Carbon Market Watch

For fair and effective climate protection.

NGO Voices on carbon markets at COP18 (Watch This! #4)

20 Dec 2012

See Watch This! #4, December 2012

Agricultural carbon markets – selling out food security?

By Teresa Anderson, International Advocacy Co-ordinator for the Gaia Foundation

At COP18 in Doha, carbon markets continued their inexorable spread into every arena of climate work, including agriculture.  With heavily politicised debates over emissions reductions, loopholes and carbon markets in almost every other part of the UNFCCC negotiations, African and G77 countries pleaded for the agriculture discussions to focus on the urgent and necessary steps towards ensuring adaptation for food security.  However the EU, US and New Zealand insisted on language about mitigation that could lead to agriculture being included in carbon markets in developing countries.

The deadlock meant that no agreement on agriculture was reached, so the fight will continue in SBSTA next year.  Similarly, discussions under Land use, Land-use change and Forestry (LULUCF) about whether “non-permanent” (ie agricultural) carbon credits should be included in the CDM were inconclusive and will continue next year.

However, in the negotiations about New Market Mechanisms, agriculture was explicitly linked to carbon markets. A request was made for a study and workshops on monitoring, reporting and verification (MRV) issues for “removals” of carbon from the air through land-based methodologies such as agriculture. As an EU negotiator lamented to me “I am coming to realise that that the only vision my EU colleagues have to address climate change is to put a price on carbon.”

“An EU negotiator lamented to me “I am coming to realize that the only vision my EU colleagues have to address climate change is to put a price on carbon.”

Did COP18 open a back door to turn forests into an offset?

By Sebastian Bock, Campaigner (Forests and Climate Politics), Greenpeace International

In terms of forests Doha marked the end of the process started in Bali, whereby developed countries agreed to provide financing to tropical forest countries in exchange for action to reduce deforestation and forest degradation (REDD). While little to no progress was made in regards to REDD itself, the final hours of COP18 in Doha opened a Pandora box which could clear the way to turn forests into an offset traded as a compliance option in a carbon market.

In an effort to keep the Kyoto protocol and its second commitment period alive, language was added at the very last minute that broadly allows “any units” from market mechanisms developed by the UNFCCC (and perhaps elsewhere) to be used to offset developed country emissions. The new text allows that “[a]ny unit[s] generated from market-based mechanisms to be established under the Convention or its instruments may be used by Parties included in Annex I to assist them in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.” While some parties were quick to point out that the rules for a market-based mechanism under REDD are not yet fully established, many countries have been pushing for such a market. Combined with the newly introduced language, there is a growing risk that REDD credits might be allowed through the back door as an offset which counts towards compliance.

For years, Greenpeace and others have been very vocal about the fact that if we want to have a realistic chance at stopping climate change, we need to tackle both deforestation and industrial emissions. By potentially allowing forests to be used as an offset this new text risks replacing one with the other. Although the full implications of those last minute changes remain unclear, there is major concern that this could turn parts of REDD into an offset scheme.

“The final hours of COP18 opened Pandora’s box which could clear the way to turn forests into an offset traded as a compliance option in the carbon market.”

Verification for REDD+ – a burden of credibility?

By Hermine Kleymann, Program Officer REDD Policy, WWF Germany

It was an up and then down two weeks for REDD+ at the 18th Conference of the Parties to UNFCCC that left negotiators and observers alike exhausted. For the first time in 7 years, no agreement could be reached under the UNFCCC technical body SBSTA and the outcome for REDD+ finance under the LCA is based on future work programs to take the work forward, hence process oriented. While the text on the table to guide countries how to measure emission reductions through REDD+ activities (forest monitoring, MRV, reference level) were welcomed by most parties and NGOs its endorsement failed over the level of international verification required to receive payments on a results-based manner.

