14 December 2011

Durban feedback: Is the carbon market “still on life support” or did it get a “Viagra shot”?

The agreement that came out of the Conference of Polluters (COP-17) in Durban included no new commitments to reduce emissions. “What we got instead was a clear signal that we might get another clear signal in 2015,” as Jonathan Grant, director of carbon markets and climate policy at PricewaterhouseCoopers told the Financial Times

By Chris Lang | REDD-Monitor | 13th December 2011

Durban feedback: Is the carbon market on life support or did it get a Viagra shot?The Conference decided to create an Ad Hoc Working Group on the Durban Platform for Enhanced Action, which is to start work “as a matter of urgency in the first half of 2012”. It is to complete its work “as early as possible but no later than 2015”. And its work is “to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention”. Whatever that means. This is to be adopted at COP21 and will “come into effect and be implemented from 2020”.

The Conference also explicitly acknowledged that the proposed emissions targets from Copenhagen and Cancún are not going to be enough to stand much chance of keeping global warming below 2°C:

Noting with grave concern the significant gap between the aggregate effect of Parties’ mitigation pledges in terms of global annual emissions of greenhouse gases by 2020 and aggregate emission pathways consistent with having a likely chance of holding the increase in global average temperature below 2 °C or 1.5 °C above pre-industrial levels,

So, having acknowledged that almost 20 years of negotiations have failed, the Conference decided to postpone any action until 2020.

In May this year, Abyd Karmali, global head of carbon markets at Bank of America Merrill Lynch, pointed out that without targets to reduce emissions, there is no demand for carbon credits:

“Where is the big demand push going to come from? And at present, it’s not so visible. The lack of significant commitments to emissions reductions means that we’re not going to see a big demand for the forestry progress. And I think that is the significant road-block that needs to be addressed.”

Yet now, after a decision to postpone a decision, Karmali told the Financial Times that the deal agreed in Durban was “like a Viagra shot for the flailing carbon markets”.

Two things are worth noting about Karmali’s post-Durban comment. First, he is confirming, at least metaphorically, that carbon markets are impotent. Second, he seems to have noticed only one of the patient’s symptoms. As Reuters commented yesterday, “carbon markets are still on life support” after the Durban deal.

In Durban, negotiators failed to agree a decision on financing REDD and postponed the decision until COP18. This decision was also postponed last year, in Cancún. Nevertheless, Conservation International attempts to spin this as progress towards a REDD carbon market. Conservation International’s Becky Chacko told Point Carbon that:

“It will be the first time in the UNFCCC that market mechanisms and REDD are mentioned in the same sentence. . . . The stronger the signal is, the more clarity you give to investors. The time is right to show the opportunity markets hold for REDD.”

Perhaps Chacko hasn’t looked at the price of carbon recently. In the EU carbon prices have lost over half their value since June 2011, as a result of the economic crisis, an over-supply of credits and a lack of demand. Durban addresses none of these problems.

Carbon traders are much more cautious than Conservation International. “It’s a sedative situation,” Jacopo Visetti, carbon trader at AitherCO2 told Reuters. “A sick market needs a cure and instead of deciding which cure to use, the doctors keep using pain relief to gain more time to make the final prognosis.”

In 2007, when the Intergovernmental Panel on Climate Change (IPCC) released its fourth assessment report, the panel’s chairman, Rajendra Pachauri said,

“If there’s no action before 2012, that’s too late. What we do in the next two to three years will determine our future. This is the defining moment.”

On Climate Progress, Joe Romm, wrote that the debate on climate is over and that further delay would be fatal. “In short — time’s up! America — we better pick the right President in 2008,” Romm wrote.

Four years later, Joe Romm’s head must be exploding. We have seen nothing but further delay and Durban guarantees eight more years of delay. Yet Romm remains a faithful US Democrat Party lapdog. He describes the Durban deal as “a pretty big success, committing the entire world — not just rich countries — to develop a roadmap for reductions”. It is a success, he wrote, “on the basis of what we think was plausibly achievable, not what is theoretically possible”.

Romm points out that “from the perspective of what is needed to avert catastrophic climate change, the agreement was, sadly, lacking.” But then he quotes his boss, John Podesta, the head of the Center for American Progress:

“I want to congratulate Todd Stern, Special Envoy for Climate Change, and his team on a successful outcome at Durban and applaud the strong interagency process that the administration employed to shape this agreement. The Obama administration saw an excellent opportunity here to push China into an agreement to play by the same rules as everyone else and took it.”

None of this is too surprising. Stern was a Senior Fellow at the Center for American Progress before Hilary Clinton appointed him as Special Envoy for Climate Change. In a speech after the Copenhagen fiasco, Stern said, “CAP [Center for American Progress] is my alma mater.”[1]

After arriving home from Durban, Pablo Solón, Bolivia’s former ambassador to the United Nations and former chief negotiator on climate change, gave an interview to Democracy Now! He described the outcome as climate apartheid:

“If there would have been a second commitment period of the KP [Kyoto Protocol], and the U.S. would have said, ‘OK, we are going to reduce an amount of 20, 25 percent,’ we could have said, ‘OK, we’re in a bad situation, but we are doing our best in order to get out of this.’ But now we can say, ‘We are in a bad situation, and we are doing our best to be in a worse situation, because nobody wants to do nothing.’ Developed countries, like the U.S., Europe, Japan, Russia, are just trying to avoid their responsibility when it comes to greenhouse emissions cuts. So, that is the real outcome out of Durban, and that is why there is so much concern around the world, because, especially the developing countries, the poor nations, and the poor people around the world, even in the United States, are going to be those ones that are going to suffer the consequences of this. That is why we call it a climate apartheid.

1. I commented on a post on Climate Progress last week, asking who funded Climate Progress. I asked because an article on Climate Progress about the Green Climate Fund was so completely void of critical analysis I wondered whether it was a press release. Romm’s response? “You don’t really read Climate Progress much. It shows.” In a follow up comment, he explained that “I get my salary from the Center for American Progress, who gives me full editorial control … To suggest we are spinning things to make the WH look good is to admit you don’t read CP.” Two days later, Podesta and Romm described Durban as a “success”. And my comments on Climate Progress no longer get past Romm’s moderation.

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