What do the Doha talks mean for the carbon market?

Sun Dec 9, 2012 9:58am IST

A general view shows the logo of the 18th United Nations Convention on Climate Change next to the Ministry of Environment (C) in Doha November 27, 2012. REUTERS/Fadi Al-Assaad/Files

A general view shows the logo of the 18th United Nations Convention on Climate Change next to the Ministry of Environment (C) in Doha November 27, 2012.

Credit: Reuters/Fadi Al-Assaad/Files

Related Topics

REUTERS - U.N. climate talks in Doha, Qatar, were unlikely to have any impact on depressed carbon markets, analysts said.

Extended debate gave the Kyoto Protocol, the world's only global pact on curbing climate change, a fragile lifeline.

But it did nothing to raise ambition on cutting emissions, which could have helped to reduce a surplus of offsets and emissions allowances that have crushed markets.

AAUS

After years of haggling, the European Union came up with an internal agreement on how to deal with its surplus of international allowances, known as Assigned Amount Units (AAUs).

The EU text was agreed with minor changes in the final package of agreements known as the Doha Climate Gateway.

Under the EU deal, allowances would be carried over into a second Kyoto commitment period, but buying of them would be limited to 2 percent of the purchaser's national allocation.

There was no decision on cancellation after 2020 of surplus permits -- as demanded by developing nations.

But the handful of nations likely to purchase the allowances -- Australia, the European Union, Japan, Liechtenstein, Norway and Switzerland -- made declarations saying they would not buy them, ensuring they have limited market value.

CLEAN DEVELOPMENT MECHANISM

The $215-billion offset market allows governments and companies to invest in emission reduction projects in return for tradeable credits (Certified Emission Reductions), which they can use to meet international climate targets.

But the Clean Development Mechanism has suffered from the failure of the talks to deliver deep emissions cuts.

Prices have collapsed from above 22 euros in 2008, just before the failure of U.N. talks in Copenhagen to get nations to agree to binding emission caps, to about 50 cents.

A U.N.-commissioned report in September said that unless nations took on deeper cuts or a reserve bank was set up to buy surplus credits, the scheme could collapse.

Doha talks reached no agreement on a solution.

"As with Durban (climate talks) last year, the outcome will not surprise the market and so is unlikely to affect the price of EU allowances or CDM credits," said Jonathan Grant, director of sustainability and climate change at PwC.

(Reporting by Nina Chestney in London and Barbara Lewis, Andrew Allan and Ben Garside in Doha; Editing by Stephen Powell)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Read | Full Coverage 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Insider Trading Case

Insider Trading Case

Ex-Goldman director Rajat Gupta to surrender June 17 in insider case.  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage