Executive Summary – EE Building Code in Morocco

Project Executive Summary

GEF Council Work Program Submission

Contribution to Key Indicators of the Business Plan: direct impact of 3.5 million tCO2, and direct post-project impact of 3.3 million tCO2, representing 2.4 million TOE in savings. The indirect impact of this project from the adoption and enforcement of the EE Building Code in other commercial, administrative and educational buildings is estimated at 6-7 million tCO2.

Record of endorsement on behalf of the Government(s):

Mr. M. Balafrej, GEF Focal Point / Date: March 21, 2006
Direction du Partenariat, de la Communication et de la Coopération
Ministère de l’Aménagement du Territoire, de l’Eau et de l’Environnement
Financing Plan (US$)
GEF Project/Component
Project / 3,000,000
PDF A
PDF B / 275,000
PDF C
Sub-Total GEF: / 3,275,000
Co-financing*
GEF Agency (PDF-B) / 50,000
GEF Agency (UNDP-TRAC) / 200,000
Government (PDF-B) / 26,000
Government (in kind) / 250,000
Govern-ment / Health / 4,000,000
Housing / 4,000,000
Private Sector/Tourism / 2,000,000
Italian Government / 1,200,000
(€1,000,000)
French Government / 960,000
(€800,000)
Sub-Total Co-financing: / 12,686,000
Total Project Financing: / 15,961,000

*Details provided under the Financial Modality and Cost Effectiveness section

Approved on behalf of the UNDP. This proposal has been prepared in accordance with GEF policies and procedures and meets the standards of the GEF Project Review Criteria for work program inclusion.

Yannick Glemarec
Deputy Executive Coordinator
UNDP/GEF / Project Contact Person: Benoit Lebot
UNDP-GEF Regional Coordinator (Climate Change)
in North Africa
Date: 26 April, 2006 / Tel.: +33 1 47 65 20 53, Email:

Agency’s Project ID: PIMS 3230

GEFSEC Project ID: 2554

Country: Morocco

Project Title: Energy Efficiency Codes in Residential Buildings and Energy Efficiency Improvement in Commercial and Hospital Buildings in Morocco

GEF Agency: UNDP

Other Executing Agency: Center for the Development of Renewable Energy (CDER)

Duration: 4 years

GEF Focal Area: Climate Change

GEF Operational Program: OP-5 Removal of Barriers to Energy Efficiency and Energy Conservation

GEF Strategic Priority: CC-1 Transformation of Markets for High Volume Products and Processes

Pipeline Entry Date: 4 January 2005

Estimated Starting Date: September 2006

IA Fee: $294,750

1.  Project Summary

A.  Project Rationale, Objectives, Outcomes & Outputs/Activities

Project Rationale

Morocco’s energy consumption continues to grow rapidly each year. Morocco must import over 97% of its energy, and existing subsidies for fuel prices are expected to cost the Government of Morocco close to US$1 billion in 2006, representing 5.4% of the government budget. It is going to be difficult for the country to sustain current growth trends given on-going energy price levels.

Morocco has yet to develop a national EE policy and lacks the proper regulatory and institutional framework to launch a comprehensive national EE program. This problem is particularly acute in the housing and service sectors which represent 25% of the country’s energy requirements. In the electricity sector, the growth in demand exceeds the most aggressive forecasts of the Ministry of Energy and Mines (MEM). The national consumption of electricity has been growing at 7%-8% per annum over last few years, compared to GDP growth in the 3.0-3.5% range.

The government is therefore concerned about on-going energy expenditures by government agencies, private enterprises and households. While a number of energy efficiency (EE) programs have been put in place with donor assistance for Morocco’s industrial sector, the service and housing sectors have not received much attention until recently. Building codes represent a well-known and robust component of any energy efficiency policy. They generate substantial energy savings in countries where they have been implemented with care.

The lack of EE standards for the construction sector means that new constructions are undertaken with minimal concern for the energy efficiency of building materials, construction techniques, HVAC equipment, etc. This is particular true for three key strategic areas that account for much of the construction activity in Morocco: tourism, housing and healthcare. As the standard of living in Morocco improves, energy expenditures are expected to grow rapidly as more people demand hot water, heating and cooling for their basic comfort and household energy needs.

