New technology, such as equipment to capture carbon dioxide from power stations and store it underground, may be deemed worthy of generating emission credits automatically, Halldor Thorgeirsson, head of emissions trading at the UN Framework Convention on Climate Change, said in an interview.
That may help reduce U.S. skepticism of UN-generated emissions credits and make investments in new technology more profitable, eliminating barriers for the U.S. to join international emissions-trading to slow global warming.
Granting certain ``benchmarked'' technology some credits would ``allow for significant scaling up'' of emission trading, Thorgeirsson said. ``In the tool box of the future, you will need different tools.''
Delegates to a UN-sponsored conference in Bali, Indonesia, in December will aim to convince the U.S. to join a new accord that will start after 2012, when the Kyoto emissions treaty ends. At stake is convincing China and the U.S., the top greenhouse-gas emitters, to join an international regime of curbing CO2 and trading permits among polluters to put a cost on global warming.
Protection Bill
U.S. lawmakers are wary of greenhouse-gas credits approved by the UN because they may not ``be real,'' an adviser to U.S. Senator Joe Lieberman said Nov. 15. Because of that, a climate- protection bill introduced by Lieberman, an Independent from Connecticut, and Virginia Republican Senator John Warner, wouldn't permit the use of credits from foreign projects approved by the UN, the adviser, David McIntosh, said at the time.
Lieberman and Warner are concerned trading under the UN- managed Clean Development Mechanism, part of the 1997 Kyoto Protocol, would allow U.S. companies to ``contract with Chinese chemical manufacturers or landfills, and those credits would not be real,'' McIntosh said. In other words, companies might contract for emissions cuts that would have been made anyway, he said.
Under Kyoto, projects in developing countries such as windfarms can only generate credits, for sale in advanced economies, if they show the enterprise wouldn't have gone ahead without the revenue from selling the credits.
It was unclear which technologies might receive backing by the UN, Thorgeirsson said. Carbon capture and storage ``might be a candidate'' to quickly boost investment in that technology, he said.
`Steeper Reductions'
``As we move into steeper emission reductions, the demand will only grow,'' the official said. Carbon dioxide can be piped to underground aquifers and oil fields instead of being vented into the atmosphere.
Industrialized nations need to curb emissions by 25 to 40 percent by 2020 from 1990 levels to stabilize the climate, the UN's Ad Hoc Working Group on Further Commitments concluded at a conference in August. More ambition ``is at the disposal'' of the richer nations through emissions trading under a potential deal to start in 2013, it said, without being more specific.
`Hard Sell'
A perception exists among U.S. lawmakers that emissions trading might transfer too much wealth to developing nations from industrialized nations, said Kate Hampton, head of policy at Climate Change Capital, an investment bank with $1.5 billion of funds under management. ``That makes CDM a hard sell,'' she said last week in an interview in the bank's headquarters in London.
So-called CDM credits, from the UN Clean Development Mechanism, are acceptable for use in the European Union carbon dioxide system, the world's largest greenhouse-gas trading program.
Some U.S. lawmakers are concerned about subsidizing China's compliance with a climate treaty, so ``there is a lot of reluctance to engage with CDM in the same way as the Europeans,'' Hampton said. ``CDM now is not what CDM will be post 2012.''
The UN also needs to do more to demonstrate the rigor behind the present system of credit approval, Thorgeirsson said. ``More could be done to convey a better understanding of the way the CDM works.''
Get Approval
The UN will publish a validation and verification manual, which will help project managers get approval in the shortest possible time and protect the market's credibility, the official said.
The manual will help the regulator balance the need to be rigorous with the need to generate sufficient quantities of credits to allow a market work properly, he said. That will ``help project developers increase the likelihood of fast-track approval.''
The UNFCCC is getting criticized both for being too rigorous and not rigorous enough, Thorgeirsson said. ``This is a very open and transparent process'' that's trying to balance both points of view, he said. Details of all projects are published on the UNFCCC Web site.
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