Priorities for the 1st Commitment Period: maximizing benefits, ensuring delivery of the Kyoto Mechanisms. Current critical issues related to CDM Priorities for the 1st Commitment Period: maximizing benefits, ensuring delivery of the Kyoto Mechanisms. Current critical issues related to CDM PANAMA: THE WAY WE EMPOWERED CDM. World Bank Carbon Funds’ Host Country Committee Annual HCC Meeting April 30th & May 1st, 2007 Cologne, Germany By Eduardo Reyes

2 Barriers for CDM Development Globally The complete CDM process is still perceived as very COMPLEX and slow.  Project Registration  Approval of New Methodologies The CDM procedures still unclear, for several DNAs.  This, most of the time leads some DOEs and Brokers among others to act as if they were the only experts. High transactions costs related to CDM process. Additionality tool misunderstood or interrogated in 1000 ways by everyone (DOEs, EB, Brokers, DNAS, the so called experts?, among others.) Why? Lack of DNAs offices dedicated exclusively to CDM related issues, with national budget for its functionality.  Not clear procedures to emit LoAs Still a learning by doing process globally.  Too many questions related to buyer and seller issues instead to focus on Modalities and Procedures approved Decisions.  Everyone tends to act as subjective lawyers (liers) instead of being objective into understanding the issue.

3 Others Barriers for CDM Development in Panama up to Lack of knowledge about what it is CDM and it benefits among the public and private sectors. Lack of qualified personal specialized in CDM related issues. Difficulties accessing funds for the financing of CDM activities. Much more difficult access to funds for the financing of projects. Unclear rules to get Letter of Approval. Usually confused. Tended to lead PPs to skip local legal environmental process.

4 Are we meeting our goals? Are we reducing GHG and contributing with sustainable development?

5 Some Answer to the Barriers: Panama case (1) Introduction of the subject at the highest levels decision makers of all the sectors involved by The National Environmental Authority (ANAM) Presidential Cabinet Some key local authorities Some key private sector stakeholders Creation of the Climate Change Unit (CCU) into ANAM structure. Creation of DNAs duties into CCU office and registration into the UNFCCC (2004). Understanding of some clear approved rules of CDM activities and search and target the local application under real national circumstances. Design of first portfolio of real potential CDM projects (32) (2004) presented at COP 10, Argentina by Vice Minister of Trade and Industry. Promotion of the CDM as a financial alternative for the financial closing of key projects from public sector ( Sanitation of Panama Bay and Panama City landfill ) and private promoters ( Renewable Energy ).

6 Some Answer to the Barriers: Panama case (2) Insertion of CDM activity as a way to get environmental license or approval if projects are very well structured from social and environmental point of view.  Need to meet Environmental Law Door to door education by DNA of benefits of CDM into the public and private sector (non stop and endless task). International Promotion of Panama as an attractive center for the implementation of CDM projects.  Portfolio has grown from 32(2004) to 108(2007) CDM possible official projects.  Major new investment programs in excess of US$ 2.5 billion are expected to be executed over the next four year as part of private and public sector partnerships, including those subject to CERs.  Emphasis on legislation that will allow for further CDM investment by private investors or in partnership with government. Particularly with regard to new investment in energy related activities. Design of the legal bases and the lineaments to establish a process of local approval for CDM projects (tied to national legal environmental instruments).

7 Key to the success At first, all efforts were focused on hydroelectric projects. Now the focus is on all the Renewable Energy projects possible to be developed or implemented as CDM projects. EIAs and PAMAs as key legal environmental tools for the acceptance of CDM projects. Use of above legal tools has created synergy with CDM. EsIA and PAMAs guarantee the social-environmental viability of projects at least on legal local reports which are mandatory. Understanding of the issue from key Ministries and Institutions (Presidential, Foreign Affairs, Economic and Finance, Trade and Industry, NAPS, PCA). Acceptance of CDM rules and link them to Country possibilities EsIA: Environmental Impact Assessment (new projects) / PAMAs: Plan of Adjustment and Environmental Management (projects before 2000)

8 Positives Results The Project promoters of the CDM projects had agreed to invest between (20-30%) of income of CERS to develop and to implement sustainable development. This has provoked that National Congress started to debate over and suggest a 30% mandatory investment on host communities under Renewable Energy Incentive Law 45. Approval of the Public Policy of Climate Change where CDM is framed within the subject of mitigation. To have a National Approval Process clearly defined. To have a Climate Change Unit personnel dedicated to the subject with national budget. To renew ANAM´s vision and objectives due to Climate Change To design a new National Environmental Strategy (short 2012 and long run 2020). Establishment of a DOE branch in Panama Establishment of some CDM Project Financial Institutions to interact with local CDM promoters and banks.

9 National Portfolio The Panamanian offer to the international carbon market is expressed in an always updated portfolio of potential CDM projects, which are promoted at international level. Project TypeNumber of projectsCERs Hydroelectric865,693,030 Eolic111,886,160 Methane71,747,819 Transportation225,680,600 Reforestation2450,000 Total 10829,770, Letters LoNOLoCLoA Project Status UVRRR Project 215

11 Population vs CERs/ per Capital Registered

12 GRACIAS Eduardo Reyes Sub Administrator General Autoridad Nacional del Ambiente Tel.: Fax: