Norway seeks to offset its pollution 12 years early

International carbon emissions trading markets are emerging as a tool to help nations meet climate goals

By Mathew Carr, Jesper Starn and Jeremy Hodges / Bloomberg





Norway is seeking to buy credits to offset its fossil-fuel emissions more than a decade before it needs them to meet pollution goals for 2030, government officials overseeing the program said.

The move is an early indication of support from a major industrial country for an effort by the UN to revive a global carbon market that once generated US$33 billion in a year. Norway is one of the first countries to set out how it would use post-2020 carbon markets to meet its emission targets.

Norway supports a World Bank program to help develop rules for a new market, putting US$80 million into the institution’s US$200 million Transformative Carbon Asset Facility, the biggest contribution so far.

“We might not need the emission reductions” before 2030, said Atle Hamar, state secretary at the Norwegian Ministry of Climate and Environment.

However, starting that year, the Scandinavian country aims to be “carbon neutral,” so it would need to use new markets to make up for its remaining domestic greenhouse gases.

Envoys from almost 200 nations yesterday wrapped up discussions in Bangkok on a set of rules for a sustainable development mechanism and other carbon markets under the Paris climate deal starting in 2020. The mechanism would channel funds for climate-related projects mainly to poorer nations in exchange for pollution credits that countries could use to reach their own goals on emissions.

Norway is Europe’s second-biggest natural gas supplier after Russia and is one of the first nations buying emission credits under proposed Paris rules.

The World Bank wants to raise US$500 million to leverage a much larger contribution from private companies and development banks for reducing greenhouse-gas pollution. The work might revive the existing UN Clean Development Mechanism, which generated more than US$300 billion for climate projects before the EU limited use of those credits in its Emissions Trading System.

Under the new market structure, all nations that volunteer to invest in climate projects overseas would be able to get allowances to offset pollution at home. It is not yet clear whether existing UN credits would be eligible for use under the Paris deal, but Brazil is among nations supporting that idea.

“The discussion on market mechanisms is speeding ahead — there’s a focus on getting markets to the implementation stage next year, risking leaving non-market mechanisms until later on a back burner,” Friends of Earth climate campaigner Rachel Kennerley said by telephone from Bangkok.

Under the Paris deal, Norway pledged to cut its emissions at least 40 percent from 1990 levels and it is working to meet that goal alongside EU nations. The EU has not said it would use Paris emission credits for its 2030 target, but it has said that it wants to be more ambitious in that period. Just how Norway’s goal meshes with the EU program remains a matter of negotiation.

“In case we fail to strike a deal with the EU, we might use flexible mechanisms, including emission reductions from TCAF, to meet our nationally determined contribution” under the Paris deal, Hamar said.

Five other nations — Canada, Germany, Sweden, the UK and Switzerland — are contributing to the World Bank program. New Zealand and South Korea have also indicated that they would buy credits to fill Paris pledges.

“International carbon markets support the efficient use of financial resources by reducing emissions where the lowest abatement costs can be found,” said Franz Perrez, an ambassador and climate negotiator for Switzerland.

Developing countries selling credits “will keep the cheapest emission reductions and the easiest ones to achieve and sell emission reductions that require more investments,” Perrez said. “Therefore, we expect higher prices for compliance credits than under the Kyoto Protocol,” the 1997 agreement that helped establish carbon markets.

International cooperation and carbon trading would spur faster emission cuts in the middle-income countries that are “central to the global transition” from fossil fuels, said Eva Svedling, state secretary to Swedish Minister for International Development Cooperation and Climate Isabella Lovin.