 Felly y prydysig yn fwy o'r llunygu ddweud ym cyfyrdd. H1rn o'n ddayl am wneud fwy fyddio mi, gallai llawer yn y blynedd ym wahanol. Dwi'n fyddech chi'n cael eu hynny'r 20 ychwaneg ei gadw ddiwedd, mae'n gwybod llai ychwaneg unig i ddydd y barhau a'r neud. Y prydysig yn fwy o'n ddweud. Ond yn eich gweld drwy'r mwy o'r llunau ar y gwasanaeth am y markedoedd cofnoseidol, mae'r arferyn ni'w'n iawn fel cdm, a'n weithio ar y dyfodd. The Carbure market is not in great straits at the moment. The price is very low, and the prospects of the price going up... ...don't seem very high in the medium term. In that sense, there's a lot of depression amongst the market players. This is a long-term problem and a long-term issue. One might not see a lot of change in the medium term. ynghylch yn y bwysigol yn y mod i'r ffyrwyr yng ngryfnidol. Wrth gwrs, ond rwy'n ddim yn fawr i'r ymgwrdd ymlaen o'r 10 yn ymddir i'r ffyrwyr, rwy'n ddigon i'r ffyrwyr, rwy'n ddigon i'r ffyrwyr, rwy'n ddigon i'r ffyrwyr, rwy'n ddigon i'r prysau sydd ym ym 90 euro a'r eiffanfaith yma yng nghylch yn ymwybr. Rwy'n ddigon i'r eiffanfaith ym 90 euro a'r prysau ym ymwybr yn cael ei ddwylliant. Ac wedi bod nhw'n golygu o wirio efalwys. Iddo yn y gyfnoddo gwahanol ffyrdd. Yn y rhaglen oedd y gallwn gwahanol gwahanol ar hynny, maen nhw'n gyffredinol i hwnnw o'r hynny. mae'n fwylo sy'n gwahanol yn gweithio gwahanol ar gyfer. Mae'n meddwl hyn o'r benifatau cyffredinol iawn. Mae hynny'n cyffredinol sydd ymddangos gan gael ei gwahanol. Ac mae'r ddweud yn gweithio gweithio'r ddiddordeb yn gweithio'r ddweud. I'm lucky enough to work for a government that wants the EU to move to 30 per cent as soon as possible, looking around, basically to drive domestic mitigation and green growth, as is seen from the UK perspective, but also to drive carbon markets. I would say that working on the CDM, certainly a lot of the issues that we've had to deal with are delivering an efficient mechanism to deliver a low carbon price, essentially to deliver cheaper baitment options to the world. But that said, the CDM has had another role of perhaps more processalising, have I said that right, role in the sense that many people don't know what to do about climate change, find it a little bit daunting to deal with, and the CDM has demonstrated across the world in 70 countries, as I'll get on to what it is possible to do about climate change and created constituencies of people that would never have met before. I'm always amused. I've got quite a pompous British lawyer friend who several years ago would ring me from Paddy Fields in China to say he was doing deals with Chinese farmers on emission reductions. For me, this is epitomised exactly what the carbon market has done. It's brought together a range of finance, agriculture, technical experts, and demonstrates what's possible to do. Anyway, my first picture, the talk of CDM, the carbon market after Durban, I have to thank somebody in the audience for this, as a member of the Irish delegation took it, because Ireland is situated beside India. This is a kind of seminal moment in the negotiations for those that were there. It's a bit like a rugby match at the end, where we agreed something called the Durban platform and a negotiation on a new treaty. While there wasn't a lot agreed on mitigation, I said it was the most important bit, probably of all of this, there's a further discussion about what the targets should be and how people are going to contribute to it, there was an agreement on another process to develop new market mechanisms, which I'll get to. So, let me talk a little bit more generally. Hopefully I'll be quick and you'll forgive me for the lack of figures. It strikes me whenever I talk about the CDM and I've been doing in the chair for the last year. I meet a lot of angry people and I'll figure out why they're angry with me. It's controversial necessarily because it deals with climate change, which some people reject as happening. Others say that the CDM and market instruments are insufficient to deal with climate change and others are merely depressed. So there's a whole range of people that are angry with the CDM for not delivering on climate change or in fact for trying to address it. That's one constituency. I then have dealt with a lot of people that hate markets and market instruments. They feel that this is neocolonialism and unleashing market forces across the world and delivering negative impacts. And others that say again the price signal is inadequate, the system is inefficient and inefficiently regulated or merely depressed about the carbon price. And then finally you've got international cooperation, which is something that you either like or don't, but it certainly doesn't work as well as it might and doesn't deliver as quickly as it should. But the CDM involves all three of these things and for me it demonstrates what's possible. It's certainly not enough, but it does work. We have a 10-member board that supervises this mechanism and we have delivered in our way. Not enough, but something. I think the other thing when you look at this is to be confident in the long-term future. Because climate change is happening, it's a long-term problem and it's not going to go away, even though people might want to put their head in the sand about it. So that gives me confidence that it will be addressed because I'm an optimist. It's pretty clear that you're not going to get the level of investments that you need without market instruments and for that reason, because it reduces the costs of doing something, I'm pretty confident that market instruments are part of the future and Durban I think would have reinforced that. And the third issue is that you can't, I think everybody has to do an amount of domestic action to contribute, but you can't solve this problem without international cooperation. It's a global problem, a ton of carbon is a ton of carbon, wherever it's emitted. So you need to have international cooperation work to deliver on it. Anyway, that's the top of my head, that's Durban. So vast generalities so far. I'll do a little bit of detail. What is the CDM? Well, it's creature of the Kyoto Protocol. It is a project mechanism which makes it difficult. Essentially what it does is it produces emission reductions in developing countries which can be sold to developed countries that have targets to meet those targets. The market at the moment is 70% in the EU, the EU ETS, because it's probably