Ludwig has heard about a new proposal for carbon markets and international cooperation that sounds almost too good to be true.
Brazilian negotiators were particularly enthusiastic about the idea. As one negotiator explained, “Imagine if you could make a transfer from your bank account to another account to pay a debt. Suppose they could get paid and your bank balance doesn’t change. Sounds great, right!! We have found a way to do that with carbon credits.”
This proposal is called the “Katowice Double Counting Mechanism”, a rebranding of the proposed Sustainable Development Mechanism. The idea, Ludwig has learned, is to turn the CDM — which has been plagued by low demand for credits, rock-bottom carbon prices, and concerns about dodgy additionality rules — into something that, after 2020, can be a win-win-win for everyone involved: buyers, sellers, project developers, etc. Everyone except the climate and the victims of climate change, but Ludwig understands you can’t please everyone.
Traditional orthodoxy would claim that any time a carbon credit is transferred from one country to another and used to allow increased emissions in that country, the source country has to deduct this from reductions needed to meet their cap. This is called “corresponding adjustments” under the Paris agreement. It is based on the apparently fallacious argument that an emission reduction can be used only once.
But under this innovative new proposal, both countries can use the credit to meet their targets. And not just countries. At the International Civil Aviation Organization (UN’s aviation agency), member states have agreed that international aviation can offset emissions above 2020 levels through a mechanism called CORSIA.
“We think airlines should get on the double counting bandwagon”, said the Brazilian negotiator. “There is no reason why countries should keep all the benefits to themselves”.
But there are still naysayers harping on the need to maintain the “integrity” of the caps and carbon markets. As a leading naysayer argued, “you can’t have your cake and sell it too.”
