defining and measuring the development dividend meeting of the expert task force of the iisd...
TRANSCRIPT
Defining and Measuring the Development Dividend
Meeting of the Expert Task Force of the IISD Development Dividend Project
March 27-28, 2006 Vancouver
Aaron Cosbey, IISD
Outline of Presentation
• Overview of recent developments in the CDM – is there still cause for concern?
• Considerations in measuring the development dividend
• Proposed assessment tool
CDM: What Has Changed in the Last Year?
• Number of projects, CERs, methodologies
• Mix of project types
• Prices for CERs
• Growth in unilateral CDM
0
20
40
60
80
100
120
140
160
Growth of CDM Projects in UNEP-Risoe Pipeline
Apr-05 Mar-06 2005: 91 projects
(0 registered)
2006: 654 projects
(135 registered)
Growth = 720%
Projects in UNEP-Risoe PipelineApril 2005
27%
32%2%
3%
1%
24%
1%4%
0%2%0%0%2% 1%1%Biomass energy
Hydro
EE industry
Wind
Agriculture
Landfill gas
Fossil fuel switch
Biogas
Cement
HFCs
Fugitive
Solar
Geothermal
EE households
Other
Projects in UNEP-Risoe PipelineMarch 2006
23%
16%
13%12%
11%
8%
4%
4%
3%1%1%1%1%0%2%
Biomass energy
Hydro
EE industry
Wind
Agriculture
Landfill gas
Fossil fuel switch
Biogas
Cement
HFCs
Fugitive
Solar
Geothermal
EE households
Other
Shifting of Project Mix
in the Pipeline
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Growth of CERs to 2012 in UNEP-Risoe Pipeline
Apr-05 Mar-06
2005: 131,599 CERs
2006: 836,266 CERs
Growth = 635%
CERs to 2012 in UNEP-Risoe PipelineApril 2005
30%
44%
0%
11%
1%
6%
1%0%0%0%0%3%4%
0%
0%
HFCs
Landfill gas
N2O
Biomass energy
EE industry
Hydro
Wind
Agriculture
Fugitive
Cement
Fossil fuel switch
Biogas
Geothermal
Coal bed/mine methane
Other
CERs to 2012 in UNEP-Risoe PipelineMarch 2006
37%
13%11%
7%
7%
5%
5%
4%
4%3% 1%1%1%1%0%
HFCs
Landfill gas
N2O
Biomass energy
EE industry
Hydro
Wind
Agriculture
Fugitive
Cement
Fossil fuel switch
Biogas
Geothermal
Coal bed/mine methane
Other
Shifts in CER Distribution
in the Pipeline
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Small-Scale CERs by 2012 in the UNEP-Risoe Pipeline(Kt CO2e)
Apr-05
Mar-06 2005: 44 projects (48%)
15.5 MtCO2e (12%)
2006: 300 projects (46%)
65 MtCO2e (8%)
0
10,000
20,000
30,000
40,000
50,000
60,000
Unilateral CERs in the UNEP-Risoe Pipeline(kt CO2e)
Apr-05
Mar-06
2005: 35 projects (39%)
5,7124 mtCO2e (43%)
2006: 456 projects (70%)
311,569 mtCO2e (37%)
Unweighted Distribution of CERs in Pipeline(total to 2012, as of Mar 6 06)
0%
5%
10%
15%
20%
25%
30%
China
India
Brazil
South K
orea
Mexico
Nigeria
Chile
Argentina
Thailand
Vietnam
Indonesia
Ivory Coast
South A
frica
Peru
Malaysia
El S
alvador
Colom
bia
Guatam
ala
Ecuador
Nicaragua
Honduras
Bolivia
Papua N
ew G
uinea
Bangladesh
Morocco
Philippines
Costa R
ica
Uruguay
Mongolia
GDP-Weighted Distribution of CERs in Pipeline(total to 2012, as of Mar 6 06)
0%
5%
10%
15%
20%
25%
30%M
ongolia
Nicaragua
Papua N
ew G
uinea
Ivory Coast
Honduras
Nigeria
Moldova
Bolivia
India
Arm
enia
El S
alvador
Brazil
Chile
Vietnam
China
Argentina
Guatam
ala
Uruguay
South K
orea
Nepal
Ecuador
Costa R
ica
Peru
Mexico
Fiji
Tanzania
Thailand
Jamaica
Cam
bodia
Regional disparity of CERs:
Not as bad as it seems?
