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Standing challenges for JI

Standing challenges for JI. Dimitar Nikov. First SDM Joint Coordination Workshop 24 – 25 March 2012 - Bonn. Lessons learned so far. What was expected from JI : to be an efficient flexibility mechanism Environment : internationally capped (and tracked) credits

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Standing challenges for JI

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  1. Standing challenges for JI Dimitar Nikov First SDM Joint Coordination Workshop 24 – 25 March 2012 - Bonn

  2. Lessons learned so far • What was expected from JI : to be an efficient flexibility mechanism • Environment : internationally capped (and tracked) credits • Economy : finance, flexibility and clean technology transfer • What was delivered : an efficient flexibility mechanism… • Environment : + emission reductions are here to stay • Economy : + harvest information on untapped emission reduction potential and inspire future policy design + improve standardization and benchmark setting under existing trading schemes • > 350 MtCO2e to be delivered in CP1 • …facing challenges in the very near future • On national level : data collection, additionnality, procedural problems • On global level : multiple Track 1 approaches, lack of enough flexibility of Track 2 • On continuation : continuation ensured for AI parties, but clarification decisions on crediting likely to be needed • On demand : lack of identified, market demand for ERUs for new, post-2012 registered projects

  3. Challenges for a DFP on national level • Baseline choice - data collection and use • Additionnality - defining and evaluating additionnality • Procedural and organizational considerations • Is the work distribution between each of the involved national entities for the approval of a project well defined (pedagogy effort often needed)? • Are national rules on the mechanism reflecting each of the possible project implementation issues? • How national rules evolve when the mechanism evolves on international level? • Define a clear place for the mechanism in the national climate policy • Ensure the involvement of private sector

  4. Challenges for a DFP on global level • Main concern for the DFP : preserve its added value • Future challenges for a DFP : improve rules on procedures in order to minimize challenges on national level, streamline approvals and incentivize financing and project development across AI parties Options to explore : • Unilateral improvement without CMP guidance (BAU scenario) still a credibility issue for the whole mechanism • Unilateral improvement under CMP guidance an unrealistic solution • Multilateral improvementunder CMP supervision meaning no more Track 1 and revision of the mechanism

  5. Challenges on continuation of JI • Durban provides for the commencement of the CP2 from the 1st of January 2013, meaning continuation for existing flexibility mechanisms • Nevertheless, even if post-2012 emission reductions are to be accounted for the CP2, it is still unclear how and when they will be credited, as they shall be backed by AAUs (unlikely that CP2 AAUs will be available in January 2013) Options to explore (need for future legal expertise): • Prompt start decisions issuing CP2 AAUs before entry into force of CP2 • Postpone the issuance of ERUs in respect of CP2 reductions until CP2 AAUs are issued • Convert CP1 AAUs into ERUs (for Parties with CP2 QELRO) and then deduct equivalent amount from CP1 AAUs to be carried-over • Convert CP1 AAUs into ERUs (for Parties with CP2 QELRO) and then deduct equivalent amount from CP2 AAU issuance

  6. Challenges on demand for ERUs • In current market most of the demand is provided by the EU-ETS. ERUs used for compliance of EU installations • ETS Directive (2009/29) rules for the third phase (2013-2020) • Accept only credits from existing (registered pre-2013) JI projects • No new short-term demand perceived under current EU commitments • The more time it takes to credit ER taking place post-2012, the less credits may get accepted in the EU-ETS (the cap of 1,6 billions tCO2e of CER, ERUs is filling quickly) • Need to search for demand for new ER in other market schemes

  7. JI hosted in France : a quick snapshot • Private investors; Domestic scheme (Track 1); 90% rule; Methodologies • 16 methodologies • 17 projects (+ 2 under approval in agriculture et another one in household emissions) with ER potential of 10 MtCO2e (9 M ERUs, over 4 Mt delivered so far) for 2008-2012. • Mainly industrial gases (benchmark approaches for nitric acid projects of 2,5 and 1,85 kgN2O/tHNO3), but small potential for replication (inclusion into the EU ETS) • High potential for agriculture where no specific public tools exist • Latest methodologies and projects focus on PoA development : agriculture, transport, housing • Examples from agriculture: • Energy (CO2) - reduce energy consumption for co-op farms drying alfalfa through biomass use rather than fuel and improve general drying practices) • Livestock farming (CH4) – nutrition modification for dairy cows with natural omega-3 rich plants (alfalfa, extruded flaxseed, etc.) • Fertilization (N2O) – diminish fertilizers use through crop rotation modification based on legumes. • http://www.developpement-durable.gouv.fr/Liste-des-methodes-referencees-et.html

  8. Thank you dimitar.nikov@developpement-durable.gouv.fr

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