The Nordic countries have always been considered pioneers where innovative thinking and development is concerned, and their attitude to environmental sustainability and global warming is no exception. As comprehensive management of climate change was declared the highlight of the Finnish presidency of the Nordic Council of Ministers in 2011, again all eyes turned to the North. Among the results of Nordic cooperation in the environmental field was the support for a Nordic Scaled Up Mitigation Initiative, intended to develop the Nordic approach toward climate change and take the market for carbon credits to the next level.
The initiative, which attracted a lot of attention at COP 16 in Cancun, is an attempt to streamline and adapt the concept of the Clean Development Mechanism (CDM) to the challenges of the post-Kyoto environment. In short, the CDM is a flexibility mechanism developed under the provisions of the Kyoto Protocol and its purpose is to enable emission-reduction projects for generating carbon credits in developing countries that are paid for by industrialised countries which need them in order to meet their emission reduction targets under the Kyoto Protocol.
The new Nordic initiative is aimed at simplifying the procedures and increasing net benefits to the atmosphere. The concept presented in this initiative, as defined by the Nordic Council, is that instead of offsetting emissions from developed countries, net atmospheric benefits could be secured through the combination of carbon trade to voluntary domestic policy measures in developing countries.
What the Nordic Scaled Up Mitigation Initiative uses as a basis, is the Nationally Appropriate Mitigation Action (NAMA), a concept that first appeared in the Bali Action Plan at the 2007 UN Climate Change Conference in Bali and that was later on included in the Copenhagen Accord in 2009. In essence, NAMAs comprise a set of policies and actions that developing countries undertake in order to reduce their greenhouse gas emissions as they receive support from developed countries in terms of technology, financing and capacity building.
Even though certain progress on implementation of NAMAs was made at the Cancun conference, mainly with the decision to establish a registry under the UNFCCC for NAMAs seeking international support, the defining and actual functioning of NAMAs is still quite unclear. According to the World Bank’s annual report “State and Trends of the Carbon Market 2011″ in order to secure the proper functioning of NAMAs, clear boundaries and tracking will be needed so that overlapping and double counting are avoided. Similar concerns seem to lie underneath the Nordic Scaled Up Mitigation Initiative as the general approach is to make the process more effective and transparent, with a view to positively influence the trading of carbon credits.
By design, upscale mechanisms would generally require a higher degree of involvement of the “host” country than the more traditional CDM. In a report called “Nordic Perspectives on Carbon Market Mechanisms”, published by the Nordic Council of Ministers in March 2011, it is stated that Nordic countries have the potential to cooperate in terms of new upscaled mechanisms that could be launched within the UNFCCC framework. However, any activities conducted via new mechanisms would have to be adjusted to the political and economic situation in each country and that logically implies increased level of commitment.
Therefore, the first step toward putting this initiative into practice was conducting a feasibility study in order to prepare the ground for a pilot project. The purpose of the study was to gain experience and knowledge as well as to create instruments that could be later on used worldwide. The feasibility study was funded by the Nordic Group on Climate Change (NOAK) and the Nordic Environment Finance Corporation (NEFCO) and was conducted in two host countries – Peru and Vietnam. The final report was published in August 2011 and it recommends integrated cooperation between donor and host countries. The first full scale pilot project is expected to start in 2012, even though it is still unclear exactly how the findings and conclusions of the feasibility study will be interpreted by the interested parties.
Among the benefits of this initiative, apart from contribution to global reduction of emissions, would be helping developing countries strengthen their environmental policies. To a certain extent, the Nordic initiative reflects the view of the European Union that existing mechanisms regulating the market for carbon credits such as the CDM cannot reduce net global emissions and therefore would gradually need to be replaced by new sectoral mechanisms in emerging economies.
With the existing uncertainty surrounding the post-Kyoto regulatory environment, concepts such as the Nordic upscale mitigation initiative are all the more important with their positive influence since they generate data and experience that might serve as a basis for development of mechanisms and practices on an international level. The Nordic countries continue to remain at the forefront of climate change management by setting an example for other countries to follow the path of climate mitigation action.
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