Tag: Flexible Mechanisms

Wild West Carbon Markets

The LCA is discussing the establishment of a new market mechanism (NMM) and a Framework for Various Approaches (FVA), including the use of markets. But well into the 1st week, it is still unclear what these two work programmes could be about. 

There is a common view that the FVA is supposed to give recognition to national emission reduction systems and, if Parties want to, make the emission reductions units that are achieved by these systems internationally tradable and eligible for meeting national emission reduction targets (QELROs). Under the NMM on the other hand, countries could put forward national emission reduction systems to the UNFCCC to be approved for the issuance of credits. Both work streams could end up hosting the same types of emission reduction systems, ranging from market-based instruments to renewable feed-in tariffs. ECO is therefore wondering why bother with two different work streams?! 
 
The answer is clear if one looks at the politics. Although the same types of emission reduction systems could be hosted, the NMM requires international common standards and UNFCCC approval before credits could be issued and used for compliance. The FVA on the other hand could allow countries to develop whatever systems they want and offer the resulting emission credits for compliance without the UNFCCC taking a close look at them, something strongly wished for by Japan, New Zealand and the US. 
 
If the FVA became part of a new agreement mandated by the Durban Platform, this would potentially enable Parties to meet part of their commitments using units of other domestic market mechanisms.
 
This means that future carbon markets could resemble the wild west, where units from multiple market and non-market mechanisms are traded wildly and internationally. In a world without a clear set of international standards, this wild trading would certainly lead to double, potentially triple counting and would leave us with no certainty on how much 1 tonne of CO2 really is. 
 
Before any firm decision on either the NMM or the FVA can be taken, delegates need to get their heads around what they actually want and whether we really need more carbon credits. ECO calls for caution: any decision must depend on a set of international standards that guarantee real, permanent, additional and verified emission reductions, including a registry for transparent accounting and tracking of all emissions units, economy and sector emission caps, and transactions. These standards must also ensure that mitigation actions secure global net atmospheric benefits, avoid double-counting and deliver sustainable development benefits.
 
Dear delegate, take a good look at the lessons learnt with the JI: centralised governance for international consistency of standards hasn’t worked. Step down from your horse and start working on common core standards!
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Stabilisation Fund Won’t Save the CDM

It is no secret that the future of the CDM looks grim. According to the High Level Panel on the CDM Policy Dialogue, the CDM will produce an excess of roughly 1.25 billion offset credits because of low ambition by developed countries. This has driven the prices in the cellar and stirred creativity on how to keep the market flourishing. In the CMP opening plenary, India suggested setting up a stabilisation fund to buy up excess offset credits – something that has also been recommended by the High Level Panel on the CDM. A large chunk of the excess offset credits will come from HFC-23 destruction facilities in India and China. Credits form such HFC-23 projects have been banned by major buyers (EU, Australia and New Zealand) for their lack of environmental integrity and sustainable development benefits. With a lack of buyers, such a fund would provide a convenient new source of money!

Even if HFC-23 credits were not allowed in such a fund, there is more to worry about. New findings from the CDM Policy research team show that large-scale power supply CDM projects, which are expected to generate the majority of CDM credits until 2020, are rarely additional and therefore increase global emissions. This means that such a stabilization fund would largely buy up excess credits from industrial gas projects and from projects that are unlikely to be additional. This seems like a terribly bad use of scarce climate finance. Certainly there are much more effective ways to spend mitigation money, such as directly supporting the implementation of renewable feed-in-tariffs and other proven policy measures.
 
Furthermore, if the CDM wants to be fit for the future it needs to get rid of its excess baggage of business-as-usual projects that inflate its supply. Banning credits from project types that are highly unlikely to be additional after 2012 would get rid of 1.6 billion offset credits between now and 2020. Stopping such projects from renewing their crediting period and not allowing the registration of new projects would also go a long way. 
 
Instead of putting money into the CDM stabilization fund, developed countries should raise ambition and put money on the table to help developing countries take actions that transform their economies to low-carbon development path. It’s as easy as that.
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A Hot Blast of Hot Air from Doha Delivers Fossils to Poland and Russia

 

The First Place Fossil is awarded to Poland. Back home in Poland, Environment Minister Korolec, revealed the country's position on the Doha talks -  claiming the carryover of AAU credits is NOT a priority issue, but that the length of the second commitment period and the obligations contained in the Kyoto Protocol are. We should remind the minister that carryover of AAUs influences the level of ambition in CP2. 

