CDM PoA, NAMAs, Sectoral Mechanism                                              and Donor Funds –                         ...
Agenda       What is Climate Financing?       What are PoAs, NAMAs, Setoral Mechanisms?         - Programme of Activitie...
What is Climate Financing?www.perspectives.cc · info@perspectives.cc   3
How to finance the 2°C stabilisation pathway?           Increased investments of trillions of                 Current em...
From carbon finance to climate finance                           Carbon markets                                           ...
Climate finance incentives for low carbon development Year                                                                ...
What are PoAs, NAMAs, Setoral Mechanisms?www.perspectives.cc · info@perspectives.cc   7
Scaling up mitigation and incentives for financing      From single measures to sectorwide efforts             Single CDM ...
Carbon market so far failed to provide pre-financing       The Clean Development Mechanism (carbon market) creates       ...
Programme of Activities - PoAwww.perspectives.cc · info@perspectives.cc   10
Why Programme of Activities (PoA)?       Scale up the CDM               Increase number and size of                CDM a...
A PoA combines project activities in one programme       One tree for one apple                     One tree for many ap...
Key features of PoAs       As CDM: baseline + credited approach -> offsets       The PoA provides the organizational, fi...
Main characteristics of a PoA under the CDM           Multiple Sites               CPAs can occur at different local, re...
The inclusion of an activity (CPA) under a PoA                        PoA Design                        Letter of Approval...
Latest rules and procedures: Additionality      Additionality of each CPA has to be demonstrated through the eligibility  ...
Latest rules and procedures: Methodologies      PoAs can use a combination of baseline methodologies               Combin...
Currently 8 Programme of Activities are registered                                                     Mexico:            ...
Nationally Appropriate Mitigation Action - NAMAwww.perspectives.cc · info@perspectives.cc   19
Nationally Appropriate Mitigations Actions (NAMAs)       Concept created in the Bali Action Plan (2007) at COP13 to denot...
NAMA: Wide options for mitigation actions                                                        Appendix II to the Copenh...
NAMAs are a key topic of UNFCCC negotiations       Different views and different ways on NAMAs         - Institutional st...
Different tiers of NAMAs (theoretical concept)                                             Supported and credited NAMAs   ...
NAMAs submissions by RCREEE member states     Country          NAMA as reported to the UNFCCC (Stand March 2011)          ...
Successfully attracting donor support for low carbon growth      and NAMAs                   • EU “fast-track“ decisions (...
Sectoral Mechanisms: how do they work, what is the difference?www.perspectives.cc · info@perspectives.cc   26
Sectoral Trading - concept      Basic functioning (as per EU proposal)1             Non Annex I (NAI) country defines sec...
Sectoral Trading – mitigation                               incentive      Basic functioning (as per EU proposal)1        ...
Sectoral Trading – country level      1. Trading on country level                                       CMP               ...
Sectoral Trading – installation level      2. Trading on installation level (not part of EU-Proposal)                     ...
Sectoral Crediting - concept      Basic functioning (as per EU proposal)1             NAI defines sectoral target, to be ...
Sectoral Crediting – incentives for                               mitigation      No lose target                          ...
The current debate on sectoral mechanisms       AWG-LCA 2009 (Copenhagen): Worked out a draft decision on item 1b (v)    ...
The current debate on sectoral mechanisms           Scope of submissions in early 2011:            - Perceived as mainly ...
Distinctive features compared to classical CDM                             Scope              Basis of            Addition...
What is a standardized baseline?www.perspectives.cc · info@perspectives.cc   36
What are standardised approaches?       Extensive use of default factors         - Use of pre-defined, conservative value...
Why we need standardised approaches?       Increase the number and range of CDM projects         - Holistic, integrated a...
Standardise baseline under PoAs, NAMAs and Sectoral Mechswww.perspectives.cc · info@perspectives.cc   39
PoAs: Performance standard for baseline and additionality           Emission intensity           (tCO2 / t output)        ...
NAMAs: Differentiated benchmarks support & credits        Example: A NAMA financing framework developed to interface non-c...
Sectoral Trading: Benchmark for allocation of allowances               Example EU ETS: Benchmark for existing lignite plan...
Donor fundswww.perspectives.cc · info@perspectives.cc   43
Donor funds: Financial, technology                               and capacity-building support           The financial, t...
Funding sources for both adaptation                                    and mitigation projects             Universe of fu...
New and additional funds?           “New and additional” mentioned in all major climate agreements                 - UNFCC...
Case studies of on-going activitieswww.perspectives.cc · info@perspectives.cc   47
PoA      Programme of Activities project idea for Tunisia       Name of the Programme                 Development of roof ...
PoA      Scoping PoA opportunities in Morocco       Scoping study to identify PoA opportunities              -   Sectors ...
NAMA      More than 500.000 new houses per year demanded until      2030 in Mexico due to demographic change              ...
NAMA      Supported NAMA Design Concept for Energy-Efficiency      Measures in the Mexican Residential Building Sector    ...
NAMA      The NAMA could significantly reduce the BAU emissions                                             Emission paths...
NAMA      Climate financing for the Mexican NAMA?       A revolving NAMA fund is a possibility              -   Directly ...
NAMA      Specific investment needs                       Billion €                   Investment needs 2013 - 2020        ...
NAMA        NAMA proposals for Tunisia                                   Tunisian                                       Di...
NAMA      Tunisia Solar Plan   Source: Tunisian “Nationally Appropriate Mitigation Action” NAMAs, Tunisian Environmental M...
