SIDS DOCK LIMITED PRESENTED TO Pacific Climate Change

SIDS DOCK LIMITED PRESENTED TO Pacific Climate Change Roundtable, Majuro Marshall Islands, 19 -23 October, 2009 Prepared by Caribbean Community Climate Change Centre Belmopan, Belize

CONTENTS • • • Purpose of Presentation Background Adaptation Objectives of SIDS DOCK Limited Benefits of SIDS DOCK Limited – Oversight, Funding & Next Steps

Purpose of the Presentation • To provide an overview of the threat posed to Small Island Developing States (SIDS) by climate change, the difficulties facing SIDS during the current United Nations Framework Convention on Climate Change (UNFCCC) negotiations for the Copenhagen, Denmark Climate Change Conference in December 2009. • To provide a concept developed jointly by the Caribbean Community Climate Change Centre (5 Cs) and the Secretariat of the Pacific Regional Environment Programme (SPREP), the two regional governmental institutions with foremost responsibility in climate change, intended to provide SIDS with a mechanism SIDS DOCK Limited - to begin generating a portion of the funding needed for adaptation to climate change. • To provide the opportunity to seek guidance, recommendation and approval for implementation of SIDS DOCK Limited

Background • SIDS economies consume in excess of 220 million barrels of petroleum fuel, annually, to meet energy needs. • Current atmospheric concentrations of GHGs are in excess of 387 ppm, 10 percent higher than the SIDS upper limit, and the highest concentration of CO 2 45 million years. Rate of emissions are greater than 7 billion tons per year, and the rate of sequestration is about amount half of the rate of emissions – this means that the concentration will continue to increase in the absence of deep emissions cuts. • SIDS are the largest economic losers with large displaced populations if average global temperatures go beyond 1. 5 C, corresponding to 350 ppm, which is considered the threshold for the continued survival of ecosystems essential to livelihoods in SIDS. • AOSIS is seeking a global agreement that would reduce greenhouse emissions by 45 percent by 2020 and 85 percent by 2050. The SIDS position calls for aggressive and deep reductions in emissions to achieve a peaking of GHG emissions by 2015, and deep annual reductions in emissions thereafter.

Background • The urgency of this position is based on the realization that many SIDS are already being negatively impacted by a changing climate, and the science which shows that long-term consequences of GHG concentration above 350 ppm would have devastating impacts on SIDS populations. • The SIDS position for more aggressive reduction and sequestration is based upon ongoing scientific monitoring and assessments, for example: - New research in 2008, showing global food production is being adversely affected by the observed levels of warming. - The rate of response of the ice sheets to warming, to date, is accelerating.

Adaptation • SIDS view their very low emissions, estimated at less than 0. 05 percent of global emissions, and significant sequestration in terrestrial and marine areas, they should not be called upon to undertake GHG reduction, nor should they be called upon to pay for the cost of adaptation. • Recent study shows the potential economic costs as a percentage of GDP to Caribbean SIDS if no action that by 2025, the average cost to the region will be 14 percent of its GDP, increasing to 39 percent by 2050, 45 percent by 2075 and 63 per cent by 2100. International agencies estimates adaptation costs for developing countries that reach high of USD 86 -109 billion a year, and it is also estimated that to take no action could cost over 20 per cent of global GDP. • Limited progress for reaching an international agreement to addresses emission reduction, or for new and additional funding for adaptation, as well as projected high and rising cost for petroleum fuels in the future - real threats to sustainable development.

Adaptation • The proposal is for the development of a SIDS Energy Initiative funded through a combination of sources including the SIDS themselves, with the goal of transforming the highly inefficient and fossil fuel dependent energy sector into a sustainable energy sector deriving energy from its renewable resources, thereby generating significant savings in foreign exchange for investing savings in adaptation to climate change and sea level rise.

