Clean Development Mechanism Status and outlook

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1 Presented by: Neeta Hooda UNFCCC Secretariat Clean Development Mechanism Status and outlook Presented at: UNFCCC Media Training Workshop, Accra, 26 August

2 The Kyoto Protocol Entry into force on 16 February Parties (April 2008) Main features Legally binding targets for emissions of six major greenhouse gases in industrialized countries during first commitment period New international market-based mechanisms, creating a new commodity: carbon Facilitate sustainable development and additional support to developing countries on adaptation 2

3 The three Kyoto mechanisms Emission Trading (ET): exchanging emission allowances among Kyoto Protocol Parties Clean Development Mechanism (CDM): credits for emissions avoided through sustainable development projects in developing countries (non-annex I countries) Joint Implementation (JI): credits for emissions avoided through projects in Annex I countries 3

4 The three Kyoto mechanisms Clean Development Mechanism Projects in developing countries can earn saleable credits for reducing/avoiding emissions certified emission reductions (CERs) The CERs can be used by countries with commitments under KP toward meeting a part of their targets Host countries benefit from sustainable development initiatives 4

5 What is the Clean Development Mechanism? Described in Article 12 of KP Projects in non-annex I countries developing countries. Projects must Contribute to sustainable development Result in real, measurable, verifiable, additional emission reductions Projects earn saleable/tradable certified emission reductions (CERs) 5

6 What is the Clean Development Mechanism? Mechanism overseen by: Executive Board (meets about eight times a year) Approval required from Parties (host country) and other Parties if any designated national authority (DNA) Projects vetted by designated operational entities (DOE); Executive Board, supported by panels and working groups, registration and issuance teams, with help from secretariat 6

7 CDM characteristics Underlying demand is driven by legally binding emissions reduction targets AI (developed countries) Lowers the cost opportunities for mitigation actions Creates incentives for investment that assist in sustainable development & enables ToT Project specific & bottom up Counter-factual base-line Additional to that which would otherwise would have happened Several scales (small, large, programmes) Run by CDM-EB, answerable to KP Parties Back-stopped by UNFCCC secretariat with support for: Registration and issuance Accreditation of certification companies Methodologies for emissions baseline setting & monitoring 7

8 CDM Regulatory Bodies Country approves COP/MOP supports DNAs elects supervises accredits EB supports recommends DOE MP RIT AP UNFCCC secretariat A/RWG SSCWG supports recommends 8

9 CDM project cycle Regulated mechanism overseen by Executive Board assisted by Panels Working groups Registration and issuance teams UNFCCC secretariat Validation: DOEs Project design: Project participants Registration: Verification/ certification DOE Executive Board Emission reductions: Real Measurable Verifiable Additional Monitoring PPs CER issuance EB 9

10 How it works Without CDM project With CDM project Emissions Time = CERs certified emission reductions 10

11 CDM concept additionality Project participants have to demonstrate to a validator that the project activity would otherwise not be implemented due to the existence of one or more barriers in order to prove that it is additional to what would have occurred in the absence of the CDM A TOOL IS AVAILABLE TO HELP! Revenue from the carbon offsets must be a primary driver for project implementation - availability of a financially more viable alternative that would have led to higher emissions Local resistance, lack of know-how, institutional or technological barrier - existence of a less technologically advanced alternative involving lower risks in terms of performance or market share and at the same time leading to higher emissions Employ technology that is not very commonly used - prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions 11

12 General overview of the CDM To date: 1,133 registered CDM projects 1.29 billion CERs expected from existing registered projects to the end of 2012 In pipeline: > 3,000 projects (including registered projects) > 2.7 billion CERs expected to the end of 2012 (assumption: no extension of crediting periods) Map and statistics accessible at 12 Status: 07 August 2008

13 General overview of the CDM CDM the largest CO2 offset system in the world 1,133 registered projects to date Over 2000 projects in addition in the pipeline 49 countries 177,487,941 CERs issued (certified emission reductions) 2.7 billion CERs expected to end of Status: 7 August 2008

14 Status of the CDM Parties with DNAs, project experience *number of parties with project experience cannot be calculated due to lack of information 14 Status: 7 August 2008

15 Status of the CDM Registered projects, by project type 15 Status: 7 August 2008 * Note that a project activity can be linked to more than one sectoral scope

16 Status of the CDM Registered projects, projects by region 16 Status: 7 August 2008

17 CDM scaling up Programme of activities Programme of activities is Voluntary coordinated action by a private or public entity which coordinates and implements any policy/measure or stated goal... which leads to GHG emission reductions or increase in net GHG removals by sinks that are additional to any that would occur in the absence of the PoA, via an unlimited number of CDM project activities, perhaps over a large area (e.g. town, state, region) 17

18 CDM Programme of activities Design frame Can extend to one or more countries Letter of approval from each host country and AI country Letter of approval states a PoA, and hence each project activity under it, contributes to SD of host country Project activities are similar Apply the same approved baseline and monitoring methodology Involve one type of technology or set of interrelated measures in the same type of facility/installation/land PoA duration 28 years maximum Crediting period of project activities in the PoA: 10-year fixed, or 7 years, renewable twice, as per Procedures for Renewal of a Crediting Period of a Registered CDM project activity, limited by duration of the PoA. 18

19 CDM Programme of activities Design frame PoA Project activity PoA and initial project activity submitted together Project activity Project activities added later Project activity Project activity Project activity A private or public entity implementing any policy/measure or stated goal requests registration of PoA with one project. Other project activities added later, according to proposed process for inclusion. 19

20 Thank you Information cdm.unfccc.int CDM Bazaar Catalogue of decisions (test): UNEP RISOE 20