Capacity Development for the Clean Development Mechanism Myung-Kyoon Lee mk.lee@risoe.dk

1. Capacity Development for the Clean Development Mechanism Myung-Kyoon Lee mk.lee@risoe.dk www.uccee.org www.cd4cdm.org

2. Contents • UNEP’s Role in Climate Change • Capacity Building • Inventory of Capacity Building Activities • What the CDM is and how it works • Capacity Development for the CDM

3. UNEP’s Role in Climate Change • Scientific Assessments • Analytical Tools and Guidelines • Public Awareness and Information • Capacity Building

4. Capacity Building Agenda 21, UN 1992: “Capacity building encompasses the country’s human, scientific, technological, organizational, institutional and resource capabilities. A fundamental goal of capacity building is to enhance the ability to evaluate and address the crucial questions related to policy choices and modes of implementation among development options,based on an understanding of environmental potentials and limits and of needs as perceived by the people of the country concerned.” Art. 5 (b) & (c) of UNFCCC Art. 10 (e) of the Kyoto Protocol

5. Key Principles of CDM Capacity Building • Focus should be broad • Active participation of the private sector • Country-specificity • National “ownership”/sharing of benefits; local incentives should be created. • A long time horizon is needed to build up human and institutional capacity in a wide range of areas including development, economic policies, environmental policies, social issues. • Build on earlier experiences from climate change studies in developing countries.

6. General Areas for Capacity Building • Scientific aspects of climate change • Estimating emissions of GHGs • Measurement techniques for methane and other GHGs • Economic analysis of projects including cost-benefit analysis • Environmental assessment of projects and policies • Social assessment of projects and policies • Risk and vulnerability assessment • Coastal zone planning • Development and implementation of adaptation technique • Development and implementation of mitigation technique • Analysis of the Kyoto Protocol instruments • Assessment of technology transfer options

7. Capacity Building Needs specific to the CDM • Developing eligible projects: project design and formulation • Assessment of projects based on national sustainable development criteria • Preparation of baselines • Financing • Monitoring • Requirements for verification and certification

8. Inventory of Capacity Building Activities (1) • National Strategy Studies (NSS) • - Launched in 1997 by the support from Switzerland, Australia, Germany and Finland in conjunction with the WB. • - the purpose is to provide assistance to host countries to develop their national approach to the utilization of the CDM and JI within their own particular set of opportunities and constraint. • - http://www-esd.worldbank.org/cc/ • UNIDO capacity building for Industrial CDM projects • - two independent programmes: one in Africa and the other in Asia • - the common objectives are to increase the full range of national capacity and supportive policies required to provide an enabling environment for industrial CDM projects. • - http://www.unido.org/doc/451673.htmls • UNEP/RISØ: Economics of GHG Limitations • - the main objective was to provide a methodology, an implementing framework and a reporting system for CC mitigation analysis, which countries can follow in meeting their reporting obligations under the UNFCCC.

9. Inventory of Capacity Building Activities (2) • PREGA • - implemented by the ADB from 2001 with funding from the Netherlands and ADB • - the objective is to promote investments in renewable energy and energy efficiency technologies that will increase access to energy services by poor residents, as well as reduce GHG emissions • - http://oesd.adb.org/prega/ • CDM Susac (Start-up CDM in ACP-Countries) • - funded by EU and co-funded by UK’s Foreign and Commonwealth Office. • - coordinated by the Institute of Energy Economics and the Rational Use of Energy. • - the main objective is to identify, develop, and promote 2-3 CDM projects in the energy sector in each of participating countries: Senegal, Uganda, Zambia • - http://cdmsusac.energyprojects.net/ • UNEP/RISØ: capacity building programme for the CDM • - four African countries are participating: Gambia, Ghana, Uganda, Zimbabwe • - the programme will analyze how identified projects could be organized, assessed, marketed, and implemented under the CDM.

10. Inventory of Capacity Building Activities (3) • The SSN (South-South-North) Project • - four countries: Bangladesh, Brazil, Indonesia, and South Africa. • - This project is seen as a capacity building exercise for the project participants. • - www.southsouthnorth.org • PLANER: planning and strategies for implementation of the CDM of the KP in Latin America • - funded by EC • - participants all from LA • - the objective is to co-operate with Central America & Andean Community to strengthen the energy planning and policies for electricity generation with renewables through the application of the CDM. • UNDP’s pilot programme for CDM capacity building • - includes Peru, the Philippines, and South Africa and is financed by Norway • - analyze possible areas for future CDM co-operation based on the national development plan; identify and formulate possible CDM projects; convene stakeholder consultations at the local level • - http://www.undp.org/seed/eap/Climate_Change/CDM.html

11. What the CDM is & How It Works (1) • Art. 12 of the KP • - the CDM is to assist Non-Annex I Parties in achieving SD, and to assist Annex I Parties in achieving compliance under Art. 3. • - the CDM could stimulate international investment and provide the essential resources for cleaner economic growth. • - the basic principle is: developed countries can invest in low-cost abatement opportunities in developing countries and receive credit for the resulting emissions reductions, thus reducing the cutbacks needed within their borders. • Eligibility Criteria for Participation • - voluntary • - the establishment of a national CDM authority • - the ratification of the Kyoto Protocol • - additional criteria for Annex I countries: establishment of assigned amount under Art. 3 of the KP; a national system for the estimation of GHGs; a national registry, an annual inventory, and an accounting system for the sale and purchase of emission reductions.

