The U.S. is proposing the creation of international carbon-trading markets because United Nations climate talks have so far failed to set rules for such a system, according to a person with direct knowledge of the plan.
A coalition of nations and regions willing to implement the market standards to meet their domestic climate targets would be a fallback position in case the UN-negotiated climate deal expected in Paris doesn’t include such measures or progress is deemed too slow, said the person, who asked not to be identified because the discussions aren’t public.
All countries will have emission limits beyond 2020 under the UN pact, and a new way of calculating the environmental value of trades relative to each nations’ climate pledge is needed, the person said. Almost 200 countries are meeting today in Bonn for a final session of climate talks before a conference in Paris in November, at which envoys plan to seal a global emissions-limiting deal.
Allyn Brooks-LaSure, a public affairs official at the U.S. State Department in Washington, declined to comment when reached by phone on Friday.
If the UN effort is seen on track setting required market rules, there would be no need for regulations from a smaller markets group, the person said. The coalition may set the rules and ask the UN Framework Convention on Climate Change process to endorse them.
Bolivia and Venezuela are among nations opposing carbon markets to protect the climate. Bolivia called for the “eradication of commodification of nature” and opposed carbon markets that promote “climate millionaires” in its Oct. 12 pledge to the UNFCCC.
The draft text for the UN meeting in Paris has an option to create a market “to support sustainable development” after 2020, building on the existing program under the 1997 Kyoto Protocol. UN Certified Emission Reduction credits, used by developed countries to offset domestic pollution by investing in green projects elsewhere, have slumped 97 percent since their peak in 2008 as nations failed to encourage buying.
The climate deal should include rules to ensure nations selling carbon units and those buying them don’t count the same emission reduction toward their separate pledges, according to the European Union.
“The principle of no double counting, something that won’t change over time, really should be enshrined in the agreement,” Sarah Blau, a Luxembourg envoy representing the EU, said Monday at a press conference in Bonn. The Paris outcome needs to include a detailed work program until 2020 to make sure the new agreement can enter into force on time, she said.
To accommodate the different types of pledges, such as absolute emission limits or reductions compared with a “business-as-usual” scenario, new trading rules are required, according to the person familiar with the U.S. plan. There should be third-party reviews of trades to ensure transparency and environmental credibility.
A planned system for rating emission-reduction credits and allowances would allow carbon markets and renewable-energy programs to trade with each other, the World Bank said in January. Rating companies might assess by how much emission reductions should be discounted or risk adjusted before they are traded internationally, the bank said at the time. Governance of such a system is still to be determined, it said.