1

Kai-Uwe Barani Schmidt

Secretary

CDM Executive Board

CleanDevelopmentMechanism

Carbon Forum America26 February 2008

2

• Legal basis in the Kyoto Protocol

– Run by Executive Board (EB) answerable to KP Parties

– EB back-stopped by UNFCCC secretariat with support for:

• Registration and issuance

• Accreditation of certification companies

• Methodologies for emissions baseline setting and monitoring

CDM general overview | International mandate

3

Additionality

Define operationally what would happen in the absence of a CDM emission reduction project

• Two experts – two views

• Agreement how best to do it

A challenge for any offset mechanism/market outside an inventory target based system

CDM general overview | International challenge

4

Not an academic concept –

CDM is up and running!

CDM general overview | World’s largest CO2 offset system

2 ½ years of operational experience (in the context of exponential growth!)

100,000,000 CERs issued at USD15 worth about 1.5billion - low global administration cost below 1%

Large pool of learning opportunities

5

CDM general overview | Global reach

• 945 projects registered to date

• 49 countries

• 119 million certified emission reductions (CERs) issued

• approx. additional 2000 projects in pipeline

• 2.6 billion CERs expected to end of 2012

• 341 below 25 K CERs/y; 23 projects above 500 K/y

6

039

183

685

945

114

471

750

1,600

3,000

100

530

940

1,900

2,700

0

500

1000

1500

2000

2500

3000

3500

May 2005 (SB22) December 2005(COP/MOP1)

May-06 May-07 Feb-08

Registered project activities Projects in the pipeline Projected CERs

No

. o

f P

roje

cts

/

CE

Rs

be

fore

20

12

(m

illio

ns

)

An explosion of project activities representing a broad range of project types and sizes

CDM general overview | Strong demand

7

Stakholders say CDM is:

A development tool – Executive Board should make it find development opportunities

A market mechanism – it will find low-cost reductions on its own, guided by private sector interests/market forces

CDM general overview | Competing views

8

Actually, CDM is both.

It creates incentive for investment• That assist in sustainable development

and

• In lower cost opportunities foremission reduction

CDM general overview | Creating incentive

9

A key challenge (imperative) is to maintain quality. Each CER must represent an emission reduction equivalent to one tonne of CO2, so that an emission can be offset, and done so cost effectively.

The EB must strike a balance:

• Recognize the challenges/constraints faced by project proponents and engage in constructive dialogue with project proponents

• Ensure the public interest, the quality imperative, so that an offset produced does not result in an increase in

emissions

CDM general overview | CDM quality standard

10

• CDM projects that entered pipeline in 2006 estimated to result in USD 25 billion in capital investment

(almost double the USD 14 billion in total investment leveraged through GEF in the climate change area since it started more than 10 years ago)

• CDM renewable energy and energy efficiency projects registered in 2006 expected to result inUSD 5.7 billion in capital investment

(about triple the ODA support for energy policy and renewable energy projects in the same countries. Almost as much as private investment in renewable energy and energy efficiency (USD 6.5 billion in 2006) in the same countries)

CDM general overview | Investment, financial flows

Condensed from the report of the CDM Executive Board to the COP/MOP 2007 <http://unfccc.int/resource/docs/2007/cmp3/eng/03p01.pdf>, page 4.

11

CDM general overview | Investment, financial flows

• Most CDM projects are small

• Most are in energy industries (renewable/non-renewable)

Projects in pipeline, by emission reductions (number of expected CERs)Registration pipeline >3000 projects (including registered projects)

12

• CDM is new, but it has already shown that it can work, that it can evolve and adapt

• What’s more, stakeholders have direct influence on the evolution/improvement of CDM

• These facts, together with CDM’s full transparency,* have earned the mechanism respect, has enabled CDM to weather misplaced criticism and benefit from constructive criticism

* Virtually every document, related to every project, is available on the CDM website.

CDM general overview | Transparency

13

Bears important lessons in how to establish additional emission reductions in a measurable and verifiable manner for use as offsets

Moved offset concept to operation on a global scale

Bears important lessons regarding bottom-up approach and participation

Assists in sustainable development

CDM general overview | Learning by doing

CDM:

14

CDM Bazaar

http://www.cdmbazaar.net/

Catalogue of decisions (test):

http://test.cdmis.net/catalogue-test

CDM UNFCCC website

cdm.unfccc.int

UNEP RISOE

http://cdmpipeline.org/

Thank You!

We are here to interact. Drop in to our booth.