Climate Change and the Clean Development Mechanism Introduction to Climate Change and the Clean Development Mechanism Training Workshop: Project Formulation for the Clean Development Mechanism Hanoi, Vietnam September 30 – October 2

Important Dates in the History of Climate Change 1988: Toronto Conference – climate change on policy agenda 1990: First International Scientific Assessment 1992: Signature of the UNFCCC 1994: UNFCCC comes into force 1997: Kyoto Protocol (CoP 3) 2001: Third International Scientific Assessment 2001: Marrakech Accords (CoP 7) – rules of implementation of Kyoto Protocol adopted

IPPC Third Assessment Report (2001) The Earth’s climate is warming and human activities are primarily responsible Most socio-economic sectors, ecological systems and human health will be adversely affected by climate change, with developing countries being the most vulnerable Technologies are available to reduce greenhouse gas emissions but policies and measures are needed to realize the technological potential

United Nations Framework Convention on Climate Change (UNFCCC) Ultimate objective of stabilizing global greenhouse gas concentrations in the atmosphere Developed countries aim to restore GHG emissions to 1990 levels Support capacity building in, and facilitate technology transfer to developing countries to mitigate, and to adapt to climate change Meet as a “Conference of Parties” in the future, consider progress Pre-industrial levels at 260 ppm Current: 360 ppm If we are to stabilize at 450 ppm, concentrations would have to peak in 2010 If we are to stabilize at 550 ppm, concentrations would have to peak in 2025? In the 1980s the world’s scientists sounded the alarm that the quantity of greenhouse gases emitted to the atmosphere could potentially affect the Earth’ climate. In response, countries signed at Earth Summit at Rio (1992) the UNFCCC came into force in March 1994 - 186 parties Objective has to be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure food production is not threatened, and to enable economic development to proceed in a sustainable manner Developed Countries: Design and implement plans to reduce greenhouse gases and/or enhance carbon sinks OECD to provide financial resources to assist developing countries in submitting national communication (inventory and national climate policy) and conduct vulnerability assessment

Contributions to Global Warming

The Kyoto Protocol 39 Developed Countries and Economies in Transition agreed to reduce greenhouse gases by 5.2 % below 1990 levels in the commitment period 2008-2012 Reduction of greenhouse gases by 5.2 % below 1990 levels in the commitment period 2008-2012 (~2800 - 4800 Mt CO2, including US) Status: Not yet in force Marrakech Accord: Final decision text agreed in Nov 2001 Coming into force: requires ratification of 55 Parties to UNFCCC representing 55 % of CO2 emissions (US constitutes 36 %) Developed Countries/ EITs now considering ratification (except the US) As of October 2001, Kyoto Protocol has 84 signatures and 43 ratifications Of the developed countries with quantified emission limitations, only Romania has ratified Assigned amount??

Graphical Representation of the Kyoto Protocol GHG Emissions or “BUSINESS AS USUAL” GHG Emissions ton/ year for Annex B countries AVG: 1990-5.2% 2008 2012 1990: Base Year First Commitment Period;

Which Policies and Measures can be Implemented by Annex B Countries? Domestic Reductions Carbon Sinks International Credits (Kyoto Mechanisms): International Emissions Trading Project –Based: Joint Implementation Project – Based: Clean Development Mechanism Supplementarity: (CoP 6 bis) “..domestic action shall constitute a significant element of the effort by each Party..”

The Kyoto Mechanisms: International Emissions Trading and JI International Emissions Trading (IET) Defined: trading of emission credits among developed countries Russia may have large supply to sell Joint Implementation Defined: credit for emission reduction investments in Annex B countries Emission credits can be accrued as of 2000, but can only be issued/ transferred once country becomes a Party Nuclear in JI: Parties are to “refrain from using..” Sinks: All activities are eligible

The Kyoto Mechanisms II: Clean Development Mechanism Defined: credit for emission reduction investments in developing (non-Annex B) countries Objectives: To promote sustainable development in developing countries To assist Annex B countries in meeting their emission reduction targets in cost-effective manner Emission Reductions (ERs) must: Create real, measurable, and long-term benefits related to the mitigation of climate change. (Art. 12.5b) Be additional to any that would occur in the absence of the certified project activity. (Art. 12.5c)

What is Additionality? “Additionality” is the key eligibility criterion for CDM projects. You must do something that you wouldn’t have done without the CDM Interpreted as “environmental additionality”: Emission Reductions = hypothetical baseline emissions – effective (project) emissions

What are the Eligibility Requirements for the CDM? Developing Countries must: ratify the Kyoto Protocol >> to promote early coming into force of the Protocol designate national CDM/JI focal point Developed countries (Annex B) must: ratify the Kyoto Protocol be in good standing with reporting requirements Parties must be subject to compliance mechanism

What are the Criteria for CDM Projects? Sustainable development Host country criteria Environmental Impact Assessment Stakeholder consultations Emission reductions Environmental additionality Project viability Technologically proven Financially sound Host country approval Project validation and registration

The Clean Development Mechanism - Other Key Features Prompt Start: projects can already begin to generate emission reductions Simplified procedures for small projects: Renewable Energy Projects up to 15MW Energy efficiency with reductions of 15GWh eq./year Other projects of less than 15,000 t/CO2 per year To be agreed by CoP8/2003 Sinks in CDM: only afforestation and reforestation activities are eligible Modalities by CoP9/2004 > manage the uncertainty Nuclear in CDM: Parties are to “refrain from using..”

What can the CDM do for you? Attract foreign investment to countries engaged in the trading CERs Increase the profitability of cleaner more efficient technology in energy, industry, and transport sectors Clean up waste management operations Improve land-use strategies and practice Contribute to sustainable development of the host country

Who can help you to develop a CDM project? World Bank Carbon Finance Unit Dutch CERUPT program Development NGOs and consultants UN Organizations (UNDP, UNEP, UNIDO) Bilateral development organizations Foreign companies

Questions? http://www.prototypecarbonfund.org http://www.ipcc.ch http://www.unfccc.de

Annex B Countries

2008-2012 GHG Emission targets (100 = 1990) Hungary 94 Iceland 110 Ireland 92 (113) Italy 92 (93.5) Japan 94 Latvia 92 Liechtenstein 92 Lithuania 92 Luxembourg 92 (72) Monaco 92 Netherlands 92 (94) New Zealand 100 Norway 101 Poland 94 Portugal 92 (127) Romania 92 Russian Federation 100 Slovakia 92 Slovenia 92 Spain 92 (115) Sweden 92 (104) Switzerland 92 Ukraine 100 UK 92 (94) USA 93 Australia 108 Austria 92 (87) Belgium 92 (92.5) Bulgaria 92 Canada 94 Croatia 95 Czech Rep. 92 Denmark 92 (79) Estonia 92 Finland 92 (100) France 92 (100) Germany 92 (79) Greece 92 (125) Between brackets: EU internal burden sharing agreement

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