Google Translation Version:
July 10, G8 summit ended, an annual trade volume of more than 60,000,000,000 U.S. dollars of the market increasingly clear carbon sink. July 19, "emission reduction projects in Shanxi Luliang energy trading services center" and officially started trial operation, which means that energy-saving emissions trading market in the establishment.
"Kyoto Protocol" stipulates that as of 2012 is the year the first commitment period of 5 years, the first year. China will become a major carbon sink market position. However, the reporter found that due to the related policy is not an exact match, the broker secret operations, information asymmetries and other reasons, to allow Chinese companies to sell carbon sinks the price of low carbon sinks billions of dollars China is the market has shrunk dramatically. China sitting on billions of dollars of China's carbon market transactions and foreign exchange markets have reached first in the world. The latest
United Nations statistics show that in the CDM (CDM) projects, India, China and Brazil-led occupying forces, of which India accounted for the total number of projects registered 32%, 19% China, Brazil accounted for 13%. However, the amount of emission reduction, with China accounting for 53% of the advantages far ahead. United Nations Environment Program resident representative in China, said Zhang Gang, the popular international capital to China's carbon sinks market provided assistance. China's emissions have gone far beyond the effectiveness of India in the International Convention on the mechanism for trading carbon sinks under many of the funds will be step by step into China.
According to the "Kyoto Protocol" provides that in the 2008-2012 period, the major industrialized countries of greenhouse gas emissions in 1990 on the basis of an average reduction of 52%. According to the United Nations and the World Bank predicted that the global carbon trading exchange in 2008 ~ 2012, the annual market size of up to 60,000,000,000 U.S. dollars, in 2012 the global carbon market transactions for 150,000,000,000 U.S. dollars. Rush of funds into the market, even though carbon sinks "Kyoto Protocol" was signed in 2005, but markets carbon sinks has been fiery, such as Chennai. Britain Beijing representative office of New Energy Finance chief should be introduced Chun told reporters that the new British Energy Finance as this not only an important business, and even has set up a special carbon sink trading analyst, analysis of the market price of carbon Change. In addition, a number of environmental organizations, NGO has also started to promote, facilitate trading carbon sinks.
A veteran of the industry such as trading of carbon sink, "carbon sinks market is a market first, further, it is a character in the middle of the market." It is reported that according to existing regulations, developing countries can not be directly Quota to sell to Western markets, these companies sell the amount of emission reduction by a number of international carbon funds and companies, or through intermediaries such as the World Bank in order to participate in the international market. This led to large and small, domestic and international consulting, intermediary companies, mostly directed at the market from trading carbon sinks. Due to the short history of markets carbon sinks, of the country, industry, many companies, many of the industry that this market will always mention one word - "chaos." However, according to seize market opportunities which will be of greater benefit theory, to enter the industry, funds can only be described as falling over one another. Black-box operation in the middle double the price of carbon emissions market is the biggest obstacle to black-box operation, the final price and a far cry from the international market price.
A foreign agency offices in China CDM project leader in private that, in direct foreign exchange trading carbon price higher than the domestic prices of 50% to 100%. In fact, the price of carbon trading is a very complex issue. CDM output of CERs (certified emission can reduce the volume) is not only the outcry trading, selling such a simple process. CDM projects need to complete a complex cycle, including the cycle of the seven basic steps are: the design and description of the project, the state approved the registration review, project financing, monitoring, verification / certification, issued by the CER.
AES China climate strategy director Chen Zhi Yang said that the AES Corporation in China in 2006 to start the establishment of carbon sinks business transactions. Is different from other brokers, AES shares through the main carriers of the way carbon trading exchange. "Such as wind power, often, carbon trading exchange earnings to account for the entire earnings of 10% to 20%." Chen Yang-sik told reporters that carbon sinks will be based on an annual transaction volume of Internet computing power, the local power grid according to the local thermal power per unit of electricity Fuel carbon dioxide emissions would amount to accounting. Chen Zhi Yang said the company currently has two carbon sink prices is not a guarantee of price and the other is guaranteed prices. "At present, the highest price of 13 euros / tonne, while secured to sell the price of 20 euros / tonne." Carbon market transactions more transparent listing? In the face of Chinese enterprises in trading, carbon sinks in a weak position, a lot of people think that the establishment of carbon exchange will help to improve the transparency of the market. "
If you go to the Finance Street, we will notice that there are several exchanges to build the company." Zhang steel in the "Daily News" said, "carbon sinks Beijing's trading center is set up very quickly things have been A lot to do in this area of business exchanges is a positive action. "
Beijing Equity Exchange Xiong Yan, president of a number of occasions that the North will be paid by the relevant departments and the establishment of the Beijing environmental rights and interests of the Stock Exchange and will set up a national environmental rights and interests of the trading platform. Jun should be said that the carbon sink trading center will allow the establishment of carbon sinks transactions transparent and to increase trading liquidity. In his view, China needs a number of such exchanges. Jun should be on the carbon exchange business model is very interested in what will be the same as the stock exchange, as a market-oriented markets, the Exchange will be able to sell, or as a secondary market, has been a certain amount of risk. Jun should be said that the market should be a secondary market have. Many in the industry have such enforcement point of view. Jun should be more worried about carbon exchange set up in 2012 will affect the post-Kyoto agreement signed.
Original Content:
7月10日，G8峰会落幕，一个每年交易额超过600亿美元的碳汇市场日渐清晰。 7月19日，“山西吕梁节能减排项目交易服务中心”正式启动并试运行，这意味着节能减排市场化交易方式在国内建立。
《京都议定书》规定，今年是截至2012年第一个5年承诺期的开局之年。中国将成为碳汇市场的主要阵地。然而，记者调查发现，由于相关配套政策还不完全匹配、中间商的暗箱操作、信息的不对称等原因，让中国企业出售碳汇的价格偏低，中国百亿美元碳汇市场正大幅缩水。中国坐拥百亿美元市场 中国的碳汇市场交易额已经达到了世界第一位。联合国最新统计数据表明，在CDM（清洁发展机制）项目中，印度、中国和巴西占据了主导力量，其中印度占注册项目总数的32%，中国占19%，巴西占13%。然而就减排额而言，中国以占53%的优势遥遥领先。
联合国环境规划署驻华代表张世钢表示，国际资金的青睐对中国的碳汇市场交易提供了助力。中国产生的减排效益远远超出了印度，在国际公约的机制下许多碳汇交易资金将会逐步涌向中国。
据《京都议定书》规定，在2008年至2012年期间，主要工业发达国家的温室气体排放量要在1990年的基础上平均减少52%。据联合国和世界银行预测，全球碳汇交易于2008～2012年间，市场规模每年可达600亿美元，2012年全球碳汇交易市场容量为1500亿美元。资金蜂拥进入碳汇市场 尽管《京都议定书》的签订是2005年的事，但碳汇市场的交易却已经如火如奈。英国新能源财经北京代表处首席代表应俊介绍告诉记者，英国新能源财经不仅将这作为一项重要业务，甚至于还设立了专门的碳汇交易分析员，分析碳汇市场的价格涨跌。此外，不少环保组织、NGO也开始推动、促成碳汇交易。
一位业内资深人士这样对碳汇交易定性，“碳汇交易市场首先是一个市场，更进一步来说，它是一个具有中间性质的市场。”据介绍，按现行规定，发展中国家不能直接将配额出售到西方市场，这些企业卖出的减排额主要由一些国际碳基金和公司，或通过世界银行等中间机构参与后才能进入国际市场。由此衍生出大大小小的国内外咨询、中介公司，大多冲着碳汇交易市场而来。 由于碳汇市场历史短，涉及的国家、行业、公司众多，因此，不少业内人士说到这块市场总会提到一个字――“乱”。但根据哪个抢占市场先机将会获得更大收益的理论，进入这个行业的公司、资金只能用蜂拥来形容。暗箱操作 中间差价翻倍 碳排放市场最大障碍是暗箱操作，最终的成交价格与国际市场价格相去甚远。
一国外机构驻华办事处CDM项目负责人私下透露，在国外碳交易所直接交易的价格比国内价格高出50%～100%。 事实上，碳市交易价格是一个非常复杂的问题。CDM产出的CERs（可核证的排放削减量）买卖并非仅仅是喊价、叫卖这样一个简单的过程。CDM项目的完成需要一个复杂的周期，这个周期包括七个基本步骤，分别是：项目设计和描述，国家批准，审查登记，项目融资，监测，核实／认证，签发CER。
爱依斯中国气候策略总监陈植扬表示，爱依斯中国公司于2006年开始建立碳汇交易业务。与其他中间商有所不同的是，爱依斯主要通过参股运营的方式进行碳汇交易。 “如风电，通常，碳汇交易的收益能占到整个收益的10%~20%。”陈植扬告诉记者，碳汇交易额将根据每年上网的电量计算，当地电网根据当地火力发电每度电所用燃料会排放的二氧化碳量来核算。陈植扬称，目前公司有两个碳汇价格，一个是没有担保的价格，另一个是有担保的价格。“目前国内最高价格为13欧元/吨，而有担保的价格能卖到20欧元/吨。”碳汇交易市场挂牌交易趋透明？ 面对中国企业在碳汇交易方面处于弱势地位，不少人认为国内建立碳交易所有助于提高这个市场的透明度。
“如果到金融街去走一下，就会发现有几家筹建交易所的公司。”张世钢在接受《每日经济新闻》采访时表示，“北京碳汇交易中心的成立是很快的事情，已经有很多做这方面交易所业务的公司正在积极行动。”
北京产权交易所总裁熊焰在多个场合表示，北交所将与相关部门合作成立北京环境权益交易所，并将以此搭建全国性的环境权益交易平台。 应俊表示，碳汇交易中心的建立将会让碳汇交易透明化，并增加交易的流动性。他认为，中国需要多家这类交易所。应俊对碳交易所的运营模式非常感兴趣，究竟会不会像证券交易所一样，是作为一级市场化的市场，到交易所就能卖，还是作为二级市场，已有一定的风险了。应俊表示，应该一级市场二级市场都有。不少业内人士也执此类观点。 应俊也比较担心碳交易所的成立会影响2012年后京都协议的签定。
Friday, December 26, 2008
California adopts tough greenhouse gas rules
California air regulators adopted a sweeping new climate plan Thursday that would require the state's utilities, refineries and large factories to transform their operations to cut greenhouse gas emissions.
The California Air Resources Board voted unanimously to adopt the United States' most comprehensive global warming plan, outlining for the first time how individuals and businesses would meet a landmark 2006 law that made the state a leader on global climate change.
The plan would hold California's worst polluters accountable for the heat-trapping emissions they produce — transforming how people travel, how utilities generate power and how businesses use electricity.
At the heart of the plan is the creation of a carbon-credit market designed to give the state's major polluters cheaper ways to cut the amount of their emissions. That market and the many other strategies referenced in the plan will be flushed out and adopted over the next few years.
California's plan comes at a time when governments around the world are struggling with a financial crisis that threatens to undermine efforts to fight climate change. California itself is facing a forecast budget gap of $41.8 billion through June 2010.
Republican Gov. Arnold Schwarzenegger, who has said the state's climate law will stimulate the economy, said Thursday that California was providing a roadmap for the rest of the country.
"Today is the day we help unleash the full force of California's innovation and technology for a healthier planet, a stronger and more robust economy and a safer and more secure energy future," Schwarzenegger said in a statement released after the board's vote.
His sentiments echo those of President-elect Barack Obama, who also has promoted investments in energy efficiency and green technology to help spur the country out of recession. Last month, Obama said he hoped Congress would adopt California's targets for the entire country, essentially reversing eight years of U.S. policy against mandated emission cuts.
California's 2006 law, called the Global Warming Solutions Act but commonly referred to as AB32, mandates the state cut emissions to 1990 levels by 2020.
The strategy chosen by air regulators relies on 31 new rules affecting all facets of life, from the fuels Californians put in their vehicles to the air conditioners businesses install in their buildings.
The average Californian, for example, could see more fuel-efficient cars at dealerships, better public transportation, housing near schools and businesses and utility rebates to equip their homes to be more energy efficient.
But there will also be costs.
California drivers will see more expensive cars on showroom floors and should expect to pay higher power bills as utilities increase their use of renewable energy.
Republicans, small businesses and major industries that will be forced to transform operations beginning in 2012 say jobs will be lost, companies might leave the state and energy prices will skyrocket. Many demanded the board perform more economic analysis before committing to policies they warned could worsen the economy.
"The deepening recession has affected businesses throughout the state," Amisha Patel, a policy advocate at the California Chamber of Commerce, told the board. "The reality of climate regulation is there will be costs."
Most of the reductions in California's emissions will come from more detailed regulations that will be written over the next few years, including rules governing a cap-and-trade program that launches in 2012 to help the largest polluters achieve emission cuts.
But allowing businesses to buy their way out of the problem is another contentious part of the plan. Representatives of California's poor communities say the polluting power plants, refineries and factories in their neighborhoods could write a check rather than cut emissions
The California Air Resources Board voted unanimously to adopt the United States' most comprehensive global warming plan, outlining for the first time how individuals and businesses would meet a landmark 2006 law that made the state a leader on global climate change.
The plan would hold California's worst polluters accountable for the heat-trapping emissions they produce — transforming how people travel, how utilities generate power and how businesses use electricity.
At the heart of the plan is the creation of a carbon-credit market designed to give the state's major polluters cheaper ways to cut the amount of their emissions. That market and the many other strategies referenced in the plan will be flushed out and adopted over the next few years.
California's plan comes at a time when governments around the world are struggling with a financial crisis that threatens to undermine efforts to fight climate change. California itself is facing a forecast budget gap of $41.8 billion through June 2010.
Republican Gov. Arnold Schwarzenegger, who has said the state's climate law will stimulate the economy, said Thursday that California was providing a roadmap for the rest of the country.
"Today is the day we help unleash the full force of California's innovation and technology for a healthier planet, a stronger and more robust economy and a safer and more secure energy future," Schwarzenegger said in a statement released after the board's vote.
His sentiments echo those of President-elect Barack Obama, who also has promoted investments in energy efficiency and green technology to help spur the country out of recession. Last month, Obama said he hoped Congress would adopt California's targets for the entire country, essentially reversing eight years of U.S. policy against mandated emission cuts.
California's 2006 law, called the Global Warming Solutions Act but commonly referred to as AB32, mandates the state cut emissions to 1990 levels by 2020.
The strategy chosen by air regulators relies on 31 new rules affecting all facets of life, from the fuels Californians put in their vehicles to the air conditioners businesses install in their buildings.
The average Californian, for example, could see more fuel-efficient cars at dealerships, better public transportation, housing near schools and businesses and utility rebates to equip their homes to be more energy efficient.
But there will also be costs.
California drivers will see more expensive cars on showroom floors and should expect to pay higher power bills as utilities increase their use of renewable energy.
Republicans, small businesses and major industries that will be forced to transform operations beginning in 2012 say jobs will be lost, companies might leave the state and energy prices will skyrocket. Many demanded the board perform more economic analysis before committing to policies they warned could worsen the economy.
"The deepening recession has affected businesses throughout the state," Amisha Patel, a policy advocate at the California Chamber of Commerce, told the board. "The reality of climate regulation is there will be costs."
Most of the reductions in California's emissions will come from more detailed regulations that will be written over the next few years, including rules governing a cap-and-trade program that launches in 2012 to help the largest polluters achieve emission cuts.
But allowing businesses to buy their way out of the problem is another contentious part of the plan. Representatives of California's poor communities say the polluting power plants, refineries and factories in their neighborhoods could write a check rather than cut emissions
UN suspends carbon-trading auditor
THE validity of the Kyoto Protocol’s $100 billion (£67 billion) carbon-trading scheme has been called into question after the United Nations suspended the world’s largest auditor of clean-energy projects.
Norway’s DNV, which claims to have approved half of the world’s carbon-credit ventures, had its accreditation suspended last month after it was unable to prove that its agents had properly vetted projects that it then approved for the carbon-trading scheme.
The episode will provide fresh ammunition to those who have long criticised the EU’s so-called Clean Development Mechanism (CDM), which allows investors in developed countries to fund green projects in the developing world. Once approved, they are then granted carbon credits that can be sold on the open market for profit.
Simon Shaw, chairman of EEA Fund Management, an investor in CDM projects and backer of the carbon-trading market Climate Exchange, said: “This is embarrassing for everybody and clearly bad news for the industry because DNV is the largest validator.” He said his firm had begun using other firms to verify proposed projects after it became apparent that DNV was overloaded.
“It became clear to us last year that they had a lot of work and were unable to resource the work properly.”
UN inspectors found five “non-conformities” when they visited DNV last month, including not being able to get evidence that technical experts had examined the projects they had approved.
Carbon credits derived from CDM schemes comprise roughly 20% of the credits in the $100 billion carbon-trading market. A DNV spokeswoman said the company was confident of being reinstated in January when UN inspectors make their next visit.
