Grant A. KirkmanTeam Leader - Methodologies

Sustainable Development Mechanisms

UNFCCC secretariathttp://unfccc.int

Current status of Post-2012 discussions and the status of the Clean Development Mechanism

Roundtable on Corporate Strategies in Response to Climate Change

World Environment Center

Augsburg, 24–25 October, 2007

Responding to the science | Political imperative

• The scientific advice is unequivocal, providing a strong foundation for policy

• The world is looking to the UN Climate Change Conference in Bali to deliver a political response to the science

• Bali can launch an intensive global effort to design and agree on a post-2012 agreement, which prevents the worst projections of the IPCC from becoming a reality

The international dimension | A global undertaking

• Central role of the UNFCCC

• Full mobilisation of the international system required

• International public-private partnerships

• National action central but national governments acting alone will not manage

• Coping with impacts, vulnerability and adaptation calls for global solidarity

Current situation | Building momentum for action

• Unparalleled attention at the highest level• Problem accepted => search for solutions• The economics and the consequence of investment

decisions better understood• Business ready to act, seeking clarity on policy

directions• Dynamic national climate change policy

developments• International climate change policy at a turning

point• Continued lack of trust among governments

Analysing strategic approaches | Informal

• Governments have concluded a two-year informal dialogue process on long-term cooperative action to address climate change

• Report of co-facilitators of this process feeds into the Bali Conference

• This has build trust among governments and provided channels for inputs

The two-track approach | Launched in Montreal 2005

Convention Dialogue:

Analysis of strategic approaches

Kyoto Ad-hoc Working Group

Development goals

Adaptation

Technology

Potential of markets

Positive incentives for voluntary action by developing countries

Appropriate national and international response

Financing

Mitigation potential and range of mitigation objectives

Means to achieve objectives

Consideration of further commitments

Form

al n

eg

oti

ati

on

s

Info

rmal p

rocess

Findings of the Dialogue | Increased understanding

• Shared goals and principles

• Building blocks

– Mitigation

– Adaptation

– Technology

– Investment and finance

• Options for further work

Global action guided by shared goals and principles

Sustainable development objectives and national circumstances

Investment and Finance

MitigationAdaptation

Technology

Findings of the Dialogue | Layers

Building blocks of an effective response | Mitigation

• Mitigation

– Nature and content of commitments (including types and levels of emission limits)

– Frameworks for voluntary national mitigation action programmes and incentives for developing countries

– Deforestation and land use

– Sectoral approaches

Building blocks of an effective response | Adaptation

• Adaptation

– Impact, vulnerability and adaptation assessments

– National planning and decision-making

– Access to and availability of finance

Building blocks of an effective response | Technology

• Technology for adaptation and mitigation

– Deployment and diffusion of existing technologies

– Research, development and demonstration of new technologies

Building blocks of an effective response | Finance

• Finance and investment

– Shifting private investment

– Market-based mechanisms

– Public finance

Breakthrough in Bali | What would constitute a success?

• Common understanding of the required building blocks (not agreement on the specifics)

• Decision to negotiate a comprehensive post-2012 agreement

• Establishment of a negotiating process with clear tasks

• Agreement on a timeframe (2009-2010)

Building the regime | Intensive design process

• Nature and content of commitments• International and national adaptation

response• Market-based mechanisms• Frameworks for voluntary national

mitigation action programmes• Sectoral efforts• Major technology initiatives• Deforestation and land use

Industrialized countries (Annex I)

Developing countries (Non-Annex I)

CDM project activity

To assist in achieving sustainable development

To assist in meeting their emission limitation commitments

Project participantsInvestors

(private business, governments, NGOs)

(private business, governments, NGOs)

What is the CDM?| Design

CDM | Characteristics

• Market mechanism offering developing country (non-Annex I) opportunities to participate in the carbon market

• Participation is voluntary and both public and private entities can participate

• Lowest marginal cost of abatement

• Ensures sustainable development (as defined by the host country)

• Projects or programs must result in real, measurable and long-term greenhouse gas (GHG) emission reductions

• Additional to any E.R’s that would occur in the absence of the project

• An international supervisory and standards setting body (CDM EB)

• Is open to regulatory and stakeholder scrutiny, at all times

• Employs bottom-up, re-use and broad application principles for standards

• Offers o low cost option (SSC)

• Offer a large scale option (A/R and non-A/R)

• Offers a multi-project option (PoA and bundling)

