According to the NASA satellite data: - “More than 2 trillion tons of land ice in Greenland, Antarctic and Alaska have melted since 2003″. - “Water melting from Greenland in the past five years would fill about 11 Chesapeake Bays and the Greenland melt seems to be accelerating.”
The Acid Rain Program is a market-based initiative taken by the United States Environmental Protection Agency in an effort to reduce overall atmospheric levels of sulfur dioxide and nitrogen oxides, which cause acid rain
The program is an implementation of emissions trading that primarily targets coal-burning power plants, allowing them to buy and sell emission permits (called "allowances") according to individual needs and costs
Size Your Carbon Footprint CALCULATE YOUR PERSONAL CARBON FOOTPRINT Home sq. feet (00) ____ x .6 = _______ You drive kms (000) ____ x .4 = _______ You fly miles (000) ____ x .3 = _______ Your Total Tons ________ www.beckstrom.com
Question How large is your personal carbon footprint? 1) 15 2) 25 3) 50 4) 100+ tons The danger is real, but WE can control the situation….
The Developments so far 1997: COP-3 -- The Kyoto Protocol Period The paradigm Key outcomes 1: Before 1990 Framing the problem 1979: First World Climate Conference 1988: Toronto Conference; Establishment of IPCC 1989: High level political conferences 1990: Second World Climate Conference; First Assessment Report of IPCC 2: 1991-1996 Leadership articulated 1992: Climate Change Convention 1995: COP-1 -- Berlin Mandate; AIJ 1996: Second Assessment Report of IPCC 3: 1997-2001 Conditional leadership 1997: COP-3 -- The Kyoto Protocol 2000: Third Assessment Report of IPCC 2001: COP-7 -- The Marrakech Accords 2001: US withdraws from Kyoto 4: 2002-2007 Leadership competition … ....: US initiates many agreements 2005: Kyoto enters into force 2007: COP-13-- Bali Roadmap 5: Post 2008 Developing countries taking lead? 2008: Global recession starts 2009: COP-15 -- Copenhagen agreement?
United Nations Framework Convention on Climate Change (UNFCCC)
North & South agree to mitigate climate change before “ it is too late”
Agree that they have “ Common but Differentiated responsibilities ”.
Kyoto Protocol which in details describe how the GHGs can be reduced entered into force on 16th February 2005.
IPCC As an intergovernmental body the IPCC is open to all member countries of the World Meteorological Organisation (WMO) and the United Nations Environment Programme (UNEP). Its activities are guided by the mandate given to it by its parent organisations WMO and UNEP and governed by principles agreed by the Panel. The work-programme of the IPCC is decided by the Panel in plenary Sessions.
At the real heart of the Kyoto Protocol lies its set of legally-binding emissions targets for industrialized countries. These emissions targets amount to a total cut, among all Annex I Parties, of at least 5% from 1990 levels by 2008-2012.
Generating Carbon Credits GHG emissions Time Project commissioned “ With project” emission level “ Without project” emission level Carbon credits Project based emission reductions need to be calculated and verified 1 reduced Ton of Carbon Dioxide equivalent = 1 Carbon Credit hereafter they can be sold on the open market.
Established by the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD).
Participants: Six countries and six private companies
Belgium (Flanders), Finland, Ireland, Luxembourg, Spain, Sweden
Abengoa (Spain), ČEZ (Czech Republic), Gas Natural (Spain), Endesa (Spain), PPC (Greece), and Union Fenosa (Spain).
