There is a need for renewed debate on creating a worldwide emission-offsetting mechanism under a new climate treaty, but the EU will proceed with caution without prescribing solutions for other countries, the EU’s top climate official said yesterday (24 March).
There is a need for renewed debate on creating a worldwide emission-offsetting mechanism under a new climate treaty, but the EU will proceed with caution without prescribing solutions for other countries, the EU’s top climate official said yesterday (24 March).
Speaking at a conference in Brussels, Jos Delbeke, director-general of the European Commission’s new climate action department, said that despite difficulties in different parts of the world in setting up cap-and trade systems, the EU is still confident that it is possible to put a linked-up OECD-wide carbon market in place by 2015.
To further this goal, the EU is now working with other nations to create a common international offsetting mechanism, he added.
Such a system will allow industrialised countries to count emissions reductions financed in developing countries towards their own commitments, as is currently the case with the Clean Development Mechanism (CDM) under the UN process.
If we had a common offsetting mechanism, we would be linked de facto already, and I think this is one of the strategic reasons why we are looking into other offsetting schemes,” Delbeke said. But he pointed out that the CDM is not very popular in the US, which is part of the reason the EU is promoting sectoral approaches to crediting.
Other speakers at the event urged the EU to take an active role in shaping the offset credit market.
Delia Villagrasa, senior advisor to the European Climate Foundation, believes the EU should play a key role as it already has an established emissions trading scheme (EU ETS; see EURACTIV LinksDossier). She pointed to uncertainty as to whether the Australian government will get cap-and-trade legislation through the Senate and a lack of clarity over what form a potential Japanese system might take.
It is also quite unclear how the American system will work with international offsets,” she said, pointing out that the US share of the carbon market is currently “peanuts.
The EU will very likely stay the key carbon market bloc in the world for a while to come. It will therefore also be the key bloc in defining how offsets should be structured,” Villagrasa stressed.
According to the expert, this means the EU will have a chance to ensure that offset credits will serve the purpose of making additional emission cuts in developing countries by setting out quality criteria for the CDM and moving towards more sectoral trading.
But Delbeke said the EU must be careful about prescribing solutions for its international partners.
I fully admit that sectoral crediting is not yet fleshed out in detail,” he said, attributing this partly to efforts to elaborate a common offsetting scheme with other nations.
We want to refrain from being seen as having hammered out a new element of the carbon market that we would be imposing on others,” the climate action director said, adding that the EU was in fruitful “offline” talks with the US on the topic.
Global market key
The importance of creating a global market was also emphasised by Russel Mills, global director of energy and climate change policy at the Dow Chemical Company, who pointed out that China’s greenhouse gas emissions will be three times higher than the EU’s by as early as 2030.
When you crunch the numbers, you’re actually much better off in the medium term having a medium price covering many entities rather than going for a short-term option of a very high price but less polluting entities,” he said.
Mills argued that the more divergent the EU’s emissions trading policies are from those of other countries, the more difficult it will be to create a global market that will have the capacity to mitigate emissions globally. He implied that the EU should not set its ambitions so high that they prevent other countries from joining.
You already have to start designing a system now to be compatible with what will eventually be a global carbon market across at least across some sectors,” Mills stressed, suggesting that ensuring international offsets are compatible with those of the EU and the US would be a start.
Background
Under the Kyoto Protocol, industrialised countries can meet part of their greenhouse gas emission reduction targets by investing in projects in developing countries through the Clean Development Mechanism (CDM).
On 28 January 2009, the European Commission presented a proposal for a global agreement to replace the Kyoto Protocol, set to be reached in Copenhagen in December (EURACTIV 26/01/09). The blueprint proposed an overhaul of the CDM to ensure that only projects delivering additional reductions and targeting more costly cuts receive credits.
Moreover, the Commission floated the idea of phasing out the project-based CDM in advanced developing countries in favour of sectoral crediting. This would set targets to cut emissions below business-as-usual levels in competitive economic sectors, laying the foundations for a transition to cap-and-trade systems. The final goal would be to move to a global carbon market.
The EU is hoping to link up national cap-and-trade schemes to an OECD-wide carbon market by 2015, but set-backs in getting cap-and-trade through national parliaments have hindered progress in the US and Australia, which are the most likely candidates to link to the EU’s emissions trading scheme (EU ETS; see EURACTIV LinksDossier).