Moreover, Poland does not want to give up even one tonne of their huge surplus of AAU emission allowances to contribute to the environmental integrity. Why? Warsaw believes their AAU surplus is a strictly national issue. Hello…!! Carbon emissions know no national borders and the issue is a key element of the CP2 negotiations!

The Second Place Fossil of the Day goes to Russia. The Russian vice Prime Minister confirmed on Wednesday following ministerial talks that the country will not sign on to the Second Commitment Period of the Kyoto Protocol. Next week, Russia will announce its emissions reduction targets, but they will not be attributed to the Second Commitment Period, which Russia strongly opposes. This also means that Russia will lose the chance to take part in JI (Joint Implementation) projects in the future, something that the country was striving to be involved with. This will have a negative effect on both the economy and low-carbon development in Russia.

A Hot Blast of Hot Air from Doha Delivers Fossils to Poland and Russia

Fossil of the Day - Day 4 of COP18 in Doha, Qatar

 

The First Place Fossil is awarded to Poland. Back home in Poland, Environment Minister Korolec, revealed the country's position on the Doha talks -  claiming the carryover of AAU credits is NOT a priority issue, but that the length of the second commitment period and the obligations contained in the Kyoto Protocol are. We should remind the minister that carryover of AAUs influences the level of ambition in CP2. 

Moreover, Poland does not want to give up even one tonne of their huge surplus of AAU emission allowances to contribute to the environmental integrity. Why? Warsaw believes their AAU surplus is a strictly national issue. Hello…!! Carbon emissions know no national borders and the issue is a key element of the CP2 negotiations!

The Second Place Fossil of the Day goes to Russia. The Russian vice Prime Minister confirmed on Wednesday following ministerial talks that the country will not sign on to the Second Commitment Period of the Kyoto Protocol. Next week, Russia will announce its emissions reduction targets, but they will not be attributed to the Second Commitment Period, which Russia strongly opposes. This also means that Russia will lose the chance to take part in JI (Joint Implementation) projects in the future, something that the country was striving to be involved with. This will have a negative effect on both the economy and low-carbon development in Russia.


Photo Credit: Miljømagasinet Putsj/Vilde Blix Huseby

Fossil bounty for backtracking Canada and New Zealand

 

The First Place Fossil is awarded to Canada, who has capped support rather than emissions. Newsflash! This just in from the Canadian Environment Minister! Developing countries need to just take a deep breath and wait until we have an all-in global deal before they should expect any support from Canada to move towards a clean energy future through the Green Climate Fund. In talking to reporters yesterday, Canada’s environment minister took a moment to tell journalists that he would ‘make it clear’ at the meetings in Doha that developing countries shouldn’t expect more money towards climate financing from Canada, because after all, Doha “isn’t a pledging conference.”
 
Thanks for clearing that up, Minister! We are sure that that will do wonders for your stellar credibility and reputation at these talks. Thankfully the Minister IS coming to Doha with at least one commitment: Canada is still firmly committed that tar sands emissions will rise far beyond the 2 degree climate limit.
 
World to Canada: You are supposed to be ramping finance up and emissions down; not the other way around!”

The Second Place Fossil of the Day goes to New Zealand, again, because not only did Wellington deliberately decide not to put its target into the second commitment period of the Kyoto Protocol, but today proposed that access to the CDM should be open to all and should not depend on whether a country is signing up to a second commitment period. To make it clear, New Zealand pointed out that otherwise the Adaptation Fund will not have enough money to keep functioning. Come on Kiwis, forget about the hobbits and think about your neighbors! You have to be serious… if you want to feast on carbon markets you have to work up your targets first!

The United States gets the Third Place Fossil for once again rejecting strong measures to reduce greenhouse gas emissions. Yesterday President Obama signed a misguided Bill coming from Congress aimed at preventing compliance of US airlines with EU regulations, for flights into and out of the EU. If Congress doesn't like the EU approach, we hope they realize the only alternative is a strong multilateral agreement. We urge Obama to reject any approach based on isolationism, and take this bill as an green light to pursue a strong multilateral agreement for the global  aviation sector, including putting a price on carbon, and to lead the way a strong and binding global climate agreement under the UNFCCC.

