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Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016

Market Readiness Proposals (MRP) Presenta>on Country: Peru Responsible agency: Ministry of Economy and Finance (MEF) & Ministry of Environment (MINAM) Date of submission: April, 2016

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 2

MRP Objec>ves and Focus Market Readiness Proposal Summary

Outline

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 3

MRP objec>ves and focus

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 4

u Development of a country-specific NAMA evalua8on framework, ensuring

consistency with Peru’s development, climate and fiscal policy objec8ves.

u Assessment of the current na8onal pipeline of NAMA proposals/concepts and

• ther priori8zed sector mi8ga8on ini8a8ves against this evalua8on framework,

and iden8fica8on of a subset of NAMAs with highest poten8al for GHG emissions reduc8ons credi8ng.

u Elabora8on of the draI MRP for Peru, describing:

§ Proposed core market readiness ac8vi8es at the na8onal level and § Proposed NAMAs and corresponding approaches for credi8ng, for further assessment and design during the implementa8on phase

MRP Objec>ves and Focus

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 5

MRP Review Process

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 6

MRP Review Process

Feedback

Analysis of feedback by Focal Points and PMR team

Consulta>ons

Coordina8on mee8ngs with relevant actors Focal Points mee8ngs with PMR team

Final MRP

MRP reviewed and approved by Focal Points

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016

Specific feedback and comment from PA13: Choice of sectors for pilot credited mi0ga0on ac0ons

Ac8ons taken: In sec8on 2.2.:

• The descrip8on of the Peru Mi8ga8on Ac8on Framework was extended decisively to

facilitate the understanding of the underlying selec8on process

• The output of the Peru Mi8ga8on Ac8on was described in more detail for each of the

selec8on ac8ons, facilita8ng the readers understanding of the selec8on and the areas in which the three mi8ga8on ac8ons excel

• Given its relevance as part of the Peruvian ‘no-regret’ approach, the mi8ga8on ac8ons’

alignment with with RBB framework was highlighted.

• In considera8on of the reduced direct mi8ga8on poten8al of the mi8ga8on ac8on on Solar

PV, Peru has elaborated more on the indirect mi8ga8on poten8al as well as other relevant factors that jus8fy the ac8on’s selec8on. In sec8on 4.:

• In respondence to the Japanese comment, Peru expanded on how the three selected

ac8ons will pave the way towards the enhanced scaled-up credi8ng programs, emphasizing the need for road-tes8ng of a complex system like the MAMS through suitable measures.

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 8

Specific feedback and comment from PA13: Overall consistency of Readiness Roadmap

Ac8ons taken:

• Overall revision of document in par8cular focusing on ac8vi8es and budget

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 9

Specific feedback and comment from PA13: Review and update post-Paris of country context

Ac8ons taken:

• The Climate related Policy on sec8on 1.2 was updated with the inclusion of Peru´s vision for

market mechanisms both pre-2020 and post-2020 under the Paris Agreement, and its rela8on with the PMR.

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 10

Specific feedback and comment from PA13: Clarifica0ons on proposed Mi0ga0on Ac0on Management System (MAMS)

Ac8ons taken:

• A complete descrip8on of the MAMS components and their respec8ve objec8ves was

extended, considering also the process and overall objec8ve descrip8on of the MAMS itself. This was done with coherency across the document where the MAMS is men8oned:

• Execu8ve summary
• Sec8on 1.1
• Introduc8on to sec8on 2
• Sec8on 3.3
• Sec8on 4.1

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 11

Specific feedback and comment from PA13: Linkages of the MAMS with the RBB

Ac8ons taken:

• An extended explana8on of the RBB module and its integrated rela8on with the MAMS was

made in sec8on 3.3, describing its relevance in the priori8za8on of mi8ga8on ac8ons, regarding the accomplishment of specific and measurable goals on priority target mi8ga8on ac8ons for the socioeconomic development. This was also resumed in sec8ons where the MAMS is men8oned.

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 12

Market Readiness Proposal Summary

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 13

Summary of BB 1 Country context - Peru

Economic development and Policy

• “El Perú hacia el 2021”: A highly compe88ve

economy has to be reliant on structures that integrate it successfully into global value chains, so that sustainable economic growth rates can be maintained over 8me.

• Projected GDP per capita growth from USD 9,870

in 2014 to 14,201 by 2021.

