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Sectoral approaches to climate action: ‘Complementary opportunities or dead end?’

Sectoral approaches to climate action: ‘Complementary opportunities or dead end?’. Business and Industry Global Dialogue 2008 23 October 2008 Richard Baron – IEA. Disclaimer – The views expressed here are the author’s and may not reflect the views of the individual IEA Member countries.

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Sectoral approaches to climate action: ‘Complementary opportunities or dead end?’

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  1. Sectoral approaches to climate action:‘Complementary opportunities or dead end?’ Business and Industry Global Dialogue 2008 23 October 2008 Richard Baron – IEA Disclaimer – The views expressed here are the author’s and may not reflect the views of the individual IEA Member countries.

  2. Outline • Sectoral approaches: do we have a choice? An illustration. • A look at countries’ recent submissions to the UNFCCC • Questions for debate

  3. Complementary or dead end? Sectoral approaches are likely to be an essential element of future international mitigation efforts  Hence, handle with care

  4. Sectoral approaches: do we have a choice?

  5. Illustration - CO2emissionsin China

  6. Illustration - CO2emissions in India

  7. Electricity (supply and use) should be a priority for action * * * * * Source: IEA(2008), Energy Technology Perspectives 2050.

  8. Why are we, internationally, looking at sectors? • Since Kyoto: from ‘simple’ country caps (-and-trade) to the actual complexity of specific mitigation policies • Whether market-based or else, useful lessons can be drawn from Annex I progress on various policy areas • See G8 best practice work and concrete recommendations on energy efficiency • Most developing countries not ready for country-wide goals – political and capability issues (CBDR/RC) • In the meantime, GHG accumulate • Some will need sector-specific support • Best policy practice and policy design • Training (see Asia-Pacific Partnership on efficiency of existing plants) • Targeted financial support • Carbon market

  9. SA under the UNFCCC at present

  10. Views on SA from submissions • China: no to benchmarks, standards, etc. but calls for larger finance incl. via carbon markets. Review of EST on basis of cost, reliability, obstacles • India: no common standards, cooperative R&D, IPR cost, standards on certain products and practices, voluntary energy efficiency programmes (pledge) • S. Africa: Register of actions. Toolbox of support instruments, SD-PAMs  No-lose • S. Korea: Registry for NAMA (nationally appropriate mitigation actions): crediting to provide finance

  11. UNFCCC submissions (ctd.) • EU: two categories. Sectoral technology and policy cooperation / sectoral approaches w. carbon market (incl. differentiated instruments) • Japan: comparability of efforts / binding sectoral intensity targets for developing countries / crediting as support to NAMA / no trade sanctions / supplementarity • Norway: explore crediting /SA further to transfer resources to move towards low-carbon economy • Russia: risk of speculation through carbon market

  12. SA toolkit on UNFCCC table at this stage • Prioritize global action & discuss comparability of efforts • Broaden crediting from CDM (project) to sectoral CDM • Move away from offsets towards actual, global mitigation (no-lose targets) • Sectoral targets under emissions trading (article 17 under the Kyoto Protocol) • SA to organize technology diffusion/transfer etc. (as per Bali Action Plan, 1.b.iv) • Absent: international negotiation over a sector (a.k.a. transnational agreement) • Outside: IAI, worldsteel, CSI, APP …

  13. Questions for debate

  14. Role(s) of the carbon market • Options abound on how to harness the carbon market: • Sector-wide CDM, sectoral crediting, no-lose, sectoral caps, intensity-based or not • Offsetting vs. crediting: how to evolve away from CDM? • How do the options bring incentives to countries / domestic agents? • CDM  project developers/installations have a clear incentive (CDM project cycle notwithstanding…) • Sectoral targets, intensity, non-binding  installations are steps away from carbon market – does this matter?

  15. Role(s) of the carbon market • Uncertainty on supply (CDM + sectoral + … ) and demand (developed country commitments) – and back • Merely a political issue (‘show me the level of your ambition, I’ll show you mine’) or also about details of instruments, incl. SA? Incentives should matter. • Limited (or lack of) data / eligibility / likely timing of entry of various sectors/countries in the market?

  16. Other possible considerations on SA in UNFCCC negotiations • Differentiation of countries or actions What implications for a sectoral approach to mitigation? • Differentiate by type? SD-PAMs  …  Sectoral targets • Differentiate by level of international support to NAMA • Support mitigation in developing countries / sectors via carbon market or other means? • Economically attractive for ‘donors’ • Verification = Intrusiveness • Countries to pledge actions: will they go beyond these pledges with SA? • Competitiveness/leakage issues: ‘elephant in the room’ or can be handled with ad-hoc measures?

  17. Going forward: Integration in an agreement by Copenhagen? • Numbers on sectors / countries by COP15? • Unlikely for most – esp. w/o agreement on precise format of SA, or differentiation of actions • Areas for decisions by COP15? • Principles for SA? • Role of carbon market, other support, eligibility sectors/countries? • A registry structure (format) to record ‘pledges’? • Pilot phase  data gathering … • Deadline for submissions of SA pledges/goals by developing countries? • Process for evaluation of submissions, as they come? Sectoral expert groups?

  18. coming soonOptions for integrating sectoral approaches (SA) into the UNFCCC Richard Baron, Ingrid Barnsley (IEA), Jane Ellis (OECD)

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