IGES New Market Mechanisms Capacity Building Activities in Asia

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1 Institute for Global Environmental Strategies Towards sustainable development - policy oriented, practical and strategic research on global environmental issues IGES New Market Mechanisms Capacity Building Activities in Asia Kentaro Takahashi Researcher, Market Mechanism Group Institute for Global Environmental Strategies (IGES)

2 IGES Overview Institute for Global Environmental Strategies (IGES) was established under an initiative by Japanese government in IGES conducts policy research to achieve a sustainable development in Asia Pacific Region. There are 5 Branch offices (Beijing, Bangkok, Tokyo, Kansai and Kita-kyusyu). Chair of the board of directors 150 staffs in total Secretary general Vice Secretary general Administrative section Research supporting unit Climate Change Market Mechanism Governance & Capacity President Program Management Office Sustainable Consumption & Production Economy & Environment Natural resource management (Forest Conservation, Adaptation, Freshwater) 2

3 IGES Capacity Building Activities Since 2003, Market Mechanism (MM) group has been conducting CDM/JI capacity building activities in cooperation with collaborating countries. In 2011 MM group started new market mechanisms capacity building activities. Our activities have 4 components in 9 collaborating countries. Reform of the CDM (Development of standardized baselines, Policy proposals to CDM EB and UNFCCC secretariat) Domestic market readiness (Support of the designing of ETS & domestic carbon market and Research etc) Promotion of Bilateral Offset Crediting Mechanism Development of Database and Publication 3

4 Capacity Building in China Background Since 2006, IGES and Tsinghua University has been implementing Sino-Japan CDM Cooperation Programme which promotes the creation of high potential CDM projects through joint cooperation between China and Japan, under the auspices of National Development and Reform Commission (NDRC) and the Ministry of the Environment, Japan. Chinese government announced the 12 th 5 years plan in March The 12 th 5 years plan mentioned that China would consider the establishment of emission trading system. In 2011 NDRC and MOEJ agreed with the expansion of our cooperating activity from CDM to low carbon society including market mechanism. 4

5 What has been done in FY2011 Component of FY2011 activities 1. Training programme for central and local government staffs (5 provinces and 8 cities ex) Guangdong, Shenzhen etc) Japanese climate change policy (Inventory, GHG reporting system, J-VER, JVETS and Carbon offset etc) Climate change policy at local levels (Tokyo Metropolitan Government, Yokohama-city, Kyoto Prefecture and Kitakyusyu-city) 2. Research on the applicability of domestic emission trading system and domestic carbon market in China based on Japanese experiences 5

6 What we found from China Chinese government could take each provincial circumstances into consideration when the emission trading system will be introduced and designed in the future. In Japan, there are 3 local emission trading system which already been started. Each system has different types of participants because each region have each characteristic. TMG (Buildings) Saitama (Factories) Kyoto (SMEs) Chinese government could communicate with energy intensive industries (steel, cement etc) and consider how to secure the economic growth. Keidanren (Japan business federation) are objecting to the introduction of emission trading system in Japan. 6

7 Capacity Building in Indonesia Background IGES has been conducting CDM capacity building activities in Indonesia since Support of PDD development Training program for DOEs Enhancement of their capacity for government and private sector Reform of the CDM (standardized baselines etc) In 2011 IGES started new market mechanism capacity building activity in cooperation with National Council on Climate Change Indonesia (DNPI) for preparing the future carbon market (domestic, international acceptable and BOCM etc) as scaled up mechanisms beyond the CDM. 7

8 What has been done in FY2011 Component of FY2011 activities 1. Organizing 3 workshops to further understand new market mechanisms and experiences on Japanese carbon market UNFCCC negotiation on new market mechanisms JVETS, J-VER, TMG ETS and Saitama Prefecture ETS Governance, MRV system and Registry etc 2. Training programme for potential GHG validators/verifiers to enhance their capacity Validation and Verification on the CDM ISO ISO ISO ISO14065 ISO

9 What we found from Indonesia Purpose of an establishment on domestic carbon market Assisting developed countries? Promoting offset? Achieving NAMAs? Type of market mechanisms Baseline and Crediting? or Cap and Trade? Common elements for designing market mechanism Law/regulation/cabinet decision/political commitment Governmental implementation body and secretariats Technical support by consultants/experts Robust MRV rules for GHG emission GHG verifiers and Accreditation of GHG verifiers Registry system for transaction of allowance /credit Support by IT technical experts Corporate accounting rule and Taxation rules for allowance/credit Possibility of ISO14064 series as a common basis of domestic carbon market Important role of KAN for accrediting validation and verification bodies 9

10 Capacity Building in Thailand Background IGES has been conducting CDM capacity building activities in Indonesia with Thailand Greenhouse Gas Management Organization (TGO). Support of PDD development Training program for DOEs Enhancement of their capacity for government and private sector Reform of the CDM (standardized baselines etc) In 2011 IGES started new market mechanism capacity building activity in cooperation with TGO for preparing the domestic carbon market. 10

11 What has been done in FY2011 Component of FY2011 activities 1. Individual consultation meetings for TGO staffs to further understand JVETs, JVER and carbon offset Governance, Implementation rule, MRV and Registry etc 2. Individual consultation meetings for preparing guidelines and methodologies with Japanese technical experts 3. Training programme for potential GHG validators/verifiers to enhance their capacity Validation and Verification on the CDM ISO ISO ISO ISO14065 ISO

12 What we found from Thailand Necessity of customizing existing guidelines (e.g. Japanese) and methodologies to reflect national circumstances Necessity of reviewing formats & guidelines with technical experts Consideration on how to provide incentives to an industry for participation into carbon market Consideration how to allocate emissions allowance for each participant in the emission trading system Consideration of approaches to set emission targets Absolute target or Intensity target? MRV of GHG related to electricity use (scope 1 or scope 2?) In case of both scope, How to avoid double counting? 12

13 Moving forward for next activities 1. Objective to establish domestic carbon market 2. Consideration for internationally acceptable level of environmental stringency and MRV standard 3. Development of infrastructure for domestic carbon market and Preparation of relevant documents Principle, Modalities & Procedures, and Guidance Governance structure MRV methodology and guideline Accreditation of GHG verifiers Registry system 3. Pilot projects for domestic ETS or VER in a selected sector or region 4. Capacity building activities for private sector and relevant stakeholders 5. More research on the applicability of potential market mechanisms for Asian countries 13