Implementation of INDCs and the Role of the Private Sector LEDS LAC Regional Platform Webinar October 7, 2015

The Global Challenge: Achievement of an ambitious Global Climate Agreement in COP 21 The National Challenge: Development & Implementation of Intended Nationally Determined Contributions (INDC)

Key Steps for Preparing INDC identifying the benefits of an INDC organizing the INDC process identifying data and analysis to inform the INDC designing the INDC communicating the INDC For the development and implementation of an INDC there are general key steps to take into account:

Developing overall objective and vision for the INDC Identifying & evaluating a set of potential actions at the national, regional and local level as appropriate & in key sectors Undertaking consultations with relevant stakeholders, including key sectoral ministries, civil society & private sector. Finalizing the proposed INDC based on the feedback received & agreements Some key Aspects of INDC – Approach to Planning Process The process of determining INDCs generally goes through stages similar to the formulation of low emission and climate resilient development strategies and includes the following main stages:

Some key Aspects of INDC – Planning Process Stakeholders involvement Institutional Arrangements The Context basis Political process of approval Implementation tools Process is about explaining “how is INDC nationally owned” (bottom-up)

Some key Aspects of INDC: Planning Process – The Context Basis Bottom-up process How is connected to SD strategies within the country (strongest anchor) A robust INDC will link clearly to other national objectives, such as climate policies, adaptation planning processes (NAPs), development Plans, policies, etc. & key sectors Most of the countries have already started integrating CC within their own developing planning processes.

Some key Aspects of INDC: Planning Process – Institutional Arrangements Important to provide a vision on how countries have done a comprehensive consultation within the countries -not only the involvement of key ministries, but also… Involvement of provincial/local governments/city level (important actors in charge of implementation). The importance of planning and executing consultation processes effectively cannot be underestimated, even for countries that are just kicking off their INDC preparations. Build broad-based support across economic sectors through innovative approaches to consultation

– Stakeholders involvement The INDC development process is an opportunity to broaden awareness of CC and increase buy-in across government, business and society. The process is as important as the technical content. Ensure that the background and aims of INDCs – including potential opportunities and risks – are well understood by decision-makers and a broad range of stakeholders, including the private sector. Participatory processes are critical to ensuring the measures included in INDCs are feasible. This tests their potential among those likely to be engaged in later implementation and ensures they are robust and aligned with other policies and activities. Participation builds support for implementing actions in the INDCs at an early stage. Some key Aspects of INDC: Planning Process

Examples of good participatory approaches from countries: Peru: developed a highly participatory and inclusive INDC preparation process. The Gov. established a multi-sectoral commission representing 11 ministries, with the responsibility of approving the country’s final INDC document. The private sector is expected to implement many of the proposed activities, particularly in the mitigation sector, and the Government has sought to engage private actors throughout the development process. Peru also published a draft of its INDC for public consultation on 5 June All interested parties have an opportunity to comment and provide feedback on the document before it presented to the UNFCCC. T&T: aligned with its National Climate Change Policy. Involved wide stakeholder consultation and participation, through its CC Focal Point Network consisting of +175 representatives of ministries, agencies and institutions, academia, private sectors, NGOs, civil society and fiduciary organizations. Mexico: based on existing climate change policies and strategies. Developed through stakeholder consultation meeting and web based inputs. Some key Aspects of INDC: Stakeholders Involvement

Some key Aspects of INDC – Planning Process – Political process of approval Important element since INDC has to be a country submission and it has to have a political endorsement and strong political support. – Implementation tools Some countries have stated how they will do the implementation and how they plan to translate a goal or target into action. Make plans for effective implementation now. INDCs must include information on how the commitments will be implemented and monitored. The INDC process can be used to set up the institutional structures needed to oversee the implementation process, including inter-ministerial arrangements. INDCs are an opportunity for countries to request support from international donors for technology, capacity building and finance. Countries should be as specific as possible about type of support needed and the financial costs. Countries should include MRV systems in their INDC to track the effectiveness of climate policies, for public accountability and to report to donors on the impacts of their investments.

