The single biggest agenda at the Madrid climate talks, an agreement over setting up a new carbon market, was in danger of being postponed for some other time, with both sides maintaining that they would not settle for a compromise solution.
There has been virtually no progress at the Madrid climate talks on two of the most contentious issues relating to the creation of a new carbon market under the Paris Agreement — the issue of transition of carbon credits from the older market under Kyoto Protocol to the new market being established, and a mechanism to avoid double counting of emissions reductions.
Carbon markets allow buying and selling of emission reductions, or carbon credits. In very simple terms it facilitates a mechanism that allows a country which has achieved its climate targets, to make additional emission reductions and sell it, for a price, to another country which is struggling to meet its targets. It is hoped that a carbon market will lead to greater overall reduction of greenhouse gas emissions.
Carbon markets are an unfinished agenda of the Paris Agreement rulebook that was finalised last year. But even after one year of consultations, and more than a week of negotiations here in Madrid, there has been little progress in resolving the contentious issues.
And it is likely that the Madrid climate talks would leave an agreement over the carbon markets for some other time.
“It is very clear that the kind of demands that countries like Brazil and India are making, on the transition of older carbon credits, or on allowing double counting, jeopardises the entire rationale of the carbon markets. I would say it would be far better for us to have no deal here in Madrid than having a bad deal,” said Giles Dufrasne, policy officer (carbon pricing) with Carbon Market Watch, an international NGO.
On the other hand, India also said it would not agree to an agreement that did not allow for transition of its older carbon credits. “India has nearly 750 million carbon credits from the Kyoto regime. We have invested money to earn these credits. Now, suddenly we are being told that these credits are useless, and that we cannot sell them because a new market is being created. We are saying we must be allowed to sell these credits in the new market… We cannot agree to a deal that does not allow this transition.,” C K Mishra, India’s Environment Secretary, said.