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Nations must safeguard CDM and global carbon market to combat climate change

Date
17 September 2012
Nations must safeguard CDM and global carbon market to combat climate change

BEIJING: A high-level panel presented its eagerly awaited recommendations to the UN's Clean Development Mechanism (CDM) last week, calling for urgent action from nations to safeguard global carbon markets to combat climate change.

The panel presented the recommendations report to the CDM's Executive Board of which our Greater China Director, Changhua Wu, is a member, in Bangkok, Thailand.

Among the 51 recommendations was the call for countries to boost support of global carbon markets.

This is because, according to the panel, if nations let the CDM mechanism dissolve, the political consensus for a global carbon market may also disintegrate.

Carbon markets accelerate growth

The CDM allows developing countries to earn credits for projects that reduce greenhouse gases, through Certified Emission Reductions (CERs).

Over the past decade, the CDM has helped nations mitigate approximately one billion tons of GHG emissions to realize US$3.6 billion in savings for developed countries. It has also mobilized more than US$215 billion in investments in developing countries, in doing so accelerating the nations’ economic growth.

But the value of CERs has plummeted, which analysts blame on dwindling demand and subsequent uncertainty over future demand. Research firm IDEAcarbon today stated that CERs have fallen to a low of €1.54 per ton of CO2. 

As a result the panel is calling on nations to increase their GHG mitigation ambition by strengthening the pledges made under the United Nations Framework Convention on Climate Change, and by adopting corresponding domestic policies and measures.

“Nations must, as a high priority, restore faith in global carbon markets generally and in the CDM specifically,” said the Panel’s Chair, Valli Moosa. “Although the CDM has been the subject of extensive criticism, it has improved markedly in recent years and has helped combat climate change by mobilizing the private sector through markets.”

CDM improvements

To improve the CDM’s performance, the panel recommends reforms including:

  • more systematic reporting, monitoring, and verification of sustainable development impacts;
  • greater access for under-represented regions;
  • implementation of standardized methods, such as performance benchmarks. 

The panel also urges nations to take measures to enhance the CDM’s role so that it adapts to new political and market conditions, including:

  • new approaches such as sectoral crediting to be implemented;
  • standards to enable linking of current and emerging carbon markets;
  • the Green Climate Fund to be supported.

The panel wants its recommendations to be brought into effect by the Doha climate summit.

Joan MacNaughton, vice-chair of the panel said: “New market-based mechanisms will take years to design and make operational. For the balance of this decade the CDM is likely to remain the world’s foremost means of gaining the benefits of a truly global carbon market. The panel believes that a strong and robust CDM is necessary to support the political consensus and bring the benefits of carbon markets to developing countries.”

Besides the chair Valli Moosa (South Africa) and the vice-chair Joan MacNaughton (UK), the other members of the high-level panel on the CDM policy dialogue are: Luciano Coutihno (Brazil), Maggie L. Fox (USA), Ross Garnaut (Australia), Prodipto Ghosh (India), Yolanda Kakabadse (Ecuador), Margaret Mukahanana-Sangarwe (Zimbabwe), Paul Simpson (UK), Nobuo Tanaka (Japan) and Changhua Wu (China).

The full recommendations report can be downloaded, and supporting research reports commissioned by the panel will also be uploaded by the end of the month.

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