Norway’s DNV, which claims to have approved half of the world’s carbon-credit ventures, had its accreditation suspended last month after it was unable to prove that its agents had properly vetted projects that it then approved for the carbon-trading scheme.
The episode will provide fresh ammunition to those who have long criticised the EU’s so-called Clean Development Mechanism (CDM), which allows investors in developed countries to fund green projects in the developing world. Once approved, they are then granted carbon credits that can be sold on the open market for profit.
Simon Shaw, chairman of EEA Fund Management, an investor in CDM projects and backer of the carbon-trading market Climate Exchange, said: “This is embarrassing for everybody and clearly bad news for the industry because DNV is the largest validator.” He said his firm had begun using other firms to verify proposed projects after it became apparent that DNV was overloaded.
“It became clear to us last year that they had a lot of work and were unable to resource the work properly.”
UN inspectors found five “non-conformities” when they visited DNV last month, including not being able to get evidence that technical experts had examined the projects they had approved.
Carbon credits derived from CDM schemes comprise roughly 20% of the credits in the $100 billion carbon-trading market. A DNV spokeswoman said the company was confident of being reinstated in January when UN inspectors make their next visit.
Monday, December 22, 2008
Obama's Science Team: A Change Of Climate?
President-elect Barack Obama filled two top science jobs Saturday. In the process, he signaled a new White House emphasis on climate change.
Harvard professor John Holdren will be the chief White House science adviser and marine biologist Jane Lubchenco will run the National Oceanic and Atmospheric Administration.
Obama said his White House is determined to turn back toward science.
"The truth is that promoting science isn't just about providing resources," he said. "It's about protecting free and open inquiry. It's about ensuring that facts and evidence are never twisted or obscured by politics or ideology. It's about listening to what our scientists have to say. Even when it's inconvenient."
It's likely to be a big change from Bush administration policy, according to NPR's Elizabeth Shogren.
Speaking with Democracy Now this summer, Holdren had this to say:
"I think that most people — even most scientists — continue to underestimate how far down the path to climate catastrophe we've already traveled."
Holdren won't be alone in his views among influential White House voices. Nobel Prize winning physicist Steven Chu, Obama's choice for energy secretary, said something similar to NPR reporters earlier this year:
"I don't think the American public understands [there's] a reasonably high probability some very bad things will happen," Chu said. "They fundamentally don't understand that, because if they really felt that then they would do something about it."
Both of these men stress the importance of cutting greenhouse-gas emissions soon.
So if Obama pushes climate change policy to the backburner because of the other urgent challenges the nation faces, Shogren tells Andrea Seabrook, he's likely to have people very close to him warning in loud voices that he has to act fast and boldly to ward off the worst consequences of climate change — such as rising sea levels, floods, hurricanes and disease.
It's hard to now how quickly Obama will push for legislation to limit greenhouse-gas emissions. Getting the right bill through Congress could be difficult with so many other priorities, including the looming financial crisis.
But there are executive options available that would bypass Congress, including asking the Environmental Protection Agency to regulate greenhouse-gas emissions, Shogren says. That could prompt Congress to move on the issue.
Harvard professor John Holdren will be the chief White House science adviser and marine biologist Jane Lubchenco will run the National Oceanic and Atmospheric Administration.
Obama said his White House is determined to turn back toward science.
"The truth is that promoting science isn't just about providing resources," he said. "It's about protecting free and open inquiry. It's about ensuring that facts and evidence are never twisted or obscured by politics or ideology. It's about listening to what our scientists have to say. Even when it's inconvenient."
It's likely to be a big change from Bush administration policy, according to NPR's Elizabeth Shogren.
Speaking with Democracy Now this summer, Holdren had this to say:
"I think that most people — even most scientists — continue to underestimate how far down the path to climate catastrophe we've already traveled."
Holdren won't be alone in his views among influential White House voices. Nobel Prize winning physicist Steven Chu, Obama's choice for energy secretary, said something similar to NPR reporters earlier this year:
"I don't think the American public understands [there's] a reasonably high probability some very bad things will happen," Chu said. "They fundamentally don't understand that, because if they really felt that then they would do something about it."
Both of these men stress the importance of cutting greenhouse-gas emissions soon.
So if Obama pushes climate change policy to the backburner because of the other urgent challenges the nation faces, Shogren tells Andrea Seabrook, he's likely to have people very close to him warning in loud voices that he has to act fast and boldly to ward off the worst consequences of climate change — such as rising sea levels, floods, hurricanes and disease.
It's hard to now how quickly Obama will push for legislation to limit greenhouse-gas emissions. Getting the right bill through Congress could be difficult with so many other priorities, including the looming financial crisis.
But there are executive options available that would bypass Congress, including asking the Environmental Protection Agency to regulate greenhouse-gas emissions, Shogren says. That could prompt Congress to move on the issue.
Sunday, December 7, 2008
Carbon market growing while Korea makes plans
LONDON - To describe the London-based European Climate Exchange, a couple of descriptive phrases are needed. For starters, it’s the planet’s leading carbon exchange where 60 percent of global carbon credits are traded.
But the exterior of the ECX headquarters in London is better described as, well, nondescript. The headquarters does not have a big sign, and only five employees including the president work there. But ECX earned 3.1 billion won ($2.1 million) in operating profits based on sales of 9.4 billion won in the first half of this year, meaning each employee earned an average of 628 million won.
ECX’s future also seems rosy because of the global carbon market’s high potential.
The World Bank said the market is expected to grow to around $150 billion in 2010 from $10 billion in 2005. New Carbon Finance, a global research group, said the market will exceed $1 trillion by 2020.
In order to capitalize on this growth, BlueNext, the France-based carbon exchange, is expanding. It has hired 15 employees since it was acquired by the New York Stock Exchange in December 2007. A total of 24 people currently work for BlueNext, the No. 2 exchange.
While carbon trading is booming internationally, Korea has still not come up with specific plans to set up its own carbon exchange. To make matters worse, the Ministry of Environment and the Ministry of Knowledge Economy are arguing over guidelines for such an exchange. Fortunately, 19 local companies have applied for the United Nations’ clean development mechanism, or CDM, programs.
Certified emission reductions, or CERs, are traded after being earned through programs like CDM. Korea is expected to have about 146,000 tons of CERs in 2008, making it the world’s fourth-largest market after China, India and Brazil.
In a carbon exchange, countries and companies can trade certified emission reductions, or CERs, they earn from voluntary carbon dioxide emission reduction projects.
Under the Kyoto Protocol, industrialized countries are required to cut their emissions. So if one country fails to do so, it must purchase CERs, which are carbon credits authorized under the Kyoto Protocol, from other countries.
But the exterior of the ECX headquarters in London is better described as, well, nondescript. The headquarters does not have a big sign, and only five employees including the president work there. But ECX earned 3.1 billion won ($2.1 million) in operating profits based on sales of 9.4 billion won in the first half of this year, meaning each employee earned an average of 628 million won.
ECX’s future also seems rosy because of the global carbon market’s high potential.
The World Bank said the market is expected to grow to around $150 billion in 2010 from $10 billion in 2005. New Carbon Finance, a global research group, said the market will exceed $1 trillion by 2020.
In order to capitalize on this growth, BlueNext, the France-based carbon exchange, is expanding. It has hired 15 employees since it was acquired by the New York Stock Exchange in December 2007. A total of 24 people currently work for BlueNext, the No. 2 exchange.
While carbon trading is booming internationally, Korea has still not come up with specific plans to set up its own carbon exchange. To make matters worse, the Ministry of Environment and the Ministry of Knowledge Economy are arguing over guidelines for such an exchange. Fortunately, 19 local companies have applied for the United Nations’ clean development mechanism, or CDM, programs.
Certified emission reductions, or CERs, are traded after being earned through programs like CDM. Korea is expected to have about 146,000 tons of CERs in 2008, making it the world’s fourth-largest market after China, India and Brazil.
In a carbon exchange, countries and companies can trade certified emission reductions, or CERs, they earn from voluntary carbon dioxide emission reduction projects.
Under the Kyoto Protocol, industrialized countries are required to cut their emissions. So if one country fails to do so, it must purchase CERs, which are carbon credits authorized under the Kyoto Protocol, from other countries.
Greening Australia a natural fit for carbon trading
Carbon trading promises grief of some kind for most businesses, but for Greening Australia it is a natural fit with the organisation's brief of revegetating degraded landscapes.
GA's new national president, Rob Gell, said carbon trading offers the organisation a revenue stream to fund revegetation activities "on a large scale".
When it thinks on a large scale, GA thinks big.
The GA project Gondwana Link, in south-west Western Australia, will string vegetation corridors across 146,000 square kilometres of farmland and national park.
Another project on GA's books is to link Broken Hill, NSW, and the coastal town of Portland, Victoria, with vegetation corridors—another enterprise rich with carbon offset potential.
To businesses that purchase its premium carbon credits, GA will offer not only the practical return of secure long-term carbon offsets, but the less tangible value of having contributed to the restoration of damaged ecosystems.
The organisation is offering two classes of carbon credit.
"Breathe Easy" is its voluntary market offering, which is available online for individuals or small businesses wanting a "feel good" offset to counter a particular carbon-emitting activity.
GA's premium product has already been classed "Kyoto-compliant", and is selling at the currently premium price of about $27 per tonne.
Purchasers buy a guarantee that the vegetation planted as an offset will be around for the next century.
The Federal Government’s Carbon Pollution Reduction Scheme kicks off in 2010, and by 2011-2012, if carbon prices travel as some are projecting, Mr Gell hopes that GA’s carbon offsets will be trading at around $45 per tonne—a rate that he says will make GA’s revegetation self-sustaining.
For landholders worried about farm forestry monocultures and the carbon liabilities incurred if trees are logged for wood or chips, GA offers an alternative.
"We don't want bluegum forests for woodchips to become the default option for plantation forestry," Mr Gell said.
"We see this as a real opportunity to work with rural landholders to do the revegetation they want to do because of their understanding of the value of carbon in the landscape, the management of water systems, and all those benefits that come with biodiverse vegetation.
"There's the potential, depending on the landscape and rainfall, for properties to plant up to 30pc of their area with native vegetation with very little or no loss of production—and to build on the capacity of the property to adapt to climate change through water management, cooling of the land surface, restoring the water cycle."
Mr Gell pointed out that a percentage of the warming pattern recorded in south-eastern Australia can be attributed to the removal of tree cover.
"It's hard to measure, but we believe that by putting green corridors across less productive land we can cool landscapes," he said.
Mr Gell, best known in his home State of Victoria as a television weather presenter, is an environmental campaigner and head of his own environmental consultancy, Access Environmental.
He replaces Jim McKnoulty as national chairman of Greening Australia.
Save the Planet and Win Injects Some Fun Into the Battle Against Global Warming
BERKELEY, CA, Dec 05, 2008 (MARKET WIRE via COMTEX) -- Save the Planet and Win launched its new environmental website and social network that lets everyone lower their carbon footprint, help reduce global warming, and participate in a worldwide collective -- while having some fun and winning prizes and cash along the way.
At Save the Planet and Win, people can calculate, monitor, and reduce their own carbon footprint by participating in free green and social marketing promotions, in addition to the option of purchasing verified carbon offsets at the site's Carbon Offset Store. Save the Planet and Win represents the first Voluntary Personal Carbon Registry (VPCR) in the United States.
Save the Planet and Win also features a Carbon Collective -- where members can join friends, family, and co-workers to track the total carbon reductions achieved by the collective. Other social aspects of the site include the ability to share sustainable solutions, post every day tips (and videos) for reducing carbon emissions, and talk about the issues with a community of green-minded folks.
The new website rewards both the planet and its members. There are multiple chances to win, including a weekly sweepstakes and Click Green and Win promotions. Members watch a green-focused message from one of Save the Planet's sponsors and in return the sponsor makes a points donation to the member's account. Points can be used to purchase carbon offsets to achieve carbon neutrality, donated toward a social cause (ranging from reforestation projects in Mexico or the International AIDS Vaccine Initiative), or members can choose to cash in their points for actual dollars.
"We know that global climate change is having and will have an enormous impact on the earth -- from rising sea levels, flooding, and increased storm activity to a rise in diseases like malaria and major changes in ecosystems and habitats. However, at an individual level, the concept of combating this trend can seem quite overwhelming," said Luis Daniel Prestamo, COO at Save the Planet and Win.
"Save the Planet and Win makes the important work of fighting global warming, such as reducing greenhouse emissions and investing green projects, more understandable and personal for each of us. The website uses the power of community to help encourage everyone to make seemingly small changes in their daily lives that can have a big impact on the earth. By sharing our green accomplishments, we can increase environmental awareness, inspire others to make a difference, and become inspired ourselves," Prestamo continued.
In 2007, the United Nations' Intergovernmental Panel on Climate Change (IPCC) concluded that the evidence of a warming trend is "unequivocal" and that human activity is "very likely" the key contributor for the warming that's already been observed. The report found that we have to cut our greenhouse emissions by 85% by the year 2050 in order to stabilize the earth's atmosphere and avoid the worst impacts of global warming.
Friday, December 5, 2008
Alternative energy
Alternative energy is derived from sources other than traditional fossil fuels, though these sources need not be renewable or green to be alternative. Some alternative fuels recognized by the Energy Policy Act of 1992 are biodiesel, electricity, ethanol, hydrogen, methanol, natural gas and propane. The problem with several of these alternative fuels is that they still use materials that create harmful emissions and are environmentally costly to produce and transport. This makes it very important to support alternative energy sources and technologies that are also renewable and green.
Renewable energy sources effectively utilize natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and bio-fuels for transportation.
While renewable energy sources like wind and solar power are becoming more familiar as the discussion around alternative energy steadily increases, the facts about sources like biomass have remained somewhat mysterious. Biomass refers to living and recently dead biological material that can be used as fuel or for industrial production. Most commonly, biomass refers to plant matter grown for use as bio-fuel, but it also includes plant or animal matter used for production of fibers, chemicals or heat. Biomass may also include biodegradable wastes that can be burnt as fuel. It excludes organic material which has been transformed by geological processes into substances such as coal or petroleum. Biomass can be produced by low-tech processes like composting, or very high-tech processes like Pyrolysis (the heating of organic wastes in the absence of air to produce gas and char.
Upon death or combustion, a plant's carbon- atmospheric carbon initially converted into biological matter by photosynthesis- is released back into the atmosphere as carbon dioxide (CO2). When biomass is used as a direct replacement for fossil fuels, it still puts the same amount of CO2 into the atmosphere. However, when biomass is used for energy production it is widely considered carbon neutral, or a net reducer of greenhouse gasses because of the offset of methane that would have otherwise entered the atmosphere.
About 13% of primary energy comes from renewable sources, with most of this coming from traditional biomass like wood burning. Hydropower is the next largest source, providing 2-3%, and modern technologies like geothermal, wind, solar and marine energies together produce less than 1% of total world energy demand. The technical potential for their use is large, exceeding all other readily available sources.
Active Solar - Active solar is an application, that uses electrical or mechanical equipment (typically pumps and/or fans) to assist in the collection and storage of solar energy for the purpose of heating, cooling (buildings, liquids, or gases), or making electricity.
Alternative energy - Alternative energy substitutes for traditional, often non-renewable sources of energy such as oil and coal. Alternative energy includes, but is not limited to solar, wind, hydro and geothermal power, as well as mixtures of alcohol-based fuels with methanol, ethanol, compressed natural gas and others.
Cogeneration - Cogeneration is a process in which power is produced by a gas-fired engine and generator set. Heat produced as part of this process is used as heating and/or cooling media. A cogeneration plant is often referred to as a combined heat and power plant.
Daylighting - Daylighting is the use of natural light to supplement or replace artificial lighting.
Fuel Cell - A fuel cell is an electrochemical device in which hydrogen is combined with oxygen to produce electricity with heat and water vapor as by products. Natural gas is often used as the source of hydrogen with air as the source of oxygen. Since electricity is produced by a chemical reaction and not by combustion, fuel cells are considered to be green power producers. Fuel cell technology is quite old, dating back to the early days of the space program. Commercial use of fuel cells has been sporadic, however, the use of fuel cells in automobiles and buildings is expected to increase in the next decade.
Geothermal Energy - Geothermal energy is a form of energy produced through drilling and harvesting heat trapped deep within the earth. Extraction methods include bringing water that has been superheated below ground to the surface, or pumping water deep into the earth to become heated and then pumped out again.
Light Shelf - A light shelf is a horizontal device positioned (usually above eye level) to conserve energy by reflecting daylight onto the ceiling and beyond. The light shelf may project into the room, beyond the exterior wall plane, or both. The upper surface of the shelf is highly reflective, i.e. having 80 percent or greater reflectance. Light shelves are also effective shading devices for windows located below them.
Passive solar - Passive solar is the use of sunlight for energy without the need for mechanical devices. Capturing sunlight in this way can be used to create heat for stored or immediate use, and to create air movement for ventilation.
