T HE W ORLD B ANK C ARBON F INANCE U NIT Programme of Activities for Cities and suitability of current framework and rules P RESENTATION AT UNFCCC P O.

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Programme of Activities for Cities and suitability of current framework and rules

PRESENTATION AT UNFCCC POA WORKSHOP MAY 2011

BY FELICITY SPORS ([email protected]) & MONALI RANADE ([email protected])

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Contents

• Why do we need a city-wide PoA ?

• How does a city-wide PoA work in practice?

• Regulations needed to support city-wide PoAs.

• PoA regulatory barriers also impact city-wide PoAs.

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“Globally, cities emit up to 70% of all GHGs but occupy only 2% of the world’s land” Source: UN Habitat

Transportation of Waste

WasteTransport

Urban Forestry

Water

Grey water reuse

Sludge treatment

Pedestrian comfort

Energy

Traffic management systems

Biogas-to-energy

Efficient water

pumping

Heat island effect

Sources of emissions:1. Transport2. Solid waste3. Water 4. Energy usage

Emission sink:Urban forestry

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Current options for cities to access carbon finance*

City A

City B

City C

Waste

Waste

Waste

Transport

Transport

Transport

water

Options 3: PoA across many cities (e.g., Transport CPAs in City A, B and C )

Option 1: Stand-alone project in one large city (e.g., LFG project in City A)

Option 2: Bundle of two or more projects in one city or across multiple cities (e.g., EE in water pumping in City B and City C)

water

* Under CDM

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• Small individual projects - Average size of stand alone medium sized projects in cities result in approx. 5000 CERs/yr.

• Bundling or PoAs across cities is administratively complex - Repeated clearances from the same city council for different projects created problems.

• Lack of support for strategic planning by the city – City authorities are not encouraged by current CDM to take a holistic view of their city.

• Direct benefits of city participation are hard to quantify – The direct local benefits CDM projects may be difficult to quantify, making it difficult for city authorities to justify expenditures on these projects

Key challenges for cities accessing current CDM

Solution proposed – city wide PoAs: The idea is to better align CDM project planning with normal urban planning and management processes, which are focused on provision of urban services. E.g. Eco-city Tianjin, Amman city PoA.

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Structure of city-wide PoAs

Management, Implementation, monitoring & reporting

Implem

entation over time

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Sectoral scope included in city-wide PoA

Sectoral Scope Examples of project activities (CPA) Methodology 1. Energy industries (RE / non-renewable)

Solar water heaters AMS I.CWind power ACM0002

2. Energy distribution Loss reduction AMS II.A3. Energy demand CFL AMS II.J

Street-lighting, water pumping AMS II.C or AMS II.LBuilding energy efficiency AMS II.E or AMS III.A.E.

6. Construction Recycling of building material When available7. Transport Bus Rapid Transit AM0031 or ACM0016

Retrofit AMS III.AAElectric vehicles and fuel-switching

AMS III.C,AMS III.S

13. Waste handling and disposal

Landfill gas ACM0001, AMS III.G

Municipal waste management, incl. recycling and waste water treatment

AMS type III methodologies

14. Afforestation and reforestation

Creation of green areas, in and around the city

AR-AMS0002

15. Agriculture Manure management system AMS III.D or ACM0010

Environmental integrity of city-wide PoAs

• Clear attribution of emissions: Emission Reductions can be traced to the exact and unique technology/measure implemented by each CPA

• Transparency and conservativeness: Calculation of ERs using approved (large/small/consolidated) methodology

• Baseline Scenario: Identified for each CPA

• Additionality: Established for the entire PoA (as financing guidelines for the PoA) or for each CPA (as IRR or EIRR benchmark)

• Monitoring: Integrated with the existing administrative system and undertaken for each CPA as per the approved methodology

• Avoidance of double-accounting: Ensured by maintaining central database of unique combinations of location and technology for individual CPAs, within the geographical boundary of the municipality.

• De-bundling: PoA will be a large-scale activity, though depending on project size and availability of methodology, appropriate methodology (large/small/consolidated) will be used for each CPA Contd.

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Paragraph 4(b) of the CMP.6 decision:

“Requests the Executive Board to reassess its existing regulations related to programmes of activities in order to: [] (b). simplify the application of programmes of activities to activities applying multiple methods and technologies, including for possible city-wide programmes, while ensuring environmental integrity to the extent required by the Kyoto Protocol and decisions of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol”

Decision of CMP6, December 2010 regarding the city-wide programmes

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• Allow use of multiple methodologies under a PoA

• Modify the PoA-DD format and remove requirement for generic CPA-DD

• To begin with, use of multiple methodologies can be restricted to PoAs that– Are implemented by a legally distinct entity (e.g., a municipal authority)

– Use approved CDM methodologies

– Allow for unique identification of each project activity (technology, location)

– Develop a centralized database system to avoid double-counting

– Each CPA has distinct and clear linkage with the municipal authority, i.e., the project is implemented by • the municipal authority directly (e.g., Bus Rapid Transit system) or

• through a sub-contractor (e.g., solar water heater for households) or

• by a private investor (e.g., wastewater treatment for the city)

Rules required to allow city wide PoA

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These are common to all PoAs and therefore will also affect the City-wide PoA.

• Lack of appropriate methodologies for some sectors – energy efficiency in buildings, transportation, etc.

• Liability for DOEs – erroneous inclusion issue needs to be addressed.

• No clear guidance on impact of mandatory law on baseline emissions. i.e. how to treat a program that is helping to achieve the greater compliance of the mandatory law should be treated especially for calculating the baseline emissions.

• Addressing uncertainty to ensure integrity of CERs - Need for greater clarity on sampling and appropriate discounts in the light of uncertainty to increase.

General challenges with PoA

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Thanks for listening

Transportation of Waste WasteTransport

Urban Forestry Water

Grey water reuse

Sludge treatmentPedestrian

comfortEnergy

Traffic mgt Biogas-to-energy

Efficient water

pumping

Heat island effect

City-wide program

Carbon markets

Climate finance

National/local government

Bi-lateral agencies

Private investors

Local jobs

Pollution reduction

Air quality

Energy saving

Quality of life

GHG mitigation

1. Define structure 2. Define boundary3. Prepare inventory4. Identify agencies5. Define incentives6. Identify activities7. Establish database8. Implement activities9. Quantify GHG ER10. Validate/verify

How to validate and verify city-wide PoA

Validation of PoA and 1st CPA• CME prepares PoA-DD and 1st CPA-DD

• DOE team with PoA experience and sectoral scope of 1st CPA

• DOE validates the CME structure and central database. The DOE also validates all other PoA requirements, eligibility, additionality, stakeholder consultation, Environmental Assessment, etc.

Inclusion of CPA in registered PoA• CME prepares CPA-DD(s)

• DOE team with sectoral scope of the relevant CPA (2nd, 3rd,…, nth)

• Site-visit, if required

Verification• CME prepares monitoring report

• DOE with sectoral scope of the CPA(s) to be verified

• Site-visits, as required, verification of database and CDM requirements

Amman

Green

Growth

Program

AA

BB

CC

A A – GAM implemented activities

B B – Activities within GAM boundary, implemented by other public or private sector agencies (e.g., BRT)

C C – GAM supported activities, outside GAM area(e.g., wind farm)

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Examples of sector specific regulatory challenges for transport and housing in city wide PoA.