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In collaboration with. Research Team Supervision and Coordination : Kwi-Gon Kim, Ph.D., UEA Secretariat Lead authors : Kwi-Gon Kim, Ph.D., UEA Secretariat.

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Presentation on theme: "In collaboration with. Research Team Supervision and Coordination : Kwi-Gon Kim, Ph.D., UEA Secretariat Lead authors : Kwi-Gon Kim, Ph.D., UEA Secretariat."— Presentation transcript:

1 In collaboration with

2 Research Team Supervision and Coordination : Kwi-Gon Kim, Ph.D., UEA Secretariat Lead authors : Kwi-Gon Kim, Ph.D., UEA Secretariat Byoungchull OH, Ph.D., UEA Secretariat Seung-Ho Seo, UEA Secretariat Young-Du Choi, UEA Secretariat Administrative : Jung-Sam Lee, Gwangju Metropolitan City Sang-Kap Kim, UEA Secretariat Nam-Ghiu Park, UEA Secretariat Advisory Group : International Inter-Agency Advisory Group for the Urban Environmental Evaluation Index and Urban CDM UNEP UNFCCC World Bank KEI In Collaboration with:

3 Table of Contents Introduction Components of Framework for UEA/Gwangju Approach to Low-Carbon Green City UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM and NAMAs Urban CDM Program : A Mandatory Approach to Carbon Financing GHG ProjectionDiagnostics Program(GPD) and Carbon Banking System : A Voluntary Approach to Carbon Financing Expanded PoA Conclusions & Suggestions Proposal on New Initiative for Urban CDM - Development of a Compensation Model for Carbon Financing

4 4 | 71 Introduction We live in the era of global warming which causes severe extreme weather events. Human beings are experiencing the events right now in the every corner of the planet. It has been proven that conventional urban planning fails to meet requirements and demand for the safe and comfortable globe. We, therefore, need ceaseless planning innovation. Comprehensive carbon-centered (3Cs) should be the mainstream of planning to combat climate change at the city-scale. The past decades were important time in terms of sustainability from low-carbon emission to carbon-neutral city in Gwangju. Gwangju has devotedly worked in this field with national and international partners and like-mind organizations and people. This paper highlights the initiatives and projects of Gwangju/UEA to reduce greenhouse gas (GHG) emissions towards low-carbon Green city which is one of Gwangju/UEA priority agendas.

5 Components of Framework for UEA/Gwangju Approach to Low-Carbon Green City 5 | 71 UEA/Gwangju Approach to Low-Carbon Green City Theoretical model of Urban CDM GPD & Carbon Banking System Outcomes of Urban CDM Expanded PoA Urban CDM Feasibility Study Urban Methodology Urban CDM Handbook Urban CDM Toolkit Theoretical model of Urban CDM Development Co-development of City Climate Planner Creditation Program Feasibility Study Urban GHG Accounting City Climate Planning Carbon Financing

6 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM and NAMAs 6 | UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM 3.2 UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs

7 7 | UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM ContentsConventional CDMUrban CDMGPD & CBSExpanded POAOthers Inventory Selection of inventory year Selection of scope of GHG (direct/indirect emissions) Measurement with Equipment Calculation Modeling Estimation by situation analysis Billing System Selection of inventory year Selection of scope of GHG among expanded projects (direct/indirect emissions) Combination of Measurements with Equipment Standardized Baseline Constant level of emission Considerations for population and economic growth, etc. Reduction Activities Prioritizing reduction projects By project By sector By Multi-Sector Expanded or Combined By project By sector By Multi-Sector Expanded or Combined Modelling & Regression Use of existing methods approved by UNFCCC New methodology Analysis on projected GHG emission by using GPD Development of projection equation through analysis of electricity/city gas/drinking water consumption Use of existing methods approved by UNFCCC New methodology Approach in the aspect of urban aggregation Accounting Carbon markets implemented at the national or regional level Carbon markets to be implemented at the city level - Compliance Market - Voluntary Market Preparation for the access to carbon market Additionality Additional initial capital investment MRV Submission of MRV report Verification/certification Submission of MRV report Verification/certification Submission of MRV report Verification/certification Submission of MRV report Verification/certification Note: 1) GPD : GHG Projection & Diagnostics Program 2) CBS : Carbon Banking System

8 8 | UEA/Gwangju Approach in the Context of Modalities & Procedures of NAMAs Steps to a NAMAs Source : Nationally Appropriate Mitigation Actions(NAMAs), Steps for Moving a NAMA from Idea towards Implementation Ver. 9.0, giz Fig. 1 Step to a NAMAs

