A proposal supported by the UAE to fund the fight against climate change by burying carbon pollution underground has been blocked by a powerful, perhaps insurmountable foe: Brazil. Climate negotiators are in the German city of Bonn this week debating a stalled proposal to award UN-administered carbon credits to projects that capture and bury carbon dioxide.
The move would richly reward the UAE, which plans to build the world's first nationwide carbon-capture network but had looked to international funding to help defray its cost of billions of dollars. If Brazil maintains the veto it disclosed last week in an official filing, the rule change is unlikely to proceed this year, experts said. The proposal had already been put on hold on a number of occasions, including the Copenhagen climate summit last December.
Brazil has worked behind the scenes to delay the proposal for years, analysts say, but declared open war in a submission to the UN Framework Convention on Climate Change (UNFCCC). The plan to steer credits to carbon capture projects through the Clean Development Mechanism (CDM), a funding scheme, amounted to "subsidies to enhance fossil fuel production", Brazil claimed. "[Carbon capture and storage] technologies have implications which are incompatible with the nature and characteristics of CDM project activities," Brazilian negotiators wrote.
Carbon capture systems use chemical processes to divert the carbon dioxide produced by a power station or other industrial facility and concentrate it for underground injection, usually in an aquifer or an oil and gas reservoir. In a shot seemingly aimed at the OPEC states, the negotiators added: "Brazil believes that [the] CDM was not conceived for giving subsidies to oil and natural gas production through, in particular, countries with on-shore production and very low costs of production."
The rule change is not imminent, said Antto Vihma, a climate researcher at the Finnish Institute of International Affairs in Helsinki. "I'm positive it's not going to happen this year," he said. "The pressure has been there for a long time for the inclusion in the CDM and there is nothing groundbreaking on the table right now. "It's a consensus-based process and Brazil is not isolated; it gets a fair amount of backing from the Alliance of Small Island States."
OPEC producers and the coal industry, along with international bodies such as the International Energy Agency, have endorsed carbon capture as the most viable means to combat climate change by taking the carbon out of the emissions of fossil fuels that provide most of the world's energy. Brazil and others, however, say the technology's promise to seal emissions permanently underground is unproven and the money for carbon capture would be better spent on carbon-free energy sources such as solar power.
The Brazilians said they also were concerned that a flood of new carbon credits could cause a collapse in prices of the credits, which are traded on an open market in Europe and bought by polluters to offset their emissions. Brazil has a financial interest in the carbon market as it is the third-largest seller of CDM credits worldwide. It earns more than 266 million (Dh1.17 billion) a year by selling the credits at current prices, based on statistics from the CDM website. The country is in a position to earn billions of euros more in coming years for its efforts to slow deforestation.
UN experts are meeting to determine technical aspects of a climate change treaty. Heads of state and high-level politicians will gather in Mexico in December to take another crack at reaching a new international treaty on reducing emissions. They will rely on the drafts that come out of this week's talks. Funding for carbon capture is only one issue among dozens being debated, but the technology needs to take off in the developing world if it is to have a significant impact on combating global warming, said Chandran Vigneswaran, a spokesman for the Global Carbon Capture and Storage Institute, an industry group based in Australia.
"Without carbon capture and storage, the task of the world in reducing its emissions is extremely difficult, and without the developing world investing in carbon capture it is near impossible," he said. Brazil's filing left open the door to a compromise, noting that carbon capture in developing countries "could be developed in another framework, using special financial mechanisms, funding and partnerships under the UNFCCC, but not as an offset mechanism".
Sam Nader, the director of carbon at Masdar, Abu Dhabi's clean energy firm, is a member of the UAE's negotiating team at climate talks and said last month the country would look to secure alternative funding streams for carbon capture and storage in this year's talks. "Carbon capture and storage is like putting an insurance policy on hydrocarbon industry," Mr Nader said recently. "When you contribute in developing and deploying the technology that will make gas-fired or oil-fired [plants] clean, you are assuring their continuation."