The alphabet soup of market based approaches to climate change mitigation: FVA, NMM, NMA. COP 19 Media Workshops November, 2013

Transcription

1 The alphabet soup of market based approaches to climate change mitigation: FVA, NMM, NMA COP 19 Media Workshops November,

2 PRESENTATION OVERVIEW What is a market-based vs. a non-market-based approach? Why are markets important in the context of the 2015 agreement? History and definition of the new market mechanism (NMM), the framework for various approaches (FVA), and non market-based approaches (NMA) Status of negotiations 2

3 CARBON PRICING MECHANISMS 3

4 THE POST-2012 GLOBAL CARBON MARKET Markets are likely to be a key component of any future climate-action framework because they: Contribute to sustainable development, tech transfer and other development objectives of the host countries Minimize the cost of climate action to society by providing flexibility to countries to meet part of their targets costeffectively in another country Empower the private sector by creating economic reasons to reduce emissions through the creation of tradable assets (units) 4

5 MARKET MECHANISMS AND UNFCCC CDM/JI IET FVA NMM NMA 5

6 BACKGROUND FVA, NMM, NMA In Doha, the decision was made to establish THREE separate work programmes under the SBSTA : 1. The Framework for Various Approaches (FVA) 2. The New Market-based Mechanism (NMM) 3. Non-Market-Based Approaches (NMA) So what are they? 6

7 THE FRAMEWORK FOR VARIOUS APPROACHES (FVA) FVA Emerging as a coordination type mechanism to oversee & facilitate the international aspects of market-based and non-marketbased approaches, including the generation of internationally tradable mitigation units and outcomes that can be used for compliance under the UNFCCC It is the glue to connect disparate approaches to mitigation 7

8 SO WHY IS THE FRAMEWORK IMPORTANT? It can create common rules to safeguard environmental integrity and avoid double counting UNFCCC recognition of domestic approaches that cross national/regional borders may increase the confidence of investors It could increases the size of the global carbon market and introduces new types of fungible units to serve different needs 8

9 IS THE FVA REALLY NEEDED? 3 9

10 INCREASINGLY COMPLEX LINKAGE 10

11 FVA POTENTIAL 11

12 NEW MARKET-BASED MECHANISM NMM Emerging as a top down model to generate tradable reductions that can be used for compliance under the UNFCCC with flexibility for bottom-up implementation Defined in Durban (COP17), but not operational yet So what should be the difference between the NMM & the Kyoto Protocol mechanisms: CDM, JI and IET? 12

13 NMM VS CDM, JI AND IET NMM could be different from existing mechanisms in terms of ambition and scope by: Going beyond offsetting and resulting in net mitigation Using of units under the Convention, not just under Kyoto Allowing for emissions trading with/between developing countries Covering broad segments of the economy (sectoral), not just project or programme-based 13

14 NON-MARKET-BASED APPROACHES NMA Emerging as a means for cost-effective and measurable mitigation and incentives for carbon-pricing without the creation of internationally transferable units Countries need a mix of market and nonmarket-based approaches in their response to climate change In some cases non-market-based approaches are more cost-effective or suitable than market-based approaches 14

15 EXAMPLES OF NON-MARKET-BASED APPROACHES

16 FVA AT COP 19 FVA is not yet defined but SBSTA is considering IF it should be (link to 2015-ageement) FVA To be defined Parties understand that there is a need for the FVA, but have differing ideas about its scope and the level of oversight Views converge that the FVA must create common rules to ensure environmental integrity, avoid double counting, enhance transparency and provide infrastructure for tracking and registration of units SBSTA discussed the FVA and started work on the definition and on an information-exchange platform, but could not agree 16

17 NMM AT COP 19 NMM Rules to be developed Unlike the FVA, the NMM is defined (established) at COP 17 SBSTA is mandated to develop its modalities and procedures (rules) Chicken and egg discussions: some Parties question the need for the NMM when ambition is low, other argue it is needed to raise ambition (link to the agreement) SBSTA discussed the NMM, including a new name and its rules and started work on the text, but could not agree 17

18 NMA AT COP 19 SBSTA is mandated to elaborate the NMA NMA To be defined Various examples of NMAs were submitted, but some Parties still question if they have relevance for UNFCCC There is a general understanding that NMA should be under the FVA SBSTA discussed the NMA and started work on a definition and issues for further clarification, but could not agree 18

19 OVERVIEW FVA/NMM/NMA at COP 19 COP 19 could have been the COP that sets in motion the processes to focus and accelerate development of different aspects of the mechanisms, but the SBSTA could not agree on a decision. If nothing happens until the end of the week, the next opportunity would be at COP 20 in Lima However, progress could be linked to progress on other more political issues, such as increase of ambition, provision of support, ratification of the Doha amendment and the 2015-agreement 19

20 FOR MORE INFORMATION WEB PAGE: /UNCarbonMechs

21 THANK YOU /UNCarbonMechs 21