Bloomberg News

Switzerland Seeks Precision as Nations Shape Carbon Markets (1)

March 10, 2014

Smog Surrounds Commercial and Residential Buildings in Guangzhou

Smog surrounds commercial and residential buildings in Guangzhou. The UN conference comes as China and the U.S., the two biggest emitters, spar over responsibility for pollution cuts to keep temperatures rising by a UN-endorsed maximum of 2 degrees Celsius (3.6 Fahrenheit) from pre-industrial times. Photographer: Brent Lewin/Bloomberg

Nations setting up carbon markets must standardize their emission-reduction benchmarks to ensure international efforts to limit global warming stay on track, according to Switzerland’s climate envoy.

At least 30 of 200 countries meeting at talks this week in Bonn are developing carbon trading systems to help meet emissions targets under a worldwide treaty to start in 2020. Nations should measure greenhouse-gas cuts as tons of carbon dioxide even if they pursue hard-to-quantify policies such as emissions taxes and energy efficiency rules, said Franz Perrez, who represents the alpine nation in United Nations talks.

The UN conference comes as China and the U.S., the two biggest emitters, spar over responsibility for pollution cuts to keep temperatures rising by a UN-endorsed maximum of 2 degrees Celsius (3.6 Fahrenheit) from pre-industrial times. Envoys at talks in November agreed to make “contributions” limiting greenhouse-gas output, rather than “commitments,” allowing countries more leeway in tackling climate change.

“We were really not happy by the use of the word ‘contributions,’” Perrez said by phone. “We have to be able to add up and understand all contributions together” so the world knows whether it’s on the correct emissions trajectory, he said.

Switzerland is a member of the Environmental Integrity Group, a UN climate negotiating group that advocates strengthening current global emissions targets. The group, formed in 2000, includes South Korea, Liechtenstein, Mexico and Monaco.

Global Treaty

This week’s meeting at the UN Framework Convention on Climate Change is the first of several in preparation for a global emissions-reduction treaty due to be signed in Paris next year and come into effect in 2020. The pact will replace the 1997 Kyoto Protocol, where emission limits applied only to industrial nations. The Paris treaty is expected to include emission cuts from all nations.

“By the first quarter of 2015, I would expect most major economies will submit their pledges” in a way that allows measurement of progress on greenhouse gases, Perrez said Feb. 27. “If they don’t, they will be expected to explain why not.”

Nations still don’t agree on how to finance new programs, markets and emission cuts. November’s climate talks in Warsaw bogged down as nations disagreed over who is to blame for global warming and how to pay for projects needed to fix and deal with it.

New Markets

From 2020, China wants developed countries to give at least 1 percent of their gross domestic product a year to the UN Green Climate Fund, set up to help poorer nations adapt to global warming, the country said March 6 in a submission on the UNFCCC website. Richer countries should provide annual funding of $40 billion this year, rising to $100 billion in 2020, it said.

The U.S. agrees some nations should pay more than others, though it wants emerging countries to have a level footing in the 2020 climate deal and accept their share of responsibility.

South Africa, Brazil and Ukraine are among countries considering carbon markets that met last week in Mexico City under the auspices of the Partnership for Market Readiness, a World Bank program to develop nations’ emissions trading.

Tools to put a value on greenhouse gases include emissions trading systems or carbon taxes, Xueman Wang, PMR’s team leader, said in a March 5 interview from Mexico’s capital. “Carbon pricing will play a very important role in the post-2020 scenario,” she said.

Emissions Cuts

Global greenhouse gas emissions need to decline to about 44 billion tons a year in 2020 from about 50 billion tons in 2012 for a 50 percent chance of limiting temperature gains to 2 degrees, according to the Grantham Research Institute on Climate Change and the Environment in London. Governments’ current emissions cutting pledges indicate carbon output will be unchanged in 2020, the institute estimates.

“The 2020 pledges so far are not of the right order,” said Bob Ward, the policy director at the institute, which is at the London School of Economics. “The climate is becoming more hostile, making it more difficult for poorer countries to develop economically,” he said March 7 by phone.

Technical work on measuring the impact of markets, taxes and emissions regulation has begun, said the World Bank’s Wang. Many poorer nations probably won’t immediately choose emissions trading systems, she said.

Thailand is seeking to cut energy use under an energy efficiency trading market that may evolve into a carbon market, Wang said. In Europe, lawmakers are seeking to tighten the world’s biggest carbon market after prices dropped by 68 percent in the past six years.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Andrew Reierson, Rob Verdonck


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