“Without binding commitments and the resulting downward pressure on greenhouse gas emissions, there is no carbon market. What’s worse, we might fail in our battle against climate change, and that would result in costs that are much higher than the cost of action now,” UN Framework Convention on Climate Change (UNFCCC) Executive Secretary Yvo de Boer said at this year’s Carbon Finance World conference in Chicago.

Last year, the international carbon market – spawned by the 1997 UN-backed Kyoto Protocol – was worth more than $30 billion, triple its size in 2005, and is expected to grow significantly this year.

The carbon market “can help us achieve the necessary shifts to green investment and contribute to the additional hundreds of billions of dollars that are estimated to be needed to address this problem,” Mr. de Boer noted.

Emissions trading and other Kyoto-inspired and market-based systems, such as the clean development mechanism (CDM), which allows projects that reduce greenhouse gas emissions in developing countries to earn certified emission reduction credits, engage the business world and create low-cost opportunities to cut back emissions.

The CDM has grown considerably, with nearly 800 projects in 48 developing countries. It has “provided developed countries with a degree of flexibility in how they meet their commitments under the Kyoto Protocol,” the Executive Secretary said. “For the CDM to be truly effective, however, it must be scaled up substantially. This also applies to the carbon market as a whole, and for any other market mechanism Parties might choose to create as part of a post-2012 agreement.”

In a related development, the head of the UN World Meteorological Organization (WMO) today said that the debate on combating climate change must not only focus on mitigation, but also on adaptation.

Speaking in advance of the high-level informal dialogue to be convened by Secretary-General Ban Ki-moon on 24 September, WMO Secretary-General Michel Jarraud said that all socio-economic sectors – influenced in some way by weather and the climate – will be impacted by the frequency and intensity of extreme events such as droughts and floods brought on by global warming.

Mr. Jarraud also called on the international community to step up support for countries without the necessary technology or resources to allow them to make the most optimal decisions on infrastructure building possible given the most current and accurate weather information.

Next week’s high-level meeting will set the stage for a major December summit in Bali, Indonesia, which will seek to determine future action on mitigation, adaptation, the global carbon market and financing responses to climate change for the period after the expiry of the Kyoto Protocol in 2012.