Trading schemes

  • 14/12/2006

The issue of the carbon market and cdm focused on carbon capture and storage (ccs), non-renewable and renewable biomass, and regional distribution of cdm projects. While some parties, including eu, Saudi Arabia, Japan, Canada, Norway and South Africa, expressed a clear interest in accessing ccs technology under the cdm, others opposed it for various reasons. Brazil expressed fears that such technology could massively impact the current cdm portfolio. "ccs would crowd out other cdm projects.Like us, the Alliance of Small Island States is equally concerned about the technical uncertainties surrounding ccs, such as seepage, storage, boundaries and long-term liability,' said Fernando Antonio Lyrio Silva, adviser for international affairs, ministry of environment, Brazil.

"Carbon capture and storage technologies will reduce the need for increasing international expenditure on renewable energy since it will provide clean and environmentally sound oil supplies,' countered Saudi Arabian oil minister Ali Ibrahim Naimi. But Yvo de Boer, one of unfccc's top officials, warned that it was unknown how permanently carbon can be buried. "Who would be responsible if it escapes?' he asked while talking to DTE.

Afforestation and reforestation issues were raised by Brazil, Colombia, Bolivia and a number of other Latin American countries, who objected to what they regarded as a restrictive interpretation by the cdm executive board of procedures for defining land eligibility for cdm projects. The debate was about the methodologies to demonstrate that land proposed for a cdm project was not a forest when a project started. An agreement was reached when eu conceded that parties should invite the cdm executive board to revisit the issue, and deal with relevant project proposals on a case-by-case basis in the interim.

Equitable distribution of cdm projects, which are now bagged mostly by India and China, was also an important concern. "Very strong concerns were expressed by the African countries not getting access to cdm projects. The only way out is capacity building,' said Boer. The eu conceded on an African group proposal to "insert language' that encourages Annex I countries to engage in initiatives, including financial support, for cdm projects in least developed countries. "But the eu just spoke about inserting language; nothing in this world happens without funding. So we have to wait and watch what happens,' said Sawyer.

Another result of the cdm debate was to defer a decision on the controversial issue of whether or not to include new hfc-23 projects into the carbon trading regime. Companies manufacturing hcfc-22, a gas used in refrigeration, generate a by-product called hfc-23. The global warming potential of carbon dioxide is 1; hfc-23's potential is 11,700: it is that potent. Companies now earn cdm benefits if they capture and destroy hfc-23 before it goes into the atmosphere.

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