2. Climate change as an opportunity to shift to
green development path
Copenhagen is not road-end, it’s a beginning
(hopefully )
UNDP can have a role!
1
3. Summary
Climate change: state of play
Climate negotiations: update and
implications for CA
BRC regional capacity building
program for climate change
MDG Carbon Facility: status and
prospects
2
4. 3
The merchant vessel Fraternity passed Nowaya Zemlya, regarded by Russia as
the official exit point of the Northern Sea Route. The Times, Sep 14, 2009
5. 21st century climate challenge
Avoiding dangerous climate change requires
recognition of:
•climate inertia and cumulative effects
• urgency of action
• global scale of issue
4
8. 21st century carbon budget
7
A sustainable GHG
emissions pathway
(against 1990):
– The world cuts
50% by 2050 with
a peak by 2020
– Developed
countries cut 80%
by 2050
– Developing
countries cut 20%
by 2050
UNDP 2007/2008 HDR
estimated 21st
Century carbon budget
at 1,456 Gt CO2
Source: UNDP HDR 2007/2008
11. “The Copenhagen Diagnosis” 2009
• Surging greenhouse gas emissions – 40% over 1990
• Recent global temperatures demonstrate human-
induced warming – 0.19oC/decade
• Acceleration of melting of ice-sheets, glaciers and
ice-caps
• Rapid Arctic sea-ice decline – 40% over forecasts
• Current sea-level rise underestimated – 80% over
forecasts
• Sea-level predictions revised – 100% over forecasts
• Delay in action risks irreversible damage
• The turning point must come soon – to keep within
2oC emissions should peak by 2015-2020
10
12. Climate change: state of play
Climate negotiations: update and
implications for CA
BRC regional capacity building
program for climate change
MDG Carbon Facility: status and
prospects
11
13. Current climate change framework
• UN Framework Convention on Climate Change :
• Stabilization of GHGs to prevent dangerous changes to
climate system
• Kyoto Protocol
• Legally binding GHG emission reduction targets for
developed countries and EITs – 5% against 1990 over
2008-2012
• Flexible mechanisms (CDM/JI)
• Expires in 2012
12
14. The Bali Action Plan
• Adopted at COP-13 in Bali in 2007
• Roadmap to reach an agreed outcome on post-
2012 regime and adopt a decision at COP-15 in
Copenhagen in December 2009
• Mitigation commitments or actions by ALL
countries:
– Measurable, reportable and verifiable nationally
appropriate mitigation commitments or actions (…) by all
developed country Parties;
– Nationally appropriate mitigation actions (NAMAs) by
developing country Parties in the context of sustainable
development…in a measurable, reportable and verifiable
manner
13
15. Post -2012 international climate regime
• Entering into new era of green global economic
growth, through significant mitigation of GHG
emissions and generating funding for adaptation
and thus creating new investment opportunities
14
16. Four political essentials to be resolved to
make Copenhagen 2009 work
1. Clarity on targets for industrialized countries
2. Clarity on nationally appropriate mitigation
actions of developing countries
3. Clarity on how to generate support for mitigation
and adaptation in developing countries
4. Clarity on the governance structures to manage
the generated support
However, no definitive agreement on any of
the four pillars as of yet!!!
15
17. Current status: proposed 2020 targets by
developed countries
Australia - 15% or 25% 2000
Belarus - - 5-10% 1990
Canada - - 20% 2006
EС-27 - - 20-30% 1990
Japan - - 25% 1990
Lichtenstein - - 20-30% 1990
Monaco - 20% 1990
New Zealand - - 10-20 % 1990
Norway - - 40% 1990
Russian Fed. - - 10- 15% 1990
Switzerland - - 20-30% 1990
Ukraine - - 20% 1990
USA - - 17% 2005
16
18. Current status: financing and governance
• EU announced plans to allocate €22-50 bn/year to
developing countries to tackle climate change by
2020
• At least €100 bn/year needed!
• Governance structures:
– USA proposal: all parties to contribute (excl. LDCs), WB
– EU proposal: all parties to contribute (excl. LDCs), GEF
– Mexican proposal: all parties, voluntary for non-Annex I,
trustee?
