Stephen presentation on Voluntary carbon market
- 1. Voluntary Carbon Market Stephen Garnett School for Environmental Research Charles Darwin University Darwin Northern Territory Australia
- 2. Voluntary Carbon Market Different types of carbon market What is the voluntary market Features of the voluntary market Voluntary carbon market products Standards and validation Buyers and sellers Price trends Benefits, costs and future of the market
- 3. Different types of carbon market Regulated emissions trading schemes (ETS) – also called cap-and-trade systems European Union ETS Kyoto compliance: Clean Development Mechanism (CDM), Joint Implementation (JI) under the United Nations Framework Convention on Climate Change Others projected (e.g. Australia) Voluntary schemes – beyond formal regulation
- 4. Size of total carbon market
- 5. What is the voluntary market The seller undertakes actions that will result in less greenhouse gas being emitted to the atmosphere (CO 2 , methane, nitrous oxide etc.) The vendor quantifies and verifies the amount of CO 2 equivalents to be saved. Verification is often by a third party The buyer purchases the CO 2 equivalents, usually to offset emissions and become carbon neutral All players act voluntarily, but the final contract is usually binding
- 6. Features of the voluntary market Innovative and experimental Diverse Products Security Price Sometimes difficult to verify or wilfully dishonest
- 7. Voluntary carbon market products Renewable energy (wind farms, hydropower, solar) Methane capture from landfills Forestry Energy efficiency/fuel switching
- 8. Standards and validation Top-rated: Gold standard: Renewable energy and energy efficiency projects with sustainable development benefits Started by World Wide Fund for Nature, South South North and HELIO International Choice of offsets makes them easy to validate Prices high but hard to track down. Vendor prices in Feb 2009 were: planetair.ca - $42/tonne myclimate.org - $31/tonne climatefriendly.com - $29/tonne
- 9. Standards and validation Second tier: California Climate Change registry/Climate registry (US projects only): high level validation. Started by California State Government at request of business Has strong validation techniques for Cement, Forest Sector, Local Government or Power/Utility About $8.20/tonne CO 2 equivalents in February 2009.
- 10. Standards and validation Second tier. Voluntary Carbon Standard (VCS) dealing in Voluntary Carbon Units (VCU) Started by the Climate Group, the International Emissions Trading Association and the World Economic Forum, World Business Council for Sustainable Development Accepts accreditation by United Nations Framework Convention on Climate Change and California Climate Change registry Price February 2009 of about $6.20/tonne CO 2 equivalents
- 11. Standards and validation Third tier. Chicago Carbon Exchange Started by Dr. Richard L. Sandor who remains CEO Has products for all six greenhouse gases, including soil carbon Validation for legally binding compliance regime by the US Financial Industry Regulatory Authority Price February 2009 of about $1.70/tonne CO 2 equivalents
- 12. Price trends Formal market has collapsed – at least temporarily. Allowance used as source of quick credit plus some European countries recently released free allowances
- 13. Price trends Voluntary market has also declined – though top end products like Gold Standard remain at 2007 prices
- 14. Performance Voluntary Carbon Index of all products has usually outcompeted CCX
- 15. Benefits, costs and future of the market Benefits – distributes wealth to less polluting industries and countries Costs – does not reduce greenhouse gas emissions – may even increase them if distributed money invested in greenhouse gas producing activities Future – buoyant as economies recover since climate will continue to change and drastic change will be needed
- 16. Action in Vietnam Voluntary Carbon Market workshop held in Hanoi 2008. It helped ICRAF share initial concepts and discuss future collaboration with companies trading carbon in a voluntary market. Should help next phase of RUPES project in Vietnam, particularly in Bac Kan province Also Like Minded Donor Group (LMDG) planned to produce a Voluntary Carbon Markets Action Plan in October 2008 Potential reasonably high if validation reliable Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits
- 17. Potential in Vietnam Potential reasonably high if validation reliable Renewable energy and fuel changes offer highest premiums through Gold Standard if combined with social benefits Forestry and lower value activities also possible but need strong and reliable validation