Post on 21-Jan-2018
transcript
Ambition, Cooperation and Opportunity.
Dirk ForristerPresident & CEO, IETASustainable ProsperityOttawa22 June 2016
The Paris Climate Agreement.It’s about three things…
Climate Challenges, Market Solutions
Realizing Ambition
Climate Challenges, Market Solutions
Enhancing Cooperation
Climate Challenges, Market Solutions
Seizing Opportunity
Climate Challenges, Market Solutions
Climate Challenges, Market Solutions
2 C = 450 ppm 80 – 90% Reductions
Climate Challenges, Market Solutions
1.5 C = 350 ppm 95% Reductions?
Climate Challenges, Market Solutions
• 2°C (or 1.5 °C) means massive transformation by 2050 –• Hold atmospheric concentrations to 450 ppm (or 350 ppm?)• Advanced nations reduce 80 – 90 % and emerging economies
reduce growth significantly• Net zero goal (sources = sinks) by 2nd half of century
• Action largely reflected in Nationally Determined Contributions • Current targets closer to 3°C than 2°C• So expect targets to strengthen over time
• Level of change means action must reach beyond borders• Helps keep costs in check and avoid economic shocks• Enables business to be a partner – not an obstacle
The Paris Outcomes on Carbon Markets
Climate Challenges, Market Solutions
Marshall Islands
New Zealand
INDC Submitted
Singapore
INDC includes the use of
International markets
San Marino
Trinidad and Tobago
Comoros
Grenada
Country will consider using markets
Seychelles
Kiribati
Mauritius
Maldives
Barbados
Tuvalu
Cape Verde
DominicaSao Tome and Principe Solomon Island
Monaco
Samoa
INDC Not Submitted
Antigua and Barbuda
Fiji
Nauru
Cook Islands
St Lucia
St. Vincent and the Grenadines
Micronesia
Vanuatu
Palau
SOURCE: IETA/EDF “Carbon Pricing: The Paris Agreement’s Key Ingredient,” April 2016
1. Cooperative approaches through “internationally transferred mitigation outcomes” (para 2)
2. Rules for carbon market accounting, particularly avoidance of double-counting (para 2 & 5)
3. Sustainable development & mitigation crediting mechanism (para 4)
The Big Caveat: Rules, modalities and procedures due by 1st COP/MOP of Parties to Paris Agreement, but negotiators’ track record is mixed.
• Enhanced cooperation through market linkages with accounting principles to drive integrity
• New mitigation mechanism available to all who want to use it• For both developed & developing countries• Could be broader than mere crediting • Operates in context of all Parties implementing NDCs
• Includes direct & indirect references to REDD+ (Art. 5)• NDCs reviewed every 5 years (Decisions 23 and 24) – may
help signal supply / demand trends
• Success in getting Article 6 reflected hard work on carbon pricing over past few years
• Market cooperation now extends beyond INDCs and Article 6• World Bank’s Partnership for Market Readiness and Carbon
Pricing Leadership Coalition• Germany/Japan leading the G7 carbon market platform • New Zealand declaration on carbon markets• Japan’s Joint Crediting Mechanism with 19 partners
• High-level Panel set ambitious goals in NYC to double coverage of pricing by 2020 and double again within a decade
Taking Carbon Markets Forward From Paris
Climate Challenges, Market Solutions
Centralized Hub• Decisions taken in COP 22 and 23
• Trading hub follows GCF, CTCN models
• Governed under COP oversight
• Results in broad buy‐in
Spin Off Clubs• UN gridlock• Coalition forms• Trading club follows CCAC model
• Governed by users• Results in narrow, but strong buy‐in
Climate Challenges, Market Solutions
Climate Challenges, Market Solutions
Common building blocks for trading
Common issuance process
Registry & tracking service
Market oversight system
Standard sector baselines Reduction targets MRV standards
Defined units of measure
Agreed offset standards
Compliance assurance
Climate Challenges, Market Solutions
The Case of the JCM
Japan
Mexico
Maldives
Cambodia
Vietnam
Kenya
Palau
Costa RicaEthiopia
BangladeshIndonesia
Laos Mongolia
Climate Challenges, Market Solutions
The Case of California‐Quebec (+Ontario?)
MOU
WCI Inc.
Compliance Instrument Tracking System Service
Joint Auctions
CA ETS QU ETS
Offsets
California Entities
Quebec Entities
Futures Exchange, Brokers
Offsets???
CAR, VCS, ACR
Standards
Climate Challenges, Market Solutions
Essential UN function may be reporting (net imports, exports)
Basic rules are similar inside or outside UNFCCC
UN Hub Independent Club
Advantages Broad fungibility Owned by supporters
Experienced team Reduced barriers to adopt policy
Build on existing tools Pulls quality systems forward
Enhance ambition for all Domestic political/reputation
Disadvantages Political interference Limited fungibility
Bureaucracy No existing institution
Reputation Potential start up pains
SOURCE: Climate Policy, “Compliance of Parties to the Kyoto Protocol in the First Compliance Period,” June 2016
Key Points• Trade enabled EU, Japan &
New Zealand to comply• EU’s internal AAU trade
significant (Poland, Romania & Czech)
• Japan imports:150m CERs, 22m ERUs, 226m AAUs
• EU imports: over 1b. units • NZ imports: 90m units
• Carbon markets got a boost from Paris• Business community’s interest is rising• Now action shifts to implementation & business readiness
• National (and sub-national) pricing systems• Cooperation across borders / business relationships• UN FCCC negotiations on rules & guidelines
• Nations are free to cooperate in either “hubs” or “clubs”• For Canada, no obligation to engage markets – just
opportunity
www.ieta.org
Climate Challenges, Market Solutions