Photovoltaic Cell - A photovoltaic cell device that converts sunlight directly into electricity. Photovoltaic (PV) cells are silicon-based semiconductors and are often referred to as solar cells. PV cells were developed in the mid-1950's and have become cost effective where it is difficult to extend conventional power lines. PV cells are often used for remote motorist call aid boxes, irrigation systems and navigational lights.
Solar Energy - Solar energy is obtained by capturing the suns rays and is utilized for heating and powering. The three most common methods of using solar energy are: Passive Solar, Active Solar, Solar Photovoltaic (PV) Systems.
Solar Insolation - Solar insolation is the amount of direct, diffuse and reflected sunlight reaching an area exposed to the sky. Solar insolation maps of your area can be used to help you size a solar electric (PV) system to meet your energy needs during the periods of the year with the shortest amount of sunshine for your location.
Wind Energy - The Sun heats the earth unevenly, creating thermal air pockets. In order to achieve equal temperatures around the earth these air pockets move about the earth as wind. The energy that travels in the wind can be captured through the use of wind turbines and converted to provide electricity.
Wind Turbine - A wind turbine is a device that converts the kinetic energy of the wind into mechanical energy that can be used to drive equipment such as pumps. The addition of a generator allows the wind's kinetic energy to be converted into electricity.
Renewable energy sources effectively utilize natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and bio-fuels for transportation.
While renewable energy sources like wind and solar power are becoming more familiar as the discussion around alternative energy steadily increases, the facts about sources like biomass have remained somewhat mysterious. Biomass refers to living and recently dead biological material that can be used as fuel or for industrial production. Most commonly, biomass refers to plant matter grown for use as bio-fuel, but it also includes plant or animal matter used for production of fibers, chemicals or heat. Biomass may also include biodegradable wastes that can be burnt as fuel. It excludes organic material which has been transformed by geological processes into substances such as coal or petroleum. Biomass can be produced by low-tech processes like composting, or very high-tech processes like Pyrolysis (the heating of organic wastes in the absence of air to produce gas and char.
Upon death or combustion, a plant's carbon- atmospheric carbon initially converted into biological matter by photosynthesis- is released back into the atmosphere as carbon dioxide (CO2). When biomass is used as a direct replacement for fossil fuels, it still puts the same amount of CO2 into the atmosphere. However, when biomass is used for energy production it is widely considered carbon neutral, or a net reducer of greenhouse gasses because of the offset of methane that would have otherwise entered the atmosphere.
About 13% of primary energy comes from renewable sources, with most of this coming from traditional biomass like wood burning. Hydropower is the next largest source, providing 2-3%, and modern technologies like geothermal, wind, solar and marine energies together produce less than 1% of total world energy demand. The technical potential for their use is large, exceeding all other readily available sources.
Active Solar - Active solar is an application, that uses electrical or mechanical equipment (typically pumps and/or fans) to assist in the collection and storage of solar energy for the purpose of heating, cooling (buildings, liquids, or gases), or making electricity.
Alternative energy - Alternative energy substitutes for traditional, often non-renewable sources of energy such as oil and coal. Alternative energy includes, but is not limited to solar, wind, hydro and geothermal power, as well as mixtures of alcohol-based fuels with methanol, ethanol, compressed natural gas and others.
Cogeneration - Cogeneration is a process in which power is produced by a gas-fired engine and generator set. Heat produced as part of this process is used as heating and/or cooling media. A cogeneration plant is often referred to as a combined heat and power plant.
Daylighting - Daylighting is the use of natural light to supplement or replace artificial lighting.
Fuel Cell - A fuel cell is an electrochemical device in which hydrogen is combined with oxygen to produce electricity with heat and water vapor as by products. Natural gas is often used as the source of hydrogen with air as the source of oxygen. Since electricity is produced by a chemical reaction and not by combustion, fuel cells are considered to be green power producers. Fuel cell technology is quite old, dating back to the early days of the space program. Commercial use of fuel cells has been sporadic, however, the use of fuel cells in automobiles and buildings is expected to increase in the next decade.
Geothermal Energy - Geothermal energy is a form of energy produced through drilling and harvesting heat trapped deep within the earth. Extraction methods include bringing water that has been superheated below ground to the surface, or pumping water deep into the earth to become heated and then pumped out again.
Light Shelf - A light shelf is a horizontal device positioned (usually above eye level) to conserve energy by reflecting daylight onto the ceiling and beyond. The light shelf may project into the room, beyond the exterior wall plane, or both. The upper surface of the shelf is highly reflective, i.e. having 80 percent or greater reflectance. Light shelves are also effective shading devices for windows located below them.
Passive solar - Passive solar is the use of sunlight for energy without the need for mechanical devices. Capturing sunlight in this way can be used to create heat for stored or immediate use, and to create air movement for ventilation.
Photovoltaic Cell - A photovoltaic cell device that converts sunlight directly into electricity. Photovoltaic (PV) cells are silicon-based semiconductors and are often referred to as solar cells. PV cells were developed in the mid-1950's and have become cost effective where it is difficult to extend conventional power lines. PV cells are often used for remote motorist call aid boxes, irrigation systems and navigational lights.
Solar Energy - Solar energy is obtained by capturing the suns rays and is utilized for heating and powering. The three most common methods of using solar energy are: Passive Solar, Active Solar, Solar Photovoltaic (PV) Systems.
Solar Insolation - Solar insolation is the amount of direct, diffuse and reflected sunlight reaching an area exposed to the sky. Solar insolation maps of your area can be used to help you size a solar electric (PV) system to meet your energy needs during the periods of the year with the shortest amount of sunshine for your location.
Wind Energy - The Sun heats the earth unevenly, creating thermal air pockets. In order to achieve equal temperatures around the earth these air pockets move about the earth as wind. The energy that travels in the wind can be captured through the use of wind turbines and converted to provide electricity.
Wind Turbine - A wind turbine is a device that converts the kinetic energy of the wind into mechanical energy that can be used to drive equipment such as pumps. The addition of a generator allows the wind's kinetic energy to be converted into electricity.
Carbon Offsetting
Carbon offsetting is the act of mitigating (canceling out) greenhouse gas emissions. Individuals and businesses can purchase offsets to compensate for the greenhouse gas emissions from personal travel or production processes. Carbon offsets can be more efficient and immediate than other measures an individual can take to fight global warming, while reducing the same or more carbon dioxide emissions.
The first step towards carbon neutrality is reducing the carbon emissions produced, by using alternative energy, alternative transportation, reusing, recycling, and supporting local farms and businesses. After reducing what you can, use a carbon calculator to determine the amount of carbon emissions you produce (often referred to as the size of your "carbon footprint"). Most carbon calculators provide an estimate of household greenhouse gas emissions (in pounds) resulting from household energy use and waste disposal, and give you information you can use to identify ways to reduce your personal greenhouse gases. Once you know the amount of carbon that needs to be offset, do a little homework, and purchase credits covering that amount from a recognized and respected carbon offset provider. The credits you purchase will be used to support carbon-reducing projects such as renewable energy facilities, energy efficiency research and reforestation projects.
For companies and other greenhouse gas producing entities, emissions trading, also called "cap and trade," is sometimes an economically desirable way to control pollution. Through this method, companies are issued emissions credits by governments or international bodies (like the United Nations) which represent the right to produce a certain amount of emissions (the "cap"). Companies that need to increase their emissions must buy credits from those who pollute less. The transfer of allowances is referred to as a "trade." In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed.
Information used in this section was found at EPA.gov and Carbonfund.org
Carbon credits - A carbon credit is a system of exchange between businesses or individuals to reduce greenhouse gas emissions by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading.
Carbon Footprint - A carbon footprint is a measure of the amount of carbon dioxide emitted through the combustion of fossil fuels. A carbon footprint is often expressed as tons of carbon dioxide or tons of carbon emitted, usually on an annual basis.
Carbon neutral - Carbon neutral indicates that a person or business has achieved a zero carbon release either by balancing total carbon emission with the use of renewable energy that produces similar useful energy, or through only using alternative energy, whereby no carbon dioxide is emitted into the atmosphere.
Nitrogen Oxides (NOx) - Nitrogen oxides are gases consisting of one molecule of nitrogen and varying numbers of oxygen molecules. Nitrogen oxides are by-products of combustion processes and are commonly found in the automobile exhaust and emissions from fossil fuel-fired power plants. NOx is a greenhouse gas and is an ingredient of acid rain and smog.
The first step towards carbon neutrality is reducing the carbon emissions produced, by using alternative energy, alternative transportation, reusing, recycling, and supporting local farms and businesses. After reducing what you can, use a carbon calculator to determine the amount of carbon emissions you produce (often referred to as the size of your "carbon footprint"). Most carbon calculators provide an estimate of household greenhouse gas emissions (in pounds) resulting from household energy use and waste disposal, and give you information you can use to identify ways to reduce your personal greenhouse gases. Once you know the amount of carbon that needs to be offset, do a little homework, and purchase credits covering that amount from a recognized and respected carbon offset provider. The credits you purchase will be used to support carbon-reducing projects such as renewable energy facilities, energy efficiency research and reforestation projects.
For companies and other greenhouse gas producing entities, emissions trading, also called "cap and trade," is sometimes an economically desirable way to control pollution. Through this method, companies are issued emissions credits by governments or international bodies (like the United Nations) which represent the right to produce a certain amount of emissions (the "cap"). Companies that need to increase their emissions must buy credits from those who pollute less. The transfer of allowances is referred to as a "trade." In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed.
Information used in this section was found at EPA.gov and Carbonfund.org
Carbon credits - A carbon credit is a system of exchange between businesses or individuals to reduce greenhouse gas emissions by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading.
Carbon Footprint - A carbon footprint is a measure of the amount of carbon dioxide emitted through the combustion of fossil fuels. A carbon footprint is often expressed as tons of carbon dioxide or tons of carbon emitted, usually on an annual basis.
Carbon neutral - Carbon neutral indicates that a person or business has achieved a zero carbon release either by balancing total carbon emission with the use of renewable energy that produces similar useful energy, or through only using alternative energy, whereby no carbon dioxide is emitted into the atmosphere.
Nitrogen Oxides (NOx) - Nitrogen oxides are gases consisting of one molecule of nitrogen and varying numbers of oxygen molecules. Nitrogen oxides are by-products of combustion processes and are commonly found in the automobile exhaust and emissions from fossil fuel-fired power plants. NOx is a greenhouse gas and is an ingredient of acid rain and smog.
Thursday, December 4, 2008
Thursday, November 27, 2008
Wednesday, November 26, 2008
United Nations Must Address Deforestation at Poland Meeting, U.S. Science Group says
United Nations Must Address Deforestation at Poland Meeting, U.S. Science Group says
Countries gathering in Poznan, Poland, next month to negotiate a follow-up treaty to the Kyoto Protocol should develop a plan to curb global warming by stopping the destruction of the world's tropical forests, say experts at the Union of Concerned Scientists (UCS), a leading U.S. science-based nongovernmental organization. The international community agreed to dramatically reduce deforestation as part of a larger plan to combat global warming at the December 2007 United Nations meeting in Bali, the group pointed out, and the Poland meeting should provide a good opportunity to forge an agreement.
"When it comes to finding ways to address global warming, maintaining tropical forests is a no-brainer," said Dr. Doug Boucher, director of the Tropical Forest and Climate Initiative at UCS. "We can cut a significant percentage of the world's global warming emissions by simply protecting tropical forests."
Boucher, an ecologist, will release a report in Poznan showing that preserving tropical forests is one of the most effective and inexpensive ways to reduce global warming pollution. (Boucher's report, "Out of the Woods: A Realistic Role for Tropical Forests in Curbing Global Warming," will be available on December 6 at: www.ucsusa.org/REDD.)
About 20 percent of the world's annual global warming pollution comes from deforestation—roughly equivalent to the total annual emissions of either the United States or China, and more than the total yearly emissions from every car, truck, plane, ship and train on Earth. When trees are cut down, they begin emitting the carbon dioxide they have stored over their lifetimes. To preserve the forests, farmers, ranchers and others who earn a living from activities that require tree clearing must be compensated for leaving forests intact.
"The people who live in the Amazon and other tropical forests have few economic opportunities other than farming and raising cattle, both of which require cutting down the forest," said Boucher. "That's why they must be compensated for the income they sacrifice by not using the land for farming or ranching."
According to the UCS report, it would cost $5 billion a year to protect nearly 20 percent of the tropical forests threatened by deforestation. Meanwhile, $20 billion a year would protect half of the forests and $50 billion a year would protect two-thirds.
Paying to keep tropical forests standing would cost a third less than the price of carbon under the European Union's cap-and-trade program, UCS found. The EU program sets a cap on global warming pollution, which will be ratcheted down over time. Companies must reduce their emissions to comply with the cap. Those that cannot reduce their pollution must buy allowances from companies that can. Ton for ton, it most often would be cheaper to reduce emissions from deforestation than buy allowances on the market.
The UCS report recommends three potential ways to generate money for preserving tropical forests:
DIRECT CARBON MARKET APPROACH: This method would let polluters that cannot meet their cap provide funding to maintain tropical forest areas. The tons of carbon dioxide eliminated by preventing deforestation would be applied against the polluters' caps. This method would generate tens of billions of dollars per year for forest preservation and reduce the cost of compliance. The downside is that it would not achieve additional emissions reductions in the polluters' own countries.
MARKET-LINKED APPROACH: Under this financing method, countries with cap-and-trade programs would use the funding generated by the programs to compensate countries and tribes that reduce their deforestation rates. The money would come from a government's initial sale of cap-and-trade allowances. UCS estimates that countries could dedicate tens of billions of dollars a year to forest preservation using this method.
VOLUNTARY APPROACH: A third financing method would ask countries, corporations, foundations and individuals to donate money to reduce deforestation. UCS estimates that hundreds of millions of dollars per year could be raised voluntarily.
"The United States can and should lead the way by supporting a comprehensive plan that combats global warming by reducing deforestation," said Boucher. "It's one of the best and most affordable tools we have."
Countries gathering in Poznan, Poland, next month to negotiate a follow-up treaty to the Kyoto Protocol should develop a plan to curb global warming by stopping the destruction of the world's tropical forests, say experts at the Union of Concerned Scientists (UCS), a leading U.S. science-based nongovernmental organization. The international community agreed to dramatically reduce deforestation as part of a larger plan to combat global warming at the December 2007 United Nations meeting in Bali, the group pointed out, and the Poland meeting should provide a good opportunity to forge an agreement.
"When it comes to finding ways to address global warming, maintaining tropical forests is a no-brainer," said Dr. Doug Boucher, director of the Tropical Forest and Climate Initiative at UCS. "We can cut a significant percentage of the world's global warming emissions by simply protecting tropical forests."
Boucher, an ecologist, will release a report in Poznan showing that preserving tropical forests is one of the most effective and inexpensive ways to reduce global warming pollution. (Boucher's report, "Out of the Woods: A Realistic Role for Tropical Forests in Curbing Global Warming," will be available on December 6 at: www.ucsusa.org/REDD.)
About 20 percent of the world's annual global warming pollution comes from deforestation—roughly equivalent to the total annual emissions of either the United States or China, and more than the total yearly emissions from every car, truck, plane, ship and train on Earth. When trees are cut down, they begin emitting the carbon dioxide they have stored over their lifetimes. To preserve the forests, farmers, ranchers and others who earn a living from activities that require tree clearing must be compensated for leaving forests intact.
"The people who live in the Amazon and other tropical forests have few economic opportunities other than farming and raising cattle, both of which require cutting down the forest," said Boucher. "That's why they must be compensated for the income they sacrifice by not using the land for farming or ranching."
According to the UCS report, it would cost $5 billion a year to protect nearly 20 percent of the tropical forests threatened by deforestation. Meanwhile, $20 billion a year would protect half of the forests and $50 billion a year would protect two-thirds.
Paying to keep tropical forests standing would cost a third less than the price of carbon under the European Union's cap-and-trade program, UCS found. The EU program sets a cap on global warming pollution, which will be ratcheted down over time. Companies must reduce their emissions to comply with the cap. Those that cannot reduce their pollution must buy allowances from companies that can. Ton for ton, it most often would be cheaper to reduce emissions from deforestation than buy allowances on the market.
The UCS report recommends three potential ways to generate money for preserving tropical forests:
DIRECT CARBON MARKET APPROACH: This method would let polluters that cannot meet their cap provide funding to maintain tropical forest areas. The tons of carbon dioxide eliminated by preventing deforestation would be applied against the polluters' caps. This method would generate tens of billions of dollars per year for forest preservation and reduce the cost of compliance. The downside is that it would not achieve additional emissions reductions in the polluters' own countries.
MARKET-LINKED APPROACH: Under this financing method, countries with cap-and-trade programs would use the funding generated by the programs to compensate countries and tribes that reduce their deforestation rates. The money would come from a government's initial sale of cap-and-trade allowances. UCS estimates that countries could dedicate tens of billions of dollars a year to forest preservation using this method.
