Kyoto Protocol flexible mechanisms

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Kyoto Protocol flexible mechanisms

• Marina Olshanskaya
• UNDP Regional Center for Eastern Europe and CIS

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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

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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.

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How Kyoto targets can be achieved by Annex I
countries

• Through domestic measures or
• By participating in three cooperative mechanisms
• Give the Annex I countries opportunity to reduce
  emissions anywhere in the worldwherever the cost
  is lowestand they can then count these
  reductions towards their own targets
• Project-based mechanisms Joint Implementation
  (JI) Clean Development Mechanism (CDM)
• Emission Trading (ET)

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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).
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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
  regulation,EIA)

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JI and CDM projects
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JI and CDM projects (cont)
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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

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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)

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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

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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

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(No Transcript)
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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
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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)
• 4 projects in Moldova

Source UNEP/Riso CDM/JI project pipeline,
January 2006
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Thank you !Marina.Olshanskaya_at_undp.org