Technical Dialogue 23: New Perspectives on International Cooperation: Carbon Markets and Climate Finance under the Paris Agreement (Barcelona)

Mosaic chimneys of Casa Batllo by Martin Corel - Public Domain
World Bank Group technical dialogue on New Perspectives on International Cooperation: Carbon Markets and Climate Finance under the Paris Agreement
Date: 
May 22 - 23, 2017
Venue: 
Fira Barcelona
Day 1
Introductory session
09:00 – 09:15 —   Opening remarks, Mr. Venkata Ramana Putti, World Bank Group
—   Presentation of the agenda, Ms. Alexandrina Platonova-Oquab, World Bank Group
Session 1 – Status update on markets and finance in international cooperation and discussion on the agenda to prepare a “Rulebook” by 2018
The session discussed the COP22 achievements and outcomes of the UNFCCC meetings in Bonn. An important signal coming out of the UNFCCC negotiations is the willingness to develop and agree on a new “Rulebook” by the end of 2018. This is critical to encourage new opportunities for international cooperation, including through carbon markets and climate finance. Presenters and panelists exchanged their views on the priority policy and technical issues to be advanced in the immediate and longer term in order to usefully inform the work on the “Rulebook.”
Moderator: Mr. Chandra Shekhar Sinha, World Bank Group
09:15 – 10:45 —   Expert presentations:
•  Status update on UNFCCC negotiations and Parties’ submissions on markets and finance, Mr. Massamba Thioye, UNFCCC Secretariat
Session 1 - Update on UNFCCC negotiations - UNFCCC Secretariat
•  New opportunities for carbon markets and climate finance, Ms. Katie Sullivan, International Emissions Trading Association (IETA)
Session 1 - New Opportunities - IETA 
—   Panel discussion
•  Mr. Juan Pedro Searle, Ministry of Energy, Chile
•  Mr. Ousmane Fall Sarr, Senegalese Rural Electrification Agency, Senegal
•  Mr. Massamba Thioye, UNFCCC Secretariat
•  Ms. Katie Sullivan, International Emissions Trading Association (IETA)
—   Discussion and Q&A
10:45 – 11:00 Coffee break
Session 2 - Facilitating international cooperation through an integrated approach
To facilitate international cooperation through the new generation of market mechanisms established by Article 6 of the Paris Agreement and through climate finance, an integrated approach is necessary to cover all the steps from the creation of readiness, to the design, planning and implementation of scaled-up mitigation actions and policies. Such an approach could help inform the policy making process, in a timely manner, both at a domestic and international level in order to ensure the most efficient use of limited public and multilateral funds and leverage of private investment.
Moderator: Mr. Stephen Hammer, World Bank Group
11:00 – 11:30 —   Integrated strategy to operationalize the new generation of the international carbon markets and innovative climate finance, Mr. Venkata Ramana Putti, World Bank Group
Session 2 - WBG Markets Strategy for PMR 
—   Discussion and Q&A
11:30 – 12:30 INFORMATION BAZAAR
Participants had the opportunity to walk around the information “bazaar” to meet and exchange with the representatives of different World Bank-led new carbon market and carbon pricing initiatives to support NDC implementation. The following World Bank initiatives were presented at separate tables and allowed participants the chance to move round the room and learn more about those initiatives of most interest to them.
—   Table 1 - Carbon Pricing Leadership Coalition (CPLC): Contributing to high-level policy dialogue on carbon pricing
—   Table 2 - NDC Partnership Support Facility: Supporting the implementation of NDCs
—   Table 3 - Partnership for Market Readiness (PMR): Building capacity for the use of carbon pricing instruments
—   Table 4 - Transformative Carbon Asset Facility (TCAF) and the Carbon Partnership Facility (CPF): Informing new rule making through piloting of scaled-up crediting approaches
—   Table 5 - Carbon Initiative for Development (Ci-Dev): Transitioning to the new generation of markets building upon Kyoto and result-based approaches
—   Table 6 - Pilot Auction Facility: Delivering climate finance effectively and efficiently
—   Table 7 - Global Partnership on Output-Based Aid: Targeting the poor and marginalized communities with climate-smart output-based approaches
—   Table 8 - Program-for-Results (PforR): Achieving results by strengthening Government Program systems
12:30 – 13:30 Lunch
13:30 – 14:00 —   Launch of the World Bank Group report:
Results-based Climate Finance in Practice: Delivering Climate Finance for Low-carbon Development
•  Opening remarks, Ms. Carmen Nonay, World Bank Group; Mr. Venkata Ramana Putti, World Bank Group
•  Presentation of the report, Mr. Klaus Oppermann, World Bank Group
Session 2 - RBCF Launch Report - WBG
Session 3 – Emerging drivers for international market development: main sources of demand, supply and finance
This session provided an overview of the existing and announced sources of demand for international cooperative actions under Article 6, including ITMOs, crediting, and result-based climate finance. The main features of demand, emerging from the early action and piloting efforts, were discussed. In the panel discussion, the participants exchanged ideas on the way new markets’ needs would impact the key considerations and analytical approaches in designing policies and actions on the ground. Further dialogue included approaches to mobilize underlying financial and institutional resources to ensure implementation (create supply), including through mobilization of private sector investment, and considered the expected contribution of crediting programs to the implementation of the NDCs.
