CDM board seeks to increase voluntary buying

: Electricity, Emissions
14/05/29

The UN's Clean Development Mechanism (CDM) executive board is meeting to devise new ways to buoy demand under the scheme, as low buying interest has pushed credit prices to historic lows.

The board will meet from today until 1 June to discuss methods for galvanising additional demand for CDM-generated certified emission reductions (CERs). Board members will look at the "exact activities they will undertake" to strengthen demand, UN Framework Convention on Climate Change (UNFCCC) strategy and policy development unit manager Niclas Svenningsen said at Carbon Expo conference in Cologne, Germany, today.

The board is likely to examine ways to make it easier for potential buyers to purchase and cancel CERs, as well as to gain recognition for cancellation. CDM executive board vice-chair Lambert Schneider, who spoke at an earlier session at Carbon Expo, pointed to the possibility of an "internet platform" through which CER holders could more easily cancel their credits.

CDM regulators will not be able to sell or market CERs, Svenningsen said. "You will never see the executive board and [UNFCCC] secretariat going out and doing marketing." But they might "try to explain in a... consistent way" the benefits of offsetting and the CDM to encourage more buyers, he said.

The board has for a number of years sought ways to increase demand for CERs to strengthen the ailing market — particularly by allowing voluntary cancellation of credits. Prices have fallen too low to cover even the administrative costs of some projects, with the benchmark December 2014 CER contract closing at a historic low of €0.08/t CO2 equivalent on 22 May. But is uncertain whether voluntary actions such as CER purchase and cancellation could offer support. Carbon tax regimes in South Africa and Mexico already plan to allow the use of some CERs for compliance, but such promises have so far showed no impact on the secondary CER market.

Nevertheless, Svenningsen holds hope that a strong outcome from the 2015 global climate change mitigation agreement could support the mechanism. Alternative global market mechanisms remain elusive, with instruments such as proposals for a new market mechanism (NMM) or framework for various approaches tabled at UN negotiations but as yet undefined. "The NMM... is an animal we do not know the shape or colour of yet," Svenningsen said. By contrast, the CDM offers a global currency guaranteeing emissions reductions.

"The CDM, in spite of the dire situation, is the best that we have. It is not very likely to disappear in the near future," he said.

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25/12/19

Australia needs electricity carbon policy: Commission

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US House passes bill to expedite permitting

25/12/18

US House passes bill to expedite permitting

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2026 set to be among 4 hottest years: UK Met Office

25/12/18

2026 set to be among 4 hottest years: UK Met Office

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Denmark pledges $9.5bn over 15 years for climate goals

25/12/18

Denmark pledges $9.5bn over 15 years for climate goals

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N Zealand proposes ETS governance penalties

25/12/18

N Zealand proposes ETS governance penalties

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