December 11, 2011 / 6:02 AM / in 8 years

U.N. climate talks launch new market mechanism

DURBAN (Thomson Reuters Point Carbon) - U.N. climate talks in Durban this week agreed to define new market mechanisms under a successor treaty to the Kyoto Protocol, but pushed forward a decision to develop rules for them until next year.

A villager in a wooden boat passes through drainage canals, which are supposed to be developed for farming, in a peat area in Mangtangai in central Kalimantan, Indonesia, April 26, 2009. REUTERS/Ferry Latif/Files

Negotiators decided the mechanisms would operate under the UNFCCC Conference of the Parties and “bear in mind different circumstances of developed and developing countries”.

But they failed to agree to develop the underlying framework in Durban, pushing the effort to 2012 talks in Qatar.

The EU, Australia and New Zealand had favoured establishing modalities and procedures under the Durban Platform, but several parties, including the U.S. and Japan, wanted to delay the decision, an EU negotiator said.

“The U.S. said they couldn’t agree on something when they don’t know what it’s going to look like,” the negotiator said, speaking on condition of anonymity.

The EU wants any new market mechanisms to cut greenhouse gas emissions outside of Kyoto anchored in international law, in order to avoid fragmentation of the international carbon market.

Parties are now tasked with developing a framework for new mechanisms over the next 12 months with a view to making recommendations in Qatar.

The talks said the rules must ensure environmental integrity of new markets, seek to avoid double counting and ensure that a net decrease in CO2 emissions is achieved.

The latter caveat is in contrast to current market-based mechanisms, which generate carbon offsets that can be used by polluters in other countries.

Analysts at Thomson Reuters Point Carbon estimate that new mechanisms, including national appropriate mitigation actions (NAMAs), schemes to reduce emissions from deforestation and degradation and Japan’s bilateral offset mechanism, could generate 500-800 million tonnes of CO2 reductions by 2020.


The Durban talks ended six years of debate over whether and how the technology of carbon capture and storage could qualify for offsets under the Clean Development Mechanism, clearing the way for the first methodologies to emerge as early as next year.

“This sets an important precedent for the inclusion of CCS into other financing and technology support mechanisms and establishes a benchmark for managing CCS projects in developing countries,” said Brad Page, CEO of the Global CCS Institute.

The new rules force developers to put 5 percent of Certified Emissions Reductions (CERs) in a reserve, to be awarded to project developers only after site monitors have proved that no CO2 has leaked from the underground store 20 years after the end of the crediting period.

Although the International Energy Agency has estimated 3,400 CCS facilities are needed by 2050 to help keep a global temperature rise below 2 degrees Celsius, observers don’t expect any CCS projects to be registered any time soon.

This is because of difficulties in showing additionality as CER prices are currently at around 5 euros.

Delegates agreed to periodically review the rules, with the first to occur in five years.

So-called ‘materiality’ rules also passed, which allow CDM projects to earn offsets in cases where some data is lacking.

The move aims to cut red tape in CER issuance to projects that have small errors or omissions in design documents, and provides guidelines for how to deal with those situations.

A proposal from the ALBA group of Latin American countries that third-party CDM auditors take greater account of the views of local communities when validating projects failed to gain consensus and was dropped from the text on Sunday morning.


The Durban meeting failed to breathe new life into Kyoto’s Joint Implementation mechanism, as negotiators once again dodged a decision on whether to allow emission reduction projects to earn carbon credits under the scheme beyond 2012.

Like U.N. talks in Cancun last year, the conference ended with delegates agreeing to delay a decision on whether to decouple the future of JI from that of Kyoto until next year’s talks.

The postponement caused concern among some negotiators that a few nations with vast Kyoto emissions right inventories, would as a precaution ramp up offset issuance ahead of that.

The Durban talks also failed to reach consensus on a recommendation by the JI’s Supervisory Committee to merge the scheme’s two tracks, a move which it said would bolster JI’s environmental integrity.

Reporting by Michael Szabo

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