Carbon markets in spotlight . . . as countries fail to reach consensus

05 Jan, 2020 - 00:01 0 Views

The Herald

Jeffrey Gogo

When the Madrid leg of the annual UN climate negotiations — or COP25 — ended mid-December under a cloud of uncertainty, one of the key aspects of the Paris Agreement that failed to achieve consensus involves international carbon market rules.

The 25th Conference of  the Parties (COP) in the Spanish capital closed with an “underwhelming outcome — more damage control than progress on climate ambition,” as one scientist from the German-based New Climate Institute put it.

Carbon markets offer countries and private corporations throughout the world to buy and sell units of carbon for the purpose of reducing greenhouse gas emissions in line with global targets on climate change.

One of the major generators of such credits is the UN’s REDD+ initiative, which pays countries and communities for avoiding deforestation and forest degradation in their localities.

Among several issues on the table during COP, negotiators could not agree on rules for the use of international carbon markets towards the achievement of countries’ climate change pledges. This is one of the outstanding elements of the rulebook of the Paris Accord, necessary to its implementation.

“The conference in Madrid is a disappointment for many and a clear indication of the limits of the consensus-based UN negotiating process in the era of rising populism,” New Climate Institute stated in a recent critical note on COP25.

The German think tank observed that depending on the strength of the rules, “international carbon markets could either prove to be an opportunity for countries to increase their level of climate ambition according to their capacity and historical responsibility, or a loophole for countries to continue polluting.”

This is an interesting observation because the success of the Paris Agreement relies on state parties cutting emissions in an effective and verifiable manner.

But carbon markets have been marred by accusations of projects selling “hot air” — basically falsified carbon credits, some which don’t even exist hence the need to reach consensus on rules, making it possible to uphold the integrity of the climate Treaty.

The San Jose Principles outline the basis for “high ambition and Integrity in International Carbon Markets”, upon which a fair and robust carbon market should be built. Introduced in the dying minutes by some negotiators, the Principles failed to ignite relevant interest to reach consensus at Madrid.

There was no agreement in at least four key areas on carbon markets, including corresponding adjustments, through which countries adjust their own emission accounts to account for reductions that have been sold or transferred abroad, according to the New Climate Institute.

This is important to avoiding that any emission cuts are “double counted”. Most countries consider this as a red line that cannot be crossed, which informs their desire for adequate rules for corresponding adjustments,.

Negotiators also failed to agree on propositions to roll-over pre-2020 emission reduction credits, in particular from the Clean Development Mechanism, into the new market mechanism established under the Paris Agreement.

Allowing parties to use surplus credits from historical markets towards their future targets “would immediately reduce the ambition of the already insufficient existing pledges under the Paris Agreement,” experts say.

It is not yet clear how the absence of consensus will affect local projects, such as the Carbon Green Africa REDD programme in western Zimbabwe, which covers 750 000 hectares of land.

Operating in the rural councils of Mbire, Nyaminyami, Binga and Hurungwe, CGA is implementing various programmes that range from conservation farming to bee-keeping — their ultimate aim, preserving the region’s native forests.

Forests are a natural absorber of carbon dioxide, the biggest driver of climate change.

When that is achieved, the company periodically invites independent global auditors to verify whether the project has indeed achieved its intended objectives — avoiding deforestation, and at what scale.

Eventually, the auditor issues out to CGA what is known as a credit, unit or offset.

Each credit is equivalent to a tonne of carbon dioxide, and is later sold mostly to governments, individuals and private sector organisations in advanced economies keen to reduce their carbon footprint.

The trade is built on the understanding that developed country governments or corporations that cannot lower greenhouse gases emissions in their home economies can do so by paying someone else overseas to do it for them  and hold that as proof of own contribution to abating climate change.

Over the years, the carbon market has become a lucrative business, with over $6 billion worth of credits traded since 2005.

The most active markets operate in the US, China and in the European where offsets from projects in renewable energy, forestry and land use, household devices (like clean cookstoves), waste management and others are traded.

As far as REDD+ is concerned, buyers pay countries or private organisations a kind of compensation for avoiding deforestation in tropical forests — clearly indicating that forests are worth more standing, than fallen.

Governments can in turn use this money for whatever they want, but preferably help communities adapt.

Carbon Green Africa pays the rural councils, which have entered into 30-year agreements with the private firm, a certain portion of the credits sale proceeds, according to each council’s shareholding in the project, or based on the amount of forested land in contribution.

In the project, Mbire holds 34 percent, Nyaminyami 29 percent, Binga 20 percent and Hurungwe 17 percent. Carbon Green Africa has paid hundreds of thousands of dollars to the rural councils,  since the project started six years ago.

Now, global carbon dioxide emissions rose again in 2019 after a plateau between 2013 and 2016. Going forward, expectations for carbon market negotiations will continue to remain strong, particularly in light of community benefits that accrue from REDD+ initiatives.

Excess supply of credits might remain a concern, having the effect of causing carbon prices to decline. But greater focus is on what projects like CGA’s can do for national greenhouse gases control towards, in part, meeting Zimbabwe’s mitigation goals under the Paris Agreement.

“The lack of an agreement on key aspects of the Paris Agreement rulebook is a setback, but this issue should not distract from increased ambition and the implementation of policies for action at the domestic level,” New Climate Institute opined.

“All efforts should be concentrated on taking the opportunity to achieve that in 2020, which must mark the year when countries set out serious plans for de-carbonisation and prevent laggards from dictating their speed and ambition.”

God is faithful.

 

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