149x Filetype PPTX File size 2.00 MB Source: www.afdb.org
The Adaptation Benefit Mechanism TITRE DE LA PRESENTATION • AfDB with support from CIF is proposing an Adaptation Benefit Mechanism (ABM) which would create Adaptation Benefit Units (ABUs) • An ABU is an output or outcome of an activity which makes households, communities or economies economically stronger and therefore more able to withstand climate-induced shocks (hard and soft; concrete and human) • For sale to donors, CSR buyers, philanthropists and anyone currently buying CERs and VERs • ABM is a results-based payment mechanism that uses CDM infrastructure to deliver verified ABUs to buyers in an efficient and transparent manner • Main purpose is to create a price signal for private sector investors ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT • Price signal is monetized via an Adaptation Benefit Offtake Agreement (ABOA) – a bankable instrument just like an ERPA Defining feature of the ABM #1 TITRE DE LA PRESENTATION • ABUs are NOT compliance-based, fungible instruments • There is no compliance obligation and no fundamental need to be able to compare and standardize different kinds of adaptation benefits • Whilst economists would find it useful, commoditizing adaptation suggests that we can create an algorithm that can quantify human suffering • There are at least three upsides to this approach: – The units in which ABUs are denominated do not matter (very significant implications for the complexity and costs of monitoring and verification); – The ABOA is a commercial transaction between a willing buyer and seller; – The mechanism escapes the major disadvantages of the CDM – the un- even playing field, the impact of speculation, rewarding of poor performance and environmental liability ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT Defining and counting ABUs TITRE DE LA PRESENTATION • For example, anything which improves opportunities for economic activities or protects assets from flood or drought, makes household economically stronger and hence better able to cope with shock – Clean / efficient cookstove reduce time spent collecting firewood and improve indoor air quality = better health = more productive lives: HH using clean cookstoves per annum – Flood protection for villages and agricultural land protects assets: Communities protected from flooding for a decade – Connecting a household to an electric (mini) grid improves economic output, education, communication etc and makes households more resilient: HH connected to a grid – Implementation of Climate Smart Agriculture make farming yields more resilient to climate shock: HH applying CSA per annum • These are the units that would be offered to buyers for sale ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT Defining feature of the ABM #2 TITRE DE LA PRESENTATION • An ABM fits better under the Paris Agreement because the principal unit – an Adaptation Benefit Unit – is relatively independent of the primary accounting units of the Paris Agreement • i.e. in claiming credit for creating ABUs and “counting” them, the mechanism is not interfering with the host country’s efforts to achieve its NDC • AND in addition, most adaptation benefit projects will have mitigation co-benefits. Like Sustainable Development benefits under the CDM, these are unquantified and are “left behind” in the host country • These un-quantified benefits will be detected in the national inventory and will have the effect of helping the host country ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT achieve their Paris commitment (which is the objective of Art 6 of the PA) TITRE DE LA PRESENTATION How does ABM work? ENERGY, ENVIRONMENT & CLIMATE CHANGE DEPARTEMENT
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