9 Urban CDM Program : A Mandatory Approach to Carbon Financing 9 | 71 Urban CDM, which was coined by Professor Kwi-Gon Kim, is a holistic forward-looking planning tool that integrates the elements of GHG analysis maximizing livability and quality of life for the people in broad terms. Good GHG accounting is a pre-requisite for good carbon planning. Urban CDM is an economic tool which helps financial analysis in a holistic manner. Urban CDM is all about return of investment, offset and benefits. What is the Urban CDM? Urban CDM is a mechanism which gives financial incentives and provides Certified Emission Reductions (CERs) as much as amount of emission reduction at the city-scale compared with baseline emissions at the city level. Therefore, it can be used as a political carbon decision support system both for green growth and economy and for urban planning and management. Rationale behind the Urban CDM - A tool for carbon financing: market-based mechanism - A tool for urban GHG accounting: urban metabolism-based mechanism - A tool for 3Cs (Carbon Centered Comprehensive) planning: land-use based mechanism

10 10 | 71 Why is the Urban CDM needed urgently? Cities are main sources of global GHG emissions and a major pollutant - 50% of the world's population now lives in cities. By 2050, three out of four people are expected to live in urban areas, due to urban migration - Urban areas currently use 67% of the world's energy and accounts for over 71% of global GHG emissions. (World Bank, 2011) Less than 1% of projects registered with the CDM are credited to cities. - Interrelated Cross-Sectoral approaches are not implemented, even in the case of reduction activities of methodologies approved by UNFCCC. Efforts to reduce GHG emissions: The impact is marginal - Due to financial vulnerability of developing countries, efforts to reduce GHG emissions and investment in environment protection are economic burden for cities in developing countries This is time to look at the CDM for the whole city.

11 11 | 71 Objectives of the Urban CDM To develop Urban CDM methodology to be registered in the UNFCCC To develop carbon accounting that can be used in the compliance market (CDM), the voluntary market, etc. To develop carbon reduction emission strategies To develop a low-carbon green city planning system module (3Cs) To mainstream low-carbon green city development into urban planning in a holistic way

12 12 | 71 Audience/Partners The Urban CDM model seeks to provide a user-friendly communication in comprehensive analysis of a very wide spectrum of large-scale integration possibilities, as seen in Figure 2. Therefore, the UEA has been working closely with UNEP, Korea Environment Institute (KEI), and UEA member cities, in collaboration with UNFCCC and the World Bank.

13 13 | 71 Conceptual model of the Urban CDM Here is our conceptual model for developing the Urban CDM. How we have arrived this model is a reflection process of analyzing and validating documents, which have been conducted. This model is very useful to understand inter-relationships between energy suppliers and consumers, and between built form, urban infrastructure, and CDM and technology mechanism for them, in a total holistic manner. Fig. 2 Integrated total Urban CDM model

14 14 | 71 Main features of the Urban CDM model include: The Urban CDM model is a new type of CDM with the combination of different categories/sectors for more than one country. It is a cross-sectoral approach to climate change. The model includes the combination of a very high number of different technologies that are relevant for urban energy grid systems. The model has a coherent documentation on the basic of procedure and standard of the UNFCCC CDM and seeks to provide a user-friendly communication in project descriptions. The model aims for calculating the cost and carbon benefits of the total system at the city-scale, which can be divided into investment costs, operation costs, and taxes, such as CO2 emissions trading costs and financial benefit such as CDM, in the course of CDM documentation. Thereby, the model can create data for further analysis of socio-economic feasibility studies, such as expanded cost-benefit analysis, including balance of payment, job creation, industrial innovation, and so on.

15 15 | 71 Urban CDM is a business case. The methodology of financial modeling of the Urban CDM incorporates the basic project approach of firstly identifying the carbon reduction solutions and quantifying the associated emissions, and then modeling the identified additional cost (additionality) to be credited with the Urban CDM and benefits, regulatory and macroeconomic influences. Financial modeling of the Urban CDM

16 16 | 71 The following Figure 3 shows multi-layers of finance modeling by different GHG emissions sources. It involves development of cost, supporting regulatory and funding environment including CERs and credit points and macro economic scenarios. Financial calculations include internal rates of return (IRR), payback periods, net present value, cash flows and cost-effectiveness analysis. This model can be used for solution for reduction actions viability decision. If the costs of reducing CO 2 emissions from the traditional technology is included in the cost calculations, an environmentally better solution would be more cost-effective than the traditional one from an economic point of view in the long run.

