Urban Carbon Mechanisms: A Handbook for Local Policy Makers Outline & Recommendations Heather ROGERS Project Manager, Climate Change & Energy Transition.

Urban Carbon Mechanisms:A Handbook for Local Policy

Makers

Outline & Recommendations

Heather ROGERSProject Manager, Climate Change & Energy Transition

ENERGIES [email protected]

Urban Methodologies for the built environment Workshop27-28 March 2014

UNFCCC Headquarters, Bonn, Germany

Stéphane PouffaryChief Executive Officer

& Founder Honorary President


“Urban Carbon Mechanisms: A Handbook for Local Policy Makers”UNFCCC & UNEP Urban Methodologies for the built environment workshop, 27-28 March 2014, Bonn, Germany

[email protected] & [email protected]

Overview1. Intro to the Handbook in preparation

2. Challenges for GHG mitigation in urban context

3. Metrics for measuring GHGs in built environment

4. The importance of MRV

5. Carbon & climate finance mechanisms - overview of key mechanisms, relevance for built environment

6. Recommendations

And then over to you – discussion questions; feedback



1. Intro to the Handbook in preparation“Urban Carbon Mechanisms: A Handbook for Local Policy Makers”Being prepared by ENERGIES 2050 for UNEPTo guide local policy makers through carbon & climate finance mechanisms and their application in the built environment

Objectives: 1. Raise awareness of the potential for carbon &

climate finance to support GHG mitigation in the built environment

2. Help local authorities to use carbon mechanisms as part of wider climate strategies, to increase energy performance of their district and generate revenue



Two documents being prepared: an in-depth research paper and a simplified “Handbook for Local Policy Makers”

Version circulated = abridged version of research paper, for discussion

Focus on urban context throughout

Structure:Context of recent climate negotiationsBuildings & cities: commonalities, challenges, opportunities, metrics & methodologies for measuring emissionsThe importance of MRVCarbon & climate finance mechanisms – existing and in developmentLooking ahead, recommendations

Best practice case studies are presented

Your feedback and best practice examples please!

1. Intro to the Handbook in preparation



2. Challenges for urban GHG mitigation – buildings

Buildings are one of the most cost effective and expedient opportunities for GHG mitigation, often with co-benefitsBut complex mix of buildings, stakeholders and technologiesVery local phenomenon (local needs, culture and policy)Data availability is a key challengeSpecific obstacles include

Range and distribution of emissions potential among building types

“Landlord-tenant dilemma”,

“Lock-in effect” of choices made regarding building components

Transaction costs

Rebound effect

We need consistency, transparency and diffusion of GHG data – hence SBCI work on the CCM



2. Challenges for urban GHG mitigation - cities

A key role to play in global climate action: generate 75% of CO2 emissionsPlus an additional 2 billion urban inhabitants expected by 2030Decisions made now can have long-lasting impacts on GHG emissions

So cities hold significant emissions reduction potential……BUT need a prominent place in climate negotiations and access to finance

“Cities are where the Climate Change battle will be won or lost

over the next decades”

Marco Scuriatti, Senior Operations Officer at the World Bank, 2011



2. Challenges for urban GHG mitigation - cities

Every city is different – standardizing mitigation is therefore challengingComplex mix of sectors, building types and stakeholdersIt is crucial to engage city / municipal governments in national GHG mitigation efforts……but there are many barriers to this, as shown in V-NAMA project:

Lack of financial or political incentives

Poor integration with national government

Lack of capacity (both in terms of resources and skills)

Given current budget constraints, carbon finance could provide a means to supporting GHG mitigation efforts……but for this, we need the tools to measure set the emissions baseline



3. Measuring GHGs in the built environmentGHG emissions profile can vary widely by city, but the main sources remain buildings, transport, waste, industry and electricity production Each of these holds challenges & opportunities for GHG mitigation…but to maximize potential, local actors must be engaged

UNEP & Gwangju City 2012: Cities and carbon finance: a feasibility study on an Urban CDM



3. Measuring GHGs in built environmentCity GHG inventories are crucial first step towards accessing carbon & climate finance at this scale…but methodologies varyStudy by Ibrahim et al 2012 compared four leading inventory approaches found varying options but set of common recommendations

e.g. distinguish direct vs. upstream emissions; additional activity data improves transparency and understanding; data quality should be assessed and reported

Efforts under way to standardize the approach e.g. GHG Protocol for Community Scale GHG Emissions (GPC)Carbon Cities Climate Registry (cCCR) – encourage regular reporting

At the building level…Common Carbon Metric making good progress towards practical, comparable tool and protocol for establishing the baseline…informing upcoming International Standard



So how about a universal sustainable cities approach?

