(Adds details on US fallback option for markets from paragraph 5)
A group of 31 national and sub-national governments spanning four continents on Monday urged UN negotiators to include provisions for international carbon trade as part of the Paris global climate pact.
The International Carbon Action Partnership (ICAP), a multilateral forum working on carbon markets, made a submission to the UNFCCC calling for the Paris agreement that “supports parties in transferring mitigation outcomes on a voluntary basis, provides a robust accounting framework for international transfers, encourages the development of sound MRV standards, and builds on the existing knowledge and institutions developed by countries and the UNFCCC.”
Officials from almost 200 nations arrived in Bonn today for the penultimate week-long negotiations ahead of the two-week climate summit in Paris starting late November.
Mention of carbon markets was largely left out of the latest version of the agreement, though references to building an international carbon market regime made it into a draft decision for negotiators to craft detailed rules on later.
US FALLBACK OPTION
The US government, which is not an ICAP member although several of its states are, is proposing the creation of international carbon trading markets for willing nations and regions in case the UN’s Paris deal doesn’t include such measures or progress is deemed too slow, Bloomberg reported, citing an anonymous person with knowledge of the matter.
All such countries will have emission limits beyond 2020 under the UN pact, and a new way of calculating the environmental value of trades relative to each nations’ climate pledge is needed, the person said.
US officials declined to comment to Bloomberg. A source familiar with the situation told Carbon Pulse that the Bloomberg article did not fully reflect the country’s position.
The World Bank has for several years worked with academics on its so-called Networked Carbon Markets project to examine ways in which different carbon pricing regimes could trade units with each other including getting ratings agencies to value pricing regimes.
However, the World Bank’s climate change envoy Rachel Kyte on Monday played down the prospect of advancing such technical work ahead of nationally-determined implementation of carbon pricing.
“How that will evolve is for the years to come … it is not ripe for resolution,” she told journalists on a conference call on Monday, adding that such work could probably advance after China and others had launched carbon markets in 2017 and 2018.
“For now what we are seeing is jurisdiction after jurisdiction, for its own strategic interest, putting a price on carbon,” she added.
The EU is among those seeking to include stronger provisions for markets in the main Paris text, in particular on transparency and accounting.
“The principle of no double counting … really should be enshrined in the agreement,” Sarah Blau of the EU delegation in Bonn told a webstreamed press conference on Monday.
At least 60 jurisdictions worldwide have implemented national and regional carbon pricing policies already, with several more being planned.
But market proponents fear that unless provision for international carbon trade is properly set out in the main UN Paris text it could struggle to emerge in future.
Bolivia and its allies have worked to block progress of market reforms and new mechanisms at UN talks, which take decisions by consensus. The group suspects such measures make it easier for richer nations to avoid cutting their own emissions by using carbon credits from poorer nations that generate little sustainable benefit.
“Carbon markets are efficient because they reduce costs for business and society as a whole. 17 ETS operating on four continents are testament to the growing trend towards cap-and-trade worldwide” states ICAP co-chair Jean-Yves Benoit.
“The INDCs submitted so far indicate that many parties support a role for market mechanisms post-2020” added fellow co-Chair Marc Allessie. “We hope that the Paris agreement will reflect this.”
By Ben Garside – firstname.lastname@example.org