17
19. Current status: low carbon strategies
• A scenario or set of scenarios that outlines a long-
term, low-emission pathway (80% reduction by
2050 for developed, ambitious targets for
developing)
• A characterization of the policies, measures or
program that could be undertaken to achieve the
pathway described above
• NAMAs:
– Nationally and internationally supported actions, MRV
– Enabled by technology, finance and CD
– Contribute to economic growth and SD
– Registered
18
20. Current expectations for Copenhagen
• Legally binding agreement impossible
• Instead, Danish PM has been “consulting with key
stakeholders” on a potential “political agreement”:
– 5-6 pager
– keeping within 2oC temperature increase
– emissions to peak by 2020 and then go down
– 50% emission reductions by 2050, but no medium-term
targets; 80% of that by developed countries
• But, opposed by developing countries unwilling to
accept “targets or caps”
• Legally binding treaty – delayed at least until June
2010 (or Dec 2010 COP in Mexico)
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21. Expected outcomes from Copenhagen
relevant for UNDP support to countries
• Support countries to formulate and implement low
carbon development and carbon resilient
strategies and action plans, including on REDD+
• Support in the implementation of the above
strategic documents and NAMAs
• Strengthening of enabling environments at the
national level, including policy and legal and
regulatory frameworks
20
22. Expected outcomes from Copenhagen
relevant for UNDP support to countries
• Enhancing the capacities to monitor and report on
climate change actions (MRV), including for
preparation of national communications
(inventories)
• Supporting participation in old and new flexible
mechanisms
• Strengthening structural and institutional capacity
for economic diversification; and
• possibly others after the agreement is finalized
21
23. Climate change: state of play
Climate negotiations: update and
implications for CA
BRC regional capacity building
program for climate change
MDG Carbon Facility: status and
prospects
22
24. Regional CD program for CC: overview
• Dedicated capacity in BRC and in the region
• Key areas of assistance:
– Institutional framework and capacity development for
CDM/JI => DNAs and project procedures in Kyrgyzstan,
Tajikistan, Uzbekistan
– Building in-country expertise for carbon projects,
advising governments on CC-related issues => low
carbon strategy in Kazakhstan*, grid EF Kyrgyzstan
– Mobilizing resources for regional and national projects
=> over $1.5m mobilized (co- /parallel)
– Building CO in-house capacity for carbon projects => at
least 28 carbon projects identified
– Support in climate negotiations
23
25. Regional CD program for CC: plans
• Draft low-carbon development strategies for
number of countries (at least one from all the sub-
regions)
• Develop proposal for REDD+ activities and CD for
undertaking REDD+ actions (e.g. establishment of
focal points, legislative changes, etc.)
• Build capacity for more efficient participation in
the revised CDM/JI, programmatic CDM/JI and the
new carbon trading mechanisms
• Build capacity for more efficient participation in
the international climate change negotiations
24
26. Climate change: state of play
Climate negotiations: update and
implications for CA
BRC regional capacity building
program for climate change
MDG Carbon Facility: status and
prospects
25
27. Objectives
Broaden access to carbon finance by
promoting carbon projects with high MDG
impact in under-represented developing
countries
Increasing financing available to developing
countries by developing new areas for the
carbon market
Goal
CC is a disproportionately high threat to the poor, but also an opportunity to
leverage carbon finance towards the achievements of MDGs
Transform the carbon market to leverage
the transition to low carbon sustainable
development in developing countries
MDG Carbon Facility
CO2e
MDG
SD
Inclusive
Access
MDG Carbon Facility
26
28. MDG Carbon Facility Mission: Market
Transformation
MDG
Impact
Geographical spread
Current
CDM Market
Objective for
MDG Carbon
Facility
27
29. Grant Assistance
A mutually reinforcing 4-prong approach
• Assisting governments with policy change:
raising awareness & policy dialogue
• Developing technical capacities
• Developing new instruments targeting emission
reduction projects with high development dividends
Project Development Services
• Developing a representative pipeline of carbon
projects through its innovative partnership model
with a financial services provider
MDG Carbon Facility
CO2e
MDG
SD
Inclusiv
e Access
28
30. 1. Engaging in policy
change
• Active/founding partner
of the Nairobi Framework
• CDM Executive Board's
'informal consultation‘
panel
• Regular invited to speak
on SD & geographic
diversity at high profile
events (eg. UNFCCC CMP
meetings, Carbon Expo)
• Technical Advisory
Committee of the Gold
Standard
• Member of the private
sector Project Developers
forum
2. Developing
technical capacity
3. Developing new
carbon market
instruments
• Training of DNAs (EE&CIS
8; Latin America 4)
• Creation of operational
CDM market framework in 6
Sub-Saharan countries
• National workshops to
raise awareness of policy
makers
• CDM scoping &
assessment studies in 5
African countries
• Support to DNAs
(development of SD criteria)
• How-to guides (National
Institutional Frameworks for
Kyoto Protocol Flexible
Mechanisms in EE&CIS)
• Member of
workgroups to
develop voluntary
carbon market
standards (CAR &
VCS)
• Initial pilot projects
in the voluntary
markets
• Policy and
architecture (invited to
contribute to Montreal
Protocol MOP)
• Communications
(video, brochures,
media articles)
MDG CF Achievements
Grant Assisted
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31. Grant Assistance
Capacity development
Advocacy
New market instruments
Grant Assistance
Capacity development
Advocacy
New market instruments
MDG CF Project development
services
How does it work?
