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1
CDM/JI/emissions trading
Background, status of themarket based mechanisms and the role of the carbon market
David AbbassPublic Information OfficerUN Climate Change Secretariat
2
United Nations Framework Convention on Climate Change
1992 Adoption of the UN Framework Convention on Climate Change
1997 COP-3 Kyoto: Adoption of the Kyoto Protocol
2001 COP-7 Marrakesh: Finalization of the technical details relating to the Kyoto Protocol –“Marrakesh Accords”
2005 16 February: Entry into force of the Kyoto Protocol
The international responseto climate change – overview
2007 COP-13/CMP-3 Bali
2008 COP-14-CMP-4 Poznan
3
United Nations Framework Convention on Climate Change
Kyoto Protocol
• Entry into force on 16 February 2005• 183 Parties ratified (Dec. 2008)
• Legally binding GHG emission targets for 37 industrialized countries and EU
• Emissions of six major greenhouse gases• New international market-based mechanisms, creating
a new commodity: carbon• Facilitate sustainable development and additional
support to developing countries on adaptation
4
United Nations Framework Convention on Climate Change
• International emissions trading
• Clean Development Mechanism (CDM)– Emission reduction projects in developing
countries
• Joint Implementation– Projects in any country with a commitment
under the Kyoto Protocol
• Projects can earn saleable/tradable units that can be used for compliance with KP targets
6
United Nations Framework Convention on Climate Change
Emissions trading
= Emission allowances to sell
= Emission units/credits needed
Emissions cap
Emitter A
Em
issi
on a
llow
ance
sEmissions cap
Downward pressure on emissions
Emitter B
= Emission allowances to sell
= Emission units/credits needed
= Emission allowances to sell
= Emission units/credits needed
Emissions cap
Emitter A
Em
issi
on a
llow
ance
sEmissions cap
Downward pressure on emissions
Emitter B
Emissions cap
Emitter A
Em
issi
on a
llow
ance
sEmissions cap
Downward pressure on emissions
Emitter B
7
United Nations Framework Convention on Climate Change
= Saleable/tradable units to be earned
Time
Em
issi
ons
leve
l
With project
Without project
How project based offset mechanisms work
8
United Nations Framework Convention on Climate Change
Benefits of market mechanisms – CDM/JI
• Important tools that stimulate needed investment.
• Help find low-cost opportunities for emissionreduction.
• Provide an incentive for action.
• Give countries, companies some flexibility in howthey meet emission targets.
13
United Nations Framework Convention on Climate Change
3. Registration: EB
2. Validation: DOE
4. Monitoring: PP
5. Verification: DOE
6. CER issuance: EB
Regulated mechanism overseen by Executive Board assisted by
Panels
Working groups
Registration and issuance teams
UNFCCC secretariat
Emission reductions:
RealMeasurableVerifiableAdditional
DOE = designated operational entity
(third-party certifier)
PP= project participant
CDM regulatoryprocess
1. Project design: PP
14
United Nations Framework Convention on Climate Change
1251 registered projects in
52 countries
Plus >3000 more projects in pipeline
226.9 million CERs issued
>2.9 billion certified emission reductionsexpected to the endof 2012
Status: 6 Dec 2008
CDM – A mechanism with global reach
15
United Nations Framework Convention on Climate Change
0114 100 39
471530
183
750940
685
1,600
1,900
1251
4,200
2,900
0
500
1000
1500
2000
2500
3000
3500
4000
4500
May 2005 (SB22) December 2005(COP/MOP1)
May-06 May-07 Nov-08
No.
of P
roje
cts
/ C
ERs
befo
re 2
012
(mill
ions
)
An explosion of project activities representing a broad range of project types and sizes
Registered project activitiesProjects in the pipelineProjected CERs
16
United Nations Framework Convention on Climate Change
• International committee that supervises JI has just verified first emission reductions under the mechanism.
• The reductions were created by project in Ukraine that makes use of coal mine methane to generate electricity, heat and vehicle fuel.
• Units issued amount to 330,000 tonnes ofCO2 equivalent for six-month reporting period.
(Joint implementation now has 5 projects registered in 3 countries.)
17
United Nations Framework Convention on Climate Change
CDMRegistry
JIInfosys
InternationalTransaction
Log
CommunityInternationalTransaction
Log
FRUKIT
SW
Etc.
International emissions trading of:
AAUs, CERs,ERUs,etc.
Essential market architecture in place
19
United Nations Framework Convention on Climate Change
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