CARBON POLICY AND CREDITS Parikhit (Ricky) Sinha, Ph.D.
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CARBON POLICY AND CREDITS Parikhit (Ricky) Sinha, Ph.D. File Location/creator initials/Business Unit/client/month & year/file name.ppt Climate Change Impacts File Location/creator initials/Business Unit/client/month & year/file name.ppt Global & Regional Climate Impacts CO2 concentrations exceed natural variability 20% decline in summer sea ice extent in past 30 years File Location/creator initials/Business Unit/client/month & year/file name.ppt Northeast Climate Impacts Report CO2 Emissions per Person Northern Australian Environment Alliance File Location/creator initials/Business Unit/client/month & year/file name.ppt International GHG Policy File Location/creator initials/Business Unit/client/month & year/file name.ppt Kyoto Protocol ¾ 185 member states agreed to reduce GHG emissions to levels 5.4% below their 1990 emissions by 2012 ¾ Set of international legally binding agreements pertaining to global warming. ¾ Based on a cap-and-trade model ¾ Adopted in 1997 File Location/creator initials/Business Unit/client/month & year/file name.ppt Recent International GHG Policy ¾ 2007 - U.N. Intergovernmental Panel on Climate Change (IPCC) releases 4th assessment report concluding: with 90% confidence that the global average net effect of human activities since 1750 has been one of warming ¾ 2007 U.N. Climate Change conference in Bali 180 countries agree to negotiate new global climate agreement in 2009 ¾ 2007 - U.S. Supreme Court rules that U.S. Environmental Protection Agency has authority to regulate greenhouse gases ¾ 2007 - IPCC and Al Gore win Nobel Peace Prize ¾ 2007 - China overtakes United States as largest GHG emitter. ¾ 2008-2012 Kyoto protocol commitment period Annex B countries must collectively reduce GHG emissions by 5% below 1990 levels File Location/creator initials/Business Unit/client/month & year/file name.ppt U.S. Federal GHG Policy Barack John Obama McCain Cosponsor of the 2007 Global Warming Pollution Reduction Act (reduce greenhouse gas emissions in the U.S. by 80% in the year 2050) Co-author of the 2005 Climate Stewardship and Innovation Act (reduce greenhouse gas emissions in the U.S. by 60% in the year 2050) Pledged to create a domestic cap-andPledged to invest $150 billion USD over trade program. the next decade in renewable energy. ¾ Lieberman-Warner Climate Security Act of 2008 Reduce greenhouse gas emissions in the U.S. by 63% in the year 2050 ¾ USEPA Notice of Proposed Rulemaking Regulating Greenhouse Gases under the Clean Air Act File Location/creator initials/Business Unit/client/month & year/file name.ppt U.S. States GHG Policy ¾ Multi-state Climate Registry Formal North American GHG registry 39 participating U.S. states File Location/creator initials/Business Unit/client/month & year/file name.ppt Other Market Drivers ¾ Carbon Disclosure Project Institutional investors with $57 Trillion in managed assets ask world’s largest companies to disclose their efforts to address climate change ¾ Greening of the Supply Chain As large retail and food service companies adopt sustainability programs, so do vendors supplying materials and resources to these companies ¾ Higher Education American College and University Presidents Climate Commitment ¾ Municipalities Clinton Climate Initiative ICLEI – Local Governments for Sustainability File Location/creator initials/Business Unit/client/month & year/file name.ppt GHG Emission Reduction ¾ Approach A Reduce direct emissions within your organization ¾ Approach B Acquire credits from emission reduction projects conducted outside your organization ¾ Carbon Credit GHG emission reduction generated by a verified emission reduction project Measured in tons of carbon dioxide equivalent. One carbon credit equals one ton of CO2e not-emitted or reduced against a baseline. ¾ Biofuels – fuel from plant material Carbon neutral File Location/creator initials/Business Unit/client/month & year/file name.ppt Emission Reduction Project File Location/creator initials/Business Unit/client/month & year/file name.ppt Emission Reduction Project Process File Location/creator initials/Business Unit/client/month & year/file name.ppt Additionality File Location/creator initials/Business Unit/client/month & year/file name.ppt Carbon Offset Broker Carbon Offset Broker File Location/creator initials/Business Unit/client/month & year/file name.ppt Carbon Markets ¾ Regulatory Markets California AB-32 