Greenhouse gases: CO 2 , methane, and nitrous oxide
Already heat world to average 60° F, rather than 0° F without an atmosphere
How greenhouse gases work
Increased CO 2 has raised temperature 1.2° F
The present radiation imbalance will cause another 1° F heating by 2050, even without more greenhouse gas emissions.
Recent cleaning of air is causing the earth’s surface to be hotter and brighter.
Stabilizing the amount of CO 2 would require a reduction to only 5% to 10% of present CO 2 emissions
Definitive Evidence of Rapid 1.2 ° F Temperature Rise over the Last Century
Carbon Dioxide Concentrations are low in glacial periods and higher in warmer interglacial periods However, concentrations now are higher than at any time in the last 450,000 years. In the insert is the dramatic growth over the last 50 years.
The last 160,000 years (from ice cores) and the next 100 years: temperature (red) tracks CO 2 (green).
Time (thousands of years)
160 120 80 40 Now – 10 0 10 100 200 300 400 500 600 700 CO 2 in 2100 (with business as usual) Double pre-industrial CO 2 Lowest possible CO 2 stabilisation level by 2100 CO 2 now Temperature difference from now °C CO 2 concentration (ppm)
Adding Climate Model Projections for the next hundred years:
Predicted Global Warming of 5°F will affect everyone in most structural aspects of society and in their costs.
We don’t realize how our present housing, business, and supply nets are closely adapted to our current climates.
The major increase in temperature and climate effects such as rainfall, drought, floods, storms, and water supply, will affect farming, year round water supplies, household and business heating and cooling energy. These may require large and costly modifications.
Some cold areas may benefit, and some hot areas will become unfarmable and costly to inhabit.
Recent projection: US agriculture would go up 4%, CA down 15%.
Methane production seems to have stabilized (UCI result)
It is very misleading to portray the problem as a purely environmentalist issue which affects only polar bears, a few Pacific islanders, and butterflies .
In 1990 the UN's Intergovernmental Panel on Climate Change (IPCC) (of which the USA is the largest funder) reported on the problem of global warming, which is by far the most important and serious environmental issue. It was once considered a long-term problem.
"In 1997 a protocol was adopted at Kyoto under which countries formally undertook to reduce the emission of greenhouse gases by specific percentages of the 1990 levels. Bill Clinton hailed the Protocol as a historic agreement and signed it in November 1998. [But President Bush from 2001 opposed it and acted to, the USA rejected it, arguing that its economic interests would be threatened, and it provoked widespread international criticism]
The reduction targets for CO2 range from -8% to +10% of the country’s individual 1990 emissions levels “with a view to reducing their overall emissions of such gases by at lease 5% below existing 1990 levels in the commitment period 2008 to 2012.
These limits call for significant reduction in currently projected emissions.
Future emissions mandatory targets are expected to be established for “commitment periods” after 2012 and will be negotiated well in advance of the periods concerned.
Marrakesh Accords are rules adopted with instructions regarding how to implement the Kyoto Protocol. These rules specify the Protocol’s emissions-trading system implementation procedures.
Countries actual emissions have to be monitored and guaranteed to be what they are reported to be, and precise records have to be kept of the trades carried out. Accordingly, “registries” – like bank accounts of a nation’s emissions units – are being set up, along with “accounting procedures”, an “international transactions log”, and “expert review teams” to verify compliance.
Kyoto Protocol Commitments for GHG Emission Reductions
Commitments under the Protocol vary:
An overall 5% target for developed countries is to be met through cuts (from 1990 levels)
European Union – 8% (member states vary from 28% reduction by Luxembourg to 27% increase by Portugal)
Switzerland – 8%
Most Central and East European states – 8%
Canada – 6%
United States – 7% (US has since withdrawn its support)
Hungray – 6%
Japan – 6%
Poland – 6%
New Zeland, Russia, and Ukraine – stabilize (0%)
Norway – Increase by 1%
Australia – Increase by up to 8% (Australia has since withdrawn its support)
Iceland – Increase by 10%
Mechanisms for Carbon Trading under the Kyoto Protocol
Three Mechanisms were established for Carbon Trading under the Kyoto Protocol:
1. International Emissions Trading (IET)
2. Clean Development Mechanism (CDM) (credits earned by sponsoring greenhouse-gas-reducing projects in developing countries).
