Tag: Carbon Accounting

Update on China: China Steps into Leadership Role as it takes Action on Climate Change

 
In his first comments as China’s prime minister, Li Keqiang recently laid out a vision of a more equitable society in which environmental protection trumps unbridled growth and government officials put the people’s welfare before their own financial interests.  While the Prime Minister was short on specifics, his comments represent an encouraging acknowledgment of some of the pressing issues facing China.

Traditionally, China has been used as a carbon scapegoat and excuse for inaction by countries such as Canada and the U.S., whose per capita emissions are much higher.  However the tables are turning with China beginning to take a leadership role in addressing climate change.  China’s emergence as a climate leader means that Canada and other countries can no longer point their fingers at China as an excuse for not taking action to reduce their own greenhouse gas emissions.

China to roll out Cap & Trade in 2013

As the world’s largest emitter of carbon dioxide, China is preparing to gradually roll out cap-and-trade pilot programs in seven major cities and provinces starting in 2013.  This initiative is part of a larger goal to reduce carbon intensity – or the amount of carbon dioxide emitted per unit of economic output – by 40% to 45% below 2005 levels by 2020.

In November 2011, the Chinese government decided to implement cap-and-trade pilots in two provinces and five cities (including Shanghai, Beijing and Shenzhen) beginning in 2013 with the final goal of implementing a nationwide exchange program by 2016.  In less than two years, officials have designed and started to implement seven trading trials that cover around one-third of China’s gross domestic product and one-fifth of its energy use.  If successful, the schemes could demonstrate that an emissions trading system will be an effective way for China to manage its greenhouse gas emissions.  In addition, China’s activities may spur policy makers in other countries such as the US to act.

Bloomberg New Energy Finance previously estimated that the regional pilots would cumulatively cover 800 million to 1 billion tonnes of emissions in China by 2015, meaning that the market would become the world’s second largest after the European Union.  It has been reported that at the beginning, regional and city-wide markets will remain separate with unique rules and criteria. For example, some of the markets will cover factories and industrial operations exclusively, while others will focus on power generation or non-industrial sectors.

The first trades took place in September 2012 in Guangdong province, when four cement-manufacturing companies invested several million dollars to acquire carbon pollution permits (allowances). The Guangdong scheme is expected to cover more than 800 companies that each emit more than 20,000 tonnes of carbon dioxide a year across nine industries, including the energy-intensive steel and power sectors.  These firms account for more than 40% of the power used in the province.  The Guangdong carbon market alone will regulate some 277 million tonnes of CO2 emissions by 2015.

China plans to open six further regional emissions-trading schemes in 2013, in the province of Hubei and in the municipalities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen.  It plans to expand and link them until they form a nationwide scheme by the end of the decade. A nationwide scheme could then link to international markets.

Until now, China’s experience with carbon trading has been limited to the Clean Development Mechanism under the Kyoto Protocol.  While China’s political system could let a carbon market grow faster than anywhere else because changes can be implemented quickly, the carbon market faces challenges in China.  In particular, China needs to develop and enforce proper legislation and regulations to measure, report and verify carbon emissions from industrial sites.  It also needs to build an effective framework to oversee the reporting and trading of carbon credits.

At this stage, the most urgent issue that needs to be addressed is how China collects and analyzes data on carbon emissions.  The credibility of China’s statistics on energy use and carbon emissions has been questioned partly because of the large discrepancies between numbers calculated using top-down data and numbers calculated using bottom-up data.  Without accurate numbers, the first transaction of the Guangdong trading scheme was based on expected future carbon emissions, rather than historical data.  Improved statistical methodology and political action will be required to boost the reliability of carbon emissions data in China.  China will also need specific laws to ensure transparent reporting and strong enforcement to prevent fraudulent or misleading claims about carbon emissions.

Chinese Carbon Tax on the Horizon

On the climate front, the Chinese government appears to be on the verge of taking a critical step which has been demonized by politicians in Canada and the USA – that is, implementing a carbon tax.  Although the carbon tax is expected to be modest, China plans to also increase coal taxes.

