GHG Programs in the Compliance and Voluntary Markets

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Intervención de Jerry Saeger, Program Manager at the Voluntary Carbon Standard Association, Washington D.C. en el marco de las jornadas de Mercado de Carbono.
16_02_2011
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http://www.eoi.es/portal/guest/evento/1392/i-jornada-mercados-de-carbono-y-reduccion-de-emisiones--carbon-markets-and-emission-reduction

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GHG Programs in the Compliance and Voluntary Markets

  1. 1. GHG Programs:<br />Compliance, Voluntary, What Next?<br />16 de febrero 2011<br />Escuela de Organización Industrial<br />Madrid, España<br />Jerry Seager<br />VCS Association<br />
  2. 2. Agenda<br /><ul><li>The Clean Development Mechanism
  3. 3. Overview
  4. 4. Achievements
  5. 5. Shortcomings
  6. 6. Cancún
  7. 7. The Verified Carbon Standard
  8. 8. Structure
  9. 9. Recent developments
  10. 10. Next Generation Crediting Models
  11. 11. Standardised approaches to baselines and additionality
  12. 12. Jurisdictional and Nested REDD</li></li></ul><li>Carbon markets - why bother?<br />
  13. 13. Registered CDM Projects by Country<br />Projects: 2798<br />
  14. 14. Certified Emission Reductions by Country<br />CERs: 548m<br />
  15. 15. Project Types<br />
  16. 16. Methodology Types<br />Methodologies (92)<br />(largescale)<br />
  17. 17. CDM - achievements<br /><ul><li>Significant emission reductions achieved
  18. 18. 2798 projects, 548m tCO2e
  19. 19. Investment in developing countries
  20. 20. India – wind power, biomass
  21. 21. Brazil – biogas, biomass
  22. 22. Mexico – landfill gas, biogas
  23. 23. Capacity building, development of expertise
  24. 24. Project development
  25. 25. Validation, verification, accreditation
  26. 26. Registries, exchanges
  27. 27. Carbon price established, confidence in carbon trading</li></li></ul><li>Conservative and Discouraging Mechanism?<br /><ul><li>Volume and ability to scale
  28. 28. Speed of project registration and CER issuance
  29. 29. Evaluation on a project-by-project basis (additionality)
  30. 30. Scope (project types)
  31. 31. Transparency (project developer access, Executive Board decision making, appeals process)</li></li></ul><li>CDM reform - Cancún<br /><ul><li>Executive board – improved communications with stakeholders, appeals process
  32. 32. Crediting of projects – can begin from date project submitted for registration, rather actual date of registration
  33. 33. Standardization in methodologies – default factors, standardized approaches to baselines and additionality
  34. 34. Carbon capture and storage – green light if permanence and safety issues can be addressed</li></li></ul><li>Fragmentation of Carbon Markets<br />
  35. 35. Agenda<br /><ul><li>The Clean Development Mechanism
  36. 36. Overview
  37. 37. Achievements
  38. 38. Shortcomings
  39. 39. Cancún
  40. 40. The Verified Carbon Standard
  41. 41. Structure
  42. 42. Recent developments
  43. 43. Next Generation Crediting Models
  44. 44. Standardised approaches to baselines and additionality
  45. 45. Jurisdictional and Nested REDD</li></li></ul><li>The Verified Carbon Standard (VCS)<br /><ul><li>Established by leading NGOs (IETA, WBCSD, The Climate Group, WEF) to:
  46. 46. Provide a global benchmark and framework for the voluntary carbon market
  47. 47. Foster innovation within a context of quality, credibility and transparency
  48. 48. Demonstrate workable frameworks that can be incorporated into compliance regimes worldwide</li></li></ul><li>The VCS Association<br /><ul><li>Non-profit organization
  49. 49. Headquartered in Washington, DC
  50. 50. Single focus – to manage and develop the platform:
  51. 51. No consulting
  52. 52. No project development
  53. 53. No methodology development
  54. 54. No validation/verification
  55. 55. No proprietary positions in the VCU market
  56. 56. Funded primarily by VCU levy ($0.10 per VCU)
  57. 57. Foundation grants help supplement special initiatives </li></li></ul><li>Development of the VCS Program<br /><ul><li>VCS Version 1 released in March 2006
  58. 58. Further consultation version released in October 2006
  59. 59. Released for broad public stakeholder input
  60. 60. Over 60 sets of comments submitted
  61. 61. Steering committee appointed to draft VCS 2007
  62. 62. VCS 2007 released November 2007
  63. 63. VCS 2007.1 released November 2008 fully integrated AFOLU requirements into the VCS Program
  64. 64. VCS Version 3 will be released March 2011
  65. 65. 60-day public comment period concluded (10 October 2010)
  66. 66. 38 submissions, with a total of 480 comments
  67. 67. Focus on further improving the clarity of the program rules
  68. 68. Further specification on certain areas (eg, appeals, grouped projects)</li></li></ul><li>VCS Program<br />
  69. 69. VCS registry system<br />New VCS registry?<br /><ul><li>3 registries that meet key criteria:
  70. 70. Financial standing
