Kyoto Protocol flexible mechanisms

							Kyoto Protocol flexible mechanisms

Marina Olshanskaya UNDP Regional Center for Eastern Europe and CIS

Kyoto Protocol
The Protocol creates legally binding obligations for 38 industrialized countries to return their emissions of greenhouse gases (GHGs) to an average of approximately 5.2 percent below their 1990 levels over the period 2008-2012

Parties to UNFCCC and Kyoto Protocol
The Convention divides countries into two groups:  Annex I Parties, the industrialized countries who have historically contributed the most to climate change, with quantified targets for reducing GHG emission;  non-Annex I Parties, primarily the developing countries, without any legally binding and quantified targets for reducing their GHG emissions;  Transition economies in Eastern Europe and CIS fall under both categories:
– New EU member states, Romania, Bulgaria, Croatia, Russia, Ukraine and Belarus – Annex I; – Central Asia, Caucasus, Moldova and Western Balkan countries – non-Annex I.

How Kyoto targets can be achieved by Annex I countries:
domestic measures; or  By participating in three cooperative mechanisms:
– Give the Annex I countries opportunity to reduce emissions anywhere in the world—wherever the cost is lowest—and they can then count these reductions towards their own targets – Project-based mechanisms: Joint Implementation (JI) Clean Development Mechanism (CDM) – Emission Trading (ET)
 Through

JI and CDM: principle
JI: allows one Annex I country to meet part of its target by investing in and carrying out a project to reduce greenhouse gas (GHG) emissions in another Annex I country. CDM: allows one Annex I country to meet part of its target by carrying out a project to reduce greenhouse gas (GHG) emissions in non-Annex I country (host country).

JI and CDM: key project criteria
International criteria: • The project has to be approved by the Government of both host and investor countries; • The project should result in real and measurable emission reductions that are additional to what would have occurred under business-as usual scenario; • Project must help the host country to achieve its national sustainable development goals (CDM – obligatory; JI – desirable); National criteria : • Depends on national circumstances (e.g. compliance with sectoral policies and

JI and CDM: projects
Type of projects Activities Improving efficiency of energy generation, supply, transmission and distribution;  Increasing building efficiency;  Increasing commercial/industrial energy efficiency;  Fuel switch a) from more GHG-intensive energy source to less intensive (coal to gas); or b) from fossil fuel to renewable energy (biomass, hydro, wind, etc)
 Animal

Energy Efficiency and fuel switch Methane recovery

waste methane recovery and utilization; Coal mine methane recovery and utlization Landfill methane recovery and utilization; Capture and utilization of fugitive gas from gas pipelines; Methane collection and utilization from Sewage/industrial waste treatment facilities

JI and CDM: projects (cont)
Project type Activities Industrial Any industrial process change resulting in the reduction of process change any category greenhouse gas emissions (e.g. cement)

Transport

Improvements

in vehicle fuel efficiency Changes in vehicles and/or fuel type Switch of transport mode to less carbon Intensive means of transport like trains or bicycles; and Reducing the frequency of the transport activity.
efficiency improvements or switching to less carbon intensive energy sources for water pumps; Reducing animal waste or using produced animal waste for energy generation of woodlots on communal lands; Reforestation of marginal areas with native species New, large-scale, industrial plantations; Biomass plantations for energy production and fuel switch
Establishment Energy

Agriculture

Afforestation and reforestation (only CDM)

JI and CDM: participants
Project owner [Project developer]: any legal entity officially
registered in host country that can develop and operate JI/CDM projects (business, municipalities, NGOs, etc): -Project developer can differ from project owner; - Each host country may establish additional criteria for project owners (e.g. financial sustainability)

Host Government: Host countries have to specify a domestic
institutional body for approving JI/CDM projects. The host country – via the designated national authority (DNA) – must approve each CDM project and ensure that it conforms to their sustainable development criteria: - 75 developing countries officially nominated DNA; - Eastern Europe: New EUmember states, Romania, Bulgaria, Moldova, and Albania

JI and CDM: participants (cont)
Designated Operational Entity (DOE): domestic
or international legal entities that have been accredited by the CDM Executive Board (JI rules are yet to be defined). They are responsible for validation of project and verification of achieved CERs: • 12 DOEs officially designed by CDM EB (mostly from developed countries); • No DOEs from Eastern Europe and CIS.

JI/CDM Investor: An investor is an entity that purchases
CERs from a CDM project. The investor is usually from an Annex I country and can be a corporation, a government body or non-governmental organization, or international carbon funs (e.g. World Bank PCF)

JI and CDM: participants (cont)
CDM Executive Board (JI Executive Board should be operationalized in 2006):
• consist of 10 members (and 10 alternates): 2- from Annex I , 2 from non-Annex I, 1 from each UN region, 1 from small island developing states; • meets at least 3 times per year; • approve and register CDM projects and issuance of CERs; • approve baseline and monitoring methodologies; • register DOEs; • any others tasks according to the decision of COP

JI/CDM: comparison
Operationalization:
- CDM is fully operational and first CERs already issued; - JI rules and JI Executive Board will be established only in 2006; many projects already developed, but no ERUs were issued - CDM rules are more stringent than JI and involve more international scrutiny (DOEs and CDM EB); - Participation in JI requires more efforts and stronger capacities on the side of host Government (especially for Track I JI)

Transaction costs: - no major difference, but vary significantly depending on
project type, risks, host country policies, etc

JI Track 1

JI Track 2
Party to the Kyoto Protocol

CDM

Designation of National Approval Authority (JI Unit/DNA) Compliance with sustainable development goals

Participation requirements to be met by host country

Calculation of Assigned Amount National system for estimation of anthropogenic emissions and removals by sinks National emissions registry Submission of national GHG inventory

Validation/Ver ification

Validation/verification according to host country procedures

Validation/verification by Independent Entity/Supervisory Committee

Transfer of ERUs/CERs

Issues of ERU according Issue of ERU (JI)/CER (CDM) upon to host country validation/verification by Independent procedures Entity/Supervisory Committee

JI and CDM: transaction costs

Project preparation: 40,000 – 170,000 EURO

Project operation: will depend on the lifetime of the project

Source: EcoSecurities 2003

JI/CDM: current situation
Joint Implementation: about 100 Project Design Documents (PDDs) prepared - mostly with host countries in Eastern Europe; Clean Development Mechanism: • 72 projects registered by CDM EB and 62 submitted for registration by CDM EB; • 450 project in the process of validation by DOEs; • India and Brazil are leading host countries (233 and 131 projects) –together more than 60% of the total CER supply • only 6 CDM projects in the final stage of development in CIS (no projects yet in Western Balkans): • 2 projects in Armenia (one registered); Source: UNEP/Riso CDM/JI project pipeline, January 2006 • 4 projects in Moldova

Thank you !
Marina.Olshanskaya@undp.org