Latin American Carbon Forum 2011

CARBON TRADING BEYOND 2012: NEW APPROACHES AND EMERGING MARKET INSTRUMENTSLatin America Carbon ForumSan José, Costa RicaSeptember 27, 2011

Martina BosiCarbon Finance Unit

The World Bank

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The climate challenge… demands action

TODAY’S DISCUSSION: NEW APPROACHES AND EMERGING MARKET INSTRUMENTS

How to keep momentum in carbon market?

Carbon markets can help identify and mobilize funding for least-cost mitigation options to achieve 2C target.

Carbon markets and carbon finance can be a key component in countries’ low emissions development/green growth strategies

But regulatory gap: Uncertainties on post-2012 framework to meet climate change goals

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•Send price signal directing capital flows to less carbon-intensive options

•Lower cost of meeting emission reduction targets through trading

•Catalyze low-carbon growth in developing countries> transactions of offsets (essentially private flows)> public funds through auctions / transaction taxes> crowd in private capital in support of $100 billion target

Carbon markets in the context of climate finance

$100 bn per annum

by 2020

Compares to historic ~$10 bn

p.a. of international

climate finance

Cancun Agreements, mobilize long-

term finance to address needs of

developing countries

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Market-based mechanisms for GHG mitigation:General landscape

InternationalDomestic (or sub-

national, or regional)

Trading mechanisms (allocation of ex-ante

allowances)

Crediting mechanisms (issuance of ex-post

credits)

Linking ?

e.g., EU Emissions Trading System

e.g., Trading under Kyoto

Protocol

e.g., Clean Development Mechanism

(CDM)

e.g., Alberta (Canada)-based

offsets eligible in Alberta’s trading

scheme

White (energy efficiency) certificatesGreen (renewable energy) certificates

As well as indirect (non-GHG) schemes:

GHG schemes

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Current and Proposed Emissions Trading Systems…

Operating Likely (?) Considering© OECD/IEA - 2010

ConsideringUnder preparationOperating

Latin American Carbon Forum 2011

Crediting Programs and Standards…

3,450 registered projects in 72 countries736 million CERs issued1-1.3 billion CERs expected by end of 2012Large source of climate finance to

developing countries: > $25 bn (2002-09) + leveraging investments

Clean Development Mechanism

Joint Implementation

282 registered projects (finally determined)

53 million ERUs issued~260 million ERUs expected by end of 2012

Latin American Carbon Forum 2011

Cancún decision on newmarket mechanism(s)

COP 16 Decision to consider establishment of 1 or more new market instruments at COP17

Maintain & build upon existing mechanisms, including KP mechanisms Elaboration during 2011

Parties and organizations have made submissions

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• Readiness for the new markets and emerging market instruments: key opportunities, challenges and needs?

• Can we build on experience & existing infrastructure or are we starting from scratch?

• What kind of mitigation actions is/should be targeted?

• Views/ outlook for linking with others markets and/or instruments?

Some Questions for the PanelTODAY’S DISCUSSION: NEW APPROACHES AND EMERGING MARKET

INSTRUMENTS