Germany Sees New Carbon Market Bolstering Feeble Climate Pledges

Climate envoys will probably consider a new carbon market at a United Nations summit in December to bolster countries' emission-reduction strategies, according to a German government official.

National climate pledges in the run-up to the Paris talks are "not enough to meet the 2 degrees target and that's the anchor for us to talk about the ambition mechanism," Franzjosef Schafhausen, director general of climate change policy at Germany's environment ministry, said in London. Envoys probably need to consider a voluntary carbon market after the Group of Seven nations vowed to place climate protection at the center of its economic-growth agenda, he said.

The plans delivered under the UN process would limit global warming to 2.7 degrees Celsius (4.9 Fahrenheit), more than the targeted 2 Celsius, according to Climate Action Tracker, a research group that monitors global emissions. The EU has said it would consider tightening its 2030 greenhouse-gas output target beyond the current plan for a 40 percent cut from 1990 levels, assuming other nations show a similar level of ambition.

An Oct. 5 draft text for the UN meeting in Paris has an option to create a market "to support sustainable development" after 2020, building on the existing program created under the 1997 Kyoto Protocol. UN Certified Emission Reduction credits, used by developed countries to offset domestic pollution by investing in green projects elsewhere, have slumped 97 percent since their 2008 peak because demand dried up as climate talks stagnated.

While an imposed global carbon market with an agreed cap is "an Utopian illusion," allowing nations voluntarily to link markets lowers the average cost of emission cuts, Nigel Topping, chief executive of the We Mean Business coalition of industry and environment groups seeking climate action, said by phone Tuesday.

There's no guarantee the Paris deal will deliver an enhanced or new program that allows the transfer of emission reductions between nations, Schafhausen said on Tuesday. "We are interested in creating international carbon markets," he said.