Biofuels Initiative
Engaging the private sector in CDM
EIT capacity building
CDM in rubber study
OPEC study
CDM in Least Developed Countries
Plurilateral GHG trading
CDM in Least Developed Countries
Project title: Getting started with Clean Development Mechanism
(CDM) in Least Developed Countries (LDCs)
Project duration: Two (2) years
Participating Least Developed Countries: Tanzania, Uganda, Mozambique, Zambia,
Malawi
Implementing agencies: UNCTAD/Earth Council Institute Geneva (ECIG) Carbon Market
Programme
Cooperating agencies: Environmental Protection and Management Services (EPMS,
Tanzania), Sustainable Development Promotion Centre (SDPC, Uganda)
Project development cost: US$ 50,000
Overview
This project is a component of the UNCTAD/Earth Council Institute Geneva (ECIG) Carbon Market Programme and is consistent with its overall thrust to promote CDM investment by supporting the establishment of operational public-private entities in developing countries that facilitate the transaction of CDM projects. This project is distinct in that it is specifically designed to support the efforts of LDCs to develop their capacity to engage in CDM projects and participate in the emerging global GHG market taking into account the unique circumstances, challenges and opportunities of LDCs. As part of the overall Carbon Market Programme, this project benefits from knowledge, network, resources and services developed in other projects of the programme as well as UNCTAD's on-going work on trade and investment promotion particularly in the LDCs. This project was conceived and developed by the participating LDCs with support from UNCTAD/ECIG. It builds on international mandates agreed at the COP of the UNFCCC and the LDC III Conference. It responds to the call for a prompt start of CDM and the equitable distribution of CDM amongst developing countries, in particular the LDCs. The project takes into account various bilateral and multilateral efforts to support LDCs to promote sustainable development, and avoids duplication. The project will be implemented in a manner that will maximize ownership and seek synergy with existing efforts, as part of a broader strategy to build capacity in LDCs. In particular, the project will be implemented in concert with the designated national authorities for CDM and existing institutions in LDCs responsible for investment promotion. In addition, in order to ensure that resources flow to institutions in LDCs, the project overhead will be kept low at 6.5% of total expenditures.
Project context
This project is proposed in the context of international mandates derived from the COP 7 Marrakech Accords and the LDC III Conference. These include the following:
Background
Poverty is recognized as the single most serious problem that must be vigorously fought in developing countries and in particular the least developed countries. In their efforts to fight poverty the LDCs have developed comprehensive plans to eradicate poverty. The wide range of plans to combat poverty includes, inter alia, the following:
These measures are aimed at creating a conducive environment to attract foreign investment. However, some of these measures such as improving basic infrastructure are long-term and therefore will not have an immediate impact on attracting foreign direct investment. The effectiveness of these plans is negatively affected by adverse effects of climate change, particularly in those LDCs that are dependent on the exploitation of natural resources and agriculture.
The United Nations Framework Convention on Climate Change (UNFCCC) has been signed and ratified by 46 LDCs. The LDCs have actively participated and continue to actively participate in the climate change negotiations. The LDCs have committed themselves to this process for two main reasons:
The Convention explicitly recognizes the situation of LDCs and under Article 4.9 urges developed countries to pay special consideration on the needs of the LDCs, particularly as their actions pertain to funding and technology transfer. Under the Kyoto Protocol, CDM projects implemented in LDCs are exempt from the adaptation levy. In addition, small scale CDM projects are to be facilitated through simplified procedures to be adopted by the CDM Executive Board. These are efforts to operationalize the equity consideration under the CDM. However, these provisions are not adequate to attract CDM investors into these countries because of their low technical and institutional capacity.
LDCs must be proactive and innovative in attracting CDM investments. An important consideration is in attracting CDM in LDCs is improving the investment climate and environment. One way to do this is to further reduce the transaction costs of CDM in LDCs in order to increase the additional financial incentive that CDM may bring to eligible investment projects. An operational public-private institutional framework conducive for implementing CDM projects can implement the steps to realize this. This project aims at getting this process started in LDCs through a learning by doing approach.
