VARIOUS APPROACHES, INCLUDING OPPORTUNITIES FOR USING MARKETS, TO

ENHANCE THE COST-EFFECTIVENESS OF, AND TO PROMOTE, MITIGATION ACTIONS,

BEARING IN MIND DIFFERENT CIRCUMSTANCES OF DEVELOPED AND

DEVELOPING COUNTRIES

2011/10/23 Tomoki Takahashi

Agenda

1. Introduction

2. Present Situation　　　 a. COP16

　　　 b. AWG-LCA 14 1st session

　　　 c. AWG-LCA 14 2nd session 　　　　　　 d. AWG-LCA 14 3rd session

3. Position of Countries

1. Introduction

What is it?

　 Various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries

　 →　 TOO LONG!!!

Simply put…

New approach or mechanism

◎ Objective

enhancing the cost effectiveness of

promoting

mitigation actions

◎ Type

Market-based and Non-market based

In Bali Action Plan (b) Enhanced national/international action on mitigation of

climate change, including, inter alia, consideration of:

(i) Measurable, reportable and verifiable nationally

・・・

　 (v) Various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries;

2. Present situation　 a. COP16　 b. AWG-LCA 14 1st session (Bangkok)　 c. AWG-LCA 14 2nd session (Bonn)　 d. AWG-LCA 14 3rd session (Panama)

COP16

The Conference of the Parties(a) Decided to consider the establishment, at its 17th session,

of one or more market-based and one or more non-market-based mechanisms

(b) Requested AWG-LCA to elaborate these mechanisms, with a view to recommending draft decisions to the COP for consideration at its 17th session

(c) Invited Parties and admitted observer organizations to submit to the their views and information by 21 February 2011

COP16

Market-based mechanism takes into account

(a) Ensuring voluntary participation of Parties, supported by the promotion of fair and equitable access for all Parties;

(b) Complementing other means of support for nationally appropriate mitigation actions by developing country Parties;

(c) Stimulating mitigation across broad segments of the economy;

(d) Safeguarding environmental integrity;

(e) Ensuring a net decrease and/or avoidance of global greenhouse gas emissions;

(f) Assisting developed country Parties to meet part of their mitigation targets, while ensuring that the use of such a mechanism or mechanisms is supplemental to domestic mitigation efforts;

(g) Ensuring good governance and robust market functioning and regulation;

AWG-LCA14 Bangkok

◎ COP16　　　　 Invitation of information on various approach from

Parties and admitted observer organizations

◎ AWG-LCA 14 1st session (Bangkok)

　 Synthesis Report　　　　 It synthesizes the information submitted by Parties and

admitted observer organizations.

　　 1. Evaluation of existing mechanism

　　 2. Possible evolution of market-based mechanisms

　　 3. Possible evolution of non-market-based mechanisms

AWG-LCA14 Bangkok

◎ Summary of the report

1. Evaluation of existing mechanism

Market-based Non-market-based

　 Enhancing of the cost effectiveness

○ ×

　 Promoting × ○

Market-basedCDM, JI, ETS…etcNon-market-basedFeed-in-tariff, Regulation, Education…etc

AWG-LCA14 Bangkok

2. Possible evolution of market-based mechanisms

　・ Inadequacy of existing mechanisms

⇒ New mechanisms should be Build upon them

　・ The base will be Trading or Crediting.

　・ Main focus is placed on national or bilateral mechanisms. (The role of COP is help them)

AWG-LCA14 Bangkok

3. Possible evolution of non-market-based mechanisms

　・ Improved version of the existing mechanism

　・ Reducing or removing of emission-intensive activities and enhancing of non-emission-intensive activities with policy or finance

　・ Others specific approach (creating national center, removing barrier of intellectual property)

AWG-LCA 14 1st session (Bangkok)　　　　 Synthesis of the information submitted by Parties and

admitted observer organizations

AWG-LCA 14 2nd session (Bonn)

　 Note by Facilitator 　 　　　 Reflection of the facilitators assessment of issues to �

be addressed by Parties for the fulfilment of Cancun agreements

AWG-LCA14 Bonn

AWG-LCA14 Bonn

Contents

1. Possible structure of one or more decisions on market-based mechanisms

2. Possible structure of one or more decisions on non-market-based mechanisms

3. Possible work prior to COP 17

AWG-LCA14 Bonn

Possible structure of decisions(a) Reference to consistency with Convention principles, guidance

from decision 1/CP.16, paragraph 80, and complementarity with Kyoto Protocol mechanisms; (1,2)

(b) Consideration of eligibility criteria and a cap on using offsets;(1)

(c) Elaboration of specific mechanism(s), with further guidance on scope, characteristics and governance;(1,2)

(d) Elaboration of a framework under the Convention to guide the bottom-up development of mechanisms by Parties;(1)

(e) Launch of work (process and timing) to develop modalities and procedures for each new mechanism;(1,2)

