming inequitably and unsustainably, by permitting them to fund cheaper forest carbon 'offsets' in developing countries, diverts critical resources and attention away from measures to address fossil fuel consumption and the real underlying causes of deforestation.

    • Price of Timber - REDD could significantly reduce the supply of timber which could lead to rapidly increasing timber prices and thus more incentive to deforest. Reducing demand for timber and agricultural commodities must be an immediate priority. Yet REDD as it is currently construed seems most unlikely to address this issue. Worse, it could even aggravate the situation by reducing timber supplies.

    • Illegal Logging is often listed as one of the prime proximate drivers of forest degradation, and one of the hardest to stop, especially in the absence of any reduction in demand for timber. Yet without such a reduction in demand, REDD could actually increase illegal/industrial logging (by leading to an increase in timber prices, as discussed above).

      It has been estimated that illegal activity was responsible for between 73% and 88% of Indonesia’s deforestation in 2006; and the Indonesian government has estimated that 2.8 million ha of forest, worth US$3.3 billion, is lost to illegal logging every year. In Amazonia, illegal activity could account for anything up to 60% of deforestation (at least down from 80% in 1997). Similarly, estimated levels for Cameroon are alleged to be about 50%; and for Papua New Guinea about 70% (Saunders & Nussbaum, 2008:2)

      It may not be reasonable to assume complex REDD policies involving large amounts of money work in countries unable to contain illegal logging and forest conversion in the first place. And if increased infrastructure, good governance and financing can help to stem these illegal activities, why not use new or existing policy measures to target these aspects directly?

    • Price of Land - If REDD leads to timber or land increasing significantly in price, as may already be happening, it is likely to have significant impacts on poor forest-dwelling communities and on land reformprogrammes.The simple fact of the forest becoming an increasingly valuable commodity will mean that it is more likely to be wrested away from local people.

  • Political Risks - Who benefits?
    • Distribution of Benefits - How can the benefits from REDD be distributed to forest communities in a just, equitable way that minimizes capture of the benefits by national governments or local elites? Local inhabitants, the communities that live in the forests, might be bypassed, not consulted and won't actually receive any revenues.

    • Loss of Sovereignty - Prioritising investment decisions that focus on maximizing profits and allowing foreign investors to buy up forest services reduces developing countries’ sovereignty over their natural resources. This is one of the reasons given by Brazil’s opposition for opposing the use of carbon markets to fund REDD and is the reason why it has proposed an alternative funding mechanism.

    • Indigenous Rights - To whom, if anyone, do forests belong is a key moral and ethical dilemma. And who has the rights to sell forest carbon credits? It is certainly clear that in the absence of secure land rights, Indigenous Peoples and other forest-dependent communities have no guarantees that they will receive any form of REDD incentive or reward for their extensive forest conservation efforts.

      Up to 1.6 billion people are at least partially reliant on access to forests for their everyday needs (FAO, 2008); and some 60 million Indigenous People depend wholly on forests for all their requirements

      REDD policies will trigger a rapid expansion in lands set aside for REDD projects. In many countries, governments and businesses are likely to ignore the customary and territorial rights of Indigenous Peoples, as they seek to protect an increasingly valuable resource, violently or otherwise. The simple fact that forests are becoming an increasingly valuable commodity means that they are more likely to be wrested away from local people.

      Commodifying forest carbon is also inherently inequitable, since it discriminates against people, and especially women, who previously had free access to the forest resources they needed to raise and care for their families, but cannot afford to buy forest products or alternatives. Any REDD projects that deny local communities and Indigenous Peoples access to forests risk having grave impacts on poverty and the achievement of the Millennium Development Goals.

    • Subsistence Farming - To what extent are subsistence farmers responsible for deforestation; and how much would it really cost to compensate them? An overly general approach to subsistence farming can also lead to the bundling together of many different kinds activities under the one heading, including:
      • Slash-and-burn activities, including by people who have migrated to the forests
      • Shifting cultivation
      • The collection of non-commercial fuelwood and non-timber forest products
      • Traditional, sustainable types of forest farming, that are known to gradually increase carbon sequestration.

    • Corruption - Facilitate corruption and poor governance in countries with tropical forests, because of the large sums of money proposed and the complex nature of the financial mechanisms likely to be involved. Given the current political institutions in many developing countries, it is likely that significant financial power will be given to a very small group of people or one individual.  Forestry departments are among the most corrupt departments in some of the most corrupt countries in the world.

      REDD could offer the opportunity to corrupt government officials to benefit from low rents in some areas and REDD income in others.

  • Environmental Risks -
    • Monocultures and Invasive Species - In an effort to cut costs, some tree-planting projects introduce fast-growing invasive species that end up damaging native forests and reducing biodiversity. For example, in Ecuador, the Dutch FACE Foundation has an offset project in the Andean Páramo involving 220 square kilometres of eucalyptus and pine planted. The NGO Acción Ecológica criticized the project for destroying a valuable Páramo ecosystem by introducing exotic tree species, causing the release of much soil carbon into the atmosphere, and harming local communities who had entered into contracts with the FACE Foundation to plant the trees. However, some certification standards, such as the Climate Community and Biodiversity Standard require multiple species plantings.

    • Plantations Included in REDD Definition - Plantations are not forests. Large-scale monoculture tree plantations cause serious environmental, social and economic problems. Furthermore, plantations store only 20% of the carbon that intact natural forests do. It thus seems inconceivable that the UN Framework Convention on Climate Change (UNFCCC) would sanction any process that allows natural forests to be replaced with plantations. Yet this is exactly what is being proposed in REDD. Some countries even support a ‘net deforestation’ approach: this would allow them to continue logging and cutting forest to make way for agricultural commodities, including biofuels, in some areas, while conserving forests and/or extending plantations in others.

    • Biodiversity - What might happen in low carbon, high biodiversity regions. UNEP, for example, refers to research indicating that only 15% of global carbon stocks are currently located in protected areas (Price, 2008). Will high biodiversity areas be neglected or de-prioritized? Ormight they be funded, as suggested by UNEP staffer Jeff Price, through premiums attached to high biodiversity REDD credits, or even through a completely separate 0financial mechanism?-*

    • Albedo effect - A study suggested that "high latitude forests probably have a net warming effect on the Earth's climate", because their absorption of sunlight creates a warming effect that balances out their absorption of carbon dioxide. This view is however being challenged by other studies showing that despite the negative albedo effects of temperate forests there is a net benefit and in addition there is weak evidence of a positive albedo effect in the tropics from clouds generated by forests.

  • Ethical Considerations
    • Will Good be the Enemy of the Necessary - It is argued that the cumulative atmospheric concentration of CO2 can be reduced by deferring deforestation: even if deforestation rates return to their original level after a certain period, cumulative concentrations of greenhouse gases will still be less than they would have been (Ebeling, 2007). There now seems to be increasing governmental consensus around what is known as the ‘50-50-50’ option which involves: “reducing deforestation rates 50% by 2050 and then maintaining them at this level until 2100 which would avoid the direct release of up to 50GtC [gigatonnes of carbon] this century, equivalent to nearly 6 years of recent annual fossil fuel emissions.

      The second questionable supposition is that any agreement is better than no agreement. This may be true for some international discussions on less critical issues, but is it for discussing a climate crisis where urgent and radical action is the only way to avert runaway climate change?

    • Equity - Because REDD is primarily intended to create financial incentives that will prompt those engaged in deforestation to switch to managing standing forests., it would reward those engaged in logging and industrial agriculture, while ignoring those countries and communities that have low deforestation rates.

  • Ignored Alternatives
    • REDD - Ignores Root Causes of Deforestation - Nailing down demand-side drivers in importing countries and resolving governance, poverty and land tenure issues in forested countries.

    • Market Bias - The use of methodologies that include exporters’ profits as opportunity costs also implies that those companies might be compensated for lost profits; and that only the market can change concession-holders or other land-holders’ behavior. However, as can be seen in Indonesia, it is quite possible for politicians to simply revoke concessions for logging and commodity production if they have sufficient incentive to do so.

