The industrialised countries are pushing forward a model for a Copenhagen agreement based firmly around carbon markets coupled with weak targets. By and large, developing countries are not boarding any train headed to weak targets. Ever stopped to wonder why?
Industrialised countries talk about carbon markets and offset mechanisms in particular as if they are doing developing countries a favour, by providing financial flows from North to South. In fact, at least under the Clean Development Mechanism, it is more accurate to say that developing countries are the ones doing the favour – by giving Annex I countries a way of meeting their targets on the cheap.
The carbon markets question is emerging as one of the key fault lines in the negotiations. It cuts across discussions on Annex I targets, finance and Nationally Appropriate Mitigation Actions. Until the discussion is reframed, it will be hard to make the progress we urgently need to see.
Part of the problem is that Annex I negotiators may be too busy to read the analysis by their own technical experts. Take the European Commission’s recent Communication on climate finance. Put aside for the moment the fact that the Commission’s model would give high probability of exceeding 2oC warming. The Commission says that developing countries will need around Euros 100 billion per year by 2020 for adaptation and mitigation. Carbon markets would provide around 40% of this total – and public finance from international sources would be some Euros 22-50 billion per year.
However, the Commission’s headline figures are based on an assumption that cumulative Annex I targets are 31% below 1990 levels by 2020. Has anyone seen that sort of ambition actually on the table here in Bangkok?
The EU has been less keen to draw attention to perhaps the most important line in the Communication. This concludes that if cumulative Annex I reductions end up at around 10% below 1990 levels, this “would require an increase in the transfer of international public finance to developing countries of around Euros 120 billion per year in 2020.”
Such “radical” voices as McKinsey, in its recent analysis for Project Catalyst, give the same simple message – weak targets require much, much higher levels of public finance from Annex I countries for mitigation in developing countries. There is no free lunch.
Unfortunately a lot of industrialised countries’ negotiators can’t get their heads round the simple maths, and are trying to have it both ways. ECO is clear – if markets are to play a role, enabling conditions must first be in place. Low Annex I targets do not enabling conditions make.
At Bonn III, developing countries called for a fundamental debate on the role of carbon markets in the Copenhagen agreement, and have strongly repeated the call here in Bangkok. An honest discussion of the conditions under which carbon markets could contribute to keeping warming well below 2oC is long overdue. Let’s strip out double, triple and quadruple counting and concentrate on what the atmosphere sees. And address the concern that the rich world is picking all of developing countries’ “low hanging fruit.”
The EU and other industrialised countries are sitting in the carbon market train wanting to discuss the colour of the seats, and wondering why developing countries won’t jump on board. The developing countries are on the platform waiting for the engine to turn up.