The developing world response
Alex Wyatt from Climate Bridge, articulated the fundamental approach of the developing world. China and India believe that historical emissions are the way to allocate the burden of responsibility, as they did not create the problem. “ It is a human rights issue – they have the right to lift their people out of poverty,” said Wyatt. He indicated that the developed nations are asking countries to take on responsibilities for greenhouse gas reduction, in nations where 40% of the population live on less than $1.25 per day and 50% on less than $2 per day.
China is not doing nothing, it is quite proactive and recognises the problem of growing greenhouse emissions. It has adopted renewable energy targets of 20% by 2020 and of the $586 billion stimulus package to be spent in the next 2 years, $260 billion is going to the Clean Tech sector according to Wyatt.
A compromise position is one whereby, ‘emerging’ developing countries would ‘graduate’ in terms of their greenhouse gas reduction responsibility. Some least developed countries (LDCs) like Bangladesh concur. LDCs like Africa should not be treated on the same basis as the emerging nations of Brazil, Russia, India and China (BRIC nations). They should be assessed in the post-2012 period on the basis of their level of economic development; capacity to act; contribution to global GHG emissions per capita; GDP per capita; current OECD membership and mitigation potential.
Advanced developing countries measures could include national emission caps; intensity targets; energy efficiency commitments; and sectoral intensity targets. India, Saudi Arabia, and China are firmly against reclassification, rejecting the idea of differentiation based on contemporary levels of development, rather seeing differentiation based on historic responsibility.
National caps are unlikely, but the compromise could be that sector caps will be applied to the BRIC nations. If this occurred the Clean Development Mechanism (CDM) would remain outside the capped sectors in the BRIC nations but remain intact in the least developed countries like Africa, Bangladesh and the Pacific. ACES provisions allow for the purchase of international offsets (CDM) from developing countries in order for the U.S to reach its targets at the least cost of abatement.
A new program called REDD (Reducing Emissions from Deforestation and Forest Degradation) will assist the advanced developing countries move into the Post 2012 Agreement as well as adaptation measures, technology transfer, and finance. A REDD mechanism means developed countries pay developing countries to reduce deforestation, as de-forestation in the tropics represents about 50% of forest-related greenhouse gas emissions. Brazil and Indonesia will be major beneficiaries of REDD credits. Brazil has also developed a large-scale hydro and bio-fuels industry such that sector caps are not taboo. It is moving towards the developed world position as a result.
The need for continued improvement in the offset market
The Conference also dealt with an evaluation of the Clean Development Mechanism (CDM) and a number of speakers like Michael Wiener of Perennia and Martijn Wilder of Baker and McKenzie in Sydney recommended changes to the management of the CDM and advice for creating new mechanisms like NAMAs and REDD going forward under Copenhagen.
Martijn indicated that there had been a lot of criticism of the CDM but reminded everyone that it is the only instrument that drives private sector development and is the global carbon currency. The CDM rulebook has established the global benchmark for offset projects and has become the de-facto standard for all offset projects in the compliance and voluntary markets.
The criticism is that the system is too complex with rules from the United Nations CDM Executive Board and in some cases additional host country rules as in China. Michael Wiener noted the lack of sustainability outcomes also. Complaints about the length of time the process takes from project origination to registration through validation and verification, including host country approvals were made by Mina Guli of Peony Capital, who finances CDM projects in China. “Two hundred days for a completeness check is too long – and that is just one part of the chain of getting a project through and a certified emission reduction (CER) sold into the market’ she said. Additionally, in the first phase China dominated the CDM market with industrial gas projects such as HFC 23 and N20. On the plus side there are 1700 carbon project entrepreneurs in India.
The criticism of CDM by Wiener and Wilder can be summarised as too few countries participated; not a broad enough range of project types were represented; a backlog of projects to be assessed in the CDM pipe-line; a lack of auditors and consistency of decision-making; lack of sustainability outcomes and Post 2012 uncertainty.
Michael Wiener stated that all these criticisms are process issues that need to be solved as the Post 2012 agreement will be relying heavily on the international revised CDM and REDD offset market to reach global greenhouse gas reduction targets. As a founder of Carbonflow Corp, I think technology can assist these markets evolve and adapt, become more reliable faster and efficient, more transparent and user-friendly.
Images Courtesy AdamSelwood and jimg944 via Flickr under Creative Commons License.
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