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Carbon trading business pespective on markets in Tianjn negotiations

Tianjin talks see progress on markets
06 October, 2010


Developing country opposition to the expansion of market mechanisms after 2012 is softening, according to delegates at the latest round of climate talks in Tianjin, China, although big-picture complexities around the negotiations could hold up progress on the issue.

Meanwhile, talks on developing a market for carbon stored in forests have been going less well, with delegates complaining of procedural wrangling in the REDD+ Partnership discussions.

Today, Margaret Mukahanana-Sangarwe, chairwoman of one of the two main negotiating streams – the working group on Long-term Cooperative Action (LCA) – told a plenary session that she hoped to have so-called “decision texts” that could form the basis of negotiations at Cancún talks, the main annual UN climate change negotiations, ready ahead of those talks starting on 29 November.

These texts would include one relating to “opportunities for using markets, to enhance the
cost-effectiveness of, and to promote, mitigation actions”, as laid out in the 2007 Bali Action Plan.

However, ahead of the publication of the markets text – expected within the next two days – it is unclear exactly what it will contain.

“What we would hope is that we end the week with a strong decision text, ready to be adopted by the [Cancún meeting], on development of new carbon market mechanisms and an affirmation on the continuation of the CDM [Clean Development Mechanism],” said Kim Carnahan, the Washington, DC-based policy leader for flexible mechanisms at the International Emissions Trading Association, who is attending the talks.

“We’ve been hearing relatively favorable reports today” about the direction of talks around markets, said Tim Baines, a London-based associate at law firm Norton Rose, who is also in Tianjin. “Market mechanisms were not very prominent in the Copenhagen Accords, and haven’t really been a focus this year.” He added that negotiators were reporting a shift on the issue from some developing countries.

“Some of the developing countries that have been opposed to any discussions of [markets] within the LCA stream have shifted their position,” confirmed Miles Austin, director of the Carbon Markets and Investors Association. “There’s definite potential there.”

The LCA includes all governments, not just Kyoto Protocol signatories. A second stream of talks is continuing among Kyoto parties, where developing countries are keen to see rich-world signatories take on emissions targets under a new ‘commitment period’, to follow the end of the first one, which ends in 2012.

However, observers warn that some developing countries remain opposed to any substantive progress under the LCA track while the Kyoto Protocol stream remains deadlocked.

“There’s a new buzzword – ‘balance’,” said Baines at Norton Rose. In a statement on Monday, Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, talked of “a balanced package of decisions” to emerge from Cancún, including an agreement to promote low-carbon technology transfer, climate finance for developing nations, action to reduce emissions from deforestation and forest degradation (REDD), and help for developing countries to adapt.

However, some governments are interpreting ‘balance’ as a way to insist that discrete areas of agreement cannot be reached without agreement in other areas.

Meanwhile, delegates expressed frustrations that the talks under the REDD+ Partnership – the successor to the Paris-Oslo process – had descended into procedural bickering. “I don’t get a sense they are building up a head of steam,” said Baines.

http://www.carbon-financeonline.com/index.cfm?section=lead&action=view&id=13235&linkref=cnews
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