Multilateral fund      World Bank„s Clean Technology Fund       Clean Technology Fund (World Bank)         - Egypt seeks ...
Planned activitieswww.perspectives.cc · info@perspectives.cc   58
UNEP National Green Economy Initiative in Egypt       UNEP National Green Economy Initiative (GEI)         - Since 2010, ...
Worldbank„s Carbon Fund soliciting the assistance to      develope NAMAs for Jordan       Further definition of Jordan‟s ...
Summarywww.perspectives.cc · info@perspectives.cc   61
Summary       The future of demand for CERs post-2012 is highly uncertain       First movers on developing country and d...
Many Thanks for                                             Your Attention!                              Emerging Carbon F...
Back up / unused slideswww.perspectives.cc · info@perspectives.cc   64
Main steps for NAMA potential identification and selection                             2. Mitigation       3. Investigate ...
Sectoral Trading      2. Trading on installation level (not part of the EU proposal)           NAI country defines absolu...
Sectoral Trading 2. Trading on installation level (not part of EU-Proposal)           Companies / private investors have ...
The current debate on sectoral mechanisms           Recalling the support for sectoral mechanisms...           North/Sou...
Standardized baselines      UK DFID project on standardised approaches for CDM       Title         - Piloting greater use...
Standardized baselines      UK DFID project on standardised approaches:      Methodological approach       Approach for cu...
Cancun paved the way for CDM reform           Mixed success of the CDM             - >2,500 projects registered, >1.8 bil...
Expectations from standardised approaches      Advocacy groups, e.g.           Industry (additionality)           DNAs (...
Expectations from standardised approaches      Additionality       Reduce subjective judgment       Increase the investm...
Upcoming SlideShare
Loading in...5
×

Pcc climate finance_cdm_po_a,_nam_as,_sectoral_mechanism cdm workshop 2011 en pp 6

180

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
180
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Pcc climate finance_cdm_po_a,_nam_as,_sectoral_mechanism cdm workshop 2011 en pp 6

  1. 1. CDM PoA, NAMAs, Sectoral Mechanism and Donor Funds – What does the Future hold for Carbon Financing? Emerging Carbon Finance Instruments GIZ Workshop Nicolas Müller, Perspectives 29.04.2011, Tunisiawww.perspectives.cc · info@perspectives.cc © 2011 Perspectives GmbH
  2. 2. Agenda  What is Climate Financing?  What are PoAs, NAMAs, Setoral Mechanisms? - Programme of Activities - PoA - Nationally Appropriate Mitigation Action – NAMA - Sectoral Mechanisms  What is a standardized baseline? - Standardise baseline under PoAs, NAMAs and Sectoral Mechs  Donor funds  Case studies of on-going activitieswww.perspectives.cc · info@perspectives.cc 2
  3. 3. What is Climate Financing?www.perspectives.cc · info@perspectives.cc 3
  4. 4. How to finance the 2°C stabilisation pathway?  Increased investments of trillions of  Current emission reduction dollars are needed to maintain on a ambitions to low to reach 2°C stabilisation path stabilisation path www.climateactiontracker.org - Global carbon emissions have to - No international agreemtn peak before 2020 - Short pledges - estimates of the need for public  Additional finance and incentives to and private climate change be mobilised financing vary widely  „Climate Finance‟ aims to achieve this by scaling up funds - public funds used and the means to disburse them must be appropriate and efficient - finding instruments that allow scaling-up of mitigation activities is the most important challenge at this stage Source: www.climateactiontracker.orgwww.perspectives.cc · info@perspectives.cc 4
  5. 5. From carbon finance to climate finance Carbon markets Non-carbon market (established) (up-scaling)  Market and carbon revenue  Governmental driven driven  Uncertain flow and channel of - ETS financing - Offets - Bilateral - Multilateral Gov. AAU sales JPN/CAN/NZ - UNFCCC CDM/JI  Different sources - Taxes, auctioning, public and Gov. procurement programs Governments Private sector EU ETS private funds, ODA = Supply Forwarding compliance = Demand Carbon Financewww.perspectives.cc · info@perspectives.cc 5
  6. 6. Climate finance incentives for low carbon development Year Maturity of mechanism high low 1997 Kyoto Track (1997/COP3) Registry: UN MRV: UN (established) ER to date1: 401 MtCO2e ER until 20121: >1,775 MtCO2e 2001 CDM (2001/COP7) Registry: UN MRV: UN (not ready) Conventional ER to date: 0 CDM Registry: UN Crediting: maybe (“ NAMA MRV: UN (not ready) crediting”) ER to date: 0 Financial/CB support: possible ER until 2012: ? 2005 CDM LCA Sectoral Mechanism Programme of Activities Cap or no-lose target (Bali Action Plan (PoA) - (2007) MRV: Domestic or UN REDD + 2007/COP13) ER to date: 0 2009 (2009/COP15) Crediting or trading Registry: UN Autonomous Supported MRV: UN (established) NAMAs NAMAs ER to date2: 0 MtCO2e ER until 20122: 2 MtCO2e (2009/COP15) (2009/COP15) Sectoral> 2010 Mechanisms Registry: Not envisaged MRV: Domestic (Bali Action Plan) ER to date: 0 Crediting: No Financial/CB support: possible 1. Registered projects only (2,148); 2. Registered PoAs only (2); As 19th April 2010 Source: Perspectives Analysis; Point Carbon‟s Carbon Project Manager (April 2010) www.perspectives.cc · info@perspectives.cc 6
  7. 7. What are PoAs, NAMAs, Setoral Mechanisms?www.perspectives.cc · info@perspectives.cc 7
  8. 8. Scaling up mitigation and incentives for financing From single measures to sectorwide efforts Single CDM CDM Programme Nationally Appropriate Sectoral projects of Activites Mitigation Action - NAMA Mechanism Mitigation action in Sub- Sector A Sectorwide Voluntary programme targets Capacity building Scale of mitigation financingwww.perspectives.cc · info@perspectives.cc 8