VOLUNTARY APPROACH: A third financing method would ask countries, corporations, foundations and individuals to donate money to reduce deforestation. UCS estimates that hundreds of millions of dollars per year could be raised voluntarily.
"The United States can and should lead the way by supporting a comprehensive plan that combats global warming by reducing deforestation," said Boucher. "It's one of the best and most affordable tools we have."
“Outstanding” greenhouse reduction from SMRC's Perth waste facility
Perth’s Southern Metropolitan Regional Council (SMRC) has been rated as “outstanding” in Australia’s first independent ranking of carbon offset providers. Being one of only five organisations to make the top grade after 57 were invited to participate could double the value of SMRC’s carbon offsets, already worth some $1 million annually.
The ratings were compiled by Carbon Offset Watch, a collaborative effort between consumer advocacy group Choice, environmental NGO the Total Environment Centre, and the Institute for Sustainable Futures.
Of 57 organisations contacted, 20 responded with sufficient information and were included in the assessment. The majority (12) were rated “good,” while three were considered “adequate”. Unsurprisingly, none of the groups rated in the voluntary survey fell into the “not recommended” category.
The top rating for SMRC comes on top of last year’s Greenhouse Challenge Plus Award for outstanding achievement in greenhouse gas abatement by government and essential services, and according to business development manager Tim Youe, it could have a significant impact on the value of its credits.
“People definitely differentiate between projects…if there’s multiple environmental benefits, along with a genuine carbon reduction supported by an independent report [then people are prepared to pay more],” he says, although it’s “hard to say” exactly how much of a premium they will fork out.
“I think we can almost double our price compared to what a broker selling a generic product would get,” he says.
In the past two years, the SMRC’s Regional Resource Recovery Centre (RRRC), which turns organic waste into high-quality compost, has become WA’s biggest greenhouse gas abatement project, prevented 146,681 tonnes of carbon entering the atmosphere.
The fully-integrated waste processing facility diverts household rubbish away from landfill for more than 350,000 residents. The net difference in emissions between waste going to landfill and composting the material gives the SMRC carbon offsets than can be sold.
The SMRC is now developing a new website to begin making a retail offering of its carbon pollution reduction credits. But the big question for the group is how will the Federal Government’s white paper on emission trading – due before year’s end – will affect the state of play across the voluntary offset market.
SMRC has joined other providers in calling on Canberra to recognise the value “of retaining an active and viable voluntary carbon market that supports Australian project-based emission reductions” and for it to clarify what will happen to existing schemes – including the Greenhouse Friendly product certification program - beyond 2009.
While hopeful the voluntary market won’t be killed off by the changes, SMRC acknowledges there is not yet any real answer as to future Australian possibilities, and “we’re looking at if we can expand into the [global] voluntary carbon standard”.
What the government decides in December will have a massive impact on the group: “it could completely obliterate our Greenhouse Friendly project and in round terms that’s a million dollars a year gone,” says Youe.
What wouldn’t be obliterated, however, is the $100 million RRRC at Canning Vale, or the debt SMRC racked up to build it.
“We’ll still run the project, but it will mean an increase [cost] to our member councils and ultimately to the ratepayers of the region, and for no benefit in terms of any more [greenhouse] abatement.”
“We see that as a bit of a perverse outcome,” Youe says.
The ratings were compiled by Carbon Offset Watch, a collaborative effort between consumer advocacy group Choice, environmental NGO the Total Environment Centre, and the Institute for Sustainable Futures.
Of 57 organisations contacted, 20 responded with sufficient information and were included in the assessment. The majority (12) were rated “good,” while three were considered “adequate”. Unsurprisingly, none of the groups rated in the voluntary survey fell into the “not recommended” category.
The top rating for SMRC comes on top of last year’s Greenhouse Challenge Plus Award for outstanding achievement in greenhouse gas abatement by government and essential services, and according to business development manager Tim Youe, it could have a significant impact on the value of its credits.
“People definitely differentiate between projects…if there’s multiple environmental benefits, along with a genuine carbon reduction supported by an independent report [then people are prepared to pay more],” he says, although it’s “hard to say” exactly how much of a premium they will fork out.
“I think we can almost double our price compared to what a broker selling a generic product would get,” he says.
In the past two years, the SMRC’s Regional Resource Recovery Centre (RRRC), which turns organic waste into high-quality compost, has become WA’s biggest greenhouse gas abatement project, prevented 146,681 tonnes of carbon entering the atmosphere.
The fully-integrated waste processing facility diverts household rubbish away from landfill for more than 350,000 residents. The net difference in emissions between waste going to landfill and composting the material gives the SMRC carbon offsets than can be sold.
The SMRC is now developing a new website to begin making a retail offering of its carbon pollution reduction credits. But the big question for the group is how will the Federal Government’s white paper on emission trading – due before year’s end – will affect the state of play across the voluntary offset market.
SMRC has joined other providers in calling on Canberra to recognise the value “of retaining an active and viable voluntary carbon market that supports Australian project-based emission reductions” and for it to clarify what will happen to existing schemes – including the Greenhouse Friendly product certification program - beyond 2009.
While hopeful the voluntary market won’t be killed off by the changes, SMRC acknowledges there is not yet any real answer as to future Australian possibilities, and “we’re looking at if we can expand into the [global] voluntary carbon standard”.
What the government decides in December will have a massive impact on the group: “it could completely obliterate our Greenhouse Friendly project and in round terms that’s a million dollars a year gone,” says Youe.
What wouldn’t be obliterated, however, is the $100 million RRRC at Canning Vale, or the debt SMRC racked up to build it.
“We’ll still run the project, but it will mean an increase [cost] to our member councils and ultimately to the ratepayers of the region, and for no benefit in terms of any more [greenhouse] abatement.”
“We see that as a bit of a perverse outcome,” Youe says.
Blitz poser
Nations see REDD in rush for carbon credits.
IN THE far north of Indonesia’s Sumatra island lies a vast stretch of forest brimming with orang utans and rare Sumatran tigers and elephants. In a quirk of fate, a decades-long insurgency in Aceh province prevented illegal loggers from stripping the place bare.
Apart from its wildlife and timber, though, the forest is rich in another resource; the carbon locked up in the soil and very trees coveted by loggers – legal and illegal.
Keen to earn money from the forest, called the Ulu Masen ecosystem, the government of Aceh province joined a leading conservation group and the financial market to save it. In return, the province is set to earn millions of dollars through the sale of carbon credits to investors, with a portion of the cash flowing to local communities to encourage them to halt illegal logging and pay for alternative livelihoods. Money from the initial sale of credits for this project is expected to flow in the coming months.
“I strongly believe there should be a market for carbon credits and forests. It’s about the only mechanism that could provide local incentives,” said Frank Momberg, project director for international NGO Fauna and Flora International, the group at the heart of the Ulu Masen forest conservation project.
The model is being studied and repeated across Indonesia and other tropical developing nations as the world turns to saving the remaining rainforests in the battle against climate change.
The United Nations-based scheme, called Reduced Emissions from Deforestation and Degradation, or REDD, could be worth tens of billions of dollars a year for developing nations, with rich nations buying forest credits to meet mandated emissions curbs. With so much money potentially at stake, banks and carbon trading firms are ramping up their interest.
Vested interests: In the battle against climate change, rich nations are paying Indonesia to keep its forests intact.
Local issue, global problem
But much has to be sorted out, such as how to ensure the forests aren’t cut down, how to accurately measure the amount of carbon saved over time, the best method to trade REDD credits and how to ensure local communities get a fair share of the money. Satellite monitoring as well as developing national carbon accounting systems will be key, and so too will be avoiding “leakage” in which preventing deforestation in one area causes logging to occur in another.
Some conservation groups also fear rich nations will merely buy up vast amounts of REDD credits to meet their emissions targets while doing little to clean up their own industries.
Europe also fears a flood of cheap REDD credits could overwhelm its existing emissions trading scheme, depressing offset prices.
“For us the main point, from a trading stand-point, where REDD projects are difficult is on their permanence,” said Trevor Sikorski, director of commodities research for Barclays Capital in London.
“If it’s about deforestation but then that deforestation goes ahead in three years then that carbon would still be released into the air So it’s all about the reversibility of forests as carbon sinks and that’s the real core issue that has to be addressed,” he said.
Forests soak up vast amounts of carbon dioxide, acting like a set of lungs for the planet. But clearing and burning them is contributing to about 20% of all mankind’s carbon emissions that are warming the planet.
The UN aims to incorporate REDD into the next phase of the Kyoto Protocol from 2013. The idea is to complement an existing Kyoto scheme, called the Clean Development Mechanism, that allows wealthy states to invest in clean energy projects in the developing world in return for CO2 offsets called CERs. These are presently trading around Euros16 (RM74) per tonne.
Huge market
“The dimensions are massive. If you compare with a CDM project of 60,000 tonnes a year, these projects are sometimes 200 times bigger, so if this comes through, it’s going to be a huge market,” said Renat Heuberger, managing partner of global carbon project developer and advisory firm South Pole Carbon.
Indonesia has rapidly become the centre of REDD trial schemes in Asia because it still has large areas of forest, despite rapid deforestation. Fauna and Flora International has teamed up with Australia’s Macquarie Group to develop three REDD projects in West Kalimantan and Papua.
Investment group New Forests, headquartered in Sydney, has signed a deal with the government of Papua to protect 200,000 ha of forest that could save up to 40 million tonnes of CO2 being emitted over the project’s lifetime.
The Australian government has pledged A$30mil (RM75mil) as part of a scheme to protect 50,000ha of forest in Kalimantan and rehabilitate at least 50,000ha of drained peat swamp.
The Ulu Masen scheme aims to save 3.4 million tonnes of CO2 being emitted each year, or 100 million tonnes over the project’s lifetime.
To market the credits, the government of Aceh last year teamed up with US bank Merrill Lynch and Australian firm Carbon Conservation to sell the offsets, called VERs, into the voluntary carbon credit market.
Carbon Conservation is acting as a broker and joined Flora and Fauna International to develop the project. The project hinges on regular monitoring of the forest from the air and on the ground and the conservation group is running a programme to recruit and train 1,000 forest rangers, some of them ex-rebels from Aceh’s former GAM separatist group.
Seeing redd
Community development was also key, said Momberg. This meant ploughing part of the proceeds directly back to the estimated 130,000 people who live around the forest to develop sustainable biofuel production, biomass power generation, mini-hydro power projects as well as promote growth of alternative cash crops.
Failure to do so would mean villagers returning to illegal logging. An estimated 2,000 to 3,000 villagers were involved in the lucrative trade around Ulu Masen, according to a 2006 report by World Bank-backed Aceh Forest and Environment Project.
“If you don’t involve the local communities in either an alternative business or something that is good for them to actually preserve that forest, there’s no long-term suitability of that project,” said Pep Canadell, executive officer of the Global Carbon Project. “It’s critical and I haven’t really seen a package of interesting possibilities,” said Canadell, a member of an Australian government advisory panel on REDD.
Some conservation groups, such as Friends of the Earth, fear placing a greater value on forests risks a jump in land rights abuses by governments and corporations in the rush for carbon credits, threatening the livelihoods of indigenous communities. More than a billion people worldwide depend of forests for their livelihoods, so REDD is a huge threat to them if not managed properly, the group says.
Flora’s Momberg said the key was to limit the direct involvement of national governments in funding schemes for local communities. REDD schemes should also meet stringent verification standards to ensure permanence, community involvement and protection of forests’ biodiversity.
“If everything is vested in the national government, that’s where you will find it very difficult to have that fair level of participation at the community level,” said Jeff Hayward, of US-based conservation group Rainforest Alliance.
“Fundamental to verification criteria is who owns the carbon, what rights do they have, how have they decided upon the use of those rights, how fairly are they being compensated, are they informed,” said Hayward, manager of the alliance’s climate initiative.
Momberg said interest in REDD investments has jumped since the UN formally backed the scheme last December. “I’m getting phone calls every month from investors into REDD. The appetite for REDD and voluntary carbon credits was non-existent two years ago.” – Reuters
IN THE far north of Indonesia’s Sumatra island lies a vast stretch of forest brimming with orang utans and rare Sumatran tigers and elephants. In a quirk of fate, a decades-long insurgency in Aceh province prevented illegal loggers from stripping the place bare.
Apart from its wildlife and timber, though, the forest is rich in another resource; the carbon locked up in the soil and very trees coveted by loggers – legal and illegal.
Keen to earn money from the forest, called the Ulu Masen ecosystem, the government of Aceh province joined a leading conservation group and the financial market to save it. In return, the province is set to earn millions of dollars through the sale of carbon credits to investors, with a portion of the cash flowing to local communities to encourage them to halt illegal logging and pay for alternative livelihoods. Money from the initial sale of credits for this project is expected to flow in the coming months.
“I strongly believe there should be a market for carbon credits and forests. It’s about the only mechanism that could provide local incentives,” said Frank Momberg, project director for international NGO Fauna and Flora International, the group at the heart of the Ulu Masen forest conservation project.
The model is being studied and repeated across Indonesia and other tropical developing nations as the world turns to saving the remaining rainforests in the battle against climate change.
The United Nations-based scheme, called Reduced Emissions from Deforestation and Degradation, or REDD, could be worth tens of billions of dollars a year for developing nations, with rich nations buying forest credits to meet mandated emissions curbs. With so much money potentially at stake, banks and carbon trading firms are ramping up their interest.
Vested interests: In the battle against climate change, rich nations are paying Indonesia to keep its forests intact.
Local issue, global problem
But much has to be sorted out, such as how to ensure the forests aren’t cut down, how to accurately measure the amount of carbon saved over time, the best method to trade REDD credits and how to ensure local communities get a fair share of the money. Satellite monitoring as well as developing national carbon accounting systems will be key, and so too will be avoiding “leakage” in which preventing deforestation in one area causes logging to occur in another.
Some conservation groups also fear rich nations will merely buy up vast amounts of REDD credits to meet their emissions targets while doing little to clean up their own industries.
Europe also fears a flood of cheap REDD credits could overwhelm its existing emissions trading scheme, depressing offset prices.
“For us the main point, from a trading stand-point, where REDD projects are difficult is on their permanence,” said Trevor Sikorski, director of commodities research for Barclays Capital in London.
“If it’s about deforestation but then that deforestation goes ahead in three years then that carbon would still be released into the air So it’s all about the reversibility of forests as carbon sinks and that’s the real core issue that has to be addressed,” he said.
Forests soak up vast amounts of carbon dioxide, acting like a set of lungs for the planet. But clearing and burning them is contributing to about 20% of all mankind’s carbon emissions that are warming the planet.
The UN aims to incorporate REDD into the next phase of the Kyoto Protocol from 2013. The idea is to complement an existing Kyoto scheme, called the Clean Development Mechanism, that allows wealthy states to invest in clean energy projects in the developing world in return for CO2 offsets called CERs. These are presently trading around Euros16 (RM74) per tonne.
Huge market
“The dimensions are massive. If you compare with a CDM project of 60,000 tonnes a year, these projects are sometimes 200 times bigger, so if this comes through, it’s going to be a huge market,” said Renat Heuberger, managing partner of global carbon project developer and advisory firm South Pole Carbon.
Indonesia has rapidly become the centre of REDD trial schemes in Asia because it still has large areas of forest, despite rapid deforestation. Fauna and Flora International has teamed up with Australia’s Macquarie Group to develop three REDD projects in West Kalimantan and Papua.
Investment group New Forests, headquartered in Sydney, has signed a deal with the government of Papua to protect 200,000 ha of forest that could save up to 40 million tonnes of CO2 being emitted over the project’s lifetime.
The Australian government has pledged A$30mil (RM75mil) as part of a scheme to protect 50,000ha of forest in Kalimantan and rehabilitate at least 50,000ha of drained peat swamp.
The Ulu Masen scheme aims to save 3.4 million tonnes of CO2 being emitted each year, or 100 million tonnes over the project’s lifetime.
To market the credits, the government of Aceh last year teamed up with US bank Merrill Lynch and Australian firm Carbon Conservation to sell the offsets, called VERs, into the voluntary carbon credit market.
Carbon Conservation is acting as a broker and joined Flora and Fauna International to develop the project. The project hinges on regular monitoring of the forest from the air and on the ground and the conservation group is running a programme to recruit and train 1,000 forest rangers, some of them ex-rebels from Aceh’s former GAM separatist group.
Seeing redd
Community development was also key, said Momberg. This meant ploughing part of the proceeds directly back to the estimated 130,000 people who live around the forest to develop sustainable biofuel production, biomass power generation, mini-hydro power projects as well as promote growth of alternative cash crops.
Failure to do so would mean villagers returning to illegal logging. An estimated 2,000 to 3,000 villagers were involved in the lucrative trade around Ulu Masen, according to a 2006 report by World Bank-backed Aceh Forest and Environment Project.
“If you don’t involve the local communities in either an alternative business or something that is good for them to actually preserve that forest, there’s no long-term suitability of that project,” said Pep Canadell, executive officer of the Global Carbon Project. “It’s critical and I haven’t really seen a package of interesting possibilities,” said Canadell, a member of an Australian government advisory panel on REDD.
