Spanish Policy on flexible mechanisms Rebeca Sainz Spanish Climate Change Bureau Ministry of Environment JI WS, Bonn February 2007

INDEX 1. Spain – Basic compliance scenario & strategy. 2. Spanish Instruments. 3. Views on JI. 4. Other Initiatives. 5. Conclusions.

Basic COMPLIANCE SCENARIO AND STRATEGY + 24% of 1990 emissions RD 1866/2004, NAP 2005-07 + 15% Kyoto Protocol objective + 2% LULUCF activities + 7% International credits = 100Mt + 37 % 1990 emissions NAP 2 (2008-2012) +20 % International credits = 289 Mt CO2

The Kyoto target would be reached jointly. Overall strategy The Kyoto target would be reached jointly. Overall strategy to use the Kyoto Protocol Flexible mechanisms: Establishment of the institutional framework. Design of a multilateral and bilateral approach with NAI and AI countries. Evaluation of the existing financial tools for the acquisition of credits. Enhancement of cooperation with private sector and financial institutions.

INSTITUTIONAL ARRANGEMENTS SPANISH INSTRUMENTS INSTITUTIONAL ARRANGEMENTS Law 1/2005, 9 march, transpose Directive 2003/87/EC and Linking Directive Establishment of the DNA (CDM & JI) Procedure Def. and recognition of international credits INTERNATIONAL COOPERATION AND PUBLIC SECTOR PARTICIPATION Establishment “Iberoamerican Climate Change Network (RIOCC).” 21 countries Signature of MOUs with 19 host countries : Argentina, Brasil, Colombia, Morocco, Mexico, Panama, Uruguay, Dominican Republic, Bolivia, Ecuador, Chile, Costa Rica, Paraguay, Guatemala, Peru, Honduras, El Salvador, Nicaragua and China. Some more under negotiation

FINANCIAL INSTRUMENTS Agreement for 40 Mt (205 M €) Spanish Carbon Fund (34 MT) + 50 M € Open to private sector (installations under the Law 1/2005) BioCarbon Fund (2MT) Participation CDCF (4MT) CF Assist (5M€). Priorities: Renewables, energy efficiency, waste management. Agreement for 9 Mt CO2 : Iberoamerican Initiative for Carbon Purchase will be held in credits through CDM projects exclusively in the Latin America and Caribbean region.

FINANCIAL INSTRUMENTS Multilateral Carbon Credit Fund 35 mill. € (~ 42% sovereign window) What? ERUs, CERs, EUAs Where? Countries in transition GIS window: under consideration Asia Pacific Carbon Fund 30 mill. USD CERs Asia- Pacific Region

Views on JI Room for the 3 market based mechanisms!!  JI - Incredible Take off!! ( Thank you, JISC!)Institutional framework settle down - Technology transfer - ERU market has a lot of potential (Russia, Ukraine) - A lot of potential in non EU ETS sectors but, - higher delivery risks. - higher transaction costs (Vs ETS). - until now, higher uncertainty (Vs CDM) There is a future for JI!: non-CO2 gases, LULUCF

JI Eligibility requirements: Views on JI JI Eligibility requirements: Focal point designated - Interministerial Committee. National guidelines: under development (RD). Investing in JI Through multilateral financial institutions (WB, MCCF) Priority projects: Renewable energy, energy efficiency, waste management. Bilaterally: Several MOUs in progress

Other initiatives Supporting initiatives under JI. (through contributions to JISC). Technical cooperation programmes. Cross-cutting instruments to promote investments in JI & CDM: - Viability Study funds - Consultancy funds. - Financing lines, Credit lines Other multilateral Funds. Increasing bilateral relationships with host countries (through bilateral agreements) Debt conversion agreements: new clause related to Kyoto Protocol (Ecuador and Uruguay). GIS, also a good complement.

Room for 3 market based mechanisms: make the best of each of them. Final thoughts Room for 3 market based mechanisms: make the best of each of them. Project-based transactions are essential for the evolution to low-carbon economies JI should evolve applying the lessons learnt from CDM. Rules are now there: time to make JI “practically” happen.

Thank you for your attention ! For additional information  Spanish Climate Change Bureau www.mma.es/oecc  Rebeca Sainz rsainz@mma.es