Discovering options for cooperative approaches and ITMOs under PA, Dr. Venkata Putti - World Bank Group
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Session 2 presentation from the 1st Strategic Dialogue of the Carbon Market, 16-17 June 2016
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Discovering options for cooperative approaches and ITMOs under PA, Dr. Venkata Putti - World Bank Group
- 1. Discovering options for cooperative approaches and ITMOs under PA Role and Activities of the World Bank Group CARBON MARKET PLATFORM 1st Strategic Dialogue Tokyo, Japan 16-17 June 2016
- 2. Guidance on presentation ๏ท Range of possible international cooperation under Article 6 of the Paris Agreement ๏ท Activities and roles of the World Bank Group related to Article 6 of the Paris Agreement (e.g. potentials and perspective from WB, as well as existing/planned activities by World Bank in order to promote international cooperation under Article 6) ๏ท Lessons learnt from those activities and the issues to be addressed in order to promote international cooperation under Article 6 2
- 3. Article 6 can be seen to provide a hook for โmarketsโ and โinternational transfersโ 6.2-6.3 6.4-6.7 Cooperative approaches that involve the use of Internationally Transferred Mitigation Outcomes (ITMOs) towards Nationally Determined Contributions (NDCs) (Sustainable Development) Mechanism 3
- 4. (SD) Mechanism Governance and process - Under authority and guidance of CMA and supervised by a CMA body; - SBSTA to develop modalities and procedures and recommend for adaption to first CMA. Purpose - Contribute to mitigation and sustainable development; - Contribute to emission reductions in the host Party; - Generate emission reductions that are internationally transferable and usable for NDC compliance; - Deliver an overall mitigation in global emissions. Elements of modalities and procedures - Voluntary participation of Parties; - Open to private and public entities authorized by a Party; - Share of proceeds including for adaptation; - Exclusion of double-counting. Elements of modalities and procedures - Real, measurable, and long-term benefits to mitigation - Specific scopes of activities; - Additionality - Third party verification and certification by DOEs - Building on experiences with existing mechanisms (CDM/JI) 4
- 5. Key characteristics of the voluntary Cooperative Approaches ๏ท Voluntary cooperative approaches in implementing Nationally Determined Contributions (NDCs) to allow for higher ambition in mitigation and adaptation actions recognized; ๏ท Internationally transferred mitigation outcomes (ITMOs) out of voluntary cooperative approaches of Parties can be used for NDC compliance if consistent with CMA guidance and authorized by participating Parties; ๏ท UN guidance, not governance (scope of guidance TBD) ๏ท Elements of CMA guidance could include: robust accounting, avoidance of double counting (emissions and removals), environmental integrity, sustainable development, transparency including on governance; ๏ท Article 4.13 establishes principles for accounting for NDCs, including transparency, accuracy, completeness, comparability, consistency, environmental integrity, and avoidance of double counting . ๏ท SBSTA to develop guidance and recommend for adaption to first Conference of the Parties serving as the meeting of the Parties to the Paris agreement (CMA)* *Not before end of 2017 as ratification period ends April 2017. 5
- 6. In contrast to Kyoto mechanisms, Cooperative Approaches allow for a broad scope and co-existence of a wide range of mitigation actions ๏ท GHG Performance standards ๏ท Technology standards ๏ท Fuel standards QUANTITY INSTRUMENTS: REGULATORY EMISSION/CERTIFICATE TRADING ๏ท Cap and Trade ๏ท Offsets Multi-Sector ๏ท Credit and baseline ๏ท Clean Energy Standard ๏ท RECs Single Sector ๏ท Carbon tax ๏ท Capital subsidies Multi-Sector PRICE INSTRUMEN TS: TAXES, INCENTIVES ๏ท Fee d-in Tariffs ๏ท Ene rgy Efficiency Tariffs Single Sector 12
- 7. Role(s) of World Bank Group related to Article 6 ๏ท Convening and mobilization of support ๏ท Innovation and piloting ๏ท Facilitation of scaled up finance ๏ท Support country readiness (policies, tools, instruments, processes) in developing a range of mitigation options ๏ท Knowledge generation and dissemination