There clearly exists a window of opportunity for this project as plans are already under way for three key government initiatives: (i) a social housing program to add 100,000 housing units each year; (ii) a program to upgrade the nation’s hospital infrastructure (127 units) in order to prepare for the introduction of Universal Health Insurance; and (iii) the “Azur” Program to increase the number of hotel rooms to accommodate up to 10 million visitors by 2010. The government intends to play a leading role in the adoption and acceptance of EE standards by incorporating these standards as core requirements in its building construction and renovation projects.

Project Goal, Objectives and Outcomes

The project’s objective is to improve the energy efficiency of buildings in Morocco, especially in the housing sector, through the introduction of an EE Building Code and standards for this sector . In doing so, the project seeks to reduce the expenditures of Moroccan households on energy through greater adoption of EE standards in housing construction. The project also seeks to encourage greater energy efficiency in the health and hotel sectors, since buildings in the service economy represent a growing share of energy consumption in Morocco.

By achieving this objective, the project will contribute to a wider goal of reducing Morocco’s overall energy-related CO2 emissions in a cost-effective way while contributing to the national poverty reduction strategies by mitigating the impact of high oil prices on the poor. The project will also help maintain the competitiveness of Morocco’s service economy.

Six outcomes are necessary to ensure successful attainment of the project’s objective. Each of these outcomes includes a number of specific outputs and a series of activities planned to achieve them. These outcomes are the following:

Outcome 1: the EE Building Code Unit has been set up at the national level, and compliance has been reinforced at the municipal level.

The outcome will be achieved by setting up the necessary legal and institutional framework to support the establishment of an EE Building Code Unit within the CDER that will be responsible for drafting the EE Building Code and by providing technical support to other government agencies on this issue. This outcome will also be achieved by supporting the preparation of an enabling EE law that will be necessary for the government to improve and enforce the provisions of the EE Building Code.

The outputs under this outcome include:

Output 1.1 – Legal and institutional framework established, including preparation of an enabling EE law;

Output 1.2 – EE Building Code Unit set up and operating within the CDER;

Output 1.3 – Institutional and operational capabilities of municipal code enforcement agencies strengthened.

Outcome 2: the EE Building Code for residential building has been drafted and implemented

The EE Building Code for residential buildings will be drafted by the CDER with the active participation and input of other line ministries and private sector representatives, especially trade associations representing architects, engineers, equipment suppliers, developers, etc. The appropriate enabling legislation and decrees will also be prepared under the authority of the energy efficiency law to be drafted under Outcome 1.

The outputs under this outcome include:

Output 2.1 – EE Building Code for residential buildings designed and drafted;

Output 2.2 – Enabling regulatory framework for EE Building Code drafted, including enforcement mechanisms.

Outcome 3: EE standards and guidelines for professionals have been developed and disseminated

The Moroccan Industrial Standard Society (SNIMA), which is responsible for developing all standards in Morocco, proposed that the existing Technical Standards Committee (TSC) for Renewable Energy be enlarged to encompass all energy efficiency matters, since the two fields are closely related. The TSC will be responsible for developing standards on a range of EE products and equipment for buildings that will serve as a technical basis for the EE Building Code. Technical guidelines will explain to professionals how EE standards need to be incorporated in existing construction practices. A testing program will be designed to measure the energy efficiency of different standards as applied to actual construction projects, allowing the standards to be adapted to Morocco’s climate and economic conditions.

The outputs under this outcome include:

Output 3.1 – EE standards developed for building design, building envelope and HVAC equipment;

Output 3.2 – Technical guides drafted for professionals;

Output 3.3 – Testing program implemented to evaluate the impact of proposed EE standards.

Outcome 4: Outreach, demonstration and knowledge sharing activities have been implemented

This outcome is designed to execute outreach activities and promote knowledge sharing, such as improved coordination among government agencies, increased awareness of energy cost savings among industry professionals, and strengthened technical know-how among architects, builders and other construction industry participants.

The outputs under this outcome include:

Output 4.1 – Mobilization, outreach and training activities;

Output 4.2 – Project development services for the private sector;

Output 4.3 – Demonstration projects .

