Carbon Markets Drive China, India Climate Efforts, Center Says
Carbon markets are a key driver for investment in the biggest emerging nations’ greenhouse-gas reducing efforts, and allowing them to collapse would be a “disaster,” according to the Center for American Progress.
The United Nations carbon market has spurred $356 billion of investment in emission cuts, encouraging climate-protection policies in at least 10 nations including China, India and Brazil, the Washington-based policy institute said in a study, citing UN data. More than 3,000 projects in China supported $202 billion in investment and seven pilot carbon markets.
Confidence in carbon markets is faltering as a surplus of emission permits and offsets pushes prices to record lows, deterring companies from investing in low-carbon technologies. Unflattering media coverage has also encouraged an incorrect perception worldwide that carbon markets are “fatally flawed,” according to the center’s report.
“If we let these things collapse, you’re going to undercut emission reduction in the nations where we see the biggest growth today,” Andrew Light, a co-author of the report, said today by phone from Washington. “There’s still a lot these markets can do” to help avert a warming climate.
Governments around the world should hold an emergency climate summit at the end of this year “to avert a climate catastrophe, with a strong emphasis on using carbon markets,” according to the report obtained by Bloomberg News.
Certified Emission Reductions from the UN’s Clean Development Mechanism, the world’s biggest greenhouse-gas offsetting market, plunged to a record 1 euro cent ($0.013) a metric ton on April 24, according to data from the ICE Futures Europe exchange in London. CER futures were as high as 23.38 euros a ton in July 2008.
European Union emission allowances have dropped 58 percent in the past year and plunged to a record on April 17 after the bloc’s parliament voted against a plan to temporarily cut supply in the 54 billion-euro market.
The UN’s CDM demonstrated to India’s businesses and its government that climate policy need not be a threat, Rajendra Pachauri, the 2007 Nobel Peace Prize winner and director general of the Energy and Resource Institute in New Delhi, said in an e- mailed statement.
“The experience has helped accelerate India’s efforts to fight climate change,” he said, commenting on the report. “India took what it learned from the CDM to help set up markets to trade renewable electricity and energy efficiency.”
The EU’s market and emerging emissions-trading systems in California, Australia, South Korea, and China can boost their impact on the climate by loosening any restrictions on imported offset credits, the center said.
“Countries should make a political commitment to increase demand for global carbon-market credits, either by setting up a market-stabilization fund or by pledging to purchase a minimum quantity of credits from developing nations,” it recommended.
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