Could carbon markets become obsolete?

Esther Ng Today Online 7 Feb 11;

SINGAPORE - It should be a happy headache for environmentalists. Yet the possibility of carbon markets becoming obsolete within the next one or two decades - as industralised countries cut their carbon emissions - could have dire consequences, according to three researchers.

Currently, carbon markets provide a rich source of funding for United Nations-backed conservation scheme REDD+. The idea is for industrialised countries to offset their own emissions by buying carbon credits from developing countries, thereby giving communities in the latter group an incentive to protect their forests and preserve endangered species.

More than just preventing deforestation and forest degradation, REDD+ also includes the possibility of offsetting emissions through "sustainable forest management", "conservation" and "increasing forest carbon stocks".

But in a paper recently published in a journal of the Society for Conservation Biology, Assistant Professor Edward Webb and PhD student Jacob Phelps from the National University of Singapore and research fellow Koh Lian Pin from Swiss Federal Institute of Technology (ETH Zurich), pointed out that REDD+ was designed to buy time for developed countries to come up with new low-carbon technologies.

However, Mr Vinod Kesava, managing director of carbon consulting firm Climate Resources Exchange, disagreed that carbon markets could become obsolete in two decades.

He said: "Carbon sequestration, renewable energy and energy efficiency in themselves are inherently the foundation of carbon markets, because had there been no action taken to invest in the R&D for such technologies and specific methods to validate and monitor them, more carbon emission would have been produced otherwise."

Environmental group Conservation International (CI) told MediaCorp that it estimates that $12 billion to $35 billion annually is needed to make significant gains in reducing emissions from deforestation.

In response to the researchers' paper, CI reiterated that public funding will need to remain a major source of finance for REDD+. However, it noted that the scheme could turn to alternative sources of financing.

For instance, the scheme could allow the private sector - instead of governments - to offset carbon emissions by financing actions to reduce emissions in developing countries.

Other innovative sources of financing, not just for REDD+, but also for other mitigation and adaptation actions in developing countries should also be considered, CI added. For example, taxes on international maritime and aviation transport could provide significant, sustainable and predictable sources of funds. ESTHER NG