Market mechanisms and NAMAs under a new international climate framework

Transcription

1 Market mechanisms and NAMAs under a new international climate framework Tomas Wyns, Director Center for Clean Air Policy/CCAP-Europe MAIN meeting, July 2012, Vietnam

2 Introduction Introduction to a possible Future Framework The Kyoto framework The post 2012 framework Issues to be resolved in new Framework The offset supply-demand in-balance Double counting Cherry picking the low hanging mitigation fruit in developing countries Possible Solution The Bright line between NAMAs and crediting New Market Based Instruments Examples of market based instruments State of Play on the ground Case Study: Tradable intensity standards

3 The Kyoto Framework Developed countries with reduction targets $ Carbon Credits CDM offsets generated by developing countries

4 The planet is changing (fast) surface melt over Greenland s ice sheet on July 8 (left) and July 12 (right) Source: NASA

5 The post 2012 Framework (for now) Binding targets under second Commitment Period of Kyoto Protocol (limited participation) NAMAs Many developing countries have made pledges to the UNFCCC and are now developing unilateral & supported NAMAs. CDM: New role & scope of the CDM (?) New Market Mechanisms: In Durban, the COP defined a new market-based mechanism that may assist developed countries to meet their mitigation targets or commitments. New binding agreement by 2015, implemented by 2020, for all parties

6 Future Framework Blue-Print CDM Policy, programmatic and Sectoral CDM NAMAs New Market Mechanism (interface?) Credited Actions & (linked) domestic trading/crediting systems Autonomous & Supported Developing countries Linked Cap & Trade Systems & off-sets Binding National Targets Develop ed countries

7 The Off-set Supply vs. Demand Problem Demand for offsets in << Supply of CERs in Gt 7 Gt CDM risks collapsing after 2013 No room for (offset generating) new market mechanism, unless Annex I ambition level goes up (significantly)

8 Supply CER's 2012 CER's expected from existing projects in validation stage 2012 CER's expected from projects requesting registration 2012 CER's expected from registered projects Total amount of CERs expected from future projects until 2012 Total amount of CERs from existing projects produced after 2012 Expected Available Available Million CERs (all types) Total amount of CERs issued Share Of Proceeds (SOP) for the Adaptation Fund Annual amount available Source UNEP-Risoe

9 Demand EU ETS: 1,000 Mt EU non-ets: min 500 Mt -max 1,000 Mt Australia: 500 Mt Rest of the world: 500 Mt Total: Gt

10 The Problem with Double Counting: We will not meet the <+2 C goal Meeting <+2 C goal require actions by developing countries; Even if Annex I emissions are reduced to zero, it won t be enough. Offsets are counted towards meeting Annex I commitments. Supported NAMAs should count towards developing country pledges. If a given action (e.g., a new wind farm) is a supported NAMA (e.g., a feed-in tariff) and also receives offset credits for emissions reduced, the same emissions reductions would be counted twice. If this happens: Developed countries would essentially pay twice for the same emissions reduced. Developed and developing country emissions reductions can t be added together towards meeting 450 ppm mitigation goal. 5

11 NAMAs, Off-sets and the low-hanging fruit problem NAMAs Offsets Unconstrained off-setting instrument will seek out (and find) low cost mitigation first. Developing countries will be left with more expensive mitigation options under their NAMAs

12 The Solution: Create a Bright Line Distinction between NAMAs and NMMs Autonomous NAMAs Supported NAMAs Credited Actions Clear accounting/mrv rules are required however A distinction is also needed between NAMAs and CDM.

13 This also solves low-hanging fruit problem Offsets take low-cost mitigation Offsets generated, above crediting threshold Credited Actions NAMAs Offsets Wrong: Developing countries are left with more expensive mitigation Supported NAMAs Autonomous NAMAs Correct: Autonomous and supported NAMAs at lower cost for developing countries

14 Examples of Market-Based Mechanisms Domestic cap & trade (linked) Sectoral crediting (or no lose trading) Tradable intensity standards A tradable intensity standard for sector crediting CCAP Global Sectoral Study CCAP

15 A groundswell of market-based instruments? ETS in preparation PMR Source: Perspectives

16 Specific Example: Tradable Intensity Standards What are they? Each facility faces a mandatory limit (GHG/output) Output not restricted; If output grows, emissions can grow Inefficient facilities pay for emissions in excess of standard (not for all emissions, as in cap-and-trade) Efficient facilities profit from sales, lowering costs and increasing production Can be done with or without linking to international markets 9

17 Tradable Intensity Standards (2) How international linking would work: Set intensity standard at baseline for international crediting. International credits used as compliance instrument. Developing country government gets credits from international body if sector beats baseline. Inefficient facilities buy credits from market to submit to government. Government gives credits from both sources to facilities that beat intensity baseline (one credit per ton).

18 Thank You Tomas Wyns, Director, CCAP Europe, 11