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Introduction to mitigation mechanisms and markets

Topic 5, Section A. Introduction to mitigation mechanisms and markets. Learning outcomes. In this presentation you will learn about mitigation mechanisms and carbon markets. Topic 5, Section A, slide 2 of 15. Outline. Mitigation mechanism Carbon market.

marissa-oistin
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Introduction to mitigation mechanisms and markets

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  1. Topic 5, Section A Introduction to mitigation mechanisms and markets

  2. Learning outcomes In this presentation you will learn about mitigation mechanisms and carbon markets. Topic 5, Section A, slide 2 of 15

  3. Outline • Mitigation mechanism • Carbon market Topic 5, Section A, slide 3 of 15

  4. Payments for ecosystem services Water regulation Biodiversity Forests Carbon Scenic beauty Livelihood support What are the carbon markets? Topic 5, Section A, slide 4 of 15

  5. Forest activities that mitigate climate change • Increasing carbon stocks Carbon Creating plantations Project Benefit Baseline Developing agroforestry Years Forest • Avoiding losses of carbon stocks Carbon With conservation Reducingdeforestation Benefit Baseline (Deforestation) • Reducingemissions caused • by forest activities Years Less energy, oil, fertilisers... • Producingbiomaterials and bioenergy Energy Topic 5, Section A, slide 5 of 15

  6. History of carbon mechanisms • 1992: United Nations Framework Convention on Climate Change (UNFCCC) • 1997: Kyoto Protocol • Cap-and-trade and flexibility mechanisms, such as the Clean Development Mechanism (CDM) • Carbon markets • 2001: Marrakesh Agreements • Role of forests in the CDM defined • 2005: Kyoto enters into force • 2010 (?): Agreement on Reducing Emissions from Deforestation and Degradation (REDD)? Topic 5, Section A, slide 6 of 15

  7. Diversity of carbon markets Kyoto: ET and JI (between Annex I countries) European Market ETS Canada Oregon JVETS (Japan) RGGI CCX WRCAI Clean Development Mechanism(*) Voluntary markets (*) Kyoto market Other cap-and-trade markets Voluntary markets GGAS (New South Wales) Annex I Non Annex I Topic 5, Section A, slide 7 of 15

  8. Carbon mechanisms and markets for forests Creating plantations Developing agroforestry ARCDM Voluntary Markets • avoiding losses of carbon pools REDD+? May also cover A/R Reducingdeforestation • reducing emissions caused by forest activities CDM(energy) • producing biomaterials and bio energy Topic 5, Section A, slide 8 of 15

  9. Emission Trading (ET) tC tC JointImplementation(JI) tC $ $ $ Clean Development Mechanism (CDM) Project Non-Annex I country The Kyoto Protocol at a Glance Flexibility mechanisms Emission reduction commitment(for 2008-2012:95% on average of 1990 level) Annex I country Annex I country Project Annex I country National Efforts Topic 5, Section A, slide 9 of 15

  10. Forests in the CDM • Eligible activities • only afforestation and reforestation (may include agroforestry) • land without forest on December 31, 1989 • Requirements • additionality and baseline • methodologies • permanence and temporary credits • Complexity and transaction costs • scale issues • Current status (April 2008) • 1 registered forestry project (among 987 CDM projects in total) • 10 approved methodologies Topic 5, Section A, slide 10 of 15

  11. Avoided deforestation • Also called • RED (Reduction of Emissions from Deforestation) • REDD (Reduction of Emissions from Deforestation and Degradation) • Tropical deforestation = 17.4% emissions • Not included in any other agreement such as the CDM • In 2005: start of new discussions on RED • Main issues: • fund vs. markets, controversies on linking REDD to cap-and-trade markets • what to reward (efforts, reductions compared to a baseline…)? • impacts on sustainable development, redistribution of benefits • monitoring • Bali 2007: agreement on pilot actions • World Bank’s Forest Carbon Partnership Facility • Many bilateral initiatives • REDD+ • Reduce emissions from deforestation and forest degradation • Forest conservation, sustainable forest management, enhancement of forest carbon sinks Topic 5, Section A, slide 11 of 15

  12. Forests in the Carbon Markets Transactions with projects (forest and non-forest) are growing fast But the share of forestry projects is very low (<1% for the CDM) Reasons: no connection with CDM-ETS, delay in forest-related CDM decisions, lack of awareness of markets, complexity. (Capoor & Ambrosi, 2007) Topic 5, Section A, slide 12 of 15

  13. Voluntary markets • Comparative advantage for forestry projects • 37% of transactions are with forestry projects (Hamilton et al., 2007) • Survey of 71 brokers (Gardette et Locatelli 2007) • 61% deal with forestry projects • 24% exclusively with forestry projects • Reason: • mostly image and public relations issues • No restrictions on activity types • avoided deforestation, reforestation, agroforestry • No well-defined modalities, but standards are emerging: • Climate, Community, Biodiversity (CCB) • Voluntary Carbon Standard (VCS) Topic 5, Section A, slide 13 of 15

  14. Discussion • How can USAID and other donors help remove some of the barriers to access to these markets? Topic 5, Section A, slide 14 of 15

  15. Thank you for your attention

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