China Speaks ... and the World Listens!

China Speaks ... and the World Listens!

Being from the business world, there are enormous amounts of COPs that go straight over our heads, as they are deeply ensconced in the minutiae of diplomatic nuance.  Frankly, it can be more than a bit boring.  

Walk into one of the larger COP plenary forums at a random occasion and you are likely to hear some country or another expounding on some formality in "square brackets" within a negotiating text or standing up to give the same speech they have given year after year and which satisfies some domestic constituency that their job has been done.  Items of true substance rarely seem to get publicly aired and all of the action happens in the back corridor diplomatic confluences that we normal civilians (those without the requisite pink-hued badges) simply cannot access.

So, imagine our surprise when China took the floor on Wednesday morning in the opening plenary session on the Clean Development Mechanism (CDM).  EcoSecurities and other carbon project developers live and breathe the CDM, so for us, we had to be there just to see if something would happen, though we expected it would be a yawn.  

But no.  For a quarter hour more than their allotted two minutes, China laid out a critique of the current CDM and made a series of suggestions for improvement that could have just as easily been written by the players within the carbon market.  Indeed, when the head of the International Emissions Trading Association (IETA), Henry Derwent, was called upon by the chair to make a statement a few minutes later, it seemed old hat.  

The Chinese had spoken -- and as the biggest beneficiaries of the so-called "China Development Mechanism," to some degree, they had taken a shot at the goose that was laying them lots of golden eggs.

That right there has to tell you something.  The CDM has been an enormous success on many levels, catalyzing carbon entrepreneurs around the world looking for ways to provide the same or better economics goods with less and less associated CO2 emissions.  But the system is definitely creaking.  

Whether from over-success or structural inadequacies is the ongoing question -- the regulators claim the former, while industry claims the latter.  China weighing in on the side of project developers like EcoSecurities was a seminal moment in that debate.

The key thing is that the coming year will mark the true-re-engagement of the world's largest emitter, the United States, in the climate change negotiations.  As the Obama Administration starts crafting its domestic and international policy positions on emissions, it should certainly take a hard and clear-eyed look at both the great successes and serious shortcomings of CDM.  

If economic efficiency around reducing emissions is a key driver -- as well as creating a global architecture of exporting clean technology -- the CDM -- or something remarkably similar to it -- must be part of the equation.  But if the single biggest beneficiary of the current system is sounding the alarm about the sustainability of that current system, that must mean that some fundamental rethinking is required.  

It's certainly not time to toss the baby out with the bathwater -- but perhaps running some new water to get the Americans into the tub is a good idea.

Marc Stuart is a co-founder of EcoSecurities, a company that works with companies in developing and industrializing countries to create emission reduction credits from projects that reduce emissions of greenhouse gases.