The Zurich Carbon Market Association was happy to welcome about 60 participants to the workshop on “Durban outcome – prospects for the carbon markets in 2012” which took place January 10, 2012 at the ETH in Zurich.

After an initial introduction by Axel Michaelowa, president of the ZCMA, our 8 shared their respective take on the outcome of Durban at the help of juicy 5-10 minutes interventions. While the interventions are very briefly summarised below, all presentations are made available to our members and participants of the workshop in the member section of the website.

Axel Michaelowa (Perspectives): Institutions saved, but where is the substance?

According to Axel the Durban talks were held against the background of a waning popularity of climate policy due to the economic and fiscal crises and at a time when carbon markets are at a parting of ways between a global, universal climate regime with a universal “currency” and a fragmented carbon world with a plethora of “currencies”.

With a silver lining in form of the establishment of the Durban Platform which leaves reason to hope for a universal system from 2020 onwards, Europe having re-gained its role as pioneer after having lost it in Copenhagen and the chance of activating a region so far underperforming in terms of climate policy by hosting the next COP in Qatar, the overall message from Durban seems: The glass is empty in terms of substance, since most critical issues were deferred, yet full in terms of institutions, since the existing ones survived or were even improved.  [Presentation available here]

Tuomas Rautanen (First Climate): Durban – European show breaking a China taboo!

For Tuomas the gist of Durban can be summarised in three points:

• European show – While Europe pushed and put on a determined show, others mostly sat in the audience. Will this show be lasting and lead to an increase in ambition or was it simply entertaining enough for the time Durban lasted?
• Breaking a Chinese taboo – The Durban Platform allows one for the first time to use “binding commitment” and “China” in the same sentence without breaking a taboo.
• Implications for the carbon markets – Durban does not change the fact that the CDM as well as the EU-ETS market are and stay over-supplied for a long while. Also, he wonders what good there is to creating new market mechanisms with demand for potential credits unclear.

He rounded up his provocative intervention by welcoming the fact that Durban did not reach an agreement on regulating emissions from shipping through the UNFCCC, since this will lead to a probably much swifter regulation of shipping GHG emissions at the EU level, something which is already being prepared  in Brussels.

Joelle de Sépibus (University of Berne): Outlook for new mechanisms

Joelle distinguished different types of potential new market mechanisms according to their type of governance and called the Durban outcome in this respect “the usual compromise”. She differentiated between top-down and bottom-up forms of new mechanisms.

Laurence Mortier (Swiss Federal Office of the Environment): New market mechanism: achievements in Durban and next steps in 2012

Laurence provided insights in what expectations Switzerland had when going to Durban, elaborated on Durban outcomes in terms of new market mechanisms and listed the priorities and expectations of Switzerland in terms of modalities and procedures to be designed in the run up to COP18. She highlighted Switzerland’s willingness to do its part in increasing the level of ambition, insisted that the operationalising of new market mechanisms need to make sure to have demand and supply go hand in hand, and was optimistic to soon see first credits from new market mechanisms, which might be used also under the revised Swiss CO2 law.

Patrick Hofstetter (WWF Switzerland): NGO perspectives on Durban

In an intervention aptly walking the line between provocation and constructive suggestions Patrick painted the picture of a world heading towards a 4 degree temperature rise to then focus on the main topics likely to affect demand and supply respectively in the post Durban world. With a sarcastic wink he stated that since “markets are always right” the current CER price might as well be taken as an indicator for the current state of the carbon market and wondered where the carbon price would be today, if from the beginning only the “good” projects had been pursued.  He ended on a positive note sketching out potential areas of business for developers such as NAMA design and stated that the “job just starts for developers.”

Carsten Schirmeisen (Holcim): Working the global CO2 legislation patchwork – a global operators’ perspective

Carsten made a tour de force of existing and planned ETS, stating that they were “same same, but different” and thus illustrating the challenges of such a patchwork for internationally active players such as Holcim. He sees Durban as a good political signal wonders however, how to raise the level of ambition significantly enough to stay on the 2 degree target. He is optimistic about the swift development of new market mechanisms and sees the cement industry, with its relatively high availability of relevant data (CSI), as an ideal candidate for pioneering activities.

Henrique Schneider (Swiss Federation of Small and Medium Enterprises): SME perspectives on Durban

Henrique stretched the importance of bottom-up, even though smaller scale, contributions to the fight against climate change and illustrated the important role “locally rooted” SMEs can play in this respect. While Durban provided some silver linings for SMEs he drew attention to the detrimental effects of home-made regulatory issues (FDI regulations, IPR, etc) in countries that could profit from Durban.

Jeff Swartz (International Emissions Trading Association): IETA’s work programme on new market mechanism and NAMAs

Jeff started off specifying what NMM exactly are or can be to then talk about the potential rise of sectoral carbon market crediting mechanisms and bilaterally linked cap and trade to the detriment of (reformed) CDM. He then enumerated focus areas of IETA’s work, illustrated potential different approaches to the buyer side of the carbon market to end on issues of trust and integrity when increasing the scale of offset-based funding.

The presentations were followed by a vivid discussion on topics ranging from best guesses in terms of timeline to first issuance of credits from NMM to solutions on how to tackle the demand-supply imbalance to the relevance of the voluntary market and other opportunities to make money in the years ahead.

The discussions continued well into informal drinks at the “Crazy Cow”.

The Zurich CMA is looking forward to seeing you and other interested parties again at either:

• Zurich CMA Drinks Meeting on “Climate engineering – new cornerstone of mitigation policies?”(February 9th, 2012)
• Workshop on “Market mechanisms in post-2012 Swiss climate policy – Cinderella or fairy prince?” (March 14th, 2012)

We look forward to seeing you there!