• Results based budge8ng (RBB) as a public

management strategy that links the budget alloca8on to measurable products and results that favor development. Energy Profile and tendencies

• The final energy consump8on is s8ll projected to increase by nearly 70% in the next 10 years.
• The energy matrix has become increasingly reliant on fossil fuels because of natural gas (67% in 2000 to

80% in 2013, and is projected to fall just slightly to 76% by 2025).

• Hydroelectricity will regain a part of its share as of 2018 and the share of non-conven8onal renewable

energy sources will increase to 5%. Na8onal Climate Change Strategy iNDC COP 20 LCCA NAMA pledges Na8onal Communica8ons Biennal Update Reports Na8onal Environmental Policy Act

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 14

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons

Mi8ga8on Ac8on Program Mi8ga8on Ac8on Management En8ty Alignment with Results-Based Budge8ng Mi8ga8on Ac8on Development Benefit

• Short version available for Mi8ga8on

Ac8ons on early stages

• Provides input for the future Mi8ga8on

Ac8on Registry

84 10 3

Desk-based analysis of public available informa8on on iden8fied mi8ga8on ac8ons Interviews and evalua8on of detailed informa8on provided

• 1. Cement NAMA
• 2. Solid Waste Management

NAMA

• 3. Mi8ga8on Ac8on on

Distributed PV panel

• Based on the adapta8on of the Evalua&on

Framework of Mi&ga&on Ac&ons developed by the Task Force to Catalyze Climate Ac&on led by the World Bank Peru Mi8ga8on Ac8on Evalua8on Framework Evalua8on Process The PMR will facilitate the crea8on of capaci8es that will foster the sector´s MRV system and set the ground for an addi8onal source of poten8al funding

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 15

• Aims at developing a framework that reduces

emissions and increases the sector´s compe88veness, simultaneously General Descrip>on Mi>ga>on Poten>al

• Large subset of poten8al mi8ga8on ac8ons with

varying emissions reduc8on poten8al in the sector Ins>tu>onal

• rganiza>on
• Highly regulated sector
• MINAM is promo8ng this NAMA with commitment from

PRODUCE, ASOCEM (Private sector) and VIVIENDA MRV and MBIs experience

• Limited experience in MRV
• Sheets and manual guides developed by The Cement Sustainability Ini8a8ve (CSI) and

includes the system Gekng the Number Right (allows benchmark with companies from different countries)

• The sector have experience in employing a func8oning RBB mechanism and is

preparing to include the NAMA-related ac8vi8es in a RBB Exis>ng support

• Funding from UNDP’s “Low Emission Capacity Building Programme” for the design

stage

• Donor support from MRP would primarily be needed for MRV

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Cement NAMA

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 16

0" 5" 10" 15" 20"

PM1" PM2" PM3" PM4" PM5" PM6" PM7"

Módulo:"Programa"de"la"Medida"de"Mi8gación"

37.1" 16.8" 70" 30" 0" 10" 20" 30" 40" 50" 60" 70" 80" EG1" EG2"

Módulo:"En8dad"Gestora""

7.8" 41.3" 30" 70" 0" 10" 20" 30" 40" 50" 60" 70" 80" PPR1" PPR2"

Módulo:"Alineación"PPR"

0" 10" 20" 30" 40"

BD1" BD2" BD3"

Módulo:"Contribución"Desarrollo"Sostenible"

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Cement NAMA

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 17

• Aims at ini8a8ng and accelera8ng the sectoral

uptake of technologies with large poten8al mi8ga8on and sustainable development co-benefits in the solid waste management sector. General Descrip>on Mi>ga>on Poten>al

• 8,341,649 tCO2e over 15 years, assuming the use of

three technologies, and 10,013,446 tCO2e, assuming the use of four technologies Ins>tu>onal

• rganiza>on
• Managed by MINAM
• It can build on exis8ng infrastructure within SIGERSOL

MRV and MBIs experience

• SIGERSOL can provide important informa8on on exis8ng waste management pamerns
• Four registered CDMs that focus on reducing the emissions of solid waste emissions
• Strong alignment with an exis8ng RBB mechanism

Exis>ng support

• A 2-year program supported by NEFCO and NOAK “Programme for suppor8ng up-scaled

mi8ga8on ac8on in Peru’s waste sector under the Nordic Partnership Ini8a8ve”.

• Poten8al synergies with IDB/JICA “Project for the Development of Solid Waste

Management Systems in Priority Areas”.

