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Relvant lessons for GIS learnt JI Track 1 and Track 2 in various Central & Eastern
European countries
Zsolt LengyelSenterNovem
Carboncredits.nl
Moscow, 28 April 2008
28 April 2008, Moscow
Russian Carbon Market Forum 2
Outline of the presentation
1. Carboncredits.nl – SenterNovem introduction2. JI Track 1 & 2, GIS – the context of eligibility 3. JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS?4. A pragmatic approach from the Dutch perspective5. Key lessons and challenges from Track 1 for GIS6. Crowding out effects spotted...7. Competition and co-operation between GIS/JI 8. Some tentative recommendations...
28 April 2008, Moscow
Russian Carbon Market Forum 3
1. Carboncredits.nl – SenterNovem introduction
1. An Agency of The Netherlands’ Ministry of Economic Affaires
2. Focus on Energy, Sustainability and Innovation with 1300 employees at four offices; an annual budget of 3-5 billion EUR
3. Carboncredits.nl was established within Senter Internationaal in 2000 to carry out the Joint Implementation purchasing through public procurement ( the ERUPT programme)
4. The Worldbank Prototype Carbon Fund and Carboncredits.nl were the first operational entities in the carbon market
5. Has signed and manages over 20 contracts with emission reductions around 17 million tonnes of CO2e
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Russian Carbon Market Forum 4
2. JI Track 1 & 2, GIS – the context of eligibility Requirement JI track 1
and GIS (IET) JI T 2.• Party to Kyoto Protocol x x• Assigned amount issued x x• National system (Art. 5.1) x• National registry in place x x• Most recent inventory submitted x • AA information submitted x
A Party involved in an Article 6 project shall inform the secretariat of:(a) Its designated focal point for approving projects pursuant to Article 6,
paragraph 1(a);(b) Its national guidelines and procedures for approving Article 6 projects,
including the consideration of stakeholders' comments, as well as monitoring and verification.
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Russian Carbon Market Forum 5
3. JI Track 1 versus Track 2 – Track 1 as a transitory route to GIS?
Supplier Host country
Purchasing entity
Transaction costs
possibly lower
possibly higher
possibly lower
Control not relevant much more not relevant
Complexity possibly less
possibly less
possibly less
Project scope
not relevant possibly more project types
not relevant
Risks & uncertainties
reduced reduced reduced
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Russian Carbon Market Forum 6
4. A pragmatic approach from the Dutch perspectiveWe had a sstrategic focus for investigating and
facilitating the Track 1 route in countries where:
• the ERU, AAU ( associated with pre-2008 early
action) volumes were high,
• where the projects that were at high JISC Track 2
risk
• where there was preparedness and move towards
eligibility for Track 1 JI
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Russian Carbon Market Forum 7
5. A pragmatic approach from the Dutch perspective (cont.)
• Track 2 has been the default option for
Carboncredits.nl, however some ERPAs and LoAs
explicitly included the optional Track 1 route (the
early crediting also required the AAU transfer
options)
• Technical assistance cooperation with Romania
(2006-2008), the first CEE country in the world,
to realise the benefits and face the challenges of
Track 1 on its route towards GIS
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Russian Carbon Market Forum 8
6. Key lessons and challenges from Track 1 for GIS
• Reducing transaction costs and risks whilst maintaining
credibility and ensuring project quality to meet the
environmental/greening criteria of the buyers
• Streamlining the approval procedures whilst
establishing a preference for GIS over Track 1/Track 2
• Enabling projects to go through GIS/Track 1 that
otherwise will have difficulties (administrative, financial)
getting approval via Track 2 ( JISC versus domestic
criteria)
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Russian Carbon Market Forum 9
7. Key lessons and challenges from Track 1 for GIS (cont.)
Specific eligibility considerations: sectoral preferences
(district heating, industrial technology housing; small
scale projects; early mover projects; programmatic
approach; project bundling)
Accreditation of domestic and international entities for
determination (e.g. AIEs have automatic accreditation for
Track 1 whilst domestic entity requirements needs to be
established; GIS fully domestic)
Standardised baselines (e.g. exemplary projects and their
baselines/cefs are selected, official grid factors
established)
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Russian Carbon Market Forum 10
8. Crowding out effects spotted...
• Buyers’side: funds set-aside for Kyoto Protocol mechanisms target GIS less for JI/CDM
• Host’s side regulatory attention towards GIS, whilst JI systems are not fully operational
• Project level alternative routes creating even more confusion
• Co-existence of GIS/JI is a fact the question is how to improve the situation in both areas?
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Russian Carbon Market Forum 11
9. Competition and co-operation between GIS/JI
• Project differentation for GIS/JI have a clear picture what project type (technical) is suitable for which scheme (sectors, baseline and monitoring methodologies)
• Regulatory preferences and clarity attention to both systems at the same time (may allow project suppliers to chose)
• Governance do not distort; make it easy (or difficult)
• Do not spread your resources too thinly!
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Russian Carbon Market Forum 12
10. Some tentative recommendations...
• One step at a time? get your Joint Implementation system ready before establishing a GIS
• Identify the key GIS implementation challenges a credible fund for disbursing and managing the GIS revenues is essential
• Learning by doing the biggest lesson of JI is that one should start acting....and constantly adjust/correct its system
• Watch out for lessons/mistakes of Hungary/Latvia//Romania/Ukraine and those most active in the JI/GIS field
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Russian Carbon Market Forum 13
Contact details for SenterNovem (Carboncredits.nl):
Visiting address: Postal address:Catharijnesingel 59 Postbus 8242 3511 GG Utrecht 3503 RE UtrechtNetherlands Netherlands
Tel: +31 30 214 7829Fax: +31 30 231 6491E-mail: z.lengyel@senternovem.nlHomepage: www.carboncredits.nlwww.senternovem.org / www.senternovem.nl
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