Integration of International Market Mechanism into INDC Financial flows are needed to facilitate cooperation between groups of countries to achieve a [net zero] emissions target. Finance will be a central pillar of the 2015 Climate Change Agreement. The ADP re-affirmed that Parties are consistent in underlining the need to mobilize finance and to do so quickly from all sources. Economic instruments such as climate finance, carbon taxes, ETS and carbon offset instruments (i.e. Clean Development Mechanism ) that mobilize resources are all needed to achieve cost savings from cooperation in the form of financial transfers between countries. MRV system will play a key role in the future mitigation scenarios. Development of new MRV systems may prove to be complex and expensive to build and operate. CDM provides substantial assurance since it has an MRV system underpinned by a robust set of UNFCCC methodologies and audited by UN accredited professional auditing companies.

Integration of International Market Mechanism into INDC INDC submission may allow access to possible incentives, such as access to market mechanisms created under the 2015 Agreement. INDCs can send a credible signal regarding future plans to mitigate, stimulate investment, promote technological innovation and engage the private sector. Parties are including references about international market mechanisms, flexible instruments and the role reformed CDM can play as part of the mitigation options they are considering in their INDCs, as tangible channels for delivering finance, technology and capacity, and for conducting the MRV of the mitigation outcomes. While rules for the use of market mechanisms are still under negotiation in the ADP process, at this stage it is useful for those Parties that intend to make use of market mechanisms post-2020 to clearly state their intention in their INDC.

PARTYTARGETINTENTION TO USE OF INTERNATIONAL MARKET MECHANISM Morocco13% below BAU by 2030, unconditional. 32% below BAU conditional on finance and an agreement under the UNFCCC. Use of international market mechanisms is possible to achieve both conditional and unconditional targets. Canada30% below 2005 by 2030Use of international market mechanisms is possible. Would like them to be “robust systems that deliver real and verified emissions reductions”. MonacoObjective of 50% ER by 2030 compare to the year reference of 1990 Does not exclude the utilization of ER units in case the domestic ER are insufficient by the end of the commitment period. SwitzerlandReduce GHG emissions by 50 % by 2030 compared to 1990 levels Intends to use the CDM and, as appropriate, the NMM under the Convention and activities under the FVA. (*This shows how international market elements can inspire greater ambition) NorwayAt least 40% reduction of GHG emissions by 2030 compared to 1990 Will use UNFCCC market mechanisms. Stipulates that “strict criteria will be applied to ensure that such credits represent real and verifiable emission reductions and that double counting is avoided.” Notes that it will consider adopting a target of more than 40% with use of UNFCCC mechanisms “if it can contribute to a global and ambitious climate agreement in Paris”. Republic of Korea GHG 37% below BAU by 2030Intends to use carbon markets from international market mechanisms. Clarified that almost a third of the intended emission cuts will be met using the international carbon market. Ethiopia145Mt or less in 2030Intends to sell carbon credits. “Supports the development of effective accounting rules under the UNFCCC to guarantee the environmental integrity of market mechanisms”. Examples of INDC Submissions

