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Trading Carbon : December - January 2011
S04 DURBAN ROUNDTABLE There is much talk of new market mechanisms. While these have considerable potential to expand the reach of GHG emission management and emission reductions, there is little point in advancing disc ussions on the topic if there is no demand. FL: This is one of the areas where substantial, concrete progress might actually be possible. A clear signal and a specific roadmap on future integration of emerging mechanisms would be the single biggest incentive to promote local innovation on climate finance. MW: It is critical. In terms of the CDM, there must be some clear signal that it will continue as a project mechanism and the UNFCCC and CDM Exec utive Board will continue to support it and issue CERs. If not, the future of the CDM will be in jeopardy. While progress on new market mechanisms is critical the reality is any agreement on what they should be and will work is many years away and, in the meantime, real foc us should be on making the CDM work. Q: Finance is another stumbling block at the talks. Is it realistic for developing countries to expect the $100 billion a year by 2020 to come mainly from public sources? JH: The world is, quite simply, in a bad economic situation, and the news only seems to be getting worse. There's a strong possibility some countries are not going to come close to the pledges they made in Copenhagen. That said, most observers, including the UN Director General's advisory committee on finance, recognise that much of GP: I think that is academic because I don't now see the EU accepting a second Kyoto Protocol (commitment period) on their own. Even if they did, I see the growing anti-aviation issue as really getting in the way of any further agreement (see pages 26--27 main magazine). FL: I don't think the EU alone can keep Kyoto going. Current CER (Certified Emissions Reduction -- CDM carbon credits) prices are nowhere near the level they have to be to have the necessary impact on greenhouse gas emissions and (EU) post-2012 eligibility r ules leave out all of Latin America, except Haiti. Q: How important is it for Durban to resolve discussions on existing market mechanisms and kick start talks on new market mechanisms? JP: Between Bonn (in June) and Durban, the Panama UN meeting (in October) had the issue of new market mechanisms on the table. Panama provided a starting point and they discussed NAMAs, but not in any detail. There are ongoing disc ussions, but there is a lot of work to be done on the CDM and Kyoto Protocol first. BL: A result on existing market mechanisms is cr ucial, to allow for new projects to go live without wasting time in a gap period between Kyoto and the next commitment period. New mechanisms are also essential, but first things first: new mechanisms will most likely build on old mechanisms, so before we embark on designing new mechanisms -- a lengthy task -- we would be well inspired to keep old mechanisms going. GP: First part vital; second part is not necessarily linked to the first. The CDM is still, despite the views of the popular press, a fundamentally essential mechanism. Negotiators have forgotten that offsetting is a transitionary measure designed to help Parties (to the UNFCCC) move to a low-carbon development pathway. Parties that take on internationally-binding caps, be they economy wide or sectoral, will continue to need access to offsets to act as a safety valve on price and help companies/captured entities manage their existing fleets until such time as they reach the end of their economic lives. At which point new, energy efficient/low-emission technologies can be deployed. Offsets are essential to the economic reality of a capped regime. Dec 2011/Jan 2012 www.pointcarbon.com Gareth Phillips, PDF: CDM's future is vital There are ongoing discussions on new market mechanisms, but there is work to be done on the CDM and Kyoto Protocol first Jenny Peetermans, IETA