the only major economic block that's delivered a carbon market. And the CDM has been driven primarily by that. And so far as 861 million tonnes of carbon, 3,800 projects in about 70 countries. So while it's the second biggest carbon market, the EU is the biggest, it's got the broadest reach and it operates in places as diverse as Bikino Faso to China. Famously, half of the projects in the emission reductions come from China or about 70% dropping down to 50 recently. So it's got massive reach. People have got different ideas in their heads about what it's about. For some it's sending too much money to China that would be a very American critique of it. There are large industrial projects, about 20 of them, that are highly profitable. And the vast majority of credits have come from there and the prices have been very high. That said, it forgets a whole range of smaller scale projects across the world. This is an example of one, I believe in India, increased efficiency in brick kilns. There are thousands of them, many of them with environmental and other benefits. CDM boards, essentially 10 members from around the world with quite different expectations of what the job is, were independently appointed in the sense that we act in a personal capacity and elect our own people. I was elected chair at the beginning of the year, not by any government but by the members of the board. And we have an incredibly difficult job to do. The two core jobs are additionality, ensuring that these projects actually deliver real emission reductions, i.e. they wouldn't have happened anyway and that the tons of carbon that are associated with our calculations are correctly calculated. We have a massive controversy at the moment. We have coal plants being credited, which I can talk about where there's a big dispute as to whether they're both additional and whether the baseline is appropriately set. In the past, we've had similar controversies around a range of things, HFCs, the industrial gases being another. Some people view this as being a quite technocratic analytical exercise. If you're an economist, you think financial analysis is the best. If you're a technologist or an engineer, you think that technological benchmarks and predictions of technological improvement are the best. And we have both economists and engineers within the board that make arguments around that. I can talk about it in greater detail. For me, I think what's forgotten, there are many people that claim these projects are just not additional, they would have happened anyway, or that they're clearly additional. It's plainly a judgment call. You can't actually know or say what would have happened in the absence of the CDM. There's a judgment call which various pieces of evidence will support or not support, and we make difficult judgment calls all the time. The other issue is sustainable development. The CDM is meant to deliver sustainable development. Of course, that term means a lot of things to a lot of people and different things to a lot of people. We have done a report on the Sustainable Development Benefits of Projects, and it indicates that quite a large number of them have either social or environmental benefits. Typically, we've had a whole range of, say, pig farm projects in Indonesia where, at the beginning, you had open sewers which were prone to explosion in some examples which are now regulated, capture the gas and provide energy to local communities. And hundreds of examples of projects where there's an environmental or social benefit attached to them. At the same time, we've had controversies because the expectation that that phrase brings forward, the most difficult things that I've had to do during the year, have been accusations of human rights abuses where people have suggested that the CDM itself is driving human rights problems in developing countries, which I think is somewhat unfair in the sense that I don't think that the CDM itself drives human rights abuses, but at the same time, I think we're probably ill-equipped to deal with difficult situations that we're faced with. Again, a problem of international cooperation. We work in 70 countries. Some of them have lower standards of environment, social and democracy than one might have. So, to go back to my three themes, we have business, NGO and countries arguing that we don't deal effectively with climate change. We don't regulate the market effectively or we've unleashed market forces in a dangerous way and that we are an inefficient body. The international cooperation that we exercise doesn't work very well. And the CDM has got itself a bit of a bad name, I think quite wrongly. Now, why that's the case, I think it's taken a long, long time for us to become sophisticated in what we do and even longer to become sophisticated in how we communicate. But the CDM has got a certain reputational problem. Also, this year we've been faced before Durban with the idea that we're not sure whether the Kyoto Protocol continues. We're not sure whether there will be mitigation commitments from major parties. And the CDM itself was a bit of a political football between the parties to the climate change negotiations with some parties saying, unless you do the Kyoto Protocol, you can't do CDM, so you won't have access to this cheaper baitment potential. And others saying, we will have access to it regardless of whether Kyoto happens or not. And in that context, the board decided that we would need to one, perhaps restore our reputation or at least open up a dialogue with all the stakeholders with all of their problems, whether they relate to climate or social impacts or whatever, and invite them to make their critique, a fundamental critique of the CDM, what they think is wrong with it and how it might be improved, but also to go around to various actors who are developing carbon markets at the moment, which I'll get on to and ask them what they want out of the CDM. The European policy context is that, as you know from 2012, the CDM can be purchased or new projects, and LDCs are the only things that are valid in the CDM. So, less developed countries, sorry, I've got an acronym problem, but we are only buying from less developed countries in the EU. And that basically consigns the CDM from a European perspective only to a certain limited amount of emissions and a small number of countries. At the same time, Australia has come online to their emissions trading scheme, which is beginning to