• Poten8al synergies with the Chiclayo project on the improvement and extension of the

Integrated Solid Waste Management System financed by the Swiss Development Coopera8on.

• Poten8al synergies with projects in Arequipa, Pucallpa and Tacna financed by KfW

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Solid Waste Management NAMA

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 18

0" 5" 10" 15" 20"

PM1" PM2" PM3" PM4" PM5" PM6" PM7"

Módulo:"Programa"de"la"Medida"de"Mi8gación"

30.8" 16.8" 70" 30" 0" 10" 20" 30" 40" 50" 60" 70" 80" EG1" EG2"

Módulo:"En8dad"Gestora""

16.8" 47.6" 30" 70" 0" 10" 20" 30" 40" 50" 60" 70" 80" PPR1" PPR2"

Módulo:"Alineación"PPR"

0" 10" 20" 30" 40"

BD1" BD2" BD3"

Módulo:"Contribución"Desarrollo"Sostenible"

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Solid Waste Management NAMA

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 19

• Proposes distributed PV as an alterna8ve energy supply for rural areas and isolated

communi8es, which cannot be supplied with energy from conven8onal grid systems. General Descrip>on Mi>ga>on Poten>al

• 150,000 PV panels that will provide 410,000 household, 7,530 health centers, and 2,100

schools, resul8ng in a referen8al emission reduc8on per year of 0.046 MtCO2e.

• Great social and economic impact (co-benefits) mainly in base of pyramid popula8on.
• Aligned with na8onal (poverty reduc8on) and sectoral (energy access) priori8es.
• Has its own RBB that allows to contemplate implementa8on in the short term.
• Meaningful scalability through a diverse set of small-scale distributed mi8ga8on ac8ons.

Ins>tu>onal

• rganiza>on
• The regulatory framework for the mi8ga8on ac8on is well established as it is already

under implementa8on MRV and MBIs experience

• CDM efforts have provided

methodologies for the different technologies applied in the distributed PV mi8ga8on ac8on Exis>ng support

• MINEM has signed an investment

contract over the installment of 150,000 PV systems and its opera8on and maintenance for 15 years

• No donor support

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Distributed PV Panel

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 20 0" 2" 4" 6" 8" 10" PM1.1" PM1.2" PM1.4" PM1.5" PM1.6" PM2.2" PM3.4" PM4.1" EG1.1" EG1.3" EG2.3" PPR1" PPR2" BD1" BD2.3" BD3.1"

Puntaje(Máximo(y(Obtenido(por(Indicador(Clave(

Summary of BB 2 Assessment and ra>onale for focusing on priority target ac>ons – Distributed PV Panel

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 21

Emissions Reduction Mitigation Actions Mitigation Action Assessment MRV System (at a National level)

InfoCarbono Registry

Summary of BB 3 Market readiness components for Peru to develop poten>ally Credi>ng Mi>ga>on Ac>ons

Quality assessment to ensure minimum requirements for proposed mi8ga8on ac8ons, based on the Evalua8on Framework Database of the ini8a8ves that will be accepted and approved, accoun8ng for their development stage A database and accoun8ng tool of all GHG emissions reduc8on generated Instruments and procedures guaranteeing that the implementa8on of all mi8ga8on ac8vi8es and GHG emission reduc8ons meets clear standards and regula8ons MAMS will have to coexist and feed other data management systems Objec>ve: iden>fy and promote high quality mi>ga>on ac>ons and keep an accurate account of all individual tons of GHG emission reduc>ons that are the result those ac>vi>es, whether to be used to fulfill na>onal commitments or to be creditable and sold, while avoiding double coun>ng

Increased TRANSPARENCY

Func8onal registra8on plaqorm

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 22

Summary of BB 3 Ac>vi>es

3.1 Define and develop the ins>tu>onal structure and the legal framework for a Na>onal Mi>ga>on Ac>on Management System 3.2 Design and introduc>on of a Na>onal Mi>ga>on Ac>on and an Emissions Reduc>on Registry 3.3 Design and introduc>on of a Na>onal monitoring, repor>ng and verifica>on system for mi>ga>on ac>ons in Peru (at a Na>onal level) 3.4 Design of a Na>onal Mi>ga>on Ac>on Assessment Framework

3.5 Develop capaci>es on the Mi>ga>on Ac>on Management System, including for the Mi>ga>on Ac>on Assessment Framework and the monitoring and repor>ng system for each of the three pilot ini>a>ves