Many initiatives for measuring GHG emissions often tied to a specific city or objectives…need a broader, systematic, adaptable, comparable approach



4. The importance of MRV

What we cover in the research paper:MRV basics (what is MRV, why is it important, what are the underlying principles)

MRV considerations for cities (apply to GHG inventory, available guidance, issues)

MRV considerations for buildings (approaches, challenges e.g. data availability)

General issues for MRV e.g. Types trade-off between accuracy vs complexity

We talk about MRV up-front before going into the carbon mechanisms to emphasis it s importance throughout the process…not an afterthought

No MRV,no entry!

Bottom line: MRV is a pre-requisite for participation in carbon finance – baseline and emissions reductions must be measured, reported and verified…

Gett

y Images



5. Carbon & climate finance mechanisms

Real heart of the Handbook is then an overview of existing and developing carbon & climate finance mechanisms

We define and compare carbon finance and climate financeAnd their potentially complementary role to support policy-based efforts and technology-based activities - realize greater mitigation overall

Then we outline the mechanisms with an emphasis on their relevance for the urban context, what they do to address challenges, and their limitations…complimented by best practice examples (but we would like more!)




CDM

Outline of CDM, experience gained, tools and methods we can take from it, reforms needed for urban context

Large scaleSome urban examples, but not well adapted

built environment, single technology, too

cumbersome for individual buildings

Small scaleMore

methodologies being approved that

suit built environment, still

restrained by validation process, potential for more

combinations

Bundled small scaleStarts to address some

limitations of CDM single projects, reduces transaction costs, but

very constrained (identical

methodologies; identify all component projects

at the start)




CDM - Programme of Activities (PoA)

Moves validation burden away from project implementers (Component

Project Activities), increased flexibility (can add more as it

grows), but still technology-by-technology focus

NAMAClimate finance approach – can be policy based…very much learning by doing. Linked closely to

development objectives…city scale means sub-national government

involvement

City-wide PoAMomentum has gathered

for multi-technology, multi-sector city scale

mechanism. This could be rolled out within 1 city

across several sectors – or in 1 sector across

several cities

NMMEarly days. Definition work in progress…market readiness

activities underway. Urban policy makers to watch with interest…but

will they be given the chance to influence its design?



6. RecommendationsKeep growing support at the international level for urban carbon mechanismsGovernments to put in place strict targets - and the instruments to support these – in order to drive sub-national involvementContinue capacity building to help sub-national governments access climate & carbon financeDevelop an urban CDM methodology and reporting framework……with harmonised metrics and a common language - to aid consistency and implementation of MRVContinue to develop standardised baselines and default valuesDevelop innovative financial mechanisms adapted to the built environment Create a satisfactory fees framework to reduce transaction costsWork on an MRV framework for urban mitigation actions - focus on key issues: systems boundaries; baseline setting; and data requirementsDevelop a cities approach that is scalable & adaptable to all cities, regardless of size and emissions profile

Urban Carbon Mechanisms:

A Handbook for Local Policy Makers

DISCUSSION QUESTIONS



Questions for discussion1. What progress has been made at international climate talks and what role

for cities?2. CDM – what can we take from it and what reforms are needed for cities?3. Programme of Activities- can it provide the flexibility needed for cities?4. City-wide CDM - could PoAs provide a city scale solution?5. NAMAs - an opportunity for bringing finance to concrete actions in cities?6. New Market Mechanism (NMM) – will it provide new opportunities for

the built environment? How to ensure it does?7. What are the next steps?



