Wooing the Reluctant
Warts and all, emissions trading systems that are emerging from the bottom up are playing a key role in the drive to protect the climate. They send signals, through increased prices and the awarding of valuable carbon credits, that industrial economies must shake the carbon habit.
In the meantime, so-called emerging nations—such as China and India—pose the toughest obstacles to expanding emissions trading systems. These countries matter because their carbon dioxide effluent is rising at roughly three times the rate in the industrialized world. Total output from emerging nations will exceed that of the industrialized West within the next decade; China is already the world’s largest single emitter. Emerging nations also count because their economies often rely on obsolete technologies that offer the opportunity, at least in theory, to save money if newer emission controls were applied. The rub lies, of course, in the refusal of these nations to accept limits on their carbon emissions.
Trying to convince less-developed countries to join a full-blown, international emissions trading system would be unwise. Wary of economic constraints, yet unsure of their future emissions levels and the costs of stanching the flow, these states will likely demand generous headroom to grow. Although well-intentioned, agreeing to such a strategy would involve giving them lax emission caps, which would be like printing excess money. It would undercut efforts to control emissions elsewhere because surplus permits would flood markets. Administrators of the Kyoto Protocol struck exactly such a deal with Russia and Ukraine to convince them to join; both countries had refused unless they were given many free permits. As a consequence, the E.U. had to erect special barriers to prevent the excess paper credits from damaging real emissions reductions within the European market.
Rather than trying to monetize all emissions in emerging economies, the clean development mechanism offers a better compromise in theory because it promises to constrain trading to areas where developing countries have made actual cuts. And because the E.U. possesses the biggest market for emission credits, the clean development mechanism’s prices have converged on those set there.
Gaming the System
In reality, however, the concept that underpins the clean development mechanism has a dark side. Investors find it difficult to identify the baseline emissions values for many projects—the “business-as-usual” scenario against which new project emissions are compared. So they instead have focused on projects to install marginal “end of pipe” technologies, rather than more fundamental changes in energy systems. About a third of the clean development mechanism credits stem from projects aimed at controlling just one industrial gas, trifluoromethane, or HFC-23, a byproduct of industrial processes that is 12,000 times as strong as carbon dioxide as a greenhouse gas.
Everyone agrees that HFC-23 releases must be halted; the debate is how best to do so. All the plants in the industrialized world voluntarily have installed inexpensive devices to remove the chemical, and leading firms have shared the technology with all comers. But manufacturers in the developing world have discovered that holding off on installation allows them to inflate their baseline values. By so doing, they earn generous clean development mechanism credits with prices set at the high European levels—prices that are not connected to the actual cost of the upgrades for HFC-23. As a result, these industries are reaping up to $12.7 billion through 2012, according to our Stanford University colleague, attorney Michael Wara, when only $136 million is needed to pay for the HFC-23-removal technology.
A better approach for dealing with HFC-23 and other industrial gases would be to simply pay directly for the necessary equipment. This method was employed by the successful Montreal Protocol to preserve the ozone layer. The E.U. has further exacerbated the clean development mechanism debacle by honoring any credit that is approved under the mechanism’s rules, which are set through a cumbersome committee process under the Kyoto Protocol. Because HFC-23 projects produce huge numbers of easily verifiable credits, European governments have rushed to purchase them even though they know that the reductions they signify are dubious. Along the way, the practice has eclipsed more effective projects that are more complex to design and monitor. As the U.S. develops its own carbon market, it should set its own tighter rules to govern whether participants can gain credit from the clean development mechanism permits and other such “offset” programs.
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10 Comments
Add CommentThis type of system will just make undeveloped countries more competitive, now if the credits are only within a country or group it might be OK. In addition positive action to reduce our impact on the environment and to mitigate the effects are required. These credits do nothing in these areas.
Reply | Report Abuse | Link to thisQuestion: To mesh a carbon tax with cap-and-trade, should the government not put a MINIMUM price on carbon, not a ceiling, as the article asserts? (Ref. 3rd para. under 'A Four-Step Plan.')
Reply | Report Abuse | Link to thisE.D.
Ottawa
Canada
Clicking on the links to the Figures brings one to a slide show on endangered birds!
Reply | Report Abuse | Link to thisDeleted and replaced with revised version
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Edited by Duane Pendergast at 12/21/2007 10:36 AM
This is an excellent discussion and review of carbon trading concepts and initiatives.
Reply | Report Abuse | Link to thisThere is, however, no discussion of market possibilities to encourage removal of carbon dioxide from the atmosphere. Perhaps this is a consequence of the common assumption that it is better to capture emissions at source rather than try to deal with them after release.
The sidebar on "The Carbon Trade" focuses on cap and trade and so-called "offset exchange" in connection with the Clean Development Mechanism (CDM). I find the use of "offset" in that context somewhat of a misnomer as the carbon emissions discussed may not be offset in the usual sense. In the example discussed, it is implied that emissions from the developed countries will be compensated by reductions in emissions in developing countries. I suspect the reality in practice will be that increasing emissions from the developed countries will support projects in developing countries which will have somewhat lower emissions than might have occurred without CDM. The total net result will be increased carbon dioxide emissions.
