Three countries have received funding under the World Bank’s Partnership for Market Readiness (PMR) to set up MRV systems and develop crediting mechanisms that could generate carbon offsets for international buyers.
The funds were awarded at the latest PMR meeting in late April, the World Bank said in an update released late Thursday.
The PMR is a World Bank-led programme funded by 13 donor governments that aims to help developing nations prepare to use market mechanisms to cut their greenhouse gas emissions.
At the meeting, Peru presented its final market readiness proposal and was allocated $3 million to implement its plan, while Sri Lanka became the programme’s 18th participant and received $350,000 to help develop a programme.
Once it has established a high-quality monitoring, reporting and verification system, Peru plans to set up a mechanism that would allow foreign buyers to acquire offsets from three sectors: cement, solid waste, and installation of solar PV panels.
“Conscious of the limited current demand for carbon credits and the uncertainty as to whether the global demand will increase in the future, the Peruvian government would like to emphasize that this proposal follows a ‘no-regret’ approach,” Peru’s plan said.
“Such an approach will grant the necessary level of flexibility and allow Peru to react to any unforeseeable changes that may lead to a change towards another (market-based instrument).”
Only a handful of nations have indicated in their INDCs that they plan to buy international offsets as part of their strategies to meet their Paris Agreement targets.
But the lack of clarity over how the international emissions market will look after 2020 means there is huge uncertainty over the supply side as well.
South Korea, which has said it will buy 100 million international offsets, is currently hammering out a detailed plan for how it will meet its target, but it’s having difficulties identifying sources of offset supply, according to several sources.
Supply from Peru would be relatively limited, as the country’s plan estimated that projects in the solid waste sector could cut emissions 8.34 million tonnes of CO2e over the next 15 years.
Offset potential from solar PV panel installations was estimated at 46,000 tonnes annually, while the capacity in the cement sector was not clearly defined. However, the nation’s ongoing construction boom means GHG emissions from cement production could grow to 9.6 million tonnes in 2030 from 3.3 million in 2010.
Meanwhile, Sri Lanka has already established a domestic carbon crediting scheme through which it can issue Sri Lankan Certified Emissions Reductions (SCERs), but wants to use the World Bank funding to scale this up and generate offsets that can trade internationally.
Sri Lanka’s presentation at the PMR meeting showed it has identified transport and energy as priority sectors for crediting, but that it might also consider the industrial and waste sectors.
The country expected to have a final market proposal ready by October, the presentation said.
Jordan, like Peru, received $3 million in support to carry its final market readiness plan, although it will primarily focus on building an MRV system.
“Jordanian stakeholders strongly support the implementation of a market mechanism, whether for projects, programmes or at a sectoral level,” the plan said.
“However, the lack of GHG data, MRV frameworks, and limited capacity of stakeholders poses a major barrier to design or implementation of an appropriate market based instrument for Jordan.”
“Establishing market readiness for (result-based financing) will provide learning among the key market players and institutions, and lay the foundations for a future crediting mechanism.”
Another PMR participant and large emitter, Turkey, is scheduled to present in November a roadmap for the consideration of the establishment and operation of a GHG trading system, with various policy and impact assessments due next year.
However, this now appears to be delayed, documents submitted at the meeting showed.
“In spite of smooth implementation, it is anticipated that the timeline of project activities will need to be extended. Careful review of the procurement plan has been performed in light of remaining activities, and the Ministry will communicate possible extension request to the PMR Secretariat accordingly,” they said.
By Stian Reklev – firstname.lastname@example.org