opportunities of new generation of crediting for cities 2... · opportunities of new generation of...

OPPORTUNITIES OF NEW GENERATION OF CREDITING FOR CITIES

ALEXANDRINA PLATONOVA-OQUAB

Session 2 - Crediting to support subnational actions Implications of the Paris Agreement for a New

Generation of International Market Mechanisms Paris, France

May 30 - July 1, 2016

To explore opportunities and challenges of scaled-up crediting for cities

Today’smainfocus

•  Urbanmi2ga2onatscale•  Roleofanewgenera2onofcredi2ng•  Methodologicalrequirements&

implementa2onmodels•  Mainfindings&wayforward

Topicstobecoveredtoday

Urbanbuildings

•  Deepenergyefficiencystandardsfornewstock

•  Retrofitofexis2ngbuildings Li

gh2n

g&App

liances

•  Aggressiveenergyperformancestandards

Transport&

land

use

•  ModeshiG

•  Transitefficiencyforresidents

•  Ci2es’mi2ga2onac2onsandleadershipisincreasinglyrecognizedbytheinterna2onalcommunity

•  About50%ofac2oninINDCsareatlocal&subna2onallevel

•  Mainmi2ga2onpoten2alwithinpowerofmayorsby2030:

Ac2ngnowtotriggermi2ga2onpoten2alinci2es

Diversityofci2es

•  Ci2escarbonfootprintisdefinedbothbytheeconomy-wideandlocalemissiondrivers(e.g.,urbanland-use,infrastructureandgrowthpaVern)

•  MandateandcapacitytomanageGHGemissionsvariesgreatlyforsophis2catedmegaci2esandsmall/mediumsizeci2es

Howtoachieveurbanmi2ga2onatscale?

Scope:

Drivenbyci2esmandate&ins2tu2onalcapacity

Cityac2ngaspolicymaker,regulatorandserviceprovider

Cityac2ngasimplemen2ngagentofana2onalpolicy

Scale:Mul2plewaystoachievescale&transforma2on

Replica2onofdiscretemeasuresat(sub-)sectorallevel

Integratedmi2ga2onac2onsinseveral(sub-)sectors

Focusontransforma2onalimpactsinci2es

•  Facilitateci2es’contribu2ontona2onalmi2ga2onac2on•  Mobilizemi2ga2onpoten2alinci2esandreducelock-ineffect

•  Triggertransforma2onalimpactatlocallevel

•  Contributetomi2gatena2onalabatementcostsinalongerterm

•  Servebroaderpolicyobjec2vesandbringmul2plesbenefits•  Focusonresult-orientedpoliciesandac2ons

•  Improvemonitoring,performancetrackingandenforcement

•  Createreadinesstoaccessothertypesofclimatefinance

•  Offeropportunitytodesignandpilotfuturemechanisms•  Buildonexperiencelearnedfromimplementa2on

•  Overcomelimita2onsofcurrentapproaches

•  Pavewayforusingmorecomprehensivemarket-basedinstruments

Howcanscaled-upcredi2ngsupportci2esachievetheirfullmi2ga2onpoten2al?

Leveragingci2es’climateac2onthroughblendedfinance

•  Sustainablemi2ga2onac2onsinci2esrequirestheuseofcomplementarypoliciesandfinancingsources

•  Planning,design&MRVarekeyforeffec2veuseofcarbonfinance

Planninguncertainty

Monitoringfailure

Regulatoryrisks

Extendeddeliveryperiod

Aggregateperformancefailure

Investmentrisk(upfrontCAPEX)

Financialbarrier(accesstofinancing)

Vertical/horizontalcoordination

Institutionalcapacity

Singlemeasure Replicationofsinglemeasures

Keychallengesofmovingbeyondproject-by-project

Howtofillthemethodologygaps&ensureintegrity?•  Comparable&transparentquan2fica2on,includingclimateac2on

planningatthesectoral/citylevel:•  Helpsintegra2ngurbanmi2ga2onintothena2onaleffort

•  Op2mizeleverageofcarbonfinanceatthelocallevel(e.g.,CURBmodel)

•  Facilitateuseofmodellingforpolicyimpactsassessment

•  Aggregateperformanceindicatorswithdifferentmetrics:•  Intensitytargets/performancebenchmarkshelptoshowambi2on&own

contribu2on

•  Capturesystemicimpactsofcomplementarypoliciestofacilitatesustainableimplementa2on

•  Compa2bleGHGinventories&registries:•  Facilitateintegra2onintona2onalpoliciesandhelpavoiddoublecoun2ng

•  GPC-apromisingtoolensuringtransversaltransparency

•  Jurisdic2onalregistriesfeedingintona2onalsystems

Implementa2onmodels:accommoda2ngdiversity

Decentralized

Na2onalpolicymakersfocuson

demandcrea2on&overallguidance

Ci2esleadonprogramdesign&priori2za2onof

ac2ons

Centralized

Na2onalpolicymakersleadon

programdesign&incen2vestructure

Ci2esbenefitfromconsolidatedinterna2onal&domes2cfunds

Policy-driven

Alloca2onofrolesdependsonpolicytargets&design

Ci2esgetsupportforenhanced

implementa2on&enforcement

Designop2onsundertheAr2cle6:completeness,levelofeffort&replicability

VoluntaryCoopera.veApproaches Art.6.4.Mechanism

Useofinterna2onalsystems

Mi2ga2onprograms

Tradeablecompliancegradeassets

Replicability

Na2onalrules&ins2tu2ons

Fullfledgemechanisms

Bilateraltransac2ons

Flexibility

•  SignificantGHGmi2ga2oninci2escanbeachievedthroughinterven2onsrela2velywellcoveredbycarbonfinanceapproaches

