Climate Feedback

Canadians are set to slap the first price tag on their greenhouse gas emissions, thanks to some very different initiatives in the works.

Reuters reported Friday that the long-awaited Montreal Climate Exchange will open on May 30, buying and selling voluntary emissions reductions in the same fashion as the Chicago Climate Exchange, its US partner.

Meanwhile, the Canadian government had a few days earlier put out the details of its plan for mandatory emissions reductions, which had likewise been in the works for over a year (a good summary is here; registration required). They're proposing to cut absolute emissions 20% from 2006 levels by 2020 (for those scoring at home, 20% down from 2005 levels would be 0% below 1990 levels, compared to the standard-bearing EU's 20% cut from 1990 levels).

But absolute emissions isn't what they'll limit - they're talking about regulating emissions intensity, or the amount of emissions per unit of production, from 2010. That could make it tough to integrate into a global climate deal, since the EU caps absolute emissions and all three US presidential candidates want to do the same. Interestingly, the plan also mandates carbon capture and storage for oil sands, a carbon-intensive economic lynchpin of the country.

Besides the voluntary market, local measures could already be in play when and if these limits come down. British Columbia is leading the way with what is to be the first carbon tax implemented outside of Europe. Although the tax hasn't been looking very popular and faces the same too-much-is-never-enough criticism that the EU climate bill came in for, liberal leader Stephane Dion now says he'd like the national strategy to be a carbon tax - or something. Anything. "We can talk about what the best model for putting a price on carbon across Canada might be –– but the fact is we need to JUST DO IT. That is what this provincial government has done, and that is what a Liberal government will do," Dion said in a speech in Vancouver.

Conservatives, who will be defending their control in the next election, countered with praise for the Montreal market. And while other provinces remain skeptical of the carbon tax, B.C. and Manitoba are considering joining western US states in a new cap-and-trade system - so a regulatory patchwork looks likely. As in the US recently, though, the question is no longer whether the Canadian government should intervene to raise fossil fuel costs, but how.

Anna Barnett

Posted by Anna Barnett on March 19, 2008
Categories: Anna Barnett, Business, Carbon markets, Climate Policy, In the News, Mitigation, Politics | Permalink | Comments (0) | TrackBacks (0)

Following on from Jeff's post on Supercallifragalistic Tuesday, Chris Mooney has a post on his blog and a column elsewhere on the differences between McCain on one side and Obama/Clinton on the other on matters climatic.

Writing before Romney dropped out of the race but after it was fairly clear he had little reason to stay in, Chris's point is that while it's true that all three of the people who might be the next President support real action on climate change, which is an undeniably good thing, they don't all support quite the same sort of action. Specifically, while the Deomocrats are talking about cap and trade measures that would lead to 80% reductions in emissions by 2050,

There are many reasons to think [McCain would] settle for a policy that is more lenient and compromise-oriented. Notably, McCain worked closely with Senator Joseph Lieberman on climate legislation in the past, and the current bipartisan Lieberman-Warner bill sets a lower target for emission reductions – a 70 percent reduction in capped emissions by 2050 (and not all emissions would be capped).

Continue reading "And then there were three" »

Posted by Oliver Morton on February 08, 2008
Categories: Carbon markets, Climate Policy, Oliver Morton | Permalink | Comments (1) | TrackBacks (0)

The European Commission's draft blueprint for tackling climate change, announced January 23rd, is praised in today's Nature editorial for hitting "the sweet spot" between politically pragmatic but shortsighted proposals and implausably idealistic ones. Other groups - idealists and pragmatists alike - have reacted differently.

Continue reading "EU climate plan "hits the sweet spot"?" »

Posted by Anna Barnett on January 31, 2008
Categories: Anna Barnett, Carbon markets, Climate Policy, Energy, In the News, Mitigation | Permalink | Comments (0) | TrackBacks (0)

Europe and the US could be headed for a trade war over climate change.

In a speech yesterday José Barroso, president of the European Commission, said he would be ready to force companies outside the EU to buy carbon allowances to ensure that companies inside were not disadvantaged by Europe’s tougher emissions targets (speech).

While this apparently went down well with the audience (of European businessmen) it hasn’t gone down so well with America.

Reuters highlights that US Trade Representative Susan Schwab said that an earlier version of the EU plans seemed to be an excuse to close the European market and amounted to something like protectionism. More worryingly, the notes for speech delivered by Schwab last week contains the statement, “The unilateral imposition of restrictions can lead to retaliation, and dramatically impact economic growth and markets worldwide – while accomplishing nothing or worse when it comes to advancing environmental objectives.”