UNDP
MDG Carbon Facility
Self-financed (CRF)
Grant Assistance
Capacity development
Advocacy
New market instruments
Grant Assistance
Capacity development
Advocacy
New market instruments Emission Reduction
Projects
Payment of
Proceeds from
Sale of Carbon
Credits
Technical
Assistance in
Project
Development
Cost Recovery
Fee (CRF) per
Project
Delivery of
Carbon
Credits
UNDP
MDG Carbon Facility (Fortis Bank exclusive partner
for the 2-year pilot)
Financial Partner
Self Financed
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33. The projects – a diverse portfolio of countries
and sectors
6 projects at the validation stage (ERPA signed):
– Reduced Natural Gas Leakage
(with a MDGIS), Uzbekistan
– Treatment of Palm Oil Mill Effluent, Honduras
– Ahuachapan Geothermal Upgrade, El Salvador
– Britannia 25 MW Wind Farm, Mauritius
– Lugansk Landfill Gas recovery, Ukraine
– Water Treatment in Secondary Schools, Rwanda
Pipeline of 7 projects (undergoing due diligence):
– Methane Capture from agricultural wastes, Macedonia
– ONEA Ouagadougou sewage methane recovery, Burkina Faso
– Luma River small hydro, Albania
– Various hydro power plants, Kyrgyzstan
– Mariinsk district heating, Russia
– Energy Efficient Cook Stoves in schools, El Salvador
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34. MDG Impact assessment and project selection
Project-intrinsic
MDG benefits
e.g. employment/income,
access to energy
air quality improvement
+ = MDG Score
Intrinsic and extrinsic MDG impacts are quantified
Quantification based on “no. of people impacted under each MDG”
PP not required to re-invest CERs into extrinsic benefits but may
do so to increase MDG Impact
Maximization of portfolio’s
development dividend
Project-extrinsic
MDG benefits
e.g. invest part of CER
income to:
schools or health clinics,
HIV education campaigns,
environmental restoration
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35. Some projects in the portfolio
a closer look
REDUCED NATURAL GAS
LEAKAGE (with MDGIS),
UZBEKISTAN
LUGANSK LANDFILL GAS
RECOVERY, UKRAINE
TREATMENT OF PALM OIL
MILL EFFLUENT
HONDURAS
BRITANNIA 25 MW WIND
FARM, MAURITIUS
WATER TREATMENT
PROJECT, RWANDA
• Greening/MDG Investment Scheme for CER
revenue to be invested in Aral Sea projects
delivering on MDGs
• Rehabilitation of landfill site
• Improved air quality, generation of energy from
renewable source, improved solid waste
management practices
• Project developers are a local co-operative of
farmers with no prior CDM experience
• Revenues support a school and medical centre
for the local community
• Host country’s first wind farm and first CDM
project
• Project catalyzing development of a Renewable
Energy feed-in-tariff
• Project delivering on multiple MDG benefits...
SD
&
MDG
BENEFITS
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36. Water Treatment Project, Rwanda will..
– save 100,000 t CO2e/yr,
– reduce deforestation pressure,
– deliver palpable health benefits to local
communities all over Rwanda
and the
benefits go
on…
including an
overdue
improvemen
t of women’s
wellbeing
100k/yr CERs and over
$10Million (over 10 yr)
300k liters/day of safe
drinking water to
15,000 people
Saving >> time (firewood
gathering – mostly by
women and children)
Savings of $$$ to schools
(and healthier kids)
Savings of $$$ & medical
staff time to clinics
Making progress
on MDGs
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37. The financial partnership has evolved
•Exclusive partnership with Fortis expired after 2 years
•Fortis has restructured and has change in ownership to
BNP Paribas
•No impact on ‘signed’ projects
•For new project sourcing, move to ‘ad-hoc model” -
identifying buyers on a case by case basis
•Advantages:
• increased flexibility and better able to customize our offer to
project proponent’s needs and service more different clients
• explore different market approaches (help design of MDGCF 2)
•Disadvantages:
• Greater uncertainty
• Potentially higher transaction costs for UNDP
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38. MDG Carbon – what it means for now?
• Less focus on adding new countries
• Primary focus on executing current portfolio
• Still want new projects but:
– Less ‘certainty’ (or more flexibility)
– Recognize there are limited number of projects that will
benefit largely from CERs in the Kyoto period (to 2012), post-
2012 more important
– Outcomes of Copenhagen will be significant on projects
being developed now
– Need to manage the ‘carbon layer’ of the project optimally
with the underlying project timelines
– ie – what is in the best interest of the project?
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39. MDG Carbon future?
• Is climate change going to be an ongoing priority for
UNDP?
• Are carbon finance/offsets/CDM/market mechanisms
going to continue to be a major part of global
response?
(those are rhetorical questions!)
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38
40. MDG Carbon future!
• Market mechanisms will continue, but their priority,
type, rules, and value (price) may well change
substantially post-2012
• Develop MDGCF-2 (MDGCF – the UNDP strikes back?)
• Aim to start MDGCF-2 mid-2010
• What will it look like?
3939
41. MDG Carbon future!
Without pre-empting lessons learnt… likely:
– Aim to be more focused on UNDP’s strengths –
more structured approach to addressing the ‘MDG’
part of MDGCF
– Aim to get a higher price for ‘MDG CERs’
– Aim to be ‘in front’ rather than ‘late starter’
– Fully develop voluntary carbon arm of MDG Carbon
– Aim to incorporate relevant links to sectoral,
NAMAs, LCDP etc
4040