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© OECD/IEA - 2007
Sectoral approaches to Sectoral approaches to climate action:climate action:
‘Complementary opportunities ‘Complementary opportunities or dead end?’or dead end?’
Business and Industry Global Dialogue 2008Business and Industry Global Dialogue 2008
23 October 200823 October 2008
Richard Baron – IEARichard Baron – IEA
Disclaimer – The views expressed here are the author’s and may not reflect the views of the individual IEA Member countries.
© OECD/IEA - 2007
OutlineOutline
Sectoral approaches: do we have a choice? An illustration.
A look at countries’ recent submissions to the UNFCCC
Questions for debate
© OECD/IEA - 2007
Complementary or dead end?Complementary or dead end?
Sectoral approaches are likely to be an essential element of future international mitigation efforts
Hence, handle with care
© OECD/IEA - 2007
Sectoral approaches: Sectoral approaches: do we have a choice?do we have a choice?
© OECD/IEA - 2007
0
500
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Mill
ion
tons
of C
O2
Power and heat (including autoproduction)
Other energy industries
Manufacturing industries and construction
Transport
Other sectors
Illustration - COIllustration - CO22 emissionsemissions in China in China
© OECD/IEA - 2007
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1971
1973
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Mill
ion
tons
of C
O2
Power and heat (including autoproduction)
Other energy industries
Manufacturing industries and construction
Transport
Other sectors
Illustration - COIllustration - CO22 emissions in India emissions in India
© OECD/IEA - 2007
Electricity (supply and use) should Electricity (supply and use) should be a priority for actionbe a priority for action
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*
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Source: IEA(2008), Energy Technology Perspectives 2050. IEA(2008), Energy Technology Perspectives 2050.
© OECD/IEA - 2007
Why are we, internationally, Why are we, internationally, looking at sectors?looking at sectors?
Since Kyoto: from ‘simple’ country caps (-and-trade) to the actual complexity of specific mitigation policies Whether market-based or else, useful lessons can be drawn from
Annex I progress on various policy areas See G8 best practice work and concrete recommendations on
energy efficiency
Most developing countries not ready for country-wide goals – political and capability issues (CBDR/RC) In the meantime, GHG accumulate
Some will need sector-specific support Best policy practice and policy design Training (see Asia-Pacific Partnership on efficiency of existing
plants) Targeted financial support Carbon market
© OECD/IEA - 2007
Views on SA from submissionsViews on SA from submissions
China: no to benchmarks, standards, etc. but calls for larger finance incl. via carbon markets. Review of EST on basis of cost, reliability, obstacles
India: no common standards, cooperative R&D, IPR cost, standards on certain products and practices, voluntary energy efficiency programmes (pledge)
S. Africa: Register of actions. Toolbox of support instruments, SD-PAMs No-lose
S. Korea: Registry for NAMA (nationally appropriate mitigation actions): crediting to provide finance
© OECD/IEA - 2007
UNFCCC submissions (ctd.)UNFCCC submissions (ctd.)
EU: two categories. Sectoral technology and policy cooperation / sectoral approaches w. carbon market (incl. differentiated instruments)
Japan: comparability of efforts / binding sectoral intensity targets for developing countries / crediting as support to NAMA / no trade sanctions / supplementarity
Norway: explore crediting /SA further to transfer resources to move towards low-carbon economy
Russia: risk of speculation through carbon market
© OECD/IEA - 2007
SA toolkit on UNFCCC table SA toolkit on UNFCCC table at this stageat this stage
Prioritize global action & discuss comparability of effortsBroaden crediting from CDM (project) to sectoral CDM
Move away from offsets towards actual, global mitigation (no-lose targets)
Sectoral targets under emissions trading (article 17 under the Kyoto Protocol)
SA to organize technology diffusion/transfer etc. (as per Bali Action Plan, 1.b.iv)
Absent: international negotiation over a sector (a.k.a. transnational agreement)
Outside: IAI, worldsteel, CSI, APP …
© OECD/IEA - 2007
Role(s) of the carbon marketRole(s) of the carbon marketOptions abound on how to harness the carbon
market: Sector-wide CDM, sectoral crediting, no-lose, sectoral
caps, intensity-based or not
Offsetting vs. crediting: how to evolve away from CDM?
How do the options bring incentives to countries / domestic agents? CDM project developers/installations have a clear
incentive (CDM project cycle notwithstanding…) Sectoral targets, intensity, non-binding installations
are steps away from carbon market – does this matter?
© OECD/IEA - 2007
Role(s) of the carbon marketRole(s) of the carbon market
Uncertainty on supply (CDM + sectoral + … ) and demand (developed country commitments) – and back Merely a political issue (‘show me the level of your
ambition, I’ll show you mine’) or also about details of instruments, incl. SA? Incentives should matter.
Limited (or lack of) data / eligibility / likely timing of entry of various sectors/countries in the market?
© OECD/IEA - 2007
Other possible considerations on Other possible considerations on SA in UNFCCC negotiationsSA in UNFCCC negotiations
Differentiation of countries or actions What implications for a sectoral approach to mitigation? Differentiate by type? SD-PAMs … Sectoral targets Differentiate by level of international support to NAMA
Support mitigation in developing countries / sectors via carbon market or other means? Economically attractive for ‘donors’ Verification = Intrusiveness Countries to pledge actions: will they go beyond these pledges
with SA?
Competitiveness/leakage issues: ‘elephant in the room’ or can be handled with ad-hoc measures?
© OECD/IEA - 2007
Going forward: Integration in an Going forward: Integration in an agreement by Copenhagen?agreement by Copenhagen?
Numbers on sectors / countries by COP15? Unlikely for most – esp. w/o agreement on precise format of SA,
or differentiation of actions
Areas for decisions by COP15? Principles for SA?
Role of carbon market, other support, eligibility sectors/countries?
A registry structure (format) to record ‘pledges’? Pilot phase data gathering … Deadline for submissions of SA pledges/goals by developing
countries? Process for evaluation of submissions, as they come? Sectoral
expert groups?