Some conservation groups, such as Friends of the Earth, fear placing a greater value on forests risks a jump in land rights abuses by governments and corporations in the rush for carbon credits, threatening the livelihoods of indigenous communities. More than a billion people worldwide depend of forests for their livelihoods, so REDD is a huge threat to them if not managed properly, the group says.
Flora’s Momberg said the key was to limit the direct involvement of national governments in funding schemes for local communities. REDD schemes should also meet stringent verification standards to ensure permanence, community involvement and protection of forests’ biodiversity.
“If everything is vested in the national government, that’s where you will find it very difficult to have that fair level of participation at the community level,” said Jeff Hayward, of US-based conservation group Rainforest Alliance.
“Fundamental to verification criteria is who owns the carbon, what rights do they have, how have they decided upon the use of those rights, how fairly are they being compensated, are they informed,” said Hayward, manager of the alliance’s climate initiative.
Momberg said interest in REDD investments has jumped since the UN formally backed the scheme last December. “I’m getting phone calls every month from investors into REDD. The appetite for REDD and voluntary carbon credits was non-existent two years ago.” – Reuters
Tuesday, November 25, 2008
PA Farm News
Agriculture, Forestry Poised to Take Significant Role in Reduced Carbon Economy
Reprinted with Permission by 25x25
LUTHERVILLE, MD — The election is over and Democratic candidate, Sen. Barack Obama (D-IL) has been declared the winner, while Democrats also have made significant gains in securing control of Congress. And while there may have been an element of uncertainty leading up to those election results November 4th, what has never been in doubt for much of the past year, regardless of electoral winners, is federal action aimed at reducing the magnitude of climate change. That agriculture and forestry will play a role in any strategy aimed at reducing the emissions that contribute to global warming is also a certainty.
Obama and his Republication opponent, Sen. John McCain (R-AZ), along with House and Senate leadership, both said they want to enact a plan to reduce the greenhouse gases - emissions that create a "greenhouse" effect and warm the Earth's temperatures. Both presidential candidates supported a plan adopted by the Senate Environment Committee in December, 2007 and considered by the full Senate this summer (it failed to garner the 60 votes needed to overcome a procedural challenge) that called for a 71-percent reduction from 2005 greenhouse gas emission levels by 2050 through the nationwide regulation of emissions with a cap-and-trade credit system. The proposal would allow companies that exceed their allowable emission limits to purchase credits from those entities that fall under their allowed limits. As president-elect, Obama has pledged to implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
The House Energy and Commerce Committee in October released a 461-page "discussion draft" of legislation that would impose mandatory reductions in emissions that contribute to climate change. The draft is the culmination of a year of hearings and a series of "white papers" issued by the committee on various aspects of global warming and comes in anticipation of next year's climate change debate to be taken up by the new Congress and an Obama administration. The House proposal differs some from the Senate version by setting lower emission limits in the earlier years of the program to allow, supporters say, for the development of new clean energy and carbon-capture technology. The impact on House climate change proposals next year as the result of the recent elevation of Rep. Henry Waxman (D-CA) to chairman of the House Energy Committee, succeeding Rep. John Dingell (D-MI), remains uncertain.
Adding to the momentum for action is a Supreme Court decision last year that found that greenhouse gases are pollutants under the Clean Air Act - a ruling that puts pressure on federal environmental regulators to take action.
Another driver behind the call for action on climate change was highlighted just this week when California Gov. Arnold Schwarzenegger signed a declaration with 11 other U.S. states and provinces or states in five other countries to help cut greenhouse gas emissions. Schwarzenegger told a climate summit in California attended by more than 700 delegates from 19 countries on Wednesday that fighting climate change shouldn't just go "nation by nation," but also must go "province by province." Regional leaders signing the declaration, including 12 U.S. governors and state or provincial representatives from Canada, Mexico, Brazil, Indonesia and India, promised to develop strategies for high-polluting industries in an effort to influence talks set for next year in Poland to renew the Kyoto Protocol, which aims to curb global climate change emissions.
Support for the role of agriculture and forestry in a reduced carbon economy, and a consensus on the accompanying advantages available to farmers, ranchers and forestland owners, is building. In anticipation of an evolution into the so-called "low carbon" economy and the benefits inherent to the transition, the National 25x'25 Steering Committee has convened a Carbon Work Group - a panel of agricultural, forestry, conservation and environmental experts - that is looking at ways agriculture and forestry sectors may contribute to the curtailment of climate change, as well as looking for and identifying the economic opportunities and challenges that are expected to come with the transition.
The Carbon Work Group is expected to complete its work soon and in early 2009, the Steering Committee plans to issue a report from the group's effort, Opportunities in a Reduced Carbon Economy: A Primer for Agriculture and Forestry.
Jean-Mari Peltier, the former president and CEO of the National Council of Farmer Cooperatives (NCFC), spoke for many in the industry when she affirmed at a 25x'25 Summit held in Omaha, NE, this year that forestry and agriculture can be part of the solution to addressing global climate change. "The agricultural industry has a real opportunity to make a positive impact on a reduced carbon economy, and benefit financially while doing this," said Peltier.
While most of the opportunities are best presented through soil sequestration of carbon and methane capture in animal agriculture operations, Peltier said the industry must ensure that all opportunities for U.S. producers be maximized, citing, for instance, the role that perennial crops such as fruit trees, grape vines and the like play in the carbon sequestration process.
There is also widespread agreement that no single legislative, regulatory or market-based initiative will fully address the changes needed to reduce carbon emissions. In addition to a cap-and-trade program, other policy alternatives expected to be considered include a carbon tax, additional biofuel volume mandates and carbon content limits on transportation fuels, increased vehicular mileage standards, more energy efficient building standards, renewable electricity objectives, and incentives aimed at improving technology, among others.
Of particular interest to the agriculture and forestry sectors is a cap-and-trade proposal, which, like a carbon tax, can be employed to control the emissions of greenhouse gases as needed. (Greenhouse gas emissions are often referred to as just "carbon emissions," though there are six greenhouse gases recommended for regulation by the Intergovernmental Panel on Climate Change, including carbon dioxide, or CO2.) Advocates say a cap and trade system allows relatively precise control of total emissions and also provides low-cost offsets from uncapped sectors, including agriculture and forestry, to produce new revenue streams and help reduce total program costs.
At issue is the administrative complexity involved with cap-and-trade programs, with market prices for allowances and equivalent offsets, or credits, varying as supply and demand shifts work through the system. While a tax on carbon does not directly control total emissions, it is seen by some as easier to administer than a cap-and-trade system. And while it can more readily fix stable market prices for carbon emissions, it could also be applied to the agriculture and forestry sectors, increasing the costs of operations.
Under proposed cap-and-trade legislation, such as the scheme envisioned by the Senate Environment Committee, emissions from the agriculture and forestry sectors are uncapped. Both sectors engage in significant biological sequestration of carbon dioxide, and there is potential for more. Agriculture can also contribute reductions of methane and nitrous oxide, two other types of emissions recommended for regulation by the IPCC. With both sectors recording emission reductions in the "plus" column, they can produce an income stream from the sale of those reductions as offsets, or credits, to entities that exceed their emission allowances.
Rich Krause, climate change specialist with the American Farm Bureau Federation, notes that all cap-and-trade proposals are not totally benign to agriculture and forestry. While the Senate proposal does not regulate agriculture emissions specifically, he says, it does define a regulated "facility" as one or more buildings or structures on the same site that emit more than 10,000 tons of carbon (or the equivalent) per year. "That definition could possibly bring some large operations under the regulatory umbrella."
But Krause says the good news under a cap-and-trade regime is the opportunities provided "for farmers, ranchers and foresters to implement voluntary greenhouse gas mitigation practices that could then be transformed into credits that excess greenhouse gas emitters could purchase on the market. This means that growers could get paid for using soil, manure and fertilizer management practices," he said.
Krause said the Senate proposal "does include a full range of agricultural practices, including soil sequestration, methane capture and destruction, and fertilizer management as allowable offset projects. The question is to what extent the economic benefits from these offset opportunities offset the increased costs to agriculture resulting from the bill."
"All sectors of the U.S. economy will need to reduce their greenhouse gas emissions," says Nathan Rudgers, a member of the National 25x'25 Steering Committee and chairman of the Carbon Work Group. "The opportunity to voluntarily participate in the offset markets as an uncapped sector being paid for reductions has distinct advantages. Agriculture and forestry stakeholders can capitalize on the opportunity by documenting their willingness and ability to produce emissions reductions. By providing offsets for other industries, they'll be increasing their own economic stability while providing additional benefits to the nation."
"Agriculture's ability to fulfill this promise is contingent on the price for carbon in the marketplace," adds Peltier, the former NCFC CEO. While the price of emission credits on markets such as the Chicago Climate Exchange (CCX) has fluctuated, Peltier insists that "new laws and regulations being discussed . . . could result in dramatic increases in the value of carbon, leading to greater potential benefit to agricultural producers."
That optimism is reflected by a study that shows the existing global market for "carbon trading" grew 36 percent between January and September of this year, from $67 billion to $84 billion, without government mandates. In fact, says New Energy Finance, a London-based company that tracks activity in energy markets, the market is expected to surpass $100 billion by the end of this year, despite the economic upheaval being experienced by other markets. The CCX currently has some 350 members, including more than 10 percent of the Fortune 100 and eight cities.
# And what does agriculture and forestry bring to the table when calculating the contributions farmers, ranchers and forestland owner can make to reducing emissions? Consider the following talking points issued by 25x'25 earlier this year on how crop production practices can impact climate change: Conservation tillage, which is a set of practices that provide minimal disturbance of the soil and leave at least 30 percent of the surface covered with crop residues. The most current national data gathered the Conservation Technology Information Center show that some form of crop residue management, which includes conservation tillage plus "reduced tillage," was practiced on 62.2 percent of total cropland. And the number is growing.
# Using conservation tillage and other residue management techniques can provide a constant buildup of soil organic carbon - more than 50 percent over 10 years that reduces greenhouse gas emissions by preventing carbon from transforming into carbon dioxide through decomposition.
# Researchers at Ohio State University say that the total carbon sequestration potential of U.S. cropland through improved management is as much as 208 million metric tons of carbon per year, or the equivalent of 763 million metric tons of carbon dioxide emissions, or nearly 14.5 percent of total U.S. greenhouse gas emissions.
# And because conservation tillage requires fewer passes over a crop field, less fossil fuel is burned, reducing another 4.4 million metric tons in carbon dioxide emissions.
# Another 300 million tons of carbon can be sequestered per year from U.S. forests.
# The total potential of carbon sequestration in U.S. soils, counting croplands, grazing lands and woodlands, is nearly 600 million metric tons of carbon, or the equivalent of more than 2,200 million metric tons of carbon dioxide emissions about 33 percent of total U.S. emissions.
# There are nontraditional feedstocks that offer even greater carbon sequestration while decreasing the use of fossil fuel. Switchgrass, for example, is a perennial native grass that doesn't require annual planting, and is harvested by taking annual cuttings. The plants require fewer inputs such as fertilizer and pesticides and have tremendous root systems that sequester carbon continuously.
Reprinted with Permission by 25x25
LUTHERVILLE, MD — The election is over and Democratic candidate, Sen. Barack Obama (D-IL) has been declared the winner, while Democrats also have made significant gains in securing control of Congress. And while there may have been an element of uncertainty leading up to those election results November 4th, what has never been in doubt for much of the past year, regardless of electoral winners, is federal action aimed at reducing the magnitude of climate change. That agriculture and forestry will play a role in any strategy aimed at reducing the emissions that contribute to global warming is also a certainty.
Obama and his Republication opponent, Sen. John McCain (R-AZ), along with House and Senate leadership, both said they want to enact a plan to reduce the greenhouse gases - emissions that create a "greenhouse" effect and warm the Earth's temperatures. Both presidential candidates supported a plan adopted by the Senate Environment Committee in December, 2007 and considered by the full Senate this summer (it failed to garner the 60 votes needed to overcome a procedural challenge) that called for a 71-percent reduction from 2005 greenhouse gas emission levels by 2050 through the nationwide regulation of emissions with a cap-and-trade credit system. The proposal would allow companies that exceed their allowable emission limits to purchase credits from those entities that fall under their allowed limits. As president-elect, Obama has pledged to implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
The House Energy and Commerce Committee in October released a 461-page "discussion draft" of legislation that would impose mandatory reductions in emissions that contribute to climate change. The draft is the culmination of a year of hearings and a series of "white papers" issued by the committee on various aspects of global warming and comes in anticipation of next year's climate change debate to be taken up by the new Congress and an Obama administration. The House proposal differs some from the Senate version by setting lower emission limits in the earlier years of the program to allow, supporters say, for the development of new clean energy and carbon-capture technology. The impact on House climate change proposals next year as the result of the recent elevation of Rep. Henry Waxman (D-CA) to chairman of the House Energy Committee, succeeding Rep. John Dingell (D-MI), remains uncertain.
Adding to the momentum for action is a Supreme Court decision last year that found that greenhouse gases are pollutants under the Clean Air Act - a ruling that puts pressure on federal environmental regulators to take action.
Another driver behind the call for action on climate change was highlighted just this week when California Gov. Arnold Schwarzenegger signed a declaration with 11 other U.S. states and provinces or states in five other countries to help cut greenhouse gas emissions. Schwarzenegger told a climate summit in California attended by more than 700 delegates from 19 countries on Wednesday that fighting climate change shouldn't just go "nation by nation," but also must go "province by province." Regional leaders signing the declaration, including 12 U.S. governors and state or provincial representatives from Canada, Mexico, Brazil, Indonesia and India, promised to develop strategies for high-polluting industries in an effort to influence talks set for next year in Poland to renew the Kyoto Protocol, which aims to curb global climate change emissions.
Support for the role of agriculture and forestry in a reduced carbon economy, and a consensus on the accompanying advantages available to farmers, ranchers and forestland owners, is building. In anticipation of an evolution into the so-called "low carbon" economy and the benefits inherent to the transition, the National 25x'25 Steering Committee has convened a Carbon Work Group - a panel of agricultural, forestry, conservation and environmental experts - that is looking at ways agriculture and forestry sectors may contribute to the curtailment of climate change, as well as looking for and identifying the economic opportunities and challenges that are expected to come with the transition.
The Carbon Work Group is expected to complete its work soon and in early 2009, the Steering Committee plans to issue a report from the group's effort, Opportunities in a Reduced Carbon Economy: A Primer for Agriculture and Forestry.
Jean-Mari Peltier, the former president and CEO of the National Council of Farmer Cooperatives (NCFC), spoke for many in the industry when she affirmed at a 25x'25 Summit held in Omaha, NE, this year that forestry and agriculture can be part of the solution to addressing global climate change. "The agricultural industry has a real opportunity to make a positive impact on a reduced carbon economy, and benefit financially while doing this," said Peltier.
While most of the opportunities are best presented through soil sequestration of carbon and methane capture in animal agriculture operations, Peltier said the industry must ensure that all opportunities for U.S. producers be maximized, citing, for instance, the role that perennial crops such as fruit trees, grape vines and the like play in the carbon sequestration process.
There is also widespread agreement that no single legislative, regulatory or market-based initiative will fully address the changes needed to reduce carbon emissions. In addition to a cap-and-trade program, other policy alternatives expected to be considered include a carbon tax, additional biofuel volume mandates and carbon content limits on transportation fuels, increased vehicular mileage standards, more energy efficient building standards, renewable electricity objectives, and incentives aimed at improving technology, among others.
Of particular interest to the agriculture and forestry sectors is a cap-and-trade proposal, which, like a carbon tax, can be employed to control the emissions of greenhouse gases as needed. (Greenhouse gas emissions are often referred to as just "carbon emissions," though there are six greenhouse gases recommended for regulation by the Intergovernmental Panel on Climate Change, including carbon dioxide, or CO2.) Advocates say a cap and trade system allows relatively precise control of total emissions and also provides low-cost offsets from uncapped sectors, including agriculture and forestry, to produce new revenue streams and help reduce total program costs.
At issue is the administrative complexity involved with cap-and-trade programs, with market prices for allowances and equivalent offsets, or credits, varying as supply and demand shifts work through the system. While a tax on carbon does not directly control total emissions, it is seen by some as easier to administer than a cap-and-trade system. And while it can more readily fix stable market prices for carbon emissions, it could also be applied to the agriculture and forestry sectors, increasing the costs of operations.
Under proposed cap-and-trade legislation, such as the scheme envisioned by the Senate Environment Committee, emissions from the agriculture and forestry sectors are uncapped. Both sectors engage in significant biological sequestration of carbon dioxide, and there is potential for more. Agriculture can also contribute reductions of methane and nitrous oxide, two other types of emissions recommended for regulation by the IPCC. With both sectors recording emission reductions in the "plus" column, they can produce an income stream from the sale of those reductions as offsets, or credits, to entities that exceed their emission allowances.
