It is too early to predict theprecise impacts of sectoralcarbon markets. It is significant,however, that the framing ofthe discussion on these newmechanisms excludes referenceto their social impacts
It should be noted, finally, that the environmental and financial arguments on sectoral mechanisms do not tell the whole story,since such measures could have damaging social impacts. Carbon offset projects under the CDM have often resulted in landgrabs, spread local environmental and social conflicts, and led to the repression of local communities and movements.
TheCDM project approval process allows little space for the voices of Indigenous Peoples and local communities – in fact, noproject has ever been rejected on the grounds of rights violations, despite these being widespread.It is too early to predict the precise impacts of sectoral carbon markets. It is significant, however, that the framing of thediscussion on these new mechanisms excludes reference to their social impacts.The UNFCCC is currently discussing new market mechanisms in response to Section 1(b)(5) of the 2007 Bali Action Plan,which calls for “Various approaches, including opportunities for using markets, to enhance the cost-effectiveness of, and topromote, mitigation actions.”
This Plan forms the basis of current international climate negotiations in the Ad Hoc WorkingGroup on Long Term Cooperative Action (LCA), which is discussing a treaty that would supplement (or succeed) the 1997Kyoto Protocol.The Cancún Accords ask that new market and non-market mechanisms beconsidered for agreement, which resulted in a short consultation process earlyin 2011. In March, the LCA Secretariat issued a “Synthesis report on informationon various approaches in enhancing the cost-effectiveness of, and promoting,mitigation actions ” (hereafter, “LCA
”), which puts togetherthe results of this consultation. This document is presented as a basis forfurther negotiations, with a view to reaching an agreement at COP17 in Durbanin December 2011.
If carbon markets are the “answer”, we would do well to ask: what is thequestion? In drawing up its synthesis, the LCA secretariat has considerably narrowed the scope of the discussion on marketmechanisms by defining these as “an infrastructure for trading emissions”, in an apparent attempt to close off other optionssuch as feed-in tariffs.
It has also interpreted its remit in a way that reduces the debate on new market (and non-market)mechanisms to two criteria: “the first being whether they ‘enhance the cost- effectiveness of mitigation actions’ and thesecond being whether they ‘promote mitigation actions’.”
explains sectoral crediting in the following terms:
On a crediting basis, a reference level for emissions within a boundary (e.g. a sector) would be determined,possibly at a level below ‘business as usual’. The emissions within this boundary would then be monitored during a period of time, known as a ‘reference period’. If, at the end of the reference period, actual emissionlevels were below the reference level, a quantity of credits corresponding to the difference would be issued.These credits would then be distributed, through a method to be determined, among the emitters withinthis boundary. The emitters would therefore have an incentive to limit their emissions, as this would enablethem to gain credits that could be monetized. A variant of this proposal would be that credits are issued for emissions that are avoided during the period.
This requires a little decoding, starting with the obvious question of what activities would be covered? Although the preciselist of sectors is not yet fixed, it is generally understood to include manufacturing sectors exposed to international competition– including steel, cement and lime, pulp and paper, and aluminium, “upstream” oil and gas production emissions (e.g. fromgas venting and flaring) – as well as the power sector.
Such crediting may also include economic sub-sectors (e.g. publictransport).
Separate discussions are being held within the context of UNFCCC negotiations regarding deforestation and agriculture.
Some international agencies, most notably the FAO, and corporate lobbyists (eg. Business Europe) wish to see theseincluded within the framework of any new sectoral crediting or trading mechanism, although reservations on this have beenexpressed even by parties (such as AOSIS) that support the principle of new sectoral mechanisms.
Emissions trading isalso under consideration in the aviation and shipping sectors, although these discussions are currently being conductedunder the mandate of the International Civil Aviation Organization (ICAO) and of the International Maritime Organization(IMO), institutions that have avoided binding agreements to control climate change for over 13 years.