clean development mechanism [email protected]@lehmanlaw.com june 23 th 2008lehman lee &...
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Clean Development Mechanism
[email protected] [email protected]
June 23th
2008Lehman Lee & Xu’s Beijing office
Aldo Settimio Boni de Nobili Associate - China desk - Beijing
22
GLOBAL WARMING
Increase in the temperature of Earth’s surface and oceans
1990-2100 = 1.4° C – 5.8° C
EFFECTS
Sea level
Precipitations and extreme weather eventsAgriculture
Glaciers
Species extinctions
Established in 1998 by WMO and UNEP
TASK:evaluate the risk of climate change
ACTIVITY:reports about UNFCCC
implementation
IPCC
DOING BUSINESS IN CHINAClean Development Mechanism
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•UNCED Rio de Janeiro 1992•Signed in 1992 by 154 nations•Parties = 192 countries•1994 entered into force•COP
•report annual emissions and sinks•submit annual inventories
Provide financial resources to Non-annex 1
Non-annex 1
Annex 1Developed countries
Developing countries
NO RESTRICTIONS
•Aim: stabilizing GHG to prevent dangerous interference with the climate system•“Common but differentiated responsibilities”•Non-binding
Annex 2OECD
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•COP3 Kyoto 11 Dec 1993 •In force 16 Feb 2005•June 2008: 182 parties•36 Annex 1 + EU = reduce GHG (61.6%)
•Cyprus, Malta and Kazakhstan intend to participate•137 Non-annex 1 ratified: no obligation •US not ratified
1° committment period = 2008-12
reduce national emissions 5.2% below 1990 baseline
Industrial entities
other parties
brokers
carbon projects developers
exchanges
Governments
Buy creditsBuy credits
$60
billi
on in
2007
•1.3 emission allowances in 2nd commitment period for every ton of GHG exceeding•suspension from transfers of credits
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DOING BUSINESS IN CHINAClean Development Mechanism
Emissions cap
Actual emissions
Credits
GAINING CREDITS BY UNDER-POLLUTING
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CO2 emissions cap
Emissions allowed
Emissions exceeding
Carbon credits
OFFSET
JI CDM
ET
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Emissions Trading (ET)
Joint Implementation (JI)
Clean Development Mechanism (CDM)
• Article 12 Kyoto Protocol • Annex 1 – Non Annex 1
• Article 6 Kyoto Protocol • Annex 1 – Annex 1
• Article 17 Kyoto Protocol • Annex 1 – Annex 1
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DOING BUSINESS IN CHINAClean Development Mechanism
777
Competitive labour and facilities costs
50% of CERs
2-8 bln US$ per year
WORLD BANK SAYS:
WHY
POTENTIALITIES
CURRENT STATUS
1197 projects nationally approved (April 2008): +400% 2006210 projects internationally registered: + 500% 20061449 projects are being nationally approved
625 approved hydro projects: 50% of the total approved projects
INTENDED CERs BUYERS
PROJECT TYPES
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Host governments + Designated National Authorities (DNA)
Designated Operational Entities (DOE)
CDM Executive Board (EB)
• national approval
•validation (outset)•making publicly available the PDD•receiving public comments and stakeholders’ comments•verification and certification of CERs (operation)
•recommendations to the COP/MOP•approve new methodologies•DOEs accrediting and suspending•reviewing accreditation procedures•make publicly available CDM activities and procedures•CDM project registry•reviewing CR and VR•issuing CERs.
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DNA
NDRC
NDRC - MOST
National CDM Project Board
National Coordination Committee on Climate Change
(NCCCC)
MOFA
SEPA – CMA – MF - MA
NDRC
Chair
Co-Chairs
Vice Chair
Board
DOING BUSINESS IN CHINAClean Development Mechanism
•reviewing national CDM policies, rules and standard
•approving Board’s members
•examination and approval
•reporting to NCCCC on progress in CDM activities
•making reccomendations on the amendments of the CDM Measures
•accepting applications•final approval
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•China’s legal system, sustainable development strategies and policies•not introduce new obligations•promote the transfer of environmentally sound technology
PROJECTFunding for CDM projects from the developed countries shall be additional to their current official development assistance and their financial obligations under the Convention.
Additionality
(Marrakech Accords)
“Chinese funded or Chinese-holding enterprises within the territory of China are eligible to conduct CDM projects with foreign partners” (art. 11 CDM Measures)
•100% Chinese•51% Chinese (at least)
•FIEs?•Hong Kong / Macau?
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PROJECT OWNER
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CERs purchaser
Domestic company
Foreign investor
Broker
Government
Company
Private companyGovernmental bodyFinancial institutionNGO
1111
CERs
RMB/tCO2
100% ChineseFIE 51% Chinese (at least)
CDM Project
Project owner
RMB/tCO2
TAXES
2%(Priority areas)
65% (HFC – PFC)
30%(N2O)
Other chinese taxes
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Energy efficiency
Methane recovery
Agriculture
Industrial process changes
Cogeneration
Transports
Afforestation and reforestation
Renewable energy
priority
areas PRC
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Approval
Validation
Registration
Implementation and monitoring
Verification
Certification and issuance
National level
International level
DNA + N Board
DOE
EB
PIN
PDD
Project owner
Project owner
DOE
Project owner
EB
•LOA
•DOE ‘s designation•consultation•validation report
•stakeholders
•filing of VR and LOA•8 weeks (potential review)•EB files decision to PO•PO files decision to NDRC •object•modality: monitoring plan PDD•submitting reports to NDRC and DOE•DOE’s designation•Verification Report•Certification Report•CERs: 15 days after reports•send to participants’ accounts at request
NDRC
Documents:--application form--PDD--enterprise status--general
information--project financing
DOE’s designation
Project reviewValidation
Report to the EB
Expert review procedure (30 days)
LOA (20-30 days)
Decision from National CDM Board
DOING BUSINESS IN CHINAClean Development Mechanism
14Aldo Settimio Boni de Nobili Associate - China desk - Beijing
[email protected] [email protected]
THANK YOU FOR YOUR ATTENTION
June 23th
2008Lehman Lee & Xu’s Beijing office
Clean Development Mechanism