Getting the carbon market in shape for global climate action

May 2014 - A global carbon market can play a crucial role in achieving global climate protection targets, says State Secretary at the Federal Environment Ministry Jochen Flasbarth. At the opening ceremony of the CarbonExpo international trade fair in Cologne, he made the following statement: "A functioning international carbon market can make a significant contribution to limiting global warming to two degrees in this century. We must mobilise the economic power of markets in the service of the global Energiewende."

The CarbonExpo is the most important international trade fair for the carbon market. Participants include government representatives from industrialised and newly industrialising countries, businesses, civil society and the media.

Flasbarth said "we only have 18 months until the climate summit in Paris, where we want to adopt a new climate agreement obligating all countries to make greater efforts from 2020 on", adding "we want this global agreement because global warming can only be limited through joint efforts." He said that the German Government was pushing to see the European Union commit to adequate climate protection targets and thus provide an important impetus to the climate negotiations. He also stated that reducing greenhouse-gas emissions within the EU by at least 40 percent by 2030 was reasonable and by no means an excessive up-front commitment and also that the EU should keep open the possibility of more ambitious goals within the framework of international negotiations. He went on to say that this additional reduction might be achieved through the use of international certificates.

In the field of international climate action, the market mechanisms established by the Kyoto Protocol, such as technology transfers within the framework of the Clean Development Mechanism, are important for the cooperation between industrialised and developing countries. To date more than 2.3 billion tonnes of carbon dioxide emissions have been avoided through this trading scheme. That is much more than double Germany´s current greenhouse-gas emissions. In these project-based mechanisms emissions reduction projects are implemented in developing and transition countries. Certificates for reductions can be sold and credited towards the emissions of industrialised countries. These projects have been crucial in raising awareness for climate change issues in developing and newly industrialising countries as well as starting up emissions trading schemes, for example in China.

The German Government continues to advocate the financing power and the potential of the global carbon market and thus sees a strong need for reform. Flasbarth said: "The market mechanisms must be developed further, so that countries do not misuse them to buy their way out of domestic climate action efforts. We have to involve the developing countries with strong economies. At the same time we must take full advantage of the mechanisms´ potential to prompt international cooperation and involve the private sector. The carbon market is not an end unto itself. Ultimately, it must lead to a reduction in CO₂emissions. Only that will mitigate global climate change."