0 The 2 degree target - Raising ambition through use of markets Frank Wolke, Germany Global Forum on the Environment, CCXG, Sept. 8, 2015
The 2 degree path – still achievable Basic assumption: maximum 21th century warming may still be limited to 2 degree 1. Necessary are comprehensive global emission reductions from 2020 2. That means that progress in climate negotiations within this decade is imperative to keep the 2 degree target within reach 3. There exist options for a variety of aspects around the differentiation of mitigation commitments. Yet a question still remains: how to move beyond current INDC´s? 4. No silver bullet, but different approaches / activities: A portfolio approach that incorporates multiple options may be most suited to ensure environmental effectiveness, cost-effectiveness and political feasibility ‹Nr.›
Use of market instruments Basic Idea: (Voluntary) increase of ambition through the use of market instruments 1. Experience so far: UNFCCC has enabled the development of innovative policy instruments for the joint achievement of common goals (especially with ETS and CDM) 2. This mobilized private financing for CDM projects with more than 1,5 bl. T CO2- reduction. 3. Estimation: The CDM can continue to leverage private investment 10 times the public funds allocated 4. Challenges / Barriers for market instruments: no further demand at the moment Hot air Markets been criticized for not providing environmental integrity (SRI study for JI) and being a zero sum game ‹Nr.›
Future use of markets 1. In the context of this year´s UNCCC negotiations: Give a clear signal to the market Facilitate the use of markets as add-on to NDC´s Some INDC already have incorporated such approaches („conditional targets“) EU: 40 % target for 2030 without markets, but door is open for „ways to collectively increase ambition further” Ensure that market mechanisms have more uniform rules, standardisation and robust MRV system to build up credibility and avoid hot air 2. Outside the negotiations: Transistion to domestic offsetting activities Other means of financing mitigation: result-based finance, green bonds ‹Nr.›
Possibilities incentives for using marketes within UNFCCC ‹Nr.›
Result-based finance : supplementary to UNFCCC commitments? Much interest from investment side: issue of Green Bonds increase steadily: from 11 bl. $ in 2013 to 32 bl. § in 2014, expactations for 2015 up to 100 bl. $ Direct climate finance seen by some Parties as better alternative to markets; but uncertainty about its contribution to reduction targets But: No common rules or standards in place Rules on the Green Climate Funds (GCF) are being elaborated necessary to assess contribution to 2 degree pathway Developments in current market instruments may be used as a toolbox for climate financing: Clear measurement of mitigation outcomes through MRV tools already established in CDM regulations Assessment of activities through methodologies also already established in CDM regulations ‹Nr.›
Domestic offsetting activities beyond UNFCCC Strengthening voluntary contributions (as stated in the Warsaw Dec.1/CP19: Inviting Parties to promote the voluntary cancellation of certified emission reductions, without double counting, as a means of closing the pre-2020 ambition gap ): Germany will voluntarily offset its governmental travel emissions which may give strong signal to private entities to join such activities German Foundation „Future of the carbon market“ providing start-up finance Use of CDM methodologies and MRV requirements for domestic systems (see China: transformation of these methodologies into regionally applicable methodologies) – CDM as tool box for other means Participation in purchase programmes like PAF A lot of capacity and experiences have been set up for current market instruments that should be used for post 2020 carbon markets. Do not reinvent the wheel ! And Use different financing ressources for leverage ‹Nr.›
Thank you for your attention! Frank Wolke Head of German DNA/DFP section E-Mail: German.dna.dfp@dehst.de Internet: www.dehst.de
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