10th Strategic Dialogue of the Carbon Market Platform - Klaus Oppermann

10th Strategic Dialogue of the Carbon Market Platform - Klaus Oppermann

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  SCALED-UP CREDITING RATIONALE ANDFIRST EXPERIENCES Carbon Market Platform 10th Strategic Dialogue Ottawa, Ontario, Canada October 22-23, 2025 1
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  Scaling up isabout quantity and quality Quantity is needed and possible,… ▪ International carbon market potential (global least cost) estimated at 2.5-5Gt p.a. by 2030*; ▪ CDM/JI average annual issuance KP1 (>97% project-by-project): 0.5 Gt (UNFCCC); ▪ CDM issued for 3,600+ projects, reduced 2008-12 emissions in 7 of its host countries by 5%+**. …Quality is key ▪ Ensure environmental and social integrity (additionality, overcome leakage and share benefits); ▪ Shifting development trajectories in a sustainable way vs punctual GHG abatement; ▪ Support critical low-carbon policy reform; ▪ Incentivize host country ambition and broadly engage relevant ministries/agencies/stakeholders; ▪ Mobilize private capital. 2 *https://www.ieta.org/initiatives/modelling-the-economic-benefits-of-article-6; https://openknowledge.worldbank.org/server/api/core/bitstreams/759965cc-fcd6-5167-b890-77efc4bdbffb/content ** https://documents1.worldbank.org/curated/en/650081545377054720/pdf/133140-19-12-2018-17-11-20-CarbonMarketsUnderKPWeb.pdf
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  Programmatic crediting ▪ Developedand piloted at the World Bank from 2004 on (CDCF, CPF, Ci-Dev); ▪ CDM PoAs since 2007. ▪ Objectives when designed: • Broaden scope: small/micro activities, low-income countries, e.g., clean cooking; √ • Reduce transaction costs → Standardized Crediting Framework, SCF (WB from 2012 on); √ • Enable financial transformation of carbon revenues; ? • Increase credit volumes beyond project level. x ▪ Example WB Energy Access and Quality Improvement Project (EAQIP) in Rwanda: • Ci-Dev cookstove program using SCF; • 200,000 households gaining access to clean cooking, 2.7mt ERs within 5-years period; • Rwanda-owned crediting framework scalable and suitable for Art.6 transactions. 3
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  Jurisdictional Crediting forREDD+ ▪ Developed and piloted at the World Bank from 2007 on (FCPF, BioCF-ISFL); ▪ jREDD+ adopted by ART-TREES, VCS-JNR standards; access to CORSIA. ▪ Objectives when designed: • Addressing drivers of deforestation/forest degradation; √ • Overcoming leakage and baseline setting issues of project-level REDD+; √ • Protecting interests of and engaging key local communities including benefit sharing; √ • Reaching scale beyond project level and increasing ambition; √ • Reaching sustainable LULUCF development trajectories. ? ▪ Example WB FCPF Ghana Cocoa Forest REDD+ Program (GCFRP): • Climate smart cocoa farming practices, over 300 community projects reached; • Payments for 10mt in carbon credits from 2019-2024; • Large scale mitigation impact paired with strong development benefits. 4
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  Policy Crediting ▪ Developedand piloted at the World Bank from 2017 on (CPF, TCAF); ▪ Under consideration by SB Art. 6.4, already partial integration in Gold Standard (CORSIA). ▪ Objectives when designed: • Catalyzing transformative change towards net zero; • Increasing effectiveness of supporting policy reform; • Directly incentivizing host country climate ambition; • Reaching scale beyond project level. ▪ Example TCAF Uzbekistan iCRAFT energy subsidy reform program: ▪ Electricity and gas end-user tariff reform towards cost recovery; ▪ Carbon revenues used for compensating vulnerable households and economic adaptation to higher energy tariffs (energy efficiency, clean technologies); ▪ 3.6mt ERs in 2022 verified, expected to increase to 10mt p.a.; ▪ Major development benefits projected: +180 MW RE; 300k efficient appliances; 2.7 new green jobs; improved air quality, $ billions in fiscal savings. https://www.tcafwb.org/programs/uzbekistan-icraft 5
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  Policy vs jurisdictional/sectoralcrediting Policy Crediting: ▪ Scope: price-based policies, regulatory policies, incentive schemes; ▪ ERs attributed to policy; ▪ ERs quantified against ex-post counterfactual through modeling (for price-based policies). Jurisdictional/sectoral crediting: ▪ Scope: segments of economy suitable for clear boundary setting; ▪ ERs not attributed to a specific climate action; ▪ ERs derived from changes in aggregated emissions (before-after observed or modelled). 6
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  ToC for transformativeimpact and sustainability ▪ Project-level/programmatic crediting: • Technology tipping points; • Ambitious benchmarks + large numbers of projects; • Lead time: planning/construction phase. ▪ Jurisdictional/sectoral crediting: • Changing jurisdictional/sectoral economics and behaviors; • Quasi emissions cap/shadow carbon price + sustained large-scale crediting; • Lead time: technical preparation and capacity building, policy implementation. ▪ Policy crediting: • Shifting enabling environment and directly increasing governments’ ambition levels; • Focus on critical policy reforms + large-scale crediting during implementation phase; • Lead time: policy implementation. 7
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  WB contribution toSCALE 8 • TF consolidation; • Full integration in Bank lending; • Building on 25 years WB carbon finance; • RBCF to catalyze carbon markets; • Focus on scaled-up crediting; • Open to all qualifying standards. https://www.worldbank.org/en/programs/scale/overview
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  9 Thank you