PARTYTARGETINTENTION TO USE OF INTERNATIONAL MARKET MECHANISM Mexico Unconditionally reduce 25% of GHG and Short Lived Climate Pollutants emissions below BAU for 2030; to be increased to 40% subject to international carbon (conditional) pricing, carbon border adjustments, technical cooperation, access to low-cost financial resources and technology transfer Intends to meet its unconditional target without use of such mechanisms, while achieving the conditional target “will require fully functional bilateral, regional and international market mechanisms”. *This shows how international market elements can inspire greater ambition! Colombia Unconditionally reduce 20% of GHG with respect to the projected BAU Scenario by 2030; Conditional to be increased by 30% subject to the provision of international support. With the objective of contributing to achieve the ER target, with a focus on cost-efficiency, will explore the use of market instruments (or other economic instruments) that guarantee the principles of transparency and environmental integrity, which result in real, permanent, additional, verified mitigation outcomes and prevent double counting. Brazil Unconditional Contribution: Brazil intends to commit to reduce GHG emissions by 37% below 2005 levels in Subsequent indicative contribution (conditional): reduce GHG emissions by 43% below 2005 levels in Brazil reserves its position in relation to the possible use of any market mechanisms that may be established under the Paris agreement. Brazil emphasizes that any transfer of units resulting from mitigation outcomes achieved in the Brazilian territory will be subject to prior and formal consent by the Federal Government. Brazil will not recognize the use by other Parties of any units resulting from mitigation outcomes achieved in the Brazilian territory that have been acquired through any mechanism, instrument or arrangement established outside the Convention, its Kyoto Protocol or its Paris agreement. Peru A reduction of emissions equivalent to 30% in relation to the GHG emissions of the projected BAU scenario in The Peruvian State considers that a 20% reduction will be implemented through domestic investment and expenses, from public and private resources (non-conditional proposal), and the remaining 10% is subject to the availability of international financing1 and the existence of favorable conditions (conditional proposal). At the time of submitting the iNDC proposal, the acquisition of emission reductions through existing or new international market mechanisms is not considered for its compliance. This is in order to avoid adjustments or duplications for ownership or accounting reasons. However, Peru is considering selling emission reductions provided this is not an obstacle for the compliance with the national commitment. Examples of LAC INDC

PARTYTARGETINTENTION TO USE OF INTERNATIONAL MARKET MECHANISM Dom. Republic Conditional Reduction of 25% of base year emissions by 2030.This reduction is conditional upon favorable and predictable support, feasible climate finance mechanisms, and corrections to the failures of existing market mechanisms. (requested by the private sector) GrenadaGrenada commits to reducing its GHG emissions by 30% of 2010 by 2025, with an indicative reduction of 40% of 2010 by Grenada currently uses no market mechanisms but is willing to explore the potential of market mechanisms and other mechanisms under the UNFCCC process that demonstrate environmental integrity. (2 nd version INDC) GuyanaAs a developing country, a coastal low lying state within SIDS, and being among the lowest emitters in the world, Guyana proposes policies, measures and actions, both conditional and unconditional. With the current state of carbon markets, Guyana does not foresee using this source at this time, but the door is open to use carbon markets in the future, subject to robust MRV systems to ensure environmental integrity. BarbadosTo achieve an economy-wide reduction in GHG emissions of 44% compared to its BAU scenario by In absolute terms, this translates to a reduction of 23% compared with the baseline year, As an interim target, the intention will be to achieve an economy-wide reduction of 37% compared to its BAU scenario by 2025, equivalent to an absolute reduction of 21% compared to (Energy & waste sectors) -Clean Development Mechanism (CDM) -Nationally Appropriate Mitigation Action (NAMA) DominicaConditional: Commits to progressively reduce total gross GHG emissions below 2014 levels (164.5 Ggs est.) at the following reduction rates: 17.9% by 2020; 39.2% by 2025; and 44.7% by Intends to introduce market-based mechanisms to promote energy conservation/efficiency and reduce greenhouse gas emissions from the transport sector principally through incentives to promote the import of hybrid vehicles. Trinidad & Tobago Unconditional: 30% reduction in GHG emissions by 2030 in the public transportation sector compared to a BAU scenario (reference year 2013). Conditional: Additional reduction achievable under certain conditions which would bring the total GHG reduction to 15% below BAU emission levels by The Energy Chamber of TT is developing a feasible carbon trading scheme that will also result in reduced emissions in the industrial sector. Examples of Caribbean INDC

