The lack of progress on climate talks may prompt nations to consider new programs posing a “serious challenge” to the world’s second-largest emissions market, a top envoy at the United Nations said.
Fragmentation of the UN-overseen Clean Development Mechanism “is maybe unavoidable, but it’s not a scenario to which we look forward,” chief climate negotiator Christiana Figueres told a conference in New Delhi.
The Clean Development Mechanism, established under the 1997 Kyoto Protocol, awards credits known as offsets to projects that lower emissions in developing nations. Negotiators failed at climate talks in Copenhagen last year to extend or replace the treaty, raising questions about how and whether the CDM would operate after 2012.
Countries could negotiate a continuation of trading independent of the Kyoto Protocol, or create an entirely new market that may not be administered by the UN, Figueres said.
“The Clean Development Mechanism does not necessarily have to be restricted to the Kyoto Protocol,” she told reporters at the conference. “Some other market, whatever they want to call it,” could be part of a broader agreement between governments.
New Zealand introduced a carbon emissions trading system in July, while China and Taiwan are among countries considering introducing domestic cap-and-trade systems. Japan may boost financing for overseas projects as it seeks carbon-offsetting accords with Asian nations including India, Indonesia and Vietnam, Takashi Hongo, head of the Japan Bank for International Cooperation’s environment finance engineering section, said in an interview this week.
‘Standards of Comparability’
Carbon markets allow companies to buy and sell credits representing reductions in emissions of greenhouse gases such as carbon dioxide. If countries begin developing independent systems, there needs to be a way to verify that credits are comparable in different countries, Figueres said.
“The market and the secretariat would have to move very quickly to provide for certain standards of comparability that would allow the different markets to be able to work in a consonant manner with each other,” she said.
China and India are the biggest generators of UN credits, which can be used to comply with pollution targets in the EU emissions trading system, the world’s largest cap-and-trade program.
Such trades cannot be the only way of financing emission reductions in developing countries, Figueres said.
“That will simply not be enough,” she said. “Industrialized countries must agree to financial vehicles that are not offset-based.”