- 8. WBG Efforts on Carbon Pricing and Markets 2. CAPACITY, INNOVATION AND PILOTING ๏ท Financial/technical support to prepare and implement carbon pricing instruments ๏ท Create a platform to share lessons and practical experience on carbon pricing 1. VALIDATING THE NEED FOR CARBON PRICING ๏ท Mobilize political leadership and business support for carbon pricing ๏ท Support upstream analytical work ๏ท Create evidence base Carbon Pricing Leadership Coalition (CPLC) Partnership for Market Readiness (PMR) Carbon Asset Development Fund (CADF) Partnership for Market Readiness (PMR) Pilot Auction Facility (PAF) World Bank Group efforts to promote and enable carbon pricing 4. ENABLING CONNECTIVITY AMONG CARBON MARKETS ๏ท Develop a framework for โcomparabilityโ among countries and โfungibilityโ among carbon assets ๏ท Facilitate the emergence of an integrated international carbon market 3. SCALING UP CARBON PRICING EFFORTS Assist countries in raising their ambition and to implement carbon pricing policies, through results-based financing Carbon Partnership Facility (CPF) Networked Carbon Markets (NCM) Transformative Carbon Asset Fund (T-CAF)
- 9. It is fostering the use of carbon pricing as a cornerstone policy through public- private high-level dialogues in a growing Coalition of ๏ท 25 governments ๏ท 85+ businesses ๏ท 30+ strategic partners CPLC translates support for carbon pricing into action 9
- 10. The Partnership for Market Readiness (PMR) PMR provides support to countries to design and implement a range of climate change mitigation policies and cost-effective measures โincluding carbon pricing instruments โin order to scale up GHG mitigation. Objectives 1. Provide grant funding to improving technical and institutional โreadinessโ, including work on GHG registries; Monitoring, Reporting and Verification (MRV) systems, data collection and management tools, and regulatory frameworks 2. Support piloting and testing of innovative market instruments (e.g., domestic emissions trading schemes (ETS) or scaled-up crediting mechanisms) 3. Provide a platform for technical discussions and knowledge creation, country-to-country exchanges, and collective innovation on new market instruments 4. Share lessons learned & best practices among policy makers and practitioners Participation 32 countries (>80% global GHG emissions) 19 developing countries/emerging economies pursuing carbon pricing & 13 countries that donate financially (US$ 130 million total)
- 11. The Transformative Carbon Asset Facility (TCAF) Piloting scaled-up carbon crediting Context & Objective ๏ท Support countries to implement ambitious sectoral mitigation measures and market- based carbon pricing for lasting impact and transformational change ๏ท Purchase carbon credits from these mitigation programs and pilot new and innovative GHG emission reduction crediting mechanisms (including โpolicy creditingโ) ๏ท Not prejudge the outcome of, but help inform the international process to develop standards and agreements for future carbon crediting instruments and transfer of mitigation assets ๏ท Support large scale programs ($30-$60m of carbon purchases over approximately 5 years per program), leverage WBG and other financing, and provide technical assistance (establishment of carbon accounting procedures and MRV systems) 11 UNDER DEVELOPMENT
- 12. The Networked Carbon Markets (NCM) Initiative NCM is a key component of WBGโs long term efforts to promote and enable carbon pricing and is based on a recognition that: ๏ท Countries and sectors are making progress in developing a broad range of โbottom-upโ approaches to reduce emissions. ๏ท However, since each is being designed individually and using a different rulebook, making the task increasingly complex to measure, understand, compare, and track progress of climate policies, across countries. ๏ท The increasing heterogeneity among countries and sectors, has accelerated the need for a credible, independent and transparent assessment framework to enable comparability of different climate mitigation actions. ๏ท Developing the services and institutions needed to enable comparability and determine the relative value of climate mitigation actions within countries and sectors and between them, is key for informing international linking decisions and facilitating a connected international carbon market. The end-goal of the NCM initiative is to enable comparability among different climate mitigation actions, for a connected international carbon market. 12
- 13. Some Lessons and Conclusions in the context of operationalizing PA ๏ท Need for a robust accounting framework โ tools, instruments, processes (PMR, TCAF) ๏ท Need for a robust transparency framework, especially in the context of voluntary cooperative approaches (NCM) ๏ท Testing and piloting different mitigation options to help scale up and leveraging finance (TCAF) ๏ท Continued need for creating strong evidence base to foster international partnerships (CPLC. PMR)
- 14. Dr. Venkata Putti Program Manager, Climate and Carbon Finance World Bank Group pramana@worldbank.org 14