The Networked Carbon Markets Initiative. Work Plan June 2016

Transcription

1 The Networked Carbon Markets Initiative Work Plan June 2016

2 Agenda Summary of Work Plan 3 Background on the Networked Carbon Markets (NCM) initiative Summary of the NCM initiative s work plan to December 2016 Country focus 9 Data Analysis and Modelling 15 Concept Development 18 Annex 22 2

3 The WBG s long term efforts to promote climate actions, including carbon pricing mechanisms PROMOTING THE CASE AND EVIDENCE BASE FOR CARBON PRICING e.g., Carbon Pricing Leadership Coalition; State and Trends of Carbon Pricing reports PLANNING, DESIGN AND PILOTS Innovating and building readiness for climate action, including carbon pricing instruments Partnership for Market Readiness; Pilot Auction Facility IMPLEMENTATION AND SCALE-UP Enabling scale-up of climate actions such as carbon pricing mechanisms Carbon Partnership Facility; Pilot Auction Facility, Partnership for Market Readiness; TCAF CONNECTIVITY AND GLOBAL TRADE Enabling connectivity of all types of climate actions, including carbon pricing mechanisms, through internationally connected carbon markets Networked Carbon Markets Initiative 3 H O W D O E S T H E N C M I N I T I A T I V E F I T I N?

4 The NCM Initiative NEED ACTIVITIES END-GOAL The NCM Initiative responds to the need for reliable and well-synthesized information on the relative value of different climate mitigation efforts, given the increasing regulatory fragmentation and heterogeneity that is emerging across and within jurisdictions. Through the NCM, the World Bank Group is convening stakeholders to develop a framework for assessing climate mitigation efforts and infrastructure to support carbon market related functions. The NCM Initiative complements the World Bank Group's ongoing lowcarbon development activities and its efforts to promote carbon markets as critical to achieving climate mitigation at large scale in an effective and costefficient way. To date, the concept has been informed by technical and analytical work as well as the World Bank Group's extensive consultations with private and industry associations, developed and developing country governments, thinktanks and academia, NGOs and multilaterals. The end-goal is to facilitate linking or "networking" of heterogeneous carbon markets, so that the linked markets will have greater liquidity and deliver climate-smart financing more efficiently. 4 H O W D O E S T H E N C M I N I T I A T I V E F I T I N?

5 Linking climate mitigation efforts Different forms of linking climate actions FORM OF LINKING DEFINITION Compliance unit in one jurisdiction is accepted Full without restriction in the linked jurisdiction Compliance unit in one jurisdiction is accepted Limited with qualitative/quantitative restrictions in the linked jurisdiction Markets are not linked directly, but have access Indirect to the same third carbon market. Fungibility of carbon assets across schemes Networking facilitated by risk-based assessment and discounting. 5 H O W D O E S T H E N C M I N I T I A T I V E F I T I N?

6 The Networked Carbon Markets (NCM) Initiative s short, medium and long term vision The NCM initiative seeks to facilitate transparency and linkage in the short, medium and long term SHORT TERM MEDIUM TERM * Design of robust climate actions * Benchmarking * Climate finance LONG TERM Comparability and linkage of climate actions: * within a country * between countries on a bilateral basis Comparability and linkage of climate actions between countries on a regional or multilateral basis. W O R K P L A N F O R T H E N C M I N I T I A T I V E 6

7 Summary of the NCM Initiative's work plan to December 2016 Concept Development Data Analysis and Modelling Country Focus - Continue to collaborate with think tanks, NGOs, private sector and governments to develop the Independent Assessment Framework. - Work with INFRAS and Grantham Research Institute to develop blueprints for the International Carbon Asset Reserve (ICAR) and International Settlement Platform to support linked carbon markets. - Through the Climate Transparency initiative, progress a composite index to assess and track mitigation contributions. - Conduct data collection to inform Independent Assessment Framework. - Model trade flows to inform preparations for linking simulations in December Pilot the Mitigation Action Assessment Protocol (MAAP) to over 100 programs globally. - Conduct stakeholder consultations to receive feedback/input on the NCM initiative s key components. - Conduct scoping studies to explore opportunities for networking heterogeneous programs. W O R K P L A N F O R T H E N C M I N I T I A T I V E 7

