Carry-over
Surplus Kyoto Emissions has Climate Finance Value, does not hurt climate targets[Jan 6, 2012]
The best way to reduce
Greenhouse Gases is when countries have binding emissions caps and their emissions remain
under that cap.
What then to do with
the remaining emissions budgets, when countries stay below their cap? This question
was at the table of the Durban Climate Summit, as the Kyoto First Commitment Period comes
to an end December 2012. Durban decided to asses the implications of carrying-over AAUs in
May and to take a decision at the next Climate Summit, December 2012 in Qatar.
Surplus national
emissions budget will occur in Eastern European Countries, because their economies didn't
come back to their 1990 levels. It can happen with more countries because of the economic
crisis or if countries succeed in decoupling growth from emissions growth. The Kyoto
Protocol rules say: add the remaining budget to the next budget. But since the Bali
Summit, The Climate Convention parties call for enhanced mitigation action to help
meet the 2 degrees target. What role can the carry-over surplus emissions budgets
play
Some say, carrying over
AAUs will endanger the 2 Degrees target, cause less reductions will be made. That is NOT
true: the delay of the use of emissions budgets will lead to fewer emissions in the
atmosphere now (‘antimululation’) The Intergovernmental Panel on
Climate Change (IPCC) has assumed for their scenario’s to reach the 2 Degrees target
(25%-40% 2020 targets needed) , that the Kyoto Budgets have been used-up.
What is true is that
countries with banking surplus AAUs, will have to take less efforts compared to countries
without surplus. That makes agreeing to stronger 2020/2030 targets easier. That is what
the EU is trying now (see “Eastern EU states offered sweetener to agree deeper CO2
goal: draft “, Pointcarbon, Jan 6, 2012: http://www.pointcarbon.com/news/1.1712254 )
Risk of limiting carrying
over AAUs?Many
propose that countries should cancel their surpluses. That may indeed increase the
efforts, however this approach has are four risks.
1.
That Parties will not be able to agree
on Legally Amending the Kyoto Protocol Rules to limit carry-over.
2.
That Parties have a perverse incentive
to use the remaining emission space up, before end-of-consumption date (True-up in 2014).
3.
That countries that have surplus, and
lose their surplus, will not agree to ambitious future targets.
4.
That developing countries, that are
interested in adopting a national target, will get reluctant: will they lose their
budget too, if they perform better?
Innovation Value of AAUs
An alternative way that
could enhance mitigation, without having to amend the Kyoto Rules, is acknowledging that
AAUs, when not used, can be seen as an asset, as innovator. And, when used in a smart way,
AAUs could encourage broader participation and assist in climate finance for additional
green growth and GHG reductions.
That could work in
practice as follows:
- Industrialized nations
are being asked to support climate finance, in their own nations and in developing
nations. Some nations will contribute money, potentially into a revolving fund that
could be used to finance low-carbon development. Some nations could deposit AAUs in the
revolving fund.
- These AAUs could serve as
'security' or 'collateral' for the innovative low-carbon financing. European Banks
already value European emissions allowances (backed by national AAUs) of factories and
power companies that way, when requesting finance for their investments.
- If a project, that
receive finance by that Fund, fails to achieve the emission reductions, the AAUs could be
retired. If a project achieves emission reductions, the project could pay back a
portion of the AAUs to the fund - a kind of gift that keeps on giving, as AAUs remain
their atmospheric value when they are not used. Public Assets can turn into Market Value.
This approach should be part of mobilising climate finance.
Doing so, saving AAUs
from the Air, by carrying them over may lead to preserving fossil fuels in the Earth.
Jos Cozijnsen, January,
6, 2012 |