Download Project Overview Inception Meeting, August 2002 Santiago, Chile

Chile’s Transportation Sector and
the Clean Development Mechanism:
Project Overview
Inception Meeting, August 2002
Santiago, Chile
Project Partners
 International Institute for Sustainable
Development (IISD)
 Cambio Climatico y Desarrollo (CC&D)
 Center for Clean Air Policy (CCAP)
 Canadian International Development
Agency (CIDA)
IISD
 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.
IISD
 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&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
CCAP
 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 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
CIDA
 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 selfsustainable economic and social development
Project Overview
Canada – 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 Transport
 CDM will be an important opportunity for a
more sustainable transportation sector for
Chile through:



Increased funding flows
Enhanced capacity
Expanded technology
Background
 In Chile,
transportation
represents
largest source
of man-made
GHG emissions
in the energy
sector approximately
33%
Emissions of CO2 Eq. (Energy Sector) 1998
Commercial
9%
Agricultural
1%
Mobile Sources
33%
Manufacturing
23%
Industrial
34%
Goals
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.
5 Main Project Components
1. Analyze Chile's transportation sector
2. Prepare two in-depth case studies of
potential transportation CDM projects
3. 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
Benefits to Chile
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 Canada
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
Meeting Goals
1. Provide CDM overview and update
2. Gather input on what will be useful and
complementary to ongoing initiatives
3. Narrow down case study options
4. Discuss data needs and potential areas of
cooperation
5. Adjust & gain approval for project
workplan
Clean Development Mechanism (CDM)
Status of the 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)
Incentives for Participation
 Certified Emission Reductions (CERs)
present additional revenue stream for
carbon reduction projects
 CERs can increase a project’s internal
rate of return
Project Cycle
1. Preparation of the project design document
(PDD)
• Key Aspects: baseline, project emission
reduction estimates, monitoring plan
2. 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
Baselines
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
Baseline Methods



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 %
Additionality
 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)
Certified Emission Reductions (CERs)
 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.
Transportation & CDM : Unique Issues
 Developing quantification methodologies
- Issues of baseline, additionality,
measurement
- Modeling of travel demand/behavioral
change
Future Impact
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
Gracias!