World Carbon Standards to Relax - CCX Head
Author: Timothy Gardner
CCX Chairman and Chief Executive Richard Sandor said he favors granting carbon credits to clean projects, such as maintenance and planting of trees, even if the actions occurred years earlier, in some cases before carbon markets existed.
The approach is counter to a major tenet of carbon trade -- known as additionality -- which says a transaction of a carbon credit is only good if it results in a emissions reduction that would not have happened otherwise.
"It doesn't matter if it's operating and ongoing," Sandor said. "New additionality doesn't require you to start from scratch," he said.
A global debate is heating up on how best to structure markets for trade of credits claiming to represent emissions reductions. Both presidential candidates in the United States, historically the top greenhouse gas polluter, favor regulating emissions, and global delegates are to meet in Copenhagen next year to decide what comes after the Kyoto Protocol.
Some carbon market players have complained about credits that reward people for long-standing activities.
The CCX, for example, has paid farmers millions of dollars for no-till agriculture -- leaving crop waste to decay in the soil -- even though many had been doing the practice before the bourse started trading in 2003.
Many market players, including at least one CCX member, refuse to buy such credits on the CCX, slamming them as "anyway tonnes" that don't pay for new actions that slow global warming. They want tighter standards to ensure every carbon credit pays for some "additional" reduction in emissions.
Sandor said looser standards in global carbon markets would reward early actors for being good environmental stewards and encourage other people, companies and cities to do so.
The CCX, run by Britain's Climate Exchange Plc, has more than 350 members including companies, nonprofit organizations, and cities. Members sign a legally binding pledge to cut emissions. If they cannot do so, they must buy credits over the exchange, either from other members or from offset projects.
Credits on the CCX, at US$2.50 a tonne, are far cheaper than those in European Union of about US$31.70 a tonne, where a mandatory market has operated since 2005.
US carbon legislation probably will include no-till farming and forestry rules similar to those on the CCX, which allows credits for past actions, Sandor said. That's because some 350 million acres of US farmland could generate credits, which could make farmers a lot of money, he said.
Still, if US legislation requires different rules, he said, the CCX would adapt.
"We're only in the business of predicting. If our predictions are incorrect, we don't care, we'll adopt whatever the wisdom of the legislation says."
(Editing by David Gregorio)