Urban Methodologies for the built environment Workshop 27-28 March 2014

1. Urban Carbon Mechanisms: A Handbook for Local Policy Makers Outline & Recommendations Heather ROGERS Project Manager, Climate Change & Energy Transition ENERGIES 2050 heather.rogers@energies2050.org • Stéphane Pouffary • Chief Executive Officer • & Founder Honorary President • ENERGIES 2050 • stephane.pouffary@energies2050.org Urban Methodologies for the built environment Workshop27-28 March 2014 UNFCCC Headquarters, Bonn, Germany

2. Overview • Intro to the Handbook in preparation • Challenges for GHG mitigation in urban context • Metrics for measuring GHGs in built environment • The importance of MRV • Carbon & climate finance mechanisms - overview of key mechanisms, relevance for built environment • Recommendations And then over to you – discussion questions; feedback

3. 1. Intro to the Handbook in preparation • “Urban Carbon Mechanisms: A Handbook for Local Policy Makers” • Being prepared by ENERGIES 2050 for UNEP • To guide local policy makers through carbon & climate finance mechanisms and their application in the built environment Objectives: • Raise awareness of the potential for carbon & climate finance to support GHG mitigation in the built environment • Help local authorities to use carbon mechanisms as part of wider climate strategies, to increase energy performance of their district and generate revenue

4. 1. Intro to the Handbook in preparation Two documents being prepared: an in-depth research paper and a simplified “Handbook for Local Policy Makers” Version circulated = abridged version of research paper, for discussion Focus on urban context throughout Structure: • Context of recent climate negotiations • Buildings & cities: commonalities, challenges, opportunities, metrics & methodologies for measuring emissions • The importance of MRV • Carbon & climate finance mechanisms – existing and in development • Looking ahead, recommendations Best practice case studies are presented Your feedback and best practice examples please!

5. 2. Challenges for urban GHG mitigation – buildings • Buildings are one of the most cost effective and expedient opportunities for GHG mitigation, often with co-benefits • But complex mix of buildings, stakeholders and technologies • Very local phenomenon (local needs, culture and policy) • Data availability is a key challenge • Specific obstacles include • Range and distribution of emissions potential among building types • “Landlord-tenant dilemma”, • “Lock-in effect” of choices made regarding building components • Transaction costs • Rebound effect • We need consistency, transparency and diffusion of GHG data – hence SBCI work on the CCM

6. 2. Challenges for urban GHG mitigation - cities • A key role to play in global climate action: generate 75% of CO2emissions • Plus an additional 2 billion urban inhabitants expected by 2030 • Decisions made now can have long-lasting impacts on GHG emissions • So cities hold significant emissions reduction potential… • …BUT need a prominent place in climate negotiations and access to finance “Cities are where the Climate Change battle will be won or lost over the next decades” Marco Scuriatti, Senior Operations Officer at the World Bank, 2011

7. 2. Challenges for urban GHG mitigation - cities • Every city is different – standardizing mitigation is therefore challenging • Complex mix of sectors, building types and stakeholders • It is crucial to engage city / municipal governments in national GHG mitigation efforts… • …but there are many barriers to this, as shown in V-NAMA project: • Lack of financial or political incentives • Poor integration with national government • Lack of capacity (both in terms of resources and skills) • Given current budget constraints, carbon finance could provide a means to supporting GHG mitigation efforts… • …but for this, we need the tools to measure set the emissions baseline

8. 3. Measuring GHGs in the built environment • GHG emissions profile can vary widely by city, but the main sources remain buildings, transport, waste, industry and electricity production • Each of these holds challenges & opportunities for GHG mitigation…but to maximize potential, local actors must be engaged • UNEP & Gwangju City 2012: Cities and carbon finance: a feasibility study on an Urban CDM

9. 3. Measuring GHGs in built environment • City GHG inventories are crucial first step towards accessing carbon & climate finance at this scale…but methodologies vary • Study by Ibrahim et al 2012 compared four leading inventory approaches found varying options but set of common recommendations • e.g. distinguish direct vs. upstream emissions; additional activity data improves transparency and understanding; data quality should be assessed and reported • Efforts under way to standardize the approach e.g. GHG Protocol for Community Scale GHG Emissions (GPC) • Carbon Cities Climate Registry (cCCR) – encourage regular reporting • At the building level… • Common Carbon Metric making good progress towards practical, comparable tool and protocol for establishing the baseline…informing upcoming International Standard