According to Jia Chen, head of the tax policy division of China’s Ministry of Finance (MOF), China will proactively introduce a set of new taxation policies designed to preserve the environment, including a tax on carbon emissions.  In an article published on the MOF web site in February 2013, Jia wrote that the government will collect an environmental protection tax instead of pollutant discharge fees, as well as levy a tax on carbon emissions.  The local taxation authority will collect the taxes, rather than the environmental protection department.  The article did not specify the level of carbon tax or when the new measures will be implemented.  In 2010, MOF experts suggested levying a carbon tax in 2012 at 10 yuan per tonne of carbon dioxide, as well as recommended increasing the tax to 50 yuan per tonne by 2020.  These prices are far below the 500 yuan (US $80) per tonne that some experts have suggested would be needed to achieve climate stability.

It is not anticipated that China’s plan will have a significant impact on global climate change, although the tax may have some beneficial impact within China itself, where air pollution is a serious problem.  A paper from the Chinese Academy for Environmental Planning suggests that a small tax could still raise revenue and provide an incentive to reduce emissions, thus bolstering China’s renewable energy industry.

To conserve natural resources, the government will push forward resource tax reforms by taxing coal based on prices instead of sales volume, as well as raising coal taxes.  A resource tax will also be levied on water.  In addition, the government is also looking into the possibility of taxing energy intensive products such as batteries, as well as luxury goods such as aircraft which are not used for public transportation.



 



	


	





	

		
		
European Parliament Approves New Rules for Monitoring GHG emissions, including Forestry and Agriculture
	


	
	
	

		
 

On March 12, 2013, the European Parliament approved two new laws to improve EU rules on monitoring and reporting of greenhouse gas (GHG) emissions, including those from forestry and agriculture.  It is expected that the Council will adopt these laws, after which they will be published in the Official Journal and enter into force.


Connie Hedegaard, European Commissioner for Climate Action, said: “These new rules will help Europe develop robust evidence-based climate policies and keep better track of progress towards meeting our emission targets. They improve transparency, coordination and the quality of data reported, and forest and agriculture emissions will now be accounted for in a harmonised way. We hope that these new rules will also set an example in the context of the international climate negotiations and serve as a benchmark for transparency of climate action by other countries.”


Monitoring Mechanism


The Monitoring Mechanism Regulation enhances the current reporting rules on Member States’ GHG emissions in order to meet requirements arising from current and future international climate agreements, as well as the 2009 climate and energy package. In particular, the revised Monitoring Mechanism aims to help the EU and Member States keep track of progress towards meeting their emission targets for the period 2013-2020 and to facilitate further development of the EU climate policy mix. The EU and Member States already cooperate to monitor and report GHG emissions, producing annual GHG inventories which are used to assess progress towards meeting Kyoto Protocol emission targets. In addition, information is compiled on GHG projections and on policies and measures to reduce emissions.


The revised rules aim to improve the quality of data reported and introduce some new elements, such as:


    

  • reporting of emissions and removals from land use, land use change and forestry (LULUCF);
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  • reporting of Member States’ adaptation to climate change;
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  • reporting of Member States’ and the EU’s low-carbon development strategies;
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  • reporting on financial and technical support provided to developing countries, and commitments arising from the 2009 Copenhagen Accord and 2010 Cancún Agreements;
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  • reporting on Member States’ use of revenues from the auctioning of allowances in the EU emissions trading system (EU ETS). Member States have committed to spend at least half of the revenue from such auctions on measures to fight climate change in the EU and third countries.
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LULUCF


The second law approved by the European Parliament establishes common rules for accounting for GHG emissions and removals of carbon from the atmosphere resulting from activities related to land use, land use change and forestry (LULUCF).  This represents a first step towards incorporating the forestry and agriculture sectors – the last major sectors without common EU-wide rules on GHG emissions – into EU climate policy. Forests and agricultural lands cover more than three-quarters of the EU territory and naturally hold large stocks of carbon, preventing its escape into the atmosphere. If their capacity to “trap” carbon were improved by just 10 percentage points (for example through improved forest or grassland management), this would remove the equivalent of annual emissions of 10 million cars from the atmosphere.


This decision requires Member States to report on their actions to increase removals of carbon and decrease emissions of greenhouse gases from forests and soils. While the law does not currently include national emission reduction targets for these sectors, such targets may be introduced at a later stage once the accounting rules have proven robust.


More information is available from the European Commission

 



	


	





	

		
		
RGGI Proposes Tightening its Regional CO2 Emissions Cap by 45%
	


	
	
	

		
 

Following a comprehensive two-year program review, the nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI), the United States’ first market-based regulatory program to reduce greenhouse gas emissions, released an updated RGGI Model Rule and Program Review Recommendations Summary in February 2013.