• A global currency (CERs) with a strong SD and ToT spin-offs

CDM | Regulatory and support system

COP/MOP

EB

UNFCCC

secretariat

SSCWGA/RWG

MP APRITDOE

superviseselects

accredits supports

recommends

supportsapproves

0

114 100 39

471530

183

750940

685

1,600

1,900

819

2,6002,500

0

500

1000

1500

2000

2500

3000

May 2005 (SB22) December 2005(COP/MOP1)

May-06 May-07 Oct-07

Registered project activities Projects in the pipeline Projected CERs

Status of the CDM | Measuring success

Status: October 2007

CDM | Key project data

Projects to date Total number

CERs expected*

Project activities in pipeline > 2,600* > 2,500 million by 2012

Project activities requesting registration

47 110 million by 2012

Project activities with review requested

38 20 Million by 2012

Project activities registered 822 > 1,060 million by 2012

CERs issued to date 171,161,604

Status: October 2007* assuming all project activities simultaneously deliver their expected annual average emission reductions and there are no renewals of crediting periods

CDM | Key date on methodology standards

CDM Methdological Standards Total numbers

Total approved large-scale methodologies 57

non-A/R methodologies 45

non-A/R consolidated methodologies 12

Total methodological tools (non-A/R & A/R) 6 + 7

used in large scale non-A/R methodologies 50

used in large scale A/R methodologies 3

used in small scale non-A/R methodologies 8

Total approved A/R methodologies (LS & SSC-A/R)

10 + 1

Total approved SSC methodologies 28

Status: October 2007

PP

s/D

OE

sS

ecre

tari

atD

NA

CD

M E

B

Complete? Fee paid?

Conduct validation, submit

F-CDM-REG

Publish request for registration,

assign RIT

Examine submissions

Review necessary?

Examine Submissions/RIT appraisal

Project Activity REGISTERED

Submit initial comments

Consider review case

at next EB meeting

If no review is requested, project activity is registered 4 or 8 weeks

after request for registration

Request for review published

YES

Registration procedure

Decision 3/CMP.1, paras. 35-42R

efer

ence

NO

A review will be considered if one request for review is submitted by a DNA involved, or three requests for

review are submitted by EB Members

Secretariat’s completeness check includes check of documentation versioning, cross-

checking, use of disclosure formulation, use of English, and appropriateness of Parties’

approval

See Review Procedures

Terms of reference, EB-RIT

EB 29 report, Annex 14

Registration/ SOP fee

Decision 7/CMP.1, para. 37

Registration-related guidance and procedures:

•http://cdm.unfccc.int/Reference/Procedures•http://cdm.unfccc.int/Reference/Guidclarif

CDM | Registration procedure

PP via the DOE

Executive Board

Approved AM00XX

Completenesscheck

Enhancedpre-assessment

1

2

2 x Desk reviews

One MPmember

1st possible written dialogue with PPs

Secretariat

2 deskreviewers

Not accepted

Lead +3 members

MP or A/R WGmeeting

2nd possible written dialogue with PPs

Prelim

3rd possible written dialogue with PPs

Draft Recomm

&Reformat

Secretariat

Refor-mattedmeth.

CA

ReformattedMeth

& final recomm.

ReformattedMeth

&recomm.

Redrafted Meth &

Finalrecomm.

PP via the DOE

A

MP/WG to reviserecommendation

C

Only 1 feedback loop possible

Not approved

possible in-meeting real-time written dialogue with PPs

Only final rec. is submitted to the EB

CDM | Methodology procedure

CDM Bazaar:http://www.cdmbazaar.net

Catalogue of EB Decisions (beta):http://test.cdmis.net/catalogue-testDr. Grant A. KirkmanTeam Leader - methodologiesSustainable Development Mechanisms - programmeUnited Nations Framework Convention on Climate Change - secretariatMartin-Luther-King-Str, 8 D-53175 Bonn, GermanyTel. +49 0228 815 1363Fax. +49 0228 815 1999Mobile: +49 173 216 6342gkirkman@unfccc.int http://www.unfccc.int

CDM | Useful links

All projects Identification of alter-natives to the project

Early start projects

only

Barrier analysis

Serious consideration of CDM

Investment analysis

Common practice analysis

Impact of CDM registration

• Investment barrier - availability of a financially more viable alternative that would have led to higher emissions

• Technological barrier - existence of a less technologically advanced alternative that involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions

• Common practice barrier - prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions

CDM | Concept Additionality

Project participants have to demonstrate to a validator that the project activity would otherwise not be implemented due to the existence of one or more barriers