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CDM & Next Steps for Montreal and Beyond Farhana Yamin Institute of Development Studies, UK Project Director, BASIC: Building And Strengthening Institutional.

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Presentation on theme: "CDM & Next Steps for Montreal and Beyond Farhana Yamin Institute of Development Studies, UK Project Director, BASIC: Building And Strengthening Institutional."— Presentation transcript:

1 CDM & Next Steps for Montreal and Beyond Farhana Yamin Institute of Development Studies, UK Project Director, BASIC: Building And Strengthening Institutional Capacity on Climate Change in Brazil, South Africa, India, China South Africa National Climate Change Conference 2005 BAS I C BA S IC

2 Presentation Overview Clean Development Mechanism – Strengths, weaknesses & improvements Why next steps discussions at Montreal are a crucial leadership test for developing countries Issues/options for a Montreal mandate for DCs – institutional home, scope, duration, due process and resource implications BASI C

3 Clean Development Mechanism Win-win carbon market mechanism for developing countries Allows richer countries & investors to provide resources for cleaner projects in return for credits (certified emissions reductions (CERs) that count towards compliance with Kyoto targets A share of the proceeds of CERs (2%) goes to vulnerable DCs to help them cope with adaptation to climate impacts CDM - a unique feature of Kyoto –only thing in Kyoto of direct benefit to DCs –only thing in Kyoto championed by DC (apart from targets)! BASI C

4 CDM Strengths Weaknesses Voluntary DCs define what counts as sustainable development climate friendly projects Enables wide range of actors to become involved in climate policy! Entry to carbon markets Benefits for all countries – even non-CDM participants through CDM Adaptation Fund US withdrawal means smaller carbon markets & uncertainty post 2012 Bigger teething problems -US withholds funding for CDM institutions Huge & unique governance challenges national & international Too many expectations from too many actors to deliver benefits immediately! BASI C

5 CDM: next phase improvements Existing CDM rules can be improved & operationalized much better right now by, e.g.: –EB proactively developing methodologies in key areas instead of allowing these to emerge bottom up thru lengthy/risky project cycle –COP/MOP guidance to EB to develop modalities for how larger projects, sectors & programmes can make use of CDM by 2006 –Affirmative action for DC certifiers (DOEs) approved to ensure in- country benefits, address bottle necks, support CDM sustainability –Capacity building for all users & stakeholders in public & private sector. e.g local authorities responsible for roads, housing, waste and provision of energy services –Secure long term funding for EB to function effectively! BASI C

6 Montreal: Leadership challenges for DCs DCs need to act proactively & strategically. Not easy due to diversity (AOSIS, LDCs, larger DCs, OPEC) & lack of policy analysis. But are a family of nations united by strong ties At Montreal DCs must work with like-minded a package covering: –Adoption of Marrakesh Accords giving effect to Kyoto –Improvements to CDM – real danger CDM pettering out by 2007/8 unless certainty on post 2012 CERs provided & DCs might be squeezed out of EU ETS carbon markets by hot air paper allowances –Adoption of outcomes on next steps discussions under FCCC & Kyoto to ensure we dont we dont return to voluntary approaches that dont work for richer countries BASI C

7 Montreal: Leadership challenges for DC International inaction shifts risks of climate change to poor and DCs…DCs need an effective international climate regime Historically DCs played key leadership role –1994/5 Green Group DC/EU alliance secured Berlin Mandate on terms favourable to DCs – DCs key players in Marrakesh Accords after US withdrawal – DCs have ratified Kyoto notwithstanding US inaction 2005 clear political choice for DCs at Montreal on next steps: –do nothing/prevaricate & increase vulnerabilities of poor & DCs –be proactive & reduce climate burdens & related poverty BASI C

8 Mapping out a Next Steps Mandate 1. Institutional home (s) –FCCC? KP? Big Emitters clubs? 2.Scope (a) Whose actions: AIPs? DCs? Big emitters? Companies? Sectors? (b) Subject matter: GHG reductions only? Adaptation? Technology? Livelihoods & well-being? Energy security? (c) Accountability: Binding? Soft? Who monitors compliance? 3.Duration: start/end date 4.Due process/resources issues (a) Effective participation of DCs & their stakeholders in negotiations (b) Resources to secure attendance & policy analysis of key future choices BASI C