The changes outlined in the Updated Model Rule and Program Review Recommendations Summary are aimed at strengthening the program by making the following improvements:


    

  • A reduction of the 2014 regional CO2 budget (the RGGI cap) from 165 million to 91 million tons – a reduction of 45%. The cap would decline 2.5% each year from 2015 to 2020.
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  • Additional adjustments to the RGGI cap from 2014-2020, which will account for the private bank of allowances held by market participants before the new cap is implemented in 2014. From 2014-2020 compliance with the applicable cap will be achieved by use of “new” auctioned allowances and “old” allowances from the private bank.
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  • Cost containment reserve (CCR) of allowances that creates a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, rising by 2.5 percent, to account for inflation, each year thereafter.)
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  • Updates to the RGGI offsets program, including a new forestry protocol.
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  • Requiring regulated entities to acquire and hold allowances equal to at least 50% of their emissions in each of the first 2 years of the 3 year compliance period, in addition to demonstrating full compliance at the end of each 3 year compliance period.
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  • Commitment to identifying and evaluating potential tracking tools for emissions associated with electricity imported into the RGGI region, leading to a workable, practicable, and legal mechanism to address such emissions.
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The original RGGI cap was set at 2009 emission levels, with the expectation that emissions would grow. However, emissions have dropped dramatically because of the use of natural gas and other efficiencies in the RGGI states, reducing the demand for the permits. This resulted in depressing the RGGI permit price for carbon credits to under US $2, which is far below the projected US $20-$30. It is anticipated that the lower cap will stimulate interest and raise RGGI permit prices in the next auction. Analyses indicate that the proposed program changes will result in a modest increase in allowance prices, with allowances expected to be priced at approximately US $4 ($2010) per allowance in 2014 and rising to approximately US $10 ($2010) per allowance in 2020. In addition, analysts expect that the proposed program changes will reduce projected 2020 power sector CO2 pollution more than 45% below 2005 levels.


With the release of the Updated Model Rule, the RGGI states now plan to revise their CO2 Budget Trading Programs through their individual state-specific statutory and regulatory processes. Each RGGI state seeks to complete their state specific processes such that the proposed changes to the program would take effect on January 1, 2014. A summary of the program review is available online.

 



	


	





	

		
		
Ontario Ministry of Environment seeks input on Greenhouse Gas Discussion Paper
	


	
	
	

		
 

On January 21, 2013, the Ontario Ministry of the Environment (MOE) released a discussion paper entitled Greenhouse Gas Emissions Reductions in Ontario. The purpose of the paper (available online): is to support discussions and gather feedback on the development of a greenhouse gas (GHG) emissions reduction program. In addition, these discussions will elicit information to support Ontario’s intention to obtain equivalency with the developing federal greenhouse gas regulations in certain sectors (including natural gas‐fired electricity generation), meaning that Ontario industries will not be subject to duplicate requirements.


In 2007, Ontario introduced its Climate Change Action Plan which includes the following GHG emissions reduction targets:


    

  • 6% below 1990 levels by 2014,
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  • 15% below 1990 levels by 2020, and
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  • 80% below 1990 levels by 2050.
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Ontario estimates that current initiatives to reduce greenhouse gas emissions will deliver 60% of the reductions needed to reach the 2020 reduction target. While a GHG emissions reduction program alone will not close the gap, it will play an important role in moving Ontario towards its goal of being 15% below 1990 emissions levels by 2020.


The program elements presented for discussion in the paper have been developed based on a set of key principles aimed at balancing Ontario’s economic and environmental interests. These principles include:


    

  • Achieving absolute reductions in greenhouse gas emissions in a cost‐effective way that considers competitiveness and supports achieving equivalency with the federal government.
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  • Simplicity, consistency, transparency and administrative efficiency.
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  • Striving to treat sectors and facilities equitably.
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  • Taking into account early action by industry leaders.
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  • Using accurate and verified emissions data to support policy development.
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  • Promoting development and deployment of clean technologies.
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  • Considering broad alignment with other emissions reduction programs of similar rigour that provides opportunity for linking in the future.
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  • Considering integration with other provincial environmental policies.
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The paper indicates that Ontario’s program would initially limit GHG emissions from fossil fuel-fired electricity generators and large GHG emitters in certain industries, including petroleum refining, chemicals, steel, cement and pulp and paper. The paper also indicates that the program would limit emissions from facilities in these sectors (other than the electricity generation sector) to the level of their current total emissions, with the limit declining thereafter by 5% over five years. Although it does not explicitly advocate a cap-and-trade system, the paper does suggest that the MOE will consider the use of emissions trading mechanisms to establish a carbon price and provide businesses with options on how to achieve reductions at the lowest cost.