      Considering the ‘full’ costs, including company profits, generates extremely high figures which are then used to justify the use of carbon trading, on the basis that no other funding source can generate finance on the scale required.

6. Success Criteria
  1. Structure - Many of the emission reduction opportunities are beyond CDM, notably in the REDD+ space. They do not have clear methodologies and are in sectors that may not be amenable to conventional financing. Organizing, financing, and implementing carbon projects in such sectors as low-tillage agriculture and sustainable land management will require developing new organizational and financing models.

  2. Indigeneous Rights - The knowledge and rights of indigenous peoples and local communities must be respected. Indigenous peoples and local communities must be able to participate fully and effectively.

  3. the national forest governance structures must be transparent and effective, taking
    into account national legislation and sovereignty.

  4. REDD+ must not encourage the conversion of natural forests to plantations.

  5. REDD can only help to avoid climate change “if it is based on sustainable forest management and integrated into broader carbon emission reduction strategies…. Weak forest governance and the marginalization of forest dependent communities are important factors that exacerbate forest loss and degradation. As long as these challenges remain unresolved, the success of REDD is uncertain and REDD mechanisms might even inadvertently reinforce corruption, undermine human rights and threaten forest biodiversity” (IUCN, 2008)

7. Case Studies
  1. GRIF - Guyana REDD Investment Fund - Norway will be the first contributor to the GRIF, and will pay US$30 million into the fund when it is established, planned at the end of this month. The payment is in recognition of Guyana’s efforts to protect its 16 million hectare rainforest, and follows the memorandum of understanding signed by the two countries in November last year. Norway intends to pay up to US$250 million into the GRIF between 2010 and 2015, based on Guyana’s performance in avoiding greenhouse gas emissions from deforestation and forest degradation, as well as Guyana’s on-going and planned strengthening of inclusive and transparent forest management. Guyana will invest GRIF revenues to implement the country’s Low Carbon Development Strategy (LCDS). This will enable Guyana to place its forest under long-term protection, catalyze public and private investment for clean energy (to move virtually the entire economy away from fossil fuel energy dependence), and create new low carbon economic and employment opportunities for forest dependent communities and other Guyanese citizens. The process will be evolving with the full and effective participation of involved stakeholders, including indigenous peoples groups.

    In June 2011, The Norwegian Government responded to the eight points of contention documented by a body of civil society personalities on March 24, 2011, as to the state of affairs of the Guyana REDD Investment Fund, saying that the partnership is very much a work in progress, one that will improve over time. With respect to the complaint over the delays in the preparation of projects, the letter said that getting the modalities of the GRIF sufficiently established and getting the projects approved by the GRIF Steering Committee has taken longer than expected. “This is a reflection of getting a new system to work, including with respect to the application of fiduciary, environmental and social safeguards,” the letter said.

    It noted that it is taking the matter seriously and said the Government of Guyana has prepared six projects and the respective partner entities are at present reviewing these. It said that as of now, no funds have been disbursed from the GRIF, even though Norway has already released the funds to Guyana, amounting to US$70M.

    Another issue that the stakeholders raised in their letter is that of the rate of deforestation under the agreement. The Norwegian letter explained that the intention of the agreement is to maintain a low level of deforestation. “By any means of comparison, the deforestation rate in Guyana remains extremely low. At deforestation rates as low as those observed in Guyana, even very small deforestation events will cause significant [percentage-wise] changes in the deforestation rate,” the letter stated.

    It said Guyana and Norway are intent on quickly disincentivizing any systematic upward trend in Guyana’s deforestation rates. “Based on the revised numbers, we have therefore put in place an incentive structure for that purpose. The incentive structure is publically available in our Joint Concept Note and implies payments start to fall at 0.56 percent deforestation and cease completely at 0.1 percent. By any measure, this is ambitious,” the letter said.

    It said that to further strengthen transparency and credibility of forest management practices and authorities in Guyana, Norway has agreed to establish Independent Forest Monitoring in the country. “An open, competitive tender process to procure the services of a credible party to fill this role has just been completed. When the IFM becomes operational in the near future, this will also be an important recipient of any information you may possess regarding suspected irregularities in the Guyanese forestry sector,” the letter stated.

    Regarding the need for strong and consistent safeguards, the letter said that these safeguards will be applied with those of the IDB, the World Bank and the UNDP, dependent on which institution will be partner entity for the relevant project. It noted that these institutions have played an important role as channels for the Norwegian multilateral cooperation for many years. They have environmental, social and fiduciary safeguards that are compatible with the requirements for the use of Norwegian funds,” the letter said.

    With regard to the complaint about the weak participatory process, the Norwegian letter advised that the stakeholders make their concern known to the authorities in Guyana.

  2. Norway Indonesia REDD+ Partnership - Indonesia’s deforestation rates are significant, and recent estimates indicate that between 2000 and 2005, 3.5 million hectares of forests have been lost (an area larger than Belgium), or around 2.9% of Indonesia’s total forest area.

    In October 2009, President Susilo Bambang Yudhoyono committed to reducing Indonesia’s CO2 emissions by 26% against a business-as-usual trajectory in 2020, the largest absolute reduction commitment made by any developing country. Indonesia has set a bold target and Norway wanted to support the Indonesian government’s efforts to realize its commitment.

    In May 2010 Norway and Indonesia signed a letter of intent to support Indonesia’s efforts to reduce greenhouse gas emissions from deforestation and degradation of forests and peat lands. Norway will support these efforts with up to 1 billion US dollars based on Indonesia’s performance, over the course of the next 7- 8 years.

    The partnership has three phases.
    1. In the first phase, funds will be devoted to finalizing Indonesia’s climate and forest strategy and putting in place enabling policies and institutional reforms.
    2. In phase two, the objective is to make Indonesia ready for the contributions-for-verified emissions reductions while at the same time initiate larger scale mitigation actions through a province-wide pilot project. Phase 2 includes
    3. i. A two year suspension on all new concessions for conversion of peat and natural forest.
      ii. Establishing a degraded lands database, starting in one or more appropriate provinces, to facilitate the establishment of economic activity on such lands rather than converted peatland or natural forests.
      iii. Enforcing existing laws against illegal logging and trade in timber and related forest crimes and set up a special unit to tackle the problem.
      iv. Taking appropriate measures to address land tenure conflicts and compensation claims.
    4. In the third phase, starting in 2014, the contributions-for-verified emissions reductions mechanism will be implemented nationally.

    In 2010 the money was spent on completing a national REDD+ strategy for Indonesia. However, the money will be distributed over a 7-8 year period and most of the funds are tied to verified emissions reductions by Indonesia.

    One focus-area of the partnership is sustainable management of forest and reduced emissions from the forest. Papua and Kalimantan are two areas of Indonesia with large tropical rainforests intact. They are also areas where insecure land tenure currently gives indigenous people and local communities little incentive to contribute to more sustainable management of forest.

    Indonesia agreed to declare a two-year suspension on new concessions on conversion of natural forests and peat forests into plantations.  The suspension was signed Indonesia's President in May 2011. This is not a “ban”, it is a temporary suspension, which applies only to “new concessions”. The Letter of Intent has nothing to say, and will not affect, concessions for clearance that have already been awarded, but not yet cleared.

    According to Greenomics-Indonesia, a Jakarta-based NGO, community and village forestry licenses are not among the many exemptions spelled under the presidential instruction that defines the moratorium. The instruction, issued last month, grants exemptions for industrial developers and allows business-as-usual in secondary forest areas by the pulp and paper, mining and palm oil industries.   "The only exceptions in the Presidential Instruction are for big business. In reality, the granting of licenses for community and village forestry development should have been prioritized for exclusion from the moratorium, especially as such activities are not environmentally destructive," said Greenomics Executive Director Effendi Effendi.