8 Agenda Summary of Work Plan 3 Country focus 9 Piloting the NCM Initiative s tools in Peru Piloting the NCM Initiative s tools in Thailand Feasibility Study in India led by TERI Scoping Study in China led by Tsinghua University, CBEEX and the University of Edinburgh Scoping Study in Japan Scoping Study in Mexico Data Analysis and Modelling 15 Concept Development Annex

9 Piloting the NCM Initiative s tools in Peru NCM ACTIVITIES In December 2016, the MAAP was applied in Peru to compare and prioritize Nationally Appropriate Mitigation Actions (NAMAs) for its Partnership for Market Readiness (PMR) proposal. Mitigation actions chosen: NAMA Waste, NAMA Cement, and Mitigation Measure of photovoltaic distributed generation. The participatory nature of the assessment proved useful to identify areas of improvement. Next Step: Explore possibility of using the MAAP as one of the mainstays of a future Mitigation Action Registry in Peru. APPLICATION AS A NAMA SCREENING TOOL THE PROCESS OF SCREENING MITIGATION ACTIONS IN PERU Shortlisting of 80+ mitigation actions Customization of MAAP by protocol developers & national experts Ex ante assessment of 10 prioritized mitigation actions Selection of 3 mitigation actions for support under the Partnership for Market Readiness: NAMA Waste, NAMA Cement, and Mitigation Measure of PV distributed generation T H E M A A P P I L O T S 9

10 Piloting the NCM Initiative s tools in Thailand PHITSANULOK NCM ACTIVITIES In February 2016, the NCM Initiative conducted field visits to the municipalities of Phitsanulok and Pak Kret to apply the MAAP to evaluate and compare Low-Carbon Cities (LCC) programs. The MAAP, as well as the findings of the field visits, were presented at a multi-stakeholder workshop in Bangkok organized in collaboration with the Thai Greenhouse Gas Management Organization (TGO). Next step: TGO has expressed interest in scaling up the application of the MAAP to 100 low-carbon city activities in Thailand. PAK KRET LCC PROGRAMS IN THAILAND BANGKOK T H E M A A P P I L O T S 10

11 Scoping Study in China BACKGROUND OF CARBON MARKETS IN CHINA 7 Pilot ETSs ( /6) Varying levels of economic development in participating regions National ETS Phase 1 ( ) National ETS Phase 2 (post-2020) Local governments given significant flexibility in designing pilot ETSs Resulted in ETSs with fairly heterogeneous structures NCM ACTIVITIES The first phase will focus on refining the national carbon market framework A scoping study in China is being led by Tsinghua University, University of Edinburgh, and the China Beijing Environment Exchange (CBEEX). The objective is to explore opportunities for the NCM Initiative to support carbon market linkages in China and to assess the feasibility of conducting regional pilots. The findings will be partially informed by a series of stakeholder consultations. Next step: Present findings from the scoping study in a workshop with key policymakers in September PILOT CARBON MARKETS IN CHINA CHONGQING HUBEI China will start to explore international linkage opportunities SHENZHEN BEIJING GUANGDONG SHANGHAI TIANJIN S C O P I N G S T U D I E S 11

12 Feasibility Study in India with TERI BACKGROUND OF GREEN CERTIFICATE AND WHITE CERTIFICATE MARKETS IN INDIA SUMMARY OF GEEN CERTIFICATE IN INDIA Green certificate market Under India s Electricity Act 2003, the State Electricity Regulatory Commission (SERC) assigns targets to utility companies to purchase a certain percentage of their total power from renewable energy sources. Entities that are unable to cover the specified share of renewable energy are able to buy tradable green certificates (i.e. renewable energy certificates) to make up for the shortfall. NCM ACTIVITIES The NCM Initiative has contracted TERI to carry out a feasibility study in India to: Explore the feasibility of enhancing the comparability and fungibility of domestic green certificate and white certificate schemes through the key components of the NCM Initiative. Conduct stakeholder outreach with the aim of introducing and receiving feedback/input on the NCM initiative's key components Develop a roadmap for progressing any opportunities revealed by the feasibility study. White certificate market Perform Achieve Trade (PAT) system is a marketbased mechanism that aims to enhance the energy efficiency in energy intensive industries, known as Designated Consumers (DCs) DCs are subject to energy consumption targets DCs with energy savings above the target benchmark are given tradable white certificates (i.e. energy saving certificates) All entities who do not meet their targets will need to buy TWCs or pay a penalty fee Map of India F E A S I B I L I T Y S T U D I E S 12

