Transcript DNA Peru's Framework

DNA- Peru’s Framework
Njeri Wamukonya
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Aim of the presentation
Demonstrate with a real case what
countries may wish to take into account
when establishing DNA
•Not imply that PERU is ‘clone’ to African
country and hence lessons should be
contexualised
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Process of establishing
DNA (1)
1. Determining the market potential and
Peru’s likely piece of the pie
•Factors taken into account:
•International
•Regional and
•National context
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Process of establishing DNA (2)
• International factors:
• USA participation
• Supplementality issues
• Level of implementation
of
potential CDM projects
• Market
regime
(hot
air,
competition)
•(shifts to annex 1- Kazaskhan)
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Process of establishing DNA (3)
• International factors:
• Competition across mechanisms
•ET- hot air e.g. has zero
transaction costs compared to
CDM projects
• Shifts to annex 1- Kazaskhanhence increase in hot air stock
• Non participation by Australia –
implying
15%
of
projected
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reductions
Process of establishing DNA (4)
• Regional factors:
• Relatively high marginal abatement
costs compared to India, China
• Lower dependence on carbon-rich
fuels compared to Asia
• More experience in carbon market
compared to Asia
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Process of establishing DNA (5)
• National factors:
• The extent to
which Peru can
influence CER prices
•Price taker since Peru’s mrkt 1%
• Availability of projects
•Barrier is mainly development
and implementation of potential
CDM projects
•Financing project design and
development is difficult due to
high dependence on external $•
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Process of establishing DNA (6)
• National factors:
• Less than 20%
of GDP is used to
finance
pre-feasibility
and
investment compared to developed
countries –100%.
•Carbon component is 1-10% of
total investment (how to get the
rest??)
• Transaction costs can exceed CER
revenues (especially small scale)
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FDI status
- why investigate this?
•Where is FDI coming from and
what is the origin’s opinion on CDM
•What is the origins possibility for
investing in CDM in Peru?
•main FDI source
•UK
•Spain
•USA
•Netherlands
•Panama
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Key Sectors attracting FDI
•Communications
•Industry
•Finance
•Mining
•Energy
(by order of importance)
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What has Peru done to attract
FDI?
•Established a Foreign Investment
Promotion Law in 1991- lays clear rules
•Law is Complimented by Framework
Law for Private Investment Growth
AND Regulations of the Private
Investment Guarantee Systems
•Foreigners are treated in the same
way as Peruvians and there are no
restrictions on what they can invest in
except should Not be within 50 km from
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the national borders
What has Peru done to attract
FDI?
•A new Private Investment Promotion
Agency, PROINVERSION, was created
with the aim of attracting private
national and foreign investment
•coordinates and negotiates
international investment treaties
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Environmental Institutional
Framework
• 1996
•
the National Council for the
Environment (CONAM) was established
(Equivalent to Ministry)
Prior to this international environmental
matters were handled by the Ministry of
Foreign Affairs
• Most ministries have
Unit
• CONAM
acts as
an environmental
coordinator
and
facilitator of these units
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Environmental Impact Assessment
Process
• The EIA Act mandates
that projects have
an environmental certificate
• The EIA is implemented by each
ministry
in accordance to its needs
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The choice of DNA
• CONAM
was appointed as the
through a supreme decree in 2002.
DNA
• Rationale?
: CONAM had been handling
the CC issues and was chair of the
National Climate Change Commission
which coordinates implementation of
UNFCCC. In addition CONAM works with
all gov and private agencies on
environmental matters
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INSTITUTIONAL SET-UP: WHERE IS CONAM
PRESIDENT OF PERU
Chaired by a
MINISTERIAL CABINET
President
(14 ministers)
Responsible for 7 public agencies
ONE of which is CONAM
Also chair
of
CONAM
Role of DNA
• PERU views the role of DNA as being
• purely approval of projects
• Mobilising
local institutional structure
to embark on the project evaluation
process
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The DNA Structure
• Within
CONAM operation of DNA is
delegated to the Climate change unit
which is mainly responsible for other CC
issues and hence not DEDICATED to DNA
• The CC Unit comprises of 2 persons; head
and an environmental expert
• The CC Unit can seek support from the CC
Cooperation Program or other divisions
within CONAM
• Evaluation of SD is done by a
multisectoral ad hoc committee
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The DNA Structure
EXECUTIVE SECRETARY
HEAD OF CLIMATE
CHANGE UNIT
CC Cooperation
Program
Ad hoc committee
Experts from
CONAM
Environmental
expert
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Legitimising the DNA
• CONAM needed cooperation of Ministries
where potential for CDM projects Lay
• CONAM’s
president communicated with
the
respective
Ministers
explaining
challenges and opportunities in CDM
• CONAM hence sealed the commitment of
relevant ministries to adhere to CDM
approval procedures
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How CONAM works
• CONAM receives the CDM proposal
• CONAM then convenes a technical
committee
with
relevant
Ministerial
representative, expert on project type,
expert on EIA, NGO, Private sector rep,
Foreign Affairs, National Environmental
fund rep
• Approval
letter from CONAM is hence
supported with report from the ad-hoc
committee and the relevant ministry.
Report indicates;
• EIA okay
• Tech proven
• Project is within national and sectoral
policy
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How CONAM works
• Ad-hoc
committee must visit project site
to ensure public is aware of project:
meetings organised by local authorities –
CONAM meets the costs
• Efficient
assessment of project in
terms of sustainable development
• Approval
takes 45 days– enforced by
including in ISO (threat of loosing the ISO
certificate)
• CONAM
has signed an MOU with
Proinversion to promote CDM (as a way to
address conflict of interest). This is the
agency promoting FDI
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Work done so far
• CONAM has approved 3 projects
• CONAM
encourages PP to undertake
activities
demonstrating
social
responsibility
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Financing the DNA
• Estimated cost of approval USD 4800
• This is based on the following activities
• Receiving proposal
• Summary preparation
• Expert opinion time
• Visit to project area (to ensure local
consultation)
• Ad hoc committee meeting
• Approval response (time spent)
• Support activities
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Financing the DNA
• The DNA is funded by government money
• CONAM has employees responsible for
implementing the CDM strategy – I.e the
climate change unit
•Peru currently does not charge the
investor for CERs in order to compete
with other suppliers and promote
private investment.
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