  3. Kenya Agricultural Carbon Project - The first project in Africa that sells carbon offsets from a sustainable land management project, improving the livelihoods of rural communities while tackling climate change. It brought the potential for carbon sequestration in soils to the forefront of carbon finance. Implemented by the Swedish NGO Vi Agroforestry, the project is located on over 40,000 hectares in the Nyanza Province and Western Province of Kenya. Smallholders and small-scale business entrepreneurs are trained in diverse cropland management techniques, including cover crops, crop rotation, compost management, and agroforestry. The farming practices both increase the yield of the land and sequester carbon in the soil.

    The project is developing the Sustainable Agriculture Land Management Methodology under the VCS. The first validation was finalized in November 2010 by Scientific Certification Systems. The project is currently undergoing the second validation. The BioCarbon Fund is leading the methodological work, together with Vi Agroforestry. It will purchase 150,000 emission reductions up to 2016.

  4. Green Wall of China - a series of human-planted forest strips in the People's Republic of China, designed to hold back the expansion of the Gobi Desert. It is planned to be completed around 2074, at which point it is planned to be 2,800 miles long.

    China has seen 3,600 km2 of grassland overtaken every year by the Gobi Desert. Each year dust storms blow off as much as 2,000 km2 of topsoil, and the storms are increasing in severity each year. These storms also have serious agricultural effects for other nearby countries, such as Japan, North Korea, and South Korea. The Green Wall project was begun in 1978 with the proposed end result of raising northern China’s forest cover from 5 to 15 percent and thereby reducing desertification.

    The 4th and most recent phase of the project, started in 2003, has two parts: the use of aerial seeding to cover wide swaths of land where the soil is less arid, and the offering of cash incentives to farmers to plant trees and shrubs in areas that are more arid. A $1.2 billion oversight system, including mapping and surveillance databases, is also to be implemented. The “wall” will have a belt with sand-tolerant vegetation arranged in checkerboard patterns in order to stabilize the sand dunes. A gravel platform will be next to the vegetation to hold down sand and encourage a soil crust to form. The trees should also serve as a wind break from dust-storms.

    As of 2009 China’s planted forest covered more than 500,000 square kilometers (increasing tree cover from 12% to 18%) – the largest artificial forest in the world. However, of the 53,000 hectares planted, a quarter has died and of the remaining many are dwarf trees, which lack the capacity to protect the soil. In 2008 winter storms destroyed 10% of the new forest stock, causing the World Bank to advise China to focus more on quality rather than quantity in its stock species.

    There is still debate on the effectiveness of the project. If the trees succeed in taking root they could soak up large amounts of groundwater, which would be extremely problematic for arid regions like northern China. For example, in Minqin, an area in north-western China, studies showed that groundwater levels dropped by 12-19 meters since the advent of the project.
    Land erosion and overfarming have halted planting in many areas of the project. China's booming pollution rate has also weakened the soil, causing it to be unusable in many areas.
    Furthermore, planting blocks of fast-growing trees reduces the biodiversity of forested areas, creating areas that are not suitable to plants and animals normally found in forests. "China plants more trees than the rest of the world combined," says John McKinnon, the head of the EU-China Biodiversity Program. "But the trouble is they tend to be monoculture plantations. They are not places where birds want to live." The lack of diversity also makes the trees more susceptible to disease, as in 2000 where one billion poplar trees were lost to disease, setting back 20 years of planting efforts.

    China’s forest scientists argue that monoculture tree plantations are more effective at absorbing the greenhouse gas carbon dioxide than slow-growth forests. So while diversity may be lower, the trees purportedly help to offset China’s carbon emissions.

    There are many who do not believe the Green Wall is an appropriate solution to China’s desertification problems. Gao Yuchuan, the Forest Bureau head of Jingbian County, Shanxi, stated that “planting for 10 years is not as good as enclosure for one year,” referring to the alternative non-invasive restoration technique that encloses a degraded area for two years to allow the land to restore itself. Jiang Gaoming, an ecologist from the Chinese Academy of Sciences and proponent of enclosure, says that “planting trees in arid and semi-arid land violates [ecological] principles”. The worry is that the fragile land cannot support such massive, forced growth. Others worry that China is not doing enough on the social level. In order to succeed many believe the government should encourage farmers financially to reduce livestock numbers or relocate away from arid areas.

8. Companies/Organizations
  1. AWG-KP - The Ad Hoc Working Group on Further Commitments for Annex 1 Parties under the Kyoto Protocol - Currently discussing changes in accounting rules for LULUCF for the second commitment period of the Kyoto Protocol. Proposed changes relate to setting of national reference levels for carbon accounting for forest management interventions; the cap, or amount of offsets that would be permitted from forest management; and accounting for carbon stored in harvested wood products (HWPs).

  2. AWG-LCA - Ad Hoc Working Group on Long-term Cooperative Action - Mandated to explore options for the type of support that should be provided for Phase lll (development of result-based activities that are fully measured, reported, and verified). and will report to the Durban Conference (COP 17). It is likely that multiple channels will be proposed, recognizing the role of the private sector, including through carbon markets, in addition to government assistance.

  3. BioCarbon Fund - A fund managed by the World Bank aimed at projects that sequester or conserve carbon with forests and agriculture. This Fund “can consider purchasing carbon from a variety of land use and forestry projects; the portfolio includes Afforestation and Reforestation, Reducing Emissions from Deforestation and Degradation and is exploring innovative approaches to agricultural carbon.”

    The BioCarbon Fund will purchase 150,000 pollution credits by 2016 from a carbon sequestration project in Kenya. The Kenya Agricultural Carbon Project, which covers over 40,000 hectares, is the first project in Africa that sells carbon offsets from a land management project. It is being implemented by the Swedish NGO Vi Agroforestry, and it is being used as the basis for the development of a Sustainable Agriculture Land Methodology under the Verified Carbon Standard (VCS).

  4. CCBA - The Climate, Community & Biodiversity Alliance - An initiative led by Conservation International, CARE, The Nature Conservancy, Rainforest Alliance, and the Wildlife Conservation Society to promote the development of land management activities that simultaneously deliver significant benefits for climate, local communities, and biodiversity. The CCBA has two major initiatives:
    1. CCB - The Climate, Community and Biodiversity Standards - In use by more than 100 projects around the world. CCB Standards enable investors, policymakers, project managers and civil society observers to evaluate land-based climate change mitigation projects by identifying high-quality projects that adopt best practices to generate significant benefits for local communities and biodiversity while delivering credible and robust carbon offsets. CCB Standards do not quantify carbon reductions, so they are often “stacked” with a carbon standard – primarily VCS – to certify projects’ additional social and environmental contribution.

      In June 2011, CCBA announced that the first two carbon forestry projects have reached verification status against the CCB Standards. While run by different organizations, both projects are located in Kenya. The International Small Group and Tree Planting Program (TIST) managed by Clean Air Action Corporation is a community based reforestation project working with over 50,000 farmers located near Mount Kenya. The sub-project that has achieved verification is 1,565 hectares (3,867 acres) in size and has sequestered approximately 80,627 tons of carbon since inception in 2004 while also generating new sources of revenue and sustainable livelihoods for over 8000 community members. The second project, is run by Wildlife Works and is located in Kasigau is 169,741 hectares (419,439 acres) in size and has generated approximately 1,002,870 tons of greenhouse gas emissions reductions in the first year of operation, providing new and diversified alternative livelihoods to local people and conserving a critical corridor for endangered wildlife.

      Each carbon project that aims to meet the CCB Standards is first ‘validated’ by a third party auditor. The validation process includes a 30-day public comment period and a site visit to check that the project has been designed to meet the requirements of the CCB Standards criteria and is likely to generate the expected climate, community and biodiversity benefits. Once a project has made progress, third party auditors review another set of public comments and visit the site once again to ‘verify’ that the project has been implemented following the validated project design – and to determine what benefits the project has actually generated.

    2. The REDD+ Social and Environmental Standards - Being developed in collaboration with the governments of Ecuador, Nepal and Tanzania to enable government programs to demonstrate that their programs for reducing emissions from land are designed and implemented in a way that ensures a high level of social and environmental performance.