While some argued that the negotiated level for verification was only justified once REDD+ will become part of carbon markets and should therefore not be pursued, one should bear in mind that REDD+ is a very complex mechanism including a very complicated monitoring and measuring process for carbon emissions achieved through reduced deforestation and degradation. The more complex a system it is the more detailed the need will be to have transparent reporting to ensure credibility and environmental integrity of results achieved. To ensure this, countries need to be continuously supported financially, but also technically through international expert teams.  This could be done under the ICA process and a clear link should be established. COP 17 already agreed that countries should establish their reference levels through a step-wise approach. This principle should also apply to the proof of credible outcomes – name them verification or, for now, capacity building. Also, there is no rush agreeing on something which might also still take a while: verification is a REDD phase 3 requirement. Most countries are in phase 2 or even still phase 1.

“Endorsement failed over the level of international verification required to receive payments on a results-based manner.”

Still lacking common carbon market standards – worrying signs from Doha

By Naoyuki Yamagishi, Leader, Climate and Energy Group, WWF Japan

Parties seem to be trapped in the cycle of reproducing work programs. Like last year, the UNFCCC decisions this year in Doha ended up producing another set of work programs for discussing a “framework” for various approaches and “new-market-based mechanisms.”  Discussions in the negotiations were helpful to clarify parties’ positions, but, at least on paper, little progress has been made.

“There is no reason to hurry the process of creating yet another mechanism when massive over-supply of credits is anticipated.”

There is, however, a risk of not having a “framework” soon enough.  Why?  It is because there will be CDM-like offset mechanisms created by national governments, or any other entities, after 2012.  Perhaps the most concrete example is the Japanese Joint Crediting Mechanism (formerly known as the Bilateral Offset Credit Mechanism).  The trend could be problematic because those parties may start claiming the non-UN credits in their pledges.  There IS already a section for such credits from non-UN mechanisms in the common reporting format for the Cancun pledges (which was adopted at Doha).   Therefore, at the next COP, we need to work even harder to ensure common standardsare there to protect the overall environmental integrity of the system.

Doha Leaves Carbon Market in the Doldrums But Manages to Curtail Hot Air (Somewhat)

By Wolfgang Sterk, Project Co-Ordinator, Wuppertal Institute for Climate, Environment, Energy

The Doha climate conference did not take any action that would put the brakes on the free fall of prices in the EU ETS and the CDM. The EU is still not able to increase its target to 30% even though it has essentially already achieved its 20% target. Proposals to curtail the supply from the CDM that would at the same time have improved its environmental effectiveness, such as tightening baselines or limiting crediting to a single ten-year period, did not make it into the final decision. And the countries that have huge surpluses of AAUs successfully fought off proposals to cancel that surplus at the end of the second commitment period (CP2).

However, the possibility to buy AAUs was capped at 2% of the buyer countries’ assigned amount in CP1 and all the potential buyers declared that they were not going to buy CP1 surplus AAUs. One of the few pleasant surprises was that the possibility of creating new hot air in CP2 was eliminated by the decision that all CP2 AAUs above a country’s average emissions in 2008-2010 will be cancelled. But overall the carbon price signal is about to become virtually extinguished. The carbon market is not a panacea, but if you decide to make it the central piece of your climate strategy, as countries have done, you should at least ensure that it remains functional.

The carbon market is not a panacea, but if you decide to make it the central piece of your climate strategy, as countries have done, you should at least ensure that it remains functional.”

UNFCCC’s Increasing Isolation from (People’s) Reality

By Dorothy-Grace M. Guerrero, Programme Coordinator Climate and Environmental Justice, Focus on the Global South


The dismal outcomes of COP18 showed that developed countries do not intend to match the urgency demanded by the climate crises with appropriate, responsible and ethical actions.  Nature already unleashed record-breaking and never-seen-before natural calamities in many parts of the world this year alone. Similar catastrophe will most likely occur again and possibly in more forceful levels. New studies already showed that climate change is happening faster and with far worse impacts on the planet than previously thought.

The negotiations in the last four years resulted to what we have now – a diluted Kyoto Protocol supported by fewer countries and characterized by a laissez faire regime where mere “voluntary pledges” for emissions reduction will happen until 2020. In the face of a clear danger of the global mean temperature increase of at least 4°C to 6°Celsius in this century, the poor majority in the developing countries who contributed little to climate change are simply condemned to more threats of calamity, increasing poverty and the possibility of becoming climate refugees in the future. Meanwhile, their forests, land and water will be put up in the market and denied to them in the name of saving the climate.

