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Stephen presentation on Voluntary carbon market

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Stephen presentation on Voluntary carbon market

  1. 1. Voluntary Carbon Market Stephen Garnett School for Environmental Research Charles Darwin University Darwin Northern Territory Australia
  2. 2. Voluntary Carbon Market <ul><li>Different types of carbon market </li></ul><ul><li>What is the voluntary market </li></ul><ul><li>Features of the voluntary market </li></ul><ul><li>Voluntary carbon market products </li></ul><ul><li>Standards and validation </li></ul><ul><li>Buyers and sellers </li></ul><ul><li>Price trends </li></ul><ul><li>Benefits, costs and future of the market </li></ul>
  3. 3. Different types of carbon market <ul><li>Regulated emissions trading schemes (ETS) – also called cap-and-trade systems </li></ul><ul><ul><li>European Union ETS </li></ul></ul><ul><ul><li>Kyoto compliance: Clean Development Mechanism (CDM), Joint Implementation (JI) under the United Nations Framework Convention on Climate Change </li></ul></ul><ul><ul><li>Others projected (e.g. Australia) </li></ul></ul><ul><li>Voluntary schemes – beyond formal regulation </li></ul>
  4. 4. Size of total carbon market
  5. 5. What is the voluntary market <ul><li>The seller undertakes actions that will result in less greenhouse gas being emitted to the atmosphere (CO 2 , methane, nitrous oxide etc.) </li></ul><ul><li>The vendor quantifies and verifies the amount of CO 2 equivalents to be saved. Verification is often by a third party </li></ul><ul><li>The buyer purchases the CO 2 equivalents, usually to offset emissions and become carbon neutral </li></ul><ul><li>All players act voluntarily, but the final contract is usually binding </li></ul>
  6. 6. Features of the voluntary market <ul><li>Innovative and experimental </li></ul><ul><li>Diverse </li></ul><ul><li>Products </li></ul><ul><li>Security </li></ul><ul><li>Price </li></ul><ul><li>Sometimes difficult to verify or wilfully dishonest </li></ul>
  7. 7. Voluntary carbon market products <ul><li>Renewable energy (wind farms, hydropower, solar) </li></ul><ul><li>Methane capture from landfills </li></ul><ul><li>Forestry </li></ul><ul><li>Energy efficiency/fuel switching </li></ul>
  8. 8. Standards and validation <ul><li>Top-rated: </li></ul><ul><li>Gold standard: Renewable energy and energy efficiency projects with sustainable development benefits </li></ul><ul><li>Started by World Wide Fund for Nature, South South North and HELIO International </li></ul><ul><li>Choice of offsets makes them easy to validate </li></ul><ul><li>Prices high but hard to track down. Vendor prices in Feb 2009 were: </li></ul><ul><li>planetair.ca - $42/tonne </li></ul><ul><li>myclimate.org - $31/tonne </li></ul><ul><li>climatefriendly.com - $29/tonne </li></ul>
  9. 9. Standards and validation <ul><li>Second tier: </li></ul><ul><li>California Climate Change registry/Climate registry (US projects only): high level validation. </li></ul><ul><li>Started by California State Government at request of business </li></ul><ul><li>Has strong validation techniques for Cement, Forest Sector, Local Government or Power/Utility </li></ul><ul><li>About $8.20/tonne CO 2 equivalents in February 2009. </li></ul>
  10. 10. Standards and validation <ul><li>Second tier. </li></ul><ul><li>Voluntary Carbon Standard (VCS) dealing in Voluntary Carbon Units (VCU) </li></ul><ul><li>Started by the Climate Group, the International Emissions Trading Association and the World Economic Forum, World Business Council for Sustainable Development </li></ul><ul><li>Accepts accreditation by United Nations Framework Convention on Climate Change and California Climate Change registry </li></ul><ul><li>Price February 2009 of about $6.20/tonne CO 2 equivalents </li></ul>
  11. 11. Standards and validation <ul><li>Third tier. </li></ul><ul><li>Chicago Carbon Exchange </li></ul><ul><li>Started by Dr. Richard L. Sandor who remains CEO </li></ul><ul><li>Has products for all six greenhouse gases, including soil carbon </li></ul><ul><li>Validation for legally binding compliance regime by the US Financial Industry Regulatory Authority </li></ul><ul><li>Price February 2009 of about $1.70/tonne CO 2 equivalents </li></ul>
  12. 12. Price trends <ul><li>Formal market has collapsed – at least temporarily. Allowance used as source of quick credit plus some European countries recently released free allowances </li></ul>
  13. 13. Price trends <ul><li>Voluntary market has also declined – though top end products like Gold Standard remain at 2007 prices </li></ul>
  14. 14. Performance Voluntary Carbon Index of all products has usually outcompeted CCX
  15. 15. Benefits, costs and future of the market <ul><li>Benefits – distributes wealth to less polluting industries and countries </li></ul><ul><li>Costs – does not reduce greenhouse gas emissions – may even increase them if distributed money invested in greenhouse gas producing activities </li></ul><ul><li>Future – buoyant as economies recover since climate will continue to change and drastic change will be needed </li></ul>
  16. 16. Action in Vietnam <ul><li>Voluntary Carbon Market workshop held in Hanoi 2008. </li></ul><ul><li>It helped ICRAF share initial concepts and discuss future collaboration with companies trading carbon in a voluntary market. </li></ul><ul><li>Should help next phase of RUPES project in Vietnam, particularly in Bac Kan province </li></ul><ul><li>Also Like Minded Donor Group (LMDG) planned to produce a Voluntary Carbon Markets Action Plan in October 2008 </li></ul><ul><li>Potential reasonably high if validation reliable </li></ul><ul><li>Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits </li></ul>
  17. 17. Potential in Vietnam <ul><li>Potential reasonably high if validation reliable </li></ul><ul><li>Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits </li></ul><ul><li>Forestry and lower value activities also possible but need strong and reliable validation </li></ul>

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