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Markets & Mechanisms Developments inside and outside the UNFCCC negotiations.

Markets & Mechanisms Developments inside and outside the UNFCCC negotiations. Building and Urban Methodologies Workshop UNFCCC, Bonn, 27-28 March 2014. What is CDM?. What is CDM?. Cumulative CDM supply to 2020 from existing projects. Challenging times.

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Markets & Mechanisms Developments inside and outside the UNFCCC negotiations.

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  1. Markets & Mechanisms Developments inside and outside the UNFCCC negotiations. Building and Urban Methodologies Workshop UNFCCC, Bonn, 27-28 March 2014

  2. What is CDM?

  3. What is CDM?

  4. Cumulative CDM supply to 2020 from existing projects

  5. Challenging times • Due to domestic politics and lacking ambition, supply exceeds demand by at least an estimated 870 million CERs (+530 million ERUs from JI) • CER prices dropped 95% in past few years. Current price ~0.20 Euros/CER. • Functioning price should be at least 5 Euro,estimated real abatement costs around 30 Euros/CO2 eqv • The mechanism works - the markets do not (currently)! • Pre-2020 gap could be closed by 20-40% by CERs from registered projects. Parties encouraged by ADP decision to use CERs to close the gap.

  6. THE POST-2012 GLOBAL CARBON MARKET Markets are very likely to be a key component of any future climate-action framework because they: • Contribute to sustainable development, tech transfer and other development objectives of the host countries • Minimize the cost of climate action • Empower the private sector by creating economic reasons to reduce emissions through the creation of tradable assets (units) 6

  7. In the meantime outside UNFCCC… 7

  8. UNFCCC negotiations overview • 2 degree C target  50-85% emission reduction by 2030 • Business as usual  Average 6ºC temp increase • Progress? Kyoto (15%)  Cancun (85% voluntary)  Durban (100% universal)  Paris (Deal!) • Durban Platform (2011): Agreement Adopt by 2015. Implement by 2020. “…with legal force for all parties…”

  9. UNFCCC negotiations overview UNFCCC Negotiations Kyoto Protocol / CMP Convention / COP SBSTA ADP SBI 2015 agreement • Revision of CDM M&P • Revision of JI guidelines • International emissions trading • KP ambition • Eligibility • Second commitment period • Science • Mitigation • Financing • Technology transfer • Capacity building • Adaptation • NAMA • Reporting • Nairobi work programme • LULUCF • New mechanisms Agreement Design Pre-2020 ambition

  10. Market mechanisms discussions FVA NMM ADP JI CDM COP21 2015 2020 10

  11. Some politics Key issues include: • Links to overall 2015 deal • Is there a need for NMM or can CDM do the job? • How to balance flexibility with environmental integrity of mechanisms? • How to avoid double counting? • Level of control: In UNFCCC or at national levels? • Sustainable development…? • To like or not to like markets? 11

  12. Conclusion • Carbon markets very likely to stay • International carbon markets very likely to be connected under UNFCCC • One or several mechanisms beyond 2020. • Look for hooks for mechanisms, NOT for an operational manual for mechanisms in the 2015 agreement • Do not discard CDM quite yet • Ambition, ambition, ambition!!! 12

  13. Thank you

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