by J. Taggart Wass and Adrian Fernandez Jauregui
Today, there was a High-level round table aimed to address carbon markets under the UNFCCC titled “market approaches for enhanced climate action”. The event was advertised as a an opportunity for discussion about issues relating to how and where markets are being addressed under the convention and to the advance the conversation on the role of markets in the context of the future climate regime. In reality, it was more like an advertisement session than a discussion or conversation one. Starting with the moderator, the session began with a pro market bombardment and continued until the last panellist spoke, with every single speaker only endorsing the previous one –not a surprise if one looks up who formed the panel. But the audience had a different perspective to offer, and almost all comments or questions challenged the views of the panellists.
The need for Markets was hammered home in this panel discussion. The panel was made up of entirely advocates for Market based solutions to mitigation. Both government and business were well represented and many of the panelists had appeared in other market promoting side events in the previous week.
Some of the issues they addressed were the need for a new market mechanism to build upon the knowledge of the CDM as well as develop a framework of various approaches to combine sub national, national, regional and international carbon markets and to make all credits interchangeable. The main argument was that for developed countries to become more ambitious a range of “tools” had to be made available. This “flexible” approach would increase confidence of countries on their ability to fulfill commitments, hence, encouraging greater ambition. The theme of “just one tool among many” or “just one tool in a tool box” was repeated to reassure countries that this approach would not to replace public finance but rather “compliment” it. The need for developed countries to have a flexible range of option was also a theme stressed throughout the panel. Another trend among the panelists was the expectation (some even said hope) that an agreement on a New Market Mechanism coming out of this COP would send a strong signals to the private sector and help boost confidence in the existing carbon market. For more background and in depth analysis of carbon markets and of the panelists’ positions check out this blog post.
The panel failed to address a few major issues with the market approach. One was whether or not they will actually reduce emissions; another was what we had actually learned from the failure of the CDM. They also failed to address the issue of rock bottom CER prices due to a lack of demand, demand that is directly related to ambitious reduction targets. Without ambitious targets or a legally binding commitment, there will be neither the demand nor the confidence to support a carbon market. Like many economic theories practiced today, carbon markets look great on paper when assuming certain factors but when applied to real world contexts it fails to perform. Much like theories of free trade and the Washington consensus, when the theory fails it is not the theory itself that is the issue it is that we did not implement it completely enough. Instead of learning our lesson from CDM the panelists advocated expanding existing markets and making them bigger.
Luckily their message was not received well. Nearly all of the questions and statements from delegates and other audience members made scathing critiques of the CDM and the proposed plan forward. Among them where delegates from Bolivia and Brazil as well a civil society from Panama, Kate Dooley from Third World Network and [Earth] on behalf of the New Zealand Youth Delegation and the African Biodiversity Network — the Statement Given at the event is available at the bottom.
On behalf of the African biodiversity network, Earth in Brackets and the New Zealand Youth Delegation,
We are deeply concerned about the current state of negotiations: not only about the low level of ambition, but also about and the prevalence of market based solutions. Many countries are focusing solely on markets and are blocking efforts to increase public finance. How can we trust that you will not just abandon public finance when the markets are set up? We see many problems with the current market systems under the convention, volatile credit prices, lack of real emissions reduction, rampant lack of additionality, lack of environmental integrity and human rights violations. What happens when a global carbon market collapses? Will mitigation and climate efforts fail with it? Can we afford to gamble with the future of our climate? Why would we continue to try the same approach? For these reasons we join the chorus of voices calling for a moratorium review on New Market Mechanism.
What we need is a combination of a public finance mechanism with strong mitigation commitments based on historical responsibility. We need strong commitments both in finance and in emissions cuts and we need them now.
We want you not to invest in markets, we want you to put the money in the right places: public finance of Mitigation, adaptation and Loss & Damage.
Link to Event Description & List of Panelists: