COP-8 Side Event - Thursday 31 October Development & Climate Change: Issues & Opportunities in Asia IPIECA Workshop - Key Messages and Learning's Kuala Lumpur, Malaysia September 2002

Background to IPIECA Founded in 1974 United Nations NGO Status (ECOSOC II) Non-profit Global oil and gas membership 25 national & multinational companies 13 national & regional associations Secretariat based in London Focus on key global environmental issues Share information, understanding & good practice Does not lobby on behalf of the industry

Core IPIECA Activities Strategic issues assessment; oil spill preparedness & response; urban air quality management; biodiversity; health issues; and global climate change. Aim: to provide members and external stakeholders with reliable and timely information, issues analysis, education and involvement in international process related to global climate change Climate Change Working Group established in 1988

IPIECA Climate Change Activities 1/ Interaction with UNFCCC –Inform members of developments in the negotiations –Publications (e.g. Guides, Glossary of Terms) 2/ Contributing to the IPCC –Industry expert Lead Authors and peer review –Guide to IPCC processes, structure and functions 3/ Workshops and Symposia –International and regional events –Scientific, technical, socio-economic aspects of climate change –Comprehensive series of reports and publications

IPIECA Workshop (25-26 September) Workshop on Development & Climate Change: Issues & Opportunities in Asia Hosted by PETRONAS in Kuala Lumpur, Malaysia Workshop goals: 1/ assess future regional energy demand, GHG trends, & options to meet climate change concerns and development priorities 2/ consider opportunities for effective technology transfer and capacity building 3/ explore the potential for market-based emission reduction approaches, particularly through CDM

Key priorities in Asia –sustainable development and poverty alleviation –technology transfer and capacity building Anticipated economic growth –average 3-7% annual  GDP –considerable national and regional variation Affordable energy is a key factor to achieve economic & social development Over 2 billion people globally without access to electricity Development Trends in Asia

According to the IEA, demand for energy will increase twofold between 2000 and 2020 –increased consumption of coal, oil, and particularly natural gas Future fossil fuel resources: –adequate for many decades –require technology developments & investment Renewable energy sources (hydro, solar, wind, geothermal and biomass) –expected to grow considerably –remain a small % of total energy mix Long-Term Energy Demand in Asia

Long-Term Emission Forecasts in Asia (IEA, 2002) Policy challenge to provide affordable energy for development, whilst at the same time limiting long term GHG emissions

Examples of Technology Options Efficiency improvements - Buildings, energy supply and use, transport CO2 Capture and Storage - Biological sinks (create & maintain stocks) - Geological sequestration Non Fossil Fuel Energy Supply - Nuclear, biomass, hydro, wind, solar... - Decades to implement additional new technologies Effective technology solutions Must be efficient and economic Short term: Global deployment of current technologies Long term: Support research and development of new technologies e.g. biotechnology

Technology Transfer Barriers: cost intellectual property rights institutional structures personnel Enabling frameworks: rule of law open markets foreign direct investment private / public collaboration training market based mechanisms CDM offers one new pathway to encourage technology transfer

Projects that: –Promote sustainable development –Reduce emissions –Result in technology transfer –Mobilize new investment (no diversion of ODA) Generating CER’s of less importance Early focus on –Energy efficiency –Renewable energy –Small scale projects CDM: Common Priorities - Host Countries

Institutions and procedures under development Significant progress in most countries Wide variety of approaches that reflect differing national priorities & structures Large potential for CDM projects & emission reductions in Asia –High growth, low abatement cost –Japan major credit buyer –Potential reductions > 100 million ton of CO2 –Projects particularly in larger Asia countries CDM: National Approaches Need to: - Establish local Operational Entities - Develop capacity - Lower transaction costs - Raise awareness

“Learning by doing” builds better understanding than analysis & workshops Private-public partnerships foster understanding –Needs & expectations of government/business –How to balance priorities of sustainable development with generation of CERs Project viability only affected by CERs at margin –Projects must be economically sound Transaction costs remain high Learnings from CDM Case Studies

Currently receive little attention Present significant technical challenges (baselines, additionality, only part of a project…) Potential for time-consuming, confrontational debates over political acceptability (eligibility, approval process…) Large scale projects have potential to: – reduce emissions significantly – encourage substantial investment – promote technology transfer – contribute to sustainable development Large-scale CDM Projects

Company emissions obligations in Annex 1 countries –extent to which CDM might contribute Economic basis for valuing CERs Rules for project eligibility, baselines, additionality Approval process, especially for large projects –information requirements –transaction costs –time and process for decisions Contrasts between public/private sector approaches Private Sector Perspectives Uncertainties at every step...

Key Messages Development & poverty alleviation key priorities Need to consider climate change in this context Access to affordable energy essential for development Fossil fuel usage in Asia set to double by 2020 Technology offers a variety of opportunities CDM offers one new pathway – multiple objectives

Key Messages (cont.) Significant potential for CDM in Asia identified Current focus on small scale projects Large-scale projects (many benefits & challenges) Diversity of National approaches being developed Lower transaction costs & faster approval needed Investment in CDM from a variety of sources

Key Messages (cont.) Uncertainties Project (additionality, baselines, eligibility…) In most cases credits affect viability at the margins Business (obligations, demand, cost…) Long-term issues International framework post 2012 Technology developments > significant reductions Mechanisms to promote technology transfer

For further details about IPIECA, and our joint Latin American workshop with ARPEL on 3-4 December 2002, please visit: or contact: