1. Programmatic CDM: Eligibility, Methodological Requirements and Implementation Development Dividend Side Event December 5, 2005 Christiana Figueres Team leader Team members: Margaree Consultants Econergy International

2. Goals of the WB Study Conceptualize programmatic CDM Confirm eligibility for 2008-2012 Identify methodological requirements Propose possible implementation mode

3. Material reviewed Kyoto Protocol and Marrakech Accords Executive Board reports ( 16, 17, 19, 20, 21) Meth Panel reports ( 15, 16 and 18) Meth Panel recommendations –NM0072- EE standards in Ghana –NM0100- EE motor replacement in Mexico –NM0108 – fuel switch biodiesel in India CDM project pipeline (CD4CDM) –406 on November 3, 2005 –13 projects w/ programmatic characteristics

4. Programmatic CDM Project Activities Private sector CDM Initiatives INCENTIVES (VOLUNTARY) Bagepalli biogas stoves Aceh solar cooker India irrigation devices Andhra Pradesh biodiesel (L) Nepal biogas partnership Kuyasa energy upgrade Morocco photovoltaic kits Moldova biomass & energy conservation (3 projects Khno Kaen ethanol (L) Mexico electric motor replacement (L) Public sector CDM Policies REGULATIONS (MANDATORY) Ghana EE standard (L) Classification of reviewed project activities “L” denotes Large scale

5. Projects reviewed Deploy renewable energy and EE technologies Often involve household, small industry, transportation High social benefits to poor and rural populations High transaction costs/low credit flows Need promoting program to occur

6. CDM project activities Single site Multiple sites under one program Types of CDM project activities

7. CDM programs Governmental policies Private sector initiatives Mandatory Voluntary Types of CDM programs Do not differentiate between “sectoral” and “policy-based” CDM

8. Definition Programmatic CDM project activities are those in which emission reductions are achieved as the result of the implementation of a government measure or private sector initiative. Restricted to those project activities that are real, measurable and verifiable.

9. Characteristics of programmatic project activities Occur as the result of a deliberate program –Government policy (mandatory or voluntary) –Private initiative (voluntary) Result in multiple dispersed actions –Not necessarily occur at the same time –Type, size and timing may not be known at outset –Each type of ER action should use appropriate baseline and monitoring methodology

10. Characteristics of programmatic project activities One enacting agent –Private or public –Provides incentives or obligations –One of the “project participants” –Does not necessarily implement all actions Program is the project activity –Actions are not project activities –Actions must be measured according to approved methodologies

11. Eligibility No provisions in KP or MA to make programmatic project activities ineligible “A project activity is a measure, operation or action that aims at reducing GHG emissions…” 1 public sector voluntary registered 2 private sector requesting registration EB considering 3 private and 5 public sector voluntary  Only missing link: programmatic project activities based on mandatory programs

12. Methodological Apply modalities and procedures for CDM mutatis mutandis As in current CDM practice: –Boundary –Leakage –Double counting

13. Methodological Baseline- adjust for two levels Program level- program not included if after November 2001 Action level- should reflect baseline at program level Additionality- adjust for two levels Program level - as in single site CDM Action level- as in single site if few large, or combination of eligibility conditions and free riders if many small

14. Methodological Crediting period –As in single site OR –Use of vintages where appropriate would reduce administrative burden Monitoring – adjust for multiple small actions –Sampling, etc

15. Implementation Eligibility should not be an issue Methodological vacuum –Programmatic project activities are being submitted “as if” single-site –EB should provide methodological guidance ASAP Multi dimensional application of existing methodologies No new conceptual approaches

16. Potential of programmatic CDM Broadens the scope of the CDM within the existing regulatory framework for 2008-2012 –Strengthens the CDM for energy efficiency and fuel switching projects (only about 5% of CERs in UNFCCC pipeline), also for renewables and waste management –Reaches the household sector, transportation sector and small enterprises with the CDM –Responds better to the needs of LDCs and poor communities

17. Thank You! Study on Programmatic CDM prepared for CFB World Bank by Christiana Figueres, Econergy International and Margaree Consultants available on: www.carbonfinance.org