  5. CFS - The CarbonFix Standard - An initiative supported by over 60 organizations promotes
    the development of climate forestation projects to sequester carbon from the atmosphere. The CarbonFix Standard is administered by CarbonFix a non-profit association based in Germany.

  6. FIP - The Forest Investment Program - A program hosted by the World Bank within the Strategic Climate Fund (a multi-donor Trust Fund within the Climate Investment Funds). The FIP's overall objective is to mobilize significantly increased funds to reduce deforestation and forest degradation and to promote sustainable forest management, leading to emission reductions and the protection of carbon terrestrial sinks.

    To obtain REDD funding under World Bank rules, a country must develop strategies to reduce deforestation, a system for monitoring, reporting and verifying emissions reductions, and a reference scenario that accounts for historic and projected future deforestation rates. The bank’s own technical advisory panel expressed concerns about “significant weaknesses” in the plans of Guyana and Panama and suggested that “analysis of the drivers of deforestation was incomplete and poorly aligned with their proposed strategies”.

    As part of the Bank’s Strategic Climate Fund, which is one of two funds in the framework of the Climate Investment Funds. The FIP, established in 2009, will mobilize larger-scale funds to prepare national strategies for the implementation of REDD+ projects under the FCPC in selected pilot countries. Furthermore, it seeks to give funds to other schemes that promote carbon markets in forests, such as the UN-REDD programme. It achieves this by providing “scaled-up financing to developing countries for readiness reforms and public and private investments, identified through national REDD+ readiness or equivalent strategies.”

    The FIP funds are channeled through five multilateral development banks: The African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and the World Bank Group

    There is disagreement is over whether there is scope for the World Bank to be involved through its existing carbon funds, its newly proposed climate investment funds and its influence over the Global Environment Facility (GEF), which is currently the operating entity of the UNFCCC’s financial mechanism; or whether funds should be handled within the framework of the UNFCCC itself (a view held by many developing countries, as expressed by the G77/China).

  7. FCPF - Forest Carbon Partnership Facility - A global partnership focused on reducing emissions from deforestation and forest degradation, forest carbon stock conservation, sustainable management of forests and enhancement of forest carbon stocks (REDD+). The FCPF assists tropical and subtropical forest countries develop the systems and policies for REDD+ and provides them with performance-based payments for emission reductions. The FCPF complements the UNFCCC negotiations on REDD+ by demonstrating how REDD+ can be applied at the country level.

    Since it became operational in June 2008, the FCPF has created a framework and processes for REDD+ readiness, which helps countries get ready for future systems of financial incentives for REDD+. Using this framework, each participating country develops an understanding of what it means to become ready for REDD+, in particular by developing reference scenarios, adopting a REDD+ strategy, designing monitoring systems and setting up REDD+ national management arrangements, in ways that are inclusive of the key national stakeholders.

    FCPF consists of two funds: the Readiness Fund and the Carbon Fund. The former supports countries in developing a national REDD+ strategy (phase 1 and 2), while the Carbon Fund is a public-private partnership due to become operational in 2011 which facilitates the trading in forest carbon credits (phase 3). In the first phase, countries have to produce Readiness Plan Idea Notes (R-PINs), which are the bases for producing the Readiness Preparation Proposals (R-PP), in order to provide the framework for REDD+ in each country.

  8. FSC - Forest Stewardship Council - An international non-profit, multi-stakeholder organization established in 1993 to promote responsible management of the world’s forests. Its main tools for achieving this are standard setting, independent certification and labeling of forest products. This offers customers around the world the ability to choose products from socially and environmentally responsible forestry.

    The FSC Label means that rather than the state, consumers are used to create shifts in industry and regulate the negative environmental impacts of deforestation.

    The main competing forest certification system is the PEFC (Programme for the Endorsement of Forest Certification schemes), established by a number of stakeholders, including associations of the forest industry, pulp-and-paper production and forest owners[citation needed] in response to the creation and increasing popularity of FSC.

    FSC has faced criticism for a number of practices, including certifying plantations, clear-cutting, and logging of old-growth forests as sustainable forestry. It has also certified companies linked to social conflict and human-rights violations. In fact Asia Pulp and Paper (APP), a brand that has been widely criticized for large-scale rainforest and peatland destruction in Indonesia, was certified by the FSC until an article in the Wall Street Journal in 2007 pushed the FSC to drop it.

  9. Rainforest Coalition - A coalition of nations led by Papua New Guinea and Costa Rica calling for the inclusion of REDD in a global cap-and-trade system. Under such an approach, industrialized countries would finance REDD projects, mainly in developing countries, to compensate for their own emissions.

    The objective is ambitious – forested tropical countries collaborating to reconcile forest stewardship with economic development.

    Who: Developing Nations with rainforests -- partnering with Industrialized Nations that support fair trade and improved market access for developing countries.

    What: Facilitate new and improved revenue streams in order to underpin community-driven environmentally sustainable economic growth.

    How: Reform international regulatory, trade and economic frameworks to effectively align market incentives with sustainable outcomes.

    Participants: Countries participating within the various activities of the Rainforest Coalition include: Argentina, Bangladesh, Belize, Cameroon, Central African Republic, Chile, Congo, Costa Rica, Cote d'Ivoire, DR Congo, Dominica, Dominican Republic, Ecuador, Equatorial Guinea, El Salvador, Fiji, Gabon, Ghana, Guatemala, Guyana, Honduras, Indonesia, Jamaica, Kenya, Lesotho, Liberia, Madagascar, Malaysia, Nicaragua, Nigeria, Pakistan, Panama, Papua New Guinea, Paraguay, Samoa, Sierra Leone, Solomon Islands, Suriname, Thailand, Uruguay, Uganda,Vanuatu and Viet Nam

    Opponents - This is likely due to two major reasons: long-standing national sovereignty issues about the Amazon, and concern about price depression in the Clean Development Mechanism (CDM). So despite encouraging developments from the world’s largest rainforest nation, deep-seated sovereignty questions remain as to whether Brazil will help REDD along or continue standing in its way.

  10. SBSTA - Subsidiary Body on Scientific and Technological Advice - Provide the COP with advice on scientific, technological and methodological matters. Two key areas of work in this regard are promoting the development and transfer of environmentally-friendly technologies, and conducting technical work to improve the guidelines for preparing national communications and emission inventories. The SBSTA also carries out methodological work in specific areas, such as the LULUCF sector, HFCs and PFCs, and adaptation and vulnerability.

    The principles or objectives of the Cancun decision to include forests in any future agreement with the possibility of generating international carbon credits will still need to be operationalized. The SBSTA is expected to develop modalities on the setting of Reference Emission Levels and the design of measurement, reporting, and verification systems (MRV) and to propose guidance on the establishment of information systems by developing countries to report on safeguards.

  11. UN-REDD Programme The United Nations Collaborative initiative on Reducing Emissions from Deforestation and forest Degradation in developing countries. The Programme was launched in September 2008 to assist developing countries prepare and implement national REDD+ strategies, and builds on the convening power and expertise of the Food and Agriculture Organization of the United Nations (FAO), the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP).

    Norway continues to be the UN-REDD Programme’s first and largest donor. Since the Programme was launched in September 2008, Norway has committed US$52.2 million for 2008-2009, and another US$31 million for 2010. Denmark became the second donor country to join the UN-REDD Programme, committing US$2 million in June 2009 and another US$6 million in November 2010. At the end of 2009, Spain announced its pledge of US$20.2 million to the UN-REDD Programme over a period of three years, and confirmed US$1.4 million for 2010 in November 2010.

  12. VSC - Verified Carbon Standard (formerly called Voluntary Carbon Standard) - Founded in 2005 by “business and environmental leaders who identified a need for greater quality assurance in voluntary markets”. As their mission sates, they have some “freedom” to create their own rules of the game, by claiming, “to pioneer innovative rules and tools that open new avenues for carbon crediting and allow businesses, non-profits and government entities to engage in on-the-ground climate action”

    VCS created a “REDD+ Methodology Framework” to assist in the creation of REDD+ methodologies for project activities in the voluntary market. Each approved methodology has been developed by different consultancy companies such as InfiniteEARTH, Winrock International, Wildlife Works Carbon and Face the Future, to name a few.

