(Reuters) - China's plans to launch a series of pilot carbon trading projects starting next year underscores its need to curb its soaring greenhouse gas emissions -- now believed to be the world's largest.

With power capacity set to double again in the next decade to 1,600 gigawatts, far more than the United States, billions of dollars of investment in cleaner technologies will be needed, and a carbon price would help increase energy efficiency without jeopardising breakneck economic growth.

It could also be a boon to some domestic environmental exchanges if a compulsory national trading scheme is launched.

But experts say China, the world's second-largest energy consumer, won't be rushing to launch a national emissions trading scheme or to commit to absolute emissions reduction targets.

"The big picture will be worked out before March, but I believe there are going to be certain components that need more time to be worked out -- the details on how to implement it will take some time," said Changhua Wu, China director at the London-based Climate Group.

In the short term, China will want to protect its position in a U.N.-backed global carbon trading scheme that has earned it billions of dollars from rich nations in exchange for carbon offsets, known as certified emission reductions (CERs).

Beijing will also be cautious given that global climate talks on a "scaled-up" version of the Clean Development Mechanism (CDM), capable of delivering even more investment, have largely stalled.

EXPERT PANEL

A researcher at the National Development and Reform Commission told Reuters that an expert panel has been working for more than a year on pilot carbon trading schemes in high-emission provinces or sectors -- but dramatic gestures are unlikely.

"Nothing is decided yet and China is still looking to see what happens to the CDM and the global climate talks," said the researcher, who did not want to give his name because he was not authorised to speak to the media.

The NDRC confirmed on Tuesday this week it was looking into the possibility of using "market mechanisms" in a number of pilot low-carbon cities and regions.

A broad commitment to carbon trading will be included in China's 2011-2015 five-year plan, to be ratified by parliament in March 2011, but the full details are unlikely to emerge immediately, said Wu of The Climate Group, who has been involved in the consultations.

The cornerstone of any Chinese carbon market will be the country's pledge, made last year, to reduce its 2005 carbon intensity rate -- the amount of CO2 produced per unit of GDP -- by 40-45 percent before the end of 2020.

The China Daily newspaper said in July that officials had "reached a consensus" that CO2 trading would be a necessary component.

ZhongXiang Zhang, a carbon expert at the East West Center in Hawaii, said China's intensity targets would eventually be "converted to absolute emission caps at company levels" and that this would form the basis for a domestic trading platform.

PROTECTING THE CDM

The CDM, part of the United Nations' Kyoto Protocol, grants CERs to industrialised nations when they invest in clean-energy projects in the developing world. Those CERs are traded or used to comply with Kyoto targets.

While it remains unclear what the CDM will look like after 2012 when the Kyoto Protocol's first phase expires, its future direction is expected to shape China's own carbon market plans.

China has supported calls for a "scaling-up" of the old project-based CDM but it has also expressed opposition to reforms proposed by Europe that would commit entire sectors, rather than single projects, to reducing CO2.

While domestic sectoral targets are on its agenda, Beijing has complained that introducing such methods to the post-Kyoto CDM amounts to a "mandatory" cut and thus violates the Kyoto principle of "common but differentiated responsibilities". This says rich nations should bear most of the burden of cutting CO2.

China's concerns are practical as well as ideological. If a company already has to meet CO2 targets at home, it might find itself in violation of a key concept known as "additionality": if its carbon reduction plans would have gone ahead anyway, it is not entitled to "additional" CDM revenue through issuing of CERs.

Zhang of the East-West Center said China will make sure that any local market it sets up will remain strictly domestic and unconnected from the CDM or any of its potential replacements.

If the EU gets its way on CDM reform, it could complicate China's plans to cap sectoral emissions or force a level of market integration that it is not prepared to accept, Zhang said.

A FEW PIONEERS

Whatever happens to the CDM, China's 20 or so environmental exchanges are hoping government commitments to reduce CO2 will boost their own voluntary trading schemes and eventually put them at the centre of a single global market.

So far, Chinese voluntary emissions trading has remained negligible, with no compelling reasons to participate.

"I think they have explored all options and tried their best but the regulatory system is the major problem -- you cannot rely on a few pioneers," said Allan Zhang, director of sustainable business solutions at PriceWaterhouseCoopers in Beijing.

A compulsory, not piecemeal, scheme was also crucial.

The China Beijing Environmental Exchange (CBEEX) could benefit most if firms were forced to buy CO2 credits. Its general manager, Mei Dewen, said it was now a matter of preparation.

Mandatory "cap and trade" schemes might still be some way away, but the issue of pre-compliance -- buying carbon credits now in order to meet binding targets imposed in the future -- could still drive domestic buyers, he said.

"Cap and trade is the Ferrari," Mei told Reuters in June. "We are now just driving a tractor, but things could change -- if you can't drive the tractor then you won't be able to drive the Ferrari."