•  Scaled-uptransforma2onalurbanmi2ga2onismosteffec2vewhensupportedbycomplementarypolicyinstruments

•  Relevantblendedfinancialpackagesarerequiredtosupporttheen2re“policy”cycletoensurebestleverageofcarbonfinance

•  Scaled-upcredi2ngshouldbeVeraddresspolicy-drivenmi2ga2onac2ons

•  Methodologicalneedsarequitewellunderstood,butcri2calgapsremain•  Tointegrateurbanac2onintona2onalclimatepolicyeffort

•  Tomovebeyondproject-by-projecttowardjurisdic2onalcredi2ng

•  Diversimplementa2onmodelshavebeenusedtofitspecificcircumstancesofci2esandurbansectors

•  Pilo2ngiskeytotestnewinnova2veapproaches

Mainfindings&wayforward

Thank you!

Alexandrina Platonova-Oquab

Climate and Carbon Finance Unit [email protected]

www.worldbank.org/climatechange

Ensuringenvironmentalintegrity&transparencySuggestedapproaches

Advantages Gaps

Comparable&transparentquan2fica2on

•  Climateac2onplanningfacilitatesdistribu2onofeffortstoachievena2onaltargets

•  Promoteuseofna2onalassump2ons(e.g.,BAU)

•  Useofmodellingforpolicyimpactsassessment

•  Dynamicurbansystemswithtransforma2onalchanges

•  Limitedexperienceofintegratedassessment

•  Mul2plever2cal&horizontalpoliciesimpacts

•  Longtermimpactspoorlyunderstood

Aggregateperformanceindicators

•  Intensitytargetsorperformancebenchmarks

•  Capturesystemicimpactsofcomplementarypolicies

•  Useofdifferentperformancemetrics

•  Noavailablebenchmarkstoshowambi2onforpolicies&addressowncontribu2on

•  LimitedcapacitytoaVributeimpacts

Compa2bleinventories&registries

•  Facilitateintegra2onintona2onalpolicies

•  Reducedoublecoun2ngissue

•  GPCasapromisingtool

•  Jurisdic2onalregistriesfeedingintona2onalsystems

•  Complexboundaries

u  National urban policy makers playing a leading role in program design u  Consolidated flow of international & domestic dedicated funds targeting

PPPs and private developers in cities u  Aggregate performance indicators at the community level u  Flexible choice of compliance options u  Savings in costs of program management, MRV, quality control

Centralizedimplementa2onmodel:mainfeatures

Carbonfinance

MinistryofUrbanDevelopment&Transport

PolicyMRVNationalclimate

fund

Localbanks&Developmentinstitutions

PPPs&Privatedevelopers

Exantequantification

Eligibilityrequirements

Performanceindicators

Basedon

MexicoUrban

NAM

A

Climatefinance

Policyobjectives

Exantequantification

u  National policy makers focusing on creation of demand and providing overall guidance

u  Cities taking the lead on program design and prioritization of actions u  Aggregate performance indicators at the level of city climate action plan u  Increased requirements for cities (e.g., GHG inventory, MAC curves,

climate action plan)

Decentralizedapproach:mainfeatures

Basedon

Tha

iland

LCD

Pprog

ram

Otherbuyers

UrbanFund

UrbanmitigationProgram

MRV

Localbanks&Developmentinstitutions

Municipalities&Communities

Eligibilityrequirements

Domesticvoluntarymarket

Programobjectives

UrbanmitigationProgram

PerformanceindicatorsProgrammanagement

Guidance&coordination

Policy-drivenapproach:thecoreofinnova2on

Rational for crediting •  Improved effectiveness through better compliance & enforcement

•  Improved ambition/stringency of regulation •  Accelerate deployment

Incentive scheme •  Support developers’ costs of designing compliant buildings •  Enhance the incentive structure of a policy •  Provide maximize leverage with a focus on critical

enabling/operational barriers •  Support policy maker’ cost of monitoring of impacts (MRV)

Quantification & MRV •  Aggregate evaluation of impacts based on modelling

Performance indicators •  Aggregate energy/GHG performance per major category of buildings

“Building codes”: supporting enforcement of ambitious policy

GHG standards for sustainable communities

Holistic actionsDiscrete actions

Territorial & transport policiesReduction of distance travel

Policy limiting personal vehicle use

Energy efficient appliances

Bus Rapid TransitCycling lines

Life-cycle optimization of waste management

Building codes

Renewable energy generation

Efficient street lighting

Waste recyclingLandfill

Covered by project-based crediting

Insights from Crediting programs & Emissions trading

Energy efficiency in buildings

Not addressed Not addressed

Project-basedmi2ga2on

Policy-drivenmi2ga2on

Carbonfinance:unevencoverage

High

High

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