Total of €165-million for 3 zones across Central Europe and Central Asia (€150 mln for projects, €15 mln for Green Investment Schemes)
MCCF helps Participants to meet their mandatory or voluntary greenhouse gas emission reduction targets by purchasing carbon credits (EAUs, CERs, ERUs and AAUs) from projects financed by the EBRD and/or EIB
The negotiation, contracting and monitoring of carbon credit transactions outsourced to private “Carbon Managers”
Multilateral Carbon Credit Fund A joint EBRD-EIB Initiative
Open to shareholders of EIB/EBRD , and also Private Companies (incl. state-owned and sub-sovereign) (compliance buyers only)
To buy credits under JI, CDM, and ETS ; but can also facilitate AAU sales under Green Investment Schemes ;
From Transition Countries (EBRD’s 27 CoOs)
Preferably from EBRD- or EIB-funded projects
Outsourcing of preparation, negotiation, contracting and monitoring of carbon transactions to 1-3 private, competitively selected “Carbon Credit Managers” (CCMs)
Light MCCF Secretariat as interface with Participants, CCMs and Project Companies, and Governments (policy dialogue), administers project selection & project participation, checks funding is in place, and supervises CCMs
Developed countries that have exceeded the levels can either cut down emissions, or borrow or buy carbon credits from developing countries.
Such a credit can be sold in the international market.
The trading can take place in open market.
How is CDM relevant for Businesses? By selling the emission reductions from a project to a Annex I party additional cash flows can be realised. Emission cap Actual emissions Buyer Carbon Credits Carbon value ( € ) Annex I party Emission reduction project The CDM project reduces the carbon emissions in the CDM country
Impact on the IRR of The Project IRR Benchmark Project return excluding CDM revenue Project return including CDM revenue CDM cash flow The gap between the project return and the required return on investment threshold The CDM cash flow increases the IRR of the project making it more interesting for investors. (2%-100%, diversification, offshore revenue stream) 12 % 15 % 16 %
The concept of Carbon Credit trading seeks to encourage countries to reduce their GHG emission, as it rewards those countries which meet their targets and provides financial incentives to others to do so
Surplus credits (collected by overshooting the emission reduction target) can be sold in the global market
One credit is equivalent to one tonne of carbon dioxide emission reduced. CC is available for companies engaged in developing renewable energy projects that offset the use of fossil fuels.
Carbon Market CDM CERs VERs EUAs CA CCX RGGI .14 BN Clean Development Mechanism GCC, etc. $24 BN $5.2 BN Trading Volumes from World Bank 2007 April report. JI ERUs .03 BN California For Kyoto Capped Countries Only Voluntary EEX EUAs Futures ?
Foreign companies which cannot fulfill the protocol norms can buy the surplus credits form companies in other countries through trading
Stage is set for Credit Emission Reduction (CER) trade to flourish
India is considered as the largest beneficiary of carbon trading, claiming about 31% of the total world carbon trade through the Clean Development Mechanism (CDM), which is expected to earn in at least $5-10 billion over a period of time.
Increased international finance and investment should be equitable and sustainable;
Governance mechanisms should be transparent and efficient;
India has also projected funding needs: USD 200‐210 Bn by 2030 additional investment + requirements for incremental investment for adaptation (UNFCCC estimate: 0.3‐0.5% of global GDP; Lord Stern: 2% of global GDP)
Not to be treated as ‘Aid’; It should be a Legal Obligation & not a Repayable ‘Loan’
What further aspects need to be addressed:
Objective mechanisms and criteria to determine eligibility for and quantum of financial assistance
The first commitment period of the Kyoto Protocol excluded forest conservation/avoided deforestation
- carbon emissions from deforestation represent 18-25% of all emissions, and will account for more carbon emissions in the next five years than all emissions from all aircraft since the Wright Brothers until at least 2025.
A tsunami is rolling across the climate science establishment since the e-mails were leaked from the Climatic Research Unit (CRU) at the University of East Anglia. What climate warming skeptics have been saying for years is now being examined seriously for the first time and the results are making headlines in major newspapers. Professor Phil Jones, head of CRU, has now stated the warming from 1975-1998 is no different than that of 1860-1880 and 1910-1940. That there has been no statistically significant warming since 1995 and the Medieval Warm Period could indeed have been global. They are comments for which he would have been labeled a “denier” or “flat earther” a scant three months ago.
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