In addition, the paper proposes that Ontario’s program would be in place one year prior to federal regulation of greenhouse gases from industry. A one year window will provide time for the province to negotiate and finalize an equivalency agreement with the federal government to ensure there is a single regulator for greenhouse gas emissions in the province.


Ontario acknowledges that other North American jurisdictions are also taking action to address emissions of GHGs. It notes that Quebec, British Columbia, Alberta, Saskatchewan and Nova Scotia all have or are developing regulations to reduce greenhouse gases. It also notes that in the USA, the Regional Greenhouse Gas Initiative limits emissions from electricity generation in north-eastern states, while California has introduced a broad greenhouse gas emissions trading regime with an intention of linking to Quebec’s program.


The MOE will accept submissions on the discussion paper until April 21, 2013. For further information, please refer to the Environmental Registry: Here

 



	


	





	

		
		
What are Greenhouse Gases?
	


	
	
	

		
 

Gases that trap heat in the atmosphere are called greenhouse gases or GHGs.  When sunlight reaches the Earth’s surface, it can either be reflected back into space or absorbed by Earth. Once absorbed, the planet releases some of the energy back into the atmosphere as heat (also called infrared radiation). GHGs like water vapor (H2O), carbon dioxide (CO2) and methane (CH4) absorb energy, which slow or prevent the loss of heat in to space.  This process is commonly referred to as the “greenhouse effect”, whereby GHGs act like a blanket, making the Earth warmer than it would otherwise be.


Since the Industrial Revolution began around 1750, human activities have contributed substantially to climate change by adding CO2 and other heat-trapping gases to the atmosphere. These GHG emissions have increased the greenhouse effect, leading to rises in the Earth’s surface temperatures. According to the National Research Council (Advancing the Science of Climate Change, 2010), atmospheric CO2 concentrations have increased by almost 40% since pre-industrial times, from approximately 280 parts per million by volume (ppmv) in the 18th century to 390 ppmv in 2010.  The current CO2 level is higher than it has been in at least 800,000 years.  The primary human activity affecting the amount and rate of climate change is greenhouse gas emissions from the burning of fossil fuels for electricity, heat, and transportation.


The main GHGs directly emitted by humans include CO2, CH4, nitrous oxide (N2O), and several others:


    

  • Carbon dioxide (CO2):  CO2 is absorbed and emitted naturally as part of the carbon cycle through animal and plant respiration, volcanic eruptions, and ocean-atmosphere exchange. Human activities, such as the burning of fossil fuels and changes in land use, release large amounts of carbon to the atmosphere, causing CO2 concentrations in the atmosphere to rise.
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  • Methane (CH4):  Methane is emitted during the production and transport of coal, natural gas, and oil. Methane emissions also result from livestock and other agricultural practices and by the decay of organic waste in municipal solid waste landfills.
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  • Nitrous oxide (N2O): Nitrous oxide is emitted during agricultural and industrial activities, as well as during combustion of fossil fuels and solid waste.
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  • Fluorinated gases or F-gases: Chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6) are synthetic, powerful GHGs that are emitted from a variety of industrial processes. F-gases are often used in coolants, foaming agents, fire extinguishers, solvents, pesticides, and aerosol propellants. F-gases are also sometimes used as substitutes for stratospheric ozone-depleting substances. These gases are typically emitted in smaller quantities, but because of their potency, they are sometimes referred to as “High Global Warming Potential” gases. F-gases have a long atmospheric lifetime and some of these emissions will affect the climate for many decades or centuries.
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  • Tropospheric ozone (O3): Tropospheric ozone has a short atmospheric lifetime, but it is a potent GHG. Chemical reactions create ozone from emissions of nitrogen oxides and volatile organic compounds from automobiles, power plants, and other industrial and commercial sources in the presence of sunlight. In addition to trapping heat, ozone is a pollutant that can cause respiratory health problems and damage crops and ecosystems.
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  • Water vapor: This is the most abundant GHG and significant in terms of its contribution to the natural greenhouse effect, despite having a short atmospheric lifetime. While some human activities can influence local water vapor levels, the concentration of water vapor on a global scale is controlled by temperature which influences overall rates of evaporation and precipitation. As a result, the global concentration of water vapor is not substantially affected by direct human emissions.
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The effect of GHGs on climate change depends on three main factors: (i) the concentration of GHGs in the atmosphere; (ii) the length of time that GHGs stay in the atmosphere; and (iii) the impact of GHGs on global temperatures.


