Ambitious carbon targets in Doha needed to energise carbon markets

Last updated on 29 November 2012, 9:56 am

Carbon markets need nations to make ambitious emission reduction pledges in order for to be an adequate to tool to tackle climate change, a former chair of the UN’s own financial mechanism has told RTCC.

Martin Hession, now a vice-chair of the Clean Development Mechanism (CDM), said it could be powerful tool in the long term. This will depend on negotiators meeting for the UN’s climate change talks, fixing ambitious emissions reduction targets in the future to build demand for carbon credits.

“I think people are forgetting the main issue, which is what are the targets going to be in the future and what instruments are going to deliver on those targets,” said Hession.

The CDM’s 5000 projects range in scale from cutting gas flaring at refinaries to solar water heaters.

Climate negotiators are currently meeting in Doha to discuss the future of the Kyoto Protocol and a longer term deal to cut emissions that would be applicable to all countries.

“People are can buy or not buy what they want, and there is an enormous amount of argument on the supply side,” Hession told RTCC, in a nod to the long-running debate in the EU over Poland’s surplus of carbon credits.

The CDM allows countries with emissions reduction commitments under the Kyoto Protocol to offset their greenhouse gas output by paying for projects in the developing world, where deeper cuts can be achieved for less money.

A lack of demand, as a result of flagging industrial output in countries bound by the Kyoto Protocol and low carbon reduction targets, has sent the price of carbon plummeting in recent years.

Rather than focusing on the left over credits of countries like Poland, or taking the route that the EU is following in its own carbon trading platform of withholding supply, Hession believes creating demand is key.

“The CDM is in a difficult situation at the moment, but with the CDM like anything else we need to look forward not back. The problem is that there is no demand so the biggest challenge is to address how we can get that,” said Hession.

He also said that the CDM is much-maligned and does not always get the credit it deserves.

“It mixes three things, climate change, markets and international cooperation. Some people just hate those three things. ‘Climate change I don’t want to know, markets are evil and international cooperation is bureaucratic nonsense.’ All of which are wrong,” said Hession.

“People say international cooperation doesn’t work, it’s a complicated one but I’d say the CDM proves it can work. It’s delivered on 5000 projects and one billion tonnes of carbon reductions in 5 years. You can’t argue with that.”

Wil Burns

I could argue with the Chair’s conclusions pretty easily. Anthropogenic emissions of carbon dioxide are a whopping 7 Gt.annually. Thus, the CDM’s results are the proverbial drop in the bucket. Moreover, the CDM Board authorizes a massive amount of projects that don’t really pass the additionality test (see Wara et al.), which means that we’re seeing little, if any, real reductions linked to the mechanism.
- Martin Hession
  
  Wil, we may agree more than you think. I also said that the CDM is just a drop in the ocean and that ensuring credibility of emission reductions essential. My comments were on climate market and international cooperation more generally – and that you can’t avoid all three if you are after significant mitigation. I have never said the CDM is enough or perfect, but a start is a start and the many critics who are dismissive are also short on credible solutions.
  
  I do think there is a lot of assertion on additionality but very little close analysis. In the end its a question of judgement. I am not one to say that there isn’t more to be done. But of course fixing BAU as a basis for assessing emission reductions is not confined to CDM. I can accept that people can argue over the additionality of certain classes of projects as they can for targets based on BAU – I do myself – but to jump from questions about some and to say definitely that there are little if any real emission reductions is rather over egging it.