  71. 71. Insurance requirements
  72. 72. Insolvency protection
  73. 73. Registries agree to:
  74. 74. Conflict of interest requirements
  75. 75. Replacement of VCUs issued in error
  76. 76. Registry system is expandable
  77. 77. VCUs can be certified against other standards (e.g., CCBS, Social Carbon) </li></li></ul><li>Registration and issuance process<br />
  78. 78. Verified Carbon Units (VCUs)<br />
  79. 79. Recent developments<br /><ul><li>52 million VCUs issued to date, from 557 projects
  80. 80. First REDD credits issued last week
  81. 81. New project types
  82. 82. Peat rewetting and conservation (PRC) out in March
  83. 83. Avoided conversion of ecosystems (ACE) out in 2011
  84. 84. Wetlands under study
  85. 85. Carbon capture and storage under study</li></li></ul><li>Recent developments - methodologies<br />
  86. 86. Agenda<br /><ul><li>The Clean Development Mechanism
  87. 87. Overview
  88. 88. Achievements
  89. 89. Shortcomings
  90. 90. Cancún
  91. 91. The Verified Carbon Standard
  92. 92. Structure
  93. 93. Recent developments
  94. 94. Next Generation Crediting Models
  95. 95. Standardised approaches to baselines and additionality
  96. 96. Jurisdictional and Nested REDD</li></li></ul><li>Technology tests<br /><ul><li>Technology test (positive list) – for demonstrating additionality
  97. 97. CDM tool - “Guidelines for demonstrating additionality of renewable energy projects <= 5MW and energy efficiency projects with energy savings <= 20 GWh per year”:
  98. 98. LDC or SIDS;
  99. 99. Off-grid;
  100. 100. < 750 kW capacity; or
  101. 101. Host country or CDM EB approved</li></li></ul><li>Performance benchmarks<br /><ul><li>Performance benchmark – for demonstrating additionality and quantifying emission reductions</li></ul>Source: Strengthening the CDM - A Cement Industry Perspective, WBCSD <br />
  102. 102. Why are standardized approaches useful?<br /><ul><li>Increase efficiency and reduce transaction costs
  103. 103. Create certainty for investors by removing the subjectivity of current project specific additionality tests
  104. 104. Allow crediting of a range of measures within a single methodology
  105. 105. Provide a stepping stone to crediting mechanisms using national/sectoral baselines and Nationally Appropriate Mitigation Actions (NAMAs)</li></li></ul><li>What are the challenges?<br /><ul><li>What are the data requirements?
  106. 106. What is the appropriate level for the benchmark?
  107. 107. Should the benchmark be different for new vs. existing facilities?
  108. 108. Is the benchmark adjusted during the project crediting period?</li></li></ul><li>VCS steering committee<br /><ul><li>The VCS is developing guidelines and rules on performance benchmarks and technology tests
  109. 109. A steering committee has been established via an open call for members and was convened in October
  110. 110. Four working groups are tackling the issues
  111. 111. lessons from existing work
  112. 112. overarching principles
  113. 113. technology tests
  114. 114. the broader context
  115. 115. Output will be subject to peer review and public stakeholder consultation; first deliverables in second half of 2011</li></li></ul><li>Jurisdictional REDD - regional baselines<br />Region<br />Regional baseline used by project<br />VCS:<br /><ul><li>Approval process for regional baseline
  116. 116. Crediting to project activities</li></ul>Credits<br />Projects<br />
  117. 117. Regional baselines – process<br /><ul><li>Approval, registration and use of regional baselines for VCS project activities
  118. 118. VCS would set out requirements, informed by project developers, states, provinces, technical experts
  119. 119. Multi-stakeholder process to develop regional baseline
  120. 120. Project-based accounting and crediting</li></li></ul><li>Jurisdictional accounting and crediting<br />Jurisdiction (state, province):<br /><ul><li>Develops program
  121. 121. Sub-national accounting and MRV</li></ul>Sub-national accounting, MRV<br />Region<br />VCS:<br /><ul><li>Approval process for program
  122. 122. Crediting to jurisdiction and project activities</li></ul>Projects<br />Credits<br />
  123. 123. Jurisdictional accounting and crediting<br /><ul><li>VCS to set high level requirements (options), and jurisdictional programs would need to address:
  124. 124. Accounting mechanism for emission reductions across the jurisdiction
  125. 125. Monitoring, reporting and verification (MRV) for issuing credits at the jurisdictional level
  126. 126. Risk management to address potential underperformance and non-permanence risk
  127. 127. Accounting for leakage from project and non-project activities
  128. 128. Ensuring additionality</li></li></ul><li>Thank you... Questions?<br />Jerry Seager<br />Director of Strategic Initiatives<br />Tel: +1 202 296 2407<br />jseager@v-c-s.org<br />VCS Association<br />1730 Rhode Island Avenue, NW<br />Suite 803<br />Washington, DC 20036<br />www.v-c-s.org<br />

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