1. Markets & Mechanisms Developments inside and outside the UNFCCC negotiations. Building and Urban Methodologies Workshop UNFCCC, Bonn, 27-28 March 2014

2. What is CDM? 2

3. 3

4. Cumulative CDM supply to 2020 from existing projects

5. Challenging times Due to domestic politics and lacking ambition, supply exceeds demand by at least an estimated 870 million CERs (+530 million ERUs from JI) CER prices dropped 95% in past few years. Current price ~0.20 Euros/CER. Functioning price should be at least 5 Euro, estimated real abatement costs around 30 Euros/CO2 eqv The mechanism works - the markets do not (currently)! Pre-2020 gap could be closed by 20-40% by CERs from registered projects. Parties encouraged by ADP decision to use CERs to close the gap. 5

6. Markets are very likely to be a key component of any future climate-action framework because they: Contribute to sustainable development, tech transfer and other development objectives of the host countries Minimize the cost of climate action Empower the private sector by creating economic reasons to reduce emissions through the creation of tradable assets (units) 6 THE POST-2012 GLOBAL CARBON MARKET

7. 7 In the meantime outside UNFCCC…

8. 8 2 degree C target  50-85% emission reduction by 2030 Business as usual  Average 6 ºC temp increase Progress? Kyoto (15%)  Cancun (85% voluntary)  Durban (100% universal)  Paris (Deal!) Durban Platform (2011): Agreement Adopt by 2015. Implement by 2020. “…with legal force for all parties…” UNFCCC negotiations overview

9. Revision of CDM M&P Revision of JI guidelines International emissions trading KP ambition Eligibility Second commitment period UNFCCC negotiations overview UNFCCC Negotiations Kyoto Protocol / CMP SBSTAADP SBI Convention / COP Science Mitigation Financing Technology transfer Capacity building Adaptation NAMA Reporting Nairobi work programme LULUCF New mechanisms 2015 agreement Agreement Design Pre-2020 ambition

10. 10 Market mechanisms discussions 20152020 COP21 JI CDM FVA NMM ADP

11. Key issues include: Links to overall 2015 deal Is there a need for NMM or can CDM do the job? How to balance flexibility with environmental integrity of mechanisms? How to avoid double counting? Level of control: In UNFCCC or at national levels? Sustainable development…? To like or not to like markets? 11 Some politics

12.  Carbon markets very likely to stay  International carbon markets very likely to be connected under UNFCCC  One or several mechanisms beyond 2020.  Look for hooks for mechanisms, NOT for an operational manual for mechanisms in the 2015 agreement  Do not discard CDM quite yet  Ambition, ambition, ambition!!! 12 Conclusion

13. Thank you