There is developing recognition of a concept that would actually remove carbon dioxide from the atmosphere and convert it to durable char or charcoal, which could then be used to sequester carbon in soil. Some researchers believe the sequestered carbon will play an additional role by significantly improving soil fertility. Interested readers can find information on this concept by searching for "terra preta" on the WWW.
Perhaps policy makers should relax their dogged focus on reducing CO2 emissions and consider the possibility they may constitute an opportunity to enhance the environment for life on earth.
Duane Pendergast
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Edited by Duane Pendergast at 12/21/2007 10:29 AM
Sorry for double post
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Edited by erichj at 12/22/2007 10:28 AM
I thought this ubiquitous carbon sink might interest you. Here's the current news and links on Terra Preta (TP)soils and closed-loop pyrolysis of Biomass, this integrated virtuous cycle could sequester 100s of Billions of tons of carbon to the soils.
Reply | Report Abuse | Link to thisTerra Preta Soils Technology To Master the Carbon Cycle
This technology represents the most comprehensive, low cost, and productive approach to long term stewardship and sustainability.Terra Preta Soils a process for Carbon Negative Bio fuels, massive Carbon sequestration, 1/3 Lower CH4 & N2O soil emissions, and 3X Fertility Too.
UN Climate Change Conference: Biochar present at the Bali Conference
http://terrapreta.bioenergylists.org/steinerbalinov2107
SCIAM Article May 15 07;
http://www.sciam.com/article.cfm?articleID=5670236C-E7F2-99DF-3E2163B9FB144E40
After many years of reviewing solutions to anthropogenic global warming (AGW) I believe this technology can manage Carbon for the greatest collective benefit at the lowest economic price, on vast scales. It just needs to be seen by ethical globally minded companies.
Could you please consider looking for a champion for this orphaned Terra Preta Carbon Soil Technology.
The main hurtle now is to change the current perspective held by the IPCC that the soil carbon cycle is a wash, to one in which soil can be used as a massive and ubiquitous Carbon sink via Charcoal. Below are the first concrete steps in that direction;
S.1884 The Salazar Harvesting Energy Act of 2007
A Summary of Biochar Provisions in S.1884:
Carbon-Negative Biomass Energy and Soil Quality Initiative
for the 2007 Farm Bill
http://www.biochar-international.org/newinformationevents/newlegislation.html
If you have any other questions please feel free to call me or visit the TP web site I've been drafted to co-administer. http://terrapreta.bioenergylists.org/?q=node
It has been immensely gratifying to see all the major players join the mail list , Cornell folks, T. Beer of Kings Ford Charcoal (Clorox), Novozyne the M-Roots guys(fungus), chemical engineers, Dr. Danny Day of EPRIDA , Dr. Antal of U. of H., Virginia Tech folks and probably many others who's back round I don't know have joined.
If pre-Columbian Kayopo Indians could produce these soils up to 6 feet deep over 15% of the Amazon basin using "Slash & CHAR" verses "Slash & Burn", it seems that our energy and agricultural industries could also product them at scale.
Harnessing the work of this vast number of microbes and fungi changes the whole equation of energy return over energy input (EROEI) for food and Bio fuels. I see this as the only sustainable agricultural strategy if we no longer have cheap fossil fuels for fertilizer.
We need this super community of wee beasties to work in concert with us by populating them into their proper Soil horizon Carbon Condos.
Erich J. Knight
Shenandoah Gardens
1047 Dave Berry Rd.
McGaheysville, VA. 22840
(540) 289-9750
shengar@aol.com
who can deny the politics behind the science of climate ,and how some thinktanks with funding support from north influence policies .is the finding of IPCC on glcier melts the tip of the iceberg of the science hoodo act to serve the interests of the developed world. why not the north show the lead in changing life styles and social systems to suit the ethics and economics of sustainable resource use and development.
Reply | Report Abuse | Link to thisno one can deny the economic advantage to the west in carbon trade while continuing to pollute.the advantage to the less developed is inflated and projected while the cost benefit in real terms favours the more developed .the developing world is increasingly being depicted as more responsible for future pollution. the science behind the future scenarios are highly dubious and influenced by vested intersts through funding support and peer pressure.
china and india are being shown as villains through data manipulation and GCM computer dta are being used for this jugglery. the world bodies are being hijacked partly for this ,and pachauri is suitably awarded. the very architects of the carbon trading have finally backed out of the protocol so that their interests are best served both ways,and scuttling that of competitors and potential growth centers.the credits are loaded in favour of the west through science and technology fixes . the world bodies are toeing the line for funds. what is needed is not more of the same but a drastic relook at the western model of growth and development through resource exploitation and depletion ,and focus on economics at the cost of ecology ,in real terms ,while making it appear as if the south is more obsessed with growth than environment through a game of data manipulation and jugglery of all sorts.it is high time that the politics of climate is called off through more transparent science. the developing world needs to be equipped and oriented towards this through support structures and a process of relearning
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