Investment in the carbon offset market could dry up with a failure in UN climate talks
With a legally binding pact looking less likely, investment in the carbon offset market could dry up, further hitting carbon prices already at an all time low.
With a legally binding pact looking less likely, investment in the carbon offset market could dry up, further hitting carbon prices already at an all time low.
Jose Tumkaya, chief operating officer at UK emissions-reduction project developer Ecosecurities says, “Parties must take the opportunity in Durban to send strong signals to the carbon market regarding their commitment to its continuation and future development. Negotiators should be concerned about the historic low carbon prices as they do reflect, to some degree, a lack of confidence in the long-term commitment to existing emission reduction targets, as well as continued uncertainty with regards to a future international agreement."
The Clean Development Mechanism (CDM) was a key component of the original Kyoto agreement and efforts must be made to negotiate its future as a viable method of offsetting carbon emissions. Many developing countries see this as an ideal way to become more carbon neutral, while offsetting the emissions of developed nations.
Investment in the CDM has fallen away dramatically in the last few years, with great uncertainty over its future. Carbon credits are also trading at an all time low. The executive board of the CDM has stated, "The board views this development with great concern as there is today a considerable risk of losing the private sector engagement and momentum in the mitigation of climate change that the CDM has thus far been instrumental in generating,"
Without a further commitment period, the CDM will wilt further. The main buyer of credits is the EU and they will only commit to a new Kyoto agreement with 85% of global emitters involved and tightening their emissions targets.
Others however think moving away from a protocol like Kyoto is the way forward. Russel Mills of the Dow Chemical Company says, "If the major aim of Kyoto was to reduce global emissions, then it obviously has taken us in the wrong direction." The answer, he says lies in an agreement that covers all major emitters.