  9. 9. Carbon market so far failed to provide pre-financing  The Clean Development Mechanism (carbon market) creates revenues though trading offset  However, it has not provided a structured financing from developed to developing countries (due to associated CDM regulatory risks)  Biggest demand for CDM certificates will remain coming from the EU after 2012 - CERs only eligible if projects registered before 2012 (time is running out) - More restricted import conditions - Demand for CER uncertain especially for supply from non least developed countries (LDCs)  Cancun: Surprisingly positive outcome regarding market But still mechanisms limited demand for - Existing mechanisms to be continued under Kyoto emission  New market mechanisms “to be considered” by COP 17 reduction - Also “non-market mechanisms” creditswww.perspectives.cc · info@perspectives.cc 9
  10. 10. Programme of Activities - PoAwww.perspectives.cc · info@perspectives.cc 10
  11. 11. Why Programme of Activities (PoA)?  Scale up the CDM  Increase number and size of CDM activities  Increase emission reduction  Allow for more project types and host countries  Reduce transaction costswww.perspectives.cc · info@perspectives.cc 11
  12. 12. A PoA combines project activities in one programme  One tree for one apple  One tree for many apples Single CDM project CPA under programmatic CDMwww.perspectives.cc · info@perspectives.cc 12
  13. 13. Key features of PoAs  As CDM: baseline + credited approach -> offsets  The PoA provides the organizational, financial, and methodological framework for the emission reductions to occur - but the PoA does not actually achieve the emission reductions  The emission reductions are attained at the level of the “CDM program activities” (CPAs)  Duration of the PoA, up to 28 years - crediting period of any CPA (1x10 or 3x7years) shall be limited to the end date of the PoA regardless of when the CPA was addedwww.perspectives.cc · info@perspectives.cc 13
  14. 14. Main characteristics of a PoA under the CDM  Multiple Sites  CPAs can occur at different local, regional or national sites.  A PoA boundary may extent to more than one country  Two-tiered structure  Two types of project participants  PoA coordinator  CPA developers  Coordinator is key programme participant  (not required to undertake CPAs himself)  Unknown number and timing of projects  Exact number and time of implementation of CPAs not known at time of submission (not possible to estimate overall emission reductions of PoA)  Any CPA can be added to the PoA at any time during the duration of the PoA by the coordinating/managing entity.www.perspectives.cc · info@perspectives.cc 14
  15. 15. The inclusion of an activity (CPA) under a PoA PoA Design Letter of Approval - Methodology CDM validation - Technology - Eligibility criteria CDM registration - Baseline - Additionality - Monitoring Plan Generic CPA CPA1 CPA2 CPA3 CPAXwww.perspectives.cc · info@perspectives.cc 15
  16. 16. Latest rules and procedures: Additionality Additionality of each CPA has to be demonstrated through the eligibility criteria for inclusion of CPAs and not on the CPA level itself  Desk review by DOEs, no individually on-site visit  E.g. once it has been determined that a certain technical equipment is additional (on PoA level), e.g. a 5 W CFL of manufacturer x, every CPA with same CFL meets additionality criteria CPA developers do not need to be formal programme participantswww.perspectives.cc · info@perspectives.cc 16
  17. 17. Latest rules and procedures: Methodologies PoAs can use a combination of baseline methodologies  Combination must be applied to all CPAs, in a consistent manner  Each combination proposal is to be checked by the Meth Panel/SSC WG  Recommendation: Include option of front-loading the request for approval of multiple methodologieswww.perspectives.cc · info@perspectives.cc 17
  18. 18. Currently 8 Programme of Activities are registered Mexico: India: ENEF – consumption - 1. ENEF – consumption – power (CFL) power (CFL) 2. Renewable - Biomass (other) – Biomass based heat generation systems China - ENEF - Power transmission and distribution – Transformer Replacement76 PoA currentlyunder validation Honduras: Brazil: South Africa: Uganda: Renewable – Hydropower Waste – Animal Waste Renewable - Solar Waste – Avoidance and (run of river) thermal – SWH IncinerationSource: Point Carbon Database, 28 April 2011 www.perspectives.cc · info@perspectives.cc 18
  19. 19. Nationally Appropriate Mitigation Action - NAMAwww.perspectives.cc · info@perspectives.cc 19
  20. 20. Nationally Appropriate Mitigations Actions (NAMAs)  Concept created in the Bali Action Plan (2007) at COP13 to denote [voluntary] mitigation actions by developing countries after 2012 “Nationally appropriate mitigation actions’ by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner.”  Futher specified in Copenhagen Accord (2009) at COP15 - Supported by technology, financing and capacity building - 30 billion $US total by 2012; 100 billion $US yearly until 2020 - Should be measurable, reportable and verifiable - MRVwww.perspectives.cc · info@perspectives.cc 20
  21. 21. NAMA: Wide options for mitigation actions Appendix II to the Copenhagen Mitigation actions Accord  Activities for emissions mitigation in developing countries that are not subject to mitigation commitments - National emission (intensity) target - Sector strategy / sector crediting baseline / sectoral emission target - Government policy programme - Single projectwww.perspectives.cc · info@perspectives.cc 21