Under the Kyoto Protocol agreement, countries have flexibility in how they will meet the targets (i.e., they may increase “sinks” such as forests at home or abroad or pay for foreign projects that result in carbon emission reductions or greenhouse gas cuts.)
It is assumed that greenhouse-gas emissions damage the atmosphere equally wherever they occur, and emission cuts help equally wherever they are made.
Countries will get credit for reducing greenhouse–gas totals by planting or expanding forests (“removal units”); for carrying out “joint implementation projects” with other developed countries, usually countries with “transition economies”; and for projects under the Protocol’s Clean Development Mechanism, which involves funding activities to reduce emission by developing nations. Credits earned this way may be bought and sold in the emissions market or “banked” for future use.
Because the atmosphere is equally damaged by greenhouse-gas emissions wherever they occur and equally helped by emissions cuts wherever they are made, the Protocol includes an arrangement for reductions to be “sponsored” in countries not bound by emissions targets.
Emission-reduction (or emission removal) projects in developing countries are allowed to earn certified emission reduction (CER) credits, each equivalent to one tonne of CO 2 .
These CERs can be traded and sold, and used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol.
Projects must qualify through a rigorous public registration and issuance process designed to ensure real, measurable and verifiable emission reductions that are additional to what would have occurred without the project. To be certified by the Clean Development Mechanism Executive Board, a project must be approved by all involved parties, demonstrate a measurable and long-term ability to reduce emissions, and provide reductions that would be additional to any that would otherwise occur.
Options to the program are also being considered. Less red tape, for example, may be required for small-scale projects, such as small renewable energy facilities. Another proposal is to allow afforestation and reforestation projects to be included.
A country with an emission-reduction limitation commitment under the Kyoto Protocol may take part in an emission reduction (or emission removal) projects in any other country with a commitment under the Protocol, and count the resulting emission units towards meeting its Kyoto target. It allows industrialized countries to meet part of their required cuts in greenhouse-gas emissions by paying for projects that reduce emissions in other industrialized countries.
JI projects earn emission reduction units (ERUs), each equivalent to one tonne of CO 2 ,
As with CDM, all emission reductions must be real, measurable, verifiable, and additional to what would have occurred without the project. To be approved for a joint implementation project, industrialized countries must meet requirements under the Protocol for accurate inventories of greenhouse-gas emissions and for detailed registries of emissions “units” and “credits”. Projects may start and receive credits during 2008. Sponsoring governments will receive credits that may be applied to their emissions targets’ the recipient nations will gain foreign investment and advanced technology (but not credit toward meeting their own emissions caps; they have to do that themselves).
Under the JI there are two “tracks” by which projects can apply for approval: 1) third-party verification and 2) international independent body verification.
Before a project will be recognized as a CDM or JI project, the project participants must receive a letter of approval from the host country. Likewise, project participants require a letter of authorization.
Joint Implementation (JI)
Third Party Oversight Required by the Kyoto Protocol
Third-party oversight is required by the Kyoto Protocol
Independent, third-party validation or determination of project design documents and verification and certification of GHG emission reductions is a key feature of the CDM and JI.
How to meet Phase II(2008-2012) in the Kyoto Protocol ?
In order to deliver on Kyoto Protocol emission reduction targets and national climate change commitments , governments must set caps in line with achieving these goals. in order to be environmentally acceptable, the level of the national caps for Phase 2 ought to be below the level of the caps for Phase 1, so that the phases of the ETS lead to a continuous downward trend in emissions.
AFTER 2012 : The Montreal Action Plan (MAP) is the key outcome of last December’s international climate change conference in Montreal, Canada. The MAP sets out how the 155 countries, having ratified the Kyoto Protocol, will negotiate deeper emission cuts for the second phase of the Kyoto Protocol after 2012.
