—EU’s stance on UN emission credits is ‘double speak’
By Mathew Carr
Nov. 12, 2020 (LONDON) — Yvo De Boer likes an analogy, but surely, this time he’s gone too far.
The former executive secretary of the United Nations Framework Convention on Climate Change has just criticised one of the European Union’s stances on global warming.
But the EU is a leader on climate action, isn’t it? It may not have everything exactly right, De Boer said in a phone interview from the Hague.
Its reluctance so far to demand any existing United Nations emission credits as it seeks to meet an ambitious new 2030 greenhouse-gas-reduction target doesn’t seem to match its own actions with its own carbon allowances, De Boer, executive secretary of the UN Framework Convention on Climate Change from 2006 to 2010, said by phone.
“It’s a bit like Trump saying in one state ‘stop counting the votes’ and in another state ‘speed it up’,” de Boer said, referring to the U.S. President’s tendency to make self-serving statements about the election he looks like losing. “It is double talk for the EU to be saying that.”
Rich countries are allowed to shift emission allowances from the pre-Paris era into the Paris era, but poorer nations shouldn’t, is what the EU stance on UN Certified Emission Reduction credits seems to signal.
It’s a pointy point from de Boer, when self-serving language pervades public utterances on climate change by many politicians.
In this case, de Boer is calling out Europe for suggesting that poorer nations should effectively play by stricter rules than rich nations, even though the developed countries are most to blame for the climate crisis.
The EU’s refusal to demand the pre-2021 UN carbon credits created in emerging nations comes while Europe’s transferring more than one billion tons of its own pre-2021 carbon allowances into a “market stability reserve.” That will keep most of them alive for years under the Paris climate deal compliance period. The EU does plan to cull some of their spare carbon allowances in the reserve.
Failing to add extra demand for the UN credits amounts to tearing them up, de Boer said.
The credits were created during the past two decades in factories and at wind farms in countries including China and Brazil, which were promised a market for them as part of the Kyoto Protocol. But the market didn’t work very well because the pact’s rich-nation emission targets were so weak and countries essentially pulled out in various ways.
Kyoto is to be replaced by the Paris starting next year.
I got in touch with a person familiar with the EU’s position, who didn’t want to be named publicly.
There is no proposal from the EU to tear up the UN credits known as CERs, the person said. The question placed on the table, by others, arguing one way or another, is whether they continue to be valid for compliance with international or domestic emission pledges, they said.
As Paris starts, envoys should be more focused on its rules, and less focused on the Kyoto-Paris transition, the person said.
Reference to the reserve muddies the waters, the person said. The MSR addresses the EU emissions trading system structural surplus, in a way that proposals for unrestricted carry over of CERs precisely does not, he said. One nation seeking to carry over the credits has floated a reserve like the MSR to address the CER surplus issues, but has yet to make a concrete proposal, he said.
At climate talks in Madrid late last year, there was a plan for limited use of pre-2021 UN credits after 2020. Emerging countries would be able to use more of those credits for compliance with Paris targets than richer nations.
But the text was never agreed by nations at those UN talks, where decisions are taken based only on global consensus — it’s hard to get everyone to agree.
De Boer has another analogy for the failed Madrid proposal. It’s a bit like a cafe owner promising to buy hundreds of donuts from a couple, only for the owner to arbitrarily renege on the deal and say the two bakers are perfectly welcome to eat all the donuts themselves.
The transition between the two climate agreements probably needs to be set and fair before the rules of Paris can be finalised, according to a person familiar with a large emerging country’s position.
The delay of the Glasgow climate talks for a year to November next year because of the global coronavirus pandemic will help win agreement for a fair transition, because 2020 emissions will be approximately known by then, that person said.
De Boer expresses some empathy with the EU’s negotiation position ahead of the talks:
Europe is rightly concerned at the moment about oversupplied carbon markets under Paris, and the same emission reduction should only be counted in one nation, not two, he said.
“All of that is quite legitimate. It makes sense if you are embarking on a new regime that you learn the lessons from the past and you make sure that the thing you design, that you adopt, has greater environmental integrity.
“If you have a surplus of credits from an old regime, to let them into a new regime at a time when emissions are higher than they’ve ever been before, rather than lower than they have ever been before — I don’t think that is a smart move.”
By linking to other carbon markets, the EU could cut the risks associated with its 2030 emissions-reduction target, using carbon trades via borders and timeframes. But under Paris, such a move by the EU is voluntary. It’s currently targeting a 55% reduction on 1990 levels, based on domestic effort.
It’s still possible that the EU will change its stance. Emerging countries would potentially get good-value finance via carbon markets to leap frog rich nations economically and technically, or at least catch up, substantially. That’s what happened for a few years under Kyoto, but green finance is still focussed on rich countries, where financial and political risks are usually lower.
If the EU were instead to cut emissions by about 75% in 2030 and use existing CERs to help meet that extra effort, “I think that would help because you would significantly increase the level of ambition and, at the same time, you are cleaning up the system, by putting previous credits to some useful purpose in an enhanced-ambition context,” de Boer said.
“Increasing the level of ambition is more effective than tearing up old credits,” he said.
(Updated, edited lightly Thursday morning London time, updated with charts Friday morning)
Excellent article – there is also a very unfair playing field with Green Bonds where there is little transparency of measurable reductions yet emerging countries are held to a much high standard of MRV on CERS, whilst multinational corporate bond issuers claim its too expensive to report properly.
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