Sustainable development policies and measures Concept and methods for a strategic approach for enhancing the climate regime post-2012 Harald Winkler Energy Research Centre University of Cape Town Presentation at the Development and Climate Workshop, 20-22 September 2006, Paris

The concept of SD-PAMs Sustainable development (SD) policies and measures (PAMs) Any better offers on the acronym? Backcast from desired future state of development, not GHG reduction goal or cap define more sustainable paths to meet development objectives Tap into the primary motivation for DCs – development How to capture the potential of SD co-benefits under the Convention for developing countries? Need a new strategic approach to capture the potential under the multi-lateral framework – SD-PAMs is one possible approach Article 3.4 “Parties have a right to, and should promote, sustainable development. Policies and measures to protect the climate system against human-induced change should be appropriate to the specific condition of each Party and should be integrated with national development programmes, taking into account that economic development is essential for adopting measures to address climate change”.

More ‘sustainable’ development paths make mitigation easier IPCC Emission Scenarios (grey) versus emissions path needed for stabilisation (red) 5 10 15 20 25 30 35 40 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 IPCC SRES B1 Scenarios 450 550 B1 IPCC SRES A1T Scenarios A1T 650 5 10 15 20 25 30 35 40 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 IPCC SRES B2 Scenarios 450 550 650 B2 IPCC SRES A1FI Scenarios 6 750 A A1T A1FI B1 B2 KEY MESSAGE: a more sustainable development path has lower emissions, even without any explicit climate policy. The corollary is also true – development objectives can be met in more or less emission-intensive ways. SPECIFICS: A1F1 has higher economic growth, fossil intensive energy supply, continued similar economic structures B1 is scenario with greatest equity, significant technological change and change in economic structure, shift toward cleaner sources of energy and efficient use Red lines show stabilisation for A1F1 at 450, 550, 650, 750 ppmv; for B1 450, 500 ppmv Source: IPCC 2001 Third Assessment Report, WG3, p. 151

The basis of SD-PAMs Article 2, the oft-forgotten second sentence: "Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner." Principle in Article 3.4 “The Parties have a right to, and should, promote sustainable development.” Article 2, 2nd sentence: this is SD in all three dimensions Principle expresses this as a right – 3rd generation rights …

Strategic approach Build on existing commitments (FCCC Art 4.1, KP 10) A commitment to implement SD policies not based on climate target, but choosing a development path that results in lowered emissions Large-scale policies and measures, not projects Formalise this pledge Could be a list of countries Could be a register of pledged policies and programmes Establish methodologies for quantifying benefits of SD-PAMs (both SD and CC) Under Article 4.1(b), all Parties commit themselves to ‘formulate, implement, publish and regularly update national and, where appropriate, regional programmes containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases.’ Article 10 of the Protocol re-affirms existing Convention commitments and aims to ‘advance the implementation of these commitments in order to achieve sustainable development’.

Steps in applying SD PAMs Country outlines future development objectives Identify PAMs to achieve development objectives more sustainably a. Existing policy not fully implemented; or b. New policies and / or more stringent measures Mobilise investment and implement SD-PAMs Could include mutual pledges to mobilise domestic investment Internationally, climate and non-climate funding Record SD-PAMs in a registry (e.g. maintained by the secretariat) Set up national monitoring system to track implementation of SD-PAMs Review SD-PAMs in SD units, either as part of national communication or a specific review Quantify the changes in GHG emissions from individual PAMs Identify PAMs with synergies or conflicts between SD benefits and GHG limitations Summarise the net impact of a basket of SD-PAMs on development and GHG emissions The SD-PAMs approach starts with the development objectives and needs of developing countries. Countries begin by examining their development priorities and identify how these could be achieved more sustainably, either by tightening existing policy or implementing new measures. The next step is to identify synergies between sustainable development and climate change, i.e. those SD-PAMs that also result in reductions of greenhouse gas (GHG) emissions. To obtain a realistic picture of the impact of a basket of SD-PAMs, those policies and measures resulting in increases in GHG emissions also need to be identified.

Methodologies for quantifying SD-PAMs In principle, methodologies needed to quantify Firstly SD benefits Secondly GHG co-benefits Existing methodologies have been bottom-up Case studies National energy modeling Exploring other methodologies Analysis of efficiencies improvements Analysis in global emission allocation models?

