EU Carbon Defies Logic as UN Talks Stall, Climate Mundial Says

Daniel Rossetto, managing director of Climate Mundial Ltd., comments on the European Union carbon market, plans known as backloading to delay supply temporarily and United Nations-overseen climate talks in Bonn that ended June 14. He spoke today and June 14 by e-mail.

On EU carbon prices, which fell 4.2 percent today to 4.57 euros ($6.10) a metric ton after rising 16 percent last week:

“EU carbon continues to defy logic, providing a price signal based on a belief that there will be long-term carbon cuts through 2030 and beyond that have yet to be agreed. There is no other way to explain why the commodity has any price whatsoever when there is no scarcity today and backloading only deals with half of the glut.”

On UN envoys’ plans to negotiate changes to decision-making rules at climate talks:

“I am far less concerned about this procedural issue than I am about the process for getting commitments within each country that would bind them to the negotiated outcomes in 2015. As we have seen in the case of Canada, it is very easy for a country to withdraw from the treaty without consequence. Given we are already at 2013, each country should by now have started the process of seeking a domestic mandate for what they can agree to in 2015 at the UN Framework Convention on Climate Change for post-2020. I don’t see much evidence of this going on, so it makes me very worried that we will get to 2015 and we will not be any closer to having a legally binding agreement.”

On a proposal to change the decision-making threshold at climate talks to 75 percent of nations voting from consensus:

“The threshold of 100 percent is unworkable. Giving the chair discretion is also too open to personal opinion. A lower threshold of 75 percent would be much better and allow decisions to be made. Financial penalties are also essential to ensure countries have the greatest possible incentive to comply in every way with the provisions of the eventual agreement. A best-endeavors basis is not enough.”

On penalties under climate agreements:

“The penalties can be paid into the Global Environment Facility and distributed to abatement and adaptation projects in the poorest countries. Each country should also have its own domestic law, not just ratification of the treaty, mandating its commitments under the UNFCCC.” Those domestic laws would make the UN agreement “fully legally enforceable.”

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