Summary

Session 1: Demonstrating the co-benefits of climate change mitigation
The first half of the event focused on the introduction of activities initiated by the Japanese Government and Japanese international institutions including the Japan International Cooperation Agency (JICA) on the co-benefits approach of climate change mitigation. Tangible co-benefits projects implemented with cooperation between Japan and other Asian countries were also introduced during the event. The Overseas Environmental Cooperation Center (OECC) also introduced activities to promote a co-benefits approach under the support of the Ministry of the Environment, Japan such as identification of developmental needs on climate change related areas, developing implementation tools on this approach such as a good practice matrix on typical cases of projects according to sectors, and demonstration of implementing co-benefits projects. The Governments of Indonesian and Viet Nam introduced actual demonstrative co-benefits projects such as appropriate municipal sewerage treatment and municipal solid waste management, which are supported by Japanese Government initiatives. The two countries also shared lessons learned from their experiences. Real experiences and lessons learned on the co-benefits approach were widely shared and participants recognised its importance. It is expected that further results of activities will be demonstrated in the future.

Shuzo Nishioka, Senior Research Advisor of IGES, moderated the last half of the event. Presentations and discussions were made for the proposals of CDM reform based on experiences in hosting countries.

Kazuhisa Koakutsu, IGES Market Mechanism Project, in his presentation introduced the IGES CDM capacity building programme implemented since 2003. The activities include DNA's institutional support, identification and development of CDM projects through training workshops, and the dissemination of CDM publications and the development of a database. The activities in relation to CDM reform in partner countries - the Philippines, Indonesia and Cambodia - was introduced.

Joyceline Goco, Department of Environment and Natural Resources, Philippines, explained the support activities to Designated National Authority (DNA) and private sector in the Philippines. She emphasised the importance of contributions to sustainable development (SD) by a CDM project and introduced actual activities to enhance a DNA's capacity to promote co-benefit types of CDM project activities and to support the capacity of developing project developers to implement projects contributing to SD. She also explained about efforts to improve CDM in her country where revisions to the contents of letter of approval resulted in fewer administrative constraints and better identification of problems faced by various actors involved in CDM through workshops implemented by IGES.

Haneda Sri Mulyanto, Ministry of Environment of the Republic of Indonesia, explained the current status of CDM in Indonesia after he expressed that CDM was a complicated and difficult mechanism for developing countries. Indonesia experienced a rapid increase of nationally approved projects, and at the same time he was concerned that remaining issues such as policy, economic, technical and political barriers should be resolved. He added that there was slow progress on national development plans which integrate climate change actions at the center of the plan and added that this was one of the policy barriers in Indonesia. He also pointed out that there were conflicts with communities or disagreement among project proponents for distribution of CERs, which disturbs the smooth implementation of CDM projects.

Sum Thy, Ministry of Environment, the Royal Government of Cambodia, explained that the current CDM methodologies and rules did not take into consideration the circumstances of Least Developed Countries (LDCs), which has meant that very few registered and nationally approved CDM projects were realised in LDCs. He also pointed out that transaction cost was a major obstacle for typical small-size CDM projects in LDCs, while the burden of such transaction cost was relatively low for large-scale projects. Therefore, Cambodia and IGES jointly proposed to the CDM Executive Board requesting preferential treatment including a 50% discount of registration fees and a shortening of the registration process specifically for projects in LDCs. He added that the proposal was partly reflected in the current CDM rules and Cambodia and IGES has just proposed a shortening of the review process for registration of CDM projects in LDCs.

Yuji Mizuno, IGES Market Mechanism Project Manager, in his presentation explained his proposal for CDM reform based on his experience of CDM capacity building. He pointed out the perverse incentive for implementing a CDM by requiring strict application of proving additionality of the project. This will increase risks and unpredictability for investing in CDM projects, which also require a high cost at the initial stage. Therefore, he recommended that a specific type of renewable project, such as wind, geothermal and PV, which clearly contribute to the additional emission reduction, can be exempt from the additionality test.

After the presentations, participants and speakers discussed the issues raised. A participant from a company interested in investing in a CDM project development, pointed out that there is not a formal venue where project participants can communicate with CDM Executive Board (EB) and said that it is essential to create such a venue to sustain financial flow to CDM. Regarding CDM reform, another participant asked whether more projects has been initiated after the EB's decision to abolish the registration fee for LDCs. Mr. Sum answered that the number of projects developed after the decision was still limited but that he has seen it providing an incentive to project developers in Cambodia. Another participant expressed his concern about removing the additionality test, from the perspective of environmental integrity, saying that once its exemption is allowed for certain types of projects, it will also influence other types of projects, which will lead to degraded "cleanness" of CDM projects as a whole.