Costa Rica
Important Dates
Market-based Approach
Costa Rica aims to develop a carbon neutral economy by 2021. A big part of achieving this has been the successful use the country’s wealth in natural resources to develop a eco-based tourist economy. To complement this transition and to contribute toward the carbon neutrality goal, Costa Rica plans to use PMR support to achieve the following:
- Design a domestic carbon market;
- Build capacity for GHG data reporting and the registration of GHG emissions reductions;
- Strengthen domestic demand for emission reduction units; and
- Consolidate supply of emission units across a range of sectors.
Crediting and Offsetting
Costa Rica has two domestic financial instruments that could support crediting and offsetting:
- The Certifiable Tradable Offset, or CTO, is a crediting instrument for placing GHG offsets in the international marketplace. A CTO represents a specific amount of greenhouse gas emissions expressed in carbon equivalent units reduced or sequestered. The home-country verification process certifies that the offsets are verifiable. This means that if such crediting were permitted under the UNFCCC, such offsets could count against national and company-level GHG reduction commitments. Ultimately, Costa Rica aims to have a domestic market for CTOs similar to the market for sulphur oxides (SOx) in the United States. 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.
- The Costa Rican Compensation Units (UCC) is a carbon offset class. It represent emissions avoided, reduced, removed, and stored and that have been monitored, reported, and verified. A UCC must be registered with the official entity that will manage the registry system and is tradable within the Costa Rican domestic market.
National Context
Mitigation Target
Since 2007, Costa Rica has pledged to reach carbon neutrality by 2021. This commitment is incorporated into the 2011-2014 National Development Plan (NDP), the country´s highest-level statement on public policy, and the National Climate Change Strategy (NCCS), a long-term strategy for sustainable development that seeks to align the country’s low carbon growth and eco-competitiveness strategies.
Costa Rica’s energy sector contributes 46% of its emissions while the agricultural sector (primarily livestock) adds an additional 37%. Waste management and industrial processes jointly add close to 16%. In addition to forest conservation, Costa Rica targets the following areas for mitigation: power generation, agriculture and livestock, solid waste management, transport, and sustainable building sectors. (Data based on 2005 National GHG Inventory.)
Achieving the Target
Costa Rica, through the NCCS, intends to establish a Domestic Carbon Market as the primary policy tool to achieve Carbon Neutrality. 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 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.