Emissions traders want United Nations climate talks in November to set rules on a trial system of globally linked carbon markets, according to their Geneva-based lobby group.
A market framework recognized by the UN would allow member countries to pursue their own carbon-cutting programs, while providing a “large” pool of tradable emission-reduction credits, Dirk Forrister, president of the International Emissions Trading Association, said yesterday by phone. Prices in the pool may be lower than in individual markets, which would attract nations seeking to cut costs, he said.
“The incentive to participate is that it’s wise to be part of a broad group of countries,” said Forrister, who helped advise former President Bill Clinton on climate protection.
Negotiators at UN talks on a global climate treaty in 2015 due to come into force from 2020 are meeting in Warsaw on November 11 to lay the groundwork for those discussions. Market-based measures to protect the climate are still attractive for nations because they offer the cheapest option, Forrister said, even after a surplus of UN carbon-credits drove prices down 97 percent since 2008.
IETA’s proposed framework would provide accounting standards and help ensure environmental integrity, according to the lobby group’s Sept. 2 submission to the UN that was e-mailed to Bloomberg News. The UN sought input from nations, industry and environmental groups on how to coordinate countries’ diverse climate-protection strategies.
Carbon budgets
The framework’s “market oversights body,” elected by countries in the system, would create and oversee a new type of carbon permit, similar to the tradable Assigned Amount Units handed to developed countries under the 1997 Kyoto Protocol, according to IETA, whose membersinclude Bank of America Corp. and Royal Dutch Shell Plc.
Climate negotiations will prod nations to accept greenhouse gas budgets that limit their carbon output over time, because they “are an atmospheric necessity,” Forrister said. The U.K. already uses carbon budgets backed by law.
The U.S., which failed to join Kyoto, will be attracted to such the new framework because the nation’s fast expansion of shale gas use has shown how quickly price incentives can reduce emissions, Forrister said. Using gas, which emits about half the carbon dioxide of coal when burned for power, may allow the U.S. to become a seller of credits instead of a buyer, he said.
“We want to move into a period of testing,” Forrister said. “If countries wanted to experiment next year, the Warsaw outcome should encourage them to do so.”