Objectives of SIDS Dock Ltd. (SDL) • AOSIS Shared Vision, presented at COP 14, called on the international community to take urgent steps in mitigation of GHG emissions, and for SIDS to mainstream adaptation to climate change as a priority. It pointed out that SIDS need an institutional mechanism to undertake adaptation. • This mechanism should be structured but flexible, allowing it to respond to the national situation; it should also be internationally and regionally supported by new, additional, and predictable financial resources from the global community for adaptation. SIDS Dock Limited (SDL) will have 4 principal functions: 1. Assisting SIDS with developing a sustainable energy sector. 2. Providing a vehicle for mobilizing resources to catalyze clean economic growth. 3. A mechanism to help SIDS generate the financial resources to investment in adaptation to climate change. 4. Provide SIDS with a mechanism for connecting with the global carbon market and taking advantage of the resource transfer possibilities that will afforded.

Objectives of SIDS Dock Ltd. (SDL) • This strength of this proposal is that it can move forward without waiting for the rest of the international community. It is called SIDS Dock because it would be designed to be a “docking station” with the European and US carbon markets and would be able to trade the avoided carbon emission in those markets.

Benefits of SIDS Dock Limited • There are currently 1, 418 registered Clean Development Mechanism (CDM) projects, 974 of which are located in India, China and Brazil. There are only 7 registered CDM projects in SIDS. • The CDM, as a consequence of its market based nature, makes it extremely difficult for small island countries to compete with larger developing countries that have economies of scale and greater resources. The structure and the detailed methodologies of the CDM do not facilitate the specific requirements for SIDS, so despite having a framework, SIDS still await the assistance pledged to help put in place the means to implementation.

Benefits of SIDS Dock Limited Benefits of the proposed SIDS Dock Limited (SDL) will provide: • • • A coordinating mechanism for the development of technical capacity, sharing of technical expertise and the provision of technical support to mitigation and adaptation activities, and sustainable development. A vehicle for SIDS to conduct advocacy and develop cooperative agreements with parties who wish to assist with financial resources. A facility for participating in the global carbon market. A mechanism to affect the transfer of sustainable energy technologies. A mechanism for managing the purchase/transfer/sale of energy sector products during the transition to a low carbon high efficient (LCHE) economy for those SIDS who do not presently have government agencies to do that. A mechanism through which SIDS can access additional funding from entities such as pension funds and labour unions wanting to support sustainable energy investment.

Benefits of SIDS Dock Limited SIDS Dock Ltd. proposes the establishment of a SIDS clean energy development bank which: 1. Provides a mechanism for SIDS to generate financial resources to support adaptation, by helping SIDS capture and realize the “energy dividend” from phasing down of high-cost petroleum fuels; 2. Gives SIDS an organizational infrastructure through which others, both private and public, can invest in sustainable energy, and; 3. Provides assistance in converting carbon allowances into funds for investing in renewable energy and energy efficiency for SIDS that want to take fossil fuel emission caps.

Oversight, Funding & Next Steps • Oversight - Board of Trustees, headquartered in a SIDS regional institution, either in the Caribbean or Pacific, with the mandate for climate change adaptation. • Funding - Based on the proposed number of pilot countries, a projected USD 200 - 400 million, annually, would be required over the first three years. A financing plan is to be developed for SDL for the first stage - 2010 through 2013 - that will address funding for core operations and resources for investment in transforming the energy sector. It is possible for SIDS to generate revenues in the form of increased foreign exchange from the reduction in fuel imports. For example, based on a 20 percent reduction in fuel imports, SIDS would generate savings in excess of USD 6 billion per year, for crude at USD 100 per barrel. Based on a price of USD 13 per ton for carbon, SIDS could generate in excess of USD 400, 000 per year, with a 20 percent reduction in emissions. • Next Steps – assessment of SDL and commitment to support SDL, leading up to and at COP 15; organize a meeting of Ministers of Energy and Ministers of Finance from SIDS, that have expressed interest in the SIDS Dock concept. This meeting should be held around the June/July 2009 period; organize the Statement at the UN General Assembly, in September 2009, by the leaders of the SDL pilot countries