A little-noticed clause in the 2015 Paris agreement allowed countries to cooperate in their efforts to reduce emissions. Nations that were running ahead of their commitments could help out those lagging behind—and get credit for it. Now Switzerland has forged a deal with Ghana that puts a price-tag on this cooperation. It will pay for efficient lighting and cleaner stoves in Ghana rather than make more expensive carbon cuts at home. On one hand, the Swiss plan could be a model for accelerating global decarbonization. On the other, it could mark a return to old colonial mindsets, and even make it harder for developing nations to hit their future climate goals.
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A Triple Win
1. It works for Switzerland. In 2021, Switzerland asked its citizens whether the country should make sweeping carbon cuts. That referendum failed. So the only way the government could hit a target of reducing domestic emissions 33% by 2030 was, counterintuitively, to look beyond its borders. A trade in “internationally transferred mitigation outcomes” (or ITMOs) with developing nations might help it get back on track at a lower cost than making changes in Switzerland itself—where most energy already comes from nuclear and hydroelectric.
2. It works for Ghana. Switzerland plans to fund 5 million households in Ghana to shift away from using wood for cooking. Wood-, coal- and dung-fired cookstoves are responsible for around 2% of global CO2 emissions, and have been linked to high rates of deadly lung diseases. Separately, Switzerland would also promote climate-friendly, low-methane rice production techniques, estimated to save more than one million tonnes of CO2-equivalent emissions by the end of the decade.
3. It works for the planet. Klaus Opperman at the World Bank thinks that ITMO trading could dramatically reduce the Paris agreement’s overall implementation costs. “Such cost reductions can translate into more ambitious targets, and then lead to increased global greenhouse gas mitigation,” he writes. Basically, we need to pick all the low-hanging carbon fruit as quickly and cheaply as possible now, to prepare us for tougher battles ahead.
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A Moral Hazard
1. Paying for business as usual. Rich nations are responsible for the vast majority of historical carbon emissions, and continue to make outsized per-capita contributions in transportation and domestic energy use. Just as colonial nations built their wealth by exploiting the resources of distant lands, trading emissions could allow them to maintain current lifestyles by offshoring climate action.
2. An outstanding debt. Back in 2009, developed nations promised to raise $100 billion every year by 2020 to help developing countries pay for climate action. The OECD says that target has never been hit, maxing out at $83 billion in 2020. Perhaps rich nations shouldn’t get to trade for carbon cuts, until they have met their existing climate (and moral) commitments.
3. Digging developing nations into a climate hole. If developing nations trade their easy carbon wins abroad, that could make it more difficult for them to tackle subsequent, more difficult challenges, notes Thomas Day of the NewClimate Institute at Carbon Pulse. He is also concerned that rich nations are simply paying for some projects that would have happened anyway—such as a Swiss program for low-carbon housing in Georgia.
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What To Keep An Eye On
1. Who copies Switzerland. Japan and Sweden are also keen to move forward with ITMO trading. Vanuatu, meanwhile, is also partnering with Switzerland in a project to deploy solar power.
2. COP27. The final rules on how nation-to-nation carbon trading using ITMOs will work are still being thrashed out in Egypt. These will include whether avoided emissions—such as used in the majority of blue carbon projects—will qualify for credits.
3. 2030. Under the Paris agreement, ITMOs cannot be banked (or thus traded) after 2030, potentially shutting the door to off-shore climate action. If more countries follow Switzerland’s lead, however, this could be renegotiated at future COP talks.
Image: © Anthropocene Magazine
