Carbon Market Watch

For fair and effective climate protection.

Media Statement: Rich countries set to benefit from proposed carbon offsetting mechanism in Paris

10 Dec 2015

Paris, 10 December. With less than 48 hours of negotiation time left, countries continue arguing about a new proposed carbon offsetting mechanism. Key concerns relate to doubts about the need for carbon offsets in the future, the inclusion of land use carbon offsets that are likely to open a new gigatonne loophole, and allowing developed countries to compete with project financing.  A new alliance of developing countries have proposed a new text to address concerns.

At yesterday’s third meeting of the so called Paris Committee, the assembly of Parties working to conclude the Paris climate treaty, discussed a new version of the negotiating text. A heavily contested provision includes the establishment of the so called “mechanism to support sustainable development”, a proposal made by Brazil and understood as a future version of the Kyoto Protocol’s carbon offsetting mechanisms, the Clean Development Mechanism (CDM) and Joint Implementation (JI).

Carbon offsetting

“There is no future for carbon offsetting in the post-2020 world: there is just no space in the remaining global carbon budget to not be acting to reduce emissions.” said Femke de Jong, Carbon Market Watch’s EU Policy Advisor. “Until now, developed countries could benefit from cheap emission reductions in developing countries but the future requires a dual commitment of ambitious domestic abatement and providing adequate financial support for climate action in developing countries.”

The latest negotiation text was heavily criticised for including elements that benefit industrialised nations to the detriment of developing countries. For example, the text proposes to allow developed countries not only to use but also to generate carbon offset credits without any restrictions on the amount of credits used.

“Allowing developed countries to benefit from selling carbon offsets is a direct competition with project financing in developing countries. This is inequitable.” commented Eva Filzmoser, Director at Carbon Market Watch. “Despite the prominent name ‘sustainable development mechanism’, there is no work program proposed to actually define how co-benefits can be best realized.”

Land use carbon offsets

The draft text also opens doors for land use carbon offsets by introducing the new concept “long-term” mitigation benefits, something that is understood to address non-permanent carbon sequestration projects, such as forest management or soil carbon sequestration activities. Not using fossil fuels is considered ‘permanent’, as they come from geological reservoirs that have remained stable for over 300 million years.

“Allowing land use carbon offsets to be used against fossil fuels in the Paris climate treaty would create a new loophole that will severely undermine the already weak climate targets.” commented Katherine Watts, Carbon Market Watch’s global climate policy advisor.

Innovative climate finance

The current text does not include a financial levy on the carbon price for market mechanisms, for example on allowances under emissions trading systems. This proposal was in earlier versions of the text, but was dropped on Wednesday afternoon.

“What developing countries would benefit from, is to use markets as a new and innovative source of finance, to help to provide financial support for adaptation, loss and damage and forest management.” added de Jong.

New markets proposal

In yesterday’s negotiations, Venezuela stressed concerns about the integrity of the proposed marked rules and warned against repeating the mistakes of the past, referring to the build-up of surplus emission allowances under the Kyoto Protocol. In response to these concerns, a new alliance consisting of the like-minded developing countries (LMDC), the Arab Group and the ALBA Group, submitted a proposal that, among other things, removes the establishment of an offsetting mechanism.

The new alliance proposed instead to “consider/explore cooperative approaches to support developing country parties in enhancing mitigation and adaptation ambition, in the context of sustainable development, environmental integrity and in harmony with nature, under the authority and guidance of the CMA.”

At the opening of yesterday’s negotiation, Minister Laurent Fabius pointed out that nothing is agreed until everything is agreed.


Background for journalists:

Press contact:

Eva Filzmoser, Director

Tel: +32 499 21 20 81

Dr. Katherine Watts, Global Climate Policy Advisor

Femke de Jong, EU Climate Policy Advisor

Tel: +33 (0) 85 88 75 63

Andrew Coiley, Communications Manager

+32 483 65 50 78