Jan. 31 (Bloomberg) -- The possible expiration of the Kyoto Protocol in 2012 would mean “very little” for carbon markets because they are driven by national targets, a senior European Union official said.
The EU, which runs the world’s biggest carbon cap-and-trade program, may need a “reflection” on the 1997 global agreement after some developed countries said they won’t commit to future limits under the treaty starting in 2013, said Jos Delbeke, director general for climate at the European Commission.
Global talks to limit emissions after 2012 have stalled amid differences between developing and industrialized countries. The United Nations summit in Durban, South Africa, later this year may not be able to produce a deal with binding carbon limits, and a new treaty may be 20 years away, according to Tim Worth, who led the U.S. delegation in Kyoto in 1997.
“Even if there’s a gap year, it will mean very little for carbon markets,” Delbeke said in an interview in Brussels on Jan. 28. “The essence of carbon markets is domestic carbon reduction commitments. That’s what drives carbon markets.”
The EU set a target for a 20 percent reduction in greenhouse-gas discharges by 2020 compared with 1990 levels, and it wants to limit them by as much as 95 percent by 2050. The bloc’s emissions trading program, known as ETS, is a cornerstone of its climate initiative, putting limits on more than 11,000 utilities and manufacturing companies and leading to a cap in 2020 that would be 21 percent below 2005 discharges.
The European program allows emitters to use credits generated under the United Nations Clean Development Mechanism, the world’s second-biggest market, known as the CDM.
“The ETS will continue, and it’s 80 percent of the global carbon market,” Delbeke said. “The CDM will continue because it’s legally created by the UN and is not linked up to the period of up to the end of 2012, when the Kyoto Protocol comes to an end.”
While envoys from more than 190 nations at the last climate summit in Cancun, Mexico, agreed in December to send as much as $100 billion a year to vulnerable nations by 2020, protect forests and outline methods to verify cuts in fossil fuel emissions, disagreements have kept the negotiators from crafting a new binding agreement.
As China, India, Brazil and South Africa pressed developed nations to make pledges of bigger cuts, Japan, Russia and Canada said they don’t want to extend the Kyoto treaty unless the two biggest emitters, China and the U.S., accept the agreement.
Achievement in Cancun
Europe is on track to meet its greenhouse-gas reduction targets under the Kyoto treaty and “it should be very clear that the EU is not the problem,” Delbeke said. The bloc’s ministers will discuss whether the region’s 2020 carbon target should be a part of Kyoto Protocol extension, he said.
“The question is what the value of putting them under the Kyoto Protocol is if no one else is going to be under the Kyoto Protocol,” Delbeke said. “But it’s an open question, and the EU has no problem defending the protocol.”
The Cancun summit formalized emission-reduction pledges offered by the biggest polluters under a political accord reached at the previous UN climate meeting in Copenhagen, Denmark, in 2009, Delbeke said.
“We did one important thing in Cancun: we anchored the pledges of the states inside the UN Framework Convention on Climate Change,” Delbeke said. “We have a process to review these pledges in a couple of years.”
While the lack of international agreements may discourage developed countries such as the U.S. or Japan from launching cap-and-trade markets, Delbeke cited “a lot of activity on emissions trading” in other nations.
“I hear what the Koreans are doing, what Singapore is discussing,” he said. “We have been repeatedly in China discussing emissions trading, so it may well be that the next wave of activity on carbon markets may lie in these emerging economies.”
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