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Introduction to Carbon Market

Introduction to Carbon Market. Yves TUYISHIME REMA. Outline. Carbon Market The Clean Development Mechanism (CDM) Kyoto Protocol Carbon Market: Is it happening in Rwanda?. CARBON MARKET. What is the carbon market?.

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Introduction to Carbon Market

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  1. Introduction to Carbon Market Yves TUYISHIME REMA

  2. Outline • Carbon Market • The Clean Development Mechanism (CDM) • Kyoto Protocol • Carbon Market: Is it happening in Rwanda?

  3. CARBON MARKET

  4. What is the carbon market? • The carbon market is like any other market, but in this particular market “people” are shopping for “carbon credits” measured in tCO2e. Source: Freefoto.com

  5. What is carbon credit? 1 Carbon credit = 1 ton of CO2 • CERs • Emission Reductions Units • Verified Emission Reductions 1 Carbon credit = 1 ton of CO2 Currently the price of one carbon credit varies between 6$ and 8 $

  6. Who are the Buyers & Sellers? • Buyers • Compliance buyers, i.e. (big) carbon emitters from developed countries which have commitment to kyoto protocol. • Voluntary buyers, e.g. corporations , e.g. as part of Corporate Social Responsibility initiatives (being “green”), attract potential clients, satisfy eco-conscious shareholders, new investment opportunities, risk management or part of their philosophy individuals, e.g. offset your holiday flight, (NGOs) etc…. • Sellers • Developing countries, i.e. Lower emission countries or with large tracks of forests • Developed countries, i.e. countries trading off their surplus in carbon credits

  7. Types of Carbon Markets • Regulatory Markets - Clean Development Mechanisms -Joint implementation • Voluntary Carbon Market

  8. Voluntary Market • The voluntary market represents those who wish to compensate voluntarily for emissions associated with their operations–either as part of a commitment to corporate responsibility or to attract green consumers. They have no legal requirement to participate. -Voluntary carbon standard VCS -Plan Vivo -Gold standard, etc….

  9. Regulatory Market - Clean Development Mechanisms - Joint implementation CLEAN DEVELOPMENT MECHANISM (CDM)

  10. The Clean Development Mechanism • Flexible mechanism under the Kyoto Protocol • Two goals: • Reduce greenhouse gas emissions • Assist sustainable development in developing countries • Cooperation between Annex-1 countries andnon-Annex 1 countries

  11. Kyoto Protocol • Establishes legally binding commitments for the reduction of GHGs • Adopted in 1997, Ratified in July2004, entered into force inFebruary 2005,and had to expire in 2012(As of august 2011,191 Countries are parties to KP) • Protocol to the 1992 UN Framework Convention on Climate Change (UNFCCC) • RequiresAnnex 1 countries (West and Eastern Europe, North America, Japan, New Zealand, Australia – industrialised countries) to reduce overall emissions of greenhouse gases by at least 5.2% during 2008 – 2012 • Voluntary participation of Non-Annex 1 countries (China, India, etc. – “developing countries”) • Clean Development Mechanism (CDM) involves Annex 1 and non-Annex 1 countries

  12. GHGs covered by KP cont…

  13. INTRODUCTION TO CDM GHGs covered by the KP Sulphur hexafluoride (SF6) GWP: 23,900 Methane (CH4) GWP: 21 Carbon dioxide (CO2) GWP: 1 Nitrous oxide (N2O) GWP: 310 Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) GWP:11,700 GWP: 9,200 Each GHG has a different Global Warming Potential

  14. Eligibility criteria • Reduction in GHG Emissions covered by the KP • Host country (Rwanda) must be a Party to the Kyoto Protocol • Contribution to Sustainable Development of Rwanda • Additionality • Emission reduction must be real, measurable and long term • Sector must be eligible

  15. Eligible sectors • Energy industries (Production &Distribution) • Manufacturing industries • Construction • Transport • Mining/mineral production • Metal production • Fugitive emissions from fuels (solid, oil and gas) • Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride • Solvent use • Waste handling and disposal • Afforestation and reforestation • Agriculture

  16. How does it work?

  17. Emissions reductions achieved Non-Annex I Annex I Carbon value (€) Buyer Emissions reductions needed Emissions reductions target Seller Certified Emissions Reductions (CERs)

  18. Host Country Approval (DNA) Project Idea Note (PP) Project Design Document (PP) Registration (EB) C E R S Implementation & Monitoring (PP) Verification (DOE) Validation (DOE) How to develop a CDM project and create carbon credits? Issuance (EB)

  19. Is it happening in Rwanda?

  20. 23 CDM projects in pipeline • improved cookstove projects • water purification • hydropower • efficient lighting projects: Solar lighting Rechargeable light by pedal machine CFL project

  21. rwandadna@gmail.comwww.rema.gov.rw/dna Murakoze

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