  22. 22. NAMAs are a key topic of UNFCCC negotiations  Different views and different ways on NAMAs - Institutional structure to support NAMAs - measurement, reporting and verification (MRV) of underlying measures  NAMAs can basically be categorized as follows: - Unilateral NAMAs: mitigation actions independently funded and carried out by developing countries - Supported NAMAs: climate protection measures in developing countries, supported by technical assistance and/or direct funding for climate protection from Annex I countries of the Kyoto Protocol ("directly" supported NAMAs) - Credited NAMAs: climate protection measures in developing countries, that generate certified emission reduction credits (credits) to be sold on the international carbon market (e.g. sectoral measures)  NAMA by developing countries and support by develop countries to be recorded in a NAMA registry (to be established)www.perspectives.cc · info@perspectives.cc 22
  23. 23. Different tiers of NAMAs (theoretical concept) Supported and credited NAMAs Mitigation cost Supported NAMAs Credited NAMAs Credit price Supported NAMAs Unilateral NAMAs Mitigation volumewww.perspectives.cc · info@perspectives.cc 23
  24. 24. NAMAs submissions by RCREEE member states Country NAMA as reported to the UNFCCC (Stand March 2011) Type Algeria Renewable energy management and Unilateral development programmes Egypt - - Jordan a) Transport sector, e.g. railway, freight Supported b) Environmental projects, e.g. energy efficiency, wet land protection c) Energy sector, e.g. fuel switch, renewable energy law d) waste sector, e.g. waste management and wastewater treatment e) Agriculture and forestry sector Lebanon - - Libya - - Morocco a) Energy sector, e.g. hydropower, solar power and heat, wind power, CCGT, use of Unilateral natural gas, energy efficiency (lightning, labelling etc.) b) Transport sector, e.g. fleet renewal, rail transport promotion, urban transport c) Industrial sector: energy recovery, energy efficiency d) Waste sector, e.g. landfill gas recovery, wastewater treatment e) Agriculture and forestry, e.g. Farm land yield improvement reforestration f) Actions related to housing, e.g. incentives and programmes for limiting urban sprawl, energy efficencies, renewable energies Palestine - - Syria - - Tunisia a) Renewable energies: Tunisian Solar Plan + Diversion of organic waste from landfills Supported b) Fuel switch in all sectors; industrial proecess. c) Energy efficiency, e.g. transport, construction of buildings, appliances certification d) Agriculture and forestry sector Yemen - -www.perspectives.cc · info@perspectives.cc 24
  25. 25. Successfully attracting donor support for low carbon growth and NAMAs • EU “fast-track“ decisions (May 2010): 2.2 billion € additional funds pledged from member states and EU Commission Donor • US “fast-track“ decisions (April 2010): 1.9 billion $US for international climate finance until 2011 40% support administered by USAID; 60% through multilateralsactivated • Japan (May 2010): 4 billion $US through Japan Bank for International Co-operation (JBIC) for NAMA support 1 Low Carbon Development Strategy 2 Financing Strategy 3 Defining concrete NAMAs for large-scale donor support • What are the concrete sectors and GHG BAU emissions scope? emissions Own financing • Whole sector or sub-sector? • Which are the detailed measuresRequire- to be implemented?ments for • What is the envisaged MRVsupport approach? Supported action • Plans for NAMA crediting? • What are the detailed financial Emissions pathway under LCDS requirements and what is the external financial contribution sought? Carbon markets • What is the delivery framework supporting the NAMA? Timewww.perspectives.cc · info@perspectives.cc 25
  26. 26. Sectoral Mechanisms: how do they work, what is the difference?www.perspectives.cc · info@perspectives.cc 26
  27. 27. Sectoral Trading - concept Basic functioning (as per EU proposal)1  Non Annex I (NAI) country defines sectoral target, to be reviewed & approved by COP  Substantially below business as usual  Absolute target  Should cover all entities/installations within a sector  Allocation of emission rights according to target  NAI country implements national policies / NAMAs  May include domestic ETS (not a must!)  NAI country can participate in International Emissions Trading (IET)  Both buy and sell 1 Submission of the EU to the 6th AWG-LCAwww.perspectives.cc · info@perspectives.cc 27
  28. 28. Sectoral Trading – mitigation incentive Basic functioning (as per EU proposal)1 Emissions of GHGs BAU-emissions Sectoral cap Allocated emission rights timewww.perspectives.cc · info@perspectives.cc 28
  29. 29. Sectoral Trading – country level 1. Trading on country level CMP Effects: • Direct incentive for NAI country Proposes target; Reviews & reports approves target to implement national policies & Carbon initiate MRV market • Means for NAMA-crediting Trades NAI (buy & sell) Implements measures & But: MRV System • Limited incentives for private investments as in CDM Report Sector • Potential overlap with CDM 1-n Company (especially in power + waste 1-n Installation sector) 1-nwww.perspectives.cc · info@perspectives.cc 29
  30. 30. Sectoral Trading – installation level 2. Trading on installation level (not part of EU-Proposal) Effects: CMP • Sets high incentives for financing Proposes target; Defines rules for ETS reports mitigation at installation level! Reviews & approves • Step to national targets? – target Opposition of NAI countries NAI • Potential overlap with CDM Allocation & Installation specific MRV Report Sector 1-n Company Carbon 1-n Installation Trade market 1-nwww.perspectives.cc · info@perspectives.cc 30
  31. 31. Sectoral Crediting - concept Basic functioning (as per EU proposal)1  NAI defines sectoral target, to be reviewed & approved by COP  Substantially below BAU, absolute target  Covers all entities/installations within sectors  NAI implements national policies / NAMAs  Emission Reduction Certificates may be issued in respect of sectoral emissions reductions beyond the absolute emission threshold  ex-post crediting  no-lose target  Supervision by COP / „a body“  Procedures and modalities tbd by COP (incl. MRV) 1 Submission of the EU to the 6th AWG-LCAwww.perspectives.cc · info@perspectives.cc 31
