CARBON-BALANCE

An examination of the regional distribution of the regional distribution of registered CDM projects tells a fascinating story. As of 2009 there are 1584 registered projects under the CDM distributed over fifty-five (55) countries. Less than two percent (2%) of these projects are in Africa. Twenty six percent (26%) are in Latin America and the Caribbean. Asia and the Pacific host almost three quarters (71%) of registered CDM projects. On the evidence it appears that the global distribution of clean technology investments under the CDM follows the same broad pattern of Foreign Direct Investments.

I will be starting a series of post of the CDM: what has been achieved over the past decade. The aim is to provide some analysis of the effectiveness and efficiency of CDM in light of the flood of recent criticisms. The first post examines the scale distribution of CDM registered projects: Suffice to state that it is not as biased one would expect. Based on the most recent data from the UNFCC more than 43% of the projects registered under CDM are in fact small scale projects. In effect only about 57% of the 1534 projects under the CDM Scheme are large scale projects. Does this bode well for small developing states?

The battle-lines are being drawn and the contours of policy debate sharpens as the Obama administration continues to signal its intention to institute some form of Carbon emission control measure in the USA. FedEx Chief Executive Officer Fred Smith adds his opinion on the matter. Smith who is part of the Energy Security Leadership Council : a group of military and business leaders and has been outspoken on energy issues advocates a straight carbon tax. Fred Smith said he is in favor of a carbon tax, but that he does not agree with the Obama Administration’s proposal for a cap-and-trade system for carbon emissions.

IMAGINE THE BEAUTY, TAKE IN THE SCENERY, BREATH AND APPRECIATE LIFE

Island Nations Honored for Taking Stand on Climate Under Ozone Treaty Environmental News Network (ENN) will be reporting that: Mauritius and the Federated States of Micronesia (FSM) will be honored today; Tuesday, April 21st 2009, with a Climate Protection Award from the U.S. Environmental Protection Agency for their outstanding contribution to climate protection under the Montreal Protocol ozone treaty.

Professor William Nordhaus' presentation to the Copenhagen Climate Change Congress Plenary Session, 11 March 2009 continues to reverberate. His first strike is against the present Kyoto Regime; as he puts it “the world should dump the “inefficient and ineffective” Kyoto protocol and replace it with a global carbon tax...” The central premise of his proposal stems from the question of "how the goals of climate policy can be effectively and efficiently implemented on the national and sub-national scale"? To this end he suggests that "We need to move the burden of taxation away from labour to resources — and tax not just on carbon but other resources such as water to tackle the far wider environmental and resource problems we face.” Given how difficult it maybe to scrap the Kyoto Regime given the political economy considerations, I think that the measures worth exploring as suggested by Professor Nordhaus include : • Modifying the Kyoto Protocol to include tax-type mod...

Reports from the Guardian: Alistair Darling will use this week's budget to announce an extra £500m of government spending on reducing carbon emissions , including a pledge of £40m to top up and keep open a grants programme for renewable-energy technologies. Several companies and campaign groups are planning to deliver a petition to Downing Street today demanding that the government put greater support for renewable energy in place. Britain is the second-worst performer in the European Union in terms of the amount of energy coming from renewables, and is a long way behind Germany, Denmark, Spain and Portugal.

UK Government buildings emit more CO2 than all of Kenya Public buildings in England and Wales are pumping out 11m tonnes of carbon dioxide a year, more than Kenya's entire carbon footprint. (The Guardian)

Kenya signs its first REDD deal to conserve forests: Mongabay.com is reporting that Kenya has signed its first carbon deal to reduce emissions from deforestation and degradation (REDD). Kenya has signed its first carbon deal to reduce emissions from deforestation and degradation (REDD). San Francisco-based Wildlife Works Carbon and Kenya Forest Service (KFS) announced a plan to protect the 80,000-acre Rukinga forest reserve in southeastern Kenya. The project will be funded by sales of carbon credits in the voluntary carbon market. The credits will be certified under the Voluntary Carbon Standard (VCS).

Financing the move to low-carbon economic development remains a crucial part of any discussion of Carbon Finance. An interesting paper by Wagner, Keohane, Petsonk, and Wang provides a valuable framework to address that issue. To them, financing the transition to low-carbon economic development must be the focus of any framework to encourage developing countries’ participation in the global carbon market... the essence of Clean Investment Budgets (CIBs). Their framework includes the proposal that emerging economies could adopt binding limits on greenhouse gas emissions, set above current levels but within economic and environmental constraints. Such a step would enable these nations to access carbon finance immediately and far more efficiently than existing and proposed mechanisms.