Outcome 5: Project management ,and M&E support have been provided

Operational support will be provided to the MEM and the CDER to assist with key project management functions, including: (i) strengthening the CDER’s ability to set up an EE Building Code Unit and manage the demonstration projects and project development services; and (ii) helping the MEM coordinate the EE building program with line ministries to facilitate the implementation of the EE Building Code. Monitoring and evaluation will also be conducted to achieve the desired outcome.

The outputs under this outcome include:

Output 5.1 – Project management and implementation support;

Output 5.2 – Monitoring and Evaluation activities.

Outcome 6: EE investments have been realized by the public and private sectors

Under this outcome, EE investments of US$ 10 million will be realized by Morocco’s public and private sectors, including: (i) US$6 million by the Housing Ministry as part of the nation’s housing program; (ii) US$2 million by the Ministry of Health as part of the rehabilitation of the nation’s hospitals; and (iii) US$2 million by the hotel industry as part of new construction and rehabilitation of existing hotels.

The outputs under this outcome include:

Output 6.1 – EE investments realized in the housing sector;

Output 6.2 – EE investments realized in the health sector;

Output 6.3 – EE investments realized in the hotel sector.

Note: a separate outcome for a Pilot Compensation Window was originally included in the PDF-B. However, during the course of the preparatory assistance phase, it became clear that such a funding mechanism for EE investments did not directly meet the needs of public and private stakeholders. With the new Finance Law that defines the government’s budgetary process, each ministry is responsible for managing its own budget and reallocating funds as necessary between categories. As a result, any savings from EE investments remain with the Ministry which can then reallocate the money to other spending priorities. Creating a central compensation window at the central government level is therefore not practical, since each ministry is responsible for its own spending and reallocation of any savings.

Similarly, the ONE (national utility) and the municipal distribution companies expressed limited interest in participating in a compensation window. Unlike large industrial users that can be encouraged to shift production to off-peak hours, the EE Building Code project will involve a great many small EE investments. Collectively, they represent a substantial energy savings at the state level, but this program does not guarantee that a utility will be able to reduce peak demand (and thus mitigate the need for further investments). Absent a monopolistic public utility that can be directed by the government to fund a compensation window, it appears that there is very little that the government can do to force the utilities to participate in such a scheme.

B.  Key Indicators, Assumptions, and Risks

Key Indicators

The main indicator for this Climate Change project is the reduction in CO2 emissions coming from a reduction in energy and/or electricity consumption for the Moroccan building sector, in particular in the housing, health and hotel sectors (see Table 1). Secondary indicators will also be included as they are central to the sustainability of this project: (i) increased market activities related to EE expenditures in the building sector; and (ii) increased number of buildings that integrate EE standards.

Table 1: Key Indicators for Impact Monitoring

Impact to Be Monitored / Indicators / Verification Means
CO2 emissions reduction / - Reduction in energy consumption in housing sector, as well as hospital and hotel sector / - Survey of architects, builders and government agencies
- Analysis of energy bills
Increased EE market activities in the housing, health and hotel sectors / - Size of EE expenditures in building/construction sector / - Survey of architects, builders, and government agencies
Increased number of housing projects that integrate EE standards / - Number of housing units that integrate EE standards and design parameters / - Survey of architects, developers and government agencies
- Survey of municipal agencies

Assumptions

The project assumes the following: (i) the government is committed to drafting and approving the appropriate legal and regulatory framework, including an EE law and the necessary EE Building Code legislation; (ii) the municipal agencies, especially in the larger cities of Casablanca, Rabat and Marrakech, will be prepared to support this initiative through increased enforcement; (iii) the line ministries will be prepared to integrated EE standards within their construction programs and sectoral programs; and (iv) the private sector is prepared to follow the government’s lead in adopting EE standards.

Based on extensive consultations with the public and private stakeholders through workshops, interviews and project meetings, the institutional and private sector partners involved in this project have indicated a strong willingness to contribute to the success of this project, especially within the context of US$ 60-70/barrel oil. The outcomes of the project have been designed to provide the necessary technical assistance and capacity building to the principal stakeholders and project participants to ensure that they have the institutional, technical and operational capability to internalize this project.