1. The Integration of PoA and NAMA; how can one support the other Ingo Puhl South Pole Carbon Asset Management Ltd. Bonn, 8. May 2011 Prepared by South Pole on the basis of analysis conducted for: PoA Support Center

2. The Big Picture: CDM projects and programs will be nested within NAMA frameworks Principal Observations – A NAMA creates a voluntary emissions target in a developing country on sector or sub-sector level. – The environmental integrity of a NAMA target (MRV, enforcement) is managed on the NAMA level by a national authority. – PoA baseline emissions are either a) already coherent with NAMA target trajectory (on aggregate) or b) a share of CER is used for domestic compliance. Implications – A NAMA framework that surrounds a PoA facilitates the simplification of CDM/PoA design because environmental integrity is controlled on NAMA level. – Existing CDM/PoA building blocks can be used on NAMA level for NAMA design 2 NAMA target GHG PoA baseline emissions NAMA MRV, i.e. IPCC 2006 CDM-style MRV PoA CPA emissions

3. Pre-Conditions for PoA Simplification; Analogy to Joint Implementation track 1 & 2 ParameterJINAMA Country EligibilityParty to KPParty to KP and has submitted NAMA with UNFCCC TargetHas calculated and recorded its assigned amount units. Has determined baseline, target and recorded NAMA. MRV systemHas in place a national system for estimating of GHG emissions in compliance with international rules. Has established NAMA MRV system RegisterHas in place a national register in compliance with international rules Has in place NAMA register in compliance with international rules Annual inventory submission Has submitted annually most recent required inventory in common reporting format Has submitted latest NAMA inventory Supplementary info Has submitted supp. Info on assigned amount units plus/minus issued ERU Has submitted supp/info required to calculate NAMA baseline and target emissions, issued CER from nested activities Minimum requirement for JI track 2Additional requirements for JI track 1

4. PoA that are located under a cap should benefit from simplification, in analogy to JI procedures Streamlined Registration and Inclusion Process Determination of eligibility, monitoring & verification subject to national rules and procedures (track 1 only) OR streamlined determination & verification process involving an AIE (DOE) and two JISC members advised by experts. Streamlined Process to Determine Baseline and Additionality Choose an appropriate method using traceable and transparent information showing that the project will lead to reductions of GHG emissions below baseline. MRV Appropriate monitoring plan, allowing combinations of CDM methods. Defined materiality thresholds

5. PoA Building Blocks for Good NAMA Design: H ow can the NAMA concept benefit from PoA experience? 5 PoA Design Element Applicable for NAMA PoA Elements Eligibility CriteriaTechnical criteria that provide an objective basis to assess eligibility of a facility or activity (type of facility, unit sizes, type of intervention..) Baseline SettingStandardized elements that have been developed for CDM methodologies:: large-scale benchmarks (carbon intensity of power grid, national or regional NRB usage rates) deemed savings (Nepal: average per household biomass use) status-quo baselines: modelled baselines can be used to determine NAMA baselines and targets. MRVA number of CDM MRV procedures are directly applicable : deemed savings approach methods that focus on large emission sources with simple MRV requirements that facilitate cost-effective MRV on facility level Implementation and Operation Some CME already operate at NAMA scale and is also an integral part of existing support mechanisms.

6. Benefits of PoA – NAMA Integration Procedural Simplification in PoA design and registration PoA/CPA additionality is derived from the NAMA and using procedures controlled by the host country with a strong link to its domestic policy. PoA can develop baseline derived from NAMA target (close to benchmark approach) Existing mechanism to implement credited NAMA instead of new mechanism NAMA could be operated mainly through (one or more) policy-driven PoA in conjunction with ODA-style capacity building/support interventions. Surplus ER (outside of PoA) could be transacted through bilateral output-based assistance approach (OBA). Shifting responsibility for the protection of environmental integrity to host country Parties, de-centralize the role of CDM EB The Party in control of NAMA compliance ensures environmental integrity on system level; typical CDM EB concerns over PoA level environmental integrity become less relevant.. I.e. DOE liability for wrongful inclusion can be addressed through NAMA eligibility criteria. 6

7. Recommendations/Next Steps 7 Explore the feasibility and benefits of this approach for an increasing number of case-studies CDM method usability vary widely depending on the underlying activity. Availability of substantial benefits need to be properly understood by Parties. Integrate the PoA/CDM reform process agenda with NAMA negotiations to facilitate integration Define requirements for the design of NAMA-level estimation methods for GHG emission inventories (based on national GHG inventory guidelines). Define requirements for the formulation of NAMA targets comparable to assigned amount units. Prepare CDM EB guidance on determination of additionality for projects/programs that are nested in eligible NAMA frameworks; in accordance with JI-style procedures on additionality for JI (track 1 and 2). Prepare CDM EB guidance on MRV flexibility on the activity level in accordance with JI-style procedures on MRV procedures (track 1 and 2).