Introduction to INDCs and the role of economic instruments

1. Introduction to INDCs and the role of economic instruments INDCs: role of economic mechanisms and the private sector Webinar, 7 October 2015 Low Emission Development Strategies, Latin America and the Caribbean

2. Overview • Intended nationally determined contributions (INDCs) • COP 21 and the Paris Agreement • State of play with INDCs • Submissions and where we stand • Parties’ views on economic mechanisms • Secretariat’s synthesis report

3. Four pillars of COP 21 • A new climate agreement to inspire nations towards progressive efforts and transformation of the global economy • A long-term vision, informed by science • Upward shift over time, supported by finance and cooperation • INDCs to define national goals and policies • First set of INDCs sets a floor of ambition – not a ceiling • NDCs to be regularly improved – measurable and transparent • Climate finance to shift and scale up transformative investments, based on a clear pathway to US$ 100 billion per year • Action agenda to showcase the groundswell of action by Parties, subnational authorities, private sector and civil society

4. Economic mechanisms sought under the Paris Agreement • Use of economic mechanisms towards their NDCs • International rules to govern accounting, avoid double counting and uphold environmental integrity • A centralized mechanism governed under the UNFCCC, accessible to all Parties and building on the CDM • Transitioning value from the CDM • Develop new mechanism for post-2020, based on Kyoto rules • Allow existing projects to migrate to the new mechanism • Allow (some) pre-2020 credits to help meet post-2020 NDCs?

5. Intended nationally determined contributions • National blueprints for climate action • International communication of governments’ actions • Demonstration of leadership in addressing climate change • COP guidance on INDCs • INDCs are a country prerogative, reflecting national circumstances, but a progression beyond current undertakings • All INDCs to address mitigation, optionally to address adaptation • Possible information to be included • Quantifiable info with clear reference point • Timeframes, coverage • Contribution to Convention objective (fair and ambitious) • Assumptions and methodological approaches

6. Overall INDC trends • New momentum, emissions well below reference scenario, but still 14 Gt from a 2°C pathway (preliminary estimate)! • Higher participation and ambition of countries • Wider coverage of sectors and emissions • Better clarity and completeness of accompanying info • More robust national structures for climate policy making • Improved national capabilities, but more support needed • 75% of Parties planning or considering economic mechanisms

7. INDC status (up to 6 October 2015) • 120 INDCs received • Covering 148 out of 196 parties (EU covers 28 Parties) • 87% of global emissions and 86% of world population • Submissions by all developed countries • Submissions by two thirds of developing countries • 48 INDCs not yet received • Some revised INDCs already being submitted • Timeframes • Most specify a 2030 horizon (>80% of INDCs) • Some 2020 or 2025 horizons to focus on early action • 2050 horizon sometimes given, especially for forestry

8. INDCs submitted and still awaited

9. Mitigation and adaptation • Developing country INDCs • Around half distinguish unconditional/conditional mitigation • Unconditional contributions typically 5-30% below BAU • Conditional contributions 2-3 times higher, dependent on support (finance, technology transfer, capacity building) • Most include an adaptation component • Developed country INDCs • Some mention of limited domestic abatement potential and/or mitigation targets conditional on access to international markets • Two INDCs include an adaptation component

10. Nature of mitigation contributions

11. Intention to use economic mechanisms • Further elaboration given • Intended domestic markets = 36 countries (7 more considering) • Interest in linking markets = 35 countries (5 more considering) • 15 countries as “buyers” – 37 countries as host country “sellers”

12. Economic mechanisms in INDCs • 120INDCs by 148 Parties • 28call for int’l market • 81consider using markets Many Parties see a role for markets to achieve part of their contribution or mobilize their mitigation potential • 37call for provisionsor rules • No double counting • Environmental integrity • Transparency • Verified outcomes • Real emission reductions • Robustness, etc • 34mention requirements for markets • 20name specific mechanisms (CDM)

13. What the INDCs say … “the flexibility offered by the existing (ie CDM) and future emission reduction mechanisms under the UNFCCC will be used where possible to achieve Barbados’ contribution domestically or jointly with regional/international partners” Barbados “Belize is willing to explore the potential of market mechanisms, including the CDM and other mechanisms under the UNFCCC process, that demonstrate environmental integrity, result in real, permanent, additional, verified mitigation outcomes, prevent double counting and are easily accessible” Belize

14. What the INDCs say … “… supports the use of market-based mechanisms to implement and achieve the conditional portion of the contributions mentioned in this document” Cape Verde “Costa Rica reserves the right to use the Domestic Carbon Market as an instrument to accomplish its mitigation goals, as a complement to national and sectorial policies for emissions reduction” Costa Rica

15. What the INDCs say … “Haiti calls for the fast implementation of such a market mechanism in order to mobilize the mitigation potential, even before 2020” Haiti