1. What progress has been made at international climate talks and what role for the built environment?

Recap on recent climate negotiations:COP18 Doha 2012

Official objective to limit global warming to 2°C reaffirmed

Second period of Kyoto Protocol (2013-2020) confirmed, but several key countries not participating

EU decided from 2012, credits will be imported only from projects in Least Developed Countries

Support shown for NAMAs, technology-transfer and to reinforce MRV schemes

Operationalization of Green Climate Fund not fully achieved, although some funds committed

COP19 Warsaw 2013

“Loss and damage” key topic of discussion resulting in “Warsaw International Mechanism for Loss and Damage” to be developed in coming years

Agreement on emission targets postponed to 2015 (for implementation by 2020)

Change in wording from “commitments” to “contributions” signified a substantial change

First Cities Day held as official side event to COP 19 - considered a successful milestone

Bonn Climate Talks in March 2014…feedback?Image: UN News Centre, 19 November 2013



2. CDM - what can we take from it for cities….?

There are many tools and techniques that have been developed for CDM that can still be useful when developing new innovative mechanisms

E.g. Experience from ‘Additionality by benchmark’ can help with developing standardised approaches going forwardE.g. Guidelines such as baseline data vintage (linked to speed of technology development)

Infras 2012



…and what reforms are needed for the urban context?

CDM requirements are not currently well suited to urban projects;Missing methodologies!

Need for more approved methodology combinations multi-technology

High transaction costs (fees, technical expertise)

Approach needs to be adapted to suit a large number of (often small) dispersed emissions sources and multiple technologies

Baseline setting and proving additionality - need for standardized approaches, given complex environment and varying capacity

Desperate need to build capacity – city policy makers need training



3. Programme of Activities- can it provide the flexibility needed for buildings and cities?

PoA in the pipeline by project type.UNEP & Gwangju City 2012



3. Programme of Activities- can it provide the flexibility needed for cities?

Clear scope for the PoA in urban context - relatively small scale projects with proven technology, that can be replicated across many sites – whether retrofitting or specification of new buildings

Pros:Reduced transactioncosts, investment risks and uncertainties for CPAsApproval process streamlined for CPAsFlexibility to scale up the programme, adding CPAs as it grows

Cons:Approval still not that speedy…Coordinating or Managing Entity = crucial – may not be easy to findHigh up-front costs for PoA set up



4. City-wide CDM - could PoAs provide a city scale solution?

City-wide PoA are starting to develop – we would like your examples of work underway

Gives more scope to tailor a PoA to a city’s GHG profile

Can lead to rather complex baseline setting and MRV – this is where we need a systematic city-scale methodology….what is the best approach – estimation based on building type? Default values for emissions reduction activities?

Combining small scale methodologies – important step towards multi-technology, multi-sector programmes.



5. NAMAs - an opportunity for bringing finance to concrete actions in cities and buildings?

Engagement of sub-national government is crucial for this

Which way forward for NAMA design?

unilateral (domestic resources and finance)

supported (requesting international support)

credited (credits can be traded on the global carbon market)

Must maximize opportunities for sustainable development co-benefits

Are the financial commitments forthcoming beyond the NAMA facility (UK /

Germany)? Green Climate Fund?

Early stages, particularly for MRV - emphasis on ‘learning by doing’

Capacity building initiatives underway….but not reaching enough?



6. NMM – will it provide new opportunities for the built environment? How to ensure that it does?

Aims to enhance the cost effectiveness of, and to promote, ‐mitigation actions…both of which are particularly important for urban context – so far limited involvement in CDM

Signals a step away from the project-based conventional CDM to more standardised approaches, with admin burden shifted to DNAs…which should be good news for cities and buildings

Importance of consulting local policy makers in the design process…so that NMM can address the downfalls / challenges of CDM so far for urban context e.g. baseline setting and demonstrating additionality



7. What are the next steps?

Transform knowledge into action……get more concrete projects in place – learning by doing, demonstrating success, testing the tools and methodologies available

Transform constraints into opportunities……we know what the barriers are; newer more flexible mechanisms give us the chance to turn these around, to experiment with a multi-technology, multi-sector, city-scale approach – so long as the support is there to build capacity and get things off the ground

Give cities a prominent place in the negotiation process…they are the future, focus on those with rapid population growth rate

MRV MRV MRV MRV MRV!

Urban Carbon Mechanisms:A Handbook for Local Policy

Makers

Heather RogersProject Manager, Climate Change & Energy Transition


Stéphane PouffaryChief Executive Officer

& Founder Honorary President


Thank you for your attention and contributions

Urban Carbon Mechanisms: A Handbook for Local Policy Makers Outline & Recommendations Heather ROGERS Project Manager, Climate Change & Energy Transition.

Documents

urban context

built environment workshop

local policy makers

built environment objectives

local authorities

local phenomenon local

key mechanisms

simplified handbook