Rich Krause, climate change specialist with the American Farm Bureau Federation, notes that all cap-and-trade proposals are not totally benign to agriculture and forestry. While the Senate proposal does not regulate agriculture emissions specifically, he says, it does define a regulated "facility" as one or more buildings or structures on the same site that emit more than 10,000 tons of carbon (or the equivalent) per year. "That definition could possibly bring some large operations under the regulatory umbrella."
But Krause says the good news under a cap-and-trade regime is the opportunities provided "for farmers, ranchers and foresters to implement voluntary greenhouse gas mitigation practices that could then be transformed into credits that excess greenhouse gas emitters could purchase on the market. This means that growers could get paid for using soil, manure and fertilizer management practices," he said.
Krause said the Senate proposal "does include a full range of agricultural practices, including soil sequestration, methane capture and destruction, and fertilizer management as allowable offset projects. The question is to what extent the economic benefits from these offset opportunities offset the increased costs to agriculture resulting from the bill."
"All sectors of the U.S. economy will need to reduce their greenhouse gas emissions," says Nathan Rudgers, a member of the National 25x'25 Steering Committee and chairman of the Carbon Work Group. "The opportunity to voluntarily participate in the offset markets as an uncapped sector being paid for reductions has distinct advantages. Agriculture and forestry stakeholders can capitalize on the opportunity by documenting their willingness and ability to produce emissions reductions. By providing offsets for other industries, they'll be increasing their own economic stability while providing additional benefits to the nation."
"Agriculture's ability to fulfill this promise is contingent on the price for carbon in the marketplace," adds Peltier, the former NCFC CEO. While the price of emission credits on markets such as the Chicago Climate Exchange (CCX) has fluctuated, Peltier insists that "new laws and regulations being discussed . . . could result in dramatic increases in the value of carbon, leading to greater potential benefit to agricultural producers."
That optimism is reflected by a study that shows the existing global market for "carbon trading" grew 36 percent between January and September of this year, from $67 billion to $84 billion, without government mandates. In fact, says New Energy Finance, a London-based company that tracks activity in energy markets, the market is expected to surpass $100 billion by the end of this year, despite the economic upheaval being experienced by other markets. The CCX currently has some 350 members, including more than 10 percent of the Fortune 100 and eight cities.
# And what does agriculture and forestry bring to the table when calculating the contributions farmers, ranchers and forestland owner can make to reducing emissions? Consider the following talking points issued by 25x'25 earlier this year on how crop production practices can impact climate change: Conservation tillage, which is a set of practices that provide minimal disturbance of the soil and leave at least 30 percent of the surface covered with crop residues. The most current national data gathered the Conservation Technology Information Center show that some form of crop residue management, which includes conservation tillage plus "reduced tillage," was practiced on 62.2 percent of total cropland. And the number is growing.
# Using conservation tillage and other residue management techniques can provide a constant buildup of soil organic carbon - more than 50 percent over 10 years that reduces greenhouse gas emissions by preventing carbon from transforming into carbon dioxide through decomposition.
# Researchers at Ohio State University say that the total carbon sequestration potential of U.S. cropland through improved management is as much as 208 million metric tons of carbon per year, or the equivalent of 763 million metric tons of carbon dioxide emissions, or nearly 14.5 percent of total U.S. greenhouse gas emissions.
# And because conservation tillage requires fewer passes over a crop field, less fossil fuel is burned, reducing another 4.4 million metric tons in carbon dioxide emissions.
# Another 300 million tons of carbon can be sequestered per year from U.S. forests.
# The total potential of carbon sequestration in U.S. soils, counting croplands, grazing lands and woodlands, is nearly 600 million metric tons of carbon, or the equivalent of more than 2,200 million metric tons of carbon dioxide emissions about 33 percent of total U.S. emissions.
# There are nontraditional feedstocks that offer even greater carbon sequestration while decreasing the use of fossil fuel. Switchgrass, for example, is a perennial native grass that doesn't require annual planting, and is harvested by taking annual cuttings. The plants require fewer inputs such as fertilizer and pesticides and have tremendous root systems that sequester carbon continuously.
Carbon Market Fundamentalism
The waste-pickers of Delhi may soon rank among the world’s endangered species if carbon markets continue their rise. Now numbering in the tens if not hundreds of thousands, waste-pickers have plied the garbage of Delhi’s streets for decades. A disturbing spectacle, often including women and children in their ranks, they nonetheless provide a vital service: recycling. In a country like India, paper, plastic and metals are an increasingly valuable commodity. And for slum-dwellers, this may be their only source of income. And so they join the cows and dogs in a daily forage through garbage by the side of road, searching for plastic, paper, metals — anything that can be turned into cash.
Bharati Chaturvedi, director and co-founder of Chintan, a small non-governmental organization (NGO) servicing India’s waste-pickers, claims that more than 1 percent of Delhi’s population is engaged in waste-picking — a significant source of revenue for the poorest — and that they recycle 9 percent to 59 percent of all of the waste generated in the city. “These waste-pickers are providing a public service — for free,” Chaturvedi says.
But a waste incinerator now proposed in Timarpur, a suburb of Delhi, may change all that. Like other incinerators, this one will generate cancer-causing dioxins, mercury, and other heavy metals and persistent organic pollutants. What’s new and different about this particular waste incinerator: It will generate carbon credits under the Clean Development Mechanism (CDM).
The CDM was originally established under the Kyoto Protocol, the climate change treaty, to address the need to provide new aid to developing countries to acquire and implement new clean energy technologies and projects. Its intent was also to provide a vehicle for development. However, critics say, the CDM is rapidly devolving into a subsidy for some of the dirtiest industries in the Global South and an excuse for inaction in cutting the significant greenhouse gas emissions by developed countries. Dirty industries and banks are growing rich on the schemes: The World Bank, for example, is becoming a major broker of many of them, charging a 13 percent commission on all of the carbon trades it brokers.
The Timarpur incinerator may be the first in a series of incinerators to benefit from the global carbon market, despite India’s informal and effective recycling industry and generally hostile posture toward incinerators. Gopal Krishna, a public health researcher at Jawaharlal Nehru University, New Delhi, had succeeded in dissuading government officials from accepting other proposals from Australian and Danish incinerator companies in Delhi, based on public health concerns. “We had managed to stop half a dozen of these dubious projects in the past,” says Krishna. “But this time around, in the name of carbon credits, fraudulent claims are being made with impunity.”
In addition to Krishna’s public health arguments, there is another reason incinerators have never gotten off the ground in Delhi: “Delhi’s garbage doesn’t have enough burnable matter,” says Neil Tangri, Waste and Climate Change Campaign Director for the Global Alliance for Incinerator Alternatives (GAIA). “It tends to be too wet, containing too much ash and sand, and non-combustible inert materials.” In other words, not enough combustible products like plastic and paper, thanks in large part to the diligent waste-pickers.
But today, with an incinerator contract looming on the horizon, and with it the potential for millions of dollars in revenue from the global carbon market, the political dynamic has changed. These waste-pickers are being harassed by dump managers and actively denied access to the dry, high-calorie items the incinerator will devour.
“They are effectively denying a livelihood to the poorest of the poor in setting up this incinerator,” says Chaturvedi. “To take that miserable existence away, it’s criminal. And now we’re seeing skyrocketing food prices in India. What will these people do? Huge local skills in recycling are now being wiped out, skills essential for a sustainable society.”
An additional problem with the incinerator is what to do with the fly ash left over. “I’ve been all over India,” says Patricia Costner, science adviser to GAIA and the International POPS Elimination Network. “I know what happens to incinerator ash. Most of it ends up by the side of the road. There are no engineered landfills in India. Fly ash and bottom ash is required to be managed very carefully in most countries, but in India, they simply do not have the infrastructure to do that.”
Improper disposal of incinerator waste isn’t the only problem: “When waste pickers are denied access to the waste stream, they go through the ash looking for metal, the only substance to survive incineration intact,” says GAIA’s Tangri. “I’ve seen people thigh deep picking through incinerator ash for metals. You’re using the human body as a toxic absorber — you’re basically spoon-feeding it to these people.”
Despite doubts raised by the Indian government and Supreme Court as to the advisability of incinerators in India, one of the most avid proponents of these carbon credit schemes is India’s former minister of environment and forests, Rajesh Kumar Sethi. Sethi was recently elected chair of the executive board of the CDM, the supervisory body that determines which projects qualify for CDM credits. “It would be impossible for [Sethi] to question any project that has been incorrectly cleared by the Central Pollution Control Board, a board that comes directly under the ministry he used to direct,” says Krishna.
Carbon Trading 101
Little understood by all but a few insiders, carbon trading was established under the Kyoto Protocol and involves two types of credits. There are “offsets” and “allowances.” Allowances are the limited number of government-allocated credits that are either auctioned or given away to certain industries within a developed country that has signed on to the Kyoto Protocol. One allowance equals one ton of carbon dioxide. Polluters that emit more than they are allowed must buy enough carbon credits within their country or from other designated developed countries (grouped as “Annex B” countries in the Kyoto Protocol) to match their allocated greenhouse gas emission levels. Thus, Company A may have exceeded its permitted carbon allowances by 100 tons, and so buys from Company B, which has managed to reduce its emissions by 100 tons carbon. The theory is: The overall cap is the same regardless of the trade, and the invisible hand of the market allows emissions reductions to occur with greater flexibility, less “command and control” and produces a “win-win” scenario for everyone involved.
The Clean Development Mechanism also permits carbon allowances to be traded between Annex B countries and developing countries — countries that are signatory to the Kyoto Protocol but don’t yet have limits on their greenhouse gas emissions. The problem here is that trading under the CDM is thus occurring between a set of countries that have an overall cap on their emissions, Annex B countries, and a set of countries that have no caps on their emissions, developing countries. In order to avoid bogus emissions credits being sold by developing countries to Annex B countries, the UNFCCC decided that carbon credits would be issued under the CDM only if they were “additional” — or “not business as usual.” This concept of additionality, which requires the proof of a counter-factual, has been all but impossible to verify.
The CDM is a subset of an overall category of carbon trading, “offsets,” which critics claim do not constitute actual emissions reductions. There are two primary markets for carbon offsets: the voluntary market and the so-called “compliance” market of the CDM. The voluntary carbon offset market — much like the “compliance” one — offers up for sale the replacement of a climate “bad” with a climate “good.” So, for example, if I am going to fly across the country, I will “offset” the carbon emissions from the flight by investing in a tree planting program. Greenhouse gas emissions may rise from my transcontinental flight; however, I can feel better knowing that I’ve “offset” my flight by investing in a tree farm that will absorb a quantity of carbon roughly equivalent to my flight. These voluntary offsets tend to be poorly regulated and therefore cheaper than compliance-based offsets, which have more rigorous — but still insufficient, to many — regulatory requirements.
Even the “Certified Emissions Reductions” sold under the CDM seem a far cry from actual “emissions reductions.” In fact, according to David Victor of Stanford University, as many as two thirds of the credits being produced by the CDM from projects in developing countries are not resulting in any emissions reductions. Victor and Michael Wara, a law professor at Stanford, found in an April 2008 paper that virtually all of the hydropower, natural gas and wind projects in China are applying for CDM credits. Yet, clearly, China could not make the argument that none of these projects would have gone forward without CDM credits — a key criterion for support under the CDM.
A separate study published by International Rivers argues that nearly three quarters of all registered CDM projects were complete at the time of approval, suggesting that the requirement that project developers could not have gone forward without the “additional” source of CDM funds is being routinely waived.
Even compliance-based offsets, such as those sold under the CDM, are proving highly problematic. With the price of offsets remaining quite low, the most common form of offsets involves large dams, the destruction of industrial pollutants and the combustion of landfill methane — the “low-hanging fruit” in a carbon market where the price of carbon has hovered at very low levels.
Policy Goals Achieved? Not Really
The same deregulatory fervor that is playing out in the bankruptcy of Wall Street banks, credit card companies and derivatives traders brought the theory of carbon trading: Open up the free markets — in this case, the newly minted market in carbon — eliminate regulatory interventions such as carbon taxes or precise standards for polluters, and the market will seek out the most efficient means of achieving the same emissions reductions goals.
“None of us is clever enough to work out what is the best way to tackle climate change,” states Matthew Whittell of Climate Exchange, a company that owns the European Climate Exchange and the Chicago Climate Exchange. “But, if we have a global carbon price, the market sorts it out.”
However, early evidence suggests that what is being sorted out is just how much more consumers will pay for an increase in greenhouse gas emissions. The European Union Emissions Trading Scheme (EU ETS), has thus far resulted in a rise in greenhouse gas emissions while profits have skyrocketed for utilities and energy traders. In a powerpoint presentation entitled, “Citigroup Analysis of the Impact of the EU Carbon Market on European Utilities,” Citigroup’s Head of European Utility Research Peter Atherton summarizes the EU ETS this way: “All generation-based utilities: winners. Coal and nuclear generators: Biggest winners. Hedge funds and energy traders: even bigger winners. Losers?? Herm … consumers!”
He goes on to note: “Have policy goals been achieved? Prices up. Emissions up. Profits up. … So, not really.”
Emissions have risen under the EU ETS because companies essentially fudged their numbers at the outset, claiming they would emit more than they expected to, so they would have an excess of permits to sell. Others were equally crafty, and the price of carbon plummeted.
A similar fiasco is unfolding in the newly minted Regional Greenhouse Gas Initiative (RGGI) an emissions trading scheme for U.S. northeastern states launched in September 2008. The RGGI initiative involves nine states aiming to provide a domestic pilot “cap and trade” market for carbon. Early results from the RGGI initiative, like the EU ETS, show evidence of over-allocation of permits to pollute and a concomitant drop in the price of carbon, as demand for carbon trades proved virtually non-existent.
Recently, the Chicago Climate Exchange (CCX), which claims to be “North America’s only and the world’s first global marketplace for integrating voluntary legally binding emissions reductions with emissions trading and offsets for all six greenhouse gases,” saw its shares drop in value by almost 80 percent from a high of $7.50 in June to a low of $1.50 on October 23, 2008. Bankrupt Lehman Brothers was among those “distressed sellers” of CCX shares that drove down the price of carbon on the U.S. markets to one of its lowest levels since carbon markets were launched in 2003. The price dropped further after a Wall Street Journal article questioned whether carbon credits trading on the CCX represent emission cuts that would not have otherwise have happened.
“We Need Direct Action”
Larry Lohmann of the UK-based think tank The Corner House, and author of the book, Carbon Trading, argues that advocates of carbon trading overlook two critical things: first, the poor are often paying the price for the vast profits of carbon traders, while seeing few benefits; and, second, the most direct solution to climate chaos is not part of the equation — namely, reorganizing society so that fossil fuels can be left in the ground while the planet’s remaining forests are preserved and even enlarged.
As carbon markets gain steam internationally, forest carbon credits are now opening up as a new arena for investment: A country’s entire forests are now up for sale as offsets for continued pollution by wealthy countries. And once again, it is the World Bank that is leading the way. Under its new “Forest Investment Fund” and “Forest Carbon Partnership Facility,” the Bank is preparing to show the world how to “scale up” forests as offsets — selling carbon from individual tracts of forests, or even an entire country’s forest reserves — as “offsets” for Northern countries to purchase, in lieu of reducing their own emissions at home.
Yet, in violation of the UN Declaration on the Rights of Indigenous Peoples, indigenous peoples who inhabit and have preserved these forests for generations, are often the last to be consulted on these schemes. For many of them, land rights, rather than cash for carbon credits, are a higher priority in the struggle for autonomy and the right to control their ancestral lands.
“Using market-based systems to privatize our land, forests and now to commodify the atmosphere is not a sustainable solution,” says Tom Goldtooth, executive director of the Indigenous Environmental Network.
Despite the early evidence of flaws in carbon markets, few environmental organizations are willing to be critical of this approach. All current legislative proposals being advanced on Capitol Hill to address climate change include some form of “cap and trade,” another name for carbon trading.
President-elect Barack Obama supports the idea of a “cap and auction” market-based approach to solve the climate crisis. Yet what few politicians mention, is that if the various market mechanisms for addressing climate change — the so-called “cap and trade” approach, where most pollution permits are given away to polluters, or the “cap and auction” approach, where pollution permits are auctioned — move forward nationally, they will eventually open up to the global market in carbon offsets, including the highly problematic CDM.
Representatives Jay Inslee, D-Washington, Ed Markey, D-Massachusetts, and Henry Waxman, D-California, are among the few Members of Congress to advance principles and legislation that recognize the problematic nature of “carbon offsets,” such as those being advanced by the World Bank and some environmental organizations. “We have to be very critical of any mechanisms involving offsets,” Inslee says. “We have to assure in the real world — not the abstract world — that you get something for your money. We do not have that right now. Until we do, I don’t think the offsets should be something you get credit for.”
