Joint Coordination Workshop Breakout Session 1.1. PoA March 2011 Presentation by Felicity Spors ( Fspors@worldbank

1. Joint Coordination Workshop Breakout Session 1.1. PoA March 2011 Presentation by Felicity Spors (Fspors@worldbank.org) With inputs from Klaus Oppermann, MonaliRanade

2. Contents • PoA – the vision vs. current situation • PoA reform • Additionality for micro CPAs under a PoA • Baseline emissions • Monitoring • PoA procedures • Why and how to create City-wide PoA

3. Current situation versus the vision? • Actual situation • Limited private sector involvement in PoAs due to market and regulatory barriers. • Regulatory uncertainty (regulations, procedures, eligibility criteria, liability etc) • Complexity in applying methodologies and tools • RESULT: PoA implementation largely with public finance and capacity building support. • PoA Vision: • Reduce transaction costs and facilitate dispersed projects. • Small projects targeted particularly from under-represented or LDC countries to participate in CDM • Scale-up and accelerate emission reduction activities

4. PoA reform * Under CDM

5. PoA reform – additionality at the micro level • Current approach for CPA inclusion into a PoA requires that a CPA is a collection of individual micro activities (e.g., a CFL); where additionality assessment is then on the CPA level and monitoring by each CPA. • The current approach is not appropriate for dispersed micro activities that are triggered by carbon co-financed incentive scheme. A group of micro activities have to be artificially presented as a CPA and assessed like a stand alone projects/project entities for the purpose of an additionality assessment. • Need a new PoA additionality approach, especially for activities in LDCs/SIDs, under-represented countries & special underdeveloped regions within a country PoAadditionality approach for micro activities: Assess individual micro unit through eligibility criteria (e.g., SHS, biogas digester) PoAs on micro activities within LDCs/SIDs and underdeveloped zones are additional if<=5MW RE or <=20GWh EE or <=20 Kt/y category III AND the PoA (with all subsystems/measures are located in LDC/SID or special underdeveloped zone. PoAs and subsystems/measures are additional if each independent subsystem/measure in the project activity is equal or smaller to the following thresholds 750kW for RE, 600MWh for EE, 600 tCO2eq/y for Type III activities AND end-users are HH/low income communities, SMEs.

6. Expand micro additionalityapproach for subsystems? Each subsystem/measure <= 5MW RE, <=20 GWh EE, or <=20kt/y Category III projects Yes No Is the geographic location of the project in LDCs/SIDs or a special underdeveloped zone? No Is the size of each subsystem/measure size equal or smaller than < 750 kW RE, 600 MWh EE or 660 ktCO2e/y for type III activities? Yes No Project is additional End users of the subsystem are households, low income community, SMEs? Use of attachment A of Appendix B of M&M of SSC CDM Yes No Use of attachment A of Appendix B of M&M of SSC CDM Project is additional Yes

7. PoA Reform – Baseline emissions • No clear guidance on how to assess impact of mandatory law on baseline emissions • Methodologies are not clear on how any program that is helping to achieve the greater compliance of the mandatory law should be treated especially for calculating the baseline emissions • Does the program require monitoring the compliance percentage and adjust the emission reductions? • How to calculate the compliance percentage? • What is the threshold for considering that the program has helped the law achieving compliance percentage? 50% or 75% or 100%?? • Should we build in an “autonomous improvement factor”? Say 2-3% per year that can be discounted from the emission reduction calculation? Clarification needed: As methodology is silent on this very important aspect (should apply to all programs helps mandatory laws for greater enforcement), developers might be forced to adopt overly conservative approaches forfeiting the benefits envisaged by the program.

8. PoA reform – monitoring • Current approach: monitoring requirements over burdensome. Extensive monitoring data, expensive surveys and data requirements. • Sampling: Attaining a large economy of scale under a PoA is predicated, in part, on employing sampling procedures during verification. Without sampling procedures, all CPAs have to be visited by the DOE, resulting in enormous verification costs • Allow deeming, especially for micro activities, with flexibility in sampling New monitoring approach for PoAs: Materiality – the concept can greatly assist with methodological barriers. Sampling – Need sampling guidance for PoAs.Flexibility could be introduced i.e. larger sample and less regular survey vs smaller samples more regular survey e.g. SSC-I.I: “Biogas/biomass use for thermal applications for households/small users” (top down developed approved EB59) Standardized approaches such as defaults (e.g. energy savings default values, building energy efficiency modeling estimates) or benchmarks if data available.

9. PoA reform – procedures • Current procedures allow submission of requests for combining methodologies but it is not clear how these are to be processed. E.g. can combine III methodologies with more than one type I methodology as may be needed if some CPAs generate heat whilst others generate electricity. • Debundling rules – inconsistency between PoA and CDM. Under the traditional CDM, two project activities are not considered as de-bundled components of a large-scale activity provided the first has been registered more than 2 years earlier • Verification – problematic due to strict liability faced by DOEs. Clarify procedures Define process for requests for methodology combinations Define timelines for PoA procedures Address liability issue. Allow CPA to start "before" consultation. CPA can start after PoApublished for GSP

10. Expanding PoAs to allow city-wide programmes * Under CDM

11. What are the current options for Cities to access CDM? Waste Transport Option 1: Stand-alone project in one large city (e.g., LFG project) City A water Transport Waste City B Option 2: Bundle of two or more projects in one city or across multiple cities (e.g., EE in water pumping) water Transport Waste City C Options 3:PoA across many cities (e.g., Transport)

12. Why expand PoA rules to allow City-wide programs? Emission reduction projects in cities currently have limited opportunity to access CDM as Typically projects in cities, except for large landfill or composting t projects in cities, yield small volumes of ERs Developers & Bundling agents need clearances from city council for each project Lack of good bundling agents and CMEs to support projects across multiple cities

13. What a city-wide PoA could look like. Implementation over time Management, Implementation, monitoring & reporting

14. Expanding PoA rules to allow City-wide programs • Pros: • The CME, City Mayor or Manager’s office, is a reputed, well-established, geographically definable government entity • The CME is legally responsible for provision of urban services and will have long term control over operation of each project • Each project is distinct and uniquely identifiable, with a specific department or unit in the city responsible for its management • Additionality related eligibility for joining PoA can be defined, validated and tracked over time, based on either investment or barrier analysis • Validation or verification site-visits are limited to a single city • No possibility of double counting as the city maintains complete data • Others? • Cons: • No CDM rules on developing, validating or verifying such PoAs • Each CPA uses a different methodology, so validation and verification is not easy • A new city government may not want to continue with the program • Others?

15. Thanks for listening