Carbon Expo: Flexible Mechanisms Instrumental in International Climate Change Regime

July 2011 - This year’s Carbon Expo trade fair in Barcelona drew to a close on 3 June. In a programmatic, future-focused speech, Christiana Figueres, Executive Secretary of the UNFCCC, pointed to the constructive decisions reached at the Climate Change Conference in Cancún. She also emphasised the importance of the issues spotlighted at Carbon Expo 2011: the need to move forward both on CDM reform and on further development of the carbon market mechanisms, and the integration of these activities into climate change policy. However, her main message focused on linking climate finance with carbon finance. “We need to ensure that carbon finance retains and reaches its full potential. And most importantly, we need to ensure that carbon finance and climate finance work effectively together so that the intention of capitalising on and using the Green Fund - hopefully before 2020, but certainly by 2020 - can be fully achieved.”

This clear vision sets the course for Germany, whose presence at Carbon Expo comprised a mix of German businesses, investors and project developers. Currently, the German Emissions Trading Authority (DEHSt) has some 270 CDM projects in its registry. According to UN estimates, its 17 percent share in technology cooperation makes Germany one of the most important players in the global carbon market. Both the existing and the new carbon market mechanisms can be used to foster the introduction of best practice climate change technologies and models.

Programmes of Activities

The CDM/JI Initiative launched by the German Environment Ministry (BMU) some time ago aims not just at quantitative involvement of German businesses, but at improving the environmental integrity of the CDM. Against this backdrop, the initiative provides a new carbon outlet. The German Environment Ministry has been promoting the KfW Bank’s PoA Support Centre for programmatic CDM and JI projects for the past three years or so. At last year’s Carbon Expo in Cologne, projects initiated by the Support Centre fostered the idea of using the programmatic approach as a bridge to nationally appropriate mitigation actions (NAMAs) conducted by developing countries. They also gave rise to the question of whether projects in the KfW portfolio might provide a foundation on which to scale up NAMAs. KfW has since commissioned South Pole, a renowned carbon offsetting company, to develop a bottom-up PoAs to NAMAs strategy based on four selected projects. The results are to be published shortly.

The outcome was presented in Barcelona as part of two BMU side events (see Downloads below), and was well received all round. Using available carbon mechanisms, the bottom-up approach supplements the top down strategy for NAMA development by developing countries themselves. It also helps highlight the financing contributions to be had from the market-based mechanisms. If the carbon market is really to make up a substantial portion of the USD 100 billion in financing that the industrialised countries are expected to provide as of 2020, then the PoA to NAMA strategy offers considerable development potential for close cooperation with developing countries.