WARSAW Nov 18 International negotiators want
countries to set a price floor for carbon offsets to help revive
the United Nations' ailing Clean Development Mechanism (CDM),
which has channelled more than $315 billion in climate finance
to developing countries, a draft text showed on Monday.
The text, which will be discussed this week during the
high-level segment of Nov. 11-22 climate talks in Warsaw,
"encourages parties to establish a pricing regulation mechanism
enabling the application of a floor price for certified emission
reductions (CERs)", the credits traded under the CDM.
The CDM lets investors in carbon-cutting projects built in
developing nations earn offsets that governments and firms can
use to meet their own emissions goals in a more cost-effective
However, demand for CERs has dried up and prices have
crashed by 95 percent to below 50 cents following the failure of
developed nations to take on deeper emissions targets under a
new global treaty.
This led countries to launch a year-long consultation in
2012 on how to fix the CDM.
The draft text did not suggest what the floor price should
be but analysts have said the cheapest projects to implement,
such as tidal power schemes, can cost as little as 60 euro cents
per tonne of abated carbon dioxide (CO2).
More expensive schemes, such as those that distribute
efficient light bulbs to households, can cost more than 2.25
euros per tonne of CO2.
Jeff Swartz of the carbon market lobby group the
International Emissions Trading Association said a minimum price
would not be a quick fix to revive the CDM.
"Setting a floor price will not change the fundamentals of
the market - in fact it will just create confusion among
investors and raise questions about the (CER purchase
agreements) that are currently under discussion," he said.
Meanwhile, a source close to the negotiations who requested
anonymity said the proposal was unlikely to be approved because
it would be too difficult to agree a minimum price and implement
Negotiators in Warsaw are trying to advance work towards a
new global climate pact to be agreed in 2015 and come into force
China, which hosts more than 50 percent of the 7,400 CDM
projects registered to date, has already imposed an unofficial
minimum CER sale price of 7 euros ($9.47).
However, traders say it has little bearing on the market
because most developers have varying floor prices set in their
(Reporting By Susanna Twidale and Michael Szabo; Editing by