Benefits of Market Mechanism CDM References in INDC International eligibility criteria for the use of markets (still to be negotiated) could incentivize countries to take on progressively more ambitious targets Access to cost-effective mitigation allows Parties to over-achieve targets or possible take on more ambitious ones Economic Instruments could enable conditional targets Markets foster international cooperation and trust in long-term climate action Markets involve the private sector into climate action and thereby mainstreaming mitigation action Markets could attract finance, capacity building, technology transfer (including from the private sector) and other types of international support for economic development and poverty reduction. A country could consider market mechanisms such as the CDM as a MRV tool for climate mitigation actions and as a tool to deliver results-based financing. Large emitters may be most interested in buying CERs from LDCs and SIDs since the impacts of climate change will be experienced the most in those countries.

CDM as an Enabler for Growth & Development Leveraged significant private sector financing, scaled-up mitigation actions, and generated large volumes of mitigated tons of CO2eq. Robust GHG accounting and monitoring standards that allow for accurate, transparent and globally comparable MRV of scaled-up mitigation actions. CDM EB and the UNFCCC secretariat have made progress in streamlining the CDM, simplifying its standards and procedures, such as SBL and CDM methodologies with default factors. CDM is an instrument/architecture that supports green banks, financial regulation and standards that allow private capital to shift from brown (high carbon) to green (light-, no-carbon) in an environmentally robust way, augmenting tools in credit enhancement and supporting development that effectively mobilizes the public sector in an age of deep financial constraint. CDM offers a common [offset] standard recognized by a large range of countries, which facilitates indirect link of instruments and cooperation between countries, at low incremental cost/risk

INDC Challenges Uncertainty on what information to include in the INDC & Lack of an agreed common reporting framework How to mitigate limited capacity? Limited expertise for assessing mitigation options Assumes the preparation of INDCs carries a cost Limited availability of data Too short time-frame for undertaking process Difficult to secure broad participation and collaboration between different government agencies Need for technical and financial support from countries.

INDC: Lessons Learned Countries should follow a transparent process when preparing their INDC in order to build trust and accountability with domestic and international stakeholders Build a broad-based support through innovative approaches to consultation (workshops, websites, online survey) & involve all levels of government, sectors and stakeholders. INDC can send a credible signal regarding future plans to mitigate, stimulate investment, promote technological innovation and engage the private sector. Submission of INDC may allow access to possible incentives, such as access to market mechanisms created under the 2015 Agreement. Submission of INDC on time is key to build political momentum and put pressure on major emitters. Make Plans for Effective Implementation Now. The INDC process does not stop in the INDC submission, cycle revision of INDC, there is a need for a progression not going back. (No Backsliding)

Countries will require support for the implementation of INDC: Technical support (analyses and studies) for inter-ministerial working groups and for processes that help ministries to agree on specific ER targets, Assessment of the financial and technical resources needed by countries to implement their INDCs, Support political decision-making processes for the submission of INDCs and their implementation, Backing the dialogue process with multiple relevant stakeholders, including the private sector, Build capacities at the government levels (especially at the local level) and agreements with the private sector, to involve them in implementation of INDC: to leverage public funding; as technology providers, Project Developer, Investor, Financer (LFIs), Brokers, Consultants, Utilities, Product providers, etc. Long-term implementation of INDCs and potential support

◦ Identification of mitigation opportunities/sectors suitable for support through the CDM and/or other mechanisms ◦ Estimation of BAU scenarios and impacts of the interventions ◦ Linkage of mitigation measures to adaptation and SD benefits ◦ Definition of unconditional/conditional elements of INDCs and what forms of international support are available and suitable ◦ Overall integration in country-wide measures and strategies ◦ Online Platform for INDC implementation (Jan. 2016) & Webinar series ◦ Side-events at LEDS LAC and LEDS Global events in Punta Cana, DR on 13 and 14 October, Long-term implementation of INDCs and potential support --Regional Collaboration Centre (RCC) St. George’s Grenada offers support in the regions, on the ground--

Publications & Reports on INDC

Thank You! Lucila Serra Climate Change Consultant