S. David Freeman, former energy advisor to Presidents Carter, Nixon and Kennedy, and former director of the Tennessee Valley Authority, goes one step further: “If we’re on death row, as Al Gore and others say we are, then we need to take direct action, and I think the most important form of direct action is deciding from this day forward it’s all going to be renewable. Why don’t we outlaw new coal and nuclear plants?
“In World War II, we told the car companies to stop making cars and to start making tanks and airplanes and we won the war in less time than we’ve been in Iraq. When we have a flu epidemic, the government goes out and buys vaccines. Yet, now, with the climate crisis, there seems to be a reluctance in this country to act collectively through its government.”
Tom Picken, the Head of International Climate for Friends of the Earth-UK, puts it this way: “It is absolutely clear that there is no ‘spare’ [carbon dioxide] ‘in the system’ and therefore no ‘spare’ [carbon dioxide] to trade. If there is no spare [carbon dioxide] to trade, then this poses a pretty fundamental challenge to the means available to achieve emissions reductions — that there cannot be any more offsetting of any form. To do so is downright dangerous, in my view, and seems to me to be based on neoliberal economic fundamentalism rather than being environmentally and socially informed.”
Bharati Chaturvedi, director and co-founder of Chintan, a small non-governmental organization (NGO) servicing India’s waste-pickers, claims that more than 1 percent of Delhi’s population is engaged in waste-picking — a significant source of revenue for the poorest — and that they recycle 9 percent to 59 percent of all of the waste generated in the city. “These waste-pickers are providing a public service — for free,” Chaturvedi says.
But a waste incinerator now proposed in Timarpur, a suburb of Delhi, may change all that. Like other incinerators, this one will generate cancer-causing dioxins, mercury, and other heavy metals and persistent organic pollutants. What’s new and different about this particular waste incinerator: It will generate carbon credits under the Clean Development Mechanism (CDM).
The CDM was originally established under the Kyoto Protocol, the climate change treaty, to address the need to provide new aid to developing countries to acquire and implement new clean energy technologies and projects. Its intent was also to provide a vehicle for development. However, critics say, the CDM is rapidly devolving into a subsidy for some of the dirtiest industries in the Global South and an excuse for inaction in cutting the significant greenhouse gas emissions by developed countries. Dirty industries and banks are growing rich on the schemes: The World Bank, for example, is becoming a major broker of many of them, charging a 13 percent commission on all of the carbon trades it brokers.
The Timarpur incinerator may be the first in a series of incinerators to benefit from the global carbon market, despite India’s informal and effective recycling industry and generally hostile posture toward incinerators. Gopal Krishna, a public health researcher at Jawaharlal Nehru University, New Delhi, had succeeded in dissuading government officials from accepting other proposals from Australian and Danish incinerator companies in Delhi, based on public health concerns. “We had managed to stop half a dozen of these dubious projects in the past,” says Krishna. “But this time around, in the name of carbon credits, fraudulent claims are being made with impunity.”
In addition to Krishna’s public health arguments, there is another reason incinerators have never gotten off the ground in Delhi: “Delhi’s garbage doesn’t have enough burnable matter,” says Neil Tangri, Waste and Climate Change Campaign Director for the Global Alliance for Incinerator Alternatives (GAIA). “It tends to be too wet, containing too much ash and sand, and non-combustible inert materials.” In other words, not enough combustible products like plastic and paper, thanks in large part to the diligent waste-pickers.
But today, with an incinerator contract looming on the horizon, and with it the potential for millions of dollars in revenue from the global carbon market, the political dynamic has changed. These waste-pickers are being harassed by dump managers and actively denied access to the dry, high-calorie items the incinerator will devour.
“They are effectively denying a livelihood to the poorest of the poor in setting up this incinerator,” says Chaturvedi. “To take that miserable existence away, it’s criminal. And now we’re seeing skyrocketing food prices in India. What will these people do? Huge local skills in recycling are now being wiped out, skills essential for a sustainable society.”
An additional problem with the incinerator is what to do with the fly ash left over. “I’ve been all over India,” says Patricia Costner, science adviser to GAIA and the International POPS Elimination Network. “I know what happens to incinerator ash. Most of it ends up by the side of the road. There are no engineered landfills in India. Fly ash and bottom ash is required to be managed very carefully in most countries, but in India, they simply do not have the infrastructure to do that.”
Improper disposal of incinerator waste isn’t the only problem: “When waste pickers are denied access to the waste stream, they go through the ash looking for metal, the only substance to survive incineration intact,” says GAIA’s Tangri. “I’ve seen people thigh deep picking through incinerator ash for metals. You’re using the human body as a toxic absorber — you’re basically spoon-feeding it to these people.”
Despite doubts raised by the Indian government and Supreme Court as to the advisability of incinerators in India, one of the most avid proponents of these carbon credit schemes is India’s former minister of environment and forests, Rajesh Kumar Sethi. Sethi was recently elected chair of the executive board of the CDM, the supervisory body that determines which projects qualify for CDM credits. “It would be impossible for [Sethi] to question any project that has been incorrectly cleared by the Central Pollution Control Board, a board that comes directly under the ministry he used to direct,” says Krishna.
Carbon Trading 101
Little understood by all but a few insiders, carbon trading was established under the Kyoto Protocol and involves two types of credits. There are “offsets” and “allowances.” Allowances are the limited number of government-allocated credits that are either auctioned or given away to certain industries within a developed country that has signed on to the Kyoto Protocol. One allowance equals one ton of carbon dioxide. Polluters that emit more than they are allowed must buy enough carbon credits within their country or from other designated developed countries (grouped as “Annex B” countries in the Kyoto Protocol) to match their allocated greenhouse gas emission levels. Thus, Company A may have exceeded its permitted carbon allowances by 100 tons, and so buys from Company B, which has managed to reduce its emissions by 100 tons carbon. The theory is: The overall cap is the same regardless of the trade, and the invisible hand of the market allows emissions reductions to occur with greater flexibility, less “command and control” and produces a “win-win” scenario for everyone involved.
The Clean Development Mechanism also permits carbon allowances to be traded between Annex B countries and developing countries — countries that are signatory to the Kyoto Protocol but don’t yet have limits on their greenhouse gas emissions. The problem here is that trading under the CDM is thus occurring between a set of countries that have an overall cap on their emissions, Annex B countries, and a set of countries that have no caps on their emissions, developing countries. In order to avoid bogus emissions credits being sold by developing countries to Annex B countries, the UNFCCC decided that carbon credits would be issued under the CDM only if they were “additional” — or “not business as usual.” This concept of additionality, which requires the proof of a counter-factual, has been all but impossible to verify.
The CDM is a subset of an overall category of carbon trading, “offsets,” which critics claim do not constitute actual emissions reductions. There are two primary markets for carbon offsets: the voluntary market and the so-called “compliance” market of the CDM. The voluntary carbon offset market — much like the “compliance” one — offers up for sale the replacement of a climate “bad” with a climate “good.” So, for example, if I am going to fly across the country, I will “offset” the carbon emissions from the flight by investing in a tree planting program. Greenhouse gas emissions may rise from my transcontinental flight; however, I can feel better knowing that I’ve “offset” my flight by investing in a tree farm that will absorb a quantity of carbon roughly equivalent to my flight. These voluntary offsets tend to be poorly regulated and therefore cheaper than compliance-based offsets, which have more rigorous — but still insufficient, to many — regulatory requirements.
Even the “Certified Emissions Reductions” sold under the CDM seem a far cry from actual “emissions reductions.” In fact, according to David Victor of Stanford University, as many as two thirds of the credits being produced by the CDM from projects in developing countries are not resulting in any emissions reductions. Victor and Michael Wara, a law professor at Stanford, found in an April 2008 paper that virtually all of the hydropower, natural gas and wind projects in China are applying for CDM credits. Yet, clearly, China could not make the argument that none of these projects would have gone forward without CDM credits — a key criterion for support under the CDM.
A separate study published by International Rivers argues that nearly three quarters of all registered CDM projects were complete at the time of approval, suggesting that the requirement that project developers could not have gone forward without the “additional” source of CDM funds is being routinely waived.
Even compliance-based offsets, such as those sold under the CDM, are proving highly problematic. With the price of offsets remaining quite low, the most common form of offsets involves large dams, the destruction of industrial pollutants and the combustion of landfill methane — the “low-hanging fruit” in a carbon market where the price of carbon has hovered at very low levels.
Policy Goals Achieved? Not Really
The same deregulatory fervor that is playing out in the bankruptcy of Wall Street banks, credit card companies and derivatives traders brought the theory of carbon trading: Open up the free markets — in this case, the newly minted market in carbon — eliminate regulatory interventions such as carbon taxes or precise standards for polluters, and the market will seek out the most efficient means of achieving the same emissions reductions goals.
“None of us is clever enough to work out what is the best way to tackle climate change,” states Matthew Whittell of Climate Exchange, a company that owns the European Climate Exchange and the Chicago Climate Exchange. “But, if we have a global carbon price, the market sorts it out.”
However, early evidence suggests that what is being sorted out is just how much more consumers will pay for an increase in greenhouse gas emissions. The European Union Emissions Trading Scheme (EU ETS), has thus far resulted in a rise in greenhouse gas emissions while profits have skyrocketed for utilities and energy traders. In a powerpoint presentation entitled, “Citigroup Analysis of the Impact of the EU Carbon Market on European Utilities,” Citigroup’s Head of European Utility Research Peter Atherton summarizes the EU ETS this way: “All generation-based utilities: winners. Coal and nuclear generators: Biggest winners. Hedge funds and energy traders: even bigger winners. Losers?? Herm … consumers!”
He goes on to note: “Have policy goals been achieved? Prices up. Emissions up. Profits up. … So, not really.”
Emissions have risen under the EU ETS because companies essentially fudged their numbers at the outset, claiming they would emit more than they expected to, so they would have an excess of permits to sell. Others were equally crafty, and the price of carbon plummeted.
A similar fiasco is unfolding in the newly minted Regional Greenhouse Gas Initiative (RGGI) an emissions trading scheme for U.S. northeastern states launched in September 2008. The RGGI initiative involves nine states aiming to provide a domestic pilot “cap and trade” market for carbon. Early results from the RGGI initiative, like the EU ETS, show evidence of over-allocation of permits to pollute and a concomitant drop in the price of carbon, as demand for carbon trades proved virtually non-existent.
Recently, the Chicago Climate Exchange (CCX), which claims to be “North America’s only and the world’s first global marketplace for integrating voluntary legally binding emissions reductions with emissions trading and offsets for all six greenhouse gases,” saw its shares drop in value by almost 80 percent from a high of $7.50 in June to a low of $1.50 on October 23, 2008. Bankrupt Lehman Brothers was among those “distressed sellers” of CCX shares that drove down the price of carbon on the U.S. markets to one of its lowest levels since carbon markets were launched in 2003. The price dropped further after a Wall Street Journal article questioned whether carbon credits trading on the CCX represent emission cuts that would not have otherwise have happened.
“We Need Direct Action”
Larry Lohmann of the UK-based think tank The Corner House, and author of the book, Carbon Trading, argues that advocates of carbon trading overlook two critical things: first, the poor are often paying the price for the vast profits of carbon traders, while seeing few benefits; and, second, the most direct solution to climate chaos is not part of the equation — namely, reorganizing society so that fossil fuels can be left in the ground while the planet’s remaining forests are preserved and even enlarged.
As carbon markets gain steam internationally, forest carbon credits are now opening up as a new arena for investment: A country’s entire forests are now up for sale as offsets for continued pollution by wealthy countries. And once again, it is the World Bank that is leading the way. Under its new “Forest Investment Fund” and “Forest Carbon Partnership Facility,” the Bank is preparing to show the world how to “scale up” forests as offsets — selling carbon from individual tracts of forests, or even an entire country’s forest reserves — as “offsets” for Northern countries to purchase, in lieu of reducing their own emissions at home.
Yet, in violation of the UN Declaration on the Rights of Indigenous Peoples, indigenous peoples who inhabit and have preserved these forests for generations, are often the last to be consulted on these schemes. For many of them, land rights, rather than cash for carbon credits, are a higher priority in the struggle for autonomy and the right to control their ancestral lands.
“Using market-based systems to privatize our land, forests and now to commodify the atmosphere is not a sustainable solution,” says Tom Goldtooth, executive director of the Indigenous Environmental Network.
Despite the early evidence of flaws in carbon markets, few environmental organizations are willing to be critical of this approach. All current legislative proposals being advanced on Capitol Hill to address climate change include some form of “cap and trade,” another name for carbon trading.
President-elect Barack Obama supports the idea of a “cap and auction” market-based approach to solve the climate crisis. Yet what few politicians mention, is that if the various market mechanisms for addressing climate change — the so-called “cap and trade” approach, where most pollution permits are given away to polluters, or the “cap and auction” approach, where pollution permits are auctioned — move forward nationally, they will eventually open up to the global market in carbon offsets, including the highly problematic CDM.
Representatives Jay Inslee, D-Washington, Ed Markey, D-Massachusetts, and Henry Waxman, D-California, are among the few Members of Congress to advance principles and legislation that recognize the problematic nature of “carbon offsets,” such as those being advanced by the World Bank and some environmental organizations. “We have to be very critical of any mechanisms involving offsets,” Inslee says. “We have to assure in the real world — not the abstract world — that you get something for your money. We do not have that right now. Until we do, I don’t think the offsets should be something you get credit for.”
S. David Freeman, former energy advisor to Presidents Carter, Nixon and Kennedy, and former director of the Tennessee Valley Authority, goes one step further: “If we’re on death row, as Al Gore and others say we are, then we need to take direct action, and I think the most important form of direct action is deciding from this day forward it’s all going to be renewable. Why don’t we outlaw new coal and nuclear plants?
“In World War II, we told the car companies to stop making cars and to start making tanks and airplanes and we won the war in less time than we’ve been in Iraq. When we have a flu epidemic, the government goes out and buys vaccines. Yet, now, with the climate crisis, there seems to be a reluctance in this country to act collectively through its government.”
Tom Picken, the Head of International Climate for Friends of the Earth-UK, puts it this way: “It is absolutely clear that there is no ‘spare’ [carbon dioxide] ‘in the system’ and therefore no ‘spare’ [carbon dioxide] to trade. If there is no spare [carbon dioxide] to trade, then this poses a pretty fundamental challenge to the means available to achieve emissions reductions — that there cannot be any more offsetting of any form. To do so is downright dangerous, in my view, and seems to me to be based on neoliberal economic fundamentalism rather than being environmentally and socially informed.”
Kenya: Growing Money on Trees?
News on Kenya’s forests were recently dominated by the eviction of squatters from the Mau forest. This may change as the country moves towards sustainable forestry. Jenny Curtain analyses the investment potential created by changes in Kenya’s forestry management and developments in the international carbon credit markets.
Changes in Kenya’s Forest Management
Kenya’s stunning landscapes make it a hugely popular tourism destination, but until now, Kenya’s forests have been under-utilised, under-appreciated and consequently under-valued. What was until recently known as the Forest Department suffered from low morale due to lack of direction and lack of funding which in turn has led to a lack of resources and poor infrastructure. This is set to change, however, due to two developments that have the potential to create considerable synergies: The creation of the new Kenya Forest Service (KFS) and the emerging carbon market.
The Government of Kenya has embarked on major reforms in the country’s forestry sector. As part of these reforms, the KFS was established to succeed the former Forest Department (FD) with effect from February 2007. KFS has an expanded mandate to manage the nation’s forest estate and provide high quality forestry related products and services. The new forest policy legislation has paved the way for doing forestry more responsibly through restructuring government and encouraging meaningful engagement with the private sector and community forest associations. The overall objective of the new reforms is increased contribution of forests to economic recovery and poverty alleviation on an environmentally and socially sustainable basis.
In line with this policy, one of the KFS first tasks was to begin the detailed mapping of all forest regions after which forest management plans (FMP) are to be drawn up for each area. This is being done forest by forest. Once the mapping and FMPs for each area are completed, the areas are being put out for tender for the development of high-end eco-tourism facilities in each area on long term leases (25 x 25 years).
On reflection, it is indeed surprising that there have always been limited eco-tourism facilities in the forests as they are among the most beautiful, bio-diverse and pristine wilderness areas in the country. Traditionally, high-end eco-tourism facilities have been limited to the national parks and reserves under the auspices of the KWS or the local councils. To date, tenders have been put out for forests in the Mount Kenya region and the Arabuko-Sokoke Forest at the North Coast. The results of the tenders were announced in early October 2008. The next areas expected to be tendered in early 2009 are the greater Aberdares area and the Maasai Mau Forest.
The aim of the tender exercise is not only to raise revenue for the KFS through rental agreements, but to preserve the forests from continued degradation and exploitation from forest adjacent dwellers (FAD) by unlocking the commercial value of the forests and providing the FADs with alternative sources of income and therefore decreasing their dependency on forest products.
