The latest draft of a UN climate deal offers two main options for how international carbon markets will be dealt with under a post-2020 regime, down from six alternatives as part of a streamlining of the text almost 200 nations are aiming to agree in Paris in December.
The co-chairs of the negotiations towards a Paris pact on Friday published a draft document requested by parties to help whittle down the main text from 90 pages.
This 83-page draft document was split into three sections: an 18-page draft of what would be the core Paris agreement, a wider “decision” text aiming to thrash out further details before the agreement enters into force from 2020, and a third section for as-yet unallocated items.
“This streamlined agreement text gives delegates a strong foundation to advance the climate negotiations. The co-chairs have cut through the clutter to make the text more coherent, clarifying the key choices to be made,” said Jennifer Morgan of US-based think-tank World Resources Institute.
Most market references were left in the third section, which gave one heavily sub-divided option allowing parties to count or transfer emission reduction initiatives in other nations, either using current UN-approved mechanisms including REDD+, an enhanced CDM or new mechanisms.
The second option was to have no provision for markets in the Paris agreement (both options are listed in pages 55-57 of the document).
The first option streamlines five often overlapping pro-market concepts in the official negotiating text concluded at a UNFCCC session in Geneva in February, with the second alternative largely reproducing that text’s sixth option.
In a statement alongside the draft, the co-chairs said negotiators must address how markets and other as-yet-unallocated items will be dealt with at the next week-long UNFCCC session in Bonn from Aug. 31 to Sep. 4.
At this, and a subsequent session from Oct. 19-23, government officials will be aiming to further streamline the text using guidance provided by ministers who will bargain over the final main points at the two-week Paris conference in December.
Observers are divided over whether a direct reference to markets in the main Paris agreement would affect governments’ use of international carbon markets beyond 2020. Some say rules could be agreed at subsequent meetings.
The EU believes clear provisions on use of international markets are needed in the agreement to enhance ambition on emission reductions and bolster its environmental integrity by agreeing clearer rules on how national pledges can be counted.
Business group IETA welcomed the streamlined text but urged more certainty on how markets will be dealt with.
“We remain concerned at the lack of clarity on the use of markets and tools to accelerate links between systems, such as common accounting rules and project crediting,” IETA said in an emailed statement.
“The Paris agreement should establish a solid foundation for the markets of the future, ensuring their integrity and effectiveness. If policymakers are serious about getting business engaged in actions on a large scale, they must ensure that carbon market mechanisms grow strong under the future framework.”
Yet, analyst Trevor Sikorski at Energy Aspects, said the final Paris text is unlikely to be very important to the use of markets.
“The thrust of the agreement does not have an implicit market at its centre, unlike the Kyoto Protocol, which was effectively a large cap and trade mechanism,” he said.
“Instead, it is an international codification of domestic targets and actions. As such, even if market mechanisms is not mentioned, any given country or region can use them if they want to as part of the domestic policy actions.”
By Ben Garside – email@example.com