Carbon Markets from CDM to NAMAs Dr Silke

Carbon Markets - from CDM to NAMAs Dr. Silke Karcher German Federal Ministry of Environment Alexanderstraße 3 / 10178 Berlin Fon: +49 -30 -18 -305 -3601 silke. karcher@bmu. bund. de 1

CDM – a brief success story The CDM was created by KP and Marrakesh. Accords by Until today the CDM market amounts to a total of 610 Mio. t CO 2. In the EU ETS this corresponds to 7, 3 billion Euro. With CERs the CDM provided the first global Carbon Currency. 2

CDM – learning by trial and error The flexible Mechanisms of the KP, including the CDM, presented completely new tools. The development of the CDM gave opportunity to learn about the design of such instruments. Important topics include: o o o Practicability of procedures (validation, liability …) Eligibility / Additionality Transparency / Participation Windfall profits Inclusion of weaker market participants (LDC) CDM reform + lessons for new mechanisms 3

New Mechanisms & NAMAS Various approaches are discussed to supplement and replace the CDM where appropriate: o Market mechanisms on a sectoral scale (e. g. sectorial crediting and sectoral trading) o Emissions Trading Systems (national, regional) o NAMAs („nationally appropriate mitigation actions“) 4

What is a NAMAs were intorduced in Bali 2007 (decision 1/CP. 13). Neither a clear definition nor a concrete plan for financing has emerged since. Three ways of financing are discussed: 1) NAMAs financed by the developing countries themselves and 2) NAMAs financed with Annex I countries‘ support 3) NAMAs financed by carbon credits Of course the possible sources could be combined. Also Financial resources and existing mechanisms could be combined E. g. some notification to Appendix II of the Copenhagen Accord declare that CDM should not be excluded from use in NAMAs 5

NAMA and MRV NAMAs need to be monitored, reported and verified in an appropriate manner Ø For domestically financed NAMAs the government has strong interests to assess how far national climate policies and measures are in line with national GHG emission targets Ø For supported and credited NAMAs the MRV framework is different. The financing party has to be sure that the emission reductions are additional to the “business as usual” scenario: o Credited: when trading with emission certificates the MRV procedures have to be as accurate as in CDM o Supported: carbon financing as a support could focus on broader climate issues such as technology transfer and capacity building, with less detailed monitoring 6

Concepts to be defined NAMAs and new market mechanisms started to exist as words and vague concepts. The COP in Cancún decided: o to create a registry for NAMAs o to discuss new market mechanisms For NAMAs the process of pinning down the concept has started: 7

First movers get to define! Registry: • Help with bringing together concepts and financing • Give transparent overview of NAMAs developed • Good ideas can be copied and spread. The definition of “NAMA” however rests with those who create one. So the first movers will get to influence what NAMAs are and can be. 8

How to build a NAMA There is no NAMA building manual yet. But several approaches can be used: o Top Down: Stocktaking of potentials and then defining of measures to realize those potentials o Bottom up: Scale up or adapt existing approaches, e. g. scale up and broadening of existing Po. As or Po. A ideas ( Details presentation by Kf. W later in this session) 9

Prompt start The CDM started before the rules were completely set: The „prompt start“ in 2000 made it possible to start projects that would later be recognized while the legal framework was not yet set. We will need a sort of prompt start and pilot projects for NAMAs, too. Financing can for example come from bilateral fast start financing or possibly from the green Climate Fund. 10

German Cooperation The German Ministry of Environment is interested in the NAMA process and new mechanisms. Concrete projects include: o MRV and NAMA partnership o Po. A support center – seeing Po. As as an improved version of classical CDM and bridge to broader mechanisms o Bilateral cooperation with NAMA development, e. g. with Mexico, Tunesia, … o Participation in World Bank Partnership for Market Readiness (PMR) 11

Outlook We are living in a quickly changing world. Pioneers and experiments are needed. 12

Thank you! Contact details: Dr. Silke Karcher Head of Division KI I 4 EU Affairs and Bilateral Cooperation "Environment and Energy" Federal Ministry for the Environment Alexanderstr. 3/ 10178 Berlin Telephone: +49 -30 18 305 -3601 silke. karcher@bmu. bund. de Internet: http: //www. bmu. de 13