($1 = 6.778 Yuan)

(By David Stanway; Editing by David Fogarty)

Source: Reuters

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Indonesia voiced concern over the outcome of climate change talks in Bonn, Germany, which seemed to move the world further away from a global treaty on emissions cuts targets in Cancun, Mexico, this year.

The five-day climate negotiation, part of the second round of talks before the Cancun summit, was concluded over the weekend (Saturday in Jakarta).

"We are unhappy with the results *of the Bonn meeting*," Indonesian delegation head Rachmat Witoelar told The Jakarta Post from Germany on Sunday.

"This is like a patient suffering a severe disease but not able to die."

He said a lot of work remained undone before the upcoming meeting in China, the last preparatory meeting ahead of Cancun.

The Bonn meeting was the third round of talks this year after the failure of the Copenhagen summit to reach a legally binding treaty.

Around 110 heads of state and governments from the world attended the Copenhagen summit last year.

Rachmat did not elaborate the result of the Bonn meeting, saying it was difficult to repeat the successes made in Bali in 2007.

The Bali meeting reached a consensus after a fortnight of tough negotiations to agree on the Bali road map and Bali action plan. The road map set the deadline for the world to adopt a legally binding treaty in 2009.

The Copenhagen summit, however, failed to meet the target, ending in the Copenhagen Accord political statement.

"It is now difficult to replicate the outcomes of the Bali meeting because a number of developing countries, including Indonesia, have developed rapidly," he said.

"Categorizing annex and non-annex *countries* should be seen in the context of what we can do for the planet, and not what the planet can do for us."

Under the existing Kyoto protocol, only rich "annex" countries are legally bound to cut their emissions.

The undeveloped and developing "non-annex" countries, including emerging countries Indonesia, China, India and Brazil, requested funding from rich nations to mitigate and adapt to the severe impacts of climate change.

Developed nations, however, argued that the emerging countries should also adhere to legally binding targets.

Rachmat said the likely outcome of the Cancun meeting would be a new time line to agree on a global treaty.

US deputy special envoy Jonathan Pershing also expressed disappointment over the poor progress made at the Bonn meeting.

"I came to Bonn hopeful of a deal in Cancun, but at this point I am very concerned as I have seen some countries walking back from progress made in Copenhagen," Jonathan said as quoted by Reuters.

The European Union's co-lead negotiator, Artur Runge-Metzger, also accused some countries of adding text in a "tit for tat" way and said, "It is important in Tianjin to turn that spirit around."

The Worldwide Fund for Nature (WWF) warned the upcoming meeting in Tianjin, China, should be the last opportunity for governments to resolve outstanding issues and agree to address climate change.

"It was worrying to see that the discussions in Bonn that moved behind closed doors did not progress issues adequately. The mitigation discussion even went backwards and became more polarized," Gordon Shepherd, leader of the WWF global climate change initiative said in a statement. (By Adianto P. Simamora)

Source: The Jakarta Post

Government officials are pointing to the drought and wildfires in Russia, and the floods across Central and East Asia as consistent with climate change predictions. While climatologists say that a single weather event cannot be linked directly to a warming planet, patterns of worsening storms, severer droughts, and disasters brought on by extreme weather are expected as the planet warms.

Russia burning

In Russia, likely thousands of people have died from heat-related illnesses and 20 percent of the nation's grain harvest has been lost due to a prolonged drought, record-breaking high temperatures, and hundreds of peatland and forest fires, which have blanketed Moscow in a toxic fog. This summer Moscow has broken 100 degrees Fahrenheit a number of times, while the previous record was 99 degrees Fahrenheit.

Russian Prime Minister Vladimir Putin has put a ban on grain exports from Russian in order to keep prices low domestically until 2011. Putin's announcement aggravated fears of a global food crisis as wheat prices have almost doubled since June.

On Thursday, Russian President Dmitry Medvedev told a Russian Security Council meeting, "Everyone is talking about climate change now. Unfortunately, what is happening now in our central regions is evidence of this global climate change, because we have never in our history faced such weather conditions in the past. This means that we need to change the way we work, change the methods that we used in the past."

On Friday Medvedev continued his sudden frankness on climate change, warning that climate change could impact the Winter Olympics.

"Frankly, what is going on with the world’s climate at the moment should incite us all (I mean world leaders and heads of public organizations) to make a more strenuous effort to fight global climate change," he said. Russia is one of the world's largest greenhouse gas emitters: when emissions due to deforestation are not included, Russia is listed as among the top 4, after China and the US, and nearly equal to India.

Prior to the heat-disaster in Russia, Medvedev announced that the nation aimed to 'cut' greenhouse gas emissions by 10-15 percent by 2020, however since this is based on a baseline of 1990 emissions (before the Soviet Union collapsed), it would actually allow Russia's greenhouse gas emissions to rise by 29-36 percent over the next ten years, according to Reuters.