The US approach has also been backed by the UK, most recently by energy minister Malcolm Wicks saying today the government was “against any measures which might look like trade barriers” and warning that some in Europe “could use this as a kind of secret weapon, as it were, to bring about protectionism” (listen to Wicks on BBC or read his comments on Reuters). Barroso also appears to be picking a fight with his own trade commissioner, Peter Mandelson. Mandelson is on record as saying the restrictions are not the way forward (BBC)*.

Continue reading "Climate change trade war" »

Posted by Olive Heffernan on January 23, 2008
Categories: Carbon markets, Daniel Cressey, Features, In the News | Permalink | Comments (0) | TrackBacks (0)

Bali, Indonesia-

As anticipated, deforestation has emerged as something of a thorny issue at the UN conference on climate change, currently nearing a close in Bali.

It was announced yesterday that measures to avoid further destruction of tropical forests, such as the Amazon, will be included in the agreement to come out of the talks at the end of this week. The Bali agreement is expected to act as a guideline for negotiations on an international climate change deal up until the end of 2009.

Daniel Nepstad of Woods Hole Research Centre, US said today in Bali that the Amazon rainforest is expected to see a 55% dieback by 2030 through deforestation, logging and drought. Rainforests in other nations, such as Indonesia are facing similar pressures. So, any effort to avoid deforestation, which accounts for an estimated 20-25% of global greenhouse gas emissions, is to be commended. But the solution being put forward to in Bali , known as REDD - Reducing Emissions from Deforestation and Degradation, is being met with opposition on many sides.

Under the proposed scheme for ‘avoided deforestation’, carbon sequestered by forests in developing countries that are not being cut can be traded on the carbon market, where developed countries can buy the credits and ‘offset’ them against their own emissions targets.

A draft text on deforestation is ready to go forward for discussion by the high level ministers, who arrived at the Bali conference today, said executive secretary of the UN conference on climate change, Yvo De Boer.

Countries such as Indonesia and numerous conservation NGOs are celebrating inclusion of the scheme. And given that emissions from deforestation were omitted from the Kyoto Protocol, it is the first such international effort of its kind.

But much remains to be agreed upon. The issue of whether such a scheme should include forest conservation is a remaining “bone of contention”. As reported in the Hindustan Times, the Indian delegation wanted to add 'conservation' to 'avoided deforestation' , owing to the fact that India is one of the few developing countries where the forest cover is going up, not down. “We should not be penalised for that” said secretary of the ministry of environment and forests, Meena Gupta

Continue reading "Deforestation a ‘thorny’ issue at the Bali talks " »

Posted by Olive Heffernan on December 12, 2007
Categories: Carbon markets, Climate Policy, Conferences and Meetings, In the News, Olive Heffernan, UN Conference on Climate Change, Bali | Permalink | Comments (0) | TrackBacks (0)

How expensive is climate change, what's the cost of stopping it, and should we pay now or pay later? Scientific American gets a three-sided look at these questions in side-by-side interviews with Nicholas Stern, Bjorn Lomborg and Gary Yohe.

Stern and Yohe push raising the price of carbon emissions via caps and taxes, respectively, as insurance to ward off big future risks, with Lomborg taking the contrarian view that we shouldn't mitigate until renewable energy is cheaper -- and shrugging off the risks. (Lomborg thinks that other problems like HIV/AIDS and malaria need money more immediately, an argument Olive Heffernan took on in NRCC's editorial last month.) Interesting discussions of the values assigned to human lives in the present vs. future (Stern, Lomborg), and to lives threatened by asbestos vs. temperature rise, also ensue.

Anna Barnett

Posted by Anna Barnett on November 29, 2007
Categories: Adaptation, Anna Barnett, Carbon markets, Climate Policy, Mitigation, Opinion | Permalink | Comments (2) | TrackBacks (0)

There's an interesting commenary in Nature this week (currently free to access) by Steve Rayner of the James Martin Institute in Oxford and Gwyn Prins of the LSE, arguing that while emissions abatement is a global priority, the Kyoto Protocol is the wrong tool for the job -- a one-size-fits-all approach that, among other failings, doesn't actually look likely to deliver the reductions that it has promised. Unfortunately, as they argue, this sub-optimal approach has developed an iconic status of its own, so that in many minds to be against Kyoto is tantamount to being against any form of action on climate. They're worried that this means people will uncritically attempt to follow up the Kyoto protocol (which expires in 2012) with a son-of-Kyoto that contains many or all of the same flaws, when they should be having a much more radical rethink.

In their words:

The Kyoto Protocol is a symbolically important expression of governments' concern about climate change. But as an instrument for achieving emissions reductions, it has failed. It has produced no demonstrable reductions in emissions or even in anticipated emissions growth. And it pays no more than token attention to the needs of societies to adapt to existing climate change. The impending United Nations Climate Change Conference being held in Bali in December — to decide international policy after 2012 — needs to radically rethink climate policy...Already, in the post-Kyoto discussions, we are witnessing that well-documented human response to failure, especially where political or emotional capital is involved, which is to insist on more of what is not working: in this case more stringent targets and timetables, involving more countries. The next round of negotiations needs to open up new approaches, not to close them down as Kyoto did.

