Brussels, 30 April (Argus) — The weakness of the EU emissions trading scheme (EU ETS) and the UN clean development mechanism (CDM) is damaging efforts to establish similar schemes across the globe, a leading economist has warned delegates at the current round of global climate talks.
Low carbon prices in the EU ETS and the UN CDM “are discrediting what had previously been quite a strong momentum towards carbon pricing,” Ross Garnaut, professor of economics at the University of Melbourne, said at a workshop during UN Framework Convention on Climate Change (UNFCCC) negotiations in Bonn, Germany.
In particular, “the EU carbon price is not contributing to incentives to reduce emissions,” while UN CDM credits have become “useless”, with a huge overhang of supply requiring a “major change” in the international approach, Garnaut said.
Both schemes are providing ammunition to critics wanting to undermine climate change action, Garnaut warned. “There are plenty of people who welcome excuses not to do anything,” he said. “They point to the low prices in the EU ETS and CDM to say that carbon trading is a failure,” which is then “undermining support for emissions trading in countries in our region,” Garnaut explained, citing Australia and China as examples.
Garnaut's comments come as negotiators at the UNFCCC talks seek to move discussions forward both on establishing a new global climate treaty by 2015, as well as finding ways for countries to increase their near-term emissions reduction pledges. The comments will be seen as particularly damaging for the EU, which has prided itself on taking a lead in developing a domestic response to climate change concerns. Most recently, European commission plans to boost EU ETS prices by temporarily withdrawing allowances from the current auctioning schedule were narrowly rejected in a plenary vote of the European Parliament, prompting fears that the proposals will now not be implemented.
But, despite the serious problems being faced by both the EU ETS and the UN CDM, Garnaut insisted that carbon pricing still has a central role to play in tackling climate change. “We can't just let carbon pricing go,” he concluded. “If we want to get the deep emissions reductions later on, carbon pricing is a necessary instrument,” he said.
Garnaut was more positive on the emergence of climate change policy nationally, which he said “can provide a firm basis for mitigation action.” A number of countries had set in place significant domestic reduction targets, Garnaut said, although he accepted that they would at best result in long-term global temperature increases of around 4°C or more.
“The present is an absolutely critical time,” he warned delegates, adding that countries will need to act urgently to preserve any chance of keeping to their stated 2°C goal. “We've used up a lot of time and chances. We're on our last chance now,” he said.
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