Is the CDM delivering? Experiences in LAC Christiana Figueres for the Annex I Expert Group on the UNFCCC Paris March 21, 2005
Jan 03, 2016
Is the CDM delivering?Experiences in LAC
Christiana Figueres
for the
Annex I Expert Group on the UNFCCC
Paris March 21, 2005
Presentation
1. The good news- LAC has concrete CDM achievements
2. The tough question- What should the CDM catalyze?
3. The bad news- What cannot occur under current circumstances
4. Moving forward- 2005-12
- Post 2012
Figueres, 3-2005
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
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
• 184 projects in some stage of preparation and under review on the part of DNA’s
• 39 have received some degree of national approval– 15 Letter of Endorsement– 24 Letter of Approval
LAC Achievements:
Project Pipeline
Source: IDB, 2004Figueres, 3-2005
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, 2004Figueres, 3-2005
LAC Achievements:
Market Share
2002-2003OECD19%
Transition Economies
15%
Africa5%
Asia21%
Latin America
40%
2003-2004 OECD10% Transition
Economies8%
Africa4%
Asia51%
Latin America
27%
Source: World Bank, State & Trends of Carbon Market, June 2004 Figueres, 3-2005
• 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; 7x3=21 years
LAC Achievements:
Diversity in Size
Source: unfccc.int updated Dec 2004
Figueres, 3-2005
LAC Achievements:
Diversity of Sectors
Renewable energy 52%
Biomass 3%
Landfill gas 27%
Other methane recovery
15%
Fossil fuel switch 3%
Source for project information: CDM EB web page, Nov.2004
(Validation & Registration stages)
Figueres, 3-2005
Source: CDM EB web page,Nov.2004
private company
52%
public-private3%
n.a.6%
state-owned; local
government 16%
subsidiary of transnational
23%
(Validation & Registration stages)
LAC Achievements:
Diversity of Participants
Figueres, 3-2005
LAC Achievements:
Methodological Expertise
LAC based experts
68%
Annex 1 experts
19%
Multilateral funds: staff
13%
New methodologies proposed by
Source for project information: CDM EB web page, Nov.2004
Figueres, 3-2005
LAC based experts 49%
Annex 1 experts 24%
Multilateral funds: staff
18%
n.d. 9%
Source for project information: CDM EB web page, Nov.2004
PDD Development
LAC Achievements:
Technical Expertise
Figueres, 3-2005
• PDDs validated, methodologies submitted:
– Econergy– Ecoinvest– Ecosecurities Brazil– ICF Consulting do Brazil– MGM International– Poch Ambiental– Urquidi, Riesco, y
Compania
• PDDs in pipeline:
– CAEMA
– CC&D
– Servicios Ambientales
– Others
LAC Achievements:
Private Sector Engagement
Source for project information: CDM EB web page, November 2004; National CDM OfficesFigueres, 3-2005
• 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
LAC Achievements:
Reduction of Transaction Costs
Figueres, 3-2005
• 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
LAC Achievements:
Reduction of Transaction Costs
Figueres, 3-2005
• Greening energy mix
• Increasing access to energy in rural areas
• Introduction of new technologies
• Improving air quality
• Conserving natural resources
• Others
LAC Achievements:
Projects have Positive Impacts
Figueres, 3-2005
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
“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
CDM not helping to integrate cc into national policies in LAC
1. Institutional weaknesses of DNAsa. Min Env – except Br, Gua, Jam
b. Low level funding/ scarce staffing
c. Mandatea. Regulatory: project is congruent with existing policies
b. Promotional
Figueres, 3-2005
CDM not helping to integrate cc into national policies in LAC
IMP
AC
T
INTEGRATION
Integrate industry Sectoral policies Local project finance
SYSTEMLEVEL
Legal framework of DNA Evaluation criteria Approval procedures
INSTITUTIONAL LEVEL
Project preparation Baseline methodologies Additionality
INDIVIDUAL LEVEL
2. Limited impact of capacity building
Figueres, 3-2005
CDM not helping to integrate cc into national policies in LAC
3. Design of the CDM
A. Project-based instrument• Single isolated projects • Congruency with existing national policies
B. Interpretation of additionality/national circumstances excludes climate friendly policies.
Figueres, 3-2005
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
5 Case StudiesBrazil, Colombia, Costa Rica, Ecuador, Mexico
• Conclusions:– DNA does not necessarily lead to CDM
projects– Country’s 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
Irony
Some countries are integrating climate considerations and national policies
But they are/will be disqualified by the CDM
Figueres, 3-2005
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
LAC emissions are rising faster than global emissions
Source: WRI, CAITFigueres, 3-2005
Global CO2 intensity is declining; LAC intensity is rising
Source: WRI, CAITFigueres, 3-2005
Moving forward…2005-12
• 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
Moving forward…post 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
Moving forward…post 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
“ Institutional Capacity to Integrate Economic Development
and Climate Change Considerations: An Assessment of DNAs in LAC ”
Inter American Development Bank, October 2004
Christiana FigueresTel. +1-202-294-4898
www.iadb.org/sds/ENV/publication/publication_183_3901_e.htm