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Cancun and Emissions Trading - December, 2010


Cancun and Emissions Trading - December 2nd, 2010  

Tom Markowitz - Friday, December 03, 2010

Welcome to Enerhope


Cancùn and Emissions Trading


©Enerhope.com, 2010


Updated December 3rd, 2010


What effects will

Cancùn and emissions trading

have on each other?


UN Climate Change Conference in Cancùn

COP 16 / CMP 6, 29 November to 10 December 2010


According to the web site of the United Nations Framework Convention on Climate Change (UNFCCC), 15,000 people, representing Governments, NGOs, IGOs, and journalists, are currently assembled in Cancùn, Mexico for the annual Conference of the Parties (“COP”) and Meeting of the Parties (“CMP”) to the Kyoto Protocol. (1)


Commentaries on the Cancun Conference in the pro-climate change media range from cautiously optimistic (2) to disappointment (3).


COP-16 in Cancun follows the frustrating COP-15 in Copenhagen, where the nations failed to sign a binding agreement, limiting greenhouse gas emissions to a specific target, replacing the Kyoto Accord (1997), which will expire in 2012. Unfortunately, at Copenhagen, the “developed” nations (e.g. the USA) were no longer willing to shoulder the Kyoto-imposed burden for emission reductions, without sharing the burden with large, “developing” nations (e.g. China). In contrast, the developing nations refused to accept any of the burden for reductions, claiming that the developed nations had caused the problem of climate change in the first place, and therefore should be solely responsible for solving the problem. "At the end of the chaotic talks in Copenhagen, participants failed to adopt the Copenghagen Accord, a nonbinding statement of good intentions, but only “took note” of the three-page document. About half the participating countries have since agreed to “associate” themselves with the Accord."  (4)


Hopes for Cancun

Xinhua News on November 29th (5) carried an article by Connie Hedegaard, European Commissioner for Climate Action. In her article, Hedegaard acknowledges that Cancun will probably not result in a legally binding emissions reduction treaty. However, she sees Cancun as a “stepping stone” to a future global climate treaty, and an opportunity to reach agreement on a number of substantial issues that lead to immediate climate action on the ground. These issues include funding for the developing world and stronger monitoring and verification of greenhouse gas emissions.


Xinhua also reported an interview with Huang Huikang, special representative for climate change negotiations of China's Foreign Ministry. (6) Huang said that the delegates at Cancun might be able to reach a balanced package of decisions on consensus issues like financial resources, technology, adaptation and forestry.


Background: UNFCCC and Emissions Trading ("ET")

The Kyoto Protocol of 1997 introduced ET as a mechanism for emission reductions. (7) The UNFCCC (the governing body of the Kyoto Accord) introduced three market-based mechanisms, thereby creating what is now known as the “carbon market.” 

The Kyoto mechanisms are:

•       Emissions Trading ("ET") (of allowances, between nations)

•       The Clean Development Mechanism (CDM) (of “CER” offsets, for emission reduction projects in developing nations)

•       Joint Implementation (JI) (of “ERU” offsets, for projects in developed nations)


Operational since the beginning of 2006, the CDM has already registered more than 2,560 projects (submitted by individual “developing” nations), totalling 402 Mt/y of Certified Emission Reductions. (8) Each participating nation operates its own CDM approvals board. Each developing nation's CDM mechanism is overseen by the UN’s CDM Executive Board.


The European Union (EU) ET scheme, started in 2005, is the world’s biggest ET scheme. (9) Currently, 30 European nations operate greenhouse gas ET, with a combined cap (2008-2012) of 2055 Mt/y CO2e, covering over 11,000 capped facilities. Account holders in ET Registries of member nations may trade allowances across European borders, and retire allowances from across the EU membership, to meet their regulatory obligations.  Since 2008, EU capped facilities have been allowed to retire a certain number of CERs and ERUs from the UNFCCC’s ET system, to meet their regulatory obligations in their own national ET systems.  The EU's overall target is a 20% reduction in greenhouse gas emissions by the capped sector, relative to 1990.


Other Greenhouse Gas ET Schemes

An October 1st article in Carbon Positive (10) summarizes greenhouse gas ET activities around the world. The article mentions the active RGGI ET system in the US Northeastern States, the developing WCI system in 7 US states and 4 Canadian provinces, the operating ET system in New Zealand, the definite ET plans of China, India, and Japan, and the failed ET plans of the USA and Australia. More recently, the State of California has forged ahead with draft rules for its own ET system. (11) These other ET systems are intended to be independent of oversight by the UNFCCC.



