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Trading Carbon : December - January 2011
quite possibly on a new road map. But I do not expect a second commitment period (to the Kyoto Protocol). JH: The current dismal global economic climate won't make things any easier for the climate negotiators, but it's not the only stumbling block they face. The stage in Durban is set for no more than incremental progress this year, unfortunately. Q: Do you think if the EU accepts a second Kyoto commitment period it would satisfy developing countries demands and allow the UN talks to make progress on other issues? PD: The EU already has de facto accepted a second commitment period: it is the Climate and Energy package. It certainly helps, but it won't be enough to lure other (developed) countries into a second commitment period. (But) countries opposed to the Kyoto Protocol prolongation share an interest in maintaining the tools of the protocol, such as project-based mechanisms. There are solutions to perpetuate those tools, for instance, by transferring them under the UNFCCC rather than keeping them under the Kyoto Protocol. It is a reasonable expectation. LA: Developing countries will likely have no choice but to support EU acceptance of the second commitment period, even if this means the protocol would exist as a crippled instr ument without the US, Japan, Russia and Canada. The question is: how would pressure be applied to other developed countries to isolate hardliners at the last minute and potentially create space for a more robust Kyoto Protocol instr ument in line with the ambition required by the science? This is important, as the survival of a robust Kyoto Protocol provides legal dimensions to the UNFCCC, which the LCA (Ad-Hoc Working Group on Long-term Cooperative Action) does not have. MW: Not necessarily, although phase three of the EU Emissions Trading Scheme (ETS), in part, does just that. While leadership from the EU is critical, the dynamics in play are now far more challenging. Europe is in financial crises, US federal action on climate change has all but evaporated and the escalating trade war over the EU ETS applying to airlines are putting in place multiple challenges. In addition, strong opposition to a second Kyoto commitment period from Japan and Canada make progress all the more difficult. Nonetheless, such action will form the basis around which to build a coalition of countries to start moving forward. It is also critical from a carbon markets perspective. It is also critical from a developed country perspective, as the more developed countries that take action the more this isolates countries such as the US and Canada. S03 DURBAN ROUNDTABLE FL: That really depends on your definition of "significant progress". We might see some countries and regions step up to a second Kyoto Protocol commitment period, but it will not have the same "clear mandate" the first one did. The areas where I do see potential for some progress are NAMAs (Nationally Appropriate Mitigation Actions), REDD (Reducing Emissions from Deforestation and Forest Degradation), emerging carbon markets and, hopefully, financing. I have a hard time picturing a future in which the CDM retains its status as the preeminent climate finance mechanism. However, I still believe there is a strong role to be played by the UNFCCC and the (CDM) Exec utive Board as integrators and overseers of the emerging mechanisms. Durban should give us a glimpse into how these bodies perceive their relationship with the large-and-growing list of national/ regional carbon markets and tools, such as NAMAs and REDD. MW: In some areas, there will continue to be positive dialogue and developments. One of those is REDD. However, the likelihood of any real progress is remote. The Australia--Norway proposal of working towards a new regime by 2015 is simply trying to buy more time. However, how the gap between the commitment periods is resolved remains entirely unclear. LA: Yes. Disc ussions on legal options have opened up perspectives for potentially deciding by Durban on a mandate to conclude discussions towards a legally-binding instr ument within a specific period/year. Unlocking this disc ussion can trickle down to concrete and more definitive negotiations on mitigation, MRV (monitoring, reporting and verification) and finance -- which, in all honesty and bluntness, are merely sitting on the result of the Kyoto Protocol disc ussions and the lack of US mandate to provide a clear indication of its future participation in the climate regime. Durban can take stock and provide the mandate to the GCF (Global Climate Fund) board to begin the hard task of initial capitalisation or "filling in the pot", and working out the r ules for access and the legal personality of the fund vis a vis the COP. GP: Yes, significant progress can be made on the GCF, continuation of the CDM and Dec 2011/Jan 2012 Lawrence Ang: Durban to take stock While leadership from the EU is critical, the dynamics in play are now far more challenging Martijn Wilder, Baker & McKenzie