The policy and plan on CDM

1. Italian Ministry for the Environment and Territory Department for Global Environment, International and Regional Conventions The policy and plan on CDM Forum MDP Maroc Marrakech, April 22 2004

2. Structure of the presentation • The Italian context • The National Action Plan • The Role of the Flexible Mechanisms • Actions of IMET • Conclusions

3. Our context: energy intensity Energy / GNP ** (Toe / 1000xUS$) * Note: without Norway from 2002-2012 ** Note: 1995 PPP Source: Italy 2003 Review, International Energy Agency

4. Our context: carbon intensity Emissions /PIL ** (t CO2 / 1000xUS$) * Note: without Norway from 2002-2012 ** Note: 1995 PPP Source: Italy 2003 Review, International Energy Agency

5. Our context: a scenario Emissions – energy use (Mt of CO2)

6. 120 GDP 115 total energy consumption CO2 emissions 110 CO2 Intensity Index 1990=100 105 100 95 90 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Our context: the whole picture

7. Our context: summary • Low energy and carbon intensity of the economic system • Peculiar energy mix (no nuclear energy by choice, importance of gas and RES) • Ambitious reduction targets (-6,5%)

8. National Action Plan: principles A climate change policy based on a few principles: • Maximizing economic efficiency • Exploiting synergies between climate change policies and other policies • Promoting technology innovation and diffusion • Integration of carbon finance activities in existing project finance activities • Facilitating global partnership

9. National Action Plan: figures Additional domestic reductions Additional use of the flexible mechanisms Italy’s Kyoto target

10. National Action Plan: role for the flexible mechanisms • Project based carbon credits xpected to offset national emissions reduction of the first CP between 10% and 50% • Flexible mechanisms will contribute to the overall foreseen reduction through: • Activites sponsored by public institutions • Activities carried out by private companies • The exact extent, to which flexible mechanisms will contribute, will depend on the evolution of both the carbon market as well as national abatement costs.

11. Actions of the IMET Specific actions undertaken: • Exploring institutional settings for JI/CDM implementation; • Experimenting with the JI/CDM project cycle; • Investing in credit generating facility; • Preparing for the increase in direct investments abroad.

12. Exploring institutional settings for JI/CDM implementation • Italy has signed a Memorandum of Understanding with China, Serbia, Moldavia, Croatia, Romania(LoI), Slovenia, Poland, Bulgaria, Morocco, Egypt, Algeria, Cyprus, Israel, Cuba, Salvador, and Brazil (LoI); • Italyhas enhanced international cooperation programs with Southern Mediterranean and Balkan countries, and particularly with China.

13. Project Type Number of Projects Energy industries (renewable source) 23 Energy industries (non-renewable source) 8 Waste handling and disposal 7 Transport 4 Energy demand 1 Construction 2 Experimenting with the JI/CDM project cycles A number of projects opportunities are being explored under a variety of implementing conditions:

14. Investing in credit generating mechanisms In order to explore the potentials of investment in credit generating mechanisms Italy has: • signed an agreement to contribute US$7.7 million to the World Bank's Community Development Carbon Fund (CDCF). The Fund supports small-scale projects in the least developed countries (LDC) and poor communities in developing countries which generate GHG emissions reductions; • set up the Italian Carbon Fund with the World Bank for GHG emissions reductions.

15. The Italian Carbon Fund Main features: • The fund supports projects eligible under the Kyoto Protocol’s CDM and JI mechanisms through the purchase of credits; • The fund is a public-private partnership currently endowed with US$ 15 million, but with a target size of US$ 80 million; • The fund will buy emissions reductions credits, but at the same time will assist host countries in achieving sustainable development by leveraging substantial investments in modern energy services and technologies, including investments from the private sector;

16. The Italian Carbon Fund (2) • The fund is operational since January 28th, 2004; • The income from payments received from the participants in the fund will be held in a separate trust and used for capacity-buildingand research—thus leading to the creation of supportive project approval systems in host countries; • The Fund’s project portfolio is proposed to include support for a wide range of technologies and regions, including China, the Mediterranean Region, as well as the Balkans and the Middle Eastern countries.

17. Italian Ministry for the Environment and Territory Conclusions • Italy has an ambitious emission reduction objective which would be difficult to achieve solely through domestic measures; • Flexible mechanisms provide viable alternatives in the framework of global partership; • Italy will be a player and a reliable partner on the global carbon market; • IMET has already taken some actions at international level, but much more is coming in next few months.

18. Italian Ministry for the Environment and Territory Thank you for the attention www.minambiente.it