36Smith School of Enterprise and the EnvironmentSmith

EnvironmentSmith School of Enterprise and the Environment37for the systems that have been set up during the first commitment period, which needs urgent COP attention.The problem of an absence of internationally agreed emissions reductions targets has largely been overcome by the domestic pledges now officially recognised by the UNFCCC process. Mechanisms such as the EU ETS and other trading schemes were stimulated by the expectation of an agreement. However, as they are the result of years of careful negotiations and invested political and financial capital there will be resistance to abandoning them at this stage; they are likely to continue regardless. What will be missing is the institutional architecture, the compliance system and some challenges for the CDM. The main recipient of the CDM investment has been China and as such this could have implications for China's participation in a global agreement. However, we note that the emissions reductions generated by the CDM in China are a drop in the ocean compared with the total amount needed. Of far greater importance are the policy decisions enforced by the Chinese Government. China is now considering a domestic CO2 trading program for its Five-Year Plan from 2011 to 2015.Over the near- to long-term parallel processes aimed at reducing emissions are likely to evolve in different regions. There is widespread recognition that market instruments such as CO2 trading schemes will have a role in supporting emissions reductions in a cost-effective manner. In the EU, the ETS is the main driver behind the 20 20 20 plan for emissions reductions across the 27 constituent nations. In the future, it would be beneficial for the EU ETS to be linked to other regions or countries that have or plan to introduce CO2 trading schemes. Potential Chapter 6: Parallel ProcessesChapter 6Parallel ProcessesFor many, the 'moment of reckoning' in the climate change negotiations will be in 2012 when the COP returns to Rio twenty years after the UNFCCC was opened for signature there in 1992. In the run up to the 2012 COP in Rio there needs to be sufficient progress in South Africa. This remains the only opportunity for the issue of the future of the Kyoto Protocol to be decided. At the time of writing, the political will of major emitters such as the US and China is simply not behind a comprehensive global agreement. In addition, other nations, namely Japan and Russia, are becoming increasingly vocal in their resistance of a second commitment phase to the Kyoto Protocol. There are areas of importance that can be moved forward in South Africa. For example, progress has been made on issues of forests, climate finance, adaptation and technology. The area of climate finance is particularly significant; securing and delivering the fast-start funding for developing countries is essential both for them to mitigate and adapt to climate change but also to help to build trust between developed and developing countries. It is vital that the rift between developed and developing countries is healed as quickly as possible. Ensuring that the fast-start money promised by the developed nations materialises is one way of going about this. Positively, on the subject of finance, there is no particular opponent to the progression of negotiations; there is therefore no obstacle to finalising the finance deal. Had a new legally-binding global agreement for the second commitment period come into being at Copenhagen or Cancun, there would still likely have been a gap between 2012 and it entering into force. As this did not happen, a gap between commitment periods is now a certainty. This has implications