Supporting Renewable Energy Policy:
How can South African best make use of
the carbon markets?
Emily Tyler – Climate Change Practise
Centre for Renewable and Sustainable Energy Studies,
August 2007
Overview of the structure of the
Carbon Market in 2007
Two principle types of trading schemes:
– Cap and Trade
– Baseline and Credit
Kyoto vs non-Kyoto
Voluntary vs Mandatory
Carbon offsets
2
Cap and Trade KYOTO
VOLUNTARY ET, EU ETS CCX, NSW CDM, JI GS Voluntary, Plan Vivo, The Climate Group Baseline and Credit 3
Canadian
Scheme
Starting…
EU scheme
started 2005
UK scheme
started 2002
Japanese
Scheme
planned
Chicago
Climate
Exchange
V
V
CDM
V
V
CDM
V
CDM
CDM
V
RGGI
Individual states
joining EU ETS?
New South
Wales scheme
National
scheme
by 2012?
South Africa and the Carbon Market
Cap and Trade KYOTO
VOLUNTARY
ET, EU ETS CCX, NSW CDM, JI GS Voluntary, Plan Vivo, The Climate Group Baseline and Credit 5
CDM vs Voluntary
• Voluntary easier, good for small
community based projects, high SD
• But contentious
• Interim measure?
• Post 2012, CDM lower risk
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How do Renewables Projects Fare?
State and Trends of the Carbon Market, WB, 2007
7
Kaphil Vaghela, Industrial Development Bank of India, based on WB analysis
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Figure 6: Programmatic CDM, CERs and DD Scores
350
Fugitive
Landfill gas
Annual CERs/project (1,000s)
300
250
Geothermal
Programmatic (new meths)
200
150
Cement
100
Agriculture
Programmatic (all)
Wind
Biomass energy
50
Fossil fuel switch
EE industry
Hydro
Biogas
EE service
0
0
10
20
30
40
50
Solar
EE house
60
DD Score
Notes: HFC and N2O projects are not plotted on this graph.
Source: IISD Development Dividend Paper 2
9
However!
• Carbon Finance is an important revenue source
• Call for tighter targets to increase carbon price
• Opportunity for govt: financial mechanism to
support RE policy
• More targeted approach to facilitate private
sector uptake
• Economies of scale for small point source
emissions: Programmatic CDM
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Drafting Group
Other funding
sources
- Housing subsidy?
- Dept Health?
- International
Donor?
SHF
Beneficiary’s
contribution
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And finally…
Interaction with TRECs
Thank you
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