 

Region: 
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Fossil bounty for backtracking Canada and New Zealand

The First Place Fossil is awarded to Canada, who has capped support rather than emissions. Newsflash! This just in from the Canadian Environment Minister! Developing countries need to just take a deep breath and wait until we have an all-in global deal before they should expect any support from Canada to move towards a clean energy future through the Green Climate Fund. In talking to reporters yesterday, Canada’s environment minister took a moment to tell journalists that he would ‘make it clear’ at the meetings in Doha that developing countries shouldn’t expect more money towards climate financing from Canada, because after all, Doha “isn’t a pledging conference.”
 
Thanks for clearing that up, Minister! We are sure that that will do wonders for your stellar credibility and reputation at these talks. Thankfully the Minister IS coming to Doha with at least one commitment: Canada is still firmly committed that tar sands emissions will rise far beyond the 2 degree climate limit.
 
World to Canada: You are supposed to be ramping finance up and emissions down; not the other way around!”

The Second Place Fossil of the Day goes to New Zealand, again, because not only did Wellington deliberately decide not to put its target into the second commitment period of the Kyoto Protocol, but today proposed that access to the CDM should be open to all and should not depend on whether a country is signing up to a second commitment period. To make it clear, New Zealand pointed out that otherwise the Adaptation Fund will not have enough money to keep functioning. Come on Kiwis, forget about the hobbits and think about your neighbors! You have to be serious… if you want to feast on carbon markets you have to work up your targets first!

The United States gets the Third Place Fossil for once again rejecting strong measures to reduce greenhouse gas emissions. Yesterday President Obama signed a misguided Bill coming from Congress aimed at preventing compliance of US airlines with EU regulations, for flights into and out of the EU. If Congress doesn't like the EU approach, we hope they realize the only alternative is a strong multilateral agreement. We urge Obama to reject any approach based on isolationism, and take this bill as an green light to pursue a strong multilateral agreement for the global  aviation sector, including putting a price on carbon, and to lead the way a strong and binding global climate agreement under the UNFCCC.

Region: 

CAN Intervention in the COP18 LCA Opening Plenary, 27 November, 2012

 

LCA Opening Plenary Intervention 

COP18, Doha

27 November, 2012


Photo Credit: IISD

Thank you Chairs. 

My name is Ben Namakin and I am from Kiribati speaking for CAN.

It is crucial that the LCA conclude here in Doha, however there is work to be done to ensure a meaningful outcome. 

Equity is a key component of the 2015 Protocol and needs to be in the discussion.

A new market mechanism and framework for various approaches must be based on international standards that guarantee real, permanent, additional and verified emission reductions, secure global net atmospheric benefits and avoid double-counting.

However, market mechanisms are useless without increased ambition. It is imperative that all developed countries:
-          Increase their 2020 pledges substantially
-          Express their 2020 targets as carbon budgets; and
-          agree on common accounting rules. 

Last year saw numerous climate related disasters. Climate finance for the 2013-2015 period needs to at least double that of Fast Start with a roadmap for scaling up to at least $100 billion per year by 2020.  It is crucial the outcome in Doha guarantees a high level political space for negotiations on finance to continue.  

One area that does not need further work is the scope of the review of the temperature goal, however Parties must decide on a strong body to conduct that review. 

Thank you. 

 

Right to appeal not a game of two halves

Here in Doha, Parties will decide on an appeals procedure that would consider decisions made by the CDM Executive Board. It is crucial that civil society representatives are eligible to launch an appeal. But wait, ECO heard that some Parties would like to grant the right to appeal to one side (investors) only? Dear delegates, this is not a game of two halves but two sides of the same coin. Indeed, we would like to remind you that any appeals procedure must serve the interests of all affected stakeholders.

Granting the right to appeal to investors only prioritises corporate profit over the public interest, especially given the wider impacts that flawed CDM projects can have on global climate change and sustainable development. ECO urges delegates to take this opportunity to adopt a fair and balanced means to provide a public check during the CDM project approval process, and promote transparency, accountability and integrity in the decision-making process.

Take this critical opportunity to introduce much needed quality control in the CDM decision-making process and adopt a robust appeals procedure!

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