The threat of global warming can be significantly lessened if nations cut emissions of heat-trapping greenhouse gases by 70 percent this century, according to a new study by the National Center for Atmospheric Research (NCAR)

How much should made of the recurring EU attempts to refine the parameters of the CDM? Following earlier proposal by the EU Commission that the CDM should be limited to LDCs, a Carbon Finance is reporting the EU is ready to close its doors to credits from such programmes – threatening global emissions trading... This follows from a position paper issued by the International Emission Trading Association (Ieta) where in The EU is proposing to phase out "one of the main private finance success stories of the Kyoto protocol" . The more things change the more they do remain the same: The EU as a major stakeholder has every right to shape the nature of any global carbon finance regime, but this is not a carte-blanche for unilateral re-modification of the most successful element of the Kyoto Agreement. The EU can not be allowed to limit the beneficiaries of the CDM for their own gains.

How much of the $95 billion on clean technology transfer to developing countries from richer nations from The UN’s Clean Development Mechanism ( CDM) stands to produce has actually occured? Are these CDM projects and by extension the "distribution of clean or low-emissions technology evenly spread around the developing world?" The study, “Analysis of Technology Transfer in CDM Projects,” provides some initial answers: Roughly 36% of the projects accounting for 59% of the annual emission reductions claim to involve technology transfer. Technology transfer is more common for larger projects and projects with foreign participants. Technology transfer is very heterogeneous across project types and usually involves both knowledge and equipment. The technology originates mostly from Japan, Germany, the USA, France, and Great Britain. Unilateral and small-scale projects involve less technology transfer, possibly due to their smaller size: Unilateral project constitutes 39% of a...

How big will a US Carbon Market be? Well New Carbon Finance research economists have taken the first crack at the estimation. According to their initial prediction; The U.S. will be home to a $1 trillion carbon emission market by 2020 if federal and state policymakers continue on their current path towards a cap-and-trade program that is confined to domestic trading only... The researchers predict that in 12 years a carbon-constrained U.S. economy that includes a cap-and-trade system allowing only domestic trades will produce: The reproduced chart says a thousand words !!

This seems to be the main point from a UK government-sponsored study to be released later this year as Reported by the Times Green Digest. The study recommends that the price of European carbon permits should be at least 85 GBP (pounds), about eight times the present price, if they are to meet their goal of getting polluters to cut emissions . Presently carbon permits under Europe’s Emissions Trading Scheme (ETS) are trading at about 11 pounds per ton.

Forestry related projects promoting afforestation and or reforestation are central to the CDM. Not surprising a number of these projects have been approved and are under consideration from Asia to South America. Its importance was underlined when the Precious Woods project in Brazil secured Latin America’s largest issue of carbon credits under Kyoto’s Clean Development Mechanism ( CDM ).: 512,000 CERs. Greenpeace is sounding the alarm warning that the : Inclusion of forest conservation in a market-based mechanism for reducing greenhouse gas emissions would crash carbon prices by swamping the market with cheap credits. .. low carbon prices would "derail global efforts to tackle global warming" and cause "developing countries losing out on billions of dollars a year for investment in clean energy technologies". To that effect Greenpeace is, proposing a hybrid market linked Tropical Deforestation Emission Reduction Mechanism (TDERM) under the UNFCCC and its Kyoto Prot...

I think its worth revisiting a topic I raised earlier : The much discussed trade of between environmental goals and economic growth. As I noted earlier only the skeptics seem to be convinced of this trade of despite mountains of evidence and analysis to the contrary. On that note here is a video from The McKinsey Quarterly of economist Nicholas Stern on the economic downturn and its effect on the climate change agenda.

Kenyan designers have built a cooker that uses trash as fuel to feed the poor, provide hot water and destroy toxic waste, as well as curbing the destruction of woodlands... While the prototype cooker, in Kibera's Laini Saba village, has been dogged by local squabbles, drought and design problems, it proved the idea worked. A tall chimney carries the once-choking fumes away and initial emissions tests have been favourable, Archer's firm says. Now the Kenyan Red Cross is preparing to install similar cookers in the Dadaab and Kakuma refugee camps near the Somali border, where cholera has already broken out this year, and at least one European aid organisation is looking at wide deployment. This mirrors the highly successful Carbon Neutral's Fuel-efficient Cooking Stove project in Eritrea which is estimated to save 300,000 tons CO 2 e per year.

