EU wants developing nations to do more on climate
Date: 12-Mar-08
Country: DENMARK
Author: Gerard Wynn
The Kyoto Protocol on global warming allows rich countries to meet binding targets on greenhouse gas emissions by funding cuts in developing nations, spawning a multi-billion dollar trade in carbon offsets.
The EU has been the biggest buyer of offsets so far but now wants developing nations to take more responsibility for cutting their contribution to global warming.
"(Emissions cuts) would become more the contributions of developing nations," the Commission's head of emissions trading, Yvon Slingenberg, told reporters at a carbon market conference in Copenhagen on Tuesday.
"If developing countries continue to be only offset suppliers we simply will not reach (desired) emissions levels. (We expect) a gradual shift from offsetting to cap and trade."
Cap and trade schemes set a limit on greenhouse gas emissions and allow participating countries and companies to trade emissions permits within that cap.
Developing countries have consistently rejected such limits, saying that cutting poverty comes first and that countries which are already well off should pay for the climate fight.
The EU stance on Tuesday was not welcomed by the United Nations' climate change body which is leading two-year talks, launched in Bali in December, to agree a new global climate change deal to extend or replace the Kyoto Protocol after 2012.
The UN wants to expand a carbon offsetting scheme under Kyoto, called the Clean Development Mechanism (CDM).
"Developing countries, at the moment, would say that the CDM is the only serious money on the table, and you (the EU) are proposing to constrain it in volume," the UN's climate change chief, Yvo de Boer, told reporters at the Copenhagen conference.
"The developing world is not willing to adapt to a cap and trade approach...they've been very clear on this," he added.
DOLLAR
The EU does not want to be the only group of countries funding emissions cuts in the developing world, and is waiting for the outcome of the Bali talks to decide finally on its approach.
Its stance is also worrying carbon market investors, already jittery after the Commission proposed in January to freeze from 2013-2020 the use of carbon offsets by energy-intensive industry.
Under the CDM western speculators hunt the most lucrative emissions-cutting projects in the developing world, to generate offsets and profit from price differences around the world.
The boutique investment bank, Climate Change Capital, for example has raised over $1 billion on the back of profits made in such markets. Founder and vice-chairman James Cameron said the carbon market could accept changes to the CDM provided they knew well in advance what they were and when they would happen.
"There's a desperate need to know when that transition happens," he said on Tuesday.
Slingenberg said there would still be a role for offsets as part of a new climate deal, for example where developing nations sold these in return for extra effort made over and above the adoption of clean energy technologies.