SDM Strategy

1. SDM Strategy SDM Joint Coordination Workshop Bonn, Germany 24-25 March 2012 James Grabert, Coordinator SDM

2. Background • SDM’s core business in CP1 is focus on operation and improvement in the CDM & JI • With CP2, new conditions will apply to carbon markets • Expectation that there will be a reduction in demand for CER drastically in 2013 • Several new markets and instruments are emerging bottom-up globally • A new market based mechanism under UNFCCC was defined in Durban • A work programme for a Framework for various approaches was launched in Durban

3. Background • The current market situation reflects over-supply, economic uncertainties, and a generally immature market behavior • Strategically the secretariat’s SDM programme needs to focus on the medium term perspective, preparing for a new market situation with several markets, several mechanisms, while, as yet, having an undefined role

4. Objective • In light of current situation, objective of strategy is broadly twofold: • Support markets / market approaches (including existing CDM & JI) to mature and become more sophisticated • Prepare for potential role(s) of the secretariat/UNFCCC in a new market situation

5. SDM Strategy • Provision of continued high quality support to the CDM & JI regulatory processes • Provision of support to Parties in the negotiation process with regard to market-based approaches • Implementation of some specific measures

6. Specific Measures Overview PurposeMeasure • Build confidence in markets: Public commitment by market players • Future market linkages:Engaging policy makers in new markets • Experience -> futuremechamisms: CDM as standard setter • Facilitate participation: Expanded registry services • Improve integrity of mechanisms: Quality assurance • Build capacity Regional support service

7. Measures Public commitment from market players • Purpose: Create a long-term commitment to carbon markets from major investors. • Outcome: Public statement on engagement in markets including a declaration of role of market mechanisms for cost effective mitigation • Means: A UNFCCC supported partnership/initiative along with key stakeholder organizations

8. Measures Engaging policy makers in new markets • Purpose: Explore foundations of a future integrated carbon market – how existing and new mechanisms may be linked under the future climate regime. • Outcome: Gain hands-on experiences from connecting bottom- up markets with KP markets. Possibility for greater fungibility of KP units in new markets. • Means: A systematic approach to contacting and interacting with policy makers, regulators and other key stakeholders in new markets.

9. Measures CDM as standard setter • Purpose: Use CDM standards as a bridge to the future mechanisms (e.g. NAMAs, NMBM). An increased level of understanding on how the current reformed CDM can support the development and implementation of future mechanisms is needed. • Outcome: Future mechanism’s take fully into account the experience and unique expertise that has built up around CDM. • Means: Through further implementation of CDM, in particular standardised baselines and PoAs, and broadening the reach of the CDM to under represented regions, underprivileged communities, and sectors, along with process improvements that particularly build the bridge to future mechanisms.

10. Measures Expanded registry services • Purpose: Facilitate the uptake of market mechanisms, promotion of a common framework for tracking units. • Outcome: Registry services available to private and public (non- state) entities to allow cancellation of units on a voluntary basis. • Means: Technical set-up and operation of registry

11. Measures Quality assurance • Purpose: Improve integrity of units generated and enhance the reputation of existing mechanisms. • Outcome: Dispelled doubts on the quality of units and improved quality in the outcomes of the various steps of validation and verification • Means: Review the internal operations and relations in the process - - PP / DOE-AIE / Secretariat and consideration of specific actions taking into account the CDM modalities and JI Guidelines

12. Measures Regional support service • Purpose: Establish a support service to assist project development in under represented countries • Outcome: Increased capacity in under-represented areas to develop projects • Means: Establish in-person support service, including through cooperation with UN agencies with local/regional presence so as to achieve efficiencies in being close to the “customers”

13. Cross-cutting measures Strategic Communication & Review of Resources / Responsibilities • Align communications and resources to the strategy, making necessary adjustments to related actions and means of working • Both are essential for delivery of the various measures and overall aims

14. Relationship: measures and markets

15. Outcome • Implementation of the CDM and JI mechanisms beyond 2012 and ensuring their evolution in a complementary manner with further approaches as they evolve • Allow SDM to continually be in a position to support Parties, constituted bodies and stakeholders effectively through the move toward the future market situation • Provision of elements of support, including improved infrastructure, to the market

16. Thank you!