India-The World Bank Partnership for Market Readiness (PMR)

Overview

"The Partnership for Market Readiness (PMR)—bringing together developed and developing countries— provides a platform for sharing experience, fostering new & innovative market-based instruments, and building market readiness capacity for countries to scale up climate change mitigation efforts.

The PMR is country-led. It provides financial and technical support to enhance a country’s capacity to build market readiness components and implement market-based instruments, such as a domestic emissions trading system (ETS) or a scaled-up crediting mechanism.

PMR Implementing Countries are at different stages of market readiness and will approach the use of market instruments in different ways. Some will focus on building core readiness components, such as systems for monitoring, reporting and verification (MRV), data collection, baseline setting, and establishing regulatory institutions; others may be in a position to implement and pilot a new domestic or international market-based scheme.

Capacity building for market readiness and piloting can have cross-cutting benefits that are relevant to supporting domestic climate change policies, elaborating low emission development strategies, and implementing mitigation actions."¹

Core objectives

"The PMR supports four core objectives:

• Provide grant funding for building market readiness components;
• Pilot and test new concepts for market instruments (e.g., domestic ETS and new crediting mechanisms);
• Provide a platform for technical discussions, South-South exchange and collective innovation on new market instruments; and
• Share lessons learned & best practices"¹

Phases and Framework

1. Expression of Interest (EoI) Phase: A country submits an EoI to the PMR Secretariat, which is subsequently presented to the PA for confirmation as an Implementing Country Participant. In 2011, the PMR reached its target of 15 Implementing Country Participants. Following confirmation, a country presents to the PA a framework of proposed PMR activities in order to receive the first phase of PMR funding.
2. Preparation Phase: With a Preparation Funding allocation from the PA of US$350,000, an Implementing Country Participant formulates its Market Readiness Proposal (MRP), which details the country’s road map for its proposed market-based instrument and market readiness components, as well as a funding estimate for its implementation.
3. Implementation Phase: An Implementing Country Participant implements readiness components outlined in the MRP, including piloting the proposed market instrument(s) where possible. Implementation is supported by PMR funding allocated by the Partnership Assembly and other funding sources.¹

Country Context and Support

Brazil

• Reduce emissions by 36.1%-38.9% below BAU by 2020 as part of voluntary commitment.
• Mitigation plan covers forestry, agriculture, energy, iron, steel & other industry, transportation, mining & building sectors.

PMR Support:

• Create Brazilian Emission Reduction Market.
• Analyze and select of suitable instrument for given sectors.

Chile

• Reduce GHG emissions growth rate by 20% below BAU compared with 2007.
• Market instruments identified as important for meeting the mitigation objective.

PMR Support:

• Support studies and design of domestic ETS.
• Develop MRV and GHG registry system.

China

• Reduce emission intensity by 40-45% compared with 2005 level by 2020.
• Establish statistical and verification systems for GHG emissions included in 12th Five Year Plan.
• Pilot ETS programs with the objective to set up national scheme in 2015.

PMR Support:

• Provide technical assistance on pilot ETS programs in cities and provinces.

Colombia

• Low carbon strategy is one of three pillars for climate agenda under National Development Plan (2010-14).
• Participation in international crediting mechanism is considered a means to attract climate financing and scale up emission reductions.

PMR Support:

• Establish carbon trading system between transport sectors of major cities.
• Identify sectoral leaders for market proposals in other sectors

Costa Rica

• Carbon neutrality goal by 2021.
• Promote and use market instruments domestically to reduce emissions.

PMR Support:

• Study mitigation potential and suitability for market instruments and facilitate policy dialogue and development in energy, transport, waste management, sustainable housing and agriculture sectors.

India

• Reduce emissions intensity by 20-25% compared with 2005 levels by 2020 as part of voluntary commitment.

PMR Support:

• Expand energy efficiency Performance-and-Trade system to small & medium enterprises and transportation fuel efficiency.
• Accelerate Indian Solar Cities Program implementation (gather baseline data for GHG calculation & accounting).

Indonesia

• Reduce emissions by up to 26% and 41% with international support by 2020 as part of voluntary target.

PMR Support:

• Support energy sector programs (e.g., for scaled-up crediting instrument), such as “Reducing emissions from fossil fuel burning” (REFF-burn program).
• Support stakeholder consultations on market instrument(s).

Jordan

• Develop renewable energy and enhance energy efficiency as part of national priority.

PMR Support:

• Explore market instruments, such as scaled-up crediting for NAMAs in sectors including energy and/or waste management.
• Support capacity building for data collection, establishment of baselines and MRV system.

Mexico

• Reduce emissions by 51 MtCO2e/yr in 2012 compared to BAU as part of domestic commitment.
• Voluntary commitment of up to 30% reduction from BAU by 2020, conditional on international support, including carbon markets.

PMR Support:

• Develop and implement crediting NAMAs in sectors (e.g., housing, appliances, public transport, solid waste & cement).
• Set up Registry/tracking system for GHG reductions.

Morocco

• Implement climate change mitigation policy as part of National Plan against Global Warming.

PMR Support:

• Establish MRV framework.
• Identify and develop crediting NAMAs in relevant sectors.

South Africa

• Reduce emissions by 34% by 2020 and 42% by 2025 below BAU on condition of international financial and technical support.
• 2011 National Climate Change Response White Paper recognizes mix of economic instruments (including carbon taxes & ETS) and incentives.

PMR Support:

• Analyze interaction between carbon tax and ETS.
• Study design aspects of ETS and new crediting mechanisms.

Thailand

• Per National Renewable Energy Development Plan, reduce energy intensity by 8% in 2015; 15% in 2020; and 25% by 2030 compared with 2005 levels.

PMR Support:

• Legal/institutional frameworks for domestic ETS in factories, industrial estates’ areas and domestic crediting in cities and carbon intensive industries.

Turkey

• Turkish Environmental Law recognizes use of carbon market for climate action.
• Studies underway to establish a carbon market by 2015.

PMR Support:

• Implement robust, installation-level MRV system.
• Pilot market instrument; create carbon exchange.

Ukraine

• Reduce emissions by 20% by 2020 and by 50% by 2050.
• ETS is key part of the proposed Law on Energy Efficiency Regulation.

PMR Support:

• Support for market readiness analysis and capacity of electric power and metallurgy sectors.
• Analysis, planning and implementation of aspects of proposed ETS.

Vietnam

• Renewable energy and energy efficiency are priority areas under National Target Program (2008-15) to Respond to Climate Change.
• Green Development Strategy (expected June 2012) includes proposed GHG reduction target and policy instrument.

PMR Support:

• Participate in new international market mechanism and explore NAMAs for energy, industry and agriculture sectors.
• Review ETS practices, and study of carbon tax options.

Progress and Outcomes

The Programme for Market Readiness aims to provide a platform for technical discussions and the exchange of information on market instruments for mitigation, and to help interested countries build capacity for scaling up their mitigation efforts through market instruments, and to pilot instruments appropriate to their domestic context. Capacity building needs indentified include: “Assessment for utilizing market mechanisms, building/enhancing capacity of data collection, Designing/enhancing existing MRV frameworks to ensure transparency, quality, credibility and consistency with international good practice, carrying out capacity building activities for cross-agency dialogues and broader consultations, facilitate design of policy and legal frameworks for market instruments, piloting and testing effective market instruments.”