We should expect to see disparities, based on disparities in GDP and population (proxies
for project opportunities)
Unweighted Distribution of CERs in Pipeline(total to 2012, as of Mar 6 06)
0%
5%
10%
15%
20%
25%
30%
China
India
Brazil
South K
orea
Mexico
Nigeria
Chile
Argentina
Thailand
Vietnam
Indonesia
Ivory Coast
South A
frica
Peru
Malaysia
El S
alvador
Colom
bia
Guatam
ala
Ecuador
Nicaragua
Honduras
Bolivia
Papua N
ew G
uinea
Bangladesh
Morocco
Philippines
Costa R
ica
Uruguay
Mongolia
Population-Weighted Distribution of CERs in Pipeline(total to 2012, as of Mar 6 06)
0%
5%
10%
15%
20%
25%
30%S
outh Korea
Chile
Brazil
El S
alvador
Mongolia
Cyprus
Nicaragua
Argentina
Costa R
ica
Uruguay
Mexico
Honduras
Papua N
ew G
uinea
Ivory Coast
Arm
enia
Bolivia
Guatam
ala
Ecuador
Panam
a
Fiji
China
Moldova
Nigeria
Israel
India
Jamaica
Peru
Malaysia
Thailand
• May 2005: prices at EUR 5 – 9
• March 2006:– Category 4 transactions as high as EUR 28– Basic registered projects – up to EUR 20– Validated, some credit risk – EUR 11 – 12
CER Prices Much Higher
• Quantity: – 0.84 billion CERs in the pipeline. – Predicted demand for AAUs of 4-5 billion. – Post-2012 uncertainty means CER supply will taper off.
• Equity:– Not critically flawed – probably better to focus on overall quality
of SD benefits in CDM.
• Quality:– Half of all CERs in pipeline are HFC and N2O– Increase in unilateral CDM, possible programmatic CDM– High prices may allow more quality projects.– In the end we do not know.
Is the CDM Delivering the Development Dividend?
• Why do it? – CDM quality is the key to solving to the quantity
problem.– Our recommendations for change need the
foundation of a development orientation.– The only way to demonstrate that is by
measuring, assessing, projects (ongoing and proposed).
Assessing the Development Dividend
• How to do it? – First, need to establish what the tool will be used
for. Who might use it?• Buyers:
– Regulated market and voluntary markets– Government, IGOs and private sector
• Host countries (DNAs)• International policy community
Assessing the Development Dividend
• Qualitative threshold tests– DNAs in India, Brazil, China, others
• Discrimination by project type:– China, Columbia regulations– Premium payments by World Bank, CERUPT
• Multi-Criteria Analysis (MCA)– SSN Matrix/Gold Standard, CCB standards – Various researchers, analysts
Current Models for Assessment
Strengths and Weaknesses
• Qualitative threshold tests– Simple to specify– Amenable to country-specific circumstances– Too subjective– Unable to compare projects to one another– Useful for DNAs, not for others
Strengths and Weaknesses
• Project-based discrimination– Simple to administer– Able to rank projects, but not within project
types– Fails to capture differences between projects
of given project types– Useful for buyers, DNAs
Strengths and Weaknesses
• Multi-criteria analysis– Able to rank projects against one another– Can be modified to adapt to local priorities– Complex system: choosing criteria, weighting– Information demands are daunting– Useful to buyers, international policy
community
Proposed Assessment Tool• “Hybrid” MCA/project type system (with criteria,
indicators) applied to project methodologies.• Use elements of existing tools for their specific
strengths (e.g., CCB for LULUCF)• Four criteria: social, economic, environmental,
integrated• Base score assigned as per methodology, bonus
points assigned as per PDD
Proposed Assessment Tool
• Threshold requirement: balance among environmental, social, economic criteria
• Limited number of indicators, some qualitative
• Narrow range of scoring for each indicator (e.g., 1 – 5)
Weaknesses
• Insensitive to country-specific circumstances
• Accounting for project size may be difficult
• How to monitor “bonus undertakings”?
• Labour intensive to create: needs extensive stakeholder involvement, applies to large number of meths
What Level of Ambition?
• Wide range of possibilities for an assessment tool, with attendant range of necessary commitment of resources.
• What would the tool be used for, and by whom?