3.6 Develop a roster of independent verifiers for the MAMS Design of MAMS components Capacity Building MAMS Ins>tu>onal and Legal framework Registry MRV Mi8ga8on Assessment Legal framework Assessment and MRV Roster of Verifiers

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 23

Summary of BB 4 Planning for scaled-up GHG credi>ng

BB3: Design of the MAMS – Readiness system BB4: Highly accurate, poten8ally creditable, emissions reduc8on through road tes8ng the MAMS BB2: iden8fy the most suited ac8ons to test the MAMS Feedback process

Crucial step to adjust the system prior to scaling it up

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 24

Summary of BB 4 Ac>vi>es

4.1 Develop and improve the baseline and mi>ga>on poten>al for each of the three pilot ini>a>ves 4.2 Development of the MRV System in each of the three pilot ini>a>ves 4.3 Apply and improve the Mi>ga>on Ac>on Management System 4.4 Enabling ac>vi>es for the Cement Industry NAMA 4.5 Enabling ac>vi>es for the Solid Waste Management NAMA Readiness ac>vi>es for each of the 3 pilot projects MAMS applica>on Enabling condi>ons Quan>fica>on MRV, Capacity building Instrument design, MRV, Capacity building Regulatory and ins>tu>onal framework, Domes>c demand, Capacity building

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 25

Summary of BB 5 Organiza>on, Communica>on, Consulta>on and Engagement

Ins8tu8onal structure of the implementa8on Implementa>on Establishment and

• pera>on of the

Technical Coordina>on Unit Define and implement the outreach and engagement process Engagement process Ac8vi8es for BB5

PMR STAFF PMR BUDGET

• 6. Technical Coordination Unit (PCU)

MINAM

• 1. Steering Committee

MEF-MINAM

• 5. National Director (MINAM)
• 11. National /International

Consultants

• 11. National /International

Consultants

• 11. National /International

Consultants

• 2. Implementation and

Monitoring Technical Commitee MINEM-PRODUCE-MINAM

• 8. Communication´s specialist
• 10. Technical Specialist 1
• 3. Private Public Advisory Board

PMR Peruvian Stake Holders

• 4. Administration Unit

UNDP

• 9. Administrative Assistant
• 10. Technical Specialist 3
• 7. National Coordinator
• 10. Technical Specialist 2

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016 26

Summary of BB 6 Schedule and Budget – phase 1

The Peruvian Government will complement the PMR funding with an in-kind contribu>on of US$ 200,000

Building Block Activity Budget (US$) Quarter Year 1 Year 2 Year 3 1 2 3 4 1 2 3 4 1 2 3 4 BB3 3.1 Define and develop the institutional structure and the legal framework for a National Mitigation Action Management System 250,000 x x x x x x x x x x x x 3.2 Design and introduction of a National Mitigation Actions and Emission reductions Registry 350,000 x x x x x x x 3.3 Design and introduction of a National monitoring, reporting and verification system for mitigation actions in Peru (at a National level) 200,000 x x x x x x 3.4 Design of a National Mitigation Action Assessment 100,000 x x x x 3.5 Develop capacities on the Mitigation Action Management System, including for the Mitigation Action Assessment and monitoring and reporting for each of the three pilot projects 200,000 x x x x x 3.6 Develop a roster of independent verifiers for the MAMS 60,000 x x x x BB4 4.1 Develop and improve the baseline and mitigation potential for each of the three pilot initiatives 200,000 x x x x 4.2 Development of the MRV System in each of the three pilot initiatives 300,000 x x x x x x 4.3 Apply and improve the Mitigation Action Management System 300,000 x x x x x 4.4 Enabling activities for the Cement Industry NAMA 120,000 x x 4.5 Enabling activities for the Solid Waste Management NAMA 120,000 x x BB5 5.1 Establishment and operation of the Technical Coordination Unit 600,000 x x x x x x x x x x x x 5.2 Define and implement the

• utreach and engagement

process 200,000 x x x x x x x x x x x x TOTAL PMR funding request 3,000,000

Peru’s Market Readiness Proposal (MRP) PA14 – Lima – April 2016

Market Readiness Proposals (MRP) Presenta>on Country: Peru Responsible agency: Ministry of Economy and Finance (MEF) & Ministry of Environment (MINAM) Date of submission: April, 2016