    The Rimba Raya conservation project, which covers nearly 100,000 hectares of peat swamp forest in the province of Central Kalimantan, Indonesia was the first REDD+ methodology approved under the VCS. It was developed by InfiniteEARTH, written by Winrock International and funded by Shell, Gazprom Market and Trading and the Clinton Foundation.

    VCS has also developed methodologies for crediting AFOLU activities (Agriculture, Forestry and Other Land Use or REDD++), expanding the possibilities to agricultural, peat and pastoral lands. By involving more and more groups interested in profiting from REDD+, the VCS presents itself as an easy way forward without the “hassle” of official regulatory frameworks, while the official REDD+ text within the UNFCCC is still being hotly debated.

9. Links
  1. UNFCC - REDD Web Platform
  2. Land Use,Land-Use Change, and Forestry A Special Report of the Intergovernmental Panel on Climate Change 2000

  3. REDD AND FOREST CARBON: Market-Based Critique and Recommendations The Munden Project March 2011 Concludes that forest carbon is not suitable for commodity trading.

  4. RECOFTC Blog – The Center for People and Forests is an international organization with a vision of local communities actively managing forests in Asia and the Pacific to ensure optimal social, economic, and environmental benefits

  5. REDD myths. A critical review of proposed mechanisms to reduce emissions from deforestation and degradation in developing countries. Friends of the Earth International, December 2008

    This paper analyses critically the measures of REDD negotiated by the United Nations. This analysis tries to answer various questions on REDD’s climate change mitigation power, as well as on who really benefits from REDD funds. The analysis focuses on the financial mechanisms and on their management, which influences its use at a national and local level. The paper suggests in conclusion that the measures should be implemented through participation of Indigenous People helping them to build sustainable livelihoods.

  6. REDD-Monitor - The website emerged from discussions between NGO networks in Europe and the South, who felt the need to share information about the way REDD is developing. REDD-Monitor critically analyzes the problems related to REDD and “avoided deforestation”. In doing so, they hope to help facilitate a public discussion about REDD and hope that by doing so they will make a useful contribution in answering the question “will REDD work?”

  7. Carbon Trade Watch - Some Key REDD+ Players June 2011

Tuesday, July 12, 2011

Distribution Automation

A self-healing modern grid detects and responds to routine problems and quickly recovers if they occur, minimizing downtime and financial loss

Hierarchy of Primary DA Functions, Secondary DA Functions, & DA Scenarios from NIST Smart Grid Workshops

Navigate this Report
Back to Distribution Index
1. Background
2. Acronyms/Definitions
3. Business Case
4. Primary DA Functions
5. DA Use Case Scenarios
6. Benefits
7. Risks/Issues
8. Success Factors
9. Companies
10. Links

  • Distribution systems have traditionally not involved much automation. Distribution equipment, once installed on feeders, was expected to function autonomously with only occasional manual setting changes. Capacitor bank switches might switch on or off based on local signals, such as time of day or current. After a local fault condition, reclosers would attempt reclosing a set number of times before locking out. Lateral fuses would blow if the current became too high.

  • In a legacy grid architecture, service calls were made by truck, switch positions were changed manually, and there was no sensors, communications or intelligence.

  • Utilities today have a fragmented view of operations derived from the silos approach and dependence on proprietary technologies that lack the ability to communicate with each other. Beyond operations, the fragmented view impacts utility system planning, as well. At the beginning of each week, electric utility managers design on paper an electric network model based on anticipated conditions, which describes the current status of all the systems that comprise the distribution grid, but the planned design they envision is not maintained throughout the week. In fact, walking through an energy control center today would show multiple operational units monitoring and managing different parts of the grid, from DCS to EMS/SCADA to OMS to AMI to DR, each with a distinct view of the state of the grid provided by the stand-alone proprietary systems. It is left to the human grid operators in the control center to integrate these disparate views of the grid and make management decisions with the information they have at hand.

  • Recently, in response to the growing demand to improve reliability and efficiency of the power system, more automation is being implemented on the distribution system. Distribution Automation is one of the four federal Smart Grid focus areas and the Smart Grid policy requirements as outlined in Energy Independence and Security Act (EISA) of December 2007 increase the need for Distribution Automation.

  • Right now solar is an immaterial contributors to the grid, but what happens when 20 percent or more of the homes in a neighborhood go solar and a cloud passes overhead? That changes a neighborhood of solar power producers to utility power customers in a matter of minutes – and grids built to deliver power one way at constant voltages and frequencies have trouble accommodating that two-way, intermittent flow.

    Too much solar power, and local grid voltage could rise, causing potential problems for motors, lights and other equipment. Too little, and voltage can sag. That may only flicker light bulbs at home, but it can lead to million-dollar work stoppages for customers like semiconductor manufacturers and server farms that need clean power at a near-to-constant voltage and frequency.

  • Eventually the smart grid — like broadband networks do — will have some sort of distributed model of computing where automated decisions are made at the edge of the network but with some sort of supervisory control layer. That distributed computing model will be quite different from the centralized mainframe model and point-to-point system that utilities largely have in place today.

2. Acronyms/Definitions
  1. Accessible, Visible, Lockable, Disconnect: A device is used by utility maintenance personnel to ensure that the DER will not energize the line during maintenance activities. The device meeting this requirement may or may not also serve as an NEC-required isolation means.

  2. ADA - Advanced Distribution Automation – A term coined by the IntelliGrid project in North America to describe the extension of intelligent control over electrical power grid functions to the distribution level and beyond. Normally, electric utilities with SCADA systems have extensive control over transmission-level equipment, and increasing control over distribution-level equipment via distribution automation. However, they often are unable to control smaller entities such as Distributed energy resources (DERs), buildings, and homes.

  3. CA - Contingency Analysis of Distribution System - Power systems are operated so that overloads do not occur either in real-time or under any statistically likely contingency.
    This is often called maintaining system “security” A simulator is equipped with tools for analyzing contingencies in an automatic fashion Contingencies can consist of several actions or elements
    • Simple Example: outage of a single transmission line –
    • Complex Example: outage of a several lines, a number of generators, and the closure of a normally open transmission line.

  4. Capacitor Banks - Capacitive devices located on distribution circuits that raise voltage and provide VAR support and control Power Factor

  5. Distributed Intelligent Controls – Actions carried out in the field based on algorithms.

  6. DSPF - Distribution System Power Flow Model - Provides utilities with real-time analysis to make operations decisions. It is a computer model of the distribution system that reflects current operating conditions. These models must be updated continuously, given the frequency of construction, upgrades, maintenance, reconfigurations, and other work on the distribution system. Data access from the SCADA system is continuous, while data updates from the other databases would be change driven. This power system model is constructed from the following models and types of data:
    • Topology model: 3-phase physical connectivity of the distribution system, often found in Geographic Information Systems, Automated Mapping systems, and paper drawings. This configuration model includes connectivity to the transmission system, interconnections between feeders, locations of aggregated loads, and connections to distributed energy resources.
    • Facilities model: power system equipment such as circuit cable characteristics, substation transformers, circuit breakers, capacitor banks, voltage regulators, and feeder switches, as well as the capabilities of the equipment controllers. This facilities data is derived from the Facilities Management system and other engineering databases.
    • Load model: aggregated loads with load profiles, associated with locations along feeders. These load models are derived from the Customer Information System (CIS).
    • Transmission interface model: the characteristics of the interfaces between the transmission system and the distribution system. This transmission model is extracted from the Energy Management System power system model.
    • Real-time data: distribution system status and measurement data from the SCADA system applied to the combined models, so that the result is an up-to-date model of the current distribution system, showing actual electrical connectivity and power system measurements.

  7. DTS - Dispatcher Training Simulation - Provides new and experienced dispatchers with training on the actual power system they are operating, by providing scenarios of events and circumstances that they must respond to.

