CARBON trade using one of the world’s most highly traded mechanisms, the clean development mechanism (CDM), could be broadened in scope and tailored better, especially so that countries deemed "least-developed" — mostly African states but not South Africa — could benefit more from carbon trade, a United Nations CDM review team, led by former environment minister Mohammed Valli Moosa, said on Tuesday.
The team released its review to the UN’s CDM executive board in Bangkok on Tuesday. If the board approves it, the report will be presented for political consideration at the UN climate-change talks in Qatar at the end of the year, said co-author Crispian Olver, a private consultant and former director-general in the then department of environmental affairs and tourism.
The CDM, in operation since 2003, allows developed economies and large corporations to offset emissions by buying "carbon credits" from developing economies. They then use the money to put in place development projects that reduce the emission of greenhouse gases — gases linked to the overall warming of global temperatures which is in turn linked to climate change.
The global carbon market was worth €96bn last year, with about 8,4-billion tons of carbon dioxide equivalent traded — up 4% in value from the previous year and 19% in traded carbon dioxide equivalent over the same period, according to Thomson Reuters Point Carbon.
Standard Bank ’s sustainability management director, Karin Ireton, said financial markets liked the CDM because "it works". However, it contained "bugs" which, if ironed out, would create a better product that would unlock more trade.
According to the report, 4,077 CDM projects have been registered across the world, with their annual average carbon emission reductions put at 5,84-million tons and an expected saving of 2,13-billion tons by the end of the UN Framework Convention for Climate Change’s first commitment period on December 31 this year. The CDM was developed under the convention, the world’s first globally binding (on industrialised countries) agreement to stabilise the emission of greenhouse gases.
Africa has 2% of this trade, and South Africa about 30% of Africa’s trade.
Mr Moosa said if the recommendations were accepted it would mean a greater opportunity for South Africa to register development projects that simultaneously reduced greenhouse gas emissions, such as the solar, wind, biogas, hydroelectricity and energy efficiency projects that had recently started "ramping up" in South Africa. "It could make a huge impact on the green economy in South Africa."
South Africa plans to create 300,000 jobs in the green economy by 2020 and is among the top 15 global greenhouse gas emitters.
The most pressing problem was the price collapse in the carbon market, he said.
Carbon credit prices had lost about 70% of their value over the past 12 months, mainly due to a supply glut and flagging demand in a slowing European economy, Reuters reported recently.