UN Talks at Bonn Show CDM Reform Agenda Wide Open
Submitted by: Grant Boyle, Articled Student
Canada and the United States are currently developing carbon offset systems as components of emerging regulatory compliance regimes for controlling greenhouse gas emissions. But what role will international offset systems play, including the Clean Development Mechanism (CDM), in helping North American emitters reach future emissions reduction targets?
Canada and the United States will likely use and may rely heavily on international offsets to meet mid-term targets that are under negotiation leading up to the 15th Conference of the Parties (COP 15)in December in Copenhagen. Canada's April 2007 Regulatory Framework stated that "certain credits" from the CDM could be used for compliance with domestic regulations, limited to 10% of each firm's regulatory obligation. The leading, draft, legislation in the United States, the Waxman-Markey Bill, allows up to one billion tons of offsets from international projects that meet certain requirements.
As of July, the CDM had issued 317 million certified emission reduction credits, and there were over 4500 projects at some stage of development. The CDM is widely expected to continue at the end of the first commitment period of the Kyoto Protocol in 2012, but it will likely undergo reform at Copenhagen and be augmented by new systems or funds.
From August 4 to 10, intersessional, informal consultations were held under the United Nations Framework Convention in Bonn, which forms part of the ongoing discussions leading to COP 15. One of the topics under discussion was the role of the CDM. Some of the ideas on the table include:
Standardized baselines: currently under the CDM there is no formally, centralized system of project protocol development, unlike emerging North American plans or Alberta's or RGGI's ( Regional Greenhouse Gas Initiative) existing offset systems.
Multiplication and Discount Factors: some Parties, for example, are recommending that a post-Copenhagen CDM apply discount factors to certain projects to account for the risk of excess crediting.
Co-benefits: some Parties want CDM projects to produce benefits such as reducing local air pollution or increasing employment in addition to reducing greenhouse gases.
Improving Access to CDM: some Parties want to ensure the CDM is used in a wider range of countries, especially African countries. Most projects to date have taken place in China, India, and Brazil.
Inclusion of Carbon Capture and Storage: currently the CDM does not include carbon capture and storage projects. Is the CDM the right mechanism for such projects?
Sectoral CDM: this approach, which appears to be favoured by the EU, would credit entire sectors (eg. electricity or transport) in developing countries rather than individual projects. Who would sell credits under such an approach, if not an individual project developer?
Funding-based approaches: these include the World Bank's Clean Technology Fund, which receives major funding from the United States as well as the recent Mexican proposal for a Green Fund, that would be financed by both developed and developing countries - a proposal that was officially endorsed by Canadian and American leaders last week in Mexico.
"REDD-plus" ( Reduced Emissions from Deforestation and Forest Degradation Plus Conservation): There is ongoing discussion over how to credit activities to prevent tropical deforestation in developing countries, especially in Brazil, the Congo Basin and Southeast Asia. Deforestation accounts globally for more greenhouse gas emissions than the transport sector.
Crediting Nationally Appropriate Mitigation Actions (NAMAs):
There was discussion at Bonn over NAMAs. By way of background, generally most developing countries will not be expected to take binding emissions reduction targets at Copenhagen, but have agreed to negotiate so-called NAMA's to reduce emissions. Should these actions receive fungible credits?
These proposals will characterize a refined CDM or perhaps a new suite of options through which North American emitters can purchase international offset credits for domestic compliance.
The next intersessional meeting leading up to Copenhagen is scheduled for the end of September in Bangkok.