deliver demand about 300 million tonnes, I'm told, to the system from 2015. So part of this dialogue is to go out to those that are developing emissions trading schemes, including in China, California, other places, and ask them what they want out of it. The EU seems to have lost faith with the system, whereas other countries are just coming on stream. The EU will of course be a key stakeholder because one of the decisions that needs to be made about the future of the EUETS is how additional demand would be put into the system. I can say that confidently from a UK perspective anyway. The prices are depressed, and while there are many exercises seeking to exclude supply from the system, they are suboptimal in the sense that the best thing to do would be to increase demand and increase the levels of emission reductions from a climate perspective. So all is not lost in the EU, and it is possible in the context of a move to 30%, or perhaps even more, that the EU might buy a proportion of its efforts from the CDM again. But there's a new kid in town since Durban, and I'm terrible at this. This is a terrible slide, so that is the conference centre in Durban. We agreed, and as part of the team that agreed, we agreed to establish new market mechanisms during the Durban negotiations. Something that the EU has been arguing for for the best part of four years and has mainly been rejected by developing countries. One, because of the love of the CDM, and two, because these new market mechanisms are seen as a way of forcing targets on developing countries to big problems with pushing it. The EU policy has basically been driven by the analysis that the CDM delivers credits from business as usual in developing countries, but as we move forward, we need developing countries to add their own mitigation actions to the mix side. They need to start contributing to emission reductions, and the CDM doesn't seem like an obvious instrument to do that. It could happen, but it was decided we needed a political conversation about the source of market instruments that would deliver a mitigation action by developing countries. The other problem is that the CDM is a project-based mechanism only, and therefore necessarily delivers at a smaller scale than might be possible if you had a sector or segment of the economy approach, and that's been behind the new market mechanism proposal. Finally, we've had one objective, which is that we need to, if we're looking at a world where the carbon markets and it is an idealistic proposition, but I think a necessary proposition that we will have a large carbon market, is that we're going to have a carbon market where 30% of emission reductions that we achieve in the world are going to be traded, i.e. that the carbon market represents a substantial proportion of the finance for emission reductions. We need to have some surety in the accounting for that. There's no point in us reducing our emissions 50% or 90% by 2050 without us all having security that what we're buying and selling has been accounted for according to the same system. Again, this proposal from the EU has been, in one sense, a way of capturing all of the bottom-up initiatives that we're seeing and trying to accommodate the Chinese trading scheme. Ironically, China is moving forward more quickly than the US, which a couple of years ago might have seemed strange, to accommodate those systems within the international framework and make sure that they are usable towards international targets when they come along. That's a quick review of where we are. There's a lot of uncertainty. I'm going tomorrow to launch the review. We have 10 independent experts appointed by me and Christiana Fogueras of the UNFCC. They come from civil society business and from the public sector. They have hopefully very little to do with carbon markets and they're not directly involved in the game. They're credible independent experts. They will meet and they will run the show on the CDM review. The questions for them will be how do we deal with the criticisms around additionality, around sustainable development, human rights, efficiencies of the system? How might we scale up the CDM? Maybe it could be a competitor to these new market mechanisms. How do we make the CDM more accountable to its stakeholders? How would we get that to happen? How maybe would the CDM start to contribute to that action? Those are pretty clear questions that have been raised in the sorts of consultation responses that we've had so far. I'm not clear what the answers to that are, but we're expecting a report. My hope and vision of it was that it would be a stern review for the CDM. Something that everybody could sign up to. Perhaps not everybody signed up to the stern review, Frank. In a sense, a document that everybody might look to as at least a basis for the future discussion. I know that we are going to review the rules of the CDM next year, so hopefully it will be an input to that and it will lead to a CDM that the EU but also other countries have more confidence in using. When they do, as I think they have to, move to higher levels of mitigation, it might be something that they would use. That's really what that is about. Why would they, given that these new market mechanisms are now on the block, while the timescale for developing the new market mechanisms is such that you can't really see them being implemented much before 2015. We've agreed the principle. We'll be working on the rules for the next year at least and probably for a long time after that. The EU is going to be making a submission on new market mechanisms at the end of the month and hopefully will spell out a programme for their implementation. But we don't see them coming on-stream with a lot of supply much before 2015 and probably after that. In the interim, it isn't CDM or nothing if you want to be involved in carbon markets. Again, one must make a calculation about when substantial demand might again come on-stream. Maybe it won't be much before 2015. But if you believe that we will move to higher levels of ambition between now and the latter part of this decade, the CDM still has a lot of life in it and we need to have a reformed and workable mechanism to deliver on that demand. I think I'll stop there. Quite a lot of generality if you forgive me. I do have a lot of slides with pictures of the project and numbers and prices. But I just thought it might be a bit of an introduction to Q&A. So, thank you.