13 Scoping Study in Japan NCM ACTIVITIES In April 2016, NCM and Institute for Global Environmental Strategies (IGES) jointly hosted a multi-stakeholder workshop in Tokyo. Participants explored the role of assessments and transparency in supporting different carbon market linkages. A scoping study is being conducted by IGES. The objective is to explore opportunities for the NCM initiative to support carbon market linkages in Japan. IGES will prepare a working paper, which will describe linkage opportunities within and outside of Japan and the Asia/Pacific region. It will also provide recommendations for subsequent engagement by the NCM initiative. Next step: Workshop with key policy makers and the private sector in Japan to present findings TOKYO S C O P I N G S T U D I E S 13

14 Scoping Study in Mexico BACKGROUND OF THE CARBON TAX IN MEXICO Mexico introduced a carbon tax which was applied to the use of fossil fuels in The initial price of the tax is $3.5/tCO 2 e and the revenue from the tax is transferred to the Finance Department. The purpose of the tax is to set a price on Co 2 emissions and to promote cleaner fuel use. Clean Development Mechanism (CDM) units can be used to offset the tax burden and natural gas is exempt from the tax NCM ACTIVITIES Scoping study in Mexico to: Explore regional interests and opportunities for carbon market linkage in/with Mexico and assess the impact on carbon prices. Conduct a stakeholder outreach with the aim of developing opportunities to support carbon market linkage in/with Mexico Develop a roadmap for progressing/piloting linking opportunities in/with Mexico. Next step: Joint CPLC/NCM outreach mission in Map of Mexico S C O P I N G S T U D Y Boundaries shown on map bear no official endorsements. 14

15 Agenda Summary of Work Plan 3 Country focus 6 Data Analysis, Modelling and Simulation 16 The NCM initiative s modelling and simulation exercises Data analysis and modelling through the Climate Transparency consortium Concept Development 18 Annex 22 15

16 The NCM initiative s modelling and simulation exercises PHASE DESCRIPTION OF ACTIVITY PURPOSE/OBJECTIVE OUTCOMES/DELIVERABLES I II III Basic initial modelling of transaction scenarios Run and re-run transaction scenarios modelling with rules and MV assessment process and various exchange rate setting processes Devise business process flow for trading ensuring market integrity Simulation exercise, possibly involving jurisdictions and actual market participants and trading entities Design testing Research specific ideas Design testing Research specific ideas Design testing Research specific ideas Outreach and stakeholder engagement involving credit rating agencies and market participants Devise and run modelling Formulate and test trading rules Report outcomes Formulate trading rules Run modelling Report outcomes Test rules with multiple runs Report outcomes Stakeholders are engaged in the simulation process M O D E L L I N G A N D S I M U L A T I O N Source: Macinante (2016), Working paper. 16

17 Data analysis and modelling through the Climate Transparency consortium Climate Transparency is an open consortium of organizations and initiatives with a shared mission to improve the completeness, quality, transparency and impact of climate action assessments D A T A A N A L Y S I S A N D M O D E L L I N G 17

18 Data analysis and modelling through the Climate Transparency consortium STRATEGIC PILLARS WORK- STREAM MISSION WORKPACKAGES G20 Climate Performance Establish a credible and comprehensive picture of G20 economies climate action on an annual basis, covering climate mitigation, enabling factors, climate finance and adaptation. To enhance transparency, comparability and ambition through climate action indices Better Quality: Enhanced Mitigation Index Enhance the framework of existing climate indices to give more comprehensive assessments on past, present and future mitigation performance. Higher Demand: G20 Advocacy Tailor direct communication of credible climate assessments for annual G20 events through working with engagement groups such as C20 and T20. UNFCCC Transparency Shadow the official process of the emerging UNFCCC transparency framework and tailor climate assessments so that they reflect, frame and influence the debate. Stronger Legitimacy: National Engagement Provide credible peer comparisons to promote knowledge exchange and competition between countries; serve as a reference point for domestic stakeholders who demand more actions. D A T A A N A L Y S I S A N D M O D E L L I N G 18

19 Agenda Summary of Work Plan 3 Country focus 6 Data Analysis and Modelling 16 Concept Development 20 Network of partners Knowledge products and outreach Advisory group on Transparency and Linking in a new Paris Regime Annex 22 19

