Permit supply from the CDM Nico van der Linden ECN Policy Studies, the Netherlands

Approach to constructing Marginal Abatement Cost(MAC) curve for the Non-Annex I region  Gathering potential & cost information from country abatement costing studies –Information from 30 non-Annex countries have been collected covering some 80 % of total non-Annex I region. –Simple extrapolation method to account for the missing countries  Developing database on GHG reduction options –Potential and cost information on some 550 reduction options  Assessing the CDM-transaction costs –Costs related to bringing the reduction option under the CDM  Constructing Marginal Abatement Cost curves for non-Annex I region as a whole and for selected sectors and countries –Sectoral curves for electricity sector, rest of industry, household sector, agricultural products & forestry and transport sector –MAC curves for China, India, Brazil and South Africa

MAC curve for the whole non-Annex I region

Main findings  Total identified GHG reduction potential in 2010 in the non-Annex region as a whole amounts to 2.1 GtCO2 equivalent –Most reduction potential (62 per cent) in the power sector (energy efficiency, fuel switch) and demand side energy efficiency measures  Approximately 1.9 GtCO2 eq. is feasible at costs of up to US$ 4 per tCO2eq reduction –Large potential with low costs makes CDM attractive instrument for countries with GHG emissions reduction targets  Large fraction of identified potential can be realized in a limited number of non-Annex I countries. Most reduction potential has been identified in China and India (some 60 per cent)

Limitations to the study The estimated reduction potential should be viewed with caution:  Different assumptions and approaches are used across the studies which make it difficult to aggregate the country results: –base year –discount rate –fuel prices –baseline  Country abatement studies are not always comprehensive; studies do not always consider all reduction options