UPDATE ON COP15
By Andrei Marcu for WEC

 Summing up the outcome of Copenhagen it easily falls in the category “it is too early to tell”. Not only the concrete outcome, but the way events unfolded challenges anyone who claims to have predicted such a scenario.Some have characterized Copenhagen as a disaster. That it was not, but it certainly was a great, great disappointment, a great missed opportunity and a move to a new system.
The two tracks AWG LCA and AWG KP continue and the Copenhagen Agreement is, at least for the moment, outside the UN Framework Convention. All the work that was done on different components stays, and its valuable work as it relates to new mechanisms where some negotiators fought very hard to have a good draft.

We did manage to pass a few interesting CDM improvements, but this was not what it was all about. However markets are very much part of the Copenhagen Agreement and have great support, among those that signed the agreement.

What is a now a must is to push hard to have the new Agreement finalized and implemented to re assure markets. Those that were at the core of the new Agreement must deliver.

So what are the consequences? The information needs to be better digested and the future actions by different Parties well scrutinized and understood. The KP architecture seems to be rapidly losing currency. The top-down model had, in the last day, no passionate defender among those inscribed in Annex B.  We are moving into what looks like a pledge and review approach. The difficulty of Kyoto was that of allocation, which was solved in the EU ETS through auctioning. This does not seem as an acceptable solution in the concert of nations.For the market, many issues, such as the future of the Kyoto surplus of AAU would be now addressed. We may not have a fix system of accounting, but a system of multiple currencies, although it is difficult to see how they could have different environmental value. Linking of systems becomes again a critical issue. Risk management, hedging and trading skills in general become more important skills in a world that will become significantly more oriented to trading permits.  

EDD is something that needs to be operationalized and rapidlyThe world will look uncertain, as it always does, but it is also a world of opportunities.

Andrei Marcu, Senior VP of Regulatory and Policy, Climate Change and Environment, Mercuria Energy