  32. 32. Sectoral Crediting – incentives for mitigation No lose target • No penalty in case the target is missed in given crediting period Emissions • Issuance of credits in case target is of GHGs exceeded BAU-emissions No penalty No-lose target Credits issued actual emissions CP CP CP timewww.perspectives.cc · info@perspectives.cc 32
  33. 33. The current debate on sectoral mechanisms  AWG-LCA 2009 (Copenhagen): Worked out a draft decision on item 1b (v) of the BAP on “various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions”.  2010: Climate talks in April, June, August, October: Particular interests heavily riddled the AWG LCA text with brackets; No direct reference to trading or crediting mechanism in LCA / KP text  Cancun 2010: COP decided to „consider“ establishment of market based mechanisms (MBMs) in Durban 2011  COP invited parties to submit views and position on the establishment of one or more MBMs; (besides this, there were other calls for submissions, eg on non-market based mechanisms, evaluation of the KP mechanisms)  22 submissions received for launch of debate on MBMs in Bangkok (April 2011) and Bonn (June 2011)www.perspectives.cc · info@perspectives.cc 33
  34. 34. The current debate on sectoral mechanisms  Scope of submissions in early 2011: - Perceived as mainly constructive - MBMs only opposed by ALBA (Bolivia, Venezuela), - „tolerated“ by Bangladesh, Tuvalu rather „cautious“ - (to some extent) supportive for MBMs by EU, AOSIS, Australia, China (cond.), Colombia, Ecuador, Japan, NZ, Norway, PNG, Peru, South Korea, Saudi Arabia, Singapore, Switzerland, Turkey, - No submission from - India (interpreted as in line with China) - Brazil (traditionally opposing) - South Africa (embarking on neutral diplomatic attitude towards COP) - US… - Sectoral mechanisms - Hold a prominent position on the agenda - Are perceived as one tool amongst several MBMs (such as NAMA crediting, CDM,...)www.perspectives.cc · info@perspectives.cc 34
  35. 35. Distinctive features compared to classical CDM Scope Basis of Additionality MRV Readinees credits for MENA CDM Single project, Baseline and Project level CDM 100% limited bundling credit assessment, methodologies mainly economic PoA Programme with Baseline and Programme / CDM 90% unlimted CPAs credit CPA eligibility, methodologies mainly economic NAMA Project, Baseline Incremental Activity ??? programme, (credited cost specific to be (Sub-)Sector, NAMA) defined, policies different due to measures, emission reductio vs. soft measures Sectoral (Sub-)Sector Benchmark, Not relevant Allocation 0% mechanism allocationwww.perspectives.cc · info@perspectives.cc 35
  36. 36. What is a standardized baseline?www.perspectives.cc · info@perspectives.cc 36
  37. 37. What are standardised approaches?  Extensive use of default factors - Use of pre-defined, conservative values instead of actual data monitored - Default factor for key parameter can boost project development (AMS-II.J Energy Efficient Lightning; ACM0002 + Grid Emission Factor, e.g. India (CEA))  Performance standard approach - Emission-rate threshold (tCO2/t output) for baseline and/or additionality - Emerging use of performance standards in CDM (ACM13, AM70)  Other options for standardisation - Positive list for additionality demonstration - Specification of best available technologies or practices - Threshold on technology penetration ratewww.perspectives.cc · info@perspectives.cc 37
  38. 38. Why we need standardised approaches?  Increase the number and range of CDM projects - Holistic, integrated approach with flexible technology choice - Increased investment certainty (less regulatory uncertainty)  Streamline project implementation & assessment - Reduced transaction costs & lead time - Increased objectivity, transparency and consistency - Clear definition of level of ambition  Improve access to CDM in underrepresented countries & sectors - Shift of burden from project developers to a central coordinatorwww.perspectives.cc · info@perspectives.cc 38
  39. 39. Standardise baseline under PoAs, NAMAs and Sectoral Mechswww.perspectives.cc · info@perspectives.cc 39
  40. 40. PoAs: Performance standard for baseline and additionality Emission intensity (tCO2 / t output) C A B Baseline PS CERs Additionality PS Note: A single performance standard can also be applied to baseline and additionality.www.perspectives.cc · info@perspectives.cc 40
  41. 41. NAMAs: Differentiated benchmarks support & credits Example: A NAMA financing framework developed to interface non-carbon credit- based NAMAs and carbon credit based-financing for the building sectorSpecificenergy BAU Baselines1demandin kWh/m² Improved future baselines(electricityand heat) Non-carbon credit based Supported NAMA financing Mandatory Minimum Performance Standards Credited NAMA/CDM Carbon credit based financing State of the Art time frame (year)² 1 Several baselines and benchmarks may be established for use in building sub-sectors. The baselines and benchmarks could be determined by building end-use types, climate zones and energy types, etc. 2 Minimum performance standards and crediting benchmarks are tightened over time. Source: According to UNDP 2009www.perspectives.cc · info@perspectives.cc 41
  42. 42. Sectoral Trading: Benchmark for allocation of allowances Example EU ETS: Benchmark for existing lignite plants (exemplary) Allocation Inefficient plants High efficient with higher plants without adjustment adjustment 990 g/kWh Efficiency related adjustment New plant Old plant 990 g/kWh 1,150 g/kWh Emission of plantwww.perspectives.cc · info@perspectives.cc 42
  43. 43. Donor fundswww.perspectives.cc · info@perspectives.cc 43