The successful tenderers have placed these themes at the core of their proposals. The idea is that the construction of eco-tourism facilities in these areas will provide long term employment for the FADs through construction, the sale of local goods and services, employment through lodge staffing, guiding etc. as well as the establishment of community trust funds financed by a percentage of profits or bed nights. The combined effect of this will be to greatly lessen, if not completely stop, the continued degradation and deforestation of these areas.
Carbon Credit Markets for Forestry
The timing could not have been better given the emergence of the carbon trading market under the Kyoto Protocol: Countries that create carbon emissions buy certified emission reductions (CERs), i.e. issued credits that can be bought and sold on the official carbon trading market, from developing countries to offset their emissions. Carbon offsets can come from many sources, but are dominated by three types of projects:
* Forestry sequestration, i.e. the avoidance of deforestation or the planting of new forests (36%),
* Renewable energy, i.e. generating power with clean renewable sources, e.g. wind and solar (33%); and
* Industrial gases, i.e. containing and storing industrial gases created by industry so they are not released into the atmosphere (30%).
Deforestation in tropical countries is often driven by the economic reality that forests are worth more dead than alive. But the emerging markets for carbon credits could radically alter that equation. A study conducted by the World Agroforestry Centre found that ventures that prompted deforestation, such as clearance for agricultural purposes, charcoal burning, wood fuel etc. rarely generated more than USD5 for every ton of Co2 equivalent they released and frequently returned less than USD1. Meanwhile, European buyers are currently paying about USD35 for an offset tied to a one-ton reduction in Co2 emissions.
Even though the Kyoto Protocol stopped short of recognising forest protection as a source of CERs, a parallel voluntary market has sprung up. Voluntary offset trading stems from a variety of sources – people trying to offset their carbon footprints, businesses seeking to reduce their greenhouse gas emissions, or major events trying to be carbon neutral, such as the Olympics, the Super Bowl etc. To date, avoidance of deforestation is still confined to the voluntary market, which is still a small part of all carbon trading and buying, with a value of USD331m in 2007 as opposed to the Kyoto Protocol’s CDM and EU’s emission trading scheme worth USD64bn. But the voluntary markets grew more rapidly in the preceding year, tripling in value from USD91m in 2006, whereas the CER market only doubled in value. This trend is set to continue as the voluntary offset market is expanding at an astounding rate and, though still in its infancy, is one of the fastest growing markets on the planet. Any doubts about the importance of the voluntary carbon market should have been removed by Merrill Lynch’s announcement in early 2008 of a new carbon offset service to assist businesses to reduce emissions through voluntary offsets: Merrill Lynch’s managing director has valued the market at over USD70bn.
There are moves afoot to have reduction and prevention of deforestation included in the list of CERs to give them even greater value. An initiative to reduce emissions from deforestation (‘REDD’) was approved at the UN climate talks in Bali in December 2007. At that event, it was suggested that cutting global deforestation rates by even 10% could generate up to USD13.5bn in carbon credits.
At a recent meeting in Manhattan on forest conservation, economic development and climate, two Nobel laureates, Al Gore and Kenya’s Wangari Maathai, joined the push to include forest preservation in carbon-trading markets as a way to curb greenhouse gases and help poor rural communities. At the same meeting, the president of the US branch of the World Wildlife Fund (WWF) said ‘Unless the world has policies that recognise the value of standing trees and forests, we have failed. In Kyoto, WWF was pivotal in keeping forests out. We have changed our position.’
The Kyoto treaty expires in 2012 when a new treaty is expected to be signed in Stockholm. It is hoped that avoidance of deforestation will then be recognised as a clean development mechanism (CDM). It has been noted that developing countries are unlikely to sign on the new treaty unless there is a prospect of money flowing into their direction in to compensate for revenue that would be lost if deforestation slows.
Kenya, Forestry and Carbon Credits
Linking these developments to the KFS and Kenyan forests, it is easy to see how Kenya can benefit from the carbon market whilst ensuring that its natural resources are valued, and more equitable revenue opportunities are created. Kenya’s population is currently estimated at 32m, with an average national growth rate of 2.57% (2006 estimate). This growth has put tremendous pressure on the country’s natural resources, particularly land, water and forests. Land use practices have disregarded land potential and carrying capacities. Marginal areas have been encroached upon, accelerating loss of productivity, hence increasing desertification and loss of biodiversity. The search for productive land has further threatened environmental sustainability as forests, both indigenous and commercial, are cleared for agricultural purposes, timber and fuel wood. Amongst other values, endangered forest resources provide direct benefits in the form of fuel, food, pastures, construction materials and traditional cures to about 3.5 million people living adjacent to forests. In addition, the forests globally influence the microclimates.
Aerial surveys and assessments of important water towers Mount Kenya, Aberdares and Mau – show the continued threats to the forests that have had diverse negative impacts in the immediate and macro-environments, notably through increased soil erosion, as well as the destruction of Kenya’s catchments areas. This contributes to polluted water sources as well as a chronic country-wide water shortage, and in turn affects the energy sector through the country’s dependence on hydro-power. The costs of timber and other related products continue rising.
Environmental degradation undermines livelihoods and future opportunities among the country’s population, where 75% of the poor, or 56% of the overall population, live in rural areas. Rural poor depend on their natural resources to survive, and so there is a strong correlation between sound environmental management and poverty reduction. In addition, the tourism industry accounting for 10% of the GDP and a major foreign exchange earner largely depends on prudent management of the environment, including the wildlife and forests.
If through the protection of existing forests via the new tender initiatives KFS can corner even a small piece of the voluntary carbon market, the financial and environmental rewards could potentially be enormous. This money would sustain Kenya’s forests into the future. With sensible management, the flow on benefits would be untold for both the protection of the forests and the surrounding communities. Income generated could then be used to upgrade infrastructure, replant degraded areas, fund clean energy schemes within the forests e.g. hydro electric, solar power etc. that in turn would generate more credits. Funds could also be used to resettle illegal forest dwellers within areas such as Kakamega and the Maasai Mau forests and to provide them with sustainable employment on the reforestation and other initiatives.
So whether it was a happy co-incidence that the reforms of the Forest Department came at the same time as the opportunities for funding under carbon trading schemes or whether the Kenyan Government had something bigger in mind, this is clearly a turning point. If Kenya’s government and parastatals act to take advantage of the substantial funds available, Kenya’s forests can be saved, and wealth created for the custodians of those forests. The Director of the KFS, Mr. David Mbugua, said recently that the service was charged by both Kenya’s society and the international community with the task of protecting forests while at the same time ensuring they continue to provide socio-economic and environmental benefits for present and future generations. The international carbon market would indeed make it possible to grow money on trees.
Changes in Kenya’s Forest Management
Kenya’s stunning landscapes make it a hugely popular tourism destination, but until now, Kenya’s forests have been under-utilised, under-appreciated and consequently under-valued. What was until recently known as the Forest Department suffered from low morale due to lack of direction and lack of funding which in turn has led to a lack of resources and poor infrastructure. This is set to change, however, due to two developments that have the potential to create considerable synergies: The creation of the new Kenya Forest Service (KFS) and the emerging carbon market.
The Government of Kenya has embarked on major reforms in the country’s forestry sector. As part of these reforms, the KFS was established to succeed the former Forest Department (FD) with effect from February 2007. KFS has an expanded mandate to manage the nation’s forest estate and provide high quality forestry related products and services. The new forest policy legislation has paved the way for doing forestry more responsibly through restructuring government and encouraging meaningful engagement with the private sector and community forest associations. The overall objective of the new reforms is increased contribution of forests to economic recovery and poverty alleviation on an environmentally and socially sustainable basis.
In line with this policy, one of the KFS first tasks was to begin the detailed mapping of all forest regions after which forest management plans (FMP) are to be drawn up for each area. This is being done forest by forest. Once the mapping and FMPs for each area are completed, the areas are being put out for tender for the development of high-end eco-tourism facilities in each area on long term leases (25 x 25 years).
On reflection, it is indeed surprising that there have always been limited eco-tourism facilities in the forests as they are among the most beautiful, bio-diverse and pristine wilderness areas in the country. Traditionally, high-end eco-tourism facilities have been limited to the national parks and reserves under the auspices of the KWS or the local councils. To date, tenders have been put out for forests in the Mount Kenya region and the Arabuko-Sokoke Forest at the North Coast. The results of the tenders were announced in early October 2008. The next areas expected to be tendered in early 2009 are the greater Aberdares area and the Maasai Mau Forest.
The aim of the tender exercise is not only to raise revenue for the KFS through rental agreements, but to preserve the forests from continued degradation and exploitation from forest adjacent dwellers (FAD) by unlocking the commercial value of the forests and providing the FADs with alternative sources of income and therefore decreasing their dependency on forest products.
The successful tenderers have placed these themes at the core of their proposals. The idea is that the construction of eco-tourism facilities in these areas will provide long term employment for the FADs through construction, the sale of local goods and services, employment through lodge staffing, guiding etc. as well as the establishment of community trust funds financed by a percentage of profits or bed nights. The combined effect of this will be to greatly lessen, if not completely stop, the continued degradation and deforestation of these areas.
Carbon Credit Markets for Forestry
The timing could not have been better given the emergence of the carbon trading market under the Kyoto Protocol: Countries that create carbon emissions buy certified emission reductions (CERs), i.e. issued credits that can be bought and sold on the official carbon trading market, from developing countries to offset their emissions. Carbon offsets can come from many sources, but are dominated by three types of projects:
* Forestry sequestration, i.e. the avoidance of deforestation or the planting of new forests (36%),
* Renewable energy, i.e. generating power with clean renewable sources, e.g. wind and solar (33%); and
* Industrial gases, i.e. containing and storing industrial gases created by industry so they are not released into the atmosphere (30%).
Deforestation in tropical countries is often driven by the economic reality that forests are worth more dead than alive. But the emerging markets for carbon credits could radically alter that equation. A study conducted by the World Agroforestry Centre found that ventures that prompted deforestation, such as clearance for agricultural purposes, charcoal burning, wood fuel etc. rarely generated more than USD5 for every ton of Co2 equivalent they released and frequently returned less than USD1. Meanwhile, European buyers are currently paying about USD35 for an offset tied to a one-ton reduction in Co2 emissions.
Even though the Kyoto Protocol stopped short of recognising forest protection as a source of CERs, a parallel voluntary market has sprung up. Voluntary offset trading stems from a variety of sources – people trying to offset their carbon footprints, businesses seeking to reduce their greenhouse gas emissions, or major events trying to be carbon neutral, such as the Olympics, the Super Bowl etc. To date, avoidance of deforestation is still confined to the voluntary market, which is still a small part of all carbon trading and buying, with a value of USD331m in 2007 as opposed to the Kyoto Protocol’s CDM and EU’s emission trading scheme worth USD64bn. But the voluntary markets grew more rapidly in the preceding year, tripling in value from USD91m in 2006, whereas the CER market only doubled in value. This trend is set to continue as the voluntary offset market is expanding at an astounding rate and, though still in its infancy, is one of the fastest growing markets on the planet. Any doubts about the importance of the voluntary carbon market should have been removed by Merrill Lynch’s announcement in early 2008 of a new carbon offset service to assist businesses to reduce emissions through voluntary offsets: Merrill Lynch’s managing director has valued the market at over USD70bn.
There are moves afoot to have reduction and prevention of deforestation included in the list of CERs to give them even greater value. An initiative to reduce emissions from deforestation (‘REDD’) was approved at the UN climate talks in Bali in December 2007. At that event, it was suggested that cutting global deforestation rates by even 10% could generate up to USD13.5bn in carbon credits.
At a recent meeting in Manhattan on forest conservation, economic development and climate, two Nobel laureates, Al Gore and Kenya’s Wangari Maathai, joined the push to include forest preservation in carbon-trading markets as a way to curb greenhouse gases and help poor rural communities. At the same meeting, the president of the US branch of the World Wildlife Fund (WWF) said ‘Unless the world has policies that recognise the value of standing trees and forests, we have failed. In Kyoto, WWF was pivotal in keeping forests out. We have changed our position.’
The Kyoto treaty expires in 2012 when a new treaty is expected to be signed in Stockholm. It is hoped that avoidance of deforestation will then be recognised as a clean development mechanism (CDM). It has been noted that developing countries are unlikely to sign on the new treaty unless there is a prospect of money flowing into their direction in to compensate for revenue that would be lost if deforestation slows.
Kenya, Forestry and Carbon Credits
Linking these developments to the KFS and Kenyan forests, it is easy to see how Kenya can benefit from the carbon market whilst ensuring that its natural resources are valued, and more equitable revenue opportunities are created. Kenya’s population is currently estimated at 32m, with an average national growth rate of 2.57% (2006 estimate). This growth has put tremendous pressure on the country’s natural resources, particularly land, water and forests. Land use practices have disregarded land potential and carrying capacities. Marginal areas have been encroached upon, accelerating loss of productivity, hence increasing desertification and loss of biodiversity. The search for productive land has further threatened environmental sustainability as forests, both indigenous and commercial, are cleared for agricultural purposes, timber and fuel wood. Amongst other values, endangered forest resources provide direct benefits in the form of fuel, food, pastures, construction materials and traditional cures to about 3.5 million people living adjacent to forests. In addition, the forests globally influence the microclimates.
Aerial surveys and assessments of important water towers Mount Kenya, Aberdares and Mau – show the continued threats to the forests that have had diverse negative impacts in the immediate and macro-environments, notably through increased soil erosion, as well as the destruction of Kenya’s catchments areas. This contributes to polluted water sources as well as a chronic country-wide water shortage, and in turn affects the energy sector through the country’s dependence on hydro-power. The costs of timber and other related products continue rising.
Environmental degradation undermines livelihoods and future opportunities among the country’s population, where 75% of the poor, or 56% of the overall population, live in rural areas. Rural poor depend on their natural resources to survive, and so there is a strong correlation between sound environmental management and poverty reduction. In addition, the tourism industry accounting for 10% of the GDP and a major foreign exchange earner largely depends on prudent management of the environment, including the wildlife and forests.
If through the protection of existing forests via the new tender initiatives KFS can corner even a small piece of the voluntary carbon market, the financial and environmental rewards could potentially be enormous. This money would sustain Kenya’s forests into the future. With sensible management, the flow on benefits would be untold for both the protection of the forests and the surrounding communities. Income generated could then be used to upgrade infrastructure, replant degraded areas, fund clean energy schemes within the forests e.g. hydro electric, solar power etc. that in turn would generate more credits. Funds could also be used to resettle illegal forest dwellers within areas such as Kakamega and the Maasai Mau forests and to provide them with sustainable employment on the reforestation and other initiatives.
So whether it was a happy co-incidence that the reforms of the Forest Department came at the same time as the opportunities for funding under carbon trading schemes or whether the Kenyan Government had something bigger in mind, this is clearly a turning point. If Kenya’s government and parastatals act to take advantage of the substantial funds available, Kenya’s forests can be saved, and wealth created for the custodians of those forests. The Director of the KFS, Mr. David Mbugua, said recently that the service was charged by both Kenya’s society and the international community with the task of protecting forests while at the same time ensuring they continue to provide socio-economic and environmental benefits for present and future generations. The international carbon market would indeed make it possible to grow money on trees.
Monday, November 24, 2008
Saturday, November 22, 2008
Solar Power's Explosive Growth - Who Will Emerge Next?
Rogol Energy Consulting Bill Kanzer, 617-262-5701 marketing@photonconsulting.com First Solar Inc. is probably the most exciting company in the solar power industry. It has remarkably low production costs, explosive growth and unique technology. Furthermore, this thin-film solar panel manufacturer is one of the first PV (photovoltaic, solar electric) companies to compete directly with the conventional energy industry.
The entire PV industry has been experiencing tremendous growth, and that growth is expected to continue. In select regions that have the right combination of high electricity prices and good financial incentives, solar electricity already competes with conventional household electricity. As expected cost reductions continue, the size of these markets will continue to grow.
According to Solar Annual 2008, a new report by PHOTON Consulting, by 2012, solar power may constitute 35% of all electric capacity additions, and thereby move from the fringe of the electricity sector to the mainstream.
This subject and more will be discussed as part of the Searching for 'Second Solar'" Conference Series, a series of three conferences to be held in San Francisco on Dec. 2-4, 2008 by PHOTON Press, the world's largest publisher specializing in solar energy, and the Boston-based consulting branch PHOTON Consulting.
The entire PV industry has been experiencing tremendous growth, and that growth is expected to continue. In select regions that have the right combination of high electricity prices and good financial incentives, solar electricity already competes with conventional household electricity. As expected cost reductions continue, the size of these markets will continue to grow.
According to Solar Annual 2008, a new report by PHOTON Consulting, by 2012, solar power may constitute 35% of all electric capacity additions, and thereby move from the fringe of the electricity sector to the mainstream.
This subject and more will be discussed as part of the Searching for 'Second Solar'" Conference Series, a series of three conferences to be held in San Francisco on Dec. 2-4, 2008 by PHOTON Press, the world's largest publisher specializing in solar energy, and the Boston-based consulting branch PHOTON Consulting.
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