The United Nations climate secretariat’s head of carbon-market demand encouraged countries to use existing credits created under the Kyoto Protocol to meet emission-reduction targets even after that pact ends in 2020.
While some countries plan to cancel certain existing credits, Niclas Svenningsen said the UN Framework Convention on Climate Change hasn’t received such instructions and doesn’t intend to delete offsets in its registry. Using UN credits would spur demand in a market that some perceive ends at the end of the decade, when Kyoto may be replaced with a new global climate treaty, he said in an interview Thursday.
“Both pre- and post-2020 action will contribute to reaching the targets,” Svenningsen said in Barcelona. “2020 is an artificial border. We shouldn’t have this division where we say everything up to 2020 doesn’t count any longer. That’s ridiculous.”
Prices for the credits, used by developed countries to offset domestic emissions, have plunged 98 percent since their 2008 record as demand evaporated. Delegates at UNFCCC climate talks next week in Bonn are set to debate the viability of market-based methods to combat global warming. UN envoys want to set a universal greenhouse-gas deal by December.
Nations still need to agree on post-2020 accounting rules for credits created under Kyoto, Svenningsen said.
The UN offset programs were created as a way for richer nations to comply with emissions targets under the Kyoto pact. Companies and countries earn credits by investing in poorer-nation emission-cutting projects. Each credit represents a reduction equivalent to 1 metric ton of carbon dioxide.
Of about 2.5 billion tons of credits generated by two UN programs, more than half has gone to the European Union market. Brazil, Canada, Mexico and Switzerland are among nations that have signaled they favor using international credits after the end of this decade, without specifying pre-2020 credits.
In March, the Dutch and Swiss emissions-trading registries said they planned to cancel some pre-2013 credits.
UN Certified Emissions Reduction credits for December settled Friday unchanged at 42 euro cents ($0.48) a ton on ICE Futures Europe in London. The contracts reached as high as 23.38 euros a ton in July 2008.
Should governments endorse the use of pre-2020 credits to meet emission targets after that year, “it would be a pungent first move to rebuild the private-sector appetite to invest in credits,” Daniel Rossetto, director of Climate Mundial in London, said Thursday by phone. Climate Mundial advises on carbon markets.
In Europe’s market, the use of UN credits displaced the bloc’s own allowances and helped contribute to a glut that depressed prices. The EU’s permits can be transferred to the post-2020 trading period, according to the program’s rules.
The UNFCCC secretariat plans to adjust in September its carbon-trading registry to make it easier to use credits for emissions compliance, Svenningsen said.
“We’re cutting out the need for the buyer to talk to the project owner or with a broker,” Svenningsen said. “This is a no-cost option. It’s a more direct and easy process than what you can do today, because today you would still need to negotiate a price with the project developer.”