Smoke stacks (Source: UNFCCC)

As the 17th Conference of the Parties (COP) to the UNFCCC kicks off in Durban this week, negotiators hope to build upon progress made during 2011 to govern the Clean Development Mechanism (CDM) and Joint Implementation (JI) more effectively. Coupled with the positive sentiment that has been seeping from recent negotiations en route to Durban via largely pre-negotiated texts, progress is expected but expectations remain low.

Seeking clarity

The CDM has been in transition for some time. While it has grown substantially since 2005, with 3,600 projects in 81 countries now registered and some 780 million tonnes of carbon mitigation generated, a cloud of uncertainty looms as only 13 months remain until the end of the first commitment period for the Kyoto Protocol (KP).

The CDM and JI will continue so long as the KP remains legally binding, but there is a lack of clarity in the KP’s legal provisions for the mechanisms beyond the first commitment period.  Fortunately, the KP has no specific mention of a ‘termination’ clause, and therefore its mechanisms and bodies cannot simply (legally) disappear after 2012, but uncertainties make for difficult market conditions for investors and other stakeholders.

The head of the UNFCCC, Christiana Figueres, has spent a good part of the year since COP16 in Cancun remaining optimistic about the future of the CDM and JI. “It is evident that there is uncertainty with respect to the future of the [CDM] market or markets for one very simple reason: the carbon market stems from a political agreement… the CDM has been improved, reinforced and enhanced constantly since its birth and that process will continue. The CDM will not drop off a cliff.”

Alternative mechanisms?

While the flexibility mechanisms may be able to survive, some are considering the potential to fill in current and pending gaps with the introduction of alternative mechanisms to the CDM and JI. These alternatives may garner some attention during the conference in Durban, including a proposal from Japan for a new carbon offset mechanism that does not contain the political nature of the CDM.

Initially launched in South East Asia, Japan’s bilateral offset carbon mechanism turns attention toward African countries where only 2% of all projects registered are currently based (see Climatico article for more information), and pays particular attention to 12 countries with little or no development in offset projects. Although the lack of CDM projects based in Africa has received little attention during negotiations thus far, with an African country hosting this year’s COP, it may be the right time to make much needed progress.

Expectations for Durban

Any negotiating time left for the Parties to put together a meaningful plan for post-2012 considerations of Kyoto’s flexibility mechanisms is quickly slipping away. However, major breakthroughs regarding extending, or more crucially not extending, the Kyoto Protocol and its commitments are not expected to take place in Durban. Many developed countries remain staunchly against extending a commitment period without similar emission targets for the major developing economies (India, China, etc.) who themselves are arguing for a new and additional binding agreement that is inclusive of the United States.

[medium_ad_left]This sentiment was further concreted after the Guardian this week revealed that ‘rich nations’, led by the EU, have quietly admitted that no new global deal would be reached by 2012, a target date established two years ago at the COP conference in Copenhagen. Instead they aim for a roadmap to be developed in Durban that now targets 2015 for a deal.

It is likely then that there will be a gap of some sort between the KP and Long-term Cooperative Action (LCA) tracks. Even if an extension (or otherwise) to the KP is agreed upon in Durban, UNFCCC processes will take more than one year to complete. Previous negotiations focused largely on a second commitment period, taken up first by the AWG-KP, then largely by the LCA (because it is here that the US attends who are viewed by many, including China, as a ‘must have’ for any further commitments). The negotiations will once again take up this point of view, but the flexibility mechanisms may be relegated to a bystander position within the discussions.

Negotiations surrounding the flexibility mechanisms in Durban will therefore likely include: clarification of the roles for the mechanisms, discussion of whether other less prescriptive and legally demanding mechanisms to reduce emissions may exist, and identifying where the CDM and JI fit in with other operational mechanisms such as REDD+, National Appropriate Mitigation Actions, and Climate Finance.

Breakthroughs for the flexible mechanisms in Durban may not be expected, but progress will remain an important ingredient in any outcomes from the COP. As Figueres affirms, “Let’s work hard to find a common, effective way forward, and let’s recognize and build on our successes as they come. The CDM is an important success that Parties need to build on in Durban, with text that reaffirms the mechanism’s continuing usefulness in the international response to climate change.”

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