Download - Assessing Alternative Approaches
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INFORMAL WORKSHOP ON NON-PERMANENCE 1
ISSUES FOR CONSIDERATION IN DECISIONS ON ALTERNATIVE APPROACHES TO ADDRESSING NON-
PERMANENCE IN LULUCF ACTIVITIES
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INFORMAL WORKSHOP ON NON-PERMANENCE 2
Assessing Alternative Approaches
Combination of Approaches
Risk assessment - are measures
needed to guard against non-permanence?
Mechanisms for Replacement- Buffer- Commercial Insurance- Government Guarantee- Performance Bond
Provide exception to low risk activities
Do credits expire or are they assumed to be permanent?
Measures Needed
Temporary Credits
Permanent
Expire
Measures Not Needed
Liability:Who takes on the liability ?
(Buyer v. Seller)
Are full credits awarded, or are they issued incrementally?
Tonne Year Crediting
Full
Incremental
Regulatory, policy, and financial considerations needed to implement
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INFORMAL WORKSHOP ON NON-PERMANENCE 3
• Is the risk screening required?– Should screening be mandatory for assessing types of risks and their
potential, if yes, what aspects need to be covered in screening– Whether activities with low risk should be notified as categorical exceptions
and exempted from permanence requirements (e.g. buffer, insurance etc.), if yes, which categories of activities
– Whether activities with high risk should be excluded from eligible activities (e.g. activities of intentional reversal), if yes, which categories of activities
Issue – Need for Risk Screening
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INFORMAL WORKSHOP ON NON-PERMANENCE 4
Liability
Entity Liability ExamplesProducer/seller Producer is liable to replace reversed
creditsNew Zealand ETS
Buyer Liability moves to ER holder – similar to default risk for a bond holder
Expired temporary credits under CDM
Customized contracts Contracts reflecting liability are negotiated between producer and buyer
Practice in over the counter transactions
System Program manages liability on behalf of sellers and buyers, and mechanisms are adopted to pool risks and to replace credits subsequent to reversal events
Voluntary standards, e.g. VCS, ACRCalifornia AB32 for forest carbon credits
• Who is liable for reversals ?– Seller – Buyer– System
• a) During contract period, and • b) Subsequent to contract period
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INFORMAL WORKSHOP ON NON-PERMANENCE 5
• How long is the permanent period? – Policy and permanence requirements – Permanence period in different standards currently is:
40 & 100 years
Issue – Permanence Period
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INFORMAL WORKSHOP ON NON-PERMANENCE 6
• What types of reversal risks need to be covered?– Unintentional– Unintentional and intentional– Exclusion of certain intentional reversals
Issue – Coverage of Reversal Risks
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INFORMAL WORKSHOP ON NON-PERMANENCE 7
• Does the scale of activities influence the choice of approaches? – Project– Program/sub-national– National
Issue – Scale of Activities
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INFORMAL WORKSHOP ON NON-PERMANENCE 8
• How feasible are various approaches in real world setting?– Balance of credit accounts – Financial viability– Institutional feasibility– Policy choice and limitations
Issue - Feasibility of Approaches or their Combinations
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INFORMAL WORKSHOP ON NON-PERMANENCE 9
• Whether the approaches analyzed are adequate?• Is there a need for additional approaches?– If yes, which are these approaches
Issue – Adequacy of Approaches
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INFORMAL WORKSHOP ON NON-PERMANENCE 10
• Do various approaches ensure environmental integrity?
Issue – Environmental Integrity
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INFORMAL WORKSHOP ON NON-PERMANENCE 11
• Should implementing entities be allowed to choose from a menu of approaches?
Issue – Choice of Approaches
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INFORMAL WORKSHOP ON NON-PERMANENCE 12
• Is there a need for a consistent policy for addressing risk of non-permanence across multiple land use activities?
Issue – Consistent Policy Across Land Use Activities
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INFORMAL WORKSHOP ON NON-PERMANENCE 13
• How the discussion on non-permanence risk relates to broad LULUCF mitigation agenda?
Issue – Risk of Non-permanence in context of LULUCF agenda
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INFORMAL WORKSHOP ON NON-PERMANENCE 14
• Risk Screening• Liability• Permanence period• Coverage of risks• Scale of activities• Feasibility • Adequacy of approaches• Environmental Integrity• Choice among approaches• Consistency across land uses• Relation to broad LULUCF agenda
Summary of Issues
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INFORMAL WORKSHOP ON NON-PERMANENCE 15
RAMA CHANDRA REDDYEMAIL: [email protected]
FOR MORE INFORMATION ON THE BIOCARBON FUND, PLEASE CONTACT:
ELLYSAR BAROUDYEMAIL: [email protected]
WWW.CARBONFINANCE.ORG
Thank you