Durban - above and beyond all expectations

9th January 2012


Related Topics

Related tags

  • Carbon Trading ,
  • Mitigation

Author

IEMA

Rachel Mountain, from EcoSecurities, reflects on the unpredicted developments agreed in Durban and what they mean for the global carbon market

Post Christmas and the start of a new year is definitely a time for contemplation and reflection, and for those people who work in the environmental sphere, and particularly the carbon markets, 2011 was definitely poignant.

The year culminated with the United Nations Framework Convention on Climate Change’s (UNFCCC) international climate change negotiations in Durban and marked a dramatic turn of events in what already had been a pretty dynamic year.

From the perspective of the carbon market, and more specifically the Kyoto Protocol’s Clean Development Mechanism (CDM), the system for generating carbon credits had never performed as effectively and efficiently as it did during 2011. It helped to mitigate more than 320 million tones of CO2 and leveraging millions of dollars worth of climate finance in the process.

In addition to the success of the CDM in 2011 came the widely-reported economic slowdown in Europe and potential fears of a Eurozone implosion, the main impact of which was to reduce demand for carbon credits and allowances in the EU Emissions Trading Scheme (EU ETS) and depress carbon prices to some of the lowest levels seen in Phase II.

So with rhetoric in the run up to Durban being particularly pragmatic, if not pessimistic, many people were not expecting much to materialize from the international climate change conference. How wrong were we!

So what did Durban achieve for the climate, the carbon markets and the private sector?

The Durban Platform of Enhanced Action (DPEA) provides a roadmap for all countries to sign up to a deal to cut greenhouse gas (GHG) emissions from 2020. This covers all major emitters including; China, the US, India and the EU, however, no tangible targets were discussed and so the battle is still to be had over the depth of cuts.

The EU also agreed to a second commitment period under the Kyoto Protocol which removed any doubt about the continuation of the CDM and its credits in Phase III of the EU ETS. It is still unclear, however, as to the length of the second commitment period, as provisions were made for it to end either in 2017 or 2020. However, agreement to a second commitment period was critical in order to get agreement on the DPEA.

With regards to the CDM specifically, that a second commitment period has been agreed post 2012 is unequivocal. In addition, there were developments with regards to the introduction of the concept of materiality (something that had taken three years to get approved) alongside transparency, consistency of decisions and improvements in waiting times. Further development was also made around the increased use of standardised baselines and on the issue of suppressed demand for Least Developed Countries. Furthermore, after six years of trying, carbon capture and storage also made it in to the CDM.

New market mechanisms also saw movement, with negotiators agreeing language that will see various inputs from parties and stakeholders (including the private sector) as to how these mechanisms can be best designed to have the most impact from a climate change perspective.

Finally, progress was also seen with respect to the Green Climate Fund (GCF) – with the launch agreed in Durban. Although capitalisation of the fund was held over for discussion at the end of 2012, the various structures and institutions need to create the GCF were established and the role of the private sector as a contributor to the fund was confirmed – albeit lacking the necessary detail to really start and move anything forwards.

So, was Durban good or bad for the carbon markets and the investment community?

Well from a medium to long-term perspective, the outcomes were very good. They definitely reaffirmed the continued use of market mechanisms as an effective tool to mitigate climate change, as well as presenting a number of new opportunities for the investment community to get involved in, such as new market mechanisms and the GCF.

However on the more pragmatic side, little new effort with respect to cutting GHG emissions will begin until 2020 at the earliest. The discussions also didn’t really address any of the demand side issues which are currently affecting carbon prices.

In the short term, the carbon markets and the investment community will need to sit tight and weather the storm, but the sun is clearly shining out on the horizon.


Rachel Mountain is head of global marketing at carbon trading firm EcoSecurities

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

EU and UK citizens fear net-zero delivery deficit

Support for net zero remains high across the UK and the EU, but the majority of citizens don't believe that major emitters and governments will reach their climate targets in time.

16th May 2024

Read more

There is strong support for renewable energy as a source of economic growth among UK voters, particularly among those intending to switch their support for a political party.

16th May 2024

Read more

Taxing the extraction of fossil fuels in the world’s most advanced economies could raise $720bn (£575bn) by 2030 to support vulnerable countries facing climate damages, analysis has found.

2nd May 2024

Read more

The largest-ever research initiative of its kind has been launched this week to establish a benchmark for the private sector’s contribution to the UK’s 2050 net-zero target.

2nd May 2024

Read more

Weather-related damage to homes and businesses saw insurance claims hit a record high in the UK last year following a succession of storms.

18th April 2024

Read more

The Scottish government has today conceded that its goal to reduce carbon emissions by 75% by 2030 is now “out of reach” following analysis by the Climate Change Committee (CCC).

18th April 2024

Read more

The Science Based Targets initiative (SBTi) has issued a statement clarifying that no changes have been made to its stance on offsetting scope 3 emissions following a backlash.

16th April 2024

Read more

While there is no silver bullet for tackling climate change and social injustice, there is one controversial solution: the abolition of the super-rich. Chris Seekings explains more

4th April 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close