1. UNIDO Vietnam Support for CDM projects in the Industrial sector: Pilot Project in Co-operation with the Austrian Industry Training Sessions on the Kyoto CDM Brief background to Kyoto & progress of the flexible mechanisms to date Mike Bess Hanoi, Vietnam 26th and 27th June 2006 © ESD 2006

2. Summary Why the Kyoto Protocol? The UNFCCC – key actions on the road to the Kyoto Commitment Period, 2008-2012 Key actions in the Kyoto process: –Ratification –The European Union Emissions Trading Scheme (EU ETS) Operations of the UNFCCC CDM Executive Board (EB) and its ‘Methodology Panel’ Status of CDM and JI, and prospects pre- Commitment Period Implications for CDM in Vietnam © ESD 2006

3. Why Kyoto? © ESD 2006

4. UNFCCC roadmap Rio Conference in 1992 resulted in three UN ‘conventions’: –Climate Change (UNFCCC) –Biodiversity –Desertification The Global Environment Facility (GEF) was put in place post-Rio to address all three On the UNFCCC ‘Activities Implemented Jointly’ were allowed & took place until 1997 Kyoto ‘Conference of Parties’ (COP) November 1997 resulting in Climate Change Protocol – the ‘Kyoto Protocol’ (KP) © ESD 2006

5. UNFCCC roadmap (cont) Kyoto market the most significant development in international environment politics Kyoto divided the world into two groups – Annex 1 and Annex 2, with Annex 1 primarily OECD, Annex 2, primarily emerging & developing countries Annex 1 countries agreed to take a ‘cap’ to reduce greenhouse gas (GHG) emissions by 5% to 8% in the ‘Commitment Period’ (CP) of 2008 to 2012 © ESD 2006

6. UNFCCC roadmap (cont) Three ‘mechanisms’ were created at Kyoto: Two ‘project-based’ mechamisms: –Clean Development Mechanism/CDM (non- capped countries) –Joint Implementation/JI (Annex 1, capped countries) and 1 trading market-based mechanism: –International Emissions Trading (EIT) © ESD 2006

7. UNFCCC roadmap (cont) Marrakech Accords (COP7, Marrakech, November 2001) said: CDM could begin from 2000, crediting from then before the CP JI could begin immediately, but no credits before 2008 (CP) Emissions Trading under Kyoto would begin 2008 Marrakech Accords also set the ‘rules of the game’, & actualised the CDM ‘Executive Board’ (EB) & put in place the JI ‘Secretariat’ under the UNFCCC © ESD 2006

8. Summary of Kyoto to date Rio 1992 – UNFCCC, GEF & more Activities Implemented Jointly (AIJ) – 1992 to 1997 Kyoto 1997 – international watershed Differentiating ‘capped’ & non-capped participants Marrakech 2001 – Kyoto operationalised USA withdraws from Kyoto 2001 Evolution of EU ETS from January 2005 Russia & Kyoto ratification 2005 Over 160 countries participating under Kyoto now © ESD 2006

9. Operations of the UNFCCC UNFCCC, after Marrakech, set up the Executive Board EB meets regularly, is now, post-Montreal 2005, fully financed, & has approved nearly 50 CDM & JI projects EB has a ‘methodology panel’ (‘Meths Panel’) which approves all methodologies acceptable for projects under CDM & JI This sets standard for PDDs, validation & verification JI Secretariat fully operationalised in Montreal 2005 © ESD 2006

10. CDM Executive Board Appointed by Kyoto Protocol signatories Ultimate authority on CDM, meets regularly Has a number of technical committees Most important committee for CDM is the ‘Methodologies Panel’ (Meths Panel) – 10 members (http://cdm.unfccc.int/Panels/meth) Meths Panel approves all methodologies for CDM Assigns numbers & approved methodologies are like ‘torts’ in law – they are ‘precedent’, & then get used by all CDM project developers Approved methodologies for all sorts of projects from renewable energy, methane capture, etc. © ESD 2006

11. Status of JI & CDM After slow start, Kyoto projects now well underway Are 30 approved methodologies (AM) & 9 approved ‘consolidated methodologies’ (ACM) (http://cdm.unfccc.int/methodologies/PAm ethodologies/approved.html) JI project developers are using many CDM approved methodologies © ESD 2006

12. Overview CDM projects After a very slow start, first CDM projects registered in 2004 Number of projects ‘in the pipeline’: 800 (16 June 2006) of which: –Number of registered projects increasing dramatically (216 from Nov 2004 to June 2006): 2004: 1 project (Brazil) 2005: 62 projects 2006 (to 16/6/06): 153 projects (including Rang Dong Oil Gas Recovery) –Number of projects in pipeline is increasing: 53 now with EB (including 1 Vietnam project Song Muc) © ESD 2006

13. Status of CDM now 9 th June 2006, the Climate Change Secretariat of the United Nations published news that projects with emission reductions worth more than 1,000,000,000 (1 billion) tonnes of carbon dioxide equivalent (CO 2 e) had just been approved!!! CDM is happening faster than anyone would have predicted two years ago All registered CDM projects in just over 18 months!!! Current demand for CERs is more than supply! Kyoto is happening!!! © ESD 2006

14. CDM projects by sector © ESD 2006

15. Status of JI & CDM (cont) © ESD 2006

16. Number of registered projects by region © ESD 2006

17. Number of registered projects by country © ESD 2006

18. Expected annual reductions by country © ESD 2006

19. Expected annual CO2e reductions by region © ESD 2006

20. Thank you! Mike Bess Director, International Division Energy for Sustainable Development Ltd. +44 1225 816 808 mike@esd.co.uk www.esd.co.uk © ESD 2006