OPPORTUNITIES OF NEW GENERATION OF CREDITING FOR CITIES
ALEXANDRINA PLATONOVA-OQUAB
Session 2 - Crediting to support subnational actions Implications of the Paris Agreement for a New
Generation of International Market Mechanisms Paris, France
May 30 - July 1, 2016
To explore opportunities and challenges of scaled-up crediting for cities
Today’smainfocus
• Urbanmi2ga2onatscale• Roleofanewgenera2onofcredi2ng• Methodologicalrequirements&
implementa2onmodels• Mainfindings&wayforward
Topicstobecoveredtoday
Urbanbuildings
• Deepenergyefficiencystandardsfornewstock
• Retrofitofexis2ngbuildings Li
gh2n
g&App
liances
• Aggressiveenergyperformancestandards
Transport&
land
use
• ModeshiG
• Transitefficiencyforresidents
• Ci2es’mi2ga2onac2onsandleadershipisincreasinglyrecognizedbytheinterna2onalcommunity
• About50%ofac2oninINDCsareatlocal&subna2onallevel
• Mainmi2ga2onpoten2alwithinpowerofmayorsby2030:
Ac2ngnowtotriggermi2ga2onpoten2alinci2es
Diversityofci2es
• Ci2escarbonfootprintisdefinedbothbytheeconomy-wideandlocalemissiondrivers(e.g.,urbanland-use,infrastructureandgrowthpaVern)
• MandateandcapacitytomanageGHGemissionsvariesgreatlyforsophis2catedmegaci2esandsmall/mediumsizeci2es
Howtoachieveurbanmi2ga2onatscale?
Scope:
Drivenbyci2esmandate&ins2tu2onalcapacity
Cityac2ngaspolicymaker,regulatorandserviceprovider
Cityac2ngasimplemen2ngagentofana2onalpolicy
Scale:Mul2plewaystoachievescale&transforma2on
Replica2onofdiscretemeasuresat(sub-)sectorallevel
Integratedmi2ga2onac2onsinseveral(sub-)sectors
Focusontransforma2onalimpactsinci2es
• Urbanmi2ga2onatscale• Roleofanewgenera2onofcredi2ng• Methodologicalrequirements&
implementa2onmodels• Mainfindings&wayforward
• Facilitateci2es’contribu2ontona2onalmi2ga2onac2on• Mobilizemi2ga2onpoten2alinci2esandreducelock-ineffect
• Triggertransforma2onalimpactatlocallevel
• Contributetomi2gatena2onalabatementcostsinalongerterm
• Servebroaderpolicyobjec2vesandbringmul2plesbenefits• Focusonresult-orientedpoliciesandac2ons
• Improvemonitoring,performancetrackingandenforcement
• Createreadinesstoaccessothertypesofclimatefinance
• Offeropportunitytodesignandpilotfuturemechanisms• Buildonexperiencelearnedfromimplementa2on
• Overcomelimita2onsofcurrentapproaches
• Pavewayforusingmorecomprehensivemarket-basedinstruments
Howcanscaled-upcredi2ngsupportci2esachievetheirfullmi2ga2onpoten2al?
Leveragingci2es’climateac2onthroughblendedfinance
• Sustainablemi2ga2onac2onsinci2esrequirestheuseofcomplementarypoliciesandfinancingsources
• Planning,design&MRVarekeyforeffec2veuseofcarbonfinance
• Urbanmi2ga2onatscale• Roleofanewgenera2onofcredi2ng• Methodologicalrequirements&
implementa2onmodels• Mainfindings&wayforward
Planninguncertainty
Monitoringfailure
Regulatoryrisks
Extendeddeliveryperiod
Aggregateperformancefailure
Investmentrisk(upfrontCAPEX)
Financialbarrier(accesstofinancing)
Vertical/horizontalcoordination
Institutionalcapacity
Singlemeasure Replicationofsinglemeasures
Keychallengesofmovingbeyondproject-by-project
Howtofillthemethodologygaps&ensureintegrity?• Comparable&transparentquan2fica2on,includingclimateac2on
planningatthesectoral/citylevel:• Helpsintegra2ngurbanmi2ga2onintothena2onaleffort
• Op2mizeleverageofcarbonfinanceatthelocallevel(e.g.,CURBmodel)
• Facilitateuseofmodellingforpolicyimpactsassessment
• Aggregateperformanceindicatorswithdifferentmetrics:• Intensitytargets/performancebenchmarkshelptoshowambi2on&own
contribu2on
• Capturesystemicimpactsofcomplementarypoliciestofacilitatesustainableimplementa2on
• Compa2bleGHGinventories®istries:• Facilitateintegra2onintona2onalpoliciesandhelpavoiddoublecoun2ng
• GPC-apromisingtoolensuringtransversaltransparency
• Jurisdic2onalregistriesfeedingintona2onalsystems
Implementa2onmodels:accommoda2ngdiversity
Decentralized
Na2onalpolicymakersfocuson
demandcrea2on&overallguidance
Ci2esleadonprogramdesign&priori2za2onof
ac2ons
Centralized
Na2onalpolicymakersleadon
programdesign&incen2vestructure
Ci2esbenefitfromconsolidatedinterna2onal&domes2cfunds
Policy-driven
Alloca2onofrolesdependsonpolicytargets&design
Ci2esgetsupportforenhanced
implementa2on&enforcement
Designop2onsundertheAr2cle6:completeness,levelofeffort&replicability
VoluntaryCoopera.veApproaches Art.6.4.Mechanism
Useofinterna2onalsystems
Mi2ga2onprograms
Tradeablecompliancegradeassets
Replicability
Na2onalrules&ins2tu2ons
Fullfledgemechanisms
Bilateraltransac2ons
Flexibility
• Urbanmi2ga2onatscale• Roleofanewgenera2onofcredi2ng• Methodologicalrequirements&
implementa2onmodels• Mainfindings&wayforward
• SignificantGHGmi2ga2oninci2escanbeachievedthroughinterven2onsrela2velywellcoveredbycarbonfinanceapproaches
• Scaled-uptransforma2onalurbanmi2ga2onismosteffec2vewhensupportedbycomplementarypolicyinstruments
• Relevantblendedfinancialpackagesarerequiredtosupporttheen2re“policy”cycletoensurebestleverageofcarbonfinance
• Scaled-upcredi2ngshouldbeVeraddresspolicy-drivenmi2ga2onac2ons
• Methodologicalneedsarequitewellunderstood,butcri2calgapsremain• Tointegrateurbanac2onintona2onalclimatepolicyeffort
• Tomovebeyondproject-by-projecttowardjurisdic2onalcredi2ng
• Diversimplementa2onmodelshavebeenusedtofitspecificcircumstancesofci2esandurbansectors
• Pilo2ngiskeytotestnewinnova2veapproaches
Mainfindings&wayforward
Thank you!
