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

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1. Global markets are in turmoil

2. But positive signs are emerging

3. The future world is taking shape

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1. Global markets are in turmoil

2. But positive signs are emerging

3. The future world is taking shape

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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)

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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

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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

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1. Global markets are in turmoil

2. But positive signs are emerging

3. The future world is taking shape

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Climate change will require a policy response

Above: Economist.

Below: Canadian Press/Jonathan Hayward/Files, Postmedia

. David McNew/Getty Images

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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

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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

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… 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

Carbon pricing as a policy tool of choice

http://cdn.howtogeek.com/wp-content/uploads/2011/07/worldmapswallpapercollection11.jpg

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Moving toward broader coverage

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1. Global markets are in turmoil

2. But positive signs are emerging

3. The future world is taking shape

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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

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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

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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

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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

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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

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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

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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

J I

Submissions (25 March) COP FVA/

NMM

CMP SBI SBI

SBI SBI

SBSTA SBSTA

?

?

?

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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

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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

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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

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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

Thank you!

Robin Rix

<rrix@unfccc.int>

http://www.unfccc.int

@UN_CarbonMechs /UNCarbonMechs

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