THE NETWORKED CARBON MARKETS INITIATIVE Barcelona May 26, 2017 - PowerPoint PPT Presentation

THE NETWORKED CARBON MARKETS INITIATIVE Barcelona May 26, 2017

MARKETS, KEY TOOL TO ADDRESS CLIMATE CHALLENGES Political alignment: NDCs of 84 countries call for markets and/or carbon pricing mechanisms – including 72 in developing countries Cost Savings: market efficiencies reduce costs of low carbon growth Resource mobilization: crowd-in public and private capital Cost of each country acts Intl cooperation through Intl cooperation through alone carbon market by 2030 carbon market by 2050 3 5 0 0 % % $ $ $ 2 Source : World Bank Group, 2016

AN INTERNATIONAL MARKET - 2030 3

4 WHERE DO MARKETS FIT UNDER PARIS? Article 6 has the opening for developing markets – agreement on guidance and rules is still under negotiation by Parties Using cooperative approaches to enhance mitigation ambition under NDCs Objectives Art. 6.2 Art. 6.4 Under the authority/ supervision of the Top Down Bottom-up Under bi- or plurilateral governance Governance COP Metrics Introduces “mitigation outcomes” (MOs) from “a mechanism to contribute to the mitigation of any mechanism/procedure/protocol GHG and support sustainable development” Parties can design and use carbon pricing instruments domestically. Today. Examples: Chile, China, India, Mexico and South Africa, among others. Markets instruments should create demand for a domestic market that will grow over time to include linkages to create an international market. Bottom-up markets appear to be the most promising approach under the Article 6.2 paradigm.

5 WHERE DO MARKETS FIT IN PARIS? • Paris Agreement encourages mitigation action relevant to national circumstances (as reflected in their NDCs) by all Parties • Comparability of the mitigation outcome of the mitigation action will be the starting point for any international transfer of the mitigation outcome Assessment of climate ambition: Assessment of mitigation action: Use of MAAP Climate Transparency initiative Domesti National c Country MOs Registry ITMOs International Clubs assessment and/or mitigation action system markets process NDC accounting

WHAT IS NETWORKING? Direct Linking System A System B A common market is explicitly established between Systems A and B (e.g. California-Quebec, EU-Switzerland) System B Indirect Linking System A System C Systems B,C, and D are indirectly linked via System A (e.g. Clean Development Mechanism) System D Networking System System A Designed to link heterogeneous climate actions B 6

WBG STRATEGY FOR CLIMATE MARKETS AND LINKAGE PROMOTING THE CASE AND EVIDENCE BASE FOR CARBON PRICING AND MARKETS e.g., Carbon Pricing Leadership Coalition; State and Trends of Carbon Pricing reports CONNECTIVITY AND GLOBAL TRANSFER Enabling cooperation of all IMPLEMENTATION AND SCALE-UP types of climate actions, including carbon pricing mechanisms, through Enabling scale-up PLANNING, DESIGN AND PILOTS internationally connected of climate actions such as climate and carbon markets carbon pricing mechanisms Innovating and building readiness for climate action, The NCM Initiative including carbon pricing e.g., TCAF, PAF, Ci-DEV instruments e.g., PMR 7

NCM’S SHORT, MEDIUM AND LONG TERM VISION LONG TERM Comparability MEDIUM TERM and linkage of mitigation Comparability outcomes and transfer between of mitigation SHORT TERM countries on a outcomes: regional or Design and • within a country implementation of multilateral basis • between robust, “market - countries on a ready” mitigation bilateral basis actions 8 • Benchmarking • Guide climate finance

NCM’S CONCEPTUAL FRAMEWORK Establishment of an overarching, coordinated Independent Assessment Framework framework to measure the relative mitigation Within country: use of MAAP to assess mitigation actions outcomes (“mitigation value”) of different Between countries: use of CTi for national climate ambition actions Track cross-border trades (manage risk of International Settlement Platform double counting) and provide possible clearing house functions A pooled reserve of carbon assets to manage carbon market related risks (e.g., price International Carbon Asset Reserve volatility, invalidity of issued and allocated carbon units) 9

MAAP: INDEPENDENT ASSESSMENTS AT THE PROGRAM LEVEL Environmental integrity 1 2 3 4 Program Manageme Financial Developme MAAP launch nt Entity Structure nt Benefits Definition & Scope Management Development Framework Financial coherence objectives and May 23 (Tue) from 2:45 pm to 5 pm Objectives & Targets targets Financial and Planning https://maap.worldbank.org/#/homepage Investment Financial Planning and Documents, document stakeholders participation control and records Programs management Emissions reductions Monitoring of from interventions Monitoring financial development Infrastructure at the flows benefits program level Monitoring and reporting 10 MAAP-Design and MAAP-Implementation