The concentration of GHGs in the atmosphere is measured in parts per million, parts per billion, and sometimes parts per trillion. One part per million is equivalent to one drop of water diluted into about 13 gallons of liquid.


With respect to the length of time that GHGs stay in the atmosphere, each GHG can remain in the atmosphere for different amounts of time, ranging from a few years to thousands of years. All of these gases remain in the atmosphere long enough to become well mixed, meaning that the amount that is measured in the atmosphere is roughly the same all over the world, regardless of the source of the emissions.


In terms of the impact of GHGs on global temperatures, the two most important characteristics are how well the gas absorbs energy (preventing it from immediately escaping to space) and how long the gas stays in the atmosphere. Some GHGs have a stronger impact than others on global temperatures. For each GHG, a Global Warming Potential (GWP) has been calculated to reflect how long it remains in the atmosphere, on average, and how strongly it absorbs energy. The GWP for a gas is a measure of the total energy that a gas absorbs over a particular period of time (usually 100 years), compared to CO2.  Gases with a higher GWP absorb more energy, per pound, than gases with a lower GWP, and thus contribute more to changes in global temperatures. For example, methane’s 100-year GWP is 21, which means that methane will cause 21 times as much warming as an equivalent mass of carbon dioxide over a 100-year time period.


Accurate reporting and monitoring of GHG emissions is fundamental to reducing greenhouse gases and taking meaningful action to combat climate change. After all, you cannot manage what you do not measure.




 



	


	





	

		
		
UN Climate Talks Conclude with an Agreement on the “Doha Climate Gateway”
	


	
	
	

		
 

The United Nations’ annual global climate negotiations – or Conference of the Parties (COP) 18 – took place in the City of Doha, Qatar from November 26 to December 8, 2012.  As the country with the highest per capita emissions in the world at 50 tonnes per person, Qatar was an interesting choice of venue.  Negotiations ran a day over schedule, but concluded with an agreement on the “Doha Climate Gateway”.  According to the United Nations Framework Convention on Climate Change, the agreement marks the beginning of discussions on a legally binding international agreement to cap emissions at scientifically acceptable levels (restricting warming to a two degree Celsius increase in global average temperature).


At COP 17 in Durban, South Africa, the parties agreed to create a treaty by 2015 which would come into force by 2020. The objectives at COP 18 were to move the collective agreement forward at an appropriate rate to meet the 2015 deadline.  Following the talks, the parties agreed to the following:


1.       The Kyoto Protocol was officially extended for a second commitment period from January 1, 2013 to 2020. A number of previous signatories, including Canada, have withdrawn from the Kyoto Protocol, which now covers only 15% of the world’s emissions. Its primary participants are the European Union, Norway and Australia.


2.       The final text of the agreement “encourages” developed nations to pay $10 billion a year to 2020 to help developing nations access clean energy and implement climate change adaptation measures. The agreement is not legally binding and does not ascribe blame to developed nations for “loss or damages” experienced as a result of events related to climate change.


Developing countries and observers expressed disappointment with the lack of ambition in outcomes in terms of mitigation and finance by developed countries, but most agreed that the conference had paved the way for a new phase of focusing on the implementation of the outcomes from negotiations under the ad hoc working groups.


An important achievement outside of COP was that 25 members of the Climate and Clean Air Coalition agreed to significantly reduce emissions of short-lived pollutants, including soot, methane and ozone, and excluding carbon dioxide. It is estimated that this agreement could reduce the expected temperature increase by 0.5 degrees Celsius by 2050, a fraction of the four to six degrees forecast by the end of the century if we stay on the current emissions path.


COP 19 will be hosted by Poland in 2013.




