According to a German government official, climate negotiators are likely to discuss the establishment of a new carbon market at the United Nations summit in December to reinforce countries' strategies for reducing emissions.
The national climate pledges made in the lead-up to the Paris Talks are deemed insufficient to meet the target of limiting global warming to 2 degrees Celsius. Franzjosef Schafhausen, the director general of climate change policy at Germany's environment ministry, expressed the need for an ambition mechanism and suggested that envoys should consider a voluntary carbon market, especially after the Group of Seven (G7) nations committed to prioritizing climate protection within their economic growth agenda.
Current plans submitted under the UN process would result in global warming of around 2.7 degrees Celsius, surpassing the desired 2-degree target, according to Climate Action Tracker. The European Union (EU) has indicated its willingness to enhance its greenhouse gas emission reduction target for 2030 beyond the existing plan of a 40% cut from 1990 levels, but this is contingent upon other countries demonstrating similar levels of ambition.
The draft text for the UN meeting in Paris includes an option to create a market "to support sustainable development" after 2020, building upon the existing program established under the 1997 Kyoto Protocol. However, demand for UN Certified Emission Reduction credits, which are used by developed nations to offset domestic pollution by investing in green projects abroad, has significantly declined since its peak in 2008 due to stagnation in climate talks.
While a globally imposed carbon market with a predetermined cap may be challenging to achieve, Nigel Topping, the CEO of the We Mean Business coalition, emphasized that voluntary market linkages between nations can reduce the average cost of emission reductions.
Schafhausen acknowledged that there is no guarantee that the Paris agreement will introduce an enhanced or new program facilitating the transfer of emission reductions between countries. Nevertheless, he expressed Germany's interest in creating international carbon markets to address climate challenges effectively.