  8. FCI – Fault Circuit Indicator - A device which provides visual or remote indication of a fault on the electric power system. Also called a faulted circuit indicator (FCI), the device is used in electric power distribution networks as a means of automatically detecting and identifying faults to reduce outage time.

    Overhead indicators are used to visualize the occurrence of an electrical fault on an overhead electrical system. Underground indicators locate faults on an underground system. Often these devices are located in an underground vault. Some fault indicators communicate back to a central location using radio or cellular signals.

  9. Fault - Any abnormal flow of electric current. For example a short circuit is a fault in which current flow bypasses the normal load. An open circuit fault occurs if a circuit is interrupted by some failure. In three phase systems, a fault may involve one or more phases and ground, or may occur only between phases. In a "ground fault" or "earth fault", current flows into the earth. The prospective short circuit current of a fault can be calculated for power systems. In power systems, protective devices detect fault conditions and operate circuit breakers and other devices to limit the loss of service due to a failure.

    In a polyphase system, a fault may affect all phases equally which is a "symmetrical fault". If only some phases are affected, the resulting "asymmetrical fault" becomes more complicated to analyse due to the simplifying assumption of equal current magnitude in all phases being no longer applicable. The analysis of this type of fault is often simplified by using methods such as symmetrical components

  10. FLISR – Automated Fault Locating Isolation and Service Restoration – Smart Distribution application function that rapidly and automatically detects and isolates permanently faulted segments of a feeder and then restores service to as many customers as possible. FLISR is able to restore service in one minute or less following the initial fault, resulting in significant reliability improvement compared with a manual restoration process. FLISR performs the following major functions:
    • Detects that a feeder fault has occurred
    • Locates the damaged portion of the feeder between two remote controlled line switches
    • Isolates the damaged portion of the feeder by opening appropriate remote controlled line switches
    • Re-energizes undamaged portions of the feeder via the primary feeder source and one or more backup sources using remote controlled tie switches.

  11. FCL – Fault Current Limiter - A device which limits the prospective fault current when a fault occurs (e.g. in a power transmission network). The term is generally applied to superconducting devices, whereas non-superconducting devices (such as simple inductors or variable resistors) are typically termed Fault Current Controllers. (For example, the ground fault circuit interrupter is commonly used in residential installations.)

    Superconducting Fault Current Limiters come in two major categories: resistive and inductive.

    In a resistive FCL, the current passes through the superconductor and when a high fault current begins, the superconductor quenches: it becomes a normal conductor and the resistance rises sharply and quickly. Inductive FCLs come in many designs; the simplest is a transformer with a closed superconducting ring as the secondary. In un-faulted operation, there is no resistance in the secondary and so the inductance of the device is low. A fault current quenches the superconductor, the secondary becomes resistive and the inductance of the whole device rises. The advantage of this design is that there is no heat ingress through current leads into the superconductor, and so the cryogenic power load may be lower. However, the large amount of iron required means that inductive FCLs are much bigger and heavier than resistive FCLs.

  12. IED - Intelligent Electronic Device - Research and development is needed to improve software updates to field devices.

  13. ITL - Intelligent Line Switching - The monitoring and control of distribution primary voltage switching devices to interrupt, restore, and redirect the flow of power across the power distribution system. Intelligent line switches are generally limited to those switches that are “electrically operable”. An electrically operable switch is one that includes an operating mechanism that stores energy needed to open or close the switching device and can be operated by pushbutton or remote control. Electrically operated switches include substation circuit breakers, motorized disconnect switches, automatic load break switches, line reclosers, and sectionalizers. ILS functions can be subdivided into two main categories: Fault Location Isolation and Service Restoration (FLISR) and Optimal Network Reconfiguration (ONR).

  14. MFR - Multi-level Feeder Reconfiguration - Multi-level feeder reconfiguration software application analyzes many different distribution system configurations, assessing each configuration from a global perspective on how it best meets one or more of the following purposes, as set up by the operator or situation:
    • Service restoration
    • Overload elimination
    • Transmission facilities overload
    • Load balancing
    • Voltage balancing
    • Loss minimization
    • Reliability improvement

  15. ONR - Optimal Network Reconfiguration - Identifies ways in which the electric utility can reconfigure an interconnected set of distribution feeders to accomplish one or more specified objectives without violating any operational constraints on the feeder. The ONR function enables the utility to achieve the following objective functions:
    1. Minimize total electrical losses on the selected group of feeders over a specified time period
    2. Minimize the largest peak demand among the selected group of feeders over a specified time period
    3. Balance the load between the selected group of feeders (i.e., transfer load from heavily loaded feeders to lightly loaded feeders.)

  16. Recloser - Sense and interrupt fault currents by opening their breaker. Attempt reclosing their breaker after a fault is detected on a feeder, usually three to four times before locking open. Restore service via a remote control command after automated or manual switching has isolated the faulted feeder section.

  17. RPR - Relay Protection Re-coordination of Distribution System - Adjusts the relay protection settings to real-time conditions based on the preset rules. This is accomplished through analysis of relay protection settings and operational mode of switching devices (i.e., whether the switching device is in a switch or in a recloser mode), while considering the real-time connectivity, tagging, and weather conditions. The application is called to perform after feeder reconfiguration, and, in case, when conditions are changed and fuse saving is required. No fault calculations are needed in this application, if the distribution system is radial without significant DER.

  18. RTU – Remote Terminal Unit - Substation master station which collects the appropriate data for transmission to the control center, and which passes control commands on from the control center to the electronic equipment.

  19. SCADA - Supervisory Control and Data Acquisition - SCADA systems at the control center monitor status and measurements of distribution equipment in substations.

  20. Self Healing - A system that does not have a “single point of failure." Transmission system is inherently self-healing. Self-Heals A self-healing modern grid detects and responds to routine problems and quickly recovers if they occur, minimizing downtime and financial loss.

  21. Smart Switch - Automated switches are installed along feeders and at feeder tie-points. These automated switches can communicate with each other locally (typically within a few miles), and are programmed to respond appropriately to feeder fault conditions.

  22. Smart Communication -
    • Peer to Peer between each of the switching points and substations. Takes the burden off central communication.
    • High Speed, low latency messages move in and out of their destination quickly
    • Open Standards (TCP/UDP etc.) Ethernet vast and well developed suite
    • Standard protocols (DNP etc.) data packets.

  23. Transfer Trip - For a Generating Facility that cannot detect Distribution System faults (both line-to-line and line-to-ground) or the formation of an Unintended Island, and cease to energize EC’s Distribution System within two seconds, EC may require a Transfer Trip system or an equivalent Protective Function.

  24. VFI – Vacuum Fault Interrupter operates in less than 50 milliseconds. Isolate and close back in to sections
Information Flows of DA Applications Based on Distribution System Power Flow (DSPF)

3. Business Case
  • Distribution Automation includes using real-time information from embedded sensors and automated controls to anticipate, detect, and respond to system problems, a smart grid can automatically avoid or mitigate power outages, power quality problems, and service disruptions.

  • You can only throw so much labor at making continuous adjustments to the grid, people in the field making constant adjustments to the switch plan, to rerouting power, that's just not realistic. So they really need technology to help them be more proactive about managing the impact of these devices that with increasing frequency will be connected to the edge of the network. The frequency of distribution grid adjustments will increase in the future—how quickly will vary by utility. Eventually they'll need to react quicker to changes in power flow both on the demand side and the supply side. The solution is to automate some monitoring and control functions and devote personnel to more complicated issues.

  • In the case of urban/city networks that for the most part are fed using underground cables, networks can be designed with interconnected topologies so that failure of one part of the network will result in no loss of supply to end users.

  • It is envisioned that the smart grid will likely have a control system that analyzes its performance using distributed, autonomous reinforcement learning controllers that have learned successful strategies to govern the behavior of the grid in the face of an ever changing environment such as equipment failures. Such a system might be used to control electronic switches that are tied to multiple substations with varying costs of generation and reliability.