 



	


	





	

		
		
More than 100 of the World’s Leading Companies Call for a Clear Price on Carbon
	


	
	
	

		
 

Shell, Unilever and more than 100 of the world’s largest companies recently released a statement calling upon lawmakers around the world to put a “clear, transparent and unambiguous price” on carbon emissions in order to address the climate challenge and help manage the business risk associated with climate change. The statement (available online), which is due to be presented to European Commissioner for Climate Action Connie Hedegaard in Brussels, calls for clarity to open channels for investment in infrastructure projects and its authors explain that in many cases, companies do not consider goals to cut greenhouse gas (GHG) emissions. The letter notes a key lesson from existing carbon pricing systems – without a sufficient carbon price signal, companies will have no incentive to invest in low-carbon projects or technology.


A price on carbon emissions must be core to policy objectives in order for the business community to deliver substantial GHG emission reductions and help the world meet the UN goal of containing the global temperature increase to two degrees Celsius. According to the International Energy Agency (IEA), almost 80% of the emissions allowable by 2035 under a two-degree scenario are already locked in because of future GHG emissions from existing power plants, factories and buildings. By 2017, all the allowable emissions will be locked in if no action is taken, the IEA said.


The letter was coordinated by Prince Charles’s Corporate Leaders Group on Climate Change, a group of companies brought together by Prince Charles and managed by the University of Cambridge. Other signatories include Bullfrog Power, Vattenfal, Alstom, Acciona, Skanska and Aviva.


The statement comes at an opportune time as Climate envoys from more than 190 nations are gathering in Doha from November 26 to December 7, 2012 for UN negotiations on climate change.




 



	


	





	

		
		
California Holds Successful First Auction of Carbon Allowances
	


	
	
	

		
 

The California Air Resources Board (CARB) held its first auction on November 14, 2012 for the purchase and sale of carbon allowances for its planned cap-and-trade regime. Mary Nichols, chairman of CARB, declared the auction a success:


“The auction was a success and an important milestone for California as a leader in the global clean tech market. By putting a price on carbon, we can break our unhealthy dependence on fossil fuels and move at full speed toward a clean energy future.  That means new jobs, cleaner water and air – and a working model for other states, and the nation, to use as we gear up to fight climate change and make our economy more competitive and resilient.”


The auction results were released to the public on November 19th (available online) .  A tonne of carbon for the 2013 vintage year sold for $10.09, which is slightly above the $10.00 price floor set by CARB. The highest bid was a whopping $91.13.  Also, there was three times the number of bidders at the auction than actual buyers, indicating a healthy and competitive market. Furthermore, 97% of allowances were purchased by regulated entities indicating that prices were not influenced by speculative buyers. Instead, it seems to indicate that regulated entities are looking to retire allowances for compliance purposes.  Perhaps most importantly, the auction sold out with all 23,126,110 2013 vintage year allowances being purchased, raising approximately US$233 million. This auction kicks off the largest carbon market in North America and the second largest in the world, behind the European Union Emissions Trading Scheme.


California’s partners in the Western Climate Initiative (WCI) – including British Columbia, Manitoba, Ontario, and Québec – are no doubt paying close attention.  Apart from Québec, which will launch its emissions trading system on January 1, 2013 with California, the success of California’s cap-and-trade program may spur the other WCI partners into action to implement a similar scheme.


 





	


	





	

		
		
California to hold First Auction of GHG Emission Allowances on November 14, 2012
	


	
	
	

		
 

Bill AB 32 requires California to reduce greenhouse gas emissions to 1990 levels by 2020. The cap and trade regulation (“Regulation”) is a key element of California’s climate plan. The Regulation is designed to provide regulated entities with the flexibility to seek out and implement the lowest cost options to reduce emissions.  California’s cap and trade program will be second in size only to the European Union’s Emissions Trading System based on the amount of emissions covered. In addition to driving emission cuts in the ninth largest economy in the world, California’s program will provide critical experience in how an economy-wide cap and- trade system can function in the United States.


It is anticipated that California’s emissions trading system will reduce greenhouse gas emissions from regulated entities by more than 16% between 2013 and 2020. Starting on January 1, 2013, the Regulation will apply to large electric power plants and large industrial plants. In 2015, it will extend to fuel distributors (including distributors of heating and transportation fuels). At that stage, the program will encompass around 360 businesses throughout California and nearly 85% of the state’s total greenhouse gas emissions.