  44. 44. Donor funds: Financial, technology and capacity-building support  The financial, technology and capacity-building support agreed in Cancun applies to both mitigation and adaptation actions by developing countries  FAST-START FINANCE UP TO 2012 - fast-start finance for developing countries of USD 30 billion up to 2012  NEW LONG-TERM FUNDING ARRANGEMENTS - In order to scale up the provision of long-term financing for developing countries, Governments decided to establish a Green Climate Fund functioning under the guidance of, and be accountable to the Conference of the Parties (COP). - Industrialized countries committed to provide funds rising to USD 100 billion per year by 2020 to support concrete mitigation actions by developing countries that are implemented in a transparent way. - Funds would be raised from a mix of public and private sourceswww.perspectives.cc · info@perspectives.cc 44
  45. 45. Funding sources for both adaptation and mitigation projects  Universe of funding sources - Bilateral - Multilateral - Foundation / Philanthropic - Private sector  Bulk of available and emerging resources relates to mitigation, mainly through transactions under the CDM in the carbon market and through World Bank administered carbon funds and facilities - including Climate Investment Fund (CIF) programmes like - the Clean Technology Fund (CTF) and - the Scaling Up Renewable Energy Program in Low Income Countries - The Global Environment Facility (GEF) has been the largest source of grant financing for energy efficiency and renewable energy projects. Source: http://www.climatefinanceoptions.org/cfo/Funding%20Sourceswww.perspectives.cc · info@perspectives.cc 45
  46. 46. New and additional funds? “New and additional” mentioned in all major climate agreements - UNFCCC - Kyoto Protocol - Copenhagen Accord Never clearly defined - “New and additional” to what? ODA vs. climate finance, past vs. present? - “New and additional” above which baseline Situation without baseline - “New and additional” can not be assessed - (Fast-start) finance fails to build trust Only old wine in new bottles?www.perspectives.cc · info@perspectives.cc 46
  47. 47. Case studies of on-going activitieswww.perspectives.cc · info@perspectives.cc 47
  48. 48. PoA Programme of Activities project idea for Tunisia Name of the Programme Development of roof thermal insulation (Promo-Isol) Roll-out of large programme for insulating roofs of private houses (new and existing buildings) in Tunisia to reduce the demand of fossil fuels for heating and fossil fuel based power generation for cooling in such premises and hence reducing Greenhouse Gas Emissions. Objective The Tunisian Energy Market is highly subsidized. By reducing the demand for fossil fuels for heating purposes and the electricity consumption for cooling, an additional objective is to reduce the amount paid for subsidies on fossil fuels. • Tunisian National Agency for Energy Conservation Programme description: (ANME) is initiating this programme • The PoA will target newly self-constructed and existing proposed activities + private buildings. incentive scheme • Specific subsidy provided by ANME per m²www.perspectives.cc · info@perspectives.cc 48
  49. 49. PoA Scoping PoA opportunities in Morocco  Scoping study to identify PoA opportunities - Sectors - Technologies - Organisational framework and Coordinating Entity - Stakeholder involvement  Planned PoA feasibility study for Moroccan Solar Planwww.perspectives.cc · info@perspectives.cc 49
  50. 50. NAMA More than 500.000 new houses per year demanded until 2030 in Mexico due to demographic change Housing stock in millions 38.1 Mil. 35.6 Mil. 33.1 Mil. 30.2 Mil. 10.8 Mil. 5.8 Mil. new houses 27.3 Mil. new houses 2011-2030 2011-2020 24.4 Mil. NAMA focused on new houses Source: CONAVI, 2010www.perspectives.cc · info@perspectives.cc 50
  51. 51. NAMA Supported NAMA Design Concept for Energy-Efficiency Measures in the Mexican Residential Building Sector Item Description Sector Building sector Sub-sector New residential houses (maximum 4 storeys and 8 units) NAMA boundary Entire country Measures and activities with Substantial up-scale of “Green mortgage” and “Ésta es tu casa” schemes through direct impact on GHG increased subsidies and more ambitious efficiency standards. emission reduction Measures and activities with Supportive actions for transformation of the “Green Mortgage” and "Ésta es tu casa" indirect impact on GHG programmes into a holistic urban planning process including building codes emission reduction • Building code pilot in 1 federal state • Promotion and enforcement of building codes across federal states over time • Capacity building • Extension of urban planning criteria and inclusion in the holistic framework NAMA timeframe -Preparation 2011-2012 -Implementation 2012-2020 NAMA implementation and Full costs of substantial up-scaling of actions until 2020 operation costs NAMA type Supported NAMA (with the possibility of NAMA crediting for parts of the actions) Type of support required Financial, technical and capacity building under the NAMAwww.perspectives.cc · info@perspectives.cc 51
  52. 52. NAMA The NAMA could significantly reduce the BAU emissions Emission paths under different scenarios Emissions 2013-20 Current practice = 57.6 MtCO2 -12% = 50.9 MtCO2 -18% = 47.2 MtCO2 -19% = 46.5 MtCO2 -28% = 41.4 MtCO2 -41% = 33.8 MtCO2www.perspectives.cc · info@perspectives.cc 52
  53. 53. NAMA Climate financing for the Mexican NAMA?  A revolving NAMA fund is a possibility - Directly reinvests monetary benefits (Mexican saved subsidies)  Such a fund could be supported by soft loans from donors/climate funds until break-even is achieved - Which are the incremental costs given that - Air-conditioners and refrigerators have negative abatement costs? - Mexican government saves a huge amount of subsidies?  Possible private sector involvement - Carbon market (NAMA crediting; e.g. of PV) => EU: Sectoral Mechanism pilot through a bilateral agreement - Provide loans to the NAMA fund on commercial terms (senior tranches)  Industrialised countries could purchase credits as wellwww.perspectives.cc · info@perspectives.cc 53
