Transport & CDM Intro to Day 3 Jodi Browne, IISD August 27, 2004 - Santiago, Chile

Reminder: Purpose of CDM “…assist Parties not included in Annex I in achieving sustainable development “…assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments...” The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.

Key points from Day 2 - Additionality questions - inherent Tension between: robust, practical Data needs, capacity building – repeated Transaction costs, bureaucracy Additionality - over and over again Tension: on the issue of baselines as well as monitoring (discounting – to know real, or get something done and open yourselves up to criticism). Indonesia/India example - differences 3) Data needs – opportunity for capacity building, strong role for ODA 4) Transaction costs, paperwork,

Day 2 Project Summaries (approx.) Tons/year Project $/Ton Transaction Costs CER % of Project Costs Bikes (6%) 85,000 $76 ? 6% Hybrid Bus 5,000 to 11,600 -$320 to +$760 2% to 8% Bus Maintenance 15,000 $8.5 (negative?) NA? LPG Bus 3,000 (total?) $40,000 TransMilenio 200,000 < $300,000 TranSantiago 700,000 $38 (draft)  $50,000 2% to 5%?

Role of CDM in Transport May be useful in the short-term, but limited by current market value of CO2 CDM typically cover 1% to 6% of project costs The future carbon market should be more attractive The transport projects that fit best into CDM have a small emissions impact Projects that address fundamental structural changes offer major reductions but are a more difficult fit for CDM If we are true to the letter of the law of current CDM rules, we may discount all of the benefits of the most important projects If we focus only on what we can quantify with confidence, we mill miss the most important emission reduction opportunities Useful in short term: - may be able to fund portions of beneficial activities - also useful in encouraging constructive thinking toward “value” of GHG reductions Long term: - hopefully expect higher values for carbon - possibly expect changes in the regime to favour transportation

Stumbling blocks Tough fit between transport and CDM: additionality prices: price of carbon vs. price of project uncertainty: ratification long project timelines vs. 10-7x3 project timelines baseline/methodologies – verification perverse incentives

Next steps CDM as one of a suite of tools to promote transport CDM as a strategic tool in the hands of developing country agencies Progression of discussion on how to encourage more transport related projects through the CDM

Next steps Continue discussion on promotion of sustainable transport in context of climate change (Eduardo) Continue with broader transportation policies that address demand (Steve) Make a contribution to int’l process by encouraging further examination of transport/climate change/CDM nexus (John) We, with the project and with this workshop, have started a dialogue… only the beginning – needs to be followed through.