- Trade body says draft will restrict carbon credit demand
- Half climate pledges favor markets in planned global deal
The United Nations’ draft climate proposal may reduce clean-technology investment to developing countries because it still limits the role of global carbon markets, according to the International Emissions Trading Association.
The latest draft keeps language from a previous pact that discouraged demand for UN emission credits over the past decade, said Dirk Forrister, president of the Geneva-based industry group. Countries can only buy carbon credits from one another to meet climate pledges if it’s “supplemental to domestic action,” according to one of the options in the preliminary plan published Oct. 5.
“It’s reared its ugly head again,” Forrister said by phone, referring to the clause in the draft plan. “An open market would serve the climate better and the interests of developing countries.”
Half of the 146 nations that submitted emission pledges before UN climate talks in December support markets, where countries facing high emission-cutting costs can buy credits from those that can reduce pollution more cheaply, according to IETA. China, planning a national market in 2017, wants developed nations to boost finance flows to developing nations, while New York governor Andrew Cuomo on Thursday called for a carbon market spanning North America.
“The first step will probably be toward national markets, national pricing systems, that might get linked at some point,” Ingo Ramming, the London-based co-head of commodity solutions at Commerzbank AG, said by phone. “I agree this is not the visionary approach that people might hope for.”
The draft text for the UN meeting in Paris has an option to create a market “to support sustainable development” after 2020, building on the existing program created under the 1997 Kyoto Protocol. Another option is to exclude any text on a market mechanism.
“The term supplemental simply reflects the reality that everyone needs to contribute to the effort,” David Abbass, a spokesman for the UN Framework Convention on Climate Change in Bonn, said Friday by phone.
UN Certified Emission Reduction credits, used by developed countries to offset domestic pollution by investing in green projects elsewhere, have slumped 97 percent since their peak in 2008 as nations failed to encourage buying. They fell 1.6 percent to 60 euro cents ($0.69) a metric ton on the ICE Futures Europe exchange in London.