IN TIME FOR COMPLIANCE: GIS ROLE

1. Carbon Market Insights 2009 17-19 March 2009 Copenhagen, Denmark IN TIME FOR COMPLIANCE: GIS ROLE Pedro Huarte-Mendicoa Spanish Climate Change Office

2. AGENDA AGENDA: • SPAIN: COMPLIANCE SCENARIO & STRATEGY • INSTRUMENTS AND MEASURES FOR COMPLIANCE • VIEWS ON GIS • MAXIMIZING BENEFITS OF GIS • GIS AND JI • POTENTIAL RISKS ASSOCIATED TO GIS

3. Spain: National Circumstances Decentralized administrative system High population and economic growth Emissions per capita below the EU-27 Significant increase in energy demand Significant increase in transport demand High external energy dependency 1. BASIC COMPLIANCE SCENARIO & STRATEGY 2006 first year of decoupling of emissions and GDP growth

4. Additional measures KP credits EU-ETS Sinks 1. BASIC COMPLIANCE SCENARIO & STRATEGY Kyoto pathway

5. 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE Spanish Climate Change and Clean Energy Strategy, Horizon 2007-2012-2020 Plan of Urgent Measures (2007) • Total reduction of 270 Mt CO2 eq in the period 2008-2012. • 198 measures, 75 indicators • 11 action lines: Institutional cooperation; Flexible mechanisms; International cooperation; Emissions trading; Sinks; CCS; Sectors diffuse pollution; Adaptation; Information and Public awareness; R+D+I; Horizontal measures • Action Plan 2008-2012 on the Strategy on Energy Efficiency and Energy Savings

6. Sustainable mobility: Inter-urban transport Metropolitan areas Urban mobility Clean and efficient means of transport Sustainable construction: New buildings Existing buildings Non-residential sector Equipment Sustainable energy: Law on Energy Efficiency and Renewable Energy Review and updating of Energy Savings and Efficiency Plan and Renewable Energy Plan CCS Waste and manure management Forestry policy and sinks Innovation 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE Strategic lines to reduce GHG emissions:

7. Hydro Natural gas 1,6% Nuclear Electricity imports 21,7% 9,7% -0,3% Wind 1,6% Other wastes 0,3% Biomass 2,9% Biogas 0,2% Renewable Liquid bio-fuels 7,0% 0,3% Solar Thermal 0,1% Solar P.V. 0,03% Oil 48,0% MSW Coal 0,4% 13,7% Solar Thermoelectric Geothermal 0,001% 0,01% 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE Contribution of RE to primary energy consumption, 2007 Source: IDAE 2007 data: provisional

8. Wind power installed in the E.U. at 31/12/2007 (MW) 22.245 15.095 3.125 2.725 2.455 2.390 2.150 1.745 4.565 TOTAL UE-27 56.495 MW Fuente: EWEA e IDAE (para España) Datos Provisionales 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE

9. + 37 % 1990 emissions • Rd 1370/2006, NAP 2 (2008-2012) + 15% Kyoto Protocol objective + 2% LULUCF activities + 20% Flexible Mechanisms= 289Mt 55% GOVERNMENT PURCHASES 289Mt 45% PRIVATE SECTOR 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE

10. Financial instruments (CDM/JI): World Bank: Spanish Carbon Fund (I & II) BioCF (I & II) CDCF CF Assist (*TA) CAF: Latin-American Carbon Program EBRD – EIB: Multilateral Carbon Credit Facility (MCCF) Green Fund (AAU-GIS) ADB: Asia Pacific Carbon Fund IADB: SECCI (*TA) 2. INSTRUMENTS AND MEASURES FOR COMPLIANCE GOVERNMENT: 55% (159,15 MtCo2e) • Bilateral purchases (AAU-GIS): • First AAU-GIS with Hungary (2008) • Other AAU-GIS under development PRIVATE SECTOR: 45% (130,05 MtCo2e) • EU-ETS • CDM/JI: Spanish DNA 89 LoA issued (122,6 MtCo2e )

11. Development Article 17 of KP (IET) Promoting GIS as a complementary mechanism to JI Achieving reliable and well-diversified GIS portfolio Fostering technology transfer (GHG mitigation) No 1/1 Greening Ratio requirement but preference for hard greening, reliable structure and monitoring Priority sectors (mitigation): RE (Wind, Solar PV, Solar Thermal, Biomass, Biogas) Cogeneration / Fuel switch Municipal Solid Waste, biogas from sanitary landfills Water treatment Energy efficiency (residential, industrial) 3. VIEWS ON GIS Spanish Government Objectives through GIS:

12. 3. VIEWS ON GIS Elements of a good GIS (our opinion): • Pre-condition of GIS: eligibility criteria for IET • Solid preparation and submission of annual GIS Plan • Earmarking of revenues through special budget fund • Dominance of hard (quantifiable) over soft (non quantifiable) greening. • Flexible greening ratio, for different project type and crediting periods • Additionality (legal and financial) • Crediting period up to Dec 2015 • Funds disbursement (project start-up or milestone) before Dec 2012 • Mix of projects and programs (sectoral CDM, policy CDM) • M&V: simple and imaginative methodologies (sampling) • Thorough supervision (financial auditor and steering committee)

13. 3. VIEWS ON GIS JI (T2) GIS MAIN DIFFERENCES Kyoto rules Yes No Approach Project Project & Programs Experience of participants Increasing Limited Contractual practice Standardized Bilateral Market Broad Mainly governments Secondary market Yes Limited (Ukraine, Japan) Project financing No Yes Use of funds Flexible Agreed Technical assistance Limited Yes (% of funds) M&V Stricter More flexible but difficult Crediting period < 2013 Agreed Additionality Test (strict) Financial / Technology Energy efficiency Difficult Suited Transaction costs (small scale) High Low

14. 3. VIEWS ON GIS GIS: POTENTIAL RISKS POSSIBLE ACTIONS FOR RISK MITIGATION

15. THANK YOU / MUCHAS GRACIAS http:/www.mma.es/oecc phuarte@mma.es Spanish Climate Change Office Secretariat of State for Climate Change Ministry of the Environment, and Rural and Marine Affairs