A Review of UNFCCC Carbon Market Developments (Newsletter #20)

The last intercessional UN climate negotiations took place in May in Bonn, Germany. The main theme of the two-week conference seemed to be “diverging views” on about every agenda item. There were diverging views about the length of the second commitment period of the Kyoto Protocol; about the work programme of the new Durban Platform that includes mitigation goals and commitments for all countries; about the purpose of new market-based mechanisms and how various mechanisms around the world would interact after 2012 etc. Below we put what happened in Bonn in the context of the overall goals of the international climate negotiation and summarise the main results (or lack thereof).

Durban Platform meets for the first time

The newly established Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP), met for the first time in Bonn. As expected the negotiations progressed very slowly with parties arguing at length over the content of the agenda. Developing a new framework that includes mitigation goals and commitments for all countries is incredibly difficult at the best of times. Given the woefully insufficient pledges of most developed countries for the second Kyoto commitment period and the huge loopholes that further weaken emissions reduction goals, it is therefore not surprising that very little was decided on. The ADP agreed on its Bureau, adopted its agenda and initiated two workstreams. Additional sessions are to be held the next intercessional in Bangkok (30 August – 5 September). IGOs and NGOs were invited to provide additional input by July 27 on how the ADP can advance its work.

New Mystery (Market) Mechanisms

The decision to establish a new market mechanism (NMM) was taken in November 2011 at the climate negotiations in Durban. Then, countries also agreed to establish an international framework for new bilateral or regional market mechanisms to comply with. However, none of the details have been worked out and even experts are unclear about what new mechanisms could look like and what the role of the so-called “common framework” should be. In an effort to advance the process, Parties held two half-day workshops on these topics. CDM Watch presented on behalf of the Climate Action Network on the essential policy tools necessary to prevent double counting.

This workshop brought the divergent views of countries to light. Many issues remain in dispute, such as whether there should be centralised governance or prevailing national rules, how to address double counting and how these new mechanisms will actually fit into the wider climate negotiations with insufficient political will for ambitious emission reductions commitments. The EU pushed for progress on both issues with the explicit goal to finalise core modalities and procedures of new market-based mechanisms by COP18. AOSIS emphasized the importance of centralised governance of mechanisms Japan and New Zealand on the other hand, stressed that such new approaches should be based predominantly on national rules. China and Brazil stressed the importance of political conditions (i.e. commitments by developed countries) for further discussion on these issues.

Given the differing views, it is not surprising that the negotiations on these two issues did not progress much and little was decided Parties agreed to:

  • Have another round of inputs from Parties and admitted observer organisations, which closed on 6 July 2012.
  • Request the Secretariat to prepare a technical paper, which draws on the information contained in the submissions, the presentations and discussions. The Secretariat is expected to present the paper at the upcoming Bangkok UNFCCC session at the end of August 2012.
  • Hold more workshops.

Even if countries unexpectedly find agreement on the many issues, the main problem remains: how can new mechanisms possibly be viable, given the insufficient political will for ambitious emissions reductions commitments and resulting lack of emission reduction buyers?

Still No Appeals Procedure

The negotiations in Bonn did not succeed in establishing a CDM appeals procedure against decisions taken by the CDM Executive Board. Diverging views on whether to allow appeals to be raised by project developers only or also include civil society and whether to allow appeals against all decisions (rejections as well as registrations of projects) prevail. Lack of consensus forced the chair to postpone the discussion to the meeting of the Subsidiary Body on Implementation in Doha.

Currently there is no way to appeal a project once it has been registered or rejected. Over the past years, CDM project developers started to push for an appeals procedure that would only be open to appeals against negative decisions (rejections) of project applications but not against positive decisions (registrations). However, since its inception, the CDM has been criticised for its lack of accountability, effective safeguards and grievance mechanisms. Establishing a legitimate process that provides means for all those impacted by a CDM project to raise their concerns and have them addressed in a timely manner has long been considered an essential requirement of the CDM. The right to information, the right to public participation and the right to seek justice are intrinsic to every individual and inherently to human rights. CDM Watch believes that peoples and communities involved in the local stakeholder consultation and stakeholders involved in the global stakeholder consultation should have legal standing for appeals.

‘Forest in Exhaustion’ – exhausted!

Parties discussed (again) if ‘forests in exhaustion’ (depleted forests) should be included as afforestation and reforestation CDM project activities. CDM Watch strongly opposes the inclusion of this project type because it is likely to provide subsidies to industrial tree plantations in circumstances that encourage bad management practices and the establishment of plantations in inappropriate locations. Many parties oppose the inclusion of this project type and it is very unlikely that this project type will be approved. Valuable time that could be spent on discussing much more pertinent issues is therefore wasted by focusing on a topic that has neither credibility nor political support.