Countries agreed in Paris to a legally binding treaty on climate change under United Nations Framework Convention on Climate Change (UNFCCC). The "Paris Agreement" comes into force on 4th November 2016, after having met necessary ratifications. The core mitigation component of the Paris agreement is Intended Nationally Determined Contributions (INDCs) that each willing Party agrees to make towards the agreed global goal of limiting global temperature rise definitely below 2 degrees C while making all the efforts to limit it below 1.5 degrees C. Various elements of Paris Agreement essentially include all the elements of future climate regime necessary for implementation of Intended Nationally Determined Contributions (INDCs), including capacity building, mitigation and adaptation framework, technology transfer, climate finance, intergovernmental cooperation, private sector engagement etc. The agreement will come into force post-2020. The role that market mechanisms will play is, to a large extent, dependent upon the nature and scope of the INDCs.
The agreement recognizes the importance of market-based and non-market approaches for the countries for implementation of their INDCs. Over and above of whatever met by domestic support (domestic market or non-market approaches), countries can use transfer of mitigation outcome through international carbon markets, for which modalities will be defined under international climate negotiations in coming years (2016-2020). In addition, Article 4 of Paris Agreement emphasizes that the actions to be developed for delivery of Paris Agreement need to take into account the special needs of the countries whose economies will be severely impacted due to response measures.
On 6th October 2016, Government, industry and civil society representatives on a new global market-based measure (GMBM) to control CO2 emissions from international aviation, during 39th Assembly of International Civil Aviation Organization (ICAO, the United Nations aviation agency) in Montreal, Canada, agreed to recommend adoption of a final Resolution text for the GMBM. ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is designed to complement the basket of mitigation measures the air transport community is already pursuing to reduce CO2 emissions from international aviation. These include technical and operational improvements and advances in the production and use of sustainable alternative fuels for aviation.
GCC region has number of international airlines, which will be covered under various phases of GMBM, and their ground and air operations will be impacted to cater to the new demands of GMBM.
On 15th October 2016 nearly 200 countries struck a landmark deal (Kigali Amendment) in Kigali, Rwanda to reduce the emissions of powerful greenhouse gases, Hydrofluorocarbons (HFCs), in a move that could prevent up to 0.5 degrees Celsius of global warming by the end of this century. HFCs are used in refrigeration and air conditioning and are immensely used in GCC countries. By signing the deal GCC countries remain committed to the phase out of HFCs.
All the positive developments at international and regional climate stage require capacity, policies and tools to make change happen. Fortunately there are several international compliance-based and voluntary project-based, multilateral and bilateral GHG reduction programs are operating, such as: Climate Action Reserve (CAR), Clean Development Mechanism (CDM), Gold Standard (GS), and Verified Carbon Standard (VCS), Japan Crediting Mechanism (JI). There are several Emission Trading Schemes and Carbon Taxation schemes are implemented or under consideration. For example, European Union-Emission Trading Scheme (EU-ETS) is the oldest and pioneering scheme in the world that had largest impact till date. Many countries are implementing ETS and Carbon Tax program, such as China, Korea, South Africa, Mexico, Australia, California etc.
As one of the most carbon intensive regions in the world, the countries of MENA region are establishing their carbon management and climate action strategies to achieve a transformation to a low-carbon economy. Action is needed at all levels, and mitigation of greenhouse gas (GHG) emissions is the key component of that action. Given the breadth and depth of action required, mitigation needs to be as cost effective as possible. Carbon markets can help to achieve regional carbon reductions across a broad range of activities and sectors of the economy while keeping costs at optimum levels. Markets do this by incentivizing entities to seek out regional emissions reductions that are available below the costs of carbon reductions in their own facilities. However, the markets should achieve the optimum carbon abatement cost management via innovative carbon finance means to let the mitigation actions take off the ground.
Establishment of domestic carbon market and carbon management facilitation platforms will help countries in the region towards handsome delivery of their INDCs and enable diversification of economies.
Gulf Carbon Trust takes the responsibility to identify and implement workable market instruments in the region and evolve over time as the market achieves maturity. GCT, in order to promote domestic carbon market, envisages the following.
- Develop simple, objective and user friendly standards for GHG reduction and sustainability enhancement projects, which ensure high level of environmental integrity of emission reductions and sustainable development.
- Adopt and develop simple and highly predictable GHG project certification, carbon finance and carbon credit issuance process,
- Prepare and facilitate the local corporates (private and public) to adopt corporate social responsibilities to reduce or offset their carbon footprints, either by implementing and registering their projects with domestic carbon scheme.
- Promote the efficient financing models, namely result-based financing, for the projects/sectors which are unable to take-off due to poor international carbon price.
- Help Qatar and GCC region in developing its economic diversification plan, of which domestic carbon market plays an integral part