Moderator: Mr. Juan Pedro Searle, Ministry of Energy, Chile
14:15 – 15:30 —   Expert presentation:
•  Assessing and mobilizing international and domestic sources of demand for scaled-up crediting-related programs, Mr. Pedro Martins Barata, Get2C
Session 3 - Assessing and Mobilizing Demand - Get2C
—   Discussion and Q&A
—   Panel discussion
•  Mr. Pedro Martins Barata, Get2C
•  Mr. Lorenzo Eguren, Ministry of Environment (MINAM), Peru
•  Ms. Diana Guzman, Secretariat of Environment and Natural Resources (SEMARNAT), Mexico
—   Discussion and Q&A
15:30 – 16:00 Coffee break
Session 4 – How can RBCF contribute to the mobilization of financing and transformative change?
This session discussed the opportunities to use RBCF as a delivery model to mobilize and expand the amount of financing flowing to mitigation actions. It also discussed how RBCF can facilitate design and implementation of mitigation programs to achieve transformation. Two case studies based on practical experience of successful RBCF operations were presented. The case studies illustrated how the key attributes of RBCF have been operationalized. Among these building blocks, the case studies showed examples of financing arrangements, technical and MRV capacity, and ways to enable institutions and governance structures.
Participants were then invited to assess two key themes in parallel group discussions: (I) the potential of RBCF to incentivize private sector engagement; and (II) the use of RBCF to foster implementation and support domestic policy processes.
Moderator: Ms. Carmen Nonay, World Bank Group
16:00 – 16:50 —   RBCF as a delivery model to mobilize and expand the amount of financing flowing to mitigation actions, Mr. John Ward, Vivid Economics
Session 4 - RBCF as Delivery Model - Vivid Economics
—   Transformative RBCF program in the energy sector, Mr. Tom Erichson, Differ Group
Session 4 - RBCF in Energy - Differ Group
—   Transformative RBCF for the urban poor, Mr. Charis Lypiridis, World Bank Group; Ms. Raluca Golumbeanu, World Bank Group
Session 4 - RBCF for the Urban Poor - WBG
16:50 – 18:15 GROUP DISCUSSIONS
—   Introduction, Ms. Caroline Ott, Rocky Mountains Institute
Session 4 - RBCF Discussion Questions - Rocky Mountain Institute
Theme I: How to use RBCF to build markets and mobilize private resources while ensuring sustainability of transformative programs? Theme II: How to use RBCF to strengthen implementation capacity and supporting domestic policy processes?
Moderator: Ms. Elina Weber EnDEv Moderator: Mr. Martin Gauss, KPC
—   Presentations of the outcomes of the thematic discussions
—   Discussion and Q&A
18:15 – 18:30 Wrap-up and quick overview of day 1
Day 2
Session 5 – What is the role of crediting and RBCF approaches in the NDC implementation context and what are the implications for their design?
This session discussed two important issues related to crediting and result-based approaches within NDCs. First, many countries have distinguished between components of their NDC mitigation commitments that are “conditional” and “unconditional.” The Paris Agreement and associated decision text do not specifically address distinctions between these NDC elements and their potential implications for international transfers. This could present challenges in deciding how to apply various provisions of the Paris Agreement when designing scaled-up crediting. Second, countries have adopted a variety of mitigation pledges, with some specifying explicit GHG reductions targets, while others indicating general actions to be undertaken, or targets specified in non-GHG terms (e.g., technology penetration goals). Since countries have only started to elaborate general and sectoral policies to implement their NDCs, it may pose challenges to the definition of sectoral or sub-sectoral coverage of crediting and RBF approaches. Two countries’ perspectives were provided to illustrate the current stage of the strategy development and planning toward NDC implementation and how the main issues of design are being considered at the general and sectoral level.