17 17 | 71 Fig. 3 Multi-layers of financial modeling by GHG emissions source Note: 1) Blue line indicates the cost with traditional equipment 2) Dotted redline indicates the cost with additional initial capital investment and CERs.

18 18 | 71 GHG ProjectionDiagnostics Program(GPD) And Carbon Banking System(CBS) : A Voluntary Approach to Carbon Financing 5.1 Background of GPD 5.2 Development process of GPD to date 5.3 Purpose of GPD 5.4 The GPD is being developed with the following objectives : 5.5 Procedure of GPD for low-carbon green city development 5.6 The application of the GPD to the Carbon Banking System 5.7 Draft GHG Projection Diagnostics Expanded Version 5.8 Overall Timeline

19 19 | 71 Many GHG-related initiatives are based on Global Protocol for Community-Scale Greenhouse Gas Emissions (GPC) - To develop case studies of best practices targeting more than 30 cities The first GHG accounting tool for Chinese cities was also developed based on the GPC. Source: It is expected that Gwangju/UEA GPD will be spread to UEA member cities and special invitees. 5.1 Background of GPD

20 20 | 71 Development of the Urban CDM commenced in April, 2011, as a result of memorandum of understanding between Gwangju and United Nations Environment Programme (UNEP) Presentation of the initial draft in the 2013 UEA San Antonio Summit Presentation of the Gwangju/UEA project at the World Bank City Climate Planner Certification Program Workshop Development of GPD expanded version in 2014 with the financial support from the Ministry of Environment, Korea Publication of the full version of the GPD in February, 2015 The purpose of this program is to propose the developed system to the international society in order to seek for and utilize climate respond funds (e.g. GCF), so that wider range of GHG reduction projects becomes available thus contributing global climate change response in an active manner. 5.2 Development process of GPD to date 5.3 Purpose of GPD

21 21 | 71 To help cities prepare GHG inventory at a macro and aggregated manner at the city-scale To help cities develop effective tools for baseline scenario through the use of statistical projection methods To help cities have systematic planning and quantitative data support for low-carbon city development To support cities to measure collective performance with systematic and credible monitoring over time; and To facilitate access of cities to climate finance opportunities 5.4 The GPD is being developed with the following objectives :

22 22 | 71 As a first step, base year inventory puts its basis on a GHG inventory developed for GPD, which is made simultaneously with the typing of input data for development of project equation in the baseline scenario analysis without GHG reduction policy & projects. The next step consists of a series of calculations that involve projected emissions reduction based on climate action plan and observed emissions reduction on the site. Then the model is divided the in to a technical or market-economic optimizing. Fig. 4 The GPD model for low-carbon green city development 5.5 Procedure of GPD for low-carbon green city development

23 23 | 71 The GPD program is an urban GHG accounting and carbon planning tool which is being developed by the UEA/Gwangju and disseminated to UEA member cities. These are the interim results of the pilot-testing of the tool for the carbon banking system. 5.6 The application of the GPD to the Carbon Banking System

24 24 | 71 The Operating System of the Carbon banking 1) Carbon Points Calculation Procedure Energy Saving Conversion of Energy Savings into CO 2 Reduction Offer of Carbon Points which Equal to US$ 560/tonCO 2 eq

25 25 | 71 2) Phased-in-operation Pilot test a. Duration: July December 2013 b. Participants: Households (single-unit/multi-unit residence) c. Target areas: Electricity, city gas, drinking water d. Grant points based on reduction of CO 2 emissions to the participants (Credits granted by Gwangju bank) *Grant points can be used for purchase of green goods/discount in park, etc.

26 26 | 71 Main project a. Grant points based on reduction of CO 2 emissions to the participants Organization: Ministry of Environment (national) Operational support: Korea Environmental Corporation Program operation: Gwangju Metropolitan City b. Carbon points are issued when there is more than 5% reduction in the average energy consumption in the past 6 months (electricity, city gas, drinking water) compared to the average of the previous 2 years. c. Benefits of the 'Green Card' issued to participants: (See Figure 5) Carbon points: incentives for reductions provided by the Ministry of Environment and the local government Green consumption: when buying registered eco-friendly products with green card, can use the carbon points and earn additional (1~5%) points. Discounted price in public sectors: 130 national parks, cultural facilities, art performances, etc. Credit card function: for purchase of public transportation (bus, subway, train), in addition, earn 10-20% d. The consumption of electricity, city gas, and drinking water are monitored through the respective meters in each household (See photos 1, 2 and 3).

