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The CDM: a review of its development and status of the carbon markets Dr. Oscar Coto

The CDM: a review of its development and status of the carbon markets Dr. Oscar Coto II National CDM Workshop Belize August 2011. Topics. Responses to climate change and the CDM Current trends in the CDM Status of the carbon markets and expectations. Increase on key parameters.

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The CDM: a review of its development and status of the carbon markets Dr. Oscar Coto

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  1. The CDM: a review of its development and status of the carbon markets Dr. Oscar Coto II National CDM Workshop Belize August 2011

  2. Topics • Responses to climate change and the CDM • Current trends in the CDM • Status of the carbon markets and expectations

  3. Increase on key parameters Source: CC Sinthesys Report IPCC (2007)

  4. Relevant subject

  5. Responses based on international and local levels, efficient and effective, with equity both in Mitigation as well as Adaptation

  6. Responding to Climate Change • Long and complex international negotiations • UNFCCC in 1992 • The Kyoto Protocol in 1997 • On-going negotiations and dilemmas

  7. Looking back in time … mitigation responses

  8. Carbon Financing

  9. The Kyoto Protocol

  10. High historical relationship between carbon markets and political decisions

  11. Carbon Markets

  12. Carbon markets: how do they work?

  13. EU ETS Allowances 118.5 Carbon Markets Allowances +1000% Assigned Amount Units RGGI Projects JI 2.0 2.2 .35 -33% +626% CDM SecondaryCDM 2.7 17.5 +18% -59% Chicago Climate Exchange .05 Voluntary New South Wales Certificates .12 .34 (US$ billions)

  14. General historic trends • 2010 stalls for the first time • Domination of european systems

  15. The Clean Development Mechanism (CDM)

  16. ¿Then, What is it? Global effort to resolve an issue of public interest through application of a market based mechanism Supply of CERs located in the developing world can be bought by developed countries for their assumed compliance Based on principles of cost effectiveness for the develop world and contribution to sustainable development in the developing world Aiming at contributing to the objectives of the UNFCCC (stabilization of GHG concentrations Several types of implications

  17. Number of projects into the CDM stream / per month (2004-2009)

  18. Recent trends

  19. Current situation of the CDM(August 4th, 2011)

  20. Who´s selling CDM CERs?

  21. CDM sectors

  22. CDM trends • Decreases over the last 2 years (lower demand, regulatory uncertainty, competition) • Still important activity in project formulation

  23. CER price continues to be indexed to the European signals

  24. CDM CER prices Source CDM Highlights, GIZ (July 2011)

  25. The future of the carbon markets

  26. At the project level …

  27. Carbon revenue is an additional source of earnings

  28. Relationship between investment and net present value of carbon contract for different types of projects (World Bank experience)

  29. Carbon revenues and project returns

  30. What is going on with the CDM? • Regulatory decisions out of COP 16 in Cancun • Expectations from market players

  31. Decisions related to CDM • Regional distribution • Integrity of the CDM and its requirements • Objectivity, efficiency of the CDM and its requirements • Enhance transparency of the CDM • Out reach • Simplification and standardization • Inclusion of CCS in CDM (Decision 7/CMP.6)

  32. Expectations from market players

  33. Plans for CDM Involvement in 2011

  34. Interest in investing in LDCs, SIDs, PoAs

  35. Concluding Remarks • Continued interest but challenging issues • Attention to regulatory developments • Act now !! if you have a sound project

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