The Asian Deluge

At the same time as central Russia is experiencing record heat and debilitating fires, a number of Asian nations have been hit with catastrophic flooding and mud slides. Flashfloods in India have left 132 people dead and some 500 missing, while mudslides in China due to flooding has taken the lives of 127 people. Nearly 50,000 people have been evacuated in China.

But to date no nation appears worst hit than Pakistan, where flooding has killed 1,600 people and affected 14 million. Landslides have followed the flooding killing dozens more.

Rice crops have also been impacted, furthering concerns of an impending global food crisis. Currently it is estimated that 4 million Pakistani flood victims are in need of food. The floods are being considered the worse in 80 years.

Pakistani glaciologist, Prof M. Iqbal Khan, told the Associated Press of Pakistan that the flooding was linked to melting glaciers in upper Pakistan.

"I have warned everyone about the floods in Peshawar, Charsadda and Nowshera due to the global warming in my previous interviews but nobody took notice and the result is before us," he said, adding that "it is the glaciers which are adding fuel to the fire and due to the melting of glaciers the flood situation is aggravated."

Experts say a warming world increases the likelihood and severity of flooding in some regions since warmer temperatures causes increases the volume of water vapor in the air leading to heavier precipitation events.

More water vapor also feeds severe storms, boosting their strength and severity. Asia has not been alone in experiencing unusually severe flooding. A number of record floods also hit the United States over the last six months.

Progress slow on climate change negotiations

Meanwhile a climate conference in Bonn, Germany, ended on Friday with what looked like little progress on increasingly difficult negotiations. US chief negotiator Jonathan Pershing said that both the fires in Russia and the floods in Pakistan were "consistent with the kind of changes we could expect from climate change, and they will get worse if we don't act quickly".

Wendel Trio, climate policy director from Greenpeace, said more starkly: ''Russia is burning and Pakistan is drowning, yet [officials] seem happy to continue as if they have all the time in the world."

The last six months have been the hottest on record worldwide since data-taking began in the late 19th Century. The decade from 2000-2009 was also the warmest on record. Climate experts overwhelmingly say that the world is warming due to extensive greenhouse gas emissions from human activities. (By Jeremy Hance)

Source: Mongabay

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The world’s leading financier for environmental projects, the Global Environment Facility (GEF), has allotted a US$87 million grant to help Indonesia protect its dwindling environmental assets, officials say.

Environment Minister Gusti Muhammad Hatta said that about half of the money would be awarded to projects dealing with mitigation and adaptation to prevent climate change.

“The project developers could be from the government, local communities, NGOs or universities,” he told reporters Monday.

The $87 million grant will be disbursed based on projects approved by the GEF executive board in Washington during the from Aug. 1, 2010, to July 31, 2014.

Indonesia received a $40 million grant from the GEF for the previous four-year period.

The GEF is an independent financial organization that awards grants to developing countries to finance projects linked to climate change, biodiversity, land degradation, ozone layer and persistent organic pollutants issues.

The GEF was set up in 1991 with the World Bank serves as its trustee.

The GEF has allocated $8.8 billion for more than 2,400 projects in more than 165 developing countries and countries whose economies are in transition.

GEF’s presence in Indonesia is currently chaired by Environment Ministry secretary-general Arief Yuwono.

The GEF Indonesia secretariat, which consists of several senior government officials would assess all proposals before submitting them to the GEF’s headquarters in Washington for approval.

Division head for multilateral cooperation at GEF’s Indonesia secretariat, Wahyu Marjaka, said that as of Monday, 23 project proposals had been submitted.

“We are still evaluating a proposal to build a water-based electrical power [facility] in Wakatobi, Southeast Sulawesi. We target to propose at least 10 project proposals to GEF Washington before November,” he said.

He said the Wakatobi project would supply free electricity to at least five villages in the area.

Wahyu said the grant from the GEF would also be used to support the government’s commitment to cut emissions by 26 percent by 2020.

The government has pledged to cut the country’s emissions by 26 percent using Rp 83 trillion of state money. If rich nations provide Rp 168 trillion in additional financial assistance, Indonesia would further cut its emissions by another 15 percent by 2020.

However, the government has not finished formulating its plan to meet the targets.

A number of countries have also pledged to provide money to Indonesia to reduce emissions, particularly from the forestry sector.

Indonesia and Norway signed a climate deal worth $1 billion to reduce Indonesia’s deforestation rate to reduce emissions. Indonesia has received an additional $106.6 million to preserve its forests.

Australia has said it plans to invest $70 million for carbon financing projects in Central Kalimantan and Jambi while Germany has promised $26 million for REDD pilot projects in Kapuas Hulu in West Kalimantan and Berau in East Kalimantan.

South Korea has pledged $5 million to develop a REDD project for forests in West Nusa Tenggara and last week the United Nations-REDD pledged $5.6 million for a REDD project in Central Sulawesi. (By Adianto P. Simamora)

Source: The Jakarta Post

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