9 Institutional home…FCCC FCCC advantages –189 Parties including US –Clear legal authority & established institutions over issues that matter to DCs financial mechanism (GEF) technology (EGTT) implementation/national communications (CGE) adaptation (LDC/LEG) –Fewer expectations of post-2012 architecture FCCC disadvantages –If US uninterested, as Party has more leverage to block progress –COP too unwieldy – smaller/parochial interests can capture agenda –Gravitates towards one-size fits all & least common denominator BASI C

10 Institutional home…Kyoto Kyoto advantages –next steps negotiations mandatory for all Parties –By 2005 for second commitment period for AIPs (Article 3.9) –In 2006 for review of whole Protocol (Article 9.2) –Familiar framework - warts and all –Established institutions (CDM/EB, A6SC & Compliance) & relatively coherent, but readily adjustable, roadmap for post-2012 (e.g. diversity of no-lose targets, more sectors, better LULUCF solutions) Kyoto disadvantages –US not a Party, no pressure for it to re-engage –Possible pressure on DCs to adopt same type of commitments as Annex I Parties rather than trying out tailor made solutions to fit DC circumstances –FCCC remains core legal/institutional focus for core DC concerns BASI C

11 Institutional home…big emitters fora No real clarity on how this would work but key initiatives/institutions suggested: –G8, G8+Plus 5? +World Bank/IEA? –Asia-Pacific Partnership for Clean Development? –Carbon Sequestration Forum? –Partnership for Hydrogen Economy? –Methane to Markets? –Around 15 other US bilaterals with major emitters since 2001? EU bilaterals? Japan-Brazil? Others? BASI C

12 Institutional home…big emitters fora Advantages –25 countries account for 83% global GHG emission with just 7 accounting for 75% global GHG emissions (EU, US, Canada, Russia, Japan, China & India) –Dynamics among small group of political giants might make for better outcomes or at least a route out of impasse Disadvantages –No established institutional fora for negotiations, no transparency, no long term accountability mechanisms for 100yr+global problem –Wide disparities: per capita emissions, development challenges, energy mix & global political aspirations -cant agree in G8! –Is multilateralism a flawed route to solve global problems? –For vulnerable DCs, is leaving the foxes in charge of the hens a safe strategy? BASI C

13 Montreal Mandate: Two steps and a leap? COP-11 –should agree a 2 day in-session workshop to be held at SBI-24 inviting FCCC Parties to submit views on next steps & how information from the reviews processes under FCCC & Kyoto due in should inform implementation/next steps processes under both instruments (see FCCC/SBI/2005/16) COP/MOP-1 –should agree that Kyoto Parties submit views to SB1-24 in-session workshop on next steps specifically addressing timing, scope and other issues relating to AIPs second commitment period (SCP) commitments with a view to COP/MOP-2 adopting a negotiating mandate that coordinates SCP negotiations with launch of Kyoto Art.9 review in 2006 & any reviews agreed under FCCC by COP-12 Role of Big emitters fora –If agreement reached can be complementary & feed into on-going COP and COP/MOP negotiations BASI C

14 Mapping out Next Steps…Scope & Timing Elaborate following by COP-12/COP-MOP2 –Whose actions: AIPs? DCs? Big emitters? Companies? Sectors? –Subject matter: GHG reductions? Adaptation? Technology? Response measures? Livelihoods & well-being? –Accountability: Binding? Soft? Who monitors compliance? End date of negotiations: 2009 latest –Must ensure smooth transition from end of Kyoto first commitment period (2012) and modalities to incorporate US in next phase e.g. thru linking with emerging US carbon markets and GHG reduction programmes BASI C

15 Mapping out Next Steps…Effective DC participation & DCs often have less input to international negotiations –due to lack of capacity to prepare positions & underlying policy analysis. e.g. failure to construct carbon markets on DC terms –DCs must take a more proactive approach to crafting institutional processes to suit their interests & capacities Resources for DC policy analysis & attendance for meetings must be put on secure footing before serious next steps negotiations begin –All FCCC/KP budgets (e.g ) must secure resources to support DC attendance, capacity building & policy analysis BASI C

16 Further information & BASIC Papers & Presentations BASIC Website: SA BASIC Team Coordinator: Mike Palmer/Julie Middleton Palmer Development Group Imbewu-Enviro Legal Consultants SouthSouthNorth Harald Winkler (ERC) Institute of Development Studies, Sussex, UK, BASI C

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