As uncertainty looms over the future of the Kyoto Protocol, the delegates of the Carbon Forum Asia 2011 met at Singapore in an attempt to iron out differences and arrive at new solutions. The sombre note was provided by the World Bank assessment that global carbon markets have stalled after five years of consecutive growth. However, the global carbon-trading market had already touched $142 billion last year, a long way from the initial year of 2005.
As the possibility of a consensus and solutions were proving increasingly evasive, the focus was shifting away from global to national and regional action plans for combating climate change and reducing emissions. Addressing the opening ceremony, Mr Henry Derwent, President and CEO of the International Emissions Trading Association said Australia is ready to embrace a comprehensive carbon-trading regime that will go international in three years. New Zealand has already implemented its own carbon-trading plan.
At the sub-national level, similar schemes are emerging from places like California to Ontario and Tokyo. Many developing countries in Asia are ready to embrace emission-reduction objectives and use carbon trading as part of the policy kit. Countries like China, India, South Korea, Brazil and Taiwan are on the list where some legislative and other moves have been reported on carbon trading.
Asian model fragmented
India has overtaken Japan in greenhouse-gas (GHG) emissions and has joined ranks with China and the US as the top three GHG-emitting countries in the world, Mr Fumio Hoshi, Deputy CEO of Japan Bank for International Cooperation (JBIC), said. Consequently, Asian countries which account for over 80 per cent of the clean-development-mechanism (CDM) market of Europe now have greater responsibility and role to play in containing emission and trading.
The Asian model of national- and regional-trading solutions is today fragmented but will have to grow and expand in a bottom-up manner, Mr Burhan Gafoor, Chief Negotiator for Climate Change for Singapore, pointed out. In such a scenario, the need was to develop common rules to govern carbon markets between regions and economies. This would ensure convertibility and environmental integrity of carbon units traded.
Emerging trends in carbon trading would only go to reinforce carbon trading, started in 2005: it is just providing new avenues to combat emerging economic and political compulsions. Global carbon markets saw 3.6 billion tonnes of carbon-dioxide equivalent exchanged in the first six months of 2011, valued at $71 billion. This was a 3 per cent increase from the $66 billion traded in the same period last year. But there was deep concern over the steep fall in the unit value of per-tonne-of-carbon traded in the European markets to as low as €6.6.
Industry observers believe that there is a pre-2013 rush to register CDM projects, as some 20 per cent more projects have been put up for validation since January 2011. As on October 2011, Asia accounts for a total of 2,815 projects, more than 75 percent of the projects registered. Asia is also beginning to expand into the demand side of the market. But international uncertainty about climate-change targets and the role of the UN in 2013 and beyond is making businesses and governments alike rethink the direction of the market.
As the world prepares for the 17th Conference of Parties meeting in Durban, South Africa, this December, Carbon Forum Asia once again represents an opportunity for Asia to regroup and air its views on the global-emissions-abatement programmes.
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