Markets must increase climate ambition - Carbon Market Watch

Markets must increase climate ambition - Carbon Market Watch priorities at the COP23 in Bonn

BRUSSELS 3 November 2017. The next round of UN climate talks takes place in Bonn from 6 to 17 November, under the Fijian Presidency, on how to implement the Paris climate deal. One open question is the role carbon markets will play in meeting global climate targets.

Carbon Market Watch will be in Bonn to follow the negotiations in relation to the market provisions of the Paris Agreement. Our key messages for the negotiators are:

Phase out the Clean Development Mechanism (CDM)

To reach the objectives of the Paris Agreement, it is essential to learn from past experience in order to avoid the mistakes made with Kyoto mechanisms, in particular the Clean Development Mechanism (CDM), used to try and compensate for increased emissions in industrialised countries.

Only 2% of CDM projects clearly reduce emissions, according to a study commissioned by the European Commission. Most credits are also double counted under different international commitments of countries, leading to increased overall emissions.

Further, a number of CDM projects have been linked to human rights violations and have done little to support sustainable development in host countries.

Governments must phase out the CDM at the end of the second Kyoto Commitment period in 2020, to make way for new effective climate measures under the Paris Agreement.

Prevent a race to the bottom - strong rules for international markets

It is a fundamental imperative of the Paris Agreement that market provisions [Article 6] increase - not undermine - climate ambition.

Carbon markets need a new approach to make sure that emissions reductions are additional, meaning that they would not have happened anyway, and to avoid perverse incentives to increase emissions only to be paid to reduce them later. Further, sustainable development and human rights can no longer be a mere afterthought, they must be at the core of any new mechanism.

To prevent a race to the bottom in future markets, strong international rules and robust oversight are fundamental for mechanisms currently being developed for the Paris Agreement.

Don’t let the aviation deal undermine the Paris Agreement

Last year, the International Civil Aviation Organization (ICAO) agreed to establish an offsetting scheme to compensate for part of its rapidly increasing emissions from 2020. There are two major problems with the aviation measure.

First, offsetting is behind its times, it merely shifts emissions from one place to another at a time when it has become alarmingly clear that everyone must cut pollution to stay within levels that limit the worst impacts of global warming.

Secondly, the global aviation deal is a black box when it comes to transparency. Scant details of the measure have been made public, which poses several obstacles: Stakeholders are unable to respond and provide input, while countries and industry don't know how to prepare to implement the scheme. In addition, larger questions on compatibility with the Paris Agreement and countries’ climate targets remain unanswered.

There is a huge risk that the aviation deal will undermine the global goals unless the two are aligned to make sure that emissions reductions are not counted towards both the countries’ national commitments under the Paris Agreement and the ICAO targets.

At the same time as COP, ICAO meets in Montreal to decide on the draft rules for the measure. Will information finally be released or will we be left in the dark regarding how aviation offsetting fits in with global climate efforts?

ICAO should make its work on its market measure public to allow for identification of areas that could undermine Paris ambition. UNFCCC and ICAO must work together to ensure that the two processes reinforce and not undermine one another.
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