27 a. Card used in b. New card to be used from 2014 Photo 1 Electricity meter Photo 2 City gas meterPhoto 3 Drinking water meter Photo 4 Overview of Sinhyochon solar village, Gwangju Photos of green cards and measuring meters Fig. 5 Green card Source: photo 1, Taken at Sinhyochon solar village, Gwangju, by UEA, on 10 January, 2014 photo 2, photo 3, 27 | 71

28 28 | 71 3) Operating System The operating diagram (Figure 6) maps out main steps of carbon banking system together with the roles of main actors who are engaged in the carbon banking process. The process starts with signing ceremony for agreement on the carbon-smart model city between central and local governments, and ended up with issuance of carbon points by private banks. It is a public-private partnership (PPP) project. This project has seen as a collaborative and collective effort among many stakeholders including city government, private consulting company, etc.

29 Fig. 6 The Operating System of the Carbon Banking System 29 | 71

30 Roles of main actors of the system a. Households Participate in carbon banking system Save energy (in electricity, city gas, drinking water) Use and accumulate carbon points b. Gwangju Metropolitan City Data analysis on the consumption of electricity, city gas, and drinking water Promotion of carbon banking system, and processing new applications Report on energy use reductions to the bank Provision of related information to energy/city gas/drinking waterworks companies Expansion of affiliates businesses for more use of carbon points c. Korea Environment Corporation : Process data on Gwangju's electricity, city gas, and drinking water d. Korea Electric Power Corporation(electricity company) : Report data on energy use to Gwangju and Korea Environment Corporation e. Gas company Report data on energy use to Gwangju and Korea Environment Corporation f. Waterworks company Report data on energy use to Gwangju and Korea Environment Corporation g. Billing company Issue bills for electricity, city gas, and drinking water h. Green Start Network Promote carbon banking system and encourage participation Educate and promote green life, and organize green leader consultative group I. Education center Promote carbon banking system Operate green leader fostering course j. Carbon bank(Gwangju Bank in , all local banks since 2014) Issue carbon points with green card k. The Ministry of Environment (joined since 2014) Organize and manage the carbon banking system Offer carbon points, cash-back, and other incentives 30 | 71

31 31 | 71 Carbon banking inventory project Method for carbon banking inventory project (1) Selection of sectors - Electricity, city gas, drinking water (2) Selection of areas - Household and expansion to commercial, industrial, public sector (3) Data collection (main data)

32 32 | 71 - GHG emissions in Gwangju for electricity, city gas, and drinking water in household, commercial, industrial, public sectors( ) Results of carbon banking inventory project

33 33 | 71 Method for carbon banking system baseline project (1) Selection of sectors - The same as in the inventory project method (2) Selection of areas - The same as in the inventory project method (3) Development of projection equation for baseline scenario - Multiple regression analysis - Projection period: (4) Selected variables - Independent variables Electricity avg. price City gas avg. price City gas use households Drinking water avg. price Drinking water leakage rate Population Industrial production index Temperature Rainfall Heating degree days Cooling degree days Season dummy Year dummy - Dependent variables GHG emissions Carbon banking baseline project

34 34 | 71 Results of the carbon banking baseline project 1st step Selection of variables & details for data analysis: electricity, city gas, drinking water

35 35 | 71 2nd step Results of the projection equation (1) Data accumulation on temperature, precipitation, expenditure (electricity, city gas, drinking water), and population with actual measurement value of CO 2

36 36 | 71 (2) Results of multiple regression analysis - Development of projection equation

37 37 | 71 3rd step Gwangju pilot baseline scenario project for selected sectors: - Application of the development projection equation - GHG emissions projection results based on electricity, city gas, drinking water usage projection results (All applied sectors: household, commercial, industrial, public sectors) Shows GHG emissions according to usage projection from 2013~2020

38 38 | 71 Effectiveness of the carbon banking system ( ) (targeted household sector : participating households) To boost GHG emissions reduction at household level and save energy in daily life To raise public awareness for climate change, and enhance the city's brand (value) image as a leading low-carbon green city.

