Business association IETA published its priorities for the Paris climate agreement on Monday, aiming to persuade countries to secure a “sound foundation” for carbon pricing by making several technical decisions in the agreed texts amid doubts among poor nations about whether such a move should be linked to aid guarantees from rich governments.
The group said the core Paris agreement should contain a provision to enable countries to transfer units between pricing systems under a transparent accounting framework, arguing that networked carbon markets perform better and allow nations to be more ambitious.
IETA added that the wider “decision” text, aiming to thrash out further details before the agreement enters into force from 2020, should adopt decisions to establish by 2017 a unified project-crediting mechanism and market tools to assist countries in achieving their INDCs.
This would unify current and planned mechanisms such as the CDM, JI, REDD+ and any future ‘New Market Mechanism’ under one coherent and comprehensive system.
“Developing countries can move to low carbon pathways faster with the right set of market mechanisms and tools,” they said.
The group added that the Paris conference must deliver continued support to the Green Climate Fund, which they said could work alongside market mechanisms to multiply the effectiveness of private capital flowing into poorer countries by “de-risking” those investments.
IETA has a more detailed set of recommended text wording in a straw proposal it drafted last year.
However, getting any mention of markets in the final Paris text could be predicated on what, if anything, is agreed with regards to finance, said the chair of the negotiating group of LDCs Giza Gaspar Martins, who is also a diplomat from Angola.
Developed countries have promised to channel at least $100 billion per year to poorer nations by 2020 to help them curb their GHG emissions and adapt to the effects of climate change, but initial pledges made over the past few years suggest governments are off track towards meeting this target.
Speaking to reporters in London on Monday, Martins said that there were contrasting views amongst the LDC Group’s 48 members over whether market-based mechanisms should appear at all in the pact.
Some developing countries support using markets to help attract low-carbon investment, while others oppose them because they are against the commoditisation of the climate or the idea that rich nations should be allowed to outsource their emission cuts.
As a result, the LDC Group does not currently have a unified position on markets, but Martins added that this could change based on what is proposed in the run up to Paris or at the UN summit itself.
He acknowledged that there was very little on markets in the current negotiating text, but said that the subject was unlikely to remain in “its own jurisdiction”, adding that the LDC Group believes that it should be explicitly tied not only to climate finance but also to other areas including technology transfer.
However, temporarily swapping his LDC Group negotiating hat for that of an Angolan government official, he said countries should not be excluding any measures in tackling climate change.
- Co-chairs due to deliver shorter draft text on UN website by Oct. 1
- To split text into core agreement and decision elements
- Most market elements currently in a third, unallocated section
- Current text has two options for markets: broad use or no provision at all
- Observers divided over whether direct market reference needed in Paris
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By Ben Garside and Mike Szabo – firstname.lastname@example.org