Moderator: Ms. Malin Ahlberg, Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), Germany
09:00 – 10:30 —   Expert presentations:
•  Key design aspects of scaled-up crediting and RBCF approaches considering the conditionality of NDC pledges and translating NDC goals into sectoral emissions pathways, Mr. Randall Spalding-Fecher, Carbon Limits
Session 5 - Key Aspects of scale-up crediting - Carbon Limits
•  Vietnam: Country perspective, Dr. Lung Quang Huy, Ministry of Natural Resources and Environment, Vietnam
•  Costa Rica: Country perspective, Mr. Felipe de Leon, Ministry of Energy and Environment, Costa Rica
Costa Rica - Session 5 - Role of Crediting and RBCF Approaches
—   Discussion and Q&A
10:30 – 11:00 Coffee break
Session 6 – How can scaled-up crediting and RBCF approaches contribute to market creation and capacity building
Building on Day 1 discussions on the use of various financing sources to support NDC implementation, this session explored the potential to build markets and capacity with support of scaled-up crediting and RBCF approaches. The implications of the combined use of climate finance and carbon markets for reporting and accounting under the Paris Agreement also were discussed.
Moderator: Ms. Silvia Charpentier, Ministry of Environment and Energy, Costa Rica
11:00 – 12:00 —   Expert presentations:
•  Potential to build markets and capacity through scaled-up crediting and RBF approaches, Ms. Felicity Spors, World Bank Group
Session 6 - Potential to build markets and capacity - WBG
•  Program for Results: An Innovative Financing Tool to Incentivize Results and Build Capacity through Harmonize Donor Support to Government Programs, Ms. Fatima Shah, World Bank Group
Session 6 - Program for Results Financing Tool - WBG
—  Discussion and Q&A
12:00 – 13:15 Lunch
Session 7 – Integration of crediting design processes into broader policy planning: lessons from ongoing exercises in implementing countries
The implementation of NDCs and related climate and sector policies is facilitated by a systematic (climate) policy planning process. An important part of such processes is the coordination among ministries and among efforts in different sectors. In some cases, a modelling or other suitable process that disaggregates a national (quantitative) pledge to specific sectors is applied (top-down), or the NDC pledge itself is formulated bottom-up, building on BAU projections and mitigation potentials in the different (sub-)sectors. This can be done based on e.g., sectoral models, or general equilibrium models or partial economic models with an adequate representation of the relevant sub-sectors. This session discussed some tools and approaches that countries are using to construct NDC pledges (or to share the overall efforts between sectors/sub-sectors) and that could be applied to examine sectoral emissions pathways, including in sectors where crediting programs might be adopted.
Moderator: Ms. Alexandrina Platonova-Oquab, World Bank Group
13:15 – 14:30 —   Expert presentation:
•  Using modeling tools for the design of the new generation of scaled-up crediting program: current capacities and future opportunities, Mr. Jürg Füssler, INFRAS
Session 7 - Using Modeling Tools - INFRAS
MEET THE EXPERTS
During this hour participants were able to move to different tables in the room to meet representatives from different countries who shared their experiences with ongoing modelling exercises in various sectors in their countries.
—   Colombia: assessing the economy-wide implications of NDC mitigation objectives, Ms. Silvia Liliana Calderon, National Planning Department, Colombia
—   Chile: Sectoral modelling in the power sector, Mr. Nicolas Westenenk, Ministry of Energy, Chile
—   Morocco: Energy efficiency in buildings based on sectoral model, Mr. Sam Foster, Element Energy
—   Vietnam: Dr. Lung Quang Huy, Ministry of Natural Resources and Environment, Vietnam
—   Sri Lanka: Modeling for power sector generation planning, Mr. M.B.S Samarasekara, Chief Engineer, Ceylon Electricity Board, Sri Lanka
Sri Lanka - Session 7 - Modeling for Power Sector
14:45 – 15:00 Coffee break
Session 8A – Baseline setting for scaled-up carbon and RBCF programs in the context of NDC implementation
This parallel session discussed the conceptual and practical issue of baseline setting for scaled-up crediting and RBCF programs in specific sectors in the context of a closer alignment of the carbon market strategy with the broader policy objectives, instruments and financial resources that would need to be mobilized to achieve NDC goals. Two case studies based on practical experience were presented. Participants were invited to assess two key themes in parallel group discussions: (I) baseline setting in the context of a closer alignment of policies and financial resources needed for the implementation of NDCs; and (II) bringing broader modelling techniques used for NDC implementation strategy development into the set of baseline setting tools for scaled-up approaches.