39 39 | 71 Projection Equation estimates 973,188 tonCO2 of reductions by 2020 in the household sector: Carbon financing using the 'Carbon Banking System * Assumption: All Gwangju households participate by 2020 Comparison of emissions with and without carbon banking system policy, and emissions reduction GHG reduction projection scenario through the carbon banking system ( )

40 40 | 71 Carbon financing using the 'Carbon Banking System' in a graphic form

41 41 | 71 Basic Basic+ Expanded Scope 1 : Inventory, Baseline Scenario Step 1 (Sector) : Electricity, Gas, Drinking water Step 1 (GHGs) : CO 2 Scope 2 : GHG Reduction Target Setting, etc. Step 2 (Sector) : Transportation, Buildings, Land use, Waste, etc. Step 2 (GHGs) : CH 4, N 2 O Full coverage of - Scopes - Sectors - GHGs 5.7 Draft GHG Projection Diagnostics Expanded Version

42 42 | 71 July 2013 : Draft GPD Scope 1/Step1 (Sector/GHGs) Version January 2014 : Consultant Selection June 2014 : Draft GPD Scope 2/Step 2 (Sector/GHGs)Version July 2014 : Advisory Committee Meeting Feb 2015 : Final GPD Expanded Version 5.8 Overall Timeline

43 43 | 71 We wanted to take a bottom up approach. Carbon banking starts with households, which is important because household and commercial activities account for 39% of greenhouse gas (GHG) emissions in Gwangju. It also helps to raise public awareness for climate change, enhancing the citys brand as a low-carbon leader. Resource: green-inclusive-resilient-competitive-citieshttp://www.worldbank.org/en/topic/urbandevelopment/publication/urban-innovations-series-conversations-on- green-inclusive-resilient-competitive-cities For more information : The World Bank Series Urban Innovations

44 44 | 71

45 45 | 71 Expanded PoA for Urban CDM 6.1 UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM 6.2 Case of Iloilo City, the Philippines 6.3 Future Plan

46 46 | UEA/Gwangju Approach in the Context of Modalities & Procedures of CDM 1) CDM Reform Increased standardization Multiple methodology approach Improved interaction of UNFCCC with stakeholders In general Emission reduction in specific priority sector Usually dispersed projects comprising different technologies Multiple stakeholders, beneficiaries Strong interrelation/mutual interference between sectors, institutions Cities rather follow holistic and policy related approach to reduce emission, Non-technical projects with large mitigation potential (e.g. urban planning, policy and carbon governance) Limited experience/number of CDM projects so far The urban context

47 47 | 71 2) Summary of Comparison of Conventional CDM and Urban CDM New Methodology ContentsConventional CDMUrban CDM new methodology Theoretical underpinnings Isolated standalone viewHolistic, Integrated, Smart view ContextSingular project development frameworkUrban planning and development framework ScopeTechnology and products-oriented system Extension of CDM to include policy, planning, and Governance MethodsUse of existing method approved by UNFCCCCombination of existing and new Method Baseline scenari o Constant level of emissionConsiderations for population and economic growth. etc. Measurement or calculation MeasurementMeasurement and estimation (or Calculation) Certification Tradable certified emission reduction(CERs) at sing le CDM project level Aggregated tradable certified emission reduction (CERs) at the city-scale and between cities Market Carbon markets implemented at the nation at regional level Carbon markets to be implemented at the city level Tool for urban planning Tool for disconnected infrastructure Tool for 3Cs(Carbon Centered Comprehensive) planning, Land-use based mechanism Effectiveness analysis Project cost-benefit analysisCarbon balance sheet analysis

48 48 | 71 3) Conceptual Framework for the Urban CDM Methodology Project Description : Flow Diagram Conventional CDMUrban CDM AM0042 grid-connected electricity generation using biomass from newly developed dedicated plantations ** Ref. Kim`s UNESCO Report

49 49 | 71 Conceptual Model Conventional CDMUrban CDM Plantation: straws, reeds, banana peel, corns *Ref. UNFCCC CDM Methodology Booklet (Information including EB 66 May 2012) This Urban CDM Model is based on the Urban Smart Grid System and Integrated Urban Planning and Management. It can be scaled up into the Super Smart Grid System. Comparison of Baseline Scenario of Individual CDM Project and Urban CDM PoA Scenario

