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Ten Years CDM Experience In Latin America

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A brief presentation of the experience after 10 years of work in CDM in Latin America

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Ten Years CDM Experience In Latin America

  1. 1. Ten years CDM experience in Latin America & the Caribbean Achievements, lessons & challenges
  2. 2. Agenda <ul><li>DNV’s Experience and take on CDM </li></ul><ul><ul><li>CDM up until now </li></ul></ul><ul><li>Some systemic challenges: Addressing time and cost </li></ul><ul><ul><li>Redundancy </li></ul></ul><ul><ul><li>Transparency and predictability </li></ul></ul><ul><ul><li>Standardization </li></ul></ul><ul><ul><li>Liabilities </li></ul></ul><ul><li>Predictability in additionality assessments </li></ul><ul><ul><li>Sectoral or performance benchmarks </li></ul></ul><ul><ul><li>An example </li></ul></ul><ul><ul><li>Materiality </li></ul></ul>
  3. 3. DNV’s Experience and take on CDM <ul><li>Based on more than ten years experience </li></ul><ul><ul><li>First DOE accredited; first CDM and PoA registrations, first CPA inclusions </li></ul></ul><ul><li>CDM up until now </li></ul><ul><li>DNV remains of the opinion that the CDM has been successful in attracting private capital to finance GHG mitigation projects in developing countries </li></ul><ul><ul><li>UNEP-RISOE estimates ~ 1 billion CERs will be issued by end of 2012 [1] . Significant contribution, but more could and should be achieved. </li></ul></ul><ul><li>The EU’s commitment to the mechanism is key </li></ul><ul><li>There are weaknesses , under the current system, which if not adequately addressed might threaten the viability of the entire system . </li></ul>[1] PointCarbon - “UN agency slashes CER forecast to 976m”. 6-Oct-10. Number of registered projects DNV ~2,500
  4. 4. Some systemic challenges: Addressing time and cost <ul><li>Redundant processes result in projects being assessed several times before being accepted </li></ul><ul><ul><li>The EB should focus on developing and supervising the systems and carry out vertical audits as part of its supervision, i.e. surveillance of a few selected projects only. </li></ul></ul><ul><li>Not all decisions are sufficiently transparent and continuous attempts to “improve” the CDM have resulted in unpredictability and inconsistent decisions over time. </li></ul><ul><ul><li>Legislating every 6-8 weeks by part-time EB generates unpredictability and instability which hinder user’s ability to become proficient/expert in subject matter </li></ul></ul><ul><ul><li>Retro-active ruling : worse enemy of predictability </li></ul></ul><ul><li>Need for further standardization </li></ul><ul><ul><li>Financial Analysis templates, DNA/UNFCCC approved emission factor (EF) rates, CER prices, etc. </li></ul></ul><ul><li>Effects of liability offloading to DOEs should be well understood </li></ul><ul><ul><li>Draft discussion on making DOEs liable for wrongly issued CERs </li></ul></ul><ul><ul><ul><li>Lack of understanding of DOE role and position </li></ul></ul></ul><ul><ul><li>Under systemic unpredictability, liability provisions on PoAs are still very hard to manage and hinder PoA development </li></ul></ul><ul><ul><li>Links with concept of Materiality </li></ul></ul>
  5. 5. Predictability in additionality assessments <ul><li>Sectoral or benchmark baselines for selected industry sectors </li></ul><ul><ul><li>A more pragmatic set up for dealing with additionality needed </li></ul></ul><ul><li>Renewable Energy as an Example </li></ul><ul><li>Certain types of renewable energy project generally cannot compete with coal fired power generation in the developing world. Hence, these projects are typically found to be not financially attractive and thus additional . </li></ul><ul><li>Creating a sectoral baseline would by definition make these types of projects additional. </li></ul><ul><li>Emission reductions can be discounted for the addition of renewable energy generation that is likely to occur also in the absence of the CDM (sectoral baseline). </li></ul><ul><li>Materiality </li></ul><ul><li>The principle of materiality should be introduced both in terms of determining emission reductions as well as in verifying the stated reductions </li></ul>
  6. 6. Safeguarding life, property and the environment www.dnv.com Your best choice for responsiveness, regional expertise, technical quality and flexibility. [email_address]

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