NAMAs and the Building Sector

UNFCCC Workshop

Buildings under UNFCCC Flexible Mechanisms

Chia-Chin Cheng

UNEP-SBCIBeihang University

International Green Energy CenterBonn, GermanyMarch 24, 2011

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NAMAs context CDM and NAMAs working together– a two-track

developing country mitigation support mechanism Benefits of the new NAMAs mechanism

Three Papers/Reports from SBCI and Risoe:

1. The Kyoto Protocol, the CDM & The Buildings & Construction Industry- 2008

2. NAMAs for Dispersed Energy End-Use Sectors: Using the Building Sector as an Example- 2009 Perspective Series

3. CDM, NAMAs and the Building Sector: a Two-Track Financing Mechanism for Post-2012 – 2011 working paper

Outline

New Development under UNFCCC

Developing Countries will share mitigation responsibilities

Bali Action Plan Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner.

Copenhagen Accord started signing up for NAMA

Cancun Agreement confirmed setting up NAMA registry for support

Underlying causes for low EEB uptake Long-tail characteristics of the sector- small saving, big effort Fragmentation of sector / uncoordinated stakeholders Insufficient R&D and information for new EEB technologies Insufficient EEB tech and management expertise and tools High upfront and transaction costs for tech adoption in DC Lack financing mechanism and interests for EE investments Lack of awareness and general inertia restrict uptake

Source: Cheng, et al., 2008

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These barriers are essentially market failure

CDM as an market-based mechanism cannot correct market failure

key long-tail sectors – market failures are prominent

rural sectors and LCD – no sufficient market activities

Public policies are required to correct market and overcome barriers

To fundamentally transform the building sector in developing countries:

Developing countries requires public sector support to enforce public policies -- NAMAs

Developing countries requires private sector support for compliance of public policies -- CDM

To Overcome Generic Barriers in Building Sector

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Policy based financing mechanism (NAMAs)

• create enabling conditions for a systematic uptake for climate change mitigation activities from the private sector in developing countries

• provide necessary funding, technology and capacity assistance for policy implementation, particularly to difficult sectors and in least developed countries

Project/program based carbon financing

• The boost of enabling conditions foster large-scale private sector investment and make use of CDM as an additional mechanism

• provide necessary means and financial resources to help regulated entities comply with government policies

• increase speed, quality and depth of policy implementation

Possible Post-2012 Mechanisms -- Dual Track Financing

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All BAP elements need to be addressed in the new mechanism

• Technology transfer and development

• Capacity building

• Sustainable development

Avoid double counting with CDM

• Use non-carbon based MRV

- some effective policy measures do not necessarily result in carbon emission reduction

- many quantitative indicators available to measure success

Source of funding

• Initially public funding

• Later private sector funding

Important Issues to be Address before inserting NAMAs

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Mandatory building inventory and baseline performance Mandatory minimum performance based standards Mandatory/voluntary building rating and certification program Loan, subsidies, incentives and tax breaks Building auditing programs for compliance and certification Building survey and monitoring programs for MRV purposes Minimum performance standards for appliances and equipment Building professional certification and education programs Technology need assessment, demonstration and model house

programs Public sector building improvement and high performance building

deployment programs R&D programs for new building materials, technology, and practices Awareness raising and informational campaign programs

Need Based NAMAs Registry for the Building Sector

NAMAs to Create Enabling Environment for Project Based Mechanism

Time**

EnergyPerformanceKWh/m2

(by topology,climate zones)

BAU BASELINES*

NAMAs to Create Enabling Environment for Project Based Mechanism

Time**

EnergyPerformanceKWh/m2

(by topology,climate zones)

BAU BASELINES*

Mandatory Minimum Performance Standards

NAMA Support (non-carbon credit based financing)

Improved Future Baseline

NAMAs

NAMAs to Create Enabling Environment for Project Based Mechanism

Time**

EnergyPerformanceKWh/m2

(by topology,climate zones)

Voluntary technology upgradeBuilding rating & certification

CDM or Project & Program Based Mechanism (carbon creditbased financing)

CarbonCredits

Mandatory Minimum Performance Standards

NAMA Support (non-carbon credit based financing)

BAU BASELINES*

Improved Future Baseline

NAMAs

NAMAs to Create Enabling Environment for Project Based Mechanism

Time**

State of the Art Technology,Best Practices

CDM or Project & Program Based Mechanism (premium credits)

Premium CarbonCredits

EnergyPerformanceKWh/m2

(by topology,climate zones)

Voluntary technology upgradeBuilding rating & certification

CDM or Project & Program Based Mechanism (carbon creditbased financing)

CarbonCredits

Mandatory Minimum Performance Standards

NAMA Support (non-carbon credit based financing)

BAU BASELINES*

Improved Future Baseline

NAMAs

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Because carbon credits are not the measurement of success , it avoids the double counting problem with the existing mechanisms.

Utilize public policy and funding to foster and mobilize private sector investment through the CDM.

For developed countries, the NAMA framework goes beyond offsetting mechanisms and focuses on supporting enabling environment for mitigation actions in developing countries.

Address all essential elements in the BAP 1b(ii) and include mechanisms to support activities for capacity building, technology, financing and MRV.

Benefits of the new NAMA mechanism

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Integrate funding from developed countries for development aids for capacity building and technology transfer in the climate change sector and implement in a more systematic manner.

Correct market barriers for key end-use long-tail sectors and boost CDM activities in these underdeveloped sectors.

Change the regional distribution of the CDM by an enabling policy framework based on country needs.

Benefits of the new NAMA mechanism