50 50 | 71 Procedures for PDD(Project Design Document) Step & activities of conventional CDMUrban CDM StepActivitiesStepActivities Step 1 : Using existing single project methodology or Development of single project methodology 1. Project Overview 2. Baseline Methodology 3. Set duration of project implementation and of CERs issuance 4. Monitoring methodology 5. Calculation of GHG emissions 6. Environmental effect evaluation 7. Comments from stakeholders Step 1 : Development and Registration of New Methodology for Urban CDM Standardization of Urban CDM methodology and registration to UNFCCC as a CDM project (This requires development or aggregation of methodologies available to use at a city-scale.) Step 2 : Planning 1. Formation of Project Team 2. Capacity building/training for cities Step 3 : Project Design (Being Planned) 3. Identification of participating cities 4. Establishment of baseline scenario 5. Calculation of the emissions expected without PoAs 6. Development of Multiple PoAs 7. Formulation of policy actions and development plans at the city scale 8. Preparation of PoAs management plans 9. Establishment of monitoring methodology to measure the actual level of emissions with PoAs 10. Establishment of aggregation methodology 11. Establishment of quantification and estimation methodology for cumulative volume of the emissions reduced with appropriate levels of aggregation 12. Preparation of Project Design Document(PDD) *Note: Procedure for CDM project using existing methodology *Note: Procedure for registration of new methodology

51 51 | 71 Step & activities of conventional CDMUrban CDM StepActivitiesStepActivities Step 2 : CDM National Approval & Validation Step 4 : National Approval 13. Approval of PDD by designated national authority(DNA) Step 5: Validation 14. Validation of designated operation entity (DOE) 15. Request for registration Step 3 : CDM Registration 2. Apply for registration of CDM project to CDM Executive Board (CDM EB) 3. Registration fee for CDM project varies projected average annual emission reductions. (Maximum fee is US$ 350,000, excluding CERs issuance fees which needs to be paid even fee- free cases) Step 6 : Registration 16. Registration of PDD by CDM Executive Board (CDM EB) Step 4 : Financial Resources Step7 : Construction & Operation Step5 : Monitoring 4. MRV (Monitoring, Report, Verification) by CDM project implementing body or the third party (for certification). Submit monitoring report to CDM Designated Operation Entity(DOE) Step 8 : Monitoring 17. Monitoring of GHG reduction activities 18. Aggregation of monitoring results of PoAs 19. Quantification or estimation of the cumulative volume of the emissions reduced, compared with the BAU baseline level of emissions 20. Preparation of monitoring report (MR) Table Continues

52 52 | 71 Table Continues Step & activities of conventional CDMUrban CDM StepActivitiesStepActivities Step 6 : Verification & Certification 5. The purpose of verification of CDM project is to identify achievements of actual GHG emissions reduction. 6. CDM Designated Operation Entity (DOE) carries out evaluation of performance outcomes such as consistence between project design document and monitoring report, method used for monitoring, identification of GHG reduction amounts, project results, etc. 7. CDM DOE request for issuance of Certified Emission Reductions (CERs) in accordance with certified amount of GHG reductions. 8. CDM DOE documents a certification report based on the submitted verification report. Step 9 : Verification & Certification 21. Verification/certification of monitoring report by DOE & request for issuance Step 7 : Issuance of CERs 9. CDM EB receives MRV report and issues CERs unless objections are made in 15 days. Step 10 : Issuance of CERs 22. Issuance of CERs by CDM EB Step 11 : Publication 23. Publication of the report on Urban CDM Joint Program Step 12 : Post PoA Management & Evaluation 24. Selling and trading of CERs 25. Post-PoA management 26. Periodic evaluation 27. Final Project Reporting

53 53 | 71 Expanded PoA is new type of format with the combination of different categories/sectors that is a format of Urban CDM which UEA seeks to develop eventually. (UNFCCC, unpublished paper, 2013) Urban CDM in the form of multi-dimensional programmatic CDM (Expanded or Combined PoA) 4) Development of Expanded PoA towards the Urban CDM Definition of Expanded PoA

54 54 | 71 - Two options are considered to combine different sectors depending on the availability of methodologies approved by UNFCCC. Option 1 is to add a new CDM program of activities (CPA) to an existing CPA. On the other hand, Option 2 is to combine two new CPAs and more. - As an example, a LED project and a solar panel project are in the same category of activities, i.e. renewable energy, but a LED project and a geothermal heating project are in the different categories. Conceptual Framework Linkages between the Selected Components Components of Framework for the Expanded PoA

55 55 | 71 The case of Iloilo City is designed to analyze possibilities of option 2, combining two new CPAs (Solar panels and Geothermal heating) as a pilot- testing project. It is important to note that once a PoA for LED + geothermal is registered, the boundary can be expanded to cover new cities and countries. Letter of Approval (LoA) from each of the country where the country is expanded will be needed. Also the PoA for more than one country can be registered if the LoA is available from all the countries (UNFCCC, unpublished paper, 2013). 6.2 Case of Iloilo City, the Philippines