  54. 54. NAMA Specific investment needs Billion € Investment needs 2013 - 2020 8 6.6 billion € 7 6.2 billion € 6 5 4.0 4.3 billion € 3.6 4 3.8 billion € 1.7 Current 3 1.2 Green Mortgage 2 2.6 billion € 1 2.6 2.6 2.6 2.6 0 Scenario 1 Scenario 2 Scenario 3 Scenario 4 Minimum supporting finance: ~ 0.17 billion EUR/yearwww.perspectives.cc · info@perspectives.cc
  55. 55. NAMA NAMA proposals for Tunisia Tunisian Diversion of organic waste Solar Plan from landfills  Implementation of “Solar Plan” as NAMA  Potential for GHG mitigation in the Tunisian under the UNFCCC and Copenhagen waste sector Accord - waste management for a more sustainable treatment of biowaste  Expanding the existing Tunisian Solar - Communal waste, agroindustry/food Plan covering: processing, agricultural production, wood, - Solar energy waste water, hotels and restaurants - Wind energy - Actions: composting and/or anaerobic digestion - Energy efficiency  Components (2011-2016) - Biogas - Study to detect cost-efficient measures for - Studies emission reductions  40 public-private projects scheduled - Scientific research on degradation processes between 2010-2016 - national concept on biowaste treatment development  Estimated emission reductions of 1.5 - Review (or study) on feed-in of electricity MtCO2e per year, compared to current - Construction of composting and anaerobic annual emission of 35 MtCO2e in Tunisia digestion plants - Awareness Building - Capacity building and training Source: Tunisian “Nationally Appropriate Mitigation Action” NAMAs, Tunisian Environmental Ministry, 2010 - Norming and standardizationwww.perspectives.cc · info@perspectives.cc 55
  56. 56. NAMA Tunisia Solar Plan Source: Tunisian “Nationally Appropriate Mitigation Action” NAMAs, Tunisian Environmental Ministry, 2010www.perspectives.cc · info@perspectives.cc 56
  57. 57. Multilateral fund World Bank„s Clean Technology Fund  Clean Technology Fund (World Bank) - Egypt seeks finance to scale up wind energy and address urban transport needs by replacing old public buses and private taxis with a new fleet of Compressed Natural Gas vehicles; completing two new lines of its underground metro; and preparing for Bus Rapid Transit and Light Rail Transit systems - kick start the establishment of a national renewable energy fund to incentivize transmission companies to purchase renewable energywww.perspectives.cc · info@perspectives.cc 57
  58. 58. Planned activitieswww.perspectives.cc · info@perspectives.cc 58
  59. 59. UNEP National Green Economy Initiative in Egypt  UNEP National Green Economy Initiative (GEI) - Since 2010, GEI has been providing advisory services to lend support to countries‟ national initiatives to achieve a green economic transformation - Advisory services include providing platforms for national dialogue and consultations; analytical and research support through macro-economic and sectoral assessments of green economy opportunities and options; capacity enhancing activities; and sharing of international experiences and best practices. - The Egyptian National Council of Competitiveness ENCC in cooperation with the Ministry of State for Environmental Affairs and the United Nations Environment Programme launched "Egypt Green Economy National Initiative" workshop on January 23, 2011 - Repot for Egypt in preparationwww.perspectives.cc · info@perspectives.cc 59
  60. 60. Worldbank„s Carbon Fund soliciting the assistance to develope NAMAs for Jordan  Further definition of Jordan‟s NAMAs  with a particular focus on possibilities of public-private partnerships in a future international climate regime  Identification on the regulatory and institutional reforms required to encourage public-private sector participation  Identification potential infrastructure for NAMAs (policy and projects) for further development  Selection of infrastructure NAMA (or possibly a program/policy NAMA) to serve as a pilot case  identify any legal, regulatory and institutional issue that would need to be addressed to allow implementation  propose measures  development of an initial pre-feasibility assessment suitable for funding negotiations under the fast-start finance/long term finance  other finance opportunitieswww.perspectives.cc · info@perspectives.cc 60
  61. 61. Summarywww.perspectives.cc · info@perspectives.cc 61
  62. 62. Summary  The future of demand for CERs post-2012 is highly uncertain  First movers on developing country and donor side are currently exploring new mechanisms, e.g. - How PoAs could be upscaled, and - and how NAMAs could be designed  However, demand for such certificates (and large-scale financing) is not existing & modalities and procedures are not clear  „old“ climate financing is available and planned to be scaled- up (WB, GEF, etc)  Pilot initiatives on PoAs/New Mechs and NAMAs with a donor country partner provide opportunity in the long-termwww.perspectives.cc · info@perspectives.cc 62
  63. 63. Many Thanks for Your Attention! Emerging Carbon Finance Instruments GIZ Workshop Nicolas Müller, Perspectives 29.04.2011, Tunisiawww.perspectives.cc · info@perspectives.cc © 2011 Perspectives GmbH
  64. 64. Back up / unused slideswww.perspectives.cc · info@perspectives.cc 64
