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Tomorrow’s Opportunities for CDM
Fourth workshop on enhancing the regional distribution of CDM projects in Asia and the
Pacific
4-5 Sep. 2013, Manila 4-5 September 2013, Manila
Gareth Phillips, Chairman Project Developer Forum
Tomorrow’s opportunities…..
Under the assumption that Governments do agree to do more
to reduce GHG emissions
Overview
What is the CDM / what is it designed to do?
Who is the CDM?
Opportunities come through change – what are
the drivers of change?
Where are the opportunities for the CDM as:
a mechanism; and
what it is?
Project Developer Forum
1) What is the CDM?
A flexibility mechanism defined under the KP with dual
objectives to help annex 1 Parties….
Think of the CDM as a:
Collection of open source procedures and tools
A means of transparently reporting verified results
A great way of undertaking national and international
stakeholder consultation
A cost effective means of delivering sustainable
development benefits
A repository of technical expertise in MRV of GHG
emissions from a wide range of sources
A way of financing new technology….
Project Developer Forum
2) Who is the CDM?
Parties to the UNFCCC and their DNAs
CDM EB
Secretariat
DOEs
Project developers
Investors
Buyers
Consultants / experts / advisors
Civil society and global stakeholders….
Project Developer Forum
3) What are the drivers of change and what
threats / opportunities do they present?
Regular EB meetings
Annual guidance from the COP
1st review of the CDM modalities and procedures
Demand arising from KP II commitments, domestic ETS
and overall level of ambition
NAMAs
FVA, New and Non market mechanisms
The Durban Platform with some form of legally binding
targets for all post 2020
Project Developer Forum
Regular EB meetings
Deliver ripples to the daily operation of the CDM
Occasional waves – e.g. current discussions on the
application of E- rules
Tends to result in more of the same – complexity and
detail
May create specific and small opportunities for project
developers, service providers
Project Developer Forum
Annual guidance from the CoP
Annual, slow, seldom earth shaking but, for example,
created
PoA
Standards and Standardized baselines
Voluntary reporting of SD benefits
Has resulted in more substantial opportunities over the
medium term particularly for project developers, service
providers, DOEs etc but currently most significant issues
diverted to review
Rarely impacts upon the CDM as a mechanism
Project Developer Forum
1st Review of the CDM Modalities and
Procedures
Much more far reaching and of great significance for the
CDM as a mechanism and hence impacts all
stakeholders
Potential to change the face of the CDM
PD Forum has been lobbying hard to convert the
CDM into a mitigation instrument
Other issues pushed to the review include significant
deficiencies, appeals, independence of the EB, crediting
periods – opportunity to complete the design of the CDM
and turn it into a mature instrument
For negotiation in Warsaw, time permitting (SBI)
Project Developer Forum
Demand
Currently lacking. Prospects for new demand?
KP II targets currently do not create any significant additional
demand but opportunity to revisit targets in 2014
ETS – EU unlikely; China could make a big difference; Korea,
Kazakhstan, Chile, Mexico….
CDM could act to link new ETS
Development of national standards for emission reductions
could undermine demand and hamper linkage (but could
create more diversity in standards and arbitrage opportunities)
Sovereign buyers – limited interest
Multinational fund / capacity fund…..
Increased demand for CERs would breath life back into
the CDM as a mechanism (but buyers won’t choose the
CDM if the quality is not what they seek)
Project Developer Forum
NAMAs
Flexible and undefined = unrestrained opportunities?
Registry and some funding initiatives in place
Domestic, supported and crediting NAMAs broadly
recognized
Supported and Crediting NAMAs could include policy
driven CDM style initiatives
Buyers / donors may be more receptive to CERs or
verified results delivered via a NAMA
Should create opportunities for project developers,
service providers, financiers, DOEs etc.
Project Developer Forum
FVA, New and Non-market
mechanisms
All currently under negotiation
Potential to create significant change
Introduce competition – could erode demand for CERs
The New market mechanism will need to address
additionality, MRV etc
Non-market mechanisms may be more suited to certain
sectors e.g. transport, agriculture
Creating demand for CDM expertise…..
Could also trigger changes in CDM as a mechanism (if
not delivered via review)
But overall, should result in an expansion of emission
management initiatives in economies across the world
Project Developer Forum
Durban Platform ….another legal instrument or an agreed outcome with legal force
under the Convention applicable to all Parties
Should result in growth in compliance driven emission
management activities with associated MRV
Should expand emission management to all sectors of
the global economy
Should trigger increasing amounts of preparatory work,
capacity building, trial schemes, advisory services and
debate….
Creating opportunities for stakeholders across the board
But remains subject to political progress up to 2015
Project Developer Forum
Opportunities for CDM as a mechanism
13
Global emission of GHGs in
2050
6 Bn tonnes
95% captured under
mechanisms
Fossil Fuel emissions
from stationary sources
(X%)
Agriculture,
Land use , transport
and others
(Y%)
Non-CO2 emissions
(Z%) Projects in LDCs,
Disorganized sectors e.g.
Household emissions, EE
Implemented via CDM/JI
Emission reductions via baseline and credit
in project based mechanisms e.g. CDM and
JI
Allowances, issued under ETS and sectoral
level market based mechanisms
Market base
mechanisms covering
all stationary sources
of
Combustion and
process
CO2 emissions, via
international
Caps or New Market
Based
Mechanism
Non-market based
mechanisms
Covering CO2
emissions
From mobile
sources,
Forestry and land
use, small sources,
households etc
Non CO2 via
Laws and
International
treaties Non-market based mechanisms – taxes and
grants, performance standards etc
Compliance with international treaties / law
Threat and opportunities for CDM
stakeholders
Project Developer Forum
CDM EB
Annual
guidance
Review of the
CDM M&P Demand NAMAs
FVA new and
non MM
Durban
Platform
Existing
investors?
New investors
PD
Consultants
Advisory
services
DOEs
DNA
Governments
MLB and
institutions
Stak
eho
lder
s
Drivers of Change
Conclusions
Tomorrows opportunities for the CDM are
related to what the CDM is, not what is was
designed to do
Emission management initiatives as we know
them (i.e. CDM projects) are facing more threats
than opportunities
But the prospects for new initiatives, have
seldom looked more exciting and never offered
more opportunities
Project Developer Forum
Thank you for your attention
The Project Developer Forum (PD-Forum) is a collective voice to represent the
interests of companies developing greenhouse gas (GHG) emission reduction
projects in international markets under the Clean Development Mechanism
(CDM), Joint Implementation (JI) and other carbon emission reduction schemes
and programs.
See our members at: www.pd-forum.net
Project Developer Forum