Continue reading "The wrong trousers" »

Posted by Oliver Morton on October 24, 2007
Categories: Adaptation, Carbon markets, Climate Policy, Mitigation, Oliver Morton | Permalink | Comments (35) | TrackBacks (0)

Posted by Olive Heffernan on behalf of Kevin Vranes

Far off the American radar screen, and perhaps not a bright blip on the European one either, is the perverse incentive problem for carbon emissions offsets. As voluntary offset purchases by both individuals and corporations ramp up, a strong backlash against "offsetting your guilt" is building astride. But offsetting guilt as a personal choice or for corporate strategy on an individual basis is one thing. Using an international financial trading mechanism embedded in an international treaty is quite another. And when the mechanisms of one international environmental treaty leads to the subversion of another international environmental treaty, well, you can just hear the collective "whoops!" echo across the Atlantic and Pacific.

Here is the situation: Annex I countries that cannot meet their GHG emissions targets under the Kyoto Protocol pay into the Clean Development Mechanism (CDM) fund, which then pays for emissions reductions in developing countries. These emissions reductions can take many forms as long as "additionality" can be proven – that is, the reduction in GHGs would not have occurred without the CDM funding. CDM projects have included capturing landfill-produced methane, creating facilities to burn biomass for energy, and installing wind power capacity. However, CDM projects have also included burning HFC-23 and this is where the perverse incentive creeps up.

HFC-23 is the byproduct of HCFC-22 production. HCFC-22 is a refrigerant and strong ozone depletor, ostensibly banned by the Montreal Protocol on Substances That Deplete the Ozone Layer. Developing countries, however, were given a loophole arrangement under the Montreal Protocol (MP) specifically for HCFC-22, so while most countries in the world with any degree of industrial activity have agreed to abide by the MP, developing countries do not have to meet HCFC-22 phase-out targets. Because of this loophole, as a cheap and effective refrigerant HCFC-22 continues to be an important industrial chemical, produced in especially high volume by "rich developing" countries such as China, India and Korea.

Both HCFC-22 and HFC-23 are also strong greenhouse gasses, but HFC-23 has a 270-year lifetime in the atmosphere, HCFC-22 only 12 years, and thus HFC-23 has over ten times the Global Warming Potential of HCFC-22 at 14,800 times CO2-equivalent (see Table TS.2 in the WGI Technical Summary of IPCC AR4). Those seeking to fund CDM projects jumped early at the chance to abate the release of HFC-23 to the atmosphere. It turned out to be quite easy (read: cheap) to install capture-and-burn equipment on HCFC-22 factories, and with a ton of HFC-23 burned being the equivalent of over 14,000 tons of CO2 prevented from reaching the atmosphere, the race to fund HFC-23 burn projects was on.

The problem from an international policy perspective is that producers of HCFC-22 now make more money burning HFC-23 than they do selling HCFC-22. Imagine what being paid handsomely to burn your waste does to your incentive to reduce your waste. If your waste stream costs you to dispose of it, you might try to improve your production to reduce waste and thus save money. And even if you did get paid to burn your waste, it might make financial sense to reduce waste anyway if your efficiency improvements paid more in reduced operating expenses than burning waste generated in income. But neither is the case for HCFC-22 factories. For them a double financial incentive now exists: keep making HCFC-22 in copious amounts at a profit, which will produce HFC-23 as a now-valuable waste product. And since HCFC-22 producers need not even lift a finger to burn their HFC-23 (those funding the CDM project fund the capture and burn device), any incentive for switching away from the ozone-depleting HCFC-22 as a refrigerant is also destroyed.

Aside from very good in-depth reporting from Fiona Harvey of the Financial Times, based in part on the work of Michael Wara of Stanford (see the 8-Feb-07 issue of Nature), the HCFC-22/HFC-23 issue has gone largely unreported thus far. While the New York Times has run a small handful of articles in the past year on HCFC-22 and its ozone-depleting properties, none have raised the HFC-23 specter. According to my Lexis-Nexis search, no other American newspaper has covered the issue.

As individual states in the U.S. begin forming interstate agreements on GHG trading in advance of a federally-instituted nationwide emissions reduction program, unintended consequences like depleting stratospheric ozone in favor of reducing GHGs will need to be carefully watched for.

Posted by Olive Heffernan on May 22, 2007
Categories: Carbon markets, Climate Policy, Kevin Vranes | Permalink | Comments (2) | TrackBacks (0)