carbon trading and carbon credits

8/17/2019 Carbon Trading and Carbon Credits

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CARBON TRADINGCARBON TRADING

Aino Efraimsson Asami Tanabu

Larri Himma

Anastasiia Kostrytsia

Alejandra Valverde

Manoj Bhusal

Laura Delgado Ortiz


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History of Carbon TradingHistory of Carbon Trading

DEFINITIONDEFINITION

OF CARBONOF CARBON

TRADINGTRADING

Main aims:

-Social

-Environmental

-Technology

-Political

Critiques andCritiques and

case studiescase studies


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A HISTORY OF CARBON TRADING: A HISTORY OF CARBON TRADING:

1992 – the UN Framework Convention on Climate Change (UNFCCC)

1997 – The Kyoto Protocol is adopted

1998 – the EU begins to develop an internal emissions trading scheme

1999 – The World Bank sets up a Prototype Carbon Fund (PCF)

2001 – The US withdraws from the Kyoto Protocol


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THE KYOTO PROTOCOLTHE KYOTO PROTOCOL::

-- 16.02.200516.02.2005:: it came into force.

- It was ratified by 127127 countriesresponsible for 61 % of global

GHG emissions- It binds 38 industrialized38 industrialized

nationsnations to reducing their

emissions an average of 5.2 %below 1990 levels by 2008-2012.


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20082008--2012 emissions targets:2012 emissions targets:

•• New creditsNew credits from Kyoto Protocol project mechanisms:

- CERs* from Clean Development MechanismClean Development Mechanism (CDM)

- ERUs* from Joint ImplementationJoint Implementation (JI)

• Development of the International market

• Development of mandatory cap & trade schemesmandatory cap & trade schemesoutside of Europe : Canada, Australia, Japan, United States


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CARBON TRADING APPROACH WASCARBON TRADING APPROACH WAS

‘MADE IN THE USA’:‘MADE IN THE USA’:

(Michael Zammit Cutajar )

•• 1960s,1960s, the pollution-tradingmechanisms of the Kyoto Protocol

were of a type proposed by North American economist.

•• 19701970--1980s,1980s, put into practice in USmarkets for lead, nitrogen oxides andsulfide dioxide and other pollutants.

•• 1990s,1990s, successfully pressed on theUN by the US government, advised byUS economists, US NGOs and USbusiness.


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WHAT ISWHAT IS CARBON TRADINGCARBON TRADING??

There are two kinds:

I.I. Emissions tradingEmissions trading (or cap and trade)

II.II. Trading in project Trading in project--basedbasedcreditscredits (carbon offset – carbon credit)

++ hybrid trading systemshybrid trading systems (it is somedifficulties in equivalences, mixing in economics)

THE STORY OF CAP &THE STORY OF CAP &

TRADE:TRADE:http://www.youtube.com/watch?v=p

A6FSy6EKrM


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• Measuring emissions,accuracy and problems.

• Limits of the so calledinnovative ‘quick fixes’.

•Non-carbon technologyand long-term efficiency,a way forward?

An An example from Uganda:example from Uganda:something is not alwayssomething is not alwaysbetter than nothingbetter than nothing! !

SurvivalSurvival emissionsemissions

vs.vs. LuxuryLuxury

emissionsemissionsDo we have a choice?


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SPECIAL PROBLEMS OF CARBONSPECIAL PROBLEMS OF CARBON

PROJECTS:PROJECTS:

SPECIAL CREDITS AND CARBON-SAVINGPROJECTS

Carbon-sequestering projects and the buildingof ‘dump extensionsdump extensions’. Entitles big polluters toemit more greenhouse gases than they haveemissions allowances for.

•

2 kinds of ‘dump extensions’

Difference between measuring carbon

credits and measuring emissions.


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PLANTAR: CARBON PROJECT INPLANTAR: CARBON PROJECT IN BBRAZILRAZIL

- Carbon project in Minas Gerais

Pr oducing imaginar y car bon commodit ies.

-- What What isis PlantarPlantarS.A?S.A?

- Some information about thePlantar project and its connectionto the World Bank. Plantararguments to receivecarboncredits.

MoralMoral hazardhazard: “tendency to take undue risksbecause the costs are not borne by the party taking the risk ”

In the case of Plantar it has to be very careful so no

incentive can be provided to avoid the doing of something.

- Where the support to Plantar comesfrom? Local communities vs. WorldLocal communities vs. World

Bank.Bank.

- The role of the FSC (Forest Stewardship Council): Authorizing 18%

of Plantar’s operations and how this

informationis used by Plantar.- Some conclusions about the Plantar

case…


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PROPERTY RIGHTS ANDPROPERTY RIGHTS AND

PRIVATIZATION:PRIVATIZATION:

• Trade requires

ownership.

• State owns emission

allowances and sells or

gives them for free.

• Not property rights but

allowances.

• Allowances are still very

close to property rights,

permanent or not.

• Decisions about thecarbon trading are ahuge target of

lobbying.• Governments are

balancing betweencountries’ economiesand the environment.

• Too many allowanceshanded out in thefuture as well?


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Are all carbon Are all carbon--saving projects really good?saving projects really good?

- Question of social and cultural impacts- Question of measurement

CASE STUDY:

SRI LANKA

Installing solar-home systems with

remote households without electricityin Sri Lanka

- Background :

- Target: Off-grid community from Tamil minority.

- Industry: Dependency on tea and rubber plantations- Privatization of Plantation:

- Increasing global competition

- Lower production cost, increasing productivity

- Increasing wages obliged by government


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ResultsResults

• Only 35 solar systems wereinstalled out of 63 families and

7 Sinhara workers.

Why the project failed??