“The poor have contributed little to climate change, but their forests, land and water will be put up in the market and denied to them in the name of saving the climate.”

How many more COPs can we afford?

Wiert Wiertsema, Both Ends


More than ever, scientists are united in confirming that man-made climate change is happening. The losses due to the emission of greenhouse gases and subsequent global warming are rapidly accumulating. As long as the costs of climate change are not reflected in the price of emissions of greenhouse gases these emissions will continue to rise for sure. Meanwhile, the bills of climate change related ‘natural’ disasters are left for the victims to pay for. The price tag for coping with the impacts of climate change is set to increase ever more.

The next climate change summit will once again explore how these ever increasing costs of climate change can be moved from the end to the beginning of the emissions chain. In the absence of strict regulations and with their focus on the end of the chain, carbon markets remain part of the problem. With every new summit effective emission reductions become more difficult to achieve. Frankly, it is hard to understand how politicians can even express satisfaction with the results of such meetings. The emotional speech of the negotiator of the Philippines about the typhoon that hit his country during the summit said it all: when will the mismatch between political realism and the facts of climate change finally be fixed? The world badly needs new leadership.

“ When will the mismatch between policitacl realisms and the facts of climate change finally be fixed? The world badly needs new leadership!”

CoP18 Darkens the Blackness of Carbon Markets

No one expected much progress from Doha.  And yet again, the carbon market racketeers came up with some dirty tricks. It’s difficult to judge which one deserves the crown of “carbon (black)marketer”. The Indian government’s proposal for a ‘stabilization fund’ for the collapsing carbon market is a contender for the crown. The UNFCCC’s CDM 2012 report that shamelessly tries to extend the fraudulent claims of “sustainable development benefits” for the developing world, based entirely on the profiting corporates’ cooked-up ‘data’, is equally in-famous.  These false claims are being made despite numerous ground-level studies showing the double whammy of CDM projects.  In the last decade or so, the global carbon markets have seen increases in emissions in buyer and seller countries, as well as globally. But the prize must go to the push for creating a large and potentially devastating new carbon market by including agricultural soil carbon sequestration in the negotiations.  The earlier FAO claim that the largest potential for agricultural soil C-sequestration – as mitigation – is in the developing nations is the evil co-contender.  Dirty carbon-money seems more precious than food sovereignty and human lives.

“Dirty carbon-money seems more precious than food sovereignty and human lives”.

Doha – an outsider’s view from the inside: why the climate talks went nowhere

By Dr.Tim Cadman, UNU Institute for Ethics Governance and Law, Griffith University

It has become almost axiomatic that the higher the number of the climate talks, or Conference of Parties (COP), the smaller the outcome. COP 18, held in Doha November 26th-December 7th 2012 was no exception. With a somber atmosphere from the very beginning – supported by the sinister spider that loomed over delegates within the hallway – it quickly became clear to the 17,000-plus attendees that little was to be expected. This was confirmed by day three, when Christiana Figueres, current Executive Secretary to the UN Framework Convention on Climate Change (UNFCCC), observed that citizens should not look to governments for the solution to climate change, but that they should take action themselves. For those concerned with emissions trading schemes, and REDD+ in particular, a key low point was the inability of Norway and Brazil to settle their differences over the need to have robust verification systems for carbon accounting (Norway), or to adopt a more hands-off approach to existing schemes (Brazil). As a result, discussions stalled, and the billions of dollars that were expected to become incentive mechanisms for developing countries to reduce deforestation and forest degradation (and hence reduce greenhouse gas emissions), are now in jeopardy. My overwhelming impression: that a high-level of support and infrastructure was provided at the conference for governmental as well as non-governmental participants to be informed of developments as they happened, if applied to the deliberations themselves perhaps they too could have been effective.

Dr Cadman’s presentation on Day One at the Side Event “REDD+: Persistent Issues & recommendations for Doha & Beyond” can be seen at http://www.youtube.com/watch?v=UgijfyTd-4U

“A key low point was the inability of Norway and Brazil to settle their difference over the need to have robust verification systems for carbon accounting.”