Dario Hidalgo, senior transport engineer at EMBARQ (the producer of this blog), and Cornie Huizenga, joint convener of the Sustainable Low Carbon Transport Partnership (SLoCaT), discuss why the current market-based mechanism for reducing global carbon emissions—the Clean Development Mechanism (CDM)—is not sufficient for the transport sector, and why a framework for voluntary measures from developing countries, known as NAMAs, would work better.

The Kyoto Protocol introduced market instruments, such as emissions trading, to spark change towards a low carbon economy and help achieve carbon mitigation targets of developed countries (a.k.a. “Annex 1” countries). These are necessary measures to avoid catastrophic climate change. It is to be expected that, in some way or another, market instruments will also be part of the next commitment period (the current commitment period expires in 2012.)  The Clean Development Mechanism (CDM) is one of the three market-based mechanisms or economic incentives of the Kyoto Protocol that allows emission reduction (or emission removal) projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of CO2. Beyond this, several agencies have developed voluntary standards, under which carbon reductions are traded, and many states and national governments are interested in further developing carbon trading mechanisms.  The market resulting from the United Nations Framework Convention in Climate Change (UNFCCC), the voluntary standards, and the states’ and countries’ initiatives is very dynamic, with billions of dollars in transactions and millions of tons of CO2 reduced.

But the transport sector, which stands for about one fifth of global carbon emissions, represents an insignificant portion of the total projects and emission certificates.  There are significant barriers to use the CDM in transport, as well as similar voluntary standards. As Cornie Huizenga, joint convener of the Sustainable Low Carbon Transport Partnership, says: “It’s like trying to fit a square peg in a round hole.”

The problem seems to reside in that the CDM was envisioned for the power sector and mainly aimed to replace carbon power plants with more sustainable but also more expensive options—with CDM bringing in the extra dollars required to make the projects feasible. Unlike in the power sector, many of the solutions for the transport sector are cheaper than the business-as-usual scenario and this makes it difficult to tap into CDM for partial financing. As Nancy Kete, former director of EMBARQ, would say, “transport is not a power plant on wheels.”  In other words, transport emissions are not concentrated in a small number of major sources but divided over many thousands of small sources that all behave in their own unique manner. Obviously, this makes measuring CO2 reductions from the transport sector more difficult. (See EMBARQ’s recently released working paper about the opportunities and challenges of measuring citywide greenhouse gas emissions.)

The big problem is that the emissions from the transport sector are growing like no other. Without considering the transport sector, we can forget about achieving the more ambitious future reductions needed to prevent the global average temperature from rising more than 2 degrees Celsius, after which climate change will be catastrophic. We are not able to bet on the CDM as the game-changer for the transport sector. After the poor performance so far and its in-built limitations for the transport sector, it will be like flogging a dead horse.

What can we do then? Well, there are really good opportunities in the new concept of Nationally Appropriate Mitigation Actions (NAMAs), voluntary emissions reduction measures that are expected to be the main instrument for planning, committing, monitoring, reporting and verifying emissions from developing countries under a future climate agreement. These NAMAs can be policies, programs and projects implemented at the national, regional, or local levels. Out of the 49 NAMAs ideas submitted by developing countries, more than 50 percent of them included transport. This is a major advancement compared to CDM, where less than 1 percent of projects submitted include transport. NAMAs place the responsibility on developing countries to mitigate their own carbon emissions in their own way, while the CDM, however, is a mechanism to help developed countries to meet their targets by enabling carbon reductions in developing countries to offset carbon emissions in developed nations. NAMAs can help in shaping the development agenda, while CDM mainly chases carbon offsets, not necessarily for sustainable development.

Is there potential for NAMAs in the transport sector?  Case studies show that it is possible to formulate NAMAs for specific programs in transport or for integrated mobility plans. (See these successful examples from China, Indonesia, Brazil and Mexico.) They also show the potential of greenhouse gas reduction and other co-benefits, such as reductions in air pollution, accidents and travel time; the monitoring, reporting and verification mechanisms, the way responsibilities are distributed to different agencies, potential risks and scale-up opportunities, and how to provide practical guidance to national and local authorities.

Final judgment on whether NAMAs will be able to make a meaningful contribution to climate change mitigation will depend, however, on the detailed implementation guidelines for NAMAs.  The limited currently available information indicates that NAMAs financing can be used for “incremental costs linked to the implementation of the NAMA and support related to enhancing capacity for the design, preparation and implementation of such actions.”  The second part of this statement is good news and can help in terms of removing barriers for sustainable transport projects.  A strict application of the first part of the statement would mean that for many of the transport NAMAs submitted, no funding will be available, since most sustainable transport projects save money for society-at-large rather than “incremental costs.”

Are we running the risk that after flogging the dead CDM horse for a couple of years we are now switching to another horse that is also almost dead? To avoid this, the transport community will have to explain clearly the differences between the transport sector and the power sector and why it is so important to have the transport sector well-represented under future NAMAs.

Read more about transport, CDM and NAMAs at www.slocat.net/cits

Cornie Huizenga from SLoCaT, Camilo Rojas García from the Andean Development Corporation, Hilda Martínez from CTS-México, and Dario Hidalgo from EMBARQ presented their points of view regarding transport and climate change instruments at the Latin American Carbon Forum, held in Santo Domingo, Dominican Republic, October 13-15, 2010. See their presentations below, or view more presentations from EMBARQ – The WRI Center for Sustainable Transport on Slideshare.