  • Smart substations require new infrastructure capable of supporting the higher level of information monitoring, analysis, and control required for Smart Grid operations, as well as the communication infrastructure to support full integration of upstream and downstream operations.

  • The substation of the future will require a wide-area network interface to receive and respond to data from an extensive array of transmission line sensors, dynamic-thermal circuit ratings, and strategically placed phasor measurement units. The smart substation must be able to integrate variable power flows from renewable energy systems in real time, and maintain a historical record or have access to a historical record of equipment performance. Combined with real-time monitoring of equipment, the smart substation will facilitate reliability-centered and predictive maintenance.

  • The lower cost of automation with respect to T&D equipment (transformers, conductors, etc.) is also making the value proposition easier to justify. With higher levels of automation in all aspects of the T&D operation, operational changes can be introduced to operate the system closer to capacity and stability constraints.

  • Results of interviews undertaken for Smart Grid System Report, (DOE July 2009) indicate that:
    • 28% of the total substations owned were automated
    • 46% of the total substations owned had outage detection
    • 46% of total customers had circuits with outage detection
    • 81% of total relays were electromechanical relays
    • 20% of total relays were microprocessor relays (presumed rounding error)

Source: EPRI
Source: EPRI

5. Primary DA Functions
  1. Monitoring and control of distribution equipment within substations
    • Distribution SCADA System Monitors Distribution Equipment in Substations
    • Supervisory Control on Substation Distribution Equipment
    • Substation Protection Equipment Performs System Protection Actions
    • Reclosers in Substations

  2. Local automation of DA equipment on feeders
    • Local Automated Switch Management
    • Local Volt/Var Control
    • Local Field Crew Communications to Underground Network Equipment
  3. Monitoring and control of DA equipment on feeders
    • SCADA Communications to Automated Feeder Equipment
    • SCADA Communications to Underground Distribution Vaults
  4. Management of Distributed Energy Resources (DER) systems
    • Protection Equipment Performs System Protection Actions on DER Interconnections
    • Monitoring of DER Units
    • Controlling DER Units
  5. DA analysis software applications
    • Study-Mode and Real-Time Distribution System Power Flow (DSPF) Model
    • DSPF /DER Model of Distribution Operations with Significant DER Generation/Storage
  6. Advanced Metering Infrastructure (AMI)
    • Implementation of AMI to Industrial, Commercial, and Residential Customers
    • Direct Customer Load Control

6. Distribution Automation Use Case Scenarios
  • Basic Reliability Scenario – Local Automated Switching for Fault Handling - Covers the use of SCADA to the substation, automated switches on feeders that respond to faults locally, and SCADA monitoring of these automated switches.

  • Advanced Reliability Scenario – FLISR with Distribution System Power Flow (DSPF) Analysis - This Use Case utilizes the power flow model of the distribution system as the primary means to assess real-time conditions by providing full power system visibility to operators, and by providing software applications with a computerized model of the power system for them to perform their analyses. With smart meters and AMI in place, FLISR becomes a process, an application, that's more readily enabled because the meters act as sensors that can trigger an alarm that the power is out. With meters, FLISR becomes more accurate and restoration goes more quickly.

  • Efficiency Scenario – Efficiency Assessment with DSPF Analysis - Efficiency of the distribution system is often considered of secondary importance to reliability, but can become of significant interest on specific feeders and substations that are handling high loads and/or variable power factor situations, so that it actually can improve reliability. The Efficiency Use Case utilizes the ADA’s DSPF model of the distribution system, along with real-time data from the SCADA system, to assess first the adequacy (will the equipment be able to handle the expected loads) and the efficiency (how efficiently is the power system operating and what can be done to improve that efficiency).

  • DER Planning Scenario – Planning, Protection, and Engineering of Distribution Circuits with Significant DER Generation - Distribution planning and/or engineering must assess each proposed DER interconnection to ensure it meets the required interconnection standards. They must also assess any impact on distribution feeders, feeder equipment, substations, distribution operations, maintenance procedures, etc. to accommodate the DER interconnection. If changes must be made, these changes must be engineered and implemented before the DER interconnection is finalized.

  • Basic Real-Time DER Management Scenario – SCADA Monitoring and Control of DER Generation - Larger DER units and aggregates of smaller DER units are impacted by, and can impact, realtime distribution operations. SCADA monitoring and (direct or indirect) control of these DER units allows them to be “visible”, thus adding to reliability and safety of distribution operations.

  • Advanced Real-Time DER Management Scenario – DSPF Analysis for FLISR, Microgrids, Safety, Market with Significant DER Generation - Involves analyzing the distribution system in real-time or “near” real-time to determine actions in response to planned or unforeseen situations that involve significant DER generation/storage. This analysis would be needed for fault location, isolation, and service restoration, protection coordination, establishment of microgrids, safety of field crews and the public during outages, power quality, market operations involving DER units, and many other activities. This type of analysis would be impossible for distribution operators to handle without support from the DSPF model that forms the foundation of the ADA capabilities. The DSPF model would need to cover not only the distribution system but also the larger DER units as well as some model of aggregated small DER units.

  • Distribution Maintenance Management with DER Scenario – Maintenance, Power Quality, and Outage Scheduling with Significant DER Generation/Storage - Maintenance of the distribution system that includes significant DER can be a new challenge. As the number of DER units grows and as the amount of generation is derived from DER units, distribution operations will no longer be able to manage the maintenance of the system without significant support from automation.

  • Demand Response with DER Scenario – Distribution Operations with Demand Response and Market-Driven DER Generation/Storage - With the inclusion of DER generating and storage capabilities, demand response becomes even more complex, and requires Advanced Distribution Applications (ADA) using the DSPF model. Without such automation, distribution operations with demand response would become extremely difficult if not impossible.

4. Benefits
  • Cost Savings - including lower costs, avoided costs, stability of costs, and pricing choices for customers. Lower operations and maintenance costs from reduced need for O&M activity and from lower equipment failure rates
    • Automation of switches can avoid the need to send personnel to the field to perform the switching.
    • Monitoring of capacitor banks and other feeder equipment can avoid the need to send personnel to check or test their status or change their parameters.
    • Monitoring of field equipment can provide maintenance personnel with more accurate historical and current information, thus allowing more timely maintenance or avoidance of maintenance when not needed.
    • Real-time knowledge of distribution equipment/line status, including length of time of any overload situations, so not reliant on “worst case” planning criteria.

  • Power Reliability - Including reduced number and length of outages, reduced number of momentary outages. Limit the number of customers impacted by system outages.
    • Quickly isolate faults to limit the impact
    • More precisely locate faults to facilitate crew dispatch
    • Automate restoration of healthy portions of the circuit
    • Apply distributed monitoring and control to eliminate single points of failure
    • More monitoring of field equipment permits greater visibility into where a problem might be. Field personnel can be sent directly there, instead of patrolling the entire line until they see the problem.
  • Power Quality - Cleaner power, and reliable management of distributed generation in concert with load management and/or microgrids. Deploy equipment that automatically adjusts to voltage fluctuations and system disturbances to prevent customer impacts.

  • Safety and Security - Including increased visibility into unsafe or insecure situations, increased physical plant security, increased cyber security, privacy protection, and energy independence.

  • Energy Efficiency - Including reduced energy usage, reduced demand during peak times, reduced energy losses, and the potential to use “efficiency” as equivalent to “generation” in power system operations.

  • Environment and Conservation – Including reducing greenhouse gases (GHG) and other pollutants, reducing generation from inefficient energy sources, and increasing the use of renewable sources of energy.

  • Scalability - Economical to start small, get big. Easy to add equipment.

7. Risks/Issues
  • Upgradability - Sometimes virtually embedded transmission and distribution assets have different failure rates and life expectancy than the majority of today’s grid technologies. These failures and resultant replacement rates must be estimated. Utilizing a reliable component, like a substation transformer, with a 40-year design life and incorporating an information technology with 10, 15 or 20 life forces careful consideration of the costs to upgrade the embedded components.

