But analysis by PricewaterhouseCoopers (PwC) shows that the pledges would deliver only half of the emissions reductions against business-as-usual required to give the world a fighting chance of avoiding temperature rises above 2°C. And carbon market participants warn that the continuing lack of a roadmap to forge a legally binding climate agreement jeopardises the establishment of a global carbon market.

“The Copenhagen Accord pledges are relatively unchanged from those made prior to the Copenhagen summit,” said Leo Johnson, a London-based partner in PwC’s sustainability and climate change practice. “At 9.7 Gt of carbon dioxide equivalent [CO₂e], the pledges total just under half the 20 Gt CO₂e reduction required from business as usual to stay on the low-carbon pathway.”

The accord – drafted in the closing hours of December’s UN climate change negotiations in the Danish capital – was merely “noted” by the conference, with only a small number of countries voicing their support for it at the time. This left it “in a kind of limbo-land”, according to law firm Norton Rose.

“We’re definitely in a no-man’s land,” said Geoff Sinclair, the London-based head of emissions sales and trading at Standard Bank. “The outcome of Copenhagen – if there was one – is that people in the market are going to look a lot more towards national and regional [emissions trading] schemes.”

However, this could provide the opportunity for more national trading programmes. “The proof of the overall success of the Copenhagen Accord is going to be the adoption of domestic measures and actions,” said Abyd Karmali, president of the Carbon Markets and Investors Association.

The accord has been described by some commentators as following a voluntary, bottom-up ‘pledge and review’ approach. One of the few changes to pledged cuts or limitation plans – from countries accounting for 80.5% of global emissions – is from Canada, which has changed its target to match that of the US, for a 17% cut against 2005 levels by 2020 – in effect, allowing the country’s greenhouse gases to grow by 3% compared with 1990 emissions. Under the Kyoto Protocol, Canada committed to cut its emissions to 6% below 1990 levels by 2012, a target since abandoned by Prime Minister Stephen Harper.

“It’s quite disappointing that the Copenhagen Accord refers to the 2°C threshold at the end of the century and the major developed countries haven’t stepped up their efforts,” said Martin Kaiser, Germany-based international climate policy coordinator for NGO Greenpeace, adding that the current proposals will only restrict the global increase in temperatures to 3–4°C.

However, Alina Averchenkova, senior policy analyst at German carbon asset manager First Climate, said she was pleased that all the major emitters have signed up to the accord: “Of course, there is some debate about the legal status of the document, but it does have the support of the major countries and can be used to guide the negotiations to Mexico.”

She added that some of the developing country proposals and support for the accord could allow some issues left unresolved at December’s summit in Copenhagen to be closed, such as the need for national actions to be measured, reported and verified. And having pledges from both developed and developing countries could break the deadlock in the climate talks and allow a new text to be negotiated – under the UN Framework Convention on Climate Change (UNFCCC) – at this year’s talks in Mexico.

“Many of the G77 countries have indicated that that’s the desired approach,” Averchenkova said.
The breakdown in the negotiations and the fact that the accord was the result of talks between a select group of leaders has cast doubt on the future of the UN negotiating process, said observers.

“That multilateral process has become increasingly unworkable,” said Sinclair at Standard Bank. “From an investors’ point of view and when you have money on the table, you need to look more at the regions and bilateral agreements.”

Also disappointing for many was the conference’s failure to adopt a text agreed under the convention negotiations that would have created a market mechanism to credit reduced emissions from deforestation and degradation (REDD), which fell victim to the wider breakdown in negotiations. “Somewhere in a cupboard at the UNFCCC is a REDD paper that the private sector thinks is ok,” said Christian del Valle, director of environmental markets at BNP Paribas in London.

The accord does, however, call for the “immediate establishment” of a REDD+ mechanism, which del Valle thinks will lead to “a lot of closed-door negotiations” in the coming months.


Source: www.carbon-financeonline.com