Rio, China Juggle Whether to Sell, Use Emission Credits

Officials from Rio de Janeiro and China said they wouldn’t use emission-reduction credits that have been exported when accounting for new domestic greenhouse- gas targets, potentially easing climate negotiations.

Brazil’s second-largest city will retire any reductions it uses when accounting for its 2020 target, said Rodrigo Rosa, special adviser on climate protection to Rio de Janeiro Mayor Eduardo Paes. “Either we retire through the targets, or we sell the credits,” Rosa said in an interview in Cologne, Germany.

China, which is setting up seven pilot carbon markets, also will ensure it doesn’t both sell reductions abroad and use them to meet its own limits, said Wang Shu, an official in the department of climate change in the National Development and Reform Commission in Beijing. “We cannot do double counting,” Wang said in an interview. “We will make that clear.”

Concern that nations will count emission reductions twice has helped stall climate talks. A three-page summary of negotiations by United Nations envoys from a meeting last month in Bonn mentions the term “double counting” seven times.

Rio, which is hosting an environmental summit of world leaders next week, is already grappling with decisions about when to sell credits and when to use them for its self-imposed limits, said Lorraine Sugar, a climate-change-policy specialist at the World Bank in Washington. Rio has established its own Low Carbon City Development Program, even as Brazil considers its own options for a national carbon market, she said.

Due Diligence

“There will be a process of looking back and maintaining this due diligence of ‘retire or sell’ and not double counting,” Sugar, who is helping advise the city, said in an interview May 31. “There’s the whole financing aspect as well. By selling some credits, we then create an opportunity to reinvest the carbon revenues in further projects.”

Those additional credits can then be either retired or sold, Sugar said.

The notion of double counting has become crucial as developing nations that up until now have sold emission credits start to take on their own targets. New carbon programs in at least 15 emerging nations from China to Costa Rica show emissions trading may take off, even as U.S. lawmakers focus on non-market-based regulations for climate protection, the World Bank said last month.

Securing Reductions

Rio’s target is to secure 2.3 million metric tons of emission reductions through 2020, a figure that’s the equivalent of 20 percent of the city’s 2005 discharges, Rosa said. Instead of trying to cut total emissions, the city is seeking to make sure output is less than it otherwise would be without the program, he said.

It’s already achieved about 1.4 million tons of cuts by covering a landfill site and capturing its methane emissions, which are being used to produce power, Rosa said May 31. That project is registered under the UN-overseen Clean Development Mechanism and the credits may be sold to factories and power utilities in Europe to comply with that region’s carbon limits.

Rio has decided not to use credits sold abroad for its own targets because that would amount to double counting, Rosa said.

The city is spending about $3 billion on a rapid-transport system, he said. It wants 63 percent of its population to use mass transport by 2016, up from about 18% now, he said. The city’s current population is about 6 million and transport emissions are about 43 percent of Rio’s total discharges.

Mass Transit

UN-overseen regulators based in Bonn are discussing how to issue credits to such mass-transit programs in developing nations.

“That takes people out of their individual cars,” Rosa said. The plan is for four so-called Bus Rapid Transit systems starting this month, Rosa said. The use of biofuels will be boosted to about 20 percent by 2016 from about 5 percent initially, he said.

It’s possible the system can be electrified in the future, further cutting emissions, he said.

Decisions needed to find emission cuts will probably test the mayor’s popularity with voters, Rosa said.

The city decided around 2010 under Paes’s administration to narrow some of the city’s streets to install the BRTs, restricting car use, he said. “There was a tough call there. If you are taking the street out and the traffic is congested, that’s not easy.”

Elections planned for October will give the population a chance to vote on the administration’s governance, including its environmental management, Rosa said. “It’s a test on everything we’re doing here.”

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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