  • Interconnectedness of Distribution Automation Functions - Individual distribution automation (DA) functions, such as monitoring VARs on a feeder or detecting faults on a circuit, cannot have their benefits or challenges assessed in isolation. Most of these DA functions can only be cost-effective if they are part of a larger set of functions. In addition, many of the DA functions must rely on “primary functions”, such as SCADA monitoring and control, to even begin to provide some benefits.

  • Inherent Lack of Redundancy in Radial Distribution Networks - As applied to distribution networks, there is no such thing as a "self healing" network. If there is a failure of an overhead power line, given that these tend to operate on a radial basis (for the most part) there is an inevitable loss of power.

  • Latency - Fast Communication Speed Needed - 50 ms communication time requirement is high for hand shakes. If you don’t do it fast enough, the main circuit breaker flips. Latency is a big deal for distribution automation, which needs a network that can execute some commands at the speed of the grid, so to speak – that is, the 60 hertz, or cycles per second, at which U.S. utilities deliver their power. The unit is the cycle, so a 60-hertz cycle is basically 17 milliseconds per cycle. There could be faster applications with a WiMax solution, which promises low latency on top of effective data rates of 2 to 3 megabits per second, compared to SpeedNet's 650 kilobits per second.

  • Legacy Equipment & Applications - Most of the North American electricity system infrastructure is 40 to 50 years old and nearing the end of their useful life. Many legacy applications simply cannot scale to handle the Smart Grid's required levels of data volume and complexity.

  • DER Proliferation - If you start putting a lot of storage in substations, there’s going to be new automation needs.

  • Data Management - Often data management methods which work well for small amounts of data can fail or become too burdensome for large amounts of data – a situation common in distribution automation and customer information.

  • Systems Integration - The key issues include interoperability of interconnected systems, cyber security, access control, data identity across systems, messaging protocols, etc.

  • Configuration Management - Modern relays are IP-addressable, but require on-going operational technology governance to manage security, firm-ware changes, configuration changes, maintenance, health checks, version control, and compatibility testing. New relays have hundreds of set points and a broad range of stored history, but most utilities use only a fraction of their functionality.

  • Merging SCADA and Protection. - For several years now, it has become apparent that substation automation using intelligent devices and modern LAN technology requires the integration of substation functions. Protection devices must be capable of control and monitoring, and SCADA devices must take some part in protection. Similarly, the parent organizations of these devices must learn to communicate with each other.

  • Merging IT and Operations. As utilities deploy enterprise bus technologies, the traditional separation between corporate IT and utility operations organizations must narrow, especially to address security issues.

  • Merging Distribution Automation and Metering. These two systems previously had nothing to do with each other although they shared a common geographic area of responsibility. Soon they will likely make use of a common, ubiquitous distribution communications network. Similarly, their respective organizations must now integrate operating procedures to realize some of the advantages of an integrated Smart Grid, such as advanced outage management.

8. Success Factors
  • Phased Approach – A phased approach can be used in distribution automation, because, unlike tightly networked transmission systems, distribution systems can fairly easily deploy pilot projects or initial implementation of DA functions that affect only a few feeders. Lessons can be learned from these initial deployments which can improve eventual deployment of the functions to a larger set of feeders.

  • Distribution Automation Scenarios, - Developing use cases based on both secondary and primary DA functions, allows utilities to understand both the benefits and the challenges involved in implementing these functions. Primary functions typically require heavy capital expenditures to implement equipment, communication, and data infrastructures whose payback can only truly come when one or more secondary functions utilize these infrastructures.

7. Companies
  1. ABB Zurich Switzerland(NYSE: ABB)- Substation protection and control solutions ensure reliable power transmission and distribution. To ensure interoperable and future-proof solutions, their products have been designed to implement the core values of the IEC 61850 standard.

  2. BPL Global, Pittsburgh PA - Provides software solutions and services to electric utilities enabling an intelligent grid to more efficiently manage demand, integrate distributed energy resources, improve service reliability, and optimize cost and capital productivity. Partners with local utilities, internet service providers, equipment suppliers and financiers to create end-to-end solutions integrating software, communications, hardware and managed services.

    BPLG provides monitoring and communications solutions for improved efficiency and reliability of the distribution grid. Their Rapid Fault Locator solution detects and reports line faults on distribution feeders, and provides continuous monitoring of the line conditions avoiding faults and reducing the duration of outages. An intelligent grid depends on a secure and robust communications platform to manage the significant increase in data capacity required to support two-way communications between a centralized software platform for monitoring and control and any smart devices distributed throughout the electrical network. BPLG offers communications solutions from basic network monitoring, to robust smart grid communications, to last-mile broadband services to consumers and businesses.

  3. GE Digital Energy (NYSE: GE)- Atlanta, GA
    1. Substation Automation
    2. Monitoring & Diagnosis
    3. Power Sensing
    4. Utility Operations Systems

  4. SAIC McLean, VA - Completed work on software that predicts failures in distribution and transmission systems days, weeks or months before they occur. Called Distribution Monitoring System, it is ready for release after nearly a year of research. The software consists of four pieces:
    1. A complex-event processing engine from San Diego’s Zementis that evaluates masses of data -- two or more years’ worth -- against rules laying out the relationship between specific, fairly obvious events in the life of a device and the likelihood such a device will fail.

      For example, a rule might state that “if a transformer experiences a voltage spike above a certain defined operational level, which lasted longer than a specified duration and the voltage spread was greater than a defined range, then this is an event likely to cause a failure.
    2. A knowledge database that correlates faults and failures -- in effect, learning to spot the problems that cause failures.
    3. A neural network -- an artificial-intelligence module that can deduce from ongoing patterns of even minor equipment aberrations whether failure will occur at some point and can say, with a stated probability, when the failure will occur. The aberrations that the neural network detects are far smaller than those dealt with by the complex event processing engine and the predicted
      failure times are farther out: days, weeks or months away.
    4. A web-based user interface and workflow manager using open standards and Java.

  5. S&C Electric, Chicago, Their IntelliTEAM system of networked devices isolates and restores faults in a distribution grid. S&C has designed its own SpeedNet radios, capable of about 5 millisecond "hops" from device to device, to handle the task.

  6. Schweitzer Engineering Laboratories, Inc.(SEL) Pullman, WA - Designs and manufactures solutions for protection, monitoring, control, automation, and metering of electric power systems. The company provides secure communications; transmission, distribution, and generator and motor protection; revenue and power quality metering; industrial power; integration and automation; and rugged computing products. It also offers precise timing, fiber-optic communications, testing, transformer, bus, breaker, and capacitor protection products, as well as SEL software solutions, SEL software downloads, and SEL accessories.

    SEL Distribution Automation Control System automates feeder restoration and reduces outage times. The system analyzes and detects fault conditions, isolates affected feeder sections, and restores power to unaffected sections. The system includes simple drag-and-drop IEC 61131 function block configuration software on an SEL information processor, with the ability to automate up to 100 devices per controller.

10. Links
  1. IEEE/PES Distribution Automation Tutorial 2007/2008 - Each section has an attached Powerpoint presentation. Some sections have a supporting text.
  2. NIST Smart Grid - Distribution Automation White Paper, ver 2 (doc) - more than scope but possibly not complete White Paper. May need more on actual Smart Grid Challenges (e.g. gaps in standards and recommended practices).
  3. Xanthus Consulting International - Report to the California Energy Commission on the Benefits and Challenges of Distribution Automation (pdf) the complete report from which the White Paper above was extracted.
  4. IntelliGrid Architecture”, EPRI's IntelliGridSM initiative is creating the technical foundation for a smart power grid that links electricity with communications and computer control to achieve tremendous gains in reliability, capacity, and customer services. A major early product is the IntelliGrid Architecture, an open standards, requirements-based approach for integrating data networks and equipment that enables interoperability between products and systems.
  5. The Value of Distribution Automation PIER Final Project Report - Prepared For: California Energy Commission Public Interest Energy Research Program Prepared By: Navigant Consulting, Inc. March 2009 CEC-500-2007-103