Alexandrina Platonova-Oquab
Climate and Carbon Finance Unit [email protected]
www.worldbank.org/climatechange
Ensuringenvironmentalintegrity&transparencySuggestedapproaches
Advantages Gaps
Comparable&transparentquan2fica2on
• Climateac2onplanningfacilitatesdistribu2onofeffortstoachievena2onaltargets
• Promoteuseofna2onalassump2ons(e.g.,BAU)
• Useofmodellingforpolicyimpactsassessment
• Dynamicurbansystemswithtransforma2onalchanges
• Limitedexperienceofintegratedassessment
• Mul2plever2cal&horizontalpoliciesimpacts
• Longtermimpactspoorlyunderstood
Aggregateperformanceindicators
• Intensitytargetsorperformancebenchmarks
• Capturesystemicimpactsofcomplementarypolicies
• Useofdifferentperformancemetrics
• Noavailablebenchmarkstoshowambi2onforpolicies&addressowncontribu2on
• LimitedcapacitytoaVributeimpacts
Compa2bleinventories®istries
• Facilitateintegra2onintona2onalpolicies
• Reducedoublecoun2ngissue
• GPCasapromisingtool
• Jurisdic2onalregistriesfeedingintona2onalsystems
• Complexboundaries
u National urban policy makers playing a leading role in program design u Consolidated flow of international & domestic dedicated funds targeting
PPPs and private developers in cities u Aggregate performance indicators at the community level u Flexible choice of compliance options u Savings in costs of program management, MRV, quality control
Centralizedimplementa2onmodel:mainfeatures
Carbonfinance
MinistryofUrbanDevelopment&Transport
PolicyMRVNationalclimate
fund
Localbanks&Developmentinstitutions
PPPs&Privatedevelopers
Exantequantification
Eligibilityrequirements
Performanceindicators
Basedon
MexicoUrban
NAM
A
Climatefinance
Policyobjectives
Exantequantification
u National policy makers focusing on creation of demand and providing overall guidance
u Cities taking the lead on program design and prioritization of actions u Aggregate performance indicators at the level of city climate action plan u Increased requirements for cities (e.g., GHG inventory, MAC curves,
climate action plan)
Decentralizedapproach:mainfeatures
Basedon
Tha
iland
LCD
Pprog
ram
Otherbuyers
UrbanFund
UrbanmitigationProgram
MRV
Localbanks&Developmentinstitutions
Municipalities&Communities
Eligibilityrequirements
Domesticvoluntarymarket
Programobjectives
UrbanmitigationProgram
PerformanceindicatorsProgrammanagement
Guidance&coordination
Policy-drivenapproach:thecoreofinnova2on
Rational for crediting • Improved effectiveness through better compliance & enforcement
• Improved ambition/stringency of regulation • Accelerate deployment
Incentive scheme • Support developers’ costs of designing compliant buildings • Enhance the incentive structure of a policy • Provide maximize leverage with a focus on critical
enabling/operational barriers • Support policy maker’ cost of monitoring of impacts (MRV)
Quantification & MRV • Aggregate evaluation of impacts based on modelling
Performance indicators • Aggregate energy/GHG performance per major category of buildings
“Building codes”: supporting enforcement of ambitious policy
GHG standards for sustainable communities
Holistic actionsDiscrete actions
Territorial & transport policiesReduction of distance travel
Policy limiting personal vehicle use
Energy efficient appliances
Bus Rapid TransitCycling lines
Life-cycle optimization of waste management
Building codes
Renewable energy generation
Efficient street lighting
Waste recyclingLandfill
Covered by project-based crediting
Insights from Crediting programs & Emissions trading
Energy efficiency in buildings
Not addressed Not addressed
Project-basedmi2ga2on
Policy-drivenmi2ga2on
Carbonfinance:unevencoverage
High
High