Oct. 25, 2020 — LONDON — Listen to climate activist Greta Thunberg (and many others), and you’d think the world is way too greedy and selfish to save the climate.
Global cooperation is close to dead, they say.
And until now, I might have agreed … but something’s happening in the world of United Nations climate politics to make me much less certain.
What’s cool is that Switzerland and Peru, for instance, are allowing at least some international — UN level — scrutiny of a trail-blazing carbon-trading arrangement, according to the contract published on the Swiss-government website.
Sure, things are gloomy — the Arctic sea ice isn’t freezing like it usually does at this time of year; Wildfires have been raging in Colorado; Vietnam’s grappling with its worst floods in decades.
But changes to market structures are also accelerating in various nations, meaning commerce is finally getting greener: not just in places like the European Union, where progress on this stuff is pretty much taken for granted.
Indeed, the EU may use international carbon markets to help meet a more-ambitious 2030 emissions reduction target of as much as 60% below 1990 levels, according to people close to international climate negotiations. The current target for that period is for a 40% cut.
EU member state Sweden is preparing to buy emission credits, for instance, potentially from Ethiopia, Nepal and Cambodia.
They are being purchased for domestic targets. But, ultimately, the credits may be used to help the EU meet its tighter Paris target, subject to further negotiations, said Sara Sundberg, head of the international climate cooperation unit at the Swedish Energy Agency.
Trading in these credits might surge as other nations jump on board and perhaps delegate companies to do the buying and selling.
“It’s starting to get there, but still we have the negotiations and we have a lot of work to do before we can actually say whether it’s going to take off, or not,” Sundberg said Monday by phone.
So, climate-protection wizardry is happening in some unlikely places.
Behind the scenes, scores of countries, banks and companies are getting on with it. They are starting to co-operate to solve the world’s biggest threat, despite the coronavirus pandemic.
The United Nations Paris climate deal, five years after it was struck, is starting to grow real teeth. And it’s beginning to use them too. Surprisingly, it’s doing this even though its rule book is not complete — and won’t be until November next year at the earliest. (Continues)
The UN is starting to show rigour, a boost the climate sorely needs. It’s important any climate solution has a global element because otherwise capital will seek out countries where climate rules are lax. The global markets need to eliminate loop holes because emissions trap heat for the whole world, no matter where they are produced.
In many ways, the Paris deal has been disappointingly slow to take hold — humans start to grow teeth BEFORE birth, after all…and they push through our gums about six months after that.
So a five-year delay seems like an age, when Paris’s own structure quite clearly showed that immediate, urgent actions were needed across every economy, back in 2015.
Still, the last five years might not have been wasted as some might think, possibly including Greta.
The Paris deal was never really meant to get off the ground until this year, and it’s true that it has been making some important progress, including spurring a massive downward revaluation of fossil-fuel companies. That’s deterred oil and natural gas exploration.
Now, the Paris agreement seems to be ramping up a notch.
Five days ago, Switzerland and Peru struck a fascinating climate deal.
Who cares what two smallish countries did, I hear you ask? Well, you should, because what they did is surprising amid the one-year delay in climate talks until November 2021.
Under the deal, it seems Switzerland has agreed to buy carbon credits from Peru using the Paris framework to help it meet its 2030 climate target for a 50% emissions reduction versus 1990 levels. Yes, the country is cutting by half, already.
Here’s a little rich country seeking to buy its way out of its climate guilt; it’s probably greenwash, you might think. You’d be wrong, again.
Such deals can have powerful benefits for both sides and they are going against a stark trend this year toward global protectionism during the coronavirus pandemic and Black Lives Matter movement. See this chart from “The Economist.”
While the World Trade Organization is looking into the EU’s plan to link climate and trade policy, Switzerland has realised it can cut its emissions at a faster pace by cooperating with Peru, a country 10,000 kilometres away — that’s about 6,000 miles.
Why? It’s often cheaper to spend money slashing greenhouse gases in a less-developed nation, because much of the low-hanging fruit has already been plucked in the wealthier nations. The deal may provide loans to small and medium factories in Peru to modernise and boost their competitiveness. A no brainer, really, because it will help Peru get a leg up in the economic stats.
So, Switzerland will pay Peru to cut emissions at a lower cost, saving money as it uses the South American nation’s emission credits to comply with its target.
This will also help Switzerland, which would probably otherwise have to pay a fortune immediately to switch the way it heats most of its houses — about two thirds of them are heated by heating oil, natural gas and wood. Having to make such a shift rapidly could also be damaging politically.
The money saved could be used instead for the higher volume of greenhouse-gas cuts in Peru. For the planet, the speed of cuts is crucial because the atmosphere is stuffed almost full with heat-trapping gas, as Greta usefully keeps reminding us.
So what’s cool is the cooperative nature of the deal. Switzerland and Peru are using Article 6.2 of Paris for their agreement, a section that arguably allows loosely regulated bilateral cooperation between nations.
Crucially, the two countries seem happy for the UN to play a role, according to my reading of the contract. The deal will be subject to rules still being put together by the UN process, including the establishment of a Paris agreement compliance committee. If either Switzerland or Peru get criticized by that committee, the other side of the deal could “suspend” the transfer of the credits.
Such a structure may limit the chance for “carbon cowboys” to profiteer unfairly from carbon markets 2.0. The markets under the Kyoto Protocol surged for a while earlier this century, but suffered (sometimes unfair) criticism for allowing super-normal earnings (even though the transparency of carbon markets was and is better than almost every other market on earth).
Now, digitization might make the market even more transparent, efficient and secure, see this UN report:
Paris’s planned compliance committee, “expert-based and facilitative in nature,’’ is meant to operate in a way that’s “transparent, non adversarial and non punitive” and pay attention to the capability of the parties, according the Paris agreement’s text.
Time will tell exactly what that means, but the wording of the Swiss-Peru deal does not seem to portend the beginning of a “free-for-all” global carbon market. Alluding to the compliance committee does not appear to be the action of two countries doing a quick bilateral deal in a reckless move to make money and save costs while burnishing green credentials.
The Swiss-Peru deal seems to tick some other crucial boxes. Peru seems to agree that once it sells credits, it will make its domestic target tighter. This “corresponding adjustment” ensures both nations don’t both simultaneously try to claim the emission reductions as their own.
Further, the contract stipulates that the money sent by Switzerland to pay for the carbon credits, assuming that is the way the money flows, is not “double counted” as climate support.
Still, the Swiss-Peru deal’s credibility will depend on progress at UN level in the next 12 months to finish rules of the Paris agreement, according to people close to those negotiations.
Without that credible UN stamp and more hard negotiations, there’s still a risk that the new era of carbon markets – the “free-for-all” — will emerge …and that would be a huge missed opportunity because it would fail to help achieve the Paris climate targets and result in an even worse climate catastrophe.
For Europe, the council of EU nations will consider the European Parliament’s plan to go for a 60% cut as it debates a tightening of its 2030 target over the next few months, said Jos Cozijnsen, a strategic consulting attorney at Climate Neutral Group in the Netherlands.
The most logical step is for the EU to mull international carbon trading as part of that, because it will spur more ambition among emerging countries and boost the levels of international “solidarity,” he said by phone.
“This is an offer for the council as they talk about this through the end of the year.”
See more on Swiss-Peru deal here:
See more from Cozijnsen here:
(Updated Monday Oct. 26 London time with Sweden’s plan to buy credits, comment from official; updated Tuesday with information on trade and comment at last paragraphs.)