Chile’s Transportation Sector Chile’s Transportation Sector and the Clean Development and the Clean Development

Mechanism: Project OverviewMechanism: Project Overview

Inception Meeting, August 2002

Santiago, Chile

Project PartnersProject Partners

International Institute for Sustainable Development (IISD)

Cambio Climatico y Desarrollo (CC&D)

Center for Clean Air Policy (CCAP) Canadian International Development

Agency (CIDA)

IISDIISD

an independent, not-for-profit corporation governed by an international Board carries out policy research and

communications

Our Vision – Better living for all – sustainably.Our Mission – To champion innovation, enabling societies to live sustainably.

IISDIISD

Canadian based, but international in scope

headquartered in Winnipeg, with offices in Ottawa, New York and Geneva.

focuses its research on five strategic objectives: Economic Policy, Trade and Investment, Natural Resource Management,Measurement and Indicators, and Climate Change & Energy

CC&DCC&D

Consulting firm specialized in the analysis, design and promotion in Chile of the market-based instruments under the UNFCCC

Established in 1994, and actively involved in the local and international climate change debate

Provides expertise on technical matters for organizations within Chile and to the UNFCCC negotiation process

CCAPCCAP

non-profit environmental think-tank that specializes in developing and implementing innovative solutions to environmental problems balancing environmental and economic interests.

extensive experience on transportation analysis and climate policy development in both domestic and international settings.

CCAP – CDM ExperienceCCAP – CDM Experience Mexico—Investment in energy efficiency and

renewable energy, identified CDM opportunities

Brazil—Analysis of CDM project opportunities in the industrial sector

Caribbean—Developed regional baseline for the power sector & held workshops to discuss potential CDM case studies

CDM Dialogue—Facilitate consensus among 40 countries re: CDM rules and implementation issues

CIDACIDA

CIDA works to reduce poverty & contribute to a more secure, equitable and prosperous world

CIDA’s objective: facilitate the efforts of developing countries to achieve self-sustainable economic and social development

Project OverviewProject Overview

Canada – Chile RelationshipCanada – Chile Relationship

MOU for cooperation signed April, 2002

Project is an investment in the relationship between Canada and Chile

Recognizes that cooperation on climate change issues, including CDM projects, can mitigate GHGs globally, and positively impact community, social and economic development

CDM & Chilean TransportCDM & Chilean Transport

CDM will be an important opportunity for a more sustainable transportation sector for Chile through:

Increased funding flows Enhanced capacity Expanded technology

In Chile, transportation represents largest source of man-made GHG emissions in the energy sector - approximately 33%

BackgroundBackground

Emissions of CO2 Eq. (Energy Sector) 1998

Commercial9%

Industrial34%

Manufacturing23%

Mobile Sources33%

Agricultural1%

GoalsGoals

The goal of this Project is to be of technical assistance to Chileans to reduce GHG emissions and promote involvement in the CDM, specifically in the transportation sector.

1. Analyze Chile's transportation sector 2. Prepare two in-depth case studies of

potential transportation CDM projects3. Strengthen the technical capacity of

relevant Chilean government authorities

4. Conduct a capacity-building workshop 5. Prepare a comprehensive final report

and disseminate the project results

5 Main Project Components5 Main Project Components

1. Local goals addressed by climate change projects: air quality, congestion, health, etc.

2. Opportunity to break new ground re: application of CDM to transport sector

3. Potential foreign investment in sustainable development technologies

Benefits to ChileBenefits to Chile

1. Fulfils goals of the Canada – Chile MOU

2. Contributes to global reduction of GHGs

3. Extends theoretical analysis of CDM project applicability

4. Identifies specific opportunities for CDM projects/credits in the transportation sector

Benefits to CanadaBenefits to Canada

1. Provide CDM overview and update2. Gather input on what will be useful and

complementary to ongoing initiatives3. Narrow down case study options4. Discuss data needs and potential areas

of cooperation5. Adjust & gain approval for project

workplan

Meeting GoalsMeeting Goals

Clean Development Mechanism Clean Development Mechanism (CDM)(CDM)

Trades can happen now (after 2000) Marrakech Accords set rules for verification,

certification, baselines (offers 3 approaches to setting baselines)- Need guidelines for project developers and OEs

on method selection/review• Small projects--EB/Panel establishing

simplified baseline methods • Regular projects--EB/Panels will likely

develop guidance as projects are approved (no resources for guidance in the nearer term)

Status of the CDMStatus of the CDM

Certified Emission Reductions (CERs) present additional revenue stream for carbon reduction projects

CERs can increase a project’s internal rate of return

Incentives for Participation Incentives for Participation

1. Preparation of the project design document (PDD)• Key Aspects: baseline, project emission

reduction estimates, monitoring plan2. Approval by designated national authorities

• Investor country approval • Host country approval

3. Validation 4. Registration 5. Monitoring and Verification 6. Certification and Issuance of CERs

Project Cycle Project Cycle

Status of the Rules (based on Marrakech Accords) The baseline is the scenario that reasonably

represents GHG emissions by sources that would occur in the absence of the proposed project activity

- Baseline is inherently speculative, since it attempts to predict what will not happen

Marrakech states baselines must be conservative.

Further guidance will likely be developed as projects are approved

BaselinesBaselines

Baseline methods must be approved by CDM EB A credible baseline would include all BAU

activities Project developers can select most appropriate

of 3 approaches:1. Existing actual or historical emissions 2. Emissions from a technology that represents

an economically attractive course of action, taking into account barriers to investment

3. Average emissions of similar project activities undertaken in the previous 5 years…and whose performance is among top 20 %

Baseline MethodsBaseline Methods

A CDM project is additional if anthropogenic emissions of GHGs by sources are reduced below those that would have occurred in the absence of the registered project activity

Financial additionality must prove CDM investment is additional to Official Development Assistance (ODA)

AdditionalityAdditionality

CERs are calculated based on the difference between project and baseline emissions - CERs not guaranteed over the entire

project lifetime. - Choice between 7 yr crediting period

with potential for renewal, OR, 10 yr period without renewal.

Certified Emission Reductions (CERs)Certified Emission Reductions (CERs)

Transportation & CDM : Unique IssuesTransportation & CDM : Unique Issues

Developing quantification methodologies- Issues of baseline, additionality,

measurement- Modeling of travel demand/behavioral

change

This project, with its emphasis on technical assistance and groundbreaking analysis of methods for structuring and implementing CDM projects, can: Provide a methodology for future use for

other developing countries and Help set precedent for transportation

CDM projects

Future ImpactFuture Impact

Gracias!