56 56 | 71 (1) Iloilo model: An illustration of option 2 As a first step, optional combination of CPAs depends heavily on practical reality. Then, the combination can be expanded to cover more categories for the implementation of Figure 2. It means that the scoping process is necessary. Expanded PoA Solar Panels (New CPA) Solar Panels (New CPA) Geothermal Heating (New CPA) Geothermal Heating (New CPA) Residential: Expanded (Parking Lots in City Hall, etc.) Residential: Expanded (Parking Lots in City Hall, etc.) Public: Expanded (Flats, Buildings, etc.) Public: Expanded (Flats, Buildings, etc.) Residential: New/Expanded (Buildings etc.) Residential: New/Expanded (Buildings etc.) Public: New/Expanded (Buildings etc.) Public: New/Expanded (Buildings etc.) + Methods

57 57 | 71 (2) Identification of targets and project plan (3) Estimation of GHG emissions reduction by each CPA a. In the case of option 1 CPA 11 (LED project 1) : Location, building #, size, investment plan, etc. CPA 12 (LED project 2) : Location, building #, size, investment plan, etc CPA 21 (Geothermal heating project 1) : Location, building #, size, investment plan, etc. CPA 22 (Geothermal heating project 2) : Location, building #, size, investment plan, etc. b. In the case of option 2 CPA 11 (Solar panels project 1) : Location, building #, size, investment plan, etc. CPA 12 (Solar panels project 2) : Location, building #, size, investment plan, etc. CPA 21 (Geothermal heating project 1) : Location, building #, size, investment plan, etc. CPA 22 (Geothermal heating project 2) : Location, building #, size, investment plan, etc. a. In the case of option 1 CPA 11 (LED project 1) : CPA 12 (LED project 2) : CPA 21 (Geothermal heating project 1) : CPA 22 (Geothermal heating project 2) : b. In the case of option 2 CPA 11 (Solar panels project 1) : CPA 12 (Solar panels project 2) : CPA 21 (Geothermal heating project 1) : CPA 22 (Geothermal heating project 2) :

58 58 | 71 (4) Introduced (Adopted) technology On the basis of contained many examples in the UNFCCC project descriptions, the following diagrams show the process of converting traditional energy systems into renewable energy systems.

59 59 | 71 a. Monitoring Utilizing Meters b. Expected Effects Reduce CDM-related transaction costs Enhance regional distribution (e.g. Asia, Africa) Consider interactions between project activities and sectors in aggregation and effectiveness of the proposed expanded/combined PoA c. Duration 28 years (renewed every 7 years) d. Implication Registered to UNFCCC by Gwangju, then distributed to other UEA Member Cities

60 60 | 71 Gwangju LED PoA Expanded/Combined PoA as a format of Urban CDM Urban CDM Step 1 Step 2 Step 3 Urban GHG Projection · Diagnostics Urban GHG Projection · Diagnostics program, GPD (Gwangju) program, GPD (Gwangju) The World Bank initiative The World Bank initiative Urban GHG Projection · Diagnostics Urban GHG Projection · Diagnostics program, GPD (Gwangju) program, GPD (Gwangju) The World Bank initiative The World Bank initiative 6.3 Future Plan Phased-in-development of the Urban CDM

61 61 | 71 Spreading the expanded PoA to UEA member cities: to be introduced as an agenda at the next Iloilo UEA-Summit in Step 1 Step 2

62 62 | 71 1) Expanded PoA in the Context of Modalities of CDM CategoryInventory Standardized Baseline Reduction GHG Projection Calculation GHG AdditionalityMRV Energy sector Renewabl e energy Solar energy Geothermal energy Energy LED lamp Electricity City gas Water Drinking water Buildings Transportation Land use Waste Total N.B 1) Bottom-up approach(World Bank) 2) Top-down approach(UNFCCC, UNEP, Buildings) 3) Rationale when combined 4) Monitoring

