1、Applicability of sectoral CDM options taking Chinas iron and steel sector as an exampleDUAN Maosheng Tsinghua University, China June 4, 2009Outline1. Rationales for the Sectoral Approach2. Assessment of Major Proposals3. Possible Way Forward2Rationales for the Sectoral ApproachAddressing Current Cha

2、llenges Low system efficiency Complicated methodological requirements Inconsistency treatment of similar projects Uncertainties regarding validation/registration/verification/issuance High transaction costs Very limited contribution to technology transfer Additionality of CDM projects3Rationales for

3、 the Sectoral ApproachNew Expectations Deeper involvement of developing countries Scaling-up of the supply International competitive concerns Leakage concern Cost-effectiveness by dealing with major emitting sectors4Major Proposals on Sectoral ApproachAbsolute Target-based Approach Intensity-based A

4、pproachPolicy-based ApproachTechnology-based Approach1.2.3.4.5AssessmentCriteriaAdditionality (offsetting mechanism) Verifiability (data availability and credibility)Encouragement for mitigation (reduced uncertainty) Transaction costs and cost distributions Ownership and distribution of CERsLinkage

5、with the current systemOther challenges1.2.3.4.5.6.7.6Absolute Target-based ApproachConcept (no-lose pre-defined absolute target)Significant fluctuation of the development of the sector, and difficulty of future projectionAdditionality challenge and attractiveness (hot air vs. acceptability)Data cha

6、llengeOwnership and distribution of CERs, and encouragement for mitigation efforts by specific enterprises in the sectorComplicated intl. procedures for both target setting and emissions verificationExclusion of current CDM projectsHuge domestic capacity requirements for host countries1.2.3.4.5.6.7.

7、8.7Absolute Target-based ApproachChinas Annual Steel Output and Relevant Growth Rate from 1980 to 2007 (Unit:10,000 tons)8Intensity-based ApproachConcept (overall sector or specific processes) Diversified products and needs for different intensitiesDifferent technologies and processes and underlying

8、 divergent emission intensities (BOF vs Electric)Technology diversity within the sector (most advanced vs out-of-date, big vs small)Inter-linkage of different processes and difficulty in attributing energy consumption and emissions to specific processes1.2.3.4.5.9Intensity-based ApproachUniform targ

9、et vs additionality and encouragement for mitigationIntensity targets for major processes of specific technologies vs targets for all processesData, distribution and huge initial cost challengeExclusion of current CDM projects and underlying difficulties6.7.8.9.10Intensity-based ApproachEnergy Consu

10、mption Intensity of Irion Production11180%160%140%120%100%80%60%40%20%0%日本韓國(guó)歐盟中國(guó)大中型中國(guó)中小型美國(guó)俄羅斯 China MAS.160%US.120%Russia.125%EU 110%China LAM.110%Japan.100%Korea.105%Policy-based ApproachAdditionality demonstration needs and contradiction with the ordinary policy processDifficulties in assessing th

11、e mitigation effects of one policy from the integrated resultsGovernment ownershipDistinction from absolute target-, intensity- or technology-based approaches, for they are the targets of specific policies (development target, energy and thus emissions intensity, technology application)1.2.3.4.12Tec

12、hnology-based ApproachConcept: list of eligible technologies and automatic eligibility of corresponding projectsEnvironmental integrity could be ensured through conservative technology selection and baseline settingPossible huge data requirements at the beginning stage while similar to the currentpr

13、ocess, and publicly available and credible data through participation of professional organizationsProject-level data requirements at the verification stage Clear ownership1.2.3.4.5.13Technology-based ApproachNeeds for addressing technology diversityPossible high initial transaction costs and significantly reduced transaction costs for project participantsStrong encouragement through reduced uncertainties on eligibility and emission reductionsEmission reductions at project level and similarities to current system6.7.8.9.14Possible Way ForwardSerious challenges for all approaches Techn