UN promises “bold response” to stalled carbon offset scheme

Clean Development Mechanism blames unambitious national emissions reduction policies after number of project submissions falls in 2013

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The UN’s carbon trading mechanism needs an “imaginative, even bold response” following a drop in the number of new project submissions last year and a fall in demand for carbon offset credits.

To date more than 7,400 emission reductions projects in 94 countries have been registered for the Clean Development Mechanism (CDM) and more than 1.4 billion Certified Emission Reduction (CER) carbon offset credits have been issued under the UN-backed scheme.

Industrialised nations and companies can purchase CERs, each of which is equivalent to a tonne of CO2 reduced or avoided, to help meet their emissions reduction commitments under the Kyoto Protocol.

But following impressive growth in 2012, the CDM saw a drop in projects and CER prices last year, as demand for CERs fell. The collapse in the market has been driven by a glut in the number of carbon allowances in the EU emissions trading scheme and the failure of industrialised nations to sign up to more ambitious emission reduction targets that would drive fresh demand for CER credits.

A meeting of the CDM Executive Board last week confirmed that the market is still ticking over with around 17 emission reduction projects entering the pipeline for accreditation each month. Moreover, the UN has sought to expand participation by opening offices in Africa, the Caribbean, and Latin America.

Hugh Sealy, the new chair of the CDM Executive Board, predicted demand for CERs should increase with companies, government agencies, and large events showing growing interest in purchasing offsets as the world moves towards a the next crucial climate change summit next year.

But he warned that major reforms to the scheme are required if it is to deliver on its early promise as a means of mobilising investment in emission reduction projects in developing countries.

“These are challenging times for the CDM,” he told the CDM board meeting. “The ship is sound, in the best shape ever after years of improvement, but there is little wind in her sails. We need to use our imagination and be bold in looking for ways to encourage use of this mechanism. Climate change needs to be addressed and we have in the CDM a fantastic tool for directing investment to emission reduction projects.”

Source / Fuente: businessgreen.com

Author / Autor: businessgreen.com

Date / Fecha: 19/03/14

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