•• 11.. The project supported the Semi-slavery structurein plantation. They reinforced the plantations’ control

over workers.

•• 2.2. The project led the inequality and social conflictsemerge in the area.


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The plantation’s motivation is to increase

productivity and labour regulations.

Conflict between the Tamil ethnic minority and Sinhalese

majority. (Benefitted) (Marginalized)

Local politicians regard the solar system as threat for their

power.

The projects give excuse to the local electronic companyfor not extending the grid.

The estates exclude retired workers and their families

from the target.

OtherOther featuresfeatures about about thethe project project ::


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WHAT CAN WE LEARN?

• Carbon trading itself is agood start, but it is not a

fundamental solution.

•

Consideration of localness.• What is “successsuccess” for

carbon-saving projects?

•

Are there any differentinterpretations of success?


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The reduction of carbonemissions

A better environmentalsituations and the extension

of the Climate Change’seffects.

Mitigate Global Warming

THE ENVIRONMENTAL AIMS OFTHE ENVIRONMENTAL AIMS OF

CARBON TRADING:CARBON TRADING:


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CARBON TRADING AND THECARBON TRADING AND THE

EFFECTS ON CULTURE:EFFECTS ON CULTURE:

“Make people and“Make people andcompanies to takecompanies to takeconscience aboutconscience aboutglobal warming”global warming”

• There is more awareness BUT peopleforgot to think about the welfare of thecountries that were supporting theircarbon credits.

• The carbon trading decision turn in avery dangerous way of getting carbon

credits that translate in otherproblems for the world sustainability.

ude develude develtries itries i

“Include developing“Include developingcountries in thecountries in the

decrease of carbondecrease of carbonemissions andemissions andimprove theirimprove their

situations”situations”

• Lack of real improvement. The is not a real respectfor the country’s sovereignty and main features.

• The carbon credits companies insist on affirming thatthe lands were “not used, not part of the economy ofthe country and that people did not know how to usethem”.


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HOW DOES CARBON TRADINGHOW DOES CARBON TRADING

COLONIZATION WORK COLONIZATION WORK??

1.1. The carbon credit“production”

companies locate an

extension of “empty”land that may beuseful for plating

trees.

2.2. These companiesbuild a “populationinclusion” program

and buy the land andthe workers to planand take care for theland for the next 100

years or more.

33. Years after, thepopulation does

not have any more

money to maintainthe plantationsand try to finish

the contract,ineffectively.

From the

Netherlands to the

Andes: the

Ecuadorian situation.


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NO SILVER BULLET:NO SILVER BULLET:

•

The reorganisation ofsociety away from fossilfuel dependency:Land use planningLand use planning

Improving public transportImproving public transportsystemssystems

Increasing renewable energy useIncreasing renewable energy useand energyand energy efficiencyefficiency

•Subsidy Shifting

• Conventional Regulation

• Green taxes


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ENABLING SUSTAINABLE

BEHAVIOUR:

•Land use planning•Mixed use areas

•Public transportation systems

•Encouraging energy efficiency and renewable energy use


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CARBON TAXESCARBON TAXES

•Existed internationally for20 years

•• Aims: Aims:

a) Reduce GHG emissions

b) Raise revenue

c) Change consumerbehaviour

•• Revenue:Revenue:

a) Carbon mitigation

b) Individuals- reducing

income taxc) Supplementing Gov. budget

•• CritiqueCritique--regressiveregressivetaxationtaxation


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REFERENCES:REFERENCES:• Kevin Voigt. TROUBLES AHEAD? World Business April 20th 2011. Availableat:

http://app1.hkicpa.org.hk/APLUS/0904/Carbontrading.pdf

•

Jitendra Kumar Singh CLEAN DEVELPOMENT MECHANISM (CDM) AND CARBON TRADINGIN INDIA Available at:http://www.tce.co.in/Downloads/bro_pdf/papers/cdm_carbon_trading.pdf

• http://www.opposingviews.com/arguments/carbon-trading-is-aimed-at-the-wrong-objectivePresentation. Carbon trading: history and stakes. BlueNext, 22nd January 2008.Christian de Perthuis- Mission Climat http://www.google.com/search?sourceid=chrome&ie=UTF-8&q=Carbon+tradinghistory+and+stakes#hl=ru&sa=X&ei=JuR0T77OOo-

UOvCT3doN&ved=0CBoQBSgA&q=Carbon+trading+history+and+stakes&spell=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.,cf.osb&fp=a09b2f23fcc77c02&biw=790&bih=380

• Sonja Butzengeiger, Axel Michaelowain Intereconomics (2004). The EU emissions tradingscheme - issues and challenges.

• Tierra resources.http://tierraresourcesllc.com/industry-facts/

• Steven Sorrell. 2003. CARBON TRADING IN THE POLICY MIX. Oxford Review on EconomicPolicy. Available at: http://oxrep.oxfordjournals.org/content/19/3/420.short

• HenrikHasselknippe. 2003. SYSTEMS FOR CARBONTRADING: AN OVERVIEW. The Fridtjof Nansen Institute, Norway. Available at:http://www.sciencedirect.com/science/article/pii/S1469306203000986

• Laurance, William. 2006. A New Initiative to Use Carbon Trading for Tropical ForestConservation. Available at: http://onlinelibrary.wiley.com/doi/10.1111/j.1744-7429.2006.00229.x/abstract;jsessionid=C89E4AD79D29285E0E35D5F08A800471.d01t03?userIsAuthenticated=false&deniedAccessCustomisedMessage=

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