Yannick Glemarec, UNDP, said environmental finance provides unprecedented opportunities for developing countries, but also poses challenges, such as how to combine and sequence different financing instruments. He discussed the MDG Carbon Facilities’ role in addressing these challenges, including increasing access to carbon finance for a broader range of developing countries and project types by providing a one-stop shop service in carbon finance. He added that another role the facility could play includes maximizing the carbon development dividend through developing a MDG Carbon Portfolio, which strikes a balance between cost-effective projects and high development impact projects.

Stephen Gitonga, UNDP Small Grants Program (SGP), discussed the potential for engaging communities in carbon finance, saying that SGP-type projects are very useful for attaining MDG outcomes in agriculture and education, but their low certified emission reduction units are a barrier to accessing carbon finance. However, noted Kitonga, the opportunities to combine small community based projects is an emerging opportunity, emphasizing that UNDP is looking at ways to facilitate CDM activities and other emerging opportunities that incorporate LDCs and SIDS into the equation.

John Van Lewis, Executive Director Climate Investment Network for Carbon Sequestration (CINCS), highlighted CINCS pilot projects including a possible LULUCF reforestation project, saying CINCS projects can fulfill the CDM project demand gap. He provided an example of projected additional income from a traditional West African agro-forestry system, and addressed key issues for pro-poor payment environmental services, including that they must integrate with ongoing field programs.

Noting the ongoing reform in the CDM market, Brian Dawson, UNDP, emphasized that it will become easier and more recognizable to bring small projects into it. He said the MDG Facility’s goal is to develop projects with high MDG outcomes and involve the LDCs.

Discussion: Participants discussed many issues, including: MDG Carbon Finance Facilities’ constraints; the need for capacity building in MDG Carbon Facilities projects; the post-2012 carbon market; and the need to involve communities in projects.

Hans-Holger Rogner, IAEA, described the technical aspects and risks of CCS. He highlighted the various location options for CO2 storage, including depleted oil and gas fields, injection into deep rock formations, and the deep sea, saying that from purely a point source perspective carbon capture might be worth pursuing. He said that CCS requires an additional energy use of 10-40% and addressed the health, safety and environmental risks, saying that not much information exists, but that geologic storage would necessitate appropriate site selection, monitoring, regulation, and remediation methods to stop leakages if they occur.

Heleen de Coninck, Energy Research Center of the Netherlands, said the report assessed potential costs through two lenses: the energy community and the climate policy-making community, noting that costs are variable, but at its cheapest, CCS costs 2-3 cents/Kwh. She noted that capture is the primary expense of CCS and that when used in the energy scenario portfolio, this will make renewable energy and energy efficiency a lesser component of the portfolio, though it would reduce overall costs of mitigating GHG emissions. Highlighting geologic storage as the only current viable option, she said that enough CO2 can be trapped to cover the high end of the economic potential range, and closed by addressing leakage, saying that the fraction of CO2 retained in geological reservoirs, if appropriately managed, is over 99% over 1,000 years.

Erwin Mulders, Ministry of Housing, Spatial Planning and the Environment, the Netherlands, described domestic CCS policies, highlighting the Netherlands' oil industry, saying that they have a transition approach to sustainable energy systems which welcomes all energy options in order to tackle climate change, emphasizing that they do not support ocean storage. He addressed the debate over whether industry or government will pay for CCS, as well as the Netherlands’ nascent debate over whether to store Russian gas or CO2 in their depleted oil fields.

Discussion: Participants addressed many issues, including: the issue of joint implementation and approval for CDM; pricing of renewables versus CCS; current CCS pilot projects; and why the report did not take into account transportation.