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Suppressed Demand An NGO Perspective Anja Kollmuss, CDM Watch 24 March 2012 www.cdm-watch.org CDM Watch scrutinizes carbon markets and advocates for fair and effective climate protection. CDM Watch provides an independent perspective on the CDM and wider carbon market developments. We work to empower civil society around the world to have a strong voice in the CDM by exposing weak governance rules and practices and organising capacity building workshops and providing tools. Ideally.... addressing suppressed demand to support a CDM that is: • Clean: Leapfrogging to low-carbon development • Pro-poor: enabling projects that benefit the poorest • Fair: equitable among different project types Yet mitigation goals must not be undermined! Discussion on how to negotiate sup. demand and mitigation goals. Revision of the suppressed demand guidelines 9. This area will focus on the improvement of the clarity and level of detail contained in the suppressed demand guidelines. This improvement may include: (i) more guidance on the minimum service level, including on how data is selected and the periodicity of updates of the data will be provided; (ii) additional specifications pertaining to areas/sectors/project types for which the guidelines are applicable; (iii) further issues raised by further analysis by the secretariat and public consultation as described in A above. (Work Programme on Suppressed Demand) Minimum service level The minimum service level is a service level that is able to meet basic human needs (e.g. basic housing, basic energy services including lighting, cooking, drinking water supply). In some situations, this service level may not have been provided prior to the implementation of the CDM project activity. Which services should be defined as basic human needs in the context of CDM? Who decides? e.g. right to waste collection? SODIS method used for water purification Senanga, Zambia (Monika Tobler, copyright by SODIS/Eawag) Identification of the baseline service level: 1. The service level provided prior to the implementation of the project activity 2. The service level provided under the project activity 3. A minimum service level [suppressed demand scenario] Guidance and clarity needed on which baseline scenario is applicable: 3. should only be applied to sectors/project types that cover basic human needs. 3. should only be applied for sectors/project types that have clear sustainability benefits. Setting suppress demand minimum service level: The minimum service level should be realistic and reasonable but not overly conservative. What does this mean? How is it operationalised? How does this fly with environmental integrity? The minimum service level should be so chosen that over a long time horizon, it will always be reached (with rare exemptions, such as a protracted conflict or a regional/global economic collapse). Vague language needs to be clarified and specified. Setting the minimum service level The following should be taken into account: (a) Environmental integrity of the emissions reductions has to be safeguarded; how is this operationalized? (b) Financial viability of the CDM project cannot be the predominant determining criteria; ?! Cost as a proxy to set minimum service level? Comments from a project developer: “I think it would be important to look at what the costs are to bring these services to the poor […] This would result in a fairer approach because it would be tied to the true costs required to reach the level of service that there is a demand for.” Cost are not a suitable proxy because costs give no information about the level of actual or avoided emissions reductions (and you still need to decide on service levels). Project cost effectiveness cannot be used as a determining factor Some project types will not be suitable for the CDM because is it impossible to make them financially feasible without compromising the environmental integrity of the CDM Setting the minimum service level, cont The following should be taken into account: (c) Normative decisions have to be clearly referenced and explained; We like it. (d) Decisions regarding suppressed demand have to be re-evaluated and updated periodically based on recent data to ensure they are based on realistic assumptions. This needs further specific guidance : e.g. vintage requirements, what needs to be updated and when, etc. Setting minimum service levels Minimum service levels should be set universally and should not be country specific. Determining baseline emissions The conversion of a minimum service level to GHG emissions depends on the technology and fuel used to provide this service. Baseline emissions will be location specific (e.g. heating needs) and depend on the fuel type used. Determining baseline emissions Is technology dependent ! Relationship between level of service and GHG emissions is not linear. Emission intensity may change radically with level of consumption ( water purification) Need for explicit guidance on the translation of minimum service level to GHG emission equivalent. Most details have to be resolved within methodologies. Overarching guidelines can help but cannot give guidance on all issues that may come up with different project types Determining baseline emissions Example: Water Purification Baseline activity only to a limited extent energy based: • People boil only limited quantities of water, no matter how rich they are. • People use other non-energy based purification technologies such as chlorination. Chosen SD baseline activity cannot be an energy-intensive activity, when non- or low energy intensive solutions are viable!! Summary Financial viability cannot be a determining criteria for minimum service level or baseline emissions. Some project types will not be suitable for the CDM. Need for explicit guidance on the translation of minimum service level to GHG emission equivalent. E.g. chosen SD baseline activity cannot be an energy-intensive activity, when non- or low energy intensive solutions are viable. Overall guidance on SD can improve consistency but the specific approaches have to be developed for each project type specifically (sectors are very different: e.g. transportation, water purification, rural electrification) Robust sampling and monitoring rules have to go hand in hand with SD guidelines Way forwards: Honest, transparent process with input from all relevant stakeholders. Looking forward to a constructive dialogue! Thank you! Anja Kollmuss Carbon Market Expert CDM Watch Switzerland: +41 77 485 3667 Germany: +49 1578 7702218 [email protected] www.cdm-watch.org