DOHA CLIMATE CHANGE CONFERENCE - NOVEMBER 2012
South African businesses are soon likely to have access to a wider range of market mechanisms that can be used to trade "certifiable emission reductions" (CERs) with developed countries that want to offset their emission of greenhouse gases linked to climate change by funding clean development in non-industrialized regions.
Developing and approving new market mechanisms was part of the task that delegates from almost 200 nations set themselves at the United Nations climate-change talks in Doha, Qatar.
Africa and South Africa have up to now largely missed out on the developing world's most commonly used market mechanism, the Clean Development Mechanism (CDM), and access to the most established market for CDM credits closes to South African companies on December 31.
While the Asia Pacific region had 84.38% of the 4,884 project activities registered by the UN Framework Convention on Climate Change (UNFCCC) by October 31 this year, Africa had a measly 2.05% . and South Africa much of that. Latin America and the Caribbean accounted for 13.17% of the registered project activities and other regions 0.41%, according to a UNFCCC publication.
"But, while South Africa will not be allowed to trade CERs through the European Union Emissions Trading Scheme after the end of the year, that is not the end of the story. It will be able to develop CDM projects with other regions and countries, and use the other market mechanisms being developed", says Harmke Immink, director at South African carbon market advisory firm Promethium Carbon.
"What's exciting is that there are some pilot programmes to test actual alternatives to the CDM ... It is always more exciting to have more dishes on a buffet," she says.
South Africa voluntarily made an emissions reduction pledge at the 2009 talks, to reduce its domestic greenhouse gas emissions trajectory by 34% by 2020, and by 42% by 2025, subject to "adequate financial and technical support".
It is unlikely to meet this goal, according to research by the German non-profit organization Climate Analytics, the Potsdam Institute for Climate Impact Research and renewable energy and carbon-efficiency consultancy Ecofys.
"Looking at the most recent data, South Africa is currently exceeding its projected business-as-usual emissions. It appears unlikely that with existing or planned policies the country will be able to turn this trend around," the three research institutions say in a research summary.
However, Ecofys Energy and Climate Policy Director Niklas HÃƒ says because South Africa's pledge was always conditional on financial and technological support, it is "highly likely" the country will get this support.
This ties in with UNFCCC executive secretary Christiana Figueres contention that every one of the almost 200 nations that have come to Doha acknowledges that not enough is being done to secure the future.
Delegates have to decide on a plan that will secure a new global and legally binding agreement on how to reduce the emission of greenhouse gases, linked to the overall rise in the world's temperature.
The rise in temperature is linked to higher sea levels that threaten coastal cities, hotter and longer heat waves, desertification, biodiversity loss and extinction, increased flooding and reduced crop yields, especially in regions that depend on rain-fed agriculture and human displacement.
"While being locked out of the world's most dominant emissions trading scheme might have been a problem a few years ago, things are looking up," says Ms Immink.
There are 20-odd disparate carbon markets in various stages of development across the globe. They are not yet linked, which can make trade more complicated, but it also makes it more exciting.
At the end of last year's climate-change talks in Durban, the participants promised to agree, by 2015, on a structure for a future carbon market to be implemented by 2020.
"While there is the potential that this will not happen, this is not necessarily a problem", says Promethium Carbon director Robbie Louw. "Links between country-specific and regional markets could still develop outside the UNFCCC, and that may be all that is necessary", he says.
Already Australia and the European Commission have, for example, announced their markets will be progressively linked up, with trade beginning when Australia's carbon market kicks into action in 2015.
"The CDM was a good start", says Martin Hession, vice-chairman of the UNFCCC's CDM executive board.
"Few would disagree that much more needs to be done to avoid the worst effects of climate change," he says. "Likewise, few would disagree that the CDM has made a significant start, demonstrating in a concrete way what is possible with political will."