DC Durban Debrief: Same Song, Second Verse-- or a Whole New Tune?
By Celine Lim
It was standing room only at this week's DC Durban Debrief event, co-hosted by local carbon contemplators Ecosystem Marketplace, Climate Focus and McGuireWoods LLP. Over 75 DC market players turned up to get the first-hand scoop about the 17th Conference of Parties from those who staked out the COP in person.
The panel of three distinguished experts (Henry Derwent, President and CEO of the IETA; Bob O'Sullivan, Executive Director of Climate Focus; and David Antonioli, CEO of VCS) was moderated by Ecosystem Marketplace's very own Director, Kate Hamilton. There was a great showing of the DC carbon community, including financial institutions, multilaterals, the State Department, project developers and NGOs.
The audience heard a report from Durban punctuated with insights on COP 17's implications for the carbon marketplaces, and then had a chance to delve deeper into the practical challenges for the carbon community on the roadmap to 2020.
Derwent received nods from around the room when he explained that although it was heartening that politicians took steps forward, it did not shift actual demand for credits or project developers' ability to attract new investment.
"The price of any of the units which are bought and sold in the markets really didn't blink," Derwent noted.
Another update from Durban that drew interest from the market-savvy crowd was the new ground broken on REDD+ finance - where Durban saw agreement around the possibility of using market-based approaches to support "results-based action", but there remains a lack of clarity around what these approaches might look like.
Will sub-national activities also be supported by markets, and will bilateral financing be recognized under the UNFCCC? And how might these relate to the possibility of linking units generated through market mechanisms under the UNFCCC to future commitments under the Kyoto Protocol?
Our panelists reflected that very little thinking has probably gone into answering these questions. Ahem.
REDD finance's uncertain trajectory is perhaps deepened by the stark, long road toward a post-2020 Kyoto agreement. Before then, it's expected that many REDD countries will have already entered into the results-based payments phase - but without binding targets, there might not be demand for the credits generated. For many, the checkmate period between now and 2020 may appear to have left countries floundering at the mercy of a new Kyoto regime.
Yet, this abyss has spurred action amongst the emerging economies, Antonioli countered. He noted that countries that did not have strong positions pre-Durban--China, Brazil, South Africa, just to name a few--are beginning to have a growing presence in the carbon world.
These players are creating individual markets on local soil that, although fragmented and segregated at the moment, provide options for new projects in agriculture and forestry while international processes catch up.
Chile and Costa Rica are also starting to explore the voluntary market. The development of domestic markets is brand new, however, and some fear that domestic markets in emerging economies may not generate sufficient demand to support local or national programs. Still, Antonioli said, countries recognize the potential of the carbon marketplace, and are venturing into the possibilities as hopeful participants.
But can these segregated markets survive? Can domestic markets be integrated at the global scale and be allowed to flourish amongst the big boys of the global community? To avoid the dominance of a top-down arrangement that might drown out these markets, as the panel suggested, standardization is critical.
Having strong, common standards for projects across the board can offer the security that those from developing markets have the right structure for and compatibility with the larger carbon world. And for these markets to scale up, they have to be transparent and consistent in their program rules for topics like additionality.
Derwent brought all of these conversations home in his response to a question from the floor on what needs to happen in order for REDD to work: "Demand, demand, demand." Without global binding agreements, he explained, there will only be a slackened demand that will undoubtedly disappoint all market players - including the hopeful new kids on the block.
Panelists noted that even with Durban's positive news for the marketplace, sinking carbon prices did not flicker an inch - and that all eyes are now cast on 2020, with hopes that in the final hour negotiators will (hopefully) finally blink.