  65. 65. Main steps for NAMA potential identification and selection 2. Mitigation 3. Investigate 4. Identification 5. Formulation 6. Outreach 1. Identification potential of NAMA of actions and of a concrete and capacity actions assessment requirements selection NAMA building • Analysis of • Analysis of • Investigation of • Identification • Formulation of • Outreach to national current GHG NAMA of most a concrete international context in mitigation requirements for promising NAMA concept donor agencies terms of potential of each identified options and for the building to seek support existing possible action selection for sector in terms for NAMA policies and actions • Desk-review of NAMA of general • Capacity programs • Review of studies/ formulation scope, detailed building on low and current GHG regulatory text to following measures, carbon identification mitigation draw out in detail specific NAMA MRV approach business of opportunities the potential selection criteria and type of plans/NAMAs appropriate within the opportunities (as • Establishment NAMA and possible building sector well as of a priority list • To be included actions and with regards to challenges) for of mitigation in Annex II of opportunities co-benefits NAMA measures / the in the • Stakeholder supporting, e.g. actions Copenhagen building consultations MRV, financing • Selection of Accords and its sector to discuss and requirements, action or set of development in refine options barriers action for NAMA practice formulationwww.perspectives.cc · info@perspectives.cc 65
  66. 66. Sectoral Trading 2. Trading on installation level (not part of the EU proposal)  NAI country defines absolute emission targets on sector level and breaks it down to level of installation level  -x% from BAU, recent base year  Mandatorily covers ‚all„ installations within sector to avoid intra- sectoral carbon leakage  Each company is self-responsible for meeting target  Companies may buy/sell on international carbon market  On national level, all installations can trade with each other  If access to international carbon market:  either directly or via public ‚aggregators„  Attractive to NAI countries?  No national emission target  Voluntary opt-in to ETS @ predefined ruleswww.perspectives.cc · info@perspectives.cc 66
  67. 67. Sectoral Trading 2. Trading on installation level (not part of EU-Proposal)  Companies / private investors have a direct incentive to reduce emissions below their target Sell €/t CO2 Average cost to Average cost : Carbon target: e.g. 5 €/t e.g. 7.5 €/t 5 market t CO2 Target Effective reductionwww.perspectives.cc · info@perspectives.cc 67
  68. 68. The current debate on sectoral mechanisms  Recalling the support for sectoral mechanisms...  North/South division reflected in party positions  Annex I: supportive - EU, Japan, Australia, NZ,...  Non Annex I: - BASIC/G77: Sceptic, but generally agrees that sectoral mechanisms are feasible for mitigation action; - BUT: Main mitigation to be bourne by Annex-I - National sectoral mitigation can only be a part of the overall instruments toolkit - Establishment conditional on concrete AI mitigation action - Fear trade barriers and oppose benchmarks or standards for Non- Annex-I - Fear “sneaking” imposement of firm targets - Crediting supported by certain smaller countries (Costa Rica, Colombia, Korea) - ALBA: Partially opposing market based instrumentswww.perspectives.cc · info@perspectives.cc 68
  69. 69. Standardized baselines UK DFID project on standardised approaches for CDM  Title - Piloting greater use of standardised approaches in the CDM  Objective - Develop practical examples of performance standards and default factors that could be applied to the CDM - Identify project types of relevance to low-income countries - Develop standardised approaches suited to national circumstances - Demonstrate the benefits of standardised approaches  Expected outcome - Development of 3 standardised CDM methodologies, each tested in 3 case studies (total of 9 case studies)www.perspectives.cc · info@perspectives.cc 69
  70. 70. Standardized baselines UK DFID project on standardised approaches: Methodological approach Approach for current phase 2:  development of framework concept for standardisation  consultation with local stakeholders (e.g. DNA, project staff).  Implications of standardised baselines - practicability of application the chosen countries (standardised approaches + data collection) - effectiveness of approach (comparison with existing CDM elements).  finalisation of the standardised approach based on outcome of assessments.  disseminations of the findings.www.perspectives.cc · info@perspectives.cc 70
  71. 71. Cancun paved the way for CDM reform  Mixed success of the CDM - >2,500 projects registered, >1.8 billion CERs until the end of 2012 - Uneven distribution of CDM projects: - Location: Dominance of emerging economies - Size: Lack of micro-scale projects - Sector: Large, untapped mitigation potential (e.g., building, transport)  Some major bottlenecks remain - High transaction costs & long lead time - Concerns about the environmental integrity (mainly, additionality) - Limited contribution to sustainable development  Standardised approaches to be developed - Both top down, and bottom up, including industry associations and NGOs - Streamline baseline & additionality procedures - Encourage participation of underrepresented countries & sectorswww.perspectives.cc · info@perspectives.cc 71
  72. 72. Expectations from standardised approaches Advocacy groups, e.g.  Industry (additionality)  DNAs (from regions in which the CDM is underrepresented due to data availability problems and difficult MRV requirements) Expand the CDM  Allow a greater access and participation to the CDM  Change the balance of the CDM (projects – geography)  Reduce the time to registration  Reduce the transaction cost Ease the baseline determination and MRV  Reduce the monitoring, easier MRV  Reduce subjective judgment  Prevent gaming  Might reduce CER outcome due to conservativenesswww.perspectives.cc · info@perspectives.cc 72
  73. 73. Expectations from standardised approaches Additionality  Reduce subjective judgment  Increase the investment certainty  Reduce complexity (whole system assessment)www.perspectives.cc · info@perspectives.cc 73

×