20 The NCM Initiative s network of over 30 partners MAAP pilots Partners: DNVGL, Thai Greenhouse Gas Office, Ministry of Environment of Peru, Wageningen University Independent Assessment Framework Partners: DNV, IISD, New Climate Institute, Climate Transparency, Observer to ISO Climate Change Standards Committee Private sector outreach Partners: Climate Markets and Investment Association (CMIA). Institutions (ICAR and International Settlement Platform) Partners: INFRAS, Grantham Institute, Reed Smith NETWORKED CARBON MARKETS PARTNERS Concept Development * Linking Carbon Markets in Asia Joint NCM/ADB vision (Asia Development Bank) * Enabling Comparability and Linkage of the REC and PAT Schemes (TERI) Explore the relevance and feasibility of the NCM Initiative in Japan (IGES) * Comparison and Linkage of Climate Mitigation Efforts in a New Paris Regime (Harvard/IETA) * Achieving compatibility and synergy between the NCM Initiative and Climate Clubs (Climate Strategies) * NCM and its compatibility with a future UNFCCC regime (Marcu) * A model for NCM based on the key elements and principles of Comparative Markets (Macinante) * Options for Operationalizing a Carbon Trading Ratio Mechanism (Austin) * Enabling Comparability of heterogeneous Emissions Trading Systems Caps, MRV frameworks and non-compliance penalties (Munnings) * Initial modelling of Transaction Scenarios (Enerdata) 20

21 Concept development communicated through 15+ knowledge products and outreach activities Collaborating with more than 30 organizations to deliver over 15 knowledge products The Mitigation Action Assessment Protocol In 2015, 10 events including a roadshow on 3 continents and side-events at international climate conferences 21 C O N C E P T D E V E L O P M E N T

22 Advisory Group on Transparency and Linking in a new Paris Regime The Advisory Group (AG) will be comprised of Government Partners; Observers and Technical Experts. The first meeting of the AG is proposed to take place in 2H 2016 in Asia The NCM initiative will act as the secretariat and will therefore have the primary role of managing and organizing the work program of the AG, including organizing and supporting AG events as well as preparing and disseminating relevant technical and analytical work The AG will provide a platform to share knowledge and promote discussion among participants about transparency and climate action linkages in a new Paris Regime Discussion and feedback from the AG will be used to guide the NCM initiative s work plan, which is to explore the services, institutions and governance structures needed for a international networked carbon market A D V I S O R Y G R O U P 22

23 Agenda Summary of Work Plan 3 Country focus 6 Data Analysis and Modelling 16 Concept Development 20 Annex 24 The MAAP: Evaluation Module Areas The MAAP Example: Pilot in Peru The MAAP Example: Module Evaluation Results 23

24 The MAAP: Evaluation Module Areas Environmental Integrity Mitigation Action Program Mitigation Action Management Entity Investment Environment Ambition Index (jurisdiction level) Development Benefits Definition & Scope Objectives & Targets Planning Roles, Responsibilities & Authorities Barriers Management Framework Financial and Investment Capacity Framework Economic and political environment Level of ambition Sustainable Development Objectives & Targets Planning & Participation T H E M A A P Emissions reduction from Intervention Monitoring and Reporting Climate Change Programs Management Climate Change Capacity Alignment and focus Monitoring of Sustainable Development 24 Mitigation Value

25 The MAAP Example: Pilot in Peru Module Rating Area Weight # Key Indicators Definition & Scope 14% 5 1. Mitigation Action Program 2. Mitigation Action Management Entity 3. Investment Environment 4. Development Benefits Objectives & Targets 20% 4 Planning 22% 7 Roles, Responsibilities & Authorities 7% 5 Barriers 7% 1 Emissions Reductions from Interventions 20% 7 Monitoring & Reporting 10% 3 Management Framework 30% 2 Financial & Investment Capacity Framework 33% 3 Climate Change Program Management 37% 3 Internationally Recognized Country Ratings 45% 4 Climate change infrastructure: program level 55% 4 Sustainable Dev. Objectives & Targets 35% 7 Planning and Participation 45% 8 Monitoring of Sustainable Development 20% 6 T H E M A A P 25

26 The MAAP Example: Module Evaluation Results Mitigation Action Program Module MONITORING AND REPORTING EMISSIONS REDUCTIONS FROM INTERVENTIONS DEFINITION & SCOPE OBJECTIVES AND TARGETS PLANNING max score score T H E M A A P BARRIERS ROLES, RESPONSIBILITIES AND AUTHORITIES 26