(f) Consideration of the use of mechanisms being contingent on legally binding targets reflecting increased levels of ambition (e.g. under a second commitment period of the Kyoto Protocol or equivalent).(1)

AWG-LCA14 Bonn

Possible work prior to COP17

The Need for

　　 Technical workshop

　　 Technical Papers

AWG-LCA 14 2nd session (Bonn)　　　　 Reflection of the facilitators assessment of issues to �

be addressed by Parties for the fulfilment of Cancun agreements

AWG-LCA 14 3rd session (Panama)

　 Parties Compilation　 　　　 Summary of the submission from Parties and

organizations and the base of discussion in COP17

AWG-LCA14 Panama

AWG-LCA 14 Panama Parties Compilation

Option 1

　 (146 paragraphs)

Option 2

　 147. Decides to consider, at the eighteenth session of the Conference of the Parties, the establishment of various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and to promote, mitigation actions, bearing in mind different circumstances of developed and developing countries;

Option 3

　 148. No decision on this matter.

AWG-LCA 14 PanamaNot Summarized yet…

　 16. Stimulating mitigation across broad segments of the economy;

　 17. Stimulating mitigation across broad segments of the economy, which constitute a significant proportion of a country’s emissions or a significant proportion of a country’s GDP, and can contain sectors or subsectors;

　 ⇒ It will be summarized before COP17 and used as the base of discussion.

3. Position of Countries

Market-based MechanismSupporters

◎ Common View　・ Considering different circumstances of countries

　・ Need for financing and technology transfer

　・ Importance of environmental integrity

　・ complement of existing market-based mechanism…etc 　 ◎ Different View

　・ Wide range or Strict rules?

　・ Schedule

Opponents

Wide range or Strict rule?

◎ Supporters of a wide range of mechanismsAustralia

　 ・ All Parties to the Convention should have full access to expanded and improved market mechanisms to achieve their mitigation actions and commitments.

　 ・ The post-2012 framework should accommodate a broad range of potential market mechanisms to harness all possible mitigation opportunities.

Japan

　 ・ New market-based mechanisms should allow wide spectrum of approaches,

　 ・ Market-based mechanisms provide opportunities to reduce GHG emissions in the area where the abatement costs are relatively low.

Wide range or Strict rule?

◎ Supporters of a wide range of mechanismsRepublic of Korea

　 ・ However, such rigorous MRV may be prohibitively costly and time-consuming or simply infeasible with regard to large-scale mitigation actions, for the interactions among mitigation actions will make it much more complicated to identify the pure reduction/avoidance of those actions.

Wide range or Strict rule?

◎ Supporters of strict rulesAOSIS(Alliance of Small Island States)

　 ・ ambitious, legally-binding emission reduction targets, taken at the international level, are essential to drive a global carbon market

　 ・ stringent baselines for new participants are essential,

　 ・ inventories must be transparent, consistent, comparable, complete and accurate for the sectors

Poland (on behalf of the EU and its member States)

　・ the units resulting from the new market-based mechanisms need to represent real, measurable, verifiable and additional emission reductions.

Wide range or Strict rule?

◎ Supporters of strict rulesChina

　 ・ Emission reduction commitments of the developed country Parties shall be achieved mainly through domestic efforts and the market-based mechanism could only play a complementary role.

Saudi Arabia

　 ・ There must be an agreed maximum percentage of total mitigation by Annex I countries (measured by total GHG reduction) that can be undertaken outside national borders.

　・ Lower cost mitigation opportunities (low hanging fruits) should be left for the developing countries, as part of their voluntary endeavor to contribute to the global mitigation effort.

Schedule

Poland (on behalf of the EU and its member States) 　・ The EU looks forward to the establishment at COP 17 in

Durban of a new market-based mechanism for developing countries consisting of a common core set of rules and procedures at the international level.

Japan　 ・ Parties should aim to adopting at the COP17 decisions

which will provide directions on the new mechanisms

Peru 　・ Peru also proposes to explore, develop and implement the

contents of these approaches, including its modalities and procedures established no further than COP18.

Opposing view

Bolivia　 ・ The issue of new market mechanisms is one of the critical

elements why Bolivia rejected the draft Decision of Cancun.

　 ・ In none of the contact groups there was a clear negotiation, much less even an acceptance, of these issues.

　 ・ Any kind of carbon markets are unacceptable, because they are against the integrity of climate policy, and only worsen the actual climate crisis.

Venezuela　 ・ They are simply a means for shifting the burden of

mitigation from developed to developing countries.

Reference

・ FCCC/AWGLCA/2011/4

・ Note by the Facilitator (Bonn)

・ FCCC/AWGLCA/2011/MISC.2

・ FCCC/AWGLCA/2011/MISC.2/Add.4

・ FCCC/AWGLCA/2011/MISC.3

・ Parties. Compilation (Panama)

Thank you for listening!