Costa Rica

Country Information

Important Dates

MRP first draft submission: 
Oct, 2012
Allocation of Implementation Funding: 
Mar, 2013

Key Documents & Presentations

Market-based Approach

  • MRV

The Costa Rican Accreditation Entity (ECA) defines the validation and verification concepts included in its standards. Validation is an evaluation process to determine whether the GHG reduction and removal goals are calculated properly and if they are reachable. Verification is done to check whether the GHG data and information are correct and may be used to evaluate the carbon footprint. The INTE-12-01-06 standard establishes that the party doing the validation may not verify the same process.

  • Data and Reporting

Costa Rica recognizes that reliable data is essential for ensuring the environmental integrity of the Domestic Carbon Market. Establishing an effective data collection and reporting system in Costa Rica involves application both by companies that want to offset their carbon footprint in search of carbon neutrality and those wishing to generate offsets from emission reduction activities.

  • Registry and data tracking system

The DCC is studying options for registry design and links to a technology platform. Access to the registry will be online to enable multiple registrations through a multi-standard interface.  The National Registry infrastructure will be divided into four components:  Projects Registry,  Transaction Registry,  Qualified Carbon Technician (QCT) Registry, and  Participants’ registry

  • Institution

The implementation of the Domestic Carbon Market is led by MINAE. Decree DCC 35669-MINAET outlines the general structure of the market in Costa Rica.  Four key institutions are to be created as part of the market infrastructure: Carbon Board, Secretariat, Control and Transparency Committee, and Methodology Committee.  Each of the institutions has elaborated functions.

  • The PMR will support Costa Rica to
    • Complete the design for Costa Rica’s domestic carbon market;
    • Build capacity for GHG data reporting and registry;
    • Strengthen domestic demand for emission reduction units; and
    • Consolidate supply of emission units across a range of sectors.

Offset and/or Other Emission Reduction Crediting Programs

  • The Certifiable Tradable Offset (CTO)

Costa Rica designed a financial instrument for placing greenhouse gas offsets in the international marketplace, called the Certifiable Tradable Offset, or CTO. A CTO represents a specific number of units of greenhouse gas emissions expressed in carbon equivalent units reduced or sequestered. The home-country verification process certifies that the offsets are of a sufficiently high quality so as to allow them to count against national and company-level GHG reduction commitments, if such crediting were eventually permitted under the UNFCCC.

Costa Rica's goal for CTOs was to trade them in a manner similar to the United States market for sulphur oxides (SOx). Conversations were held with Natsource Energy Brokers and The Centre for Financial Products, an active participant in the development of SOx, but the idea proved to be early for its time.

  • Costa Rican Compensation Unit (UCC)

Costa Rican Compensation Unit (UCC) is a carbon offset class. It represents emissions that were avoided, reduced, removed, and stored and that have been monitored, reported and verified. Also, it must be registered with the official entity that will manage the registry system and is tradable within the Costa Rican domestic market.

National Context

According to data of the 2005 National GHG Inventory, the energy sector was the largest emitter taking up 46%, of which transportation contributes with 46%. The agricultural sector followed with 37%, where the enteric fermentation process in livestock generated most emissions. Waste management and industrial processes jointly added close to 16% of Costa Rica´s CO2 emissions. Costa Rica expects potential mitigation in power generation, agriculture and livestock, solid waste management, transport, and sustainable building sectors.

Costa Rica aspires to reach carbon neutrality by 2021. The carbon mitigation component of the strategy focuses on this 2007 national pledge. This commitment was also incorporated into the 2011-2014 National Development Plan (NDP), the country´s highest-level statement on public policy, and the National Climate Change Strategy, a long-term strategy for sustainable development that seeks to align the country’s low carbon growth and eco-competitiveness strategies.

The Costa Rican Government, through the National Climate Change Strategy (NCCS), intends to establish a Domestic Carbon Market as the primary policy tool to achieve its Carbon Neutrality target. It is designed to assist Costa Rica to meet its target in the most flexible and cost-effective way, while also providing a financial incentive to the private sector for investment in low emissions technology research, development and commercialization, and to develop the country’s eco-competitive strategies.

The Costa Rican Office for Joint Implementation (OCIC) was established in April 1996, with the authority to formulate the Joint Implementation (JI) policy and evaluate and approve projects, reporting to the Ministry of Environment and Energy (MINAE). The office established project approval criteria and assisted in the development of more than 15 project proposals, many internationally noted as among the best designed of the first generation of similar attempts. In the late 90s, the OCIC strategy became one of exclusively promoting three national-scale projects focusing on 1) park consolidation (Protected Areas Project-PAP), 2) natural forest management by private landowners (Private Forestry Project-PFP), and 3) renewable energy. The Protected Areas Project and the Private Forestry Project included long-term monitoring of carbon benefits.

The Ministry of Environment and Energy (MINAE) is in charge of implementing the Strategy at the national level, mainly through its Directorate of Climate Change (DCC). The DCC was mandated by Decree No. 35669-MINAET, January 6, 2010. The Decree establishes the context for policy-making within the National Climate Change Program, explicitly through the creation of new capacities and the integration of a platform for knowledge exchange in climate change mitigation and adaptation. The DCC is finalizing NCCS´s Action Plan, which is envisioned as a reference point for policy design and implementation, while strengthening education and public awareness processes.

Other entities directly related to implementation of the country’s climate change agenda are the Costa Rican Office for Joint Implementation (OCIC) which was established in April 1996, National Forestry Financing Fund (FONAFIFO), the National System of Conservation Areas (SINAC), the Office for Environmental Quality Management (DIGECA) and the National Environmental Technical Secretariat.

News

The Government of Costa Rica and the Forest Carbon Partnership Facility (FCPF) of the World Bank signed a Letter of Intent (LOI) to negotiate an Emission Reductions Payment Agreement (ERPA) worth up to $63 million. This would make Costa Rica the first country in the world to access large-scale performance-based payments for conserving its forests, regenerating degraded lands, and scaling up agro-forestry systems for sustainable landscapes and livelihoods.

Costa Rica takes a leadership role in Carbon Neutrality in the world.

Environment Ministry officials made public the first phase of Costa Rica’s carbon-neutral strategy.

Disclaimer: The World Bank does not guarantee the comprehensiveness and accuracy of the data and information included in the Market Readiness Proposal (MRP) and in presentations submitted by PMR participants. Further, the World Bank accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in the MRPs or on this website do not imply on the part of the World Bank any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries.