After two weeks of talks, envoys from almost 200 countries shelved work on adding market mechanisms as a tool to curb greenhouse gases, settling on a more limited set of measures to rein in climate change.
Delegates at a United Nations meeting in Madrid deadlocked for a second year in a row on how to create a system of credits for projects that would cut emissions. They also couldn’t agree on language about how to spur finance for green projects.
The result left open how key sections of the landmark 2015 Paris Agreement will work when that deal comes into force next year. Many envoys said that the decision to express an “urgent need” to make more ambitious cuts in fossil fuel emissions represents a step backward from previous deals.
“It’s not what the world had hoped for and what Europe would’ve hoped for,” said Karsten Sach, an official speaking for Germany at the meeting in Madrid. “We couldn’t agree on a market mechanism. The process was sometimes a little bit cumbersome slow.”
The delegates from environment and energy ministries stumbled over the details for a new market instrument to rein in pollution. They were trying to work out how to prevent double counting of credits and integrate into the new system an existing mechanism that funnels at least $138 billion into green projects.
The impasse leaves companies that encouraged carbon trading, including the oil major Royal Dutch Shell Plc and the Spanish utility Iberdrola SA, with fewer price signals showing how quickly the cost of pollution is rising.
“This is a huge disappointment,” said Dirk Forrister, chief executive officer of the International Emissions Trading Association. “The fact is that countries’ ability to deliver stronger targets in line with net zero goals will depend on having access to international market cooperation.”
The meeting was meant to flesh out the last rules needed to implement the 2015 Paris Agreement, under which all nations promised steps to cut greenhouse gas pollution.
The delegates are working toward limiting the Earth’s average temperature increase to 1.5 degrees Celsius since the start of the industrial revolution. Even that would be the biggest shift in the climate since the last ice age ended some 10,000 years ago, and scientists say rising temperatures are already lifting sea levels and causing more violent storms.
“The key polluting countries responsible for 80% of the world’s climate-wrecking emissions stood mute while smaller countries announced they’ll work to drive down harmful emissions in the coming year,” said Jake Schmidt, who is following the talks for the Natural Resources Defense Council, a New York-based research group.
While carbon markets were the main strand of discussion this year in Madrid, the most visible disagreement at the talks was over what the delegates call “ambition.” That relates to the voluntary commitments nations make toward cutting emissions.