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Govts inch towards framework for global CO2 market

Source: Reuters - Thu, 13 Jun 2013 04:44 PM
Author: Michael Szabo and Andrew Allan
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Environmental activists stage an open-air carbon auction in front of the European Parliament in Brussels, April 9, 2013. REUTERS/Francois Lenoir
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BONN, June 13 (Reuters Point Carbon) – Governments may this year launch a global framework to tie together national and regional greenhouse gas reduction efforts, a move that U.N. climate negotiators meeting in Germany this week said could lay the groundwork for a global carbon market.

The plan would unite schemes currently being developed in nations including the United States and China onto a single platform, encouraging governments to share ideas with the view of eventually designing a global market to help fight climate change.

“The idea is to start to road-test a framework for including various mitigation approaches around the world,” said one senior negotiator who spoke on condition of anonymity.

“It would be (open to) anyone that wants to voluntarily connect to this framework, to see if the software and hardware is there to build (something) bigger.”

The U.N. climate talks are tasked with launching new market mechanisms that will leverage billions of dollars of private sector finance to help poor countries grow economically in a sustainable way.

But the negotiations have made little progress in the area, prompting Poland to first float the idea to other governments earlier this year.

The plan could include launching a pilot scheme to examine developing common standards that could, for example, join existing and future carbon markets with mitigation efforts or initiatives to slow deforestation rates in developing countries.

“It started as an ambitious idea but it’s been adjusted towards a more general approach following a few rounds of consultations with parties,” said Sven Braden, a negotiator for Lichtenstein.

“The hope is it will eventually bring in different mechanisms to try to find common ground and assist in producing proposals for new market-based approaches.”

Other member states said the concept remains vague and will need further work at U.N. climate talks in Poland in November, or at a yet unscheduled two-day workshop before or after the meeting.

“At the moment, it’s very sketchy as there’s not much detail. It will depend on formal negotiations (in Warsaw) in terms of what happens to it,” said Artur Runge-Metzger, lead EU negotiator at the climate talks.

MARKETS

Existing international carbon markets under the Kyoto Protocol, such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) are used only by the 35 or so signatories to the 1997 agreement to meet their climate goals.

As such, countries that never ratified the treaty (United States), pulled out of it (Japan), or were not forced to cut emissions by it (China) cannot use credits from those markets to meet existing or future climate goals.

Any new framework to be launched in Warsaw would be under the U.N. Framework Convention on Climate Change, meaning any of the 190 or so parties could take part.

Frustrated with Kyoto’s markets, Japan has designed its own offset scheme and is pushing for international recognition that reductions made under it would count against the nation’s pledge to cut emissions by 2020.

One Japanese negotiator said his nation would support the Polish proposal if it allowed Japan to offset emissions via its Joint Crediting Mechanism.

“We’re implementing a real scheme, so if this proposal is for a test phase with no specific meaning for 2020 (goals), we wouldn’t have much interest,” said Yuji Mizuno, a director at Japan’s environment ministry.

Green groups were opposed to Poland’s idea and called for a review of existing carbon markets before launching new ones, noting the CDM, JI and EU carbon markets are suffering from record low prices due to weak national pledges.

“It’s a recipe for disaster,” said Kate Dooley, a campaigner with Third World Network.

“Instead of learning from these failures and figuring out what went wrong and (how) fix that, northern governments in particular are pushing forward this discussion of markets ... with even looser rules and very broad eligibility criteria.”

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