Agreeing to a second commitment period without meaningful rules is pointless. Emission cuts must be ambitious
The 18th Conference of Parties (COP) to the United Nations Framework Convention on Climate Change began last Monday in Doha. This is an important “transitional” COP towards a brand new agreement that promises to encompass all countries. A number of items are up for discussion, but this article only deals with those of interest to the carbon market.
When Parties last met in Durban (2011), they committed to developing a future climate regime by initiating a new round of negotiations to be concluded by 2015 and made operational by 2020. In other words, they agreed to talk. Decision text of the Durban Platform for Enhanced Action appears to bring all Parties from the developed and developing worlds alike onto one track, but considering the last minute weakening of the EU’s proposed “legal framework” to “an agreed outcome with legal force”, there is scepticism around Parties’ levels of sincerity.
The good news, though, is that China and Brazil seem to be willing to take on emissions cuts sooner than expected. This appears to have fractured the traditional G77 + China negotiating block into smaller groups, and it remains to be seen whether their actions nudge others to take on similar commitments.
The nuts and bolts
The following items may sound like noise, but are important and are up for discussion in Doha:
1. It is time to take a call on a second commitment period for the Kyoto Protocol, which is set to end in December 2012. There has been no resolution on US participation, developing countries have objections, and Japan says it won’t join. Australia and the EU remain the only candidates to commit, but may (and should) do so if for no other reason than to rescue the clean development mechanism (CDM) and link their carbon markets with a common approach to accounting, and a single market currency – assigned amount units (AAUs) and certified emission reductions (CERs). Despite the lack of critical mass, Parties do need to agree, at least to use Kyoto’s inherent carbon market architecture into the New Agreement.
However, agreeing to a second commitment period without meaningful rules is pointless: emissions cuts must be ambitious and carryover rules shouldn’t drag surplus carbon permits from the 2008-2012 period to a fresh phase. According to Thomson Reuters, targets declared by Parties likely to participate in a second Kyoto