Tomorrow s Opportunities for CDM

Transcription

1 Tomorrow s Opportunities for CDM Fourth workshop on enhancing the regional distribution of CDM projects in Asia and the Pacific 4-5 Sep. 2013, Manila 4-5 September 2013, Manila Gareth Phillips, Chairman

2 Tomorrow s opportunities.. Under the assumption that Governments do agree to do more to reduce GHG emissions Overview What is the CDM / what is it designed to do? Who is the CDM? Opportunities come through change what are the drivers of change? Where are the opportunities for the CDM as: a mechanism; and what it is?

3 1) What is the CDM? A flexibility mechanism defined under the KP with dual objectives to help annex 1 Parties. Think of the CDM as a: Collection of open source procedures and tools A means of transparently reporting verified results A great way of undertaking national and international stakeholder consultation A cost effective means of delivering sustainable development benefits A repository of technical expertise in MRV of GHG emissions from a wide range of sources A way of financing new technology.

4 2) Who is the CDM? Parties to the UNFCCC and their DNAs CDM EB Secretariat DOEs Project developers Investors Buyers Consultants / experts / advisors Civil society and global stakeholders.

5 3) What are the drivers of change and what threats / opportunities do they present? Regular EB meetings Annual guidance from the COP 1 st review of the CDM modalities and procedures Demand arising from KP II commitments, domestic ETS and overall level of ambition NAMAs FVA, New and Non market mechanisms The Durban Platform with some form of legally binding targets for all post 2020

6 Regular EB meetings Deliver ripples to the daily operation of the CDM Occasional waves e.g. current discussions on the application of E- rules Tends to result in more of the same complexity and detail May create specific and small opportunities for project developers, service providers

7 Annual guidance from the CoP Annual, slow, seldom earth shaking but, for example, created PoA Standards and Standardized baselines Voluntary reporting of SD benefits Has resulted in more substantial opportunities over the medium term particularly for project developers, service providers, DOEs etc but currently most significant issues diverted to review Rarely impacts upon the CDM as a mechanism

8 1 st Review of the CDM Modalities and Procedures Much more far reaching and of great significance for the CDM as a mechanism and hence impacts all stakeholders Potential to change the face of the CDM PD Forum has been lobbying hard to convert the CDM into a mitigation instrument Other issues pushed to the review include significant deficiencies, appeals, independence of the EB, crediting periods opportunity to complete the design of the CDM and turn it into a mature instrument For negotiation in Warsaw, time permitting (SBI)

9 Demand Currently lacking. Prospects for new demand? KP II targets currently do not create any significant additional demand but opportunity to revisit targets in 2014 ETS EU unlikely; China could make a big difference; Korea, Kazakhstan, Chile, Mexico. CDM could act to link new ETS Development of national standards for emission reductions could undermine demand and hamper linkage (but could create more diversity in standards and arbitrage opportunities) Sovereign buyers limited interest Multinational fund / capacity fund.. Increased demand for CERs would breath life back into the CDM as a mechanism (but buyers won t choose the CDM if the quality is not what they seek)

10 NAMAs Flexible and undefined = unrestrained opportunities? Registry and some funding initiatives in place Domestic, supported and crediting NAMAs broadly recognized Supported and Crediting NAMAs could include policy driven CDM style initiatives Buyers / donors may be more receptive to CERs or verified results delivered via a NAMA Should create opportunities for project developers, service providers, financiers, DOEs etc.

11 FVA, New and Non-market mechanisms All currently under negotiation Potential to create significant change Introduce competition could erode demand for CERs The New market mechanism will need to address additionality, MRV etc Non-market mechanisms may be more suited to certain sectors e.g. transport, agriculture Creating demand for CDM expertise.. Could also trigger changes in CDM as a mechanism (if not delivered via review) But overall, should result in an expansion of emission management initiatives in economies across the world

12 Durban Platform.another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties Should result in growth in compliance driven emission management activities with associated MRV Should expand emission management to all sectors of the global economy Should trigger increasing amounts of preparatory work, capacity building, trial schemes, advisory services and debate. Creating opportunities for stakeholders across the board But remains subject to political progress up to 2015

13 Opportunities for CDM as a mechanism Fossil Fuel emissions from stationary sources (X%) Market base mechanisms covering all stationary sources of Combustion and process CO2 emissions, via international Caps or New Market Based Mechanism Projects in LDCs, Disorganized sectors e.g. Household emissions, EE Implemented via CDM/JI Non-CO 2 emissions (Z%) Agriculture, Land use, transport and others (Y%) Non CO2 via Laws and International treaties Non-market based mechanisms Covering CO2 emissions From mobile sources, Forestry and land use, small sources, households etc Global emission of GHGs in Bn tonnes 95% captured under mechanisms Allowances, issued under ETS and sectoral level market based mechanisms Non-market based mechanisms taxes and grants, performance standards etc Compliance with international treaties / law Emission reductions via baseline and credit in project based mechanisms e.g. CDM and JI 13

14 Threat and opportunities for CDM stakeholders Stakeholders Drivers of Change Existing investors CDM EB Annual guidance Review of the CDM M&P Demand NAMAs? FVA new and non MM Durban Platform New investors PD Consultants Advisory services DOEs DNA Governments MLB and institutions

15 Conclusions Tomorrows opportunities for the CDM are related to what the CDM is, not what is was designed to do Emission management initiatives as we know them (i.e. CDM projects) are facing more threats than opportunities But the prospects for new initiatives, have seldom looked more exciting and never offered more opportunities

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