10. So how about a universal sustainable cities approach? • Many initiatives for measuring GHG emissions often tied to a specific city or objectives…need a broader, systematic, adaptable, comparable approach

11. 4. The importance of MRV No MRV, no entry! • What we cover in the research paper: • MRV basics (what is MRV, why is it important, what are the underlying principles) • MRV considerations for cities (apply to GHG inventory, available guidance, issues) • MRV considerations for buildings (approaches, challenges e.g. data availability) • General issues for MRV e.g. Types trade-off between accuracy vs complexity • We talk about MRV up-front before going into the carbon mechanisms to emphasis it s importance throughout the process…not an afterthought • Bottom line: MRV is a pre-requisite for participation in carbon finance – baseline and emissions reductions must be measured, reported and verified… • Getty Images

12. 5. Carbon & climate finance mechanisms • Real heart of the Handbook is then an overview of existing and developing carbon & climate finance mechanisms • We define and compare carbon finance and climate finance • And their potentially complementary role to support policy-based efforts and technology-based activities - realize greater mitigation overall • Then we outline the mechanisms with an emphasis on their relevance for the urban context, what they do to address challenges, and their limitations • …complimented by best practice examples (but we would like more!)

13. 5. Carbon & climate finance mechanisms CDM Outline of CDM, experience gained, tools and methods we can take from it, reforms needed for urban context Bundled small scale Starts to address some limitations of CDM single projects, reduces transaction costs, but very constrained (identical methodologies; identify all component projects at the start) Large scale Some urban examples, but not well adapted built environment, single technology, too cumbersome for individual buildings Small scale More methodologies being approved that suit built environment, still restrained by validation process, potential for more combinations

14. 5. Carbon & climate finance mechanisms CDM - Programme of Activities (PoA) Moves validation burden away from project implementers (Component Project Activities), increased flexibility (can add more as it grows), but still technology-by-technology focus City-wide PoA Momentum has gathered for multi-technology, multi-sector city scale mechanism. This could be rolled out within 1 city across several sectors – or in 1 sector across several cities NAMA Climate finance approach – can be policy based…very much learning by doing. Linked closely to development objectives…city scale means sub-national government involvement NMM Early days. Definition work in progress…market readiness activities underway.Urban policy makers to watch with interest…but will they be given the chance to influence its design?

15. 6. Recommendations • Keep growing support at the international level for urban carbon mechanisms • Governments to put in place strict targets - and the instruments to support these – in order to drive sub-national involvement • Continue capacity building to help sub-national governments access climate & carbon finance • Develop an urban CDM methodology and reporting framework… • …with harmonised metrics and a common language - to aid consistency and implementation of MRV • Continue to develop standardised baselines and default values • Develop innovative financial mechanisms adapted to the built environment • Create a satisfactory fees framework to reduce transaction costs • Work on an MRV framework for urban mitigation actions - focus on key issues: systems boundaries; baseline setting; and data requirements • Develop a cities approach that is scalable & adaptable to all cities, regardless of size and emissions profile

16. Urban Carbon Mechanisms: A Handbook for Local Policy Makers DISCUSSION QUESTIONS

17. Questions for discussion • What progress has been made at international climate talks and what role for cities? • CDM– what can we take from it and what reforms are needed for cities? • Programme of Activities- can it provide the flexibility needed for cities? • City-wide CDM - could PoAs provide a city scale solution? • NAMAs - an opportunity for bringing finance to concrete actions in cities? • New Market Mechanism (NMM) – will it provide new opportunities for the built environment? How to ensure it does? • What are the next steps?

