17 December 2014 | When it comes to the future of our climate, are you a glass half full or a glass half empty kind of person? If you’re on the glass half full side, then you will find new reason to hope in the fact that the international climate talks in Lima, Peru concluded on Sunday with a basic agreement on what constitutes the national submissions expected to form the foundation of a new climate deal in Paris in 2015.
But if you fall in the glass half empty camp, then you’re probably disappointed that the 20th Conference of Parties (COP 20) talks ended with very few details about what these Intended Nationally Determined Contributions (INDC) due in March will actually look like. The 22 paragraphs in the Lima agreement provided precious few details about the INDCs beyond the fact that they will contain specific emission reduction targets and plans for achieving them. Whether the sum of these contributions will keep global temperature rise limited to 2 degrees Celsius the agreed goal of the United Nations Framework Convention on Climate Change (UNFCCC) remains to be seen.
“The information for the INDCs is key,” said Manuel Pulgar-Vidal, the Peruvian Minister of Environment who served as President of COP 20. “The INDCs are key to having this balance between the bottom-up and the top-down process for Paris, and also because the INDCs are going to show us if there is a gap, what is the dimension of the gap.”
One of the COP 20 highlights for the optimists among us was the increasing momentum behind the Green Climate Fund (GCF), which surpassed the $10 billion mark and secured financial commitments from both developed and developing countries. Particularly noteworthy were financial pledges of $6 million apiece from host country Peru and Colombia, which demonstrated that these developing countries wanted to play a constructive role in supporting the GCF despite having very limited historic responsibility for escalating global greenhouse gas (GHG) emissions.
Now the race begins to assess and finance the first GCF projects and programs ahead of the Paris talks. Funding under the GCF will be split 50-50 toward adaptation and mitigation activities and REDD+ (reducing emissions from deforestation and forest degradation) projects could find themselves on the GCF’s fast track.
“I would be more than delighted if some of the projects approved include forestry projects,” said Héla Cheikhrouhou, GCF’s Executive Director. But given the short time frame to Paris, she warned: “Don’t bring us concepts that will take years to develop.”
The pessimists among us may be disappointed by the lack of clear signals on future demand for offsets generated under the Clean Development Mechanism (CDM). Negotiations on the CDM ended with the adoption of guidance calling for, among other things, consolidation of its rules and streamlining methodologies. The CDM and Joint Implementation (JI) programs are still in serious need of reform if they are to be included in some form in the Paris agreement, market experts said.
“But we’ve already done a helluva a lot of this work and it seems ridiculous to throw away the capacity we’ve built up, both within the UNFCCC itself, within host country governments, within the governments in the buyer countries and also with the private sector and start again afresh,” said Miles Austin, Executive Director of the Climate Markets and Investment Association. “Because if we don’t learn the lessons of the CDM and from JI, then we’re simply going to recreate history.”
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Early movers get the worm
The governments of Germany and Norway committed up to $65 million apiece to Colombia and Ecuador, expanding the REDD Early Movers Program (REM) to these two rainforest nations. The contributions will be distributed over three years, starting in 2015 through the end of 2017, as payments for verified emissions reductions. “The best contribution we can make as donors is to demonstrate that we are willing to pay for the results,” said Hege Araldsen, the Norwegian Ambassador to Ecuador, Chile and Peru. The announcement marks a significant expansion of the REM program, following the 2013 agreement between Germany and the state of Acre, Brazil. Read more here
Ready to get results
Heru Prasetyo, head of Indonesia’s REDD+ Agency, said the country will be ready for results-based payments for reducing deforestation by the end of 2016. The first step was submitting reference levels on Indonesia’s historical deforestation to the UNFCCC a task completed last week. The reference levels include both deforestation and degradation between 2000 and 2012 and projects that land-use change in Indonesia will result in 439 million tonnes of carbon dioxide emissions per year by 2020 under a business-as-usual scenario. Creating the reference level required pulling together disparate data from several sources across the country and getting different institutions to work together a massive undertaking, according to the REDD+ Agency. Read more here from EM Read more from Mongabay
Fake it till you make it
Twenty Brazilian companies participated in an emissions trading system (ETS) simulation using live corporate data, through a partnership between the Rio de Janeiro Green Stock Exchange and Empresas Pelo Clima, a Brazilian business group. The simulation included auctioning and bonds markets, assessment of company emission submissions, and fines for non-compliance. The idea is to stimulate conversation between companies and the government about how a carbon market in Brazil could potentially work, and to expose companies to ways to include carbon pricing in their business strategies, wrote Nicolette Bartlett of the Prince of Wales’s Corporate Leaders Group. Read more here
What’s the Vegas spread?