Under a cap and trade system, companies must hold enough emission allowances to cover their emissions, and are free to buy and sell allowances on the open market.  As part of the cap and trade program, the California Air Resources Board (ARB) will hold allowance auctions to allow market participants to acquire allowances directly from ARB.  ARB will conduct the first auction on November 14, 2012 from 10am to 1pm PST.  ARB will also conduct the first quarterly reserve sale on March 8, 2013. Auction participants will have to apply to participate in an auction, or submit a bid for reserve sales, and meet financial regulatory requirements in order to participate in an auction or reserve sale.


The November 14th auction will mark the beginning of the first greenhouse gas cap and trade program in the United States since the Regional Greenhouse Gas Initiative (RGGI), a cap and trade program for power plants in nine northeastern US states, held its first auction in 2008.


California covered entities, opt-in covered entities, and voluntarily associated entities are eligible to participate in the November 2012 GHG allowance auction. Approved offset registries, verification bodies, and offset verifiers are not eligible to participate in auctions as they are not allowed to hold compliance instruments under the Regulation. Prior to participating in an auction, the Primary Account Representative (PAR) and Alternate Account Representative (AAR) that will be authorized to bid on behalf of entities eligible to participate in the auction must be approved users in the Compliance Instrument Tracking System Service (CITSS) and the entity must have an entity account in the CITSS.


The detailed auction requirements and instructions are available online

 



	


	





	

		
		
Copenhagen to become first Carbon Neutral Capital by 2025
	


	
	
	

		
 

On August 23, 2012 an overwhelming majority of the Copenhagen City Council adopted an ambitious climate plan for the city.  The plan, entitled CPH 2025, builds on a 2009 climate plan in which the city set out to reduce its carbon dioxide emissions to 20 percent of 2005 levels by 2015 and to become carbon neutral by 2025, making it the first national capital to do so. Copenhagen already met the first target in 2011, four years ahead of schedule, despite the fact that the city’s population grew by ten percent over the same period.


 


CPH 2025 mirrors the climate plan set out by the Danish government to vastly reduce the country’s carbon footprint and end its reliance on fossil fuels for energy production by 2035. The city released approximately 1.9 million tonnes of carbon dioxide in 2011, a figure that would drop to 1.16 tons a year in 2025 if no new initiatives were introduced. Extensive retrofitting of buildings, reorganisation of the energy supply and changes in transport habits are some of many initiatives the City of Copenhagen will implement in order to achieve its carbon neutral goal. Some of the key targets include:


 


Energy consumption:


    

  • 20% reduction of heat consumption.
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  • 20% reduction of commercial and 10% reduction of residential electricity consumption.
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  • Installation of photovoltaic cells to generate 1% of 2025 Copenhagen’s electricity.
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Energy production:


    

  • Carbon neutral district heating.
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  • Electricity produced by wind and biomass will exceed the total energy consumption of Copenhagen.
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  • Separation of commercial and residential plastic waste.
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  • Bio-gasification of organic waste.
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Transportation:


    

  • 75% of overall trips in Copenhagen will be on foot, bike or public transport.
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  • 50% of school or work commuting trips will be by bike.
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  • 20% increase in public transport passengers.
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  • Carbon neutral public transport.
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  • 20-30% of light vehicles will use renewable energy like biogas or hydrogen.
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  • 30-40% of heavy vehicles will use renewable energy.
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City administration:


    

  • 40% reduction of energy consumption in municipal buildings.
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  • New municipal constructions till 2015 will meet the requirements of the 2015 classification.
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  • New municipal constructions till 2020 will meet the requirements of the 2020 classification.
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  • City of Copenhagen vehicles will run on electricity, hydrogen or bio-fuels
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  • 50% reduction of street lighting energy consumption.
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  • 60,000 square meters of solar panelling will be installed on municipal buildings.
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CPH 2025 offers a holistic vision for the city that reduces carbon dioxide emissions by transitioning energy production away from coal and toward biomass, wind and solar energy, while also reducing energy consumption and improving energy efficiency in transport, housing, heating and industry. The plan will cost the city about 2.7 billion kroner before 2025, although additional private investments of between 20 and 25 billion kroner will be needed from the private sector in order for the city to meet its targets.