18. 1. What progress has been made at international climate talks and what role for the built environment? Recap on recent climate negotiations: COP18 Doha 2012 • Official objective to limit global warming to 2°C reaffirmed • Second period of Kyoto Protocol (2013-2020) confirmed, but several key countries not participating • EU decided from 2012, credits will be imported only from projects in Least Developed Countries • Support shown for NAMAs, technology-transfer and to reinforce MRV schemes • Operationalization of Green Climate Fund not fully achieved, although some funds committed COP19 Warsaw 2013 • “Loss and damage” key topic of discussion resulting in “Warsaw International Mechanism for Loss and Damage” to be developed in coming years • Agreement on emission targets postponed to 2015 (for implementation by 2020) • Change in wording from “commitments” to “contributions” signified a substantial change • First Cities Day held as official side event to COP 19 - considered a successful milestone Bonn Climate Talks in March 2014…feedback? • Image: UN News Centre, 19 November 2013

19. 2. CDM - what can we take from it for cities….? • There are many tools and techniques that have been developed for CDM that can still be useful when developing new innovative mechanisms • E.g. Experience from ‘Additionality by benchmark’ can help with developing standardised approaches going forward • E.g. Guidelines such as baseline data vintage (linked to speed of technology development) Infras 2012

20. …and what reforms are needed for the urban context? • CDM requirements are not currently well suited to urban projects; • Missing methodologies! • Need for more approved methodology combinations  multi-technology • High transaction costs (fees, technical expertise) • Approach needs to be adapted to suit a large number of (often small) dispersed emissions sources and multiple technologies • Baseline setting and proving additionality - need for standardized approaches, given complex environmentand varying capacity • Desperate need to build capacity – city policy makers need training

21. 3. Programmeof Activities- can it provide the flexibility needed for buildings and cities? PoA in the pipeline by project type. UNEP & Gwangju City 2012

22. 3. Programmeof Activities- can it provide the flexibility needed for cities? • Clear scope for the PoA in urban context - relatively small scale projects with proven technology, that can be replicated across many sites – whether retrofitting or specification of new buildings Pros: • Reduced transactioncosts, investment risks and uncertainties for CPAs • Approval process streamlined for CPAs • Flexibility to scale up the programme, adding CPAs as it grows Cons: • Approval still not that speedy… • Coordinating or Managing Entity = crucial – may not be easy to find • High up-front costs for PoA set up

23. 4. City-wide CDM - could PoAs provide a city scale solution? • City-wide PoA are starting to develop – we would like your examples of work underway • Gives more scope to tailor a PoA to a city’s GHG profile • Can lead to rather complex baseline setting and MRV – this is where we need a systematic city-scale methodology….what is the best approach – estimation based on building type? Default values for emissions reduction activities? • Combining small scale methodologies – important step towards multi-technology, multi-sector programmes.

24. 5. NAMAs - an opportunity for bringing finance to concrete actions in cities and buildings? • Engagement of sub-national government is crucial for this • Which way forward for NAMA design? • unilateral (domestic resources and finance) • supported (requesting international support) • credited (credits can be traded on the global carbon market) • Must maximize opportunities for sustainable development co-benefits • Are the financial commitments forthcoming beyond the NAMA facility (UK / Germany)? Green Climate Fund? • Early stages, particularly for MRV - emphasis on ‘learning by doing’  Capacity building initiatives underway….but not reaching enough?

25. 6. NMM – will it provide new opportunities for the built environment? How to ensure that it does? • Aims to enhance the cost‐effectiveness of, and to promote, mitigation actions…both of which are particularly important for urban context – so far limited involvement in CDM • Signals a step away from the project-based conventional CDM to more standardisedapproaches, with admin burden shifted to DNAs…which should be good news for cities and buildings • Importance of consulting local policy makers in the design process…so that NMM can address the downfalls / challenges of CDM so far for urban context e.g. baseline setting and demonstrating additionality

26. 7. What are the next steps? • Transform knowledge into action… • …get more concrete projects in place – learning by doing, demonstrating success, testing the tools and methodologies available • Transform constraints into opportunities… • …we know what the barriers are; newer more flexible mechanisms give us the chance to turn these around, to experiment with a multi-technology, multi-sector, city-scale approach – so long as the support is there to build capacity and get things off the ground • Give cities a prominent place in the negotiation process…they are the future, focus on those with rapid population growth rate • MRV MRVMRVMRVMRV!

27. Urban Carbon Mechanisms: A Handbook for Local Policy Makers Thank you for your attention and contributions Heather Rogers Project Manager, Climate Change & Energy Transition ENERGIES 2050 heather.rogers@energies2050.org • Stéphane Pouffary • Chief Executive Officer • & Founder Honorary President • ENERGIES 2050 • stephane.pouffary@energies2050.org