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How will the post 2012 flexible mechanism system work ?

At present nobody knows what the post-2012 flexible mechanism system will be. Everybody is waiting for this COP to clarify things.

But the draft set up by the Bali Action Plan which is likely to be accepted, proposes different mechanism for advanced developing countries and Least developed countries (LDC).
As the Clean development mechanism (CDM) would remain for the LDC, with hopefully some improvement, the incentive for the most advanced Developing Country to mitigate their emissions through actions has been called Nationally Appropriate Mitigation Actions (NAMA).


How do NAMA work ?

Basically, countries have to draft  a list of actions to achieve  voluntary emission reduction targets which could be done within their territory in order to reduce their CO2 emissions.  Emissions reductions achieved beyond these “no lose” targets would then be eligible for sale through carbon trading mechanisms.

The principle is that NAMAs are carbon-based and have to be developed in a measurable, reportable and verifiable (MRV) manner. This also means that NAMA will need to be closely monitored and verified. They could be registered in a national registry, after having been approved by a technical panel.

3 types of NAMAs

This incentive  consists  of 3 types of actions :
1.    Unilateral actions : with no counterpart intervention
2.    Conditional/cooperative actions : with the financial et technical help from industrialized countries which would implicate an up-front payment
3.    Credit generating actions which would be the closest to the current CDM mechanism : it would mean that these projects would be rewarded by carbon credits

Which approach ?

Under this framework, actions could be set up in a sectoral approach, a concept that had been highlighted during the last COP of Poznan, which establishes global commitment to be distributed between the sector stakeholders .
Programmatic CDM based could be another option to operationalize the idea of credit for NAMAs. And in balancing the quality of credit from NAMA and project-based CDM, the carbon credit could have a different price.

Awarding carbon credit for NAMAs is a concrete idea to scale up the current CDM to systematically decarbonise economies in developing countries as it seems obvious that CDM won’t be sufficient to finance mitigation actions.

Not ready yet to be set up

Unfortunately, the targets are still very unclear and even if this proposed scheme was to be accepted, it will again requires a lot of time and efforts to understand and set up some actions and projects that will be part of this framework. Indeed, NAMA will require to set up a structure in order to define precise actions, collect data to assess the baselines, ensure additionality, tackle procedural issues, build up capacity building. The competitiveness is also an important issue as a mitigation action focused on one sector of the economy could increase the costs of the product, and therefore be less competitive compared to the neighborhood countries or the others producers of the region. This will probably slow down enthusiasm of some countries to make any efforts on their high emission generation sectors.

Are NAMAs the first step to the CDM exclusion? Most likely, as it is clearly one of the EU and USA objective. But least developing countries are not ready to give up the CDM yet as it is still a way for them to reach financing and technology transfer. However a reform is necessary so that LDC have a broader access CDM projects.

Manon Delachenal for GERES