1. The document discusses the future of global carbon markets and mechanisms in the post-2020 climate policy landscape. 2. It notes that while global markets are currently unstable, signs indicate the future policy response will involve three pillars: international agreements, domestic actions, and private sector engagement. 3. Parties support using market and non-market mechanisms to meet mitigation targets, and negotiations are underway to develop rules for a Framework and new market-based mechanism, as well as revise the CDM and JI, to ensure environmental integrity.

1. UNFCCC secretariat, Sustainable Development Mechanisms programme
Robin Rix, Lead, Strategy Development
Post-2020 Policy Landscape
for Global Carbon Markets
Carbon Expo
Barcelona, 30 May 2013

2. 2
1. Global markets are in turmoil
2. But positive signs are emerging
3. The future world is taking shape

3. 3
1. Global markets are in turmoil
2. But positive signs are emerging
3. The future world is taking shape

4. 4
KP2 is limited (~15% of global emissions)
Ukraine
-24
Monaco
-22
EU, Croatia,
Iceland
-20
Liechtenstein,
Norway
-16
Switzerland
-15.8
Belarus
-12
Kazakhstan
-5
Australia
-0.5
% below base year or period (usually 1990)

5. 5
Convention pledges are uncertain
42 developed countries
• Including US, Russia, Japan, Canada
• Not always unconditional
• Process underway to clarify targets, including use of market
mechanisms
55 developing countries (plus African Group)
• Including Brazil, China, India, South Africa
• Diverse in nature, ranging from project-based to economy-wide
proposals
• Process underway to understand this diversity

6. 6
Surprising growth of joint implementation
0.12 / 0
4.7 / 1.3
28.0 / 2.9
2011
2012
ERU issuances by year (mn)
Track 1 / Track 2
517.1 / 9.1
86.7 / 6.8
2010
> 800 mn as at May 2013

7. 7
1. Global markets are in turmoil
2. But positive signs are emerging
3. The future world is taking shape

8. 8
Climate change will require a policy response
Above: Economist.
Below: Canadian Press/Jonathan Hayward/Files, Postmedia
. David McNew/Getty Images

9. 9
Contours of the policy response are emerging
Need to speed up – and scale up – action
This action has three key pillars:
(a) International
(b) Domestic
(c) Private sector
Overall need for collaboration, collective action,
and innovation

10. 10
Markets have shown their success in mitigation
Almost 7000 registered CDM projects in over 80 countries
Almost 150 registered CDM programmes of activities
Over 1.3 billion credits issued to date

11. 11
… and in providing finance and capacity
$362 billion
Total climate finance mobilized by the CDM
• Tool to promote sustainable development
• Tool to enhance knowledge and capacity

12. Carbon pricing as a policy tool of choice
http://cdn.howtogeek.com/wp-content/uploads/2011/07/worldmapswallpapercollection11.jpg

13. 13
Moving toward broader coverage

14. 14
1. Global markets are in turmoil
2. But positive signs are emerging
3. The future world is taking shape

15. 15
Parties support a role for markets
• Acknowledgement that Parties may develop and
implement mechanisms (independently or jointly)
• Acknowledgement that such mechanisms may include
market-based mechanisms
• Affirmation that such mechanisms can facilitate an
increase in global mitigation ambition, particularly by
developed countries

16. 16
Parties are now negotiating the rules
• All Parties agree that mechanisms must meet
environmental integrity standards:
• Real, permanent, additional, and verified mitigation outcomes
• Avoid double counting of effort
• Net decrease and/or avoidance of emissions
• Question is how mechanisms used to meet UNFCCC
mitigation targets will be determined to meet these
standards

17. 17
FVA
• A “framework for various approaches”
• Why it is needed
• What mechanisms it will cover
• How it will ensure environmental integrity
• How it will record and track mitigation efforts
• Who will administer it
• To be elaborated in 2013
• Submission deadline of 25 March 2013
• SBSTA agenda in June and November 2013
• COP19 decision in November 2013

18. 18
NMM
• The new market-based mechanism
• Key characteristics
• Net decrease in emissions
• Coverage of broad segments
(from projects to sectors)
• Crediting and/or trading
• Ambitious reference levels
• Sustainable development
• Participation by private-sector entities
• Prompt start
• To be elaborated in 2013, parallel process to framework

19. 19
CDM review
Launch of revision to CDM modalities and procedures
• Under SBI, to be concluded by Warsaw
• Inputs via submissions, Executive Board recommendations, and
secretariat-organized workshop
• Input from UNFCCC secretariat on the basis of its experience:
• Governance improvements (voting, conflict of interest, term limits)
• Better monitoring/assessment of sustainable development benefits
• Streamlining of programmatic CDM, top-down methodology
development
• Delegation, avoid enshrining detail in hard-to-change documents

20. 20
JI review
Relaunch of revision to JI guidelines
• Under SBI, to be concluded by Warsaw
• Inputs via submissions and secretariat compilation
• “Key attributes” to include:
• Single track
• Unified/aligned accreditation procedures
• Appeals process
• Mandatory host Party requirements
• To consider additionality and issuance innovations

21. 21
A busy year ahead for mechanisms
Q1 Q2 Q3 Q4
11-22 Nov (Warsaw)
COP19/CMP9
ADP, SBI/SBSTA39
3-14 Jun (Bonn)
ADP
SBI/SBSTA38
29 Apr-3 May
(Bonn)
ADP
CDM EB recommendations
Submissions (25 March)
Submissions (18 February)
CMP
Secretariat compilation report
CDM
JI
Submissions (25 March) COP
FVA/
NMM
CMPSBISBI
SBISBI
SBSTA SBSTA
?
?
?

22. 22
Can Parties make progress?
Design/reform of tools
(FVA, NMM, CDM, JI)
Primarily technical
SBI/SBSTA
Use/role of such tools,
particularly non-UN mechanisms
Primarily political
ADP

23. 23
Emerging toolkit of mechanisms
• All countries mitigate by using appropriate mechanisms
• Can involve markets, but not necessarily
• Can be implemented independently or jointly
• Can be UN-administered, but not necessarily
• Each country can choose what to do with the quantum
of mitigation that is achieved by each mechanism
• Keep it, count towards its domestic mitigation target
• Transfer it internationally

24. 24
From here to there
• Avoid paralysis of requiring full certainty on future
use/role before elaborating the design
• Use pre-2020 reporting as an opportunity
• Common tabular format (decision 19/CP.18)
• Means to prove/report/demonstrate quality and quantity control
• Explore models for evaluating non-UN mechanisms
• By country (e.g. eligibility criteria)
• By mechanism
• By each transfer of units

25. 25
Looking to the future
• There is more common ground than often feared:
• Universal support for ensuring that all mechanisms meet robust
environmental integrity standards
• Interest in brainstorming models for considering whether and how
different mechanisms meet these standards
• Importance of helping countries to develop and use mechanisms
(market-based and non-market-based)
• Need to build trust, comfort, confidence:
• Markets are a leap of faith for some Parties – and private sector
• Need for prompt action in light of declining capacity
• Get tools ready for the time when the world will be ready to use them

26. Thank you!
Robin Rix
<rrix@unfccc.int>
http://www.unfccc.int
@UN_CarbonMechs /UNCarbonMechs
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