Confluence Presentation - Graciela Chichilnisky

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January 26, 2012

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Confluence Presentation - Graciela Chichilnisky

  1. 1. The Kyoto Protocol Carbon Market - reflections by its author - Graciela Chichilnisky Confluence Philanthropy Practitioners Meeting Key Note Speech Cavallo Point Sausalito CA - January 26 2012
  2. 2. Human Dominated World Human Beings are today the largest geological force in the planet We are changing the planet’s atmosphere, its body of waters, and the complex web of species that makes life on earth Climate Change
  3. 3. Global Risks• Climate Change• Biodiversity Extinction• Clean Water scarcity• Life in the Seas going extinct Avoiding Extinction
  4. 4. URGENCY Why are we being called to respond toThe Climate Question
  5. 5. Catastrophic Risks• Global sea level raise threatens the survival of 43 island nations• Polar Caps melt - accelerating warming trend• Record breaking tornadoes, floods, droughts and devastating fires• 30 million climate migration in 2011• National Security at Risk US Pentagon 2009 Oceans - the origin of life – going extinct
  6. 6. Are Humans Next?• Need Action Now• Waited too long• Industrial economies 20% of world population cause most of world’s C02 emissions Energy from fossil fuels is 45% of global emissions Clean Energy is the Only Solution
  7. 7. The AnthropoceneThe change we are producing will be read in rock formationsfor thousands of yearsA new geological era - the ‘Anthropocene’ – follows theHolocene –it started in 1945 The Bretton Woods Institutions after WWII led to Globalization of Western Economics
  8. 8. A Brief History of Western Economics How an individualistic frontier societyGrows Interconnections & the Global Commons
  9. 9. Western Economics an Individualistic frontier Society• Lacks connections with natural resources• Lacks connections between present and future• Lacks connections between people
  10. 10. Western Market Economics based on – Competitive Markets - individualistic consumers trade private goods: no connection between people – Optimal Growth Theory -- exponential growth of population and resource use – a frontier society without limits: no connection between the economy and ecological systems – Cost Benefit Analysis and Financial Models Discount the Future – a short term vision: no connection between the present and the future Dictatorship of the Present
  11. 11. So far Western economics• Lacks connections between people• Lacks connections between economy and environment• Lacks connections across generations Sustainable Development requires building connections WHY?
  12. 12. Because humans dominate the planet• For the first time in recorded history• Following an era of rapid globalization Humans dominate Planet Earth• We are connecting and changing the planet’s atmosphere, its bodies of water, and the complex web of species that makes life on Earth
  13. 13. This means natural resource limits• As we reach natural resource and environmental limits The survival of humankind is at stake• Need connections with the ecology, between people and with the future of our species Can Western Economics adjust? Can Markets become Sustainable?
  14. 14. Sustainable Economics How to do it
  15. 15. Changes Articulated by the United NationsKyoto Protocol
  16. 16. The Missing Signal• If we destroy all trees & make toilet paper our economy improves – why?• Because Toilet Paper has Market Value & Trees do not. We lack Market Prices New Market prices = New Values New costs and New benefits The Carbon Market Provides the Missing Signal• 1996: KP Placed Limits on industrial emissions• 2005: KP Carbon Market International Law
  17. 17. December 2011: Kyoto Protocol extended 3 years in Durban COP 17• Existing KP limits valid until 2015• New limits pledged for 2015
  18. 18. The Carbon Market• What is it?• What it is not
  19. 19. Emission Limits are the basis of Carbon Market How does it Work Carbon Makes Clean Energy CARBON CHANGES THE Dirty pays profitable PRICES ARE $25/TON ENTIREclean – ZERO Dirty Energy THE Missing EMITTED GLOBALoverall costs expensive and Signal ECONOMY Undesirable
  20. 20. The Carbon Market• Trades $200 Bn/year• Reduced 30% EU emissions• CDM transfersred $50 Bn clean energy projects in poor nations• EU ETS
  21. 21. Carbon Market Links to Global Economy Everything is made with energy Economic growth = Energy Use Link to EnergyCarbon Market provides Missing Signal New Market Prices = New Values
  22. 22. FOCUS of Carbon Market• Capping Emissions• We can’t get there without emissions reductions Markets for trading a Global Public Good: Using the planet’s Atmosphere Creating Equity and Efficiency
  23. 23. REDD• Reducing Emissions from Deforestation and Forest Degradation• Limited effect on Climate• Mot Important effect on Biodiversity Not International Law
  24. 24. Where are We?What comes Next?
  25. 25. Economy, the Earth and our Species• Need to develop connections with the earth’s resources, between people and with the future of our species Basic needs• The Basic Needs of 80% of Humankind who live in developing nations• Undermined by resource intensive economics: over-extraction of raw materials from the poorest nations in Africa and Latin America• Resources exported and over-consumed by 20% of world population in the industrial world
  26. 26. What to do?• Changing International Law• Changing Economics We just have to do it• For the survival of our Species
  27. 27. Change International Law Basic Needs• In 1974 I created the Bariloche Model of the World Economy• Based on my new concept of Basic Needs• Was the basis of Sustainable Development voted by 150 nations at the 1992 UN Earth Summit in Rio Brazil• Adopted by the G – 20 in 2009 Sustainable Development
