This year’s climate talks in Poland will attempt to establish a framework for rules governing industry-based carbon markets and non-market programs after 2020, according to the Centre for European Policy Studies.
A single system covering various approaches would provide flexibility to nations wary of giving control over their domestic energy or greenhouse-gas markets to an international process, said Andrei Marcu, head of CEPS’s carbon market forum in Brussels and adviser to Poland, which is hosting the United Nations negotiations in Warsaw starting Nov. 11.
The rules would allow nations to run their own programs, markets, regulations and taxes, and choose whether they want to join the international market, he said yesterday by phone. Otherwise, countries could use their emission reductions domestically to show they are taking action to protect the climate, he said.
President Barack Obama yesterday said his administration would “redouble” efforts to help forge an international climate-protection agreement that would govern emissions beyond 2020 and apply to all nations, not just those that have already industrialized.
“We need an agreement that’s flexible, because different nations have different needs,” Obama said in a speech in Washington. “And if we can come together and get this right, we can define a sustainable future for your generation.”
Obama sought to limit U.S. emissions from existing and new fossil-fuel power stations and create free trade in clean-energy goods.
His resolve to regulate using the Environmental Protection Agency may prompt the business community to lobby Congress to consider adopting more cost-effective carbon markets, said Anthony Hobley, president of the Climate Markets & Investments Association in London.
Obama’s speech also may encourage the UN talks to become more pragmatic during their next few negotiating sessions, focusing on setting principles for domestic programs rather than seeking to impose targets, Hobley said yesterday in a phone interview. “We’ve been a little naive in what we expected international law to do.”
Nations may join the Framework for Various Approaches voluntarily should they decide they want to transfer their emission reductions internationally, Marcu said. “These guidelines will need to accommodate everything from Japan’s bilateral programs, Ecuador’s Yasuni project and the linked carbon markets of Australia and the European Union,” he said.
The Yasuni ITT Trust Fund was established by Ecuador’s government and the UN in August 2010 to receive and manage contributions after the nation decided to forgo extracting about 846 million barrels of oil from the Yasuni National Park’s Ishpingo Tambococha Tiputini oil fields, according to a UN website.
Emissions credits from the Clean Development Mechanism, the biggest UN carbon market, have plunged 89 percent in the past year on rising supply and because nations haven’t tightened greenhouse-gas reduction targets.
Climate talks in November need to at least signal some ground rules, or investors will continue to hesitate before returning to the markets, Marcu said.
“We need to start to learn how to operate in this new world and test new ideas,” he said.
The requirement for emission reductions is clear, Marcu said. Even if carbon markets don’t currently provide enough demand, the world can’t afford an eight-year gap in mitigation efforts, he said.
Industries in nations or within a group of nations should be rewarded with tradable carbon credits if they cut emissions now, Marcu said. The November talks need to encourage industry-based, or sectoral, carbon markets, he said.
Investors may be more willing to spend on climate protection if “they can produce for a future market rather than a past market,” he said.
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