Pollution limits in the only treaty curbing greenhouse gases may lapse at the end of next year because of a rift between richer countries and developing ones over how to combat global warming.
China, India, Brazil and their allies are pushing for an extension of theKyoto Protocol, which requires industrialized nations to cut emissions through 2012. Japan, Canada and Russia refuse to sign that plan, and the U.S. never ratified it.
The impasse risks undermining the $142 billion a year market designed to cap carbon-dioxide linked to burning fossil fuels, which are blamed for damaging the climate, and stunting investments in renewable energy that jumped 32 percent to a record $211 billion last year. Negotiators from 190 countries will gather for two weeks of United Nations climate talks starting Nov. 28 in Durban, South Africa.
“We need an international agreement to have any formal new targets, and it’s equally clear that those new targets are a long way from being agreed,” Henry Derwent, president of the International Emissions Trading Association and a former U.K. climate envoy said on Nov. 21. “We are just going have to live without targets for a reasonable period of time.”
Carbon Permits Slump
European Union carbon permits dropped as much as 13 percent today, losing more than one-fourth of their value this week, as slower economic growth and Europe’s debt crisis held back factory production. United Nations emissions credits plummeted as much as 16 percent to a record low of 4.53 euros in a move that reflected concerns about the outcome of the summit, said Per Lekander, a Paris-based analyst at UBS AG.
“In the middle of the most serious financial crises since World War II and with several world leaders facing elections, climate mitigation is on the back-burner and neither Asia nor U.S., and possibly also not Europe, will sign up to anything which is costly,” Lekander said.
“It would be a big surprise to me if Durban didn’t become another Copenhagen,” he said, referring to the 2009 summit that disappointed investors.
The talks under the UN Framework Convention on Climate Change aim to outline a future for the market-based mechanisms including carbon trading sketched out in the 1997 Kyoto treaty. They’re also talking about how to implement a fund that would channel part of the $100 billion a year industrial nations have pledged in climate aid to developing nations.
‘Very Low Chance’
Last year’s talks in Cancun, Mexico, left open the most difficult issue of whether to extend emissions limits in Kyoto or start afresh with a new treaty. Developing nations such as China and India didn’t have requirements for cutting back carbon under Kyoto and since have become two of the three biggest polluters.
“With current positions that countries are starting with in Durban, I’d give Kyoto extension a very low chance,” said Niklas Hoehne, director for energy and climate policy at Ecofys, a Dutch consultant that has the EU among its clients. “This is the last moment to save” the Kyoto treaty, and “if it’s lost, we’re in a bottom-up mode when everybody proposes what they want to do -- a different and weaker system.”
Failure to extend Kyoto would cast a shadow over long-term prospects for limiting global warming. Should countries give up on agreeing to targets after the current limits expire in December 2012, the treaty’s relevance would diminish.
President Barack Obama isn’t scheduled to attend the talks in Durban and has stepped back from pushing climate measures through the U.S. Congress after the Senate rejected carbon cap- and-trade legislation.
Kyoto ‘Lessons’
“One of their lessons from the Kyoto experience was they won’t get ahead of the U.S. Congress,” said Dirk Forrister, head of President Bill Clinton’s 1997 task force on climate. “We have a divided Congress. Some want action on climate change. Others don’t want to mention the words.”
The EU is asking the talks to agree on a timeline for adopting a new treaty that would replace Kyoto. The 27-nation bloc, which has adopted a law to cut greenhouse gases by 20 percent in 2020 compared with 1990 levels, is ready to sign up for a new commitment period under Kyoto if other countries agree on when they’ll adopt a legally binding global deal.
EU Climate Commissioner Connie Hedegaard has ruled out moving without promises for emissions cuts from other nations.
“Let’s be frank: At best we could only get the EU, Norway and maybe two or three more countries to sign up for a second Kyoto period,” Hedegaard said this week in Oslo. “That will not make any difference whatsoever for the overall trend in global emissions. It would also take away pressure from other countries, both developed and developing, to engage in more ambitious climate action.”
China, EU Talks
A road map to a new UN treaty by 2015 would be “the most optimistic” outcome of the Durban summit and progress on it will rely on talks between China and EU, according to Bloomberg New Energy Finance. “Although by no means aligned on their expectations and there’s a long way to go, these two countries offer the best hope for constructive talks,” BNEF analysts said today in a report.
China says goals for developing countries should be voluntary, and India urges industrialized nations to take account of their historical responsibility to clean up the emissions they created in past decades.
“We in developing countries are not spoiling the party,” Indian Environment Minister Jayanthi Natarajan said in New Delhi. “We’re not refusing to cooperate. You all know how far we’ve walked, how far we’ve gone to cooperate, how much action developing countries are taking voluntarily to reduce their carbon footprint.”
South Africa, which is hosting the climate talks, wants to avoid having the effort to constrain global warming fizzle on its soil.
“We cannot from conference to conference repeat the same rhetoric without getting to a practical implementation,” Cedric Frolick, house chair in the South African parliament, said in an Oct. 31 interview. “We simply cannot afford for Durban to become the graveyard of the Kyoto Protocol.”
To contact the reporter on this story: Ewa Krukowska in Brussels atekrukowska@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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