Institute for Global Environmental Strategies Towards sustainable development - policy oriented, practical and strategic research on global environmental issues IGES view on new market IGES view on new market- IGES view on new market IGES view on new market based mechanisms based mechanisms based mechanisms based mechanisms Views expressed in this presentation is based on the submission to the UNFCCC on the view of “one or more market-based mechanisms” on Feb. 2011. h i ” F b 2011 7 June 2011 7 June 2011 IGES Side Event at SB34 Kazuhisa KOAKUTSU K hi KOAKUTSU Deputy-Director, Market Mechanism Group, IGES We need New Market Mechanisms We need New Market Mechanisms (NMM) in addition to CDM (NMM) in addition to CDM The CDM has created many opportunities for the mitigation projects in developing country. We see more potential in the CDM and the reform of the CDM is necessary in order to enhance efficiency y y of the system and maximize its potential. However we also need to recognize that there are However, we also need to recognize that there are more opportunities that the CDM has not tapped. E g Domestic emission trading offset scheme E.g. Domestic emission trading, offset scheme, policy-based mitigation activities (low carbon development policy) etc development policy), etc. 2
Elements of New Market Mechanisms Elements of New Market Mechanisms (NMMs) (NMMs) Principles I t International Framework to support market mechanisms ti l F k t t k t h i Differentiation of accounting system from KP system More flexibility for the design of the system M fl ibilit f th d i f th t Governance Establish “Market Mechanisms Committee” under COP Develop robust MRV guideline g Certify emission reductions (not the issuance of credit) Manage international accounting g g Robust MRV MRV guideline MRV guideline Third party GHG validation/verification (DOE, ISO14065) 3 Governance and Accounting Governance and Accounting UNFCCC UNFCCC UNFCCC UNFCCC Market Market Market Market Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms CDM EB CDM EB CDM EB CDM EB Committee Committee Committee Committee (MMC) (MMC) (MMC) (MMC) (MMC) (MMC) (MMC) (MMC) Int’l Accounting system Int’l Accounting system Int l Accounting system Int l Accounting system MRV Guideline MRV Guideline Non Annex Non Annex- Non Annex- Non Annex -I -I I I Annex Annex- Annex Annex- -I -I I I National Accounting National Accounting N ti N ti l A l A ti ti N ti N ti National Accounting National Accounting l A l A ti ti system for NMM system for NMM system for NMM system for NMM NAMA, Sectoral, NAMA, Sectoral, NAMA, Sectoral, NAMA, Sectoral, Finance, CB, Tech. Finance, CB, Tech. Finance, CB, Tech. Finance, CB, Tech. Project Project Project Project 4
What is the Guideline for MRV? What is the Guideline for MRV? What is the Guideline for MRV? What is the Guideline for MRV? CDM < MRV Guideline for NMM < ISO14065 Guidelines are designed to achieve a uniform approach to compliance with the applicable standards or procedures issued by the CMP and/or the EB. (EB53 Annex 38) CDM CDM PDD CDM-PDD CDM CDM CDM-PDD CDM CDM PDD PDD PDD PDD PDD MRV Guideline MRV Guideline MRV Guideline MRV Guideline MRV Guideline MRV Guideline MRV Guideline MRV Guideline ISO14065 ISO14065 ISO14065 ISO14065 ISO14065 ISO14065 ISO14065 ISO14065 A. General A. General A. A. General General - - Boundary Boundary Boundary Boundary -Boundary -Boundary description description description description - - Category Category Category Category -GHG source -GHG source B. Baseline/Monito B. B. B. Baseline/Monito Baseline/Monito Baseline/Monito (NAMA, (NAMA, (NAMA, (NAMA, -Baseline -Baseline ring ring ring ring Sectoral, etc) Sectoral, etc) Sectoral, etc) Sectoral, etc) scenario scenario C C. Crediting period C. Crediting period C. C C. Crediting period Crediting period Crediting period Crediting period Crediting period Crediting period - - Reference Reference Reference Reference Reference Reference Reference Reference -ER calculation -ER calculation ER calculation ER calculation D. D. Environmental D. Environmental D. Environmental Environmental scenario/emissi scenario/emissi scenario/emissi scenario/emissi -Monitoring -Monitoring impacts impacts impacts impacts impacts impacts impacts impacts on on on on on on on on E. E. E. Stakeholder E. Stakeholder Stakeholder Stakeholder - - Monitoring Monitoring Monitoring Monitoring 5 Possible scenarios for Market Mechanism? Possible scenarios for Market Mechanism? Scenarios 1 Scenarios 1 Scenarios 3 Scenarios 3 Scenarios 2 Scenarios 2 AWG AWG-KP AWG-KP AWG AWG AWG KP AWG AWG KP KP KP KP KP AWG-KP AWG-KP AWG AWG AWG AWG-KP AWG AWG-KP KP KP KP KP AWG AWG-LCA AWG-LCA AWG AWG AWG LCA AWG LCA AWG LCA LCA LCA LCA +AWG +AWG AWG- AWG- -LCA -LCA LCA LCA Pledge & Pledge & Pl d Pledge & Pl d Pledge & Pl d Pl d & & & & Review Review Review Review AAUs+ AAUs+ AAUs AAUs + + + + AAUs AAUs AAUs AAUs AAU AAU AAU AAU Pledge & Pledge & Pledge & Pledge & New Market New Market New Market New Market + + Review Review Review Review Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms Mechanisms CDM+JI+IET CDM+JI+IET CDM+JI+IET CDM+JI+IET CDM+JI+IET CDM+JI+IET CDM+JI+IET CDM+JI+IET (Including (Including (Including (Including New Market New Market New Market New Market CDM) CDM CDM CDM) ) ) Mechanisms Mechanisms Mechanisms M Mechanisms M M M h h h h i i i i CDM CDM CDM could be CDM could be could be utilized could be utilized utilized under any utilized under any under any scenarios under any scenarios scenarios scenarios New New market mechanisms market mechanisms should compete with should compete with CDM CDM 6
Approach for Accounting Approach for Accounting KP Units Emission Emission Emission Emission ± AAUs AAUs AAUs AAUs RMUs RMUs RMUs RMUs CDM/JI CDM/JI CDM/JI CDM/JI IET IET IET IET + + = Cap for Cap for Cap for Cap for AI AI AI AI AI AI AI AI New Market Mechanisms National National National National Adjusted Adjusted Adjusted Adjusted Certified Certified Certified Certified ± ± Inventory Inventory Inventory Inventory y = Emissions Emissions Emissions E E E E Emissions i i i i i i i i ERs by ERs by ERs by ER ER ER ER ERs by b b b b For AI & NAI For AI & NAI For AI & NAI For AI & NAI MMC MMC MMC MMC National National National National Communication Communication 7 Su Summary and Issues Forward Summary and Issues Forward Su a y a d ssues a y a d ssues o o a d a d The objective of new market mechanisms (NMMs) is to recognize various approaches (NMMs) is to recognize various approaches for ERs activities in developing countries and promoting them through certification. NMMs should help developing countries to NMMs should help developing countries to achieve low carbon development while utilizing market based approach domestically utilizing market-based approach domestically. Since it is early stage, we need to develop and robust MRV guideline and pilot test NMMs in order to show the effectiveness of NMMs in order to show the effectiveness of the mechanism. 8
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