  28. 28. Change International Law The Carbon Market• The Carbon Market I designed and wrote into the UN Kyoto Protocol in 1997- international law since 2005• Productive clean CDM transfers to developing nations $50 Bn since 2005• EU ETS Trades $200 Bn/year, decreased 37% EU emissions since became law in 2005• Makes profitable the use of clean energy for the production of all goods and services• Changes the energy foundation of the Global Economy• China ratified the Kyoto Protocol and since 2005 leads the World in Solar and Wind markets• US did not and we are left behind in clean technology
  29. 29. Changing Economics is Key HOW?• Provide the Missing Connections• Between people, with the environment,• Between the Present & the Future
  30. 30. The Present and the Future• Cost Benefit Analysis and Optimal Growth theory exist that do not discount the FutureA Formal Theory of Sustainable Development has been developed that provides Equal treatment for future generations Connects the present and the future Sustainable Development (Chichilnisky 1996, 2000, 2006, 2009, 2010)
  31. 31. New types of Markets + New GDP• Market economics can be made consistent with sustainable goals• But markets themselves must change • Individualistic markets must evolve into new types of markets that I postulated - markets for public goods – which incorporate connections between people and value Valuing the Global Commons • They are slowly emerging due to new scarcities: carbon market I created within the Kyoto Protocol, international law since 2005 trading $200Bn/year; SO2 markets in CBOT, new markets for water and for biodiversity (Chichilnisky (1992, 1996, 2000, 2002, 2009, 2010, 2011) Global markets that value privately produced public goods the Global Commons
  32. 32. New Markets change Capitalism• Markets trading privately produced public goods are new• They combine equity with efficiency Connecting People• They require limits on resource use Connecting Economics with Ecological Systems
  33. 33. Green Capitalism in the 21st Century • The basis exists: international law and economics • Theoretically and in practice • New markets for the global commons, new growth theory, new cost benefit analysis and new GDP measures, new international law
  34. 34. The Global Commons New Economics From maximizing profits to economic progressthat ensures survival of our species
  35. 35. Technology Urgently Needed• To Reduce Carbon from the Atmosphere• In a Profitable Way The Word needs Energy CLEAN ENERGY FOR DEVELOPING NATIONS
  36. 36. Global Thermostat Pilot Plant, SRI International - Menlo Park California February 2011
  37. 37. What is a Carbon Negative Solution Carbon Neutral is not enough Reducing CO2 Concentrations in • Neutralizing emissions does not prevent the Atmosphere CO2 Parts per Million (PPM) 800 further increases in atmospheric CO2 700 • Even the most aggressive efficiency Business as Usual improvements and renewables adoption 600 are unlikely to keep CO2 concentration at 500 Constant Growth the generally agreed 450ppm to avoid 400 catastrophic climate risk Wedges 300 Approach / Negative Carbon is the solution1 200 Stabilization Global • Air capture enables direct and rapid 100 Thermostat reduction of CO2 concentration 0 Hazardous Level • GT allows for the capture of even more CO2 450 ppm than we are loading into the atmosphere or that the earth’s systems can absorb – Negative Carbon GT’s technology directly reduces1 United Nations Headquarters, New York, November 12, 2009. Presentation by G.Chichilnisky on"The Rising Tide at Copenhagen: carbon concentration in theA Win-Win Solution for Industrialized and Developing Nations" air, making carbon negative possible Global Thermostat Company Confidential Page 37
  38. 38. Closing the Carbon Cycle• GT Technology Captures Carbon from Air• Inexpensive: Uses Low Process Heat• Cogenerates Power Production withCarbon Capture• The More Power is Produced – the More Carbon is reduced• Makes Coal Plants Carbon Negative• Makes Solar Power Plants even more Carbon Negative
  39. 39. GT’s Air Capture TechnologyThree-Step Process Produces Concentrated CO 2 Stream Step 1 Step 2 Step 3 Air Input CO 2 Capture CO 2 Regeneration Key to GT’s technology is cogeneration using Transport and Compression Other low temperature Injection Applications process heat to capture CO 2 Subsequent steps are shared by all CO 2 capture methods though pipelining costs can be reduced by co-locating where CO 2 is stored or used
  40. 40. UP Absorbing CO2Pipes to oil well or algae
  41. 41. DOWN Releasing CO2Pipes to oil well or algae ponds
  42. 42. Applications & Markets for Captured CO2 Storage Enhanced Oil Algae-Based Recovery* Biofuels* *EOR and Algae-based biofuels represent most significant opportunities for commercial applications of CO2 captured using GT’s technology Hydrogen- Products Based Fuels cement, fertilizer, plastic s, greenhousesGlobal Thermostat Company Confidential Page 42
  43. 43. Unique Advantages of GT’s Technology Measurable advantages over other forms of carbon capture Carbon Negative SolutionLow-Cost Provider •An energy or industrial plant can•Powered by low cost & widely capture even more CO2 than isavailable process heat emitted – a carbon negative solution Flexible IntegrationScalable Design • Fossil, renewable, nuclear•Modular design adapts to plants, industrialdifferent sized applications plants, (cement, steel) – anywhere heat is available
  44. 44. GT Pilot Plant at SRI - October 1, 2010Global Thermostat Company Confidential Page 44
  45. 45. Strategic Partners
  46. 46. Project with Algae Systems GT is developing fully-integrated biorefinery in partnership with Algae Systems • Produces carbon negative transportation fuels (gasoline diesel) • Treats municipal wastewater and produces drinking water • Generates green electricity and biochar fertilizers CO2 Fuels, Algae Fuel Solar Dewatering Electricity & Production ProductionEnergy Biochar Waste water Treated Drinking Desalination Wastewater Water Provides critical municipal services while producing energy Global Thermostat As Green As It Gets Company Confidential Page 46

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