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Trading Carbon : November 2011
30 SPECIAL REPORT LATIN AMERICA In the murky post-2012 world, it is anyone's guess as to what new market mechanisms will emerge to supplement or replace the Clean Development Mechanism (CDM), currently the world's biggest offset market. But amid the uncertainty, Colombia has emerged as a country that is hoping to shape the post-2012 landscape. The South American country is piloting a number of new market mechanisms that can tackle rising greenhouse gas (GHG) emissions at home and influence the creation of new carbon instruments abroad. In June, Colombia became one of the first eight developing countries awarded $350,000 as part of the World Bank-led Partnership for Market Readiness. The initiative was launched at last year's high-level UN climate change talks in Cancun. It aims to help countries exchange information, provide expertise and design and implement market-based measures to limit GHG emissions Although Colombia had been a relatively small player in the CDM market -- with roughly 157 projects in its pipeline -- the UN offset mechanism managed to engage several players from the country's private sector in the government's efforts to reduce GHG emissions, said Andrea Garcia-Guerrero, coordinator of the climate change mitigation group in the country's environment ministry. Garcia-Guerrero said Colombia is keen to be at the forefront of the design of new market mechanisms to expand on the role of the CDM, which has "driven a lot of change in a lot of our productive sectors", she said. "I think the country is always interested in new sustainable options for mitigation and adaptation. The CDM has brought good things to Colombia, but it's been limited. We are trying to weigh-in on the development of new market mechanisms," she said. The country plans to use support from the World Bank to prepare its energy, agriculture, transportation, industry, mining and waste management businesses for a new global sectoral trading or crediting mechanism, should one emerge. There are several approaches that could be taken with sectoral crediting, but its basic design would envisage setting an industry-wide emissions benchmark for a sector in order to determine emissions offsets. Colombia will use the financial and technical support from the World Bank to identify the institutions within each of the sectors that could represent their respective industries under a global sectoral mechanism. With the World Bank's support, Colombia would build up the capacity of these institutions and improve their ability to monitor, report and verify emissions for their respective sectors. "Those institutions would act as the leader in the sector and would organise actions if, and when, a sectoral market mechanism is created," she said. The South American country will also use World Bank funds to launch a separate feasibility study for a domestic trading programme between major cities for transportation emissions, Garcia-Guerrero said. She said Colombia's proposal calls for the transport-related emissions of various cities to be capped and would require AFTER YEARS OF MIXED RESULTS FROM THE CLEAN DEVELOPMENT MECHANISM, COLOMBIA IS A TESTING GROUND FOR NEW CARBON MARKET SYSTEMS. VALERIE VOLCOVICI REPORTS November 2011 www.pointcarbon.com JOSE GOMEZ/REUTERS Colombia gets ready The CDM has brought good things, but it's been limited Andrea Garcia-Guerrero, MoE Colombia
December - January 2011