63 63 | 71 2) The Application Description of Projects(To be Selected) Target Area : combination of a private house (or a multi-unit residence) and an office building Target Project : e.g. a combination of solar panel project and geothermal energy project or a combination of two (or more) renewable energy projects feasible to implement in the city Location : residential area and city hall building Size : (regarding amount of energy generation) to the extent which a project can be feasible How to measure : use measurement meters Investment Plan - Service Cost(Agency) : expenses for documentation to register a project to UNFCCC, and for a procedure with DOE (designated operation entity), etc. - Installation Cost(Equipment) Solar Panel (2 sets) and measurement meters Geothermal Energy Plant (1 set) and measurement meters - Financial Resources : by submitting application(proposal) to ADB, USAID, GIZ, or GCF for collaborative opportunities Effect - A PoA needs to be registered only once by the CDM Executive Board of UNFCCC. After that, it can include an unlimited and unspecified number of individual CPAs without recourse it to the CDM Executive Board. - The Expanded PoA is a pilot testing project developed by UEA in close consultation with UNFCCC. It will be introduced at 2015 UEA Iloilo Summit and spread to UEA member cities over the globe. Timeline - It aims to be registered to UNFCCC by the time of 2015 UEA Iloilo Summit

64 64 | Conclusions 7.2 Suggestions Conclusions & Suggestions

65 65 | 71 What I have presented in this paper is the 3 years' work of UEA/Gwangju with international agencies for climate issues at the city scale. One of the broad areas that are being highlighted in the UEA/Gwangju program is climate change mitigation and related issues at the city-scale, encompassing best practices, planning, policy, outreach (Governance) and all the other facets.

66 7.1 Conclusions Low-carbon green cities will have big investment opportunities in cities both in developing and developed countries such as social overhead capital (SOC). Gwangju/UEA are seeking to establish a world class carbon-free city Two of main features of Gwangju low-carbon policies are: Shifting from fossil-fuel oriented urban policy to new and renewable energy oriented urban policy Urban policies which are economically rational and can contribute to a global climate agenda Urban CDM, GHG ProjectionsDiagnostics Program and Expanded PoA that UEA/Gwangju in collaboration with UNEP and World Bank are currently developing will be utilized usefully not only as a tool for city carbon planning but also as for GHG accounting on different planning policy options and for economic tools. The 'renewable energy grid system' and best management practices (BMP) that Gwangju is carrying out will become model cases that are also useful in an economical way. The carbon banking system implemented in Gwangju is successfully operated due to active participation of involved actors, in particular, participating citizens. 66 | 71

67 This system was introduced at 2011 UEA Gwangju Summit and 2013 UEA San Antonio Summit. Many city representatives attending these Summits showed interest in the system and have requested Gwangju to disseminate it to their cities. Therefore, it is expected that the carbon banking system, which is considered as a successful model case of the Korean green growth policy, shall be disseminated in order to contribute to the green economic development in the global society. The Gwangju 100% renewable solutions makes clear that it is indeed economically and technically viable to choose renewable energy system. 67 | 71

68 7.2 Suggestions Through outreach programs, Gwangju and UEA are making efforts to contribute to the international community by sharing accumulated programs, technologies and experiences with cities wanting to be low-carbon green cities. Gwangju and UEA are making endeavours to create a carbon-free city, and want to have UNEP, UNFCCC, the World Bank, and other related international organizations join these efforts. In particular, as a part of common duties for the GHG emissions reductions at developing country cities, not only approaches including CDM and NAMAs but also opportunities for those cities to be funded by funding agencies need to be sought. Possible funding agencies could include USAID, KGGTF, GCF, and so forth. As a part of this effort, the next chapter suggests a proposal for a model of new carbon finance. 68 | 71

69 69 | 71 Proposal on a New Initiative for Implementation of The Urban CDM - Development of a Compensation Model for Carbon Financing 1. Objective To develop and disseminate an easy, practical, simple Compensation Model that can be implemented in line with existing CDMs, NAMAs, and Other Carbon Financing systems. To develop a Compensation Model in a format of Public-Private Partnership(PPP), and of the 3rd sector: participation from central government, local government, and commercial banks are required. 2. Possible Framework for the Compensation Model : Refinement of Gwangju's Carbon Banking Operating System(Figure 7)(to be Developed) 3. Potential Partners : UEA, UNFCCC, UNEP, World bank, and varies fund agency

70 70 | Source of Finance E.g.) The Korea Green Growth Trust Fund(KGGTF), World Bank - 1st year : USD 6,900,000 for 24 projects - 2nd year : USD 10,000,000 for projects to be invited Other : GCF - Development of business model in progress 5. Formation of Compensation Model Task Force To prepare a concept note and the proposal on the development of a compensation model for carbon financing To submit them to the possible funding agencies in due course

71 71 | 71 Fig. 7 The Operating System of the Carbon Banking System

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