A successful early start of CDM in LDCs is essential in order to capitalize on the existing political goodwill and to show that CDM in LDCs is a viable and attractive option. Time is therefore an important determining factor. It is therefore important to use all available channels to get CDM working in LDCs as quickly as possible.
Project perspective
CDM projects in LDCs are both a challenge and an opportunity. It is a challenge because of the very definition of LDCs and an opportunity because of the prospects for advancing sustainable development if investments are planned properly. The key challenge is to identify GHG offset projects that advance local and regional environmental and development objectives in sectors such as energy, industry and transport that build the infrastructure in LDCs.
CDM is market driven. LDCs will therefore need to take steps to attract the private sector. These actions may include:
However before these steps and actions can be taken, it is first necessary to raise awareness and develop the capacity of potential stakeholders in the LDCs themselves. For obvious reasons, the awareness of the public and private sectors in LDCs of the opportunities afforded by CDM is relatively lower than in other countries. They need to be engaged in a manner that is proactive and demonstrative of the opportunities of CDM. It is in this vein that the proposed project aims at getting started with CDM in LDCs through a learning by doing approach. This project will aim to lead LDCs to take the steps needed to make CDM investments an opportunity to promote sustainable development. It cannot ensure that all the necessary steps and actions will be undertaken by LDCs but it will get them started.
Objectives
In getting LDCs started with CDM, the project will be guided in a flexible manner by the following objectives:
Actors and activities
Project activities will be carried out at the local, national, and international levels. National teams will implement national activities. Regional centers and international institutions will implement international activities. Ad hoc national teams will be brought together by the project in consultation and with the agreement and commitment of relevant national authorities until such time that a National CDM Agency is established. National teams will be derived from: Climate change focal institution/s, including the designated national authority for the CDM (where they exist), UNFCCC focal point, GEF focal point, institutions responsible for the national GHG inventory and national communication, and others as appropriate Private sector entities and/or industry associations and NGOs Institutions responsible for energy and transport sector Academic and research institutions Regional support to national teams and the resulting national CDM agencies will be provided by established centers and service NGOs in LDCs. Those identified include Environmental Protection and Management Services (EPMS) in Tanzania, and Sustainable Development Promotion Centre (SDPC) in Uganda. These regional centers will provide the first level of support and seek regional synergies where appropriate. The UNCTAD/Earth Council Carbon Market Programme will fill in the gaps and provide the interface for bringing international knowledge and networking to the project. Specific support is described in later sections.
National level activities
At the national level, activities will be carried out in 2 stages reflecting the institution building nature of the project. The first stage will preparatory to the establishment of a National CDM Agency and will include steps to designate the CDM National Authority. It will be carried out by the National CDM Team mobilized by the project. The second stage activities will be carried out by the National CDM Agency and will be more permanent in character.
Stage 1 activities implemented by the ad hoc national CDM team will focus on mobilizing for a National CDM Agency and may include:
Stage 2 activities implemented by the National CDM Agency will focus on learning by doing CDM and may include:
Regional and international level activities
Regional and international level activities have three objectives (a) facilitate the sharing of knowledge and experience among the participating countries and among LDCs (b) document and broadcast progress and best practices, (c) network institutions and resources from the North and the South in support of National CDM Agencies. Mainly they will fill in the gaps and be on tap to expedite and facilitate the objectives of the National CDM Authorities.
There will be 3 events that will serve as landmarks for the project. These are:
In terms of support, regional and international activities may include the following:
UNCTAD/Earth Council activities
Mainly the Carbon Market Programme will provide project management, networking support, e-learning opportunities. The latter will be carried out through the UNCTAD/Earth Council Carbon Market eLearning Center. The Carbon Market Programme will also lead the organization and implementation of the regional workshops and the LDC Carbon Market Forum.
Summary view
Outputs
Tools
Next steps
Contact Information
Annexes (to be developed)
Climate change institutional map - who is doing what in each of the countries and how they can be networked/linked to the proposed project CDM projects - description and contact information for any CDM projects that may exist Policy information - compilation of existing or planned policy documents relevant to CDM in the country Donor interest - information on donor interests in country Work plan and budget Information on EPMS and SDPC- capacity, skills, personnel, projects, infrastructure (training and communication facilities) Information on UNCTAD/Earth Council Carbon Market Programme