The project uses the “programmatic approach” to the Clean Development Mechanism (CDM) of the Kyoto Protocol, allowing many small individual projects to participate in the carbon market as one CDM project thus generating significant impact, and benefiting more players.

The German Reconstruction Bank (KfW) is the carbon buyer of the $7.3-million Clean Development Mechanism financing of the ‘Chillers Energy Efficiency Project’. Additional financing will be provided by a $2.6-million grant from the Global Environment Facility (GEF) Trust Fund and a $1-million grant from the Multilateral Fund (MLF) for the implementation of the Montreal Protocol.

Aim of and financial incentives under the project

The objective of the project is to reduce greenhouse gas (GHG) emissions by replacing inefficient chillers, including both old Chlorofluorocarbon (CFC)-based chillers and non-CFC-based chillers. “The project will also illustrate to building owners that investing in environment-friendly technologies also brings energy efficiency and thus makes good business sense”, said Secretary Horacio Ramos of the Philippines Department of Environment and Natural Resources (DENR).

To encourage investment in chiller replacement, the project will provide financial incentives whereby chiller owners will receive an upfront grant subsidy of 15% of the cost of new energy efficient chillers, or opt for future carbon finance revenues to be generated by energy savings from the replacement of their chillers.

Hydrocarbon chillers in the Philippines: a track record of energy savings

Several conversions of chillers and coolers for commercial buildings to hydrocarbons have been carried out in the Philippines. The Energy Resources Group provides several examples of successful projects and the energy savings they entail in commercial buildings:

• Gaisano Country Mall - 50tr Hitachi Screw Type Compressor - 16% associated energy savings
• Park Square One (Ayala Mall) - 7.5tr Frascold Semi - Hermetic Reciprocating Compressor - 12% associated energy savings
• Delsa Chemicals Office - 5tr Maneurop Hermetic Reciprocating Compressor - 14% associated energy savings
• McDonalds Restaurant - 7.5tr Maneurop Scroll Type Compressor - 12% associated energy savings
• Legenda Hotel - 2tr Matsushita Rotary Type Compressor - 19% associated energy savings
• Federal Express (Fedex) - 7tr Copeland Hermetic Reciprocating Compressor - 21% associated energy savings
• Iglesia ni Cristo Church - 3tr Copeland Scroll Type Compressor - 15% associated energy savings
• INARP Research Inc. - 2tr Matsushita Rotary Compressor - 12%
• Building Care Corporation - 5tr Copeland Hermetic Reciprocating Compressor - 20% associated energy savings
• Mandarin Restaurant - 40tr Century Screw Type Compressor - 17% associated energy savings

In addition to the greenhouse gas savings associated with the energy savings, additional emissions savings are realised thanks to the fact that most commonly used hydrocarbon refrigerants have a global warming potential (GWP) of just 3, unlike chemical refrigerants the GWP of which can amount to several thousands.

The Chillers Energy Efficiency Project’ provides a market opportunity for the hydrocarbons industry, especially in South East Asia and Australasia, where several companies are active in the field.

Next steps

The Foreign Assisted and Special Projects Office (FASPO) of DENR will act as the Coordinating Entity (CE) of the project and will charge an independent consulting firm as a project management contractor to aggregate a number of eligible chiller replacements.