Presentation at the Global Carbon Markets Conference
Mahmood A. Ayub
UN Resident Coordinator
Honorable Minister Guler
Representatives of the Ministries
Representatives of the Private Sector
Representatives of the Academia and NGOs
I think you will all agree with me that climate change has emerged as one of the most critically important global issues of our time. The scientific evidence on climate change is by now overwhelming. The link between human activity and climate change is now firmly established. While there is some uncertainty on how fast the process will unfold, there is consensus that climate change impact is not easy to reverse, and may even be irreversible. The more we wait, the greater the risks of potentially catastrophic effects in the long-run.
Ultimately of course climate change is a threat to all of humanity. But it is the almost 3 billion poor of the world who face the immediate and most severe human costs of climate change. And the tragedy is that this constituency of the world’s poorest is being punished for an ecological crime that they did not commit. There is now strong evidence that forces unleashed by global warming could stop and then reverse the progress that has been achieved so far under the Millennium Development Goals.
Such is the urgency and global nature of the devastation from global warming that we should not view the current global financial and economic crisis as an excuse to slow down our climate change mitigation and adaptation efforts.
Indeed the challenge of the current financial crisis should be considered a unique opportunity for forceful climate change action. Limiting global warming to less than 2 degrees Celsius above the pre-industrial era is estimated to require about $ 250 billion a year in additional investments to “green” the world economy in the period 2010-2015. This amount is estimated to increase to more than $ 700 billion a year during 2025-2030. Investing a part of the 2009 global fiscal expansion of $ 2 trillion or more to meet these needs will contribute to shifting our economies towards more resource efficient and low carbon production and consumption patterns that preserve our planet.
This investment will pay off in the short-term by helping reverse the recessionary tendencies in almost all the countries of the world. But it will also help with the transition towards low carbon economies, with investments that will generate new green industries and jobs.
Fortunately a whole range of market-based instruments are now available to us to address environmental issues. This includes the use of compliance and voluntary emission offsets. In the compliance sector, the Kyoto Protocol—through the Clean Development Mechanism (CDM) and Joint Implementation—has in a very short time stimulated a rapidly expanding, multi-billion dollar international market. Financial flows from emission-offset markets could become a major source of financing sustainable development.
To give you an idea of the magnitudes involved, the value of the global carbon market increased dramatically by 80% in 2007, with some 2.7 billion tons of CO2 credits, worth $ 64 billion changing hands. This is a very encouraging sign of the growing enthusiasm for carbon trading among companies and investors worldwide. About 60% of this trading took place through the European Union’s Emissions Trading Scheme (ETS). This Scheme has continued to dominate the global carbon market so far, both in transaction volume and monetary value, and is the cornerstone of European climate policy.
Given sufficient incentive and a long lead time, developing countries can deliver large volumes of cost-effective emission reductions. This puts a special responsibility on countries to cooperate under the Bali Action Plan to reach an ambitious international agreement to reduce emissions. It also makes it important for the EU, the US and other major emitters to find ways as early as possible to encourage the continued engagement of developing countries in mitigation activities.
Experience of the carbon market so far also demonstrates the critical role of the private sector. The private sector is willing and able to cooperate in solving the problem, provided of course the policies are predictable, consistent and transparent, and the regulations are simple and efficient.
Finally—Ladies and Gentlemen—allow me to say a few words on the role of the United Nations in this important area. The UN is playing an active role, working with governments, civil society and the private sector to offer system-wide support now and post-2012.
Aside from supporting the negotiations, the UN system will continue to provide parties up-to-date scientific findings and resources that facilitate informed decision making. We are also working with developing countries to build their capacities to address climate change. In this regard, the UN system—including the Bretton Woods Institutions—is assisting developing countries in better leveraging finance from a variety of sources to help them adapt to climate change impacts, undertake nationally appropriate mitigation actions, and make their regulatory and investment environment more conducive to climate-friendly investment.
The UN system is also playing an important role in assisting developing countries participate in, and benefit from, carbon markets. For example, the UNDP has recently established the MDG Carbon Facility to assist developing countries in leveraging carbon finance for clean energy development and sustainable land use practices. And the Nairobi Framework, including UNEP, UNDP, the World Bank, the African Development Bank, and the UNFCCC Secretariat, is developing the capacity of low income countries to access the Clean Development Mechanism.
Let me conclude by thanking you all for your participation, and to wish all the stakeholders success in this challenging but rewarding road towards adapting to Climate Change and contributing to achieve the Millennium Development Goals in Turkey and elsewhere.