Will a future international climate agreement include compliance markets for forest carbon offsets? Investment firms such as London-based Permian Global, which is planning to invest $100 million in REDD projects in Latin America, are betting on it. The payments will be based on achieved emissions reductions. “Philanthropy will not be enough to preserve forests,” said Stephen Rumsey, chairman of Permian Global. But some delegates to COP 20 oppose forest-based offsets, arguing that countries would use them as an excuse to maintain higher emissions levels. Read more here
For what it’s worth
Three of China’s seven pilot carbon markets reached milestones recently. Beijing’s market surpassed the 100 million yuan (about $15 million USD) mark. Guangdong province announced that 600 million yuan ($97 million USD) in revenue generated from emissions permit auctions will be invested in a fund for pollution-cutting projects. And carbon prices in Shanghai reached a record high (36.9 yuan, or $5.98 USD per tonne) after 20 trading houses entered the market. Despite these developments, experts say the pilot markets are so far not driving the level of investment China will need to meet its 2020 target of slashing the carbon emissions associated with each unit of Gross Domestic Product to 40-45% below 2005 levels. Read more on Beijing
Read more on Guangdong
Read more on Shanghai
K-pop is music to climate policy
Starting in January, South Korea’s carbon trading market, the Korea Exchange (KRX), will be open for business. Five-hundred and twenty-five regulated companies will participate as the government aims to cut emissions 30% below business-as-usual levels over five years. Last week, South Korea’s environment ministry gave petrochemical, energy, steel and power generation companies an emissions quota of just under 16 billion Korean Allowance Units (KAUs), as opposed to the 20 billion KAUs requested by companies. Initially, the KRX will be open for trading for just two hours per day, but business hours may expand depending on market activity. Read more here
Bet they will remember their first time
In their first joint auction on November 25, California and Quebec sold GHG allowances for $12.1/tCO2e each. Buyers purchased 23.1 million allowances that can be used immediately and an additional 10.8 million allowances that can be used starting in 2017. The two governments received 1.7 bids for every allowance that was on sale. Both California and Quebec are actively looking to recruit new US states and Canadian provinces to join their cap-and-trade system. Read more here
A vanishing act
The world’s mangroves are being destroyed at three to five times the rate of tropical forests, exposing developing countries to sea level rise and flooding, according to the UN Environment Programme (UNEP). The agency’s analysis finds that this destruction comes at a staggering cost: $42 billion per year. In African nations such as Cameroon, Gabon, and Angola, replacing mangroves with seawalls would cost as much as $11,286 per hectare for the same coastal protection benefits, the study finds. Mangroves are also important, butquickly disappearing carbon stocks
, according to a report by the Marine Ecosystems Services program of Forest Trends and UNEP suggests they should be included more prominently in REDD+ discussions. Read more here
STANDARDS & METHODOLOGY
Agriculture strikes Gold
The Gold Standard launched its agricultural program last week at a side event at COP 20. “Our secret agenda is to make sure that payments for carbon reduction actually become payments for sustainable development,” said Pieter van Midwoud, Director of Land Use and Forests. The certified emissions reductions program includes streamlined guidelines for smallholder farmers. The Gold Standard is working with partners Hivos, Solidaridad and the Cool Farm Alliance, and their announcement states that they aim to make their agricultural program “a strong weapon for corporates implementing zero-net deforestation commitments.”Read more here
SCIENCE & TECHNOLOGY
A quicker payoff
Previously, climate scientists have suggested that the effects of carbon dioxide emitted today may not be fully felt for several decades. But that may be a misconception, according to a recent study published in Environmental Research Letters
. In fact, the “maximum warming effect” is felt after 10.1 years, researchers at the Carnegie Institute for Science found after analyzing several climate models. The benefits of reducing emissions will also be felt in that timeframe, meaning a quicker payoff for governments that enact carbon-cutting policies. “Our results show that people alive today are very likely to benefit from emissions avoided today and that these will not accrue solely to impact future generations,” said Katharine Ricke, the study’s lead author.Â Read more here
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