Enhancing Demand for CDM: Addressing Challenges and Solutions
The Regional Workshop on CDM and NAMAs in Bogotá, Colombia highlighted the need to boost demand for CDM projects amidst low international ambition in emissions reduction. With a focus on shifting market dynamics and nurturing policies, the workshop emphasized the importance of increasing CER demand through various means such as engagement in compliance markets, voluntary cancellation of CERs, and exploring new approaches for sustainable development benefits.
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Presentation Transcript
CDM: Enhancing demand and improving supply Fatima-Zahra Taibi, UNFCCC secretariat Regional Workshop on CDM and NAMAs for Latin America and the Caribbean Bogot , Colombia
A challenging market Low international ambition in reducing emissions Low demand for CERs and current excess supply CER prices dropped 95% in past few years Significant challenges in selling issued CERs Little incentive for new projects Many buyers looking for more than just the CDM as we know it A net overall contribution to global mitigation Assurance of sustainable development benefits 2
calls for a change of plan Shift in thinking to identify new markets and increase CER demand CDM Executive Board call for nurturing policies to broaden demand and participation in the CDM Supports the broader objectives of the climate change Convention by facilitating real mitigation action Supports CDM s ability to deliver real benefits to developing countries and real emission reductions globally 3
Increasing demand Facilitate acceptance of CERs in compliance markets Emerging trading schemes and ICAO Emerging approaches (carbon tax, etc.) Enhanced use of CDM in voluntary markets By governments and the UN By private companies and NGOs Sporting and conference events Develop CDM for delivering mitigation finance Results-based finance Nationally appropriate mitigation actions (NAMAs) 4
Voluntary cancellation of CERs Voluntary cancellation = destroying CERs so they may not longer be used for compliance In practice, achieved by transferring CERs to a cancellation account in the CDM or a national registry Driven by a number of reasons By organizations or individuals showing leadership by offsetting emissions Increase de facto mitigation (in particular governments) Support developing countries (finance, technology, capacity) Contribute to closing the pre-2020 ambition gap Preserve investors confidence in UNFCCC mechanisms 5
Make it easy, visible and recognized! To promote voluntary cancellation Strengthened communication and outreach campaign Improved recognition of the CERs cancelled Establish an information platform on CERs available for cancellation Develop a simple online platform for conducting cancellation (under development) 6
Initials signs ADP invited governments to consider reducing the pre-2020 mitigation gap with CERs cancellation Total gap by 2020 is estimated to be at least 20 billion tonnes CO2 eqv Potential supply from all registered CDM projects accumulated until 2020: ~8 billion CERs FIFA World Cup 2014 offsetting with CERs Carbon pricing initiatives considering use of CERs as offsets (e.g. Mexico, Costa Rica) Initial contacts with potential cancellers have been positive 7
