(PMR) Thailand's Market Readiness Proposal (MRP) Date of Submission
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Thailand’s Market Readiness Proposal th Date of Submission: 7 February 2014 PARTNERSHIP FOR MARKET READINESS (PMR) Thailand’s Market Readiness Proposal (MRP) Date of Submission: 7th February 2014 Responsible Agency: Thailand Greenhouse Gas Management Organization (Public Organization: TGO) TABLE OF CONTENTS General Information .................................................................................................................... 8 Executive Summary ..................................................................................................................... 9 Chapter 1. The Big Picture: Policy Context ................................................................................. 14 1. Development and climate change mitigation plans ..................................................... 14 2. Nationally Appropriate Mitigation Actions (NAMAs) pledge ........................................ 18 3. Historic and projected emissions trends and key drivers of the GHG emissions ............ 18 4. Mitigation actions and plan for implementation ......................................................... 22 5. Carbon market experience .......................................................................................... 24 6. Proposed Activities, Objectives and Budget ................................................................. 25 Chapter 2. The Proposed Programs ........................................................................................... 26 Chapter 2.1 Vision Toward Mandatory Carbon Market .............................................................. 27 1. Background and country’s necessity ........................................................................... 27 2. A vision toward the establishment of mandatory carbon market ................................ 29 3. Proposed Activities, Objectives and Budget ................................................................. 31 Chapter 2.2 Energy Performace Ceritificate Scheme (EPC) ......................................................... 33 1. Assessment and rationale for establishing the EPC scheme ......................................... 34 i. Background ......................................................................................................... 34 ii. Existing relevant policies and political tools ......................................................... 36 iii. The outline and rationale of the EPC .................................................................... 39 iv. How the EPC would evolve into the ETS ............................................................... 41 2. Design of the EPC scheme ........................................................................................... 43 i. Conceptual framework of the EPC scheme ........................................................... 43 ii. Scope and coverage ............................................................................................ 46 iii. Target setting methodology ................................................................................ 51 iv. Allocation of allowances ..................................................................................... 57 v. System for domestic MRV and compliance .......................................................... 59 vi. Fostering stability................................................................................................ 62 vii. Regulatory framework and institutional arrangement ......................................... 63 viii. Use of offset and/or linking consideration ........................................................... 66 ix. Incentives for EPC participants ............................................................................ 66 3. Proposed Activities, Objectives and Budget ................................................................. 70 Chapter 2.3 Low Carbon City Program (LCC) .............................................................................. 77 1. Assessment and rationale for establishing the LCC program ....................................... 78 i. Background ......................................................................................................... 78 ii. Existing relevant policies and political tools ......................................................... 79 iii. The outline and rationale of the LCC .................................................................... 81 iv. LCC expanded to cover all municipalities ............................................................. 84 2. Design of Low Carbon City Program (LCC) ................................................................... 86 i. Conceptual framework of the LCC program ......................................................... 86 ii. LCC program cycle ............................................................................................... 87 iii. Scope and coverage ............................................................................................ 88 iv. Quantification of emission reductions and the MRV system ................................. 90 v. Potential emission reductions generated from LCC program ................................ 92 vi. Regulatory framework and institutional arrangement ......................................... 93 3. Proposed Activities, Objectives and Budget ................................................................. 96 Chapter 2.4 Low Carbon City Program Fund (LCC fund) ............................................................. 99 1. Assessment and rationale for establishing the LCC fund ............................................ 100 2. Design of the LCC fund .............................................................................................. 101 2 i. LCC Fund function and activities ........................................................................ 101 ii. Pricing mechanism for LCC-TVERs & carbon finance .......................................... 103 iii. Promotion, outreach and business development to promote LCC program ........ 104 iv. Potential sources of funding .............................................................................. 104 v. Administrative arrangement ............................................................................. 105 3. Proposed Activities, Objectives and Budget ............................................................... 107 Chapter 3. Organization, Communication, Consultation and Engagement ............................... 111 1. Project management and organization ..................................................................... 112 2. Communication, consultation and engagement ........................................................ 114 3. Proposed Activities, Objectives and Budget ............................................................... 116 Chapter 4. Summary of Schedule and Budget .......................................................................... 119 3 LIST OF FIGURES Figure 1: Key national policies with significant impacts on GHG mitigation ............................. 15 Figure 2: Institutional framework for climate change planning and implementation ............... 17 Figure 3: Thailand’s GHG emissions in 2000 ............................................................................ 18 Figure 4: Thailand’s GHG emissions in 2000-2009 ................................................................... 20 Figure 5: Thailand’s GHG emissions 2010-2050 in the baseline scenario ................................. 21 Figure 6: Scenario comparison of Thailand’s GHG emissions from 2012-2050 ......................... 21 Figure 7: The relationship among EPC, LCC, LCC fund, T-VER and T-COP .................................. 24 Figure 8: Mapping carbon pricing initiatives, the World Bank (2013) ....................................... 28 Figure 9: Thailand’s energy intensity in 1985-2011 (source EPPO, 2013) ................................. 35 Figure 10: Target of the 20-year Energy Efficiency Development Plan (EEDP), EEPO 2013 ......... 38 Figure 11: Major building blocks of the EPC framework ............................................................ 45 Figure 12: Plant boundary ........................................................................................................ 51 Figure 13: Illustration of target setting ..................................................................................... 53 Figure 14: Sectoral target ......................................................................................................... 53 Figure 15: Setting target for DF&Bs .......................................................................................... 56 Figure 16: Broad principles of MRV system ............................................................................... 60 Figure 17: EPC step by step flow chart ...................................................................................... 65 Figure 18: Institutional structure .............................................................................................. 65 Figure 19: The proposed incentive option for EPC participants ................................................. 68 Figure 20: Thailand’s population density and urbanization rate ................................................ 79 Figure 21: Target of the 10-year Alternative Energy Development Plan (AEDP), DEDE 2011 ...... 80 Figure 22: The relationship between LCC and LCC fund ............................................................. 87 Figure 23: Annual GHG emission reduction