Moderator: Ms. Ulrika Raab, Swedish Energy Agency
15:00 – 16:00 —  Main recommendations of the PMR technical note Baselines Setting for Scaled-up Crediting in the Broader NDC Context, Ms. Noémie Klein, Ecofys
Session 8A - Recommendations of the Baselines PMR Technical Note - Ecofys
—   Case studies, Mr. Randall Spalding-Fecher, Carbon Limits
—   Discussion and Q&A
16:00 – 17:30 GROUP DISCUSSIONS
Theme I: Baseline setting in the context of a closer alignment of the carbon market strategy with the broader policy objectives, instruments and financial resources that would need to be mobilized to achieve NDC goals. Theme II: How to build upon existing model-based policy, economic and financial analysis of the NDC implementation strategies to inform baseline setting for scaled-up crediting and RBCF programs in specific sectors.
Moderator: Ms. Alexandrina Platonova-Oquab, World Bank Group Moderator: Mr. Felipe de Leon, Costa Rica
Session 8B – Benchmarking as a practical tool to design domestic and international carbon pricing approaches
This parallel session will discuss the conceptual and practical issues of benchmark setting for developing voluntary cooperative and scaled-up crediting programs in targeted sectors in the context of a need for development of various carbon pricing approaches and their alignment with the broader policy objectives, and the role they could play to mobilize financial resources to achieve NDC goals. Two country perspectives will be discussed. Participants will be invited to assess two key themes in parallel group discussions: (I) role of benchmark setting in the context of a need for closer alignment of policies and financial resources needed for the implementation of NDCs; and (II) aligning benchmark setting approaches for various carbon pricing instruments for NDC implementation strategy development.
Moderator: Mr. Harikumar Gadde, World Bank Group
15:00 – 16:00 —   Benchmarking approaches for various carbon pricing instruments: A new perspective on their role in the implementation of NDCs, Carolina Downey de Oliveira, Ricardo-AEA
Session 8B - New Perspective in NDC Implementation - Ricardo-AEA
—   Two country perspectives:
•  South Africa, Mr. Mkhuthazi Steleki, Department of Environmental Affairs
South Africa - Session 8B Benchmarking
•  Kazakhstan, Ms. Botagoz Akhmetova, Zhasyl Damu (National ETS Operator)
Kazakhstan - Session 8B Benchmarking
—   Discussion and Q&A
16:00 – 17:30 GROUP DISCUSSIONS
Theme I: What is the role of benchmark setting for various carbon pricing instruments? How can they help to align with the broader policy objectives and mobilize financial resources to achieve NDC goals? Theme II: How to align benchmark setting approaches for various carbon pricing instruments with the NDC implementation strategy development?
Moderator: Mr. Axel Michaelowa, Perspectives Moderator: Mr. Carsten Warnecke, New Climate Institute
17:30 – 18:00 Outcomes and recommendations from Sessions 8A & 8B, Ms. Ulrika Raab, Swedish Energy Agency; Mr. Harikumar Gadde, World Bank Group
18:00 – 18:30 Wrap-up and conclusions, Mr. Adrien de Bassompierre, World Bank Group

These two-day sessions were organized by the Partnership for Market Readiness (PMR) jointly with other initiatives on carbon and climate finance led by the World Bank. It was a sequel, built from discussions and technical workshops on scaled-up crediting and result-based climate finance (RBCF) held in Paris on May 31-June 2, 2016.

The objective served to broaden understanding of the new generation of carbon markets and climate finance in order to support NDC implementation and strengthen international co-operation to achieve the goals of the Paris Agreement. Participants learned about new approaches to design and to finance transformative mitigation. Further, shared insights in documenting priority steps to support markets and effective climate finance delivery within the Paris "Rulebook." Finally, the participants shared their perspectives on key methodological approaches, including modeling tools and benchmarking, that could be used to inform quantification of the mitigation outcomes and baseline setting for scaled-up climate policies and actions. The workshop was an interactive dialogue, to include both plenary and breakout group sessions.