12. What the CDM is & How It Works (2) • Eligible Projects • - energy efficiency (both end-use and supply side) • - renewable energy • - fuel switching • - agriculture (reduction of CH4 and N2O) • - industrial processes • - sinks project (only afforestation and reforestation) • A Fast Track for Small Scale Projects • - renewables up to 15MW • - energy efficiency with a reduction of consumption either on the supply or the demand side of up to 15 GWh/year • - other projects that both reduce emissions and emit less then 15kt of CO2 equivalent annually

13. Source: Introduction to the CDM, UCCEE, August 2002.

14. What the CDM is & How It Works (3) • The Executive Board • - the supervisory board for the CDM (operated under the COP) • - accrediting Operational Entities • - maintenance of a CDM registry • - setting rules and modalities of the CDM • - manage account for CERs levied for adaptation and administrative expenses • - maintain a CER account for each non-Annex I Party hosting a CDM project. • Finance • - no diversion from ODA • - subject to “share of proceeds”: 2% of CERs for adaptation fund • - levy for the CDM’s administrative costs • - projects in LDCs are exempted from the levy for adaptation and administrative costs

15. What the CDM is & How It Works (4) • Project Identification and Formulation • - the first step is to identify and formulate potential CDM projects which will bring real, measurable, additional emission reduction. • - a monitoring plan by either a project developer or a specialized agent • National Approval • - DNA screening by SD goals and policies • Validation & Registration • - OE validates the project as a CDM. • - once validated, OE forward it to the EB for formal registration • Monitoring, Verification & Certification • - a monitoring report by a project developer • - verification & certification by OE • - issuance of CERs by the CDM registry

16. National Value and Benefits from the CDM • Benefits from the CDM • - for developed countries: reducing abatement costs • - for developing countries: contributing to SD through new investments and TT • - global benefits: contributing to slowing down global warming and changing the development path in a more environment-friendly way • The CDM will contribute to a developing country’s SD through • - transfer of technology and financial resources • - sustainable ways of energy production • - increasing energy efficiency & conservation • - poverty alleviation through income and employment generation • - local environmental ancillary benefits • Therefore, carbon abatement and sustainable development goals can be simultaneously pursued.

17. Capacity Development for the CDM (1) • Overview • Donor: the Netherlands Ministry of Foreign Affairs • Implementing Agency: UNEP Collaborating Centre on Energy & Environment • Period: Feb. 2002 – Dec. 2005

18. Capacity Development for the CDM (2) • Main goals • generating a broad understanding of the CDM in the developing countries • developing institutional capability and human capacity of the developing countries to fully participate as equal partners with developed countries in the formulation and implementation of the Clean Development Mechanism (CDM).

19. Capacity Development for the CDM (3) • Participating countries • three countries each from four regions • Asia: Cambodia, the Philippines, Viet Nam • Latin America: Bolivia, Ecuador, Guatemala • ME & NA: Egypt, Jordan, Morocco • Sub-Saharan Africa: Côte d’Ivoire, Mozambique, Uganda

20. Capacity Development for the CDM (4) • Country Selection Criteria • Ratification of the UNFCCC • Ratification/Signature of the KP • Existence of focal agency to the CC and KP • Existence of national policies to promote RE & EE • GHG emission reduction potential • On-going activities of the CDM/AIJ • Existence of FDI framework • Political stability • Existing institutional and analytical capacity • Eagerness to participate in the CDM

21. Capacity Development for the CDM (5) • Main tasks • sensitizing government supports for the CDM • developing capacity of policy makers • establishing institutional framework for the CDM projects • strengthening capabilities of the public and private sectors • creating a pipeline of the CDM projects

22. Capacity Development for the CDM (6) • Implementation Strategy • UCCEE together with Regional Centres of Excellence and national institutions • PhaseI (early 2003): completion of national workplans • PhaseII (early 2003 – Dec. 2005): implementation of national workplans • By means of studies, surveys, training courses, workshops, seminars, consultations, development of training materials and information dissemination.

23. Capacity Development for the CDM (7) • Progress • Phase 1 is finishing: 7 work plans • A CDM information booklet is being distributed and translated into relevant local languages including Korean and Japanese. • A project information folder will be finished. • National and Regional workshops • Analytical works such as background papers and training manuals are under development. • Advisory group invited (NL, WB, ADB, UNFCCC,….) • COP8 special event made • www.cd4cdm.org

24. Capacity Development for the CDM (8) • Analytical works under development • CDM project guidance material • Baseline scenarios • Sustainable development impacts • Legal and institutional framework • Financial Aspect of the CDM

25. Capacity Development for the CDM (8) • Current Status • Asia: two national workshops and a regional workshop completed • Africa: two national and a regional workshop completed, Cote d’Ivoire to be decided • LA: three national and one regional workshops completed • ME & NA: two national workhsops and a regional workshop completed, Jordan to be decided

26. Coordination with Other Institutions • Advisory Body • Invites other institutions working on capacity building for climate change: UNFCCC, UNDP, UNIDO, WB, ADB • CF Assist-WB has shown a strong interest in the coordination of NSS program and ours: use their outputs, inviting each other to workshops, share materials and tool kits • ADB is also ready to cooperate but need a little more concrete discussion

27. Observations & Concluding Remarks • Different countries at different stages • All countries are keen on taking advantage of CDM opportunities • Synergies among participating countries desirable • Academic and practical approaches together • An opportunity not just for the CDM but for the long-term sustainable development of the nation