Emissions Trading Issues and Events at Cancun


International Harmonization

Prospects for an international carbon market, trading allowances, offsets, CERs and ERUs from around the world, appear to be remote. On December 2nd, The Cancun Conference will feature a session entitled, "The Future of Carbon Markets: challenges and the way forward for the EU." (12)


Clean Development Mechanism

If and when the Kyoto Accord expires in 2012, the Clean Development Mechanism will also expire. Carbon Positive reports on December 3rd that both developed and developing countries want to see the extension of the CDM beyond 2012. “The International Emissions Trading Association says that it doesn’t matter enormously how the CDM’s future is extended, as long as some way is found to deliver certainty to participants in the international carbon market.” (13)


Business Green reports that proposals to reform the global carbon market dominated the third day of Cancun. Oil-producing states campaigned for creation of CER offsets for carbon capture and storage projects, opposed by Brazil and a number of other countries. (14)


The controversy over CDM approval of millions of tonnes of CERs for HFC-23 emission reductions will no doubt be raised at Cancun. On November 29th, the CDM Executive Board approved 17.8 megatonnes of CERs, mostly for HFC-23 reduction projects.
(15) CDM issues was the subject of a November 29th Session at Cancun entitled,"A CDM fit for the future: why is CDM reform needed and how can developing countries benefit?" On November 30th, the CDM Executive Board reported on its activities and fielded questions from the audience. (16)

(See Enerhope's September, 2010 Newsletter, "A Bullet-Proof Cap-and-Trade System", which described the HFC-23 controversy. (17) )


Airlines and Shipping

Airlines and shipping are both confronting the need for greenhouse gas emission reductions. 

The EU has announced that, starting in 2012, airline flights to, from and within the EU will be capped under the EU emissions trading system. (18) The International Civil Aviation Association will present at Cancun its objections to this emissions trading requirement, and its proposal for an alternative program to reduce greenhouse gas emissions from civil aviation.

Similarly, at Cancun, the shipping industry will press for climate change programs under the leadership of the International Maritime Organization, which has already created an energy-efficiency design index for ships, and is studying market-based measures to promote emission reductions. (19)





Welcome to the official website of the UN Climate Change Conference in Cancun

COP 16 / CMP 6, 29 November to 10 December 2010



Optimism, though cautious, remains ahead of Cancun climate conference


November 27, 2010



Hopes low ahead of Cancun climate talks


November 26, 2010



Global Climate Change Talks Begin in Cancún

New York Times

November 30, 2010



With political will, Cancun can succeed 

by Connie Hedegaard


November 29, 2010



Dual-track negotiations remain crucial for Cancun conference: Chinese diplomat 


November 27, 2010



The Mechanisms under the Kyoto Protocol:

Emissions Trading, the Clean Development Mechanism and Joint Implementation



CDM Statistics




European Commission Climate Action

Emissions Trading System (EU/ETS)



Progress report: Emissions trading worldwide

Carbon Positive

October 1, 2010



California Air Resources Board


November 8, 2010



Daily Programme

COP-16 and CMP-6



CDM future hanging on Cancún

Carbon Positive

December 3, 2010



Cancun Summit divided over carbon market reforms

Business Green

December 3, 2010



Carbon Drops as UN Board Approves Record Volume of Credits


November 29, 2010



Daily Programme

COP-16 and CMP-6



A Bullet-Proof Cap-and-Trade System


September 1, 2010



EU to press ahead with ETS despite ICAO global emissions framework

Flight International

October 13, 2010



Seeking an elusive global solution

Transport sector under scrutiny in Cancun

Buenos Aires Herald

November 30, 2010



Emissions Trading News Items, November, 2010

Canada to match U.S. emissions standards

Canada will establish “equivalent” regulations for major polluters if the Obama administration in the United States goes ahead with a plan to demand greener
technology in new industrial plants, Environment Minister John Baird says.
The Globe and Mail (CANADA)
November 28, 2010 28, 2010


How Kenya can reap from carbon credits
The Nation (KENYA)
November 24, 2010


Japan jumps into battle for forest carbon credits
Asahi Shimbun
November 19, 2010


South Korea unveils cap and trade plan
Carbon Positive
November 19, 2010


'Green stealth tax' carbon reduction scheme delayed
Delay of CRC programme follows announcement that Treasury would keep revenues raised
The Guardian (UK)
November 17, 2010


Expert Recommends Early Start to China's Carbon Trading
A world leading meteorologist said Wednesday that it's in China's long-term interests to develop its domestic carbon-trading market.
November 17, 2010


Survey shows public support for ETS measures
November 15, 2010


EPA issues guidelines for reducing greenhouse gas
Associated Press
November 10, 2010


Editorial: Tuesday's environmental impact
The Republican takeover of the House puts an end to hopes for a federal bill. But headway will still be made at the state level.
Los Angeles Times
November 5, 2010


Carbon Price Must Rise to $175 a Ton to Halve Emissions, IEA's Tanaka Says.
The price of carbon dioxide must rise to $175 a metric ton in order to halve global emissions by 2050, the head of the International Energy Agency said.
November 1, 2010



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