Difficulties in the application of multiple methodologies & City Wide PoAs

1. Difficulties in the application of multiple methodologies & City Wide PoAs PoA Workshop 8thMay 2011

2. Content • A city snapshot of project categories and methodologies • Stock taking: Which methodologies get currently combined in small scale and PoAs? • Pros and cons of expanded methodology combinations • Reality check on PoAs and cities as well as some conclusions

3. Transport in Cities, Indonesia, Source: KfW Bildarchiv, photothek.net Community Participation Unit Project, India, Source: KfW Bildarchiv, J.E. Röttgers SWH in South Africa Source: T. Covary Electricity Network,Vietnam, KfW Bildarchiv,photothek.net Wild waste dump, Vietnam, KfWBildarchiv, photothek.net CDM Opportunities in Cities TRANSPORT Major GHG Emission Sources in Cities WASTE and WASTE WATER ELECTRICITY NEEDS (IN BUILDINGS)

4. Transport in Cities, Indonesia, Source: KfW Bildarchiv, photothek.net Community Participation Unit Project, India, Source: KfW Bildarchiv, J.E. Röttgers SWH in South Africa Source: T. Covary Electricity Network,Vietnam, KfW Bildarchiv,photothek.net Wild waste dump, Vietnam, KfWBildarchiv, photothek.net CDM Opportunities in Cities TRANSPORT Methodologies AMS III.C / III.UAMS III AK etc. COMBINATION OF WIDE ARRAY of Methodologies WASTE and WASTE WATER Methodologies AMS I.D / I.A / I.FAMS II.C / II.D / II.E / II.JAMS III.AE etc. Methodologies AMS III.E / III.F / III.G / III.H / III.AJ etc. ELECTRICITY NEEDS (IN BUILDINGS)

5. Which combinations are possible in POAs? In conclusion, almost anything is possible – in theory. Sources: http://cdm.unfccc.int/Reference/Guidclarif/ssc/methSSC_guid06.pdf and http://cdm.unfccc.int/Reference/Procedures/PoA_proc03.pdf

6. Methodology combinations in regular SSC* * Almost no combinations in large scale methodologies anymore due to „Tool to calculate the emission factor for an electricity system” (previously covered via ACM0002 / I.D) Source: Risoe, March 2011, Registered SSC projects

7. Methodology combinations in PoAs Source: Risoe, March 2011, Registered SSC projects

8. Conclusions on the regulatory side • In regular SSC, few combinations besides Type III & Type I. • In PoAs some combinations based on „newer“ methodologies (biogas: III.R / III.AO; buildings: III.AE) – no or small track record (on methodology / impact of combination) • Possibly some further options for PoAs by using fewer combinations of registered Type II projects, and other previous „one time“ combinations. To be maintained on the radar: • Does the demonstration and DOE acceptance of methodology combinations based on registered projects lead to increased Requests for Review? • Time demand for MP and SSC-WG approval of new combinations?

9. The broader view: Pros & Cons of expanded combinations Does it make sense to go one step further and combine not directly related activities / methodologies in XL-Cross-Sectoral-POAs, e.g. transport and waste? Pros: • Aggregate higher emission reductions • Lower transaction costs • Synergies in administration & management Cons: • Higher complexity of XL-Cross-Sectoral-POAs increases risks for delays or entering dead-ends (in any step of the formal CDM cycle) • Risk to exceed the capacities of the CME • Risk of delayed or no approval of methodology combinations Conclusion: • Integrative character is a key advantage of expanded combinations • However, scope of the POAs to be designed case by case • Controlling and managing risks will be decisive for overall success

10. POA PoA Coordinator and Business Modell Private or public Legal arrangements / Contracting -> Usually to be developed for PoA Incentive System Reach out to target group financial, partly non-financial Applicable technology and methodology Ideally simple & homogenous (sources) CDM methodologies Financing Carbon finance enters late; Seed Funding of Incentive / Investments needed City Programme Management or Initiation by specific units / departments. Public agency – political & fixed setting Public-private partnerships? Incentive Systems can be designed using all regulative instruments (tax, sanctions, financials, marketing, expanding offers to citizens) Emissions / Applicable Methodologies Diversity of sources & sectors Mitigation e.g. based on low-carbon strategies CDM methodologies only partly adequate Financing Various options to raise financing budgetary constraints & complicated planning POA vs. City needs and reality LESS THAN 1% OF REGISTERED CDM PROJECT CREDITED TO CITIES – WIDER DEFINITION LEADS TO < 9% OF „URBAN PROJECTS“ (CDC 2011)

11. Role of the Business Model in City Wide Approaches • Experiences show that sound management of city wide programmes need strong ownership and governing bodies • Management multisectoral PoAs in Cities need Departments / Agencies that enjoy an overarching mandate to lead the PoA and are able to: • call for integrated action and for sector wide actions throughout the city and integrate all relevant sectors • support design of incentive programmes and design distribution of CER revenues • supervise monitoring activities • secure (up-front) financing for the incentive programme

12. Conclusions • Further experience of combinations in PoAs remains to be gathered. • Expanded combination creates opportunities & risks. • Not all emission sources in cities can be tackled by PoAs. In order to achieve the possible: • Concentration on the key emissions sources covered by existing methodologies (RE, EE, waste water, buildings, possibly transport) • Further approved combinations and/or new integrative methodologies needed. • Business Model of CME is sensitive as Cities are “political” entities • Finding the right institution / department within the city • Work in cooperation with (financial) institutions or other back-ups

13. Thank you for your attention! For further information:www.kfw.de/carbonfund