Brazil and EU propose new carbon market at COP 21

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O Estado de S. Paulo,

Brazil and the EU suggested, on Tuesday, 8, the creation of a new carbon market mechanism that could be part of the climate regime to be adopted by the end of this week at the 21th UN Climate Conference in Paris. The main idea is to expand the possibilities of negotiating carbon credits in order to encourage the ambition of countries in their goals for reducing emissions of greenhouse gases.
 
The proposal follows the principle of Clean Development Mechanism, but amplifies it, with improvements. The CDM was created in the context of the Kyoto Protocol, adopted in 1997, by which only rich countries had obligations to reduce their greenhouse gases emissions.
 
One way to do this was offset part of its commitment investing in activities that reduce emissions in developing countries - generally cheaper than in rich nations. For example, EU countries could finance energy efficiency in India. Emissions avoided there would be counted as credits to be deducted from the amount that Europeans had to reduce.
 
The plan did not quite work so well because the Kyoto Protocol itself eventually failed, but the principle makes sense. The proposal of Brazil and the European Union got inspiration on CDM to create what countries are calling as sustainable development mechanism.
 
The idea is still invest in activities and technologies that can reduce emissions in developing countries. But instead of only developed nations be allowed to do this, all countries that have presented INDCs (set of national contributions) with absolute targets to reduce emissions could also use the carbon credits to offset their commitments. The proposal also establishes that companies and sub-national governments could participate on the market.
 
All the nations considered within the Climate Convention as developed presented INDCs with absolute target, as well Brazil did. The country submitted the proposal to cut by 37% of it’s emissions by 2025, rising to 43% by 2030 based on 2005 values. Most developing nations presented relative targets – such as, for example, to reduce its carbon intensity (the amount of carbon that is emitted per unit of GDP generated, for example).
 
Brazil states that the proposal does not take place (only) for their own benefit, but as an incentive – or as one diplomat a "carrot" – to attract other nations to also adopt absolute goals valid emissions for the entire economy and thus can participate in this market getting carbon credits to meet these commitments. It is understood that an absolute goal is bolder in terms of combating greenhouse gas emissions that cause global warming.
 
That would be a positive incentive to solve one of the major gridlocks of the Paris agreement, the "differentiation progression". Some developed nations claims the world is no longer divided today as it was when the Climate Convention was created in Rio-92. It was in Rio that was established this distinction between developed nations as having obligations and developing nations, no.
 
The new market provides a instrument for a Brazilian plan presented last year at the Lima Climate Conference, the so-called concentric circles, which provide a progression of the commitments of countries over the years. Thus, a very poor country would begin with few goals, an average country with a little more commitment and a rich one, even more. Over time, and with economic growth, these commitments would progress.
 
That's what could happen to this new market, in which the nations which have no absolute targets are also progressing to access these credits.
The proposal, as submitted jointly by Brazil and EU, is available at the UNFCCC Secretariat website (under voluntary submissions at bottom of page).