MAAP PARTNERSHIPS AND COLLABORATION 11

ASSESSMENT OF CLIMATE AMBITION: CLIMATE TRANSPARENCY Secretariat Technical partners Climate Technical partners Transparency is a consortium of experts and organizations that have a common goal to enhance assessments Funding partners of climate action http://www.climate-transparency.org / 12

Private sector Concept Development outreach Institutional frameworks * ‘Options for Operationalizing a Carbon Trading Partners: INFRAS, Partners: Climate Ratio Mechanism’ (Austin) Grantham Institute, Reed Markets and Investment Smith, Xpansiv * Achieving compatibility and synergy between the Association (CMIA), IETA, CPLC NCM Initiative and Climate Clubs (Climate Strategies) MAAP * ‘Comparison and Linkage of Climate Mitigation Efforts in a New Paris Regime’ (Harvard/IETA) Partners: PMR, DNVGL, Thai Greenhouse Gas Office, Ministry ‘Explore the relevance and feasibility of the NCM of Environment of Peru, Initiative in Japan’ (IGES) Wageningen University, UNEP- * ‘A model for NCM based on the key elements and DTU Partnership, Gold Standard, principles of Comparative Markets’ (Macinante) IGES, Perspectives, Carbon Trust, * ‘NCM and its compatibility with a future UNFCCC Government of Jalisco in Mexico, regime’ (Marcu) ITAM, TERI * ‘Enabling Comparability of heterogeneous Emissions Trading Systems – Caps, MRV frameworks and non- compliance penalties’ (Munnings) Assessment and modelling * Enabling Comparability and Linkage of the REC Partners: and PAT Schemes (TERI) DNV, IISD, New Climate Institute, * The METRIC for successful linking post-Paris (Vivid Climate Transparency, Observer NCM Economics) to ISO Climate Change Partners Standards Committee, Enerdata 13

14 NETWORKED CARBON MARKET INITIATIVE International Independent Assessment International Carbon Reserve Framework Settlement Platform Assessment of climate ambition: Assessment of mitigation action: Use of MAAP Climate Transparency initiative Domesti International National c Country MOs Registry ITMOs markets/ assessment and/or mitigation action system Carbon process NDC Clubs accounting

SCALING UP THE APPLICATION OF THE MAAP ONLINE INTERFACE Barcelona May 26, 2017

ACTIVITIES YTD  2 work streams:  Internal – identify Bank supported projects and opportunities with Bank local offices - Ecuador, Mexico  Independent Assessments. IGES, Perspectives, GS, UNEP DTU, Carbon Trust.  MAAP Design and MAAP Implementation  Assessor Guidelines  Training and support to MAAP partners e.g. SECO, DTU-OLADE workshop  Scouting activities for MAAP Policy alignment module. 16

CONCLUSSIONS MAAP ROUNDTABLE  Benefit for having a reference point for the design of MA for NDCs  Evaluate strategy of targeting multiple (too many?) different users.  Partner with key stakeholders for those users to roll out online tool.  Need for comprehensive set of capacity building activities to ensure online tool is used.  MAAP in the context of the overall NCM long term strategy 17

SCALING UP MAAP Regional workshops with MA practitioners:  Capacity building  Populate online database Evaluate integration of UNDP SD Online Tool Strategy for external partnerships Adaptation Module Develop existing draft of MAAP Policy Alignment Module 18

1 RATIONALE, VISION AND OBJECTIVES SUPPORTING MARKETS AND NDC IMPLEMENTATION THROUGH THE MAAP TOOL 19

SHORT, MEDIUM AND LONG TERM VISION LONG TERM MEDIUM TERM Comparability and transfer Generation of of mitigation mitigation SHORT TERM outcomes outcomes at the across program level Design and countries • Comparability of implementation of • Exchangeability mitigation actions robust, “market - of carbon assets ready” mitigation actions • Self-evaluation 20 • Prioritization

WHAT IS THE MAAP? Environmental integrity 1 2 3 4 Program Manageme Financial Developme nt Entity Structure nt Benefits Definition & Scope Management Development Framework Financial coherence objectives and Objectives & Targets targets Financial and Planning Investment Financial Planning and Documents, document stakeholders participation control and records Programs management Emissions reductions Monitoring of from interventions Monitoring financial development Infrastructure at the flows benefits program level Monitoring and reporting 21 MAAP-Design and MAAP-Implementation