Is the CDM delivering? Experiences in LAC

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Is the CDM delivering?Experiences in LAC

• Christiana Figueres
• for the
• Annex I Expert Group on the UNFCCC
• Paris March 21, 2005

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Presentation

• The good news
• - LAC has concrete CDM achievements
• The tough question
• - What should the CDM catalyze?
• The bad news
• - What cannot occur under current circumstances
• Moving forward
• - 2005-12
• - Post 2012

Figueres, 3-2005
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LAC Achievements

Institutional

• All countries have ratified UNFCC and KP
• Most countries have DNA or are forming
• Operational funding
• Public and international cooperation
• Canada, Dutch, Finland, Germany, Japan, CAF,
  UNEP/Riso, UNDP, WB
• MOUs
• Austria, Canada, Finland, France, Italy, Spain,
  Netherlands, others

Figueres, 3-2005
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LAC Achievements Capacity Building

• Major investment
• 18 million over past 3 years (Canada, WB, CAF,
  UNDP, UNEP, etc)
• Intra-regional capacity building
• Consulting
• Lesson sharing
• Exchange of views on UNFCCC negotiation

Figueres, 3-2005
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LAC Achievements Project
Pipeline

• 184 projects in some stage of preparation and
  under review on the part of DNAs
• 39 have received some degree of national approval
• 15 Letter of Endorsement
• 24 Letter of Approval

Source IDB, 2004
Figueres, 3-2005
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LAC Achievements Project Advance

• Projects under validation or registry
• Latin America 33
  62.3
• Asia 18
  34.0
• Africa 1
  1.9
• Other 1
  1.9
• Total 53
  100

Source www.unfccc.int updated Dec 1, 2004
Figueres, 3-2005
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LAC Achievements Market Share
Source World Bank, State Trends of Carbon
Market, June 2004
Figueres, 3-2005
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LAC Achievements Diversity in Size

• 17 Small-scale
• Smallest (by CERs) Zacapa/Honduras,
• small-hydro 1 kTonCO2/year 10 years
• 16 Conventional
• Largest (by CERs) Salvador de
  Bahia/Brazil landfill gas 800 kTonCO2eq/year
  7x321 years

Source unfccc.int updated Dec 2004
Figueres, 3-2005
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LAC Achievements Diversity of Sectors
(Validation Registration stages)
Source for project information CDM EB web page,
Nov.2004
Figueres, 3-2005
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LAC Achievements Diversity of Participants
(Validation Registration stages)
Source CDM EB web page,Nov.2004
Figueres, 3-2005
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LAC Achievements Methodological Expertise
New methodologies proposed by
Source for project information CDM EB web page,
Nov.2004
Figueres, 3-2005
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LAC Achievements Technical Expertise
PDD Development
Figueres, 3-2005
Source for project information CDM EB web page,
Nov.2004
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LAC Achievements Private Sector
Engagement

• PDDs validated, methodologies submitted
• Econergy
• Ecoinvest
• Ecosecurities Brazil
• ICF Consulting do Brazil
• MGM International
• Poch Ambiental
• Urquidi, Riesco, y Compania

• PDDs in pipeline
• CAEMA
• CCD
• Servicios Ambientales
• Others

Source for project information CDM EB web page,
November 2004 National CDM Offices
Figueres, 3-2005
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LAC Achievements Reduction of Transaction
Costs

• DNAs
• Evaluate and approve projects
• CDM promotion
• Market enabling
• Applicant Entities
• ICONTEC in Colombia
• TECPAR in Brazil
• 4 provisionally Designated Operational Entities
  have local offices/representations in LAC

Figueres, 3-2005
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LAC Achievements Reduction of Transaction
Costs

• CAF (Andean Development Corporation)
• 17 member countries, regional presence
• Both public and private lending
• Infrastructure focus
• Energy, transportation and industry
• Carbon finance program (PLAC) since 1999
• ER intermediary since 2002
• Mitigates risk
• Has transacted 10MT, 18 under evaluation

Figueres, 3-2005
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LAC Achievements Projects have Positive
Impacts

• Greening energy mix
• Increasing access to energy in rural areas
• Introduction of new technologies
• Improving air quality
• Conserving natural resources
• Others

Figueres, 3-2005
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The Tough Question

• Back to Basics
• Assist industrialized countries in achieving KP
  compliance
• Assist non A-1 in achieving sustainable
  development
• Assist non A-1 in contributing to atmospheric
  stabilization

Figueres, 3-2005
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• Achieving SD
• and
• Contributing to stabilization
• require
• integrating climate considerations
• into domestic policy of non A-1
• in order to
• decarbonize growth trajectories

Figueres, 3-2005
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CDM not helping to integrate cc into national
policies in LAC

• Institutional weaknesses of DNAs
• Min Env except Br, Gua, Jam
• Low level funding/ scarce staffing
• Mandate
• Regulatory project is congruent with existing
  policies
• Promotional

Figueres, 3-2005
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CDM not helping to integrate cc into national
policies in LAC
2. Limited impact of capacity building
Figueres, 3-2005
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CDM not helping to integrate cc into national
policies in LAC

• Design of the CDM
• Project-based instrument
• Single isolated projects
• Congruency with existing national policies
• B. Interpretation of additionality/national
  circumstances excludes climate friendly policies.
  

Figueres, 3-2005
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5 Case StudiesBrazil, Colombia, Costa Rica,
Ecuador, Mexico

• History of mitigation activities
• Current institutional arrangements
• Experience to date with CDM
• Other sectoral initiatives with GHG emissions
  implications
• Assessment of integration of climate
  considerations into national policies

Figueres, 3-2005
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5 Case StudiesBrazil, Colombia, Costa Rica,
Ecuador, Mexico

• Conclusions
• DNA does not necessarily lead to CDM projects
• Countrys mitigation activities cannot be
  measured by its involvement in carbon market
• Integration of climate considerations into
  national policies can disqualify projects from CDM

Figueres, 3-2005
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Irony

• Some countries are integrating climate
  considerations and national policies
• But they are/will be disqualified by the CDM

Figueres, 3-2005
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Perverse Incentive

• CDM most successful in those countries with
  climate damaging policies
• Non-A1 continue on an emission intense growth
  path, and implement a few isolated CDM projects

Figueres, 3-2005
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LAC emissions are rising faster than global
emissions
Source WRI, CAIT
Figueres, 3-2005
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Global CO2 intensity is declining LAC intensity
is rising
Source WRI, CAIT
Figueres, 3-2005
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Moving forward2005-12

• Move capacity building to system level
• Initiate more local banks in carbon finance
• Push for methodologies which help integrate cc
  into national policies
• Pilot one sector
• Methane recovery from landfills in LAC

Figueres, 3-2005
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Moving forwardpost 2012

• Deepening of A -1 commitments
• Market mechanism for non A-1 participation
• Sector wide
• Large scale initiatives which transform sector
• Policy based
• Intentional SD policies
• Market pull for clean technologies

Figueres, 3-2005
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Moving forwardpost 2012

• Request WB to launch a Carbon Adjustment (DLP)
  initiative for larger non A-1
• Energy/transportation policy reforms to reduce
  carbon intensity
• Policy pull for clean technologies
• Appropriate financing instruments
• Decarbonization of key sectors
• Greening of the WB lending portfolio

Figueres, 3-2005
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• Institutional Capacity
• to Integrate Economic Development
• and Climate Change Considerations
• An Assessment of DNAs in LAC
• Inter American Development Bank, October
  2004
• Christiana Figueres
• Tel. [phone]
• christiana_at_figueresonline.com

www.iadb.org/sds/ENV/publication/publication_183_3
901_e.htm