Latest status of and beyond CDM

29 October 2013Kenta UsuiClimate and Energy Area, IGES

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CDM credits increasing…CDM credits increasing…

2Source: UNFCCC

… but the price is falling… but the price is falling

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sCER Price (EUR)

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25sCER Price …

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10Today’s Price: 1tCER=0.53 EUR=1230 MNT

0

5

3

0

2008 2009 2010 2011 2012Source: Point Carbon

Reason 1: General Economic DownturnReason 1: General Economic DownturnGDP Growth Rate (World Bank Development Indicators)

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15

AustraliaEuropean UnionJapan

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pMongoliaNew ZealandUnited States

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‐5

0

2007 2008 2009 2010 2011 2012

4‐10

Reason 2: Limited GHG reduction Commitments in the FutureGHG reduction commitments compared to 1990 level (100%)

CP 1 (2008‐2012) CP2 (2013‐2020)EU 92 80

GHG reduction commitments compared to 1990 level (100%)

EU 92 80Australia 108 99.5C d 94 N/ACanada 94 N/ANew Zealand 100 N/AJapan 94 N/ARussia 100 N/A

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USA N/A N/A

Reason 3: EU‐ETS only accepts LDC credits

• From 2013 on, EU‐ETS accepts only CERs from L D l d C i (LDC )Least Developed Countries (LDCs)– Applied to CDM projects registered from 2013– LDCs are given favorable conditions for CDM.– Mongolia is not an LDC –so not eligible

• For this reason, there was a “rush” at the end of 2012 for CDM registration.

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Is CDM dead?Is CDM dead?

• Unhealthy but still aliveUnhealthy, but still alive– A good project (reliable, contribution to sustainable development) can have higher pricesustainable development) can have higher price

– There may be potential buyers in new domestic ETSETS

• Non‐CDM schemes also offer opportunitiesJoint Crediting Mechanism (JCM)– Joint Crediting Mechanism (JCM)

– Voluntary Carbon Standard (VCS)

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BIGGER PICTURE..BIGGER PICTURE..

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9Source: World Bank (2013) Mapping carbon pricing initiatives 

Emission Trading Scheme beyond EU 

• China South Korea Australia and NewChina, South Korea, Australia and New Zealand are / will be operating domestic ETS

• Australia New Zealand and Switzerland• Australia, New Zealand and Switzerland accepting CDM credits (including post‐2012 credits)credits)

• Thailand and Indonesia are developing their d i ff hdomestic offset schemes – Thailand Voluntary Emission Trading Scheme (T‐VETS)VETS)

– Nusantara Carbon Scheme (Indonesia) 10

Demand Prospects (2013‐2020)Demand Prospects (2013 2020)

11Source: World Bank 2012

New Market Mechanism (NMM)New Market Mechanism (NMM)

• Currently under negotiation at the UNCurrently under negotiation at the UN• Will most likely be “Sectoral trading and crediting mechanism”crediting mechanism– Host country defines sectoral emission baselines, Th i i h h MRV– The sector emission goes through MRV

– Carbon credits generated

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Linking would expand carbon markets

UNFCCC (Under COP) Non‐UNFCCC

Mechanisms under Kyoto Protocol

Bilateral, domestic and voluntary

CDMBilateral/

Joint mechanism

Linkage?JI

IET Domestic ETS

V l

Mechanism under COP

New Market

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Voluntary offset scheme 

New Market Mechanism

Thank you.Thank you.Баярлалаа.

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