China’s Carbon Market Unlikely To Go Global For Decades

May 16, 2013 China, the world’s largest greenhouse-gas emitter, probably won’t import carbon credits for two decades as global diplomats craft a new emissions market that will increase supply, the nation’s climate negotiator said. Using offsets from outside China in that period is an “unlikely scenario,” Su Wei said in an interview in Bonn earlier this month. “Rather, internally we will have a lot of offsetting credits.” United Nations envoys are seeking to put together a new carbon market as the world negotiates a climate-protection agreement to take effect around 2020. The need for greenhouse- gas action may surge by then, when global emissions will probably exceed by at least 18 per cent the limits scientists have said will keep temperatures from rising 2 degrees Celsius, the UN estimated in November. “We are not very hopeful that we’ll see a global agreement over the next few years” that will increase demand, said Albrecht von Ruffer, Hamburg-based managing partner of Nserve Environmental Services GmbH. While China, South Korea and California are building or have installed carbon markets, “we don’t expect them to allow meaningful volumes of imports,” he said in a May 13 phone interview. The European Union is due to publish data today showing which emission credits were used by factories, power stations and airlines last year. Excess supply Certified Emission Reduction, or CER, offsets are created from carbon-reducing projects in developing countries under the Clean Development Mechanism, the biggest UN market by supply. Emission Reduction Units are from developed nation projects under the UN’s Joint Implementation mechanism. Supplies from both programs were at 2.1 billion tons as of May 14, according to data from the website of the UN Framework Convention on Climate Change. That’s more than the 1.7 billion tons allowed for compliance in the EU carbon market in the 13 years through 2020, according to that market’s rules. CERs for December have jumped 48 per cent so far this month, amid buying by EU emitters for compliance in the world’s largest carbon market. They rose 1 cent, or 2.6 per cent, to settle at 40 cents a ton on ICE yesterday in London. Waning demand for UN credits drove prices 90 per cent lower in the past year, according to ICE Futures Europe in London. New market A new market might encourage installation of the latest emissions-cutting technology in developing-nation industries, said Artur Runge-Metzger, the EU’s lead negotiator. The plan, still being put together, would stimulate nations to enact policies requiring industries to cut emissions, Runge- Metzger said May 2 in an interview in Bonn. For instance, a facility in the waste-management industry may get credits for implementing technology that’s even more advanced than set out in a government policy. “That may be the part that is going to be credited,” Runge-Metzger said. “You don’t have to go project by project, or waste-management site by waste-management site.” Crediting would result from a monitoring system that’s industrywide rather than project-specific, he said. Under the Clean Development Mechanism, each project must win registration from UN-overseen regulators and monitor its own emission reductions. ‘Not attractive’ A new offsetting market is “not attractive” to China, Su said in a May 2 interview in Bonn. Nations need tighter greenhouse-gas limits to spur consumption of credits, he said. “If there are no ambitious targets, there will be no demand,” he said. “So what’s the purpose of starting a new market mechanism?” Carbon markets are needed to encourage clean technology and protect the climate, according to Norway, a country that is buying offsets. “We believe the carbon markets will be very important in the years going forward,” Kjetil Lund, an Oslo-based deputy minister in the nation’s finance ministry, said in a May 7 phone interview. “We’re not happy with the very low prices.” Nserve, founded in 2003 before the EU’s market began, also is buying selected offsets, favoring those that may be alternatively marketed to companies and people who wish to voluntarily cut their emissions, von Ruffer said. That’s because there’s still not enough certainty about the future of international regulated markets, he said. “I wouldn’t build a business on this hope at the moment.” Read more: http://www.smh.com.a…l#ixzz2TSOXbVhd Taylor Scott International