Regional Greenhouse Gas Initiative ¾ Voluntary Markets Chicago Climate Exchange Over the Counter (OTC) Market ¾ Common Emission Reduction Project Types Landfill/Agricultural methane Forestry Energy efficiency Renewable energy File Location/creator initials/Business Unit/client/month & year/file name.ppt California Climate Action Registry (CCAR) ¾ Voluntary greenhouse gas registry that protects and promotes early actions to reduce GHG emissions by organizations ¾ Developed protocols to assist in the calculating, verifying and reporting of GHG emissions Livestock – capture and combustion of methane from manure management systems Forest – concentrate on forest carbon stocks and biological CO2 emissions Landfill – capture and combustion of methane from landfills File Location/creator initials/Business Unit/client/month & year/file name.ppt Regional Greenhouse Gas Initiative (RGGI) ¾ Multi-state cap and trade program with a market-based emissions trading system ¾ Phase I (2009-2015): stabilize emissions from the power sector at approximately current levels ¾ Phase II (2015-2019): 10% emissions decline from current level ¾ Offset Projects allowed: End-use energy efficiency improvements Converting non-forested land to forested land Landfill gas capture Agricultural methane capture sulfur hexafluoride (SF6) reduction from electric transmission and distribution (T&D) File Location/creator initials/Business Unit/client/month & year/file name.ppt Voluntary Carbon Market ¾ Chicago Climate Exchange (CCX) CCX market range from around US $1.50 to almost US$7 Global voluntary market on CCX was worth US $97 million in 2006 CCX reporting 180% growth in the first quarter of 2008 2008 projection; 80M tCO2e trade ¾ “Over-the-Counter”(OTC) market (i.e. Voluntary Carbon Standard) Voluntary OTC market was worth US$54.9 million in 2006 OTC market is dominated by (3) types of Projects – forestry sequestration (36%) – renewable energy (33%) – industrial gases (30%) Referred to as Verified or Voluntary Emissions Reductions (VERs) Current price of carbon credit transacted on OTC market = $6.10 – 49% increase from the 2006 average of $4.10 File Location/creator initials/Business Unit/client/month & year/file name.ppt Chicago Climate Exchange ¾ Cap and trade system ¾ Members make a voluntary, legally binding emission reduction commitment Phase I: reduce emissions by 1% per year for 4 years Phase II: reduce emissions by 6% below baseline by 2010 ¾ Allocated annual emission allowances in accordance with their emissions Baseline and the CCX Emission Reduction Schedule ¾ If reduce beyond target - surplus allowances ¾ If reduce below target - purchase CCX Carbon Financial Instrument® contract ¾ Commodity CFI contract which represents 100 metric tCO2e. – Exchange Allowances: issued to emitting Members in accordance with their emission baseline and the CCX Emission Reduction Schedule – Exchange Offsets: are generated by qualifying offset projects ¾ Available programs: Agricultural methane, Agricultural soil carbon, Rangeland soil carbon, Coal mine methane, Landfill methane, Forestry renewable energy, and Ozone depleting substance destruction www.chicagoclimatex.com ¾ Carbon trading value: $7.50 per metric ton CO2 File Location/creator initials/Business Unit/client/month & year/file name.ppt Voluntary Carbon Standard ¾ The VCS Program provides a global standard and program for approval of credible voluntary offsets. ¾ VCS offsets must be real (have happened), additional (beyond business-as-usual activities), measurable, permanent (not temporarily displace emissions), independently verified and unique (not used more than once to offset emissions) Main objective is to standardize and provide transparency and credibility to the voluntary offset market Launched in 2006, w/ the most recent version released in 2007 with the World Business Council for Sustainable Development as a founding partner Independent third party verification provided by validators and verifiers approved under a GHG Program recognized under the VCS or accredited under the ISO verification standards (ISO 14065) http://www.v-c-s.org File Location/creator initials/Business Unit/client/month & year/file name.ppt Conclusions ¾ Variety of GHG Market Drivers International, federal, state, municipal, business ¾ Variety of Carbon Markets Regulatory Voluntary ¾ Carbon Credit Verified Emission Reduction Renewable energy (e.g., biofuel) project File Location/creator initials/Business Unit/client/month & year/file name.ppt