The largest economy in Africa steps up as it stands South Africa is the largest emitter on the African continent, depending on coal for 90 percent of its electricity needs. Despite that fact, moves to diversify to other energy sources have so far stalled due to a lack of policy framework and incentives for investors. In the latest bid to rectify that situation: South Africa's regulator (NERSA) has approved renewable energy tariffs to boost investment in the sector that would help meet the country's target on alternative energy,...

Finally those most vulnerable to Global Warming are speaking out: Small island states have sharpened their calls for the rich to make deep cuts in greenhouse gas emissions, saying low-lying atolls risk being washed off the map by rising ocean levels. An alliance of 43 island states, backed by more than a dozen nations in Africa and Latin America, urged developed countries at U.N. climate talks in Bonn on Thursday to cut greenhouse emissions by "at least 45 percent below 1990 levels by 2020".

This week I will starting a series of post providing important updates and developments from Carbon Markets outside the EU and developments in the US. Tokyo bought about 2 million tonnes in the past year of carbon offsets generated by clean energy projects in developing countries, called certified emission reductions (CERs)... In the two years through March 2008, Tokyo had concluded contracts to buy a total 23.04 million tonnes from abroad, all of which were CERs generated by projects in developing countries under Kyoto's Clean Development Mechanism (CDM).

Reuters is reporting that it appears that industry data for 2008 carbon dioxide emissions shows a permit shortage in The European Union's Emissions Trading Scheme . In effect there was "undershooting" of carbon permits issued under the EU ETS. This in effect meant that EU industries emitted allocated quota of permits. COUNTRY 2008 2008 2007 EMISSIONS ALLOCATIONS EMISSIONS Austria 32.2 30.2 31.8 Belgium 55.5 55.8 52.8 Bulgaria N/A N/A 39.2 Cyprus N/A N/A 5.4 Czech Rep. 77.9 85.4 87.8 Germany 472.6 388.8 487.1 Denmark 26.5 24.0 29.4 Estonia 13.5 11.7 15.3 Spain 162.7 151.7 186.6 Finland 36.2 36.5 42.5 France 112.2 129.5 126.6 UK 265.0 ...

If you want a gist of the the debate in the US please listen to this contribution to the Senate Finance Committee. Start from 1:56 of the video

In the previous post I made a reference to Mayor Bloomberg's Proposal on using wind energy in New York City. Here are the relevant links. Audio Link Text Link (Press Release)

Phoenix's Mayor Phil Gordon wants to make his city America's first carbon-neutral city. Seems like the race is on in the US. This follows on Mayor Bloomberg's proposal at the 2008 National Clean Energy Summit to make New York City a clean-energy powerhouse through off-shore and on-building wind farms.

Though the skeptic position on the trade-off between environmental policy and economic growth has been largely debunked (see here) and (here) for a start, questions still persist. One strain of the latest version of this debate focuses on the cost to developing countries in terms of lower growth rate. For those interested in this debate should read The World Bank's "Low Carbon High Growth - Latin American Responses to Climate Change". A few extracts are worth stating: Given its past record of low-carbon development, its wealth of natural resources, and its intermediate levels of income—when assessed on a global scale— many Latin American countries are well placed to take a leadership role in the developing world’s response to the climate change challenge. This is not only possible; it is also in Latin America’s best interest. Beyond adaptation policies, there is a strong case for Latin America to be an active part of a broader effort to mitigate climate change by means o...

The International Finance Corporation (IFC) announced the final approval of its revised social and environmental standards last month, ending a process that has been wracked by controversy. The revised standards are expected to be reflected in changes in coming weeks to the Equator Principles, a voluntary set of project finance guidelines. The new Performance Standards introduce a number of additional requirements to IFC’s lending criteria. For example, large companies in the developing world applying to the IFC for a loan will now have to report on their greenhouse gas emissions. Other additions include stronger safeguards on biodiversity protection, the introduction of grievance mechanisms for workers and local communities, new measures on the use of security services, and guarantees for community health and safety.

Carbon TradeEx America 2009 on April 7-8, 2009 at the Washington, DC Convention Center.

Positive news on the USA front towards Cap and Trade.The discussion draft of The Waxman-Markey - “The American Clean Energy and Security Act of 2009 ” is now public. The Summary can be found here. For those interested in a more detailed version click here