Introduction of information note

Compilation and analysis of available information on the scope, effectiveness and functioning of the flexibility mechanisms under the Kyoto Protocol

UNFCCChttp//:unfccc.int

http//:cdm.unfccc.inthttp//:ji.unfccc.int

Pres-sessional workshop on the second review of the Kyoto Protocol pursuant to its Article 9

22 – 23 October 2008Athens, Greece

Outline |

Background & Scope of note

Possible improvements to - Institutional arrangements and governance

in relation to the Executive Board in relation to designated operational entities

- Rules and procedures of the CDM - Joint Implementation

Background & Scope of note | Mandate

At its 28th session SBI requested secretariat to prepare an information note to compile and analyse available information on the scope, effectiveness and functioning of the flexibility mechanisms under the Kyoto Protocol

SBI further requested secretariat to make the note available to Parties prior to this pre-sessional workshop

Parties were invited to submit their views on the issue, which the secretariat has compiled in document FCCC/KP/CMP/2008/MISC.2

Background & Scope of note | Scope

Compiles & analyses information on the scope, effectiveness and functioning of mechanisms, focusing on CDM and JI

Sections II and III consider possible improvements to institutional arrangements and governance in relation to the CDM Executive Board and designated operational entities

Section IV considers possible improvements to the rules and procedures of the Executive Board

Section V discusses the potential to apply these possible improvements to JI

Sources:

Submissions by Parties

Work undertaken by Executive Board & JISC

Issues identified by Parties at 5th session of AWG-KP

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Delegation of technical decision-making

Delegation to the secretariat and/or committees and panels established under the Board (support structure)

Rationale: to allow Board to focus on strategic and policy issues and improvements to system

Could enhance overall efficiencyBoard would maintain full accountabilitySupport structure would be accountable to Board and provide regular,

comprehensive reportingBoard has taken a number of steps to move in this direction already, with

secretariat performing many support duties and several panels already having been established

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Delegation of technical decision-making

Specific areas where delegation could happen:

• Approval of baseline and monitoring methodologies, development of methodologies using benchmarks and, assistance in developing methodologies where none are being proposed;

• Accreditation of designated operational entities;• Registration of projects and issuance of certified emission

reductions (CERs), including reviews of registration and issuances cases.

In relation to the Executive Board: Consistency and transparency of decision-making

Proposal for enhancement of the consistency and transparency of decision-making by the Board have been made

Would reduce likelihood of value judgments and improve understanding of decisions by stakeholders

Following measures considered:• All decisions taken classified, published and indexed;• Introduction of classification system for decisions;• Establish a formal hierarchy of decisions;• Decisions reference to previous decision;• Process for amending/replacing previous decisions;• All decisions and rationale to be published.Board has already acted or is in the process of concluding on some of

these issues

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Process for reviews and issuance

Proposal for streamlining the review process so as to reduce or avoid delays in project registration

Reconsideration of the ways in which reviews are made, including possible change to timelines and establishment of criteria for triggering reviews and deciding what to include in a review

Board presently takes all decisions within the prescribed timelines

Some delays are occurring due to resource constraints in the support structure and DOEs – the Board is in the process of addressing these

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Process for appeals

Proposal for introduction of an appeals process for the CDMAppropriate body for appeals: the Board or third body?If new body need to consider: composition, competencies of

members and required support structureAppeals on what: due process or question technical issues?Will need criteria for what appeals may be brought forth and

what actions can be taken by appeals bodySteps will need to be taken to ensure appeals system not

misused

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Selection and role of members

Proposal that members be selected to ensure Board possess appropriate expertise and that members’ activities need be declared

Specific measures suggested:• Terms of reference for members to clarify their roles and identify

restrictions• Publication of nominations period prior to selection• Separate selection process from election process to other

constituted bodies• Direct election of Chair and Vice-Chair by CMP to full-time posts• Establishment of code of conduct to ensure quality of work and

assure impartiality

Possible improvements | Institutional arrangements and governance

In relation to the Executive Board: Management of support to bodies

Proposal that secretariat enhance the management and transparency of its resources use

Need for more closely monitoring allocation of resources to activities in the support of the Board to ensure they are effectively focused to facilitate CDM projects

Take advantage of similarities and synergies between the support structures of the Board and JISC

Possible improvements | Institutional arrangements and governance

In relation to the designated operational entities: Accreditation process

Proposal to adopt a single standard for accreditation of entities

Specific areas to consider:• Clarify roles of each stage – desk review, onsite

assessment, witnessing• Elaborate purpose of spot checks and surveillance of DOEs• Establish indicative timelines for each stage• Address the issue of availability of projects for witnessing

Establish mandatory formal training for experts working for DOEs

Possible improvements | Institutional arrangements and governance

In relation to the designated operational entities: Guidance provided by bodies

Suggestion for more guidance from Board to DOEsRegular communication to keep DOEs informed of latest

decisions and ensure appropriate understanding and interpretation of decisions

Actions the Board presently undertaking:• Meets with representative of DOEs at each meeting• Sends email alerts after each meeting• Involves DOEs in development of procedures and

guidance• Provides substantive support to regional calibration

meetings

Possible improvements | Institutional arrangements and governance

In relation to the designated operational entities: Quality and consistency of assessments

Propose the Board enforce higher standards in results of DOEsEstablish a system of non-compliance, leading to suspension or

withdrawal of accreditationPublish statistics of DOE performance; apply sanctions

(financial or restricting right to further work)Reporting of outcomes of DOEs assessment, whether positive

or negativeSuggestion for publishing of all outcomes of validation processBoard has initiated work on a policy framework to address non-

compliance

Possible improvements | Institutional arrangements and governance

In relation to the designated operational entities: Selection and payment

Propose the Board or secretariat select and pay for the services of DOEs

Enhance the impartiality of DOEs and independence from the project participants

Project participants would still bear the direct costs for each project though

Possible improvements | Institutional arrangements and governance

Additionality and methodologies

More objective and standardized assessment of additionality of projects

Specific options:• Greater standardization in the use of financial benchmarks;• More objective and quantitative criteria in project barrier analysis; • Greater use of emission benchmarks for demonstrating

additionalityFurther enhance the objectivity and environmental integrity by further

using sector- and subsector-specific benchmarks at a national level

The Board is already exploring the subject of benchmark and refernce values

Possible improvements | Rules and procedures of the CDM

Programmes of activities

Suggestion to further enhance the approach to programmes of activities under the CDM

Process is still in its infancy (DOEs currently validating five PoAs)

Likely to be further scope for enhancing current rules for PoAs – the Board has made a call for public inputs to collect information on experiences and challenges

Possible improvements | Rules and procedures of the CDM

Potential to apply improvements to JI

In principle many of the suggested improvements could be implemented for JI as well

However, JI has less experience than CDM and not clear if changes would be warranted in the context of JI – if were to be applied, the characteristics and circumstances of JI would need to be taken into account

The example of delegation of technical decisions to support structure for example would imply a different scope for JI (and Track 2 only)

As well, as there have been fewer projects that have received a final determination, issues of consistency of decision-making has not arisen in the process

Overall, the specific characteristics of JI Track 2 would need to be considered, but it would be possible to apply some of the proposed measures discussed for the CDM to JI Track 2

Possible improvements | Joint Implementation

Thank you