Poor countries will be worse off and poorest people have the least capacity to adapt, especially the rural poor
Private Capital and Technology Transfer:
Kyoto’s flexible mechanisms and lower marginal cost of abatement provide unprecedented incentives for private investment in clean technology, agriculture and forestry in developing and transition economies
New Funds Development Bio Carbon Fund C F Carbon Finance Products of the World Bank
How the Funds Work Industrialized Countries and Companies Host Countries and Communities $ Finance $ Technology Finance PCF Payment on delivery CO Equivalent 2 Emission Reductions Other project funding
Development + Carbon = Carbon with a human face
What is Emissions Trading ? Intention : Re duce emissions from industry overall Companies in certain energyintensive industries are issued with permits for the amount of carbon dioxide they may produce each year. Companies wanting to produce more must buy permits from cleaner businesses with spares. Sometimes businesses are given fewer permits than they ”actually” need, they are thereby forced to either reduce their carbon output or buy spare permits from ”cleaner”businesses.
A new asset, a new world The man who built the markets for Emission Trading, Richard Sandor. The story really started in 1991. Richard Sandor, chairman of Climate Exchange, attended the Earth Summit at Rio. Scientists and environmentalists laid out the issue of climate change. After a lot of effort Richard Sandor managed to collect money and to convince and get the Chicago Climate Exchange (CCX) off ground as a platform for trading voluntary emissions reductions. This was a part of an libertarian experiment to test the ability of market forces to drive down emissions without government intervention
The polluter uses up the whole allowance in the allocated time period, but still pollute more. In order to do remain in compliance, spare credits must be bought from another polluter which has not used up the whole allotment.
The polluter can invest in numerous pollution reduction schemes in other countries or regions and ‘earn’ credits from these projects which can then be sold, banked or used to make up shortfalls in the original allowance.
Carbon Trading has potential to reduce carbon emissions at cheapest cost.
Companies are given a free allowance which may be reduction on historic trends, an increase on historic trends, or at a constant level.
Carbon Trading takes place between companies.
If a company exceeds it allowance it can reduce its carbon emissions, or it can purchase allowances from someone who has a surplus.
However, there is an ultimate buy out penalty if there are too few allowances.
Currently this penalty 40 € a tonne in EU-ETS
Buyer’s side How Carbon Trading Operates Emissions target Purchase of allowances Host country benefits from technology and financial flows $ $ Domestic action Purchase of ERs is supplemental to domestic action Baseline emissions Baseline Scenario Seller’s side (Host Country) Emission Reductions (ERs) Project emissions Project Scenario ER Purchase of ERs
One metric tonne of carbon dioxide equivalent CO 2 e
Source IPCC 1996 Gas Type Chemical Symbol Global warming potential over 100 years Carbon dioxide CO 2 1 Methane CH 4 21 Nitrous oxide N 2 O 310 Sulphur hexafluoride SF 6 23,900 Hydro fluorocarbons HFCs 140-11,700 Per fluorocarbons PFCs 6,500-9,200
Growth of the Carbon Market Mil. USD 2006 2007 2008 Compliance Markets 31,165 63,770 117,084 Voluntary Markets 70 265 499
The overall value of the global aggregated carbon markets was over US$10 billion in 2005. In the first quarter of 2006, overall transactions worth US$7.5 billion had led some to predict that this new financial market would be valued at between US$2530 billion in 2006
These values had been driven by soaring prices in the European Union Emissions Trading Scheme (EU ETS) market for Phase I European Union Allowances (EUAs).
Developing countries began to participate meaningfully in the market and brought real emission reductions to the table.
THIRD PHASE of the emmission trading scheme, the need for clarity for investment decisions long time ahead. Markets now price carbon and this has created the opportunity for the private sector to efficiently support investments to reduce emissions. ” If companies are going to be able to make accurate decisions on investments in cleaner, but more expensive generation in future, the key element is a stable and transparent European carbon price well beyond 2012” , Sam Laidlaw chief executive of UK based (electricity)generator Centrica. State and trends of the Carbon Market in 2006