Method 1: Case study - rural electrification in India Development challenge: 500-600 million people without electricity Three supply scenarios: Grid First Diesel First Renewables First Three levels of rural electricity demand Source: Dubash and Bradley, 2005

Method 1: Case study - rural electrification in India Approaches are evaluated by India’s national criteria. Grid First offers little hope of meeting electrification goals. Diesel First raises significant oil import concerns. Renewables First brings benefits but at significant capital cost – can international policy help? CO2 emissions under the scenarios Qualitative assessment of the scenarios Source: Dubash and Bradley, 2005

Method 2: National energy modeling Use national energy modeling in South Africa Energy emissions four-fifths of total Study on Energy policies for sustainable development in South Africa Winkler, H (Ed) 2006, www.erc.uct.ac.za/recentpub Combined effect Efficiency in industry, commerce and residential Fuel-switching and cleaner residential fuels Lower-carbon electricity generation Biofuels for transport

Method 2: National energy modeling Saves R 15.9 billion in total energy system costs over the period, relative to base case Reduction in local air pollutants Non-methane volatiles 142 375 t NMVOC Oxides of nitrogen 5 797 285 t Nox Sulphur dioxide 10 152 000 t SO2 Carbon monoxide 1 324 336 t CO

Avoided CO2 emissions from SA energy policies for SD 700 600 Base case 500 400 Emissions reduced by adding all policies Mt CO2 300 200 100 If combined, the emission reductions achieved by all the policies analysed here add up to 50 Mt CO2 by 2015 and 142 Mt CO2 for 2025, which amounts to 14% and 24% of the projected base case emissions respectively. One important conclusion is that significant emission reductions (‘avoided emissions’) compared to business-as-usual are possible. However this should be understood together with a second conclusion, which is that stabilising emissions levels (e.g. at 2010 levels) would require some additional effort from 2020 onwards. Avoids emissions: 142 Mt CO2 for 2025 (24% < BAU) Source: Winkler (ed) 2006

Method 3: Analysis of policies by sectoral data Using quantitative data, based on available literature Detailed activity data, in tons of product / output by economic sector Value added, in monetary terms by sector Energy use by fuel type by sector  Calculation of energy and GHG intensity by sector Focus on emissions from the energy sector Mainly CO2 Enabling calculation of all GHG Similar set of policies as in method 2 Source: Höhne & Moltmann et al., forthcoming for RIVM

Share in electricity production

Scenarios electricity Condition Convergence in thermal efficiency Aver. Max Converg. Coal 0.34 0.40 0.42 Oil 0.35 0.44 0.45 Gas 0.37 0.48 0.54 Convergence in CO2/kWh per fuel Min 0.96 0.73 0.69 0.68 0.39 0.4 0.52 0.27 0.28 Convergence in CO2/kWh 0.05 Reduction on CO2 intensity Reduce by 3% per year Growth in electricity production from IMAGE implementation of SRES scenarios for regions applied to countries. Reduced by 0.5% for improvements in energy efficiency in appliances

Scenarios electricity

Reductions in the global context Scenario Condition “Mild” Annex I excl. USA -15% below 1990 level in 2020 USA +10% above 1990 level in 2020 Non-Annex I Reference “Strong” -30% below 1990 level in 2020 +0% at 1990 level in 2020 Sectoral for electricity, iron & steel and cement “SD-PAMs” All countries

Reductions after 2020 towards 450 ppmv CO2 Maximum annual reduction rate -2.2% -4% -6.5% -10% Global emission levels necessary to stay below 450 ppmv CO2 concentration assuming that all greenhouse gases are reduced in the same proportion and that the global trend cannot change be faster than 0.5 percentage points per year using the MAGICC model. For 550 ppmv the difference between the cases is less pronounced (maximum annual reduction rate of 0.6%, 0.9%, 0.9%, 1% for immediate reductions after 2020)

Method 4: Global emission allocation models Models set up to allocate a given carbon budget across countries, e.g. FAIR, EVOC Top-down appraoch to analysing climate implications of bottom-up SD-PAMs Mainly to answer questions of effectiveness If sufficient policies could be specified for a country, might be able to represent in this model Needs further work Including articulating national energy models with international allocation models Studies exist, not all information public (yet)

Formalising SD-PAMs in the multi-lateral system Regular reporting on implementation (Article 12.4) Could be part of national communications … … separate reporting perhaps preferable? Primary reporting: SD units Also quantify GHG co-benefits (as illustrated in methods) Registry of SD-PAMs Could be administered by Secretariat Formal recognition of action taken National capacity critical, e.g M&V of energy efficiency

How can SD-PAMs be supported internationally? Step 1: Validate SD-PAMs approach COP decision - “register” of countries Allow countries to decide whether to register and how to report Step 2: Create supportive processes E.g. CGE develop methodologies E.g. Secretariat compilation and synthesis reports Step 3: Develop incentives for implementation Expedited access to climate funding Non-climate funding (IFIs, ECAs, FDI, domestic) Potential to link to carbon markets – later Otherwise much like policy CDM

SD-PAMs and post-2012 By itself, does not guarantee environmental outcome (still need quantified mitigation commitments) … … but important in mobilising action Turn climate from ‘threat’ to development into genuine opportunity to make development sustainable for DCs ‘Only’ requires a decision by the COP, not a whole new Protocol Important as trust-building measure under the Convention One possible ‘package’: SD-PAMs, implemented through technology, enabled by finance, in balance with adaptation

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