CARBON TRADING CARBON TRADING

Aino EfraimssonAsami TanabuLarri Himma

Anastasiia KostrytsiaAlejandra Valverde

Manoj BhusalLaura Delgado Ortiz

History of Carbon Trading History of Carbon Trading

DEFINITION DEFINITION OF CARBON OF CARBON

TRADINGTRADING

Main aims:

-Social -Environmental -Technology-Political

Critiques and Critiques and case studies case studies

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

THE KYOTO PROTOCOLTHE KYOTO PROTOCOL::

-- 16.02.200516.02.2005:: it came into force.

- It was ratified by 127 127 countries responsible for 61 % of global GHG emissions

- It binds 38 industrialized 38 industrialized nationsnations to reducing their emissions an average of 5.2 % below 1990 levels by 2008-2012.

20082008--2012 emissions targets:2012 emissions targets:

•• New creditsNew credits from Kyoto Protocol project mechanisms:- CERs* from Clean Development Mechanism Clean Development Mechanism (CDM) - ERUs* from Joint Implementation Joint Implementation (JI)

• Development of the International market• Development of mandatory cap & trade schemesmandatory cap & trade schemes

outside of Europe : Canada, Australia, Japan, United States

CARBON TRADING APPROACH WAS CARBON TRADING APPROACH WAS ‘MADE IN THE USA’:‘MADE IN THE USA’:(Michael Zammit Cutajar )

•• 1960s, 1960s, the pollution-trading mechanisms of the Kyoto Protocol were of a type proposed by North American economist.

•• 19701970--1980s, 1980s, put into practice in US markets for lead, nitrogen oxides and sulfide dioxide and other pollutants.

•• 1990s, 1990s, successfully pressed on the UN by the US government, advised by US economists, US NGOs and US business.

WHAT IS WHAT IS CARBON TRADINGCARBON TRADING??

There are two kinds:I.I. Emissions trading Emissions trading (or cap and trade)II.II. Trading in projectTrading in project--based based

credits credits (carbon offset – carbon credit)

+ + hybrid trading systems hybrid trading systems (it is some difficulties in equivalences, mixing in economics)

THE STORY OF CAP & THE STORY OF CAP & TRADE: TRADE: http://www.youtube.com/watch?v=pA6FSy6EKrM

• Measuring emissions, accuracy and problems.

• Limits of the so called innovative ‘quick fixes’.

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

An An example from Uganda: example from Uganda: something is not always something is not always better than nothingbetter than nothing!!

SurvivalSurvival emissions emissions vs. vs. LuxuryLuxuryemissions emissions

Do we have a choice?

SPECIAL PROBLEMS OF CARBON SPECIAL PROBLEMS OF CARBON PROJECTS:PROJECTS:SPECIAL CREDITS AND CARBON-SAVING PROJECTS

Carbon-sequestering projects and the building of ‘dump extensionsdump extensions’. Entitles big polluters to emit more greenhouse gases than they have emissions allowances for. • 2 kinds of ‘dump extensions’

Difference between measuring carbon credits and measuring emissions.

PLANTAR: CARBON PROJECT IN PLANTAR: CARBON PROJECT IN BBRAZILRAZIL- Carbon project in Minas Gerais

Producing imaginarycarbon commodities.

-- WhatWhat isis Plantar Plantar S.A?S.A?- Some information about the Plantar project and its connectionto the World Bank. Plantar arguments to receive carbon credits.

Moral Moral hazardhazard: “tendency to take undue risks because 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 comes from? Local communities vs. World Local communities vs. World Bank.Bank.

- The role of the FSC (ForestStewardship Council): Authorizing 18% of Plantar’s operations and how thisinformation is used by Plantar. - Some conclusions about the Plantar case…

PROPERTY RIGHTS AND PROPERTY 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 the carbon trading are a huge target of lobbying.

• Governments are balancing between countries’ economies and the environment.

• Too many allowances handed out in the future as well?

Are all carbonAre 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 electricity in 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

ResultsResults• Only 35 solar systems were installed out of 63 families and 7 Sinhara workers.

Why the project failed??

•• 11. . The project supported the Semi-slavery structure in plantation. They reinforced the plantations’ control over workers.

•• 2. 2. The project led the inequality and social conflicts emerge in the area.

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 company for not extending the grid.

The estates exclude retired workers and their families from the target.

OtherOther featuresfeatures aboutabout the the projectproject: :

WHAT CAN WE LEARN?

• Carbon trading itself is a good start, but it is not a fundamental solution.

• Consideration of localness.

• What is “successsuccess” for carbon-saving projects?

• Are there any different interpretations of success?

The reduction of carbon emissions

A better environmental situations and the extension

of the Climate Change’s effects.

Mitigate Global Warming

THE ENVIRONMENTAL AIMS OF THE ENVIRONMENTAL AIMS OF CARBON TRADING: CARBON TRADING:

CARBON TRADING AND THE CARBON TRADING AND THE EFFECTS ON CULTURE: EFFECTS ON CULTURE:

“Make people and “Make people and companies to take companies to take conscience about conscience about global warming”global warming”

• There is more awareness BUT people forgot to think about the welfare of the countries that were supporting their carbon credits.

• The carbon trading decision turn in a very dangerous way of getting carbon credits that translate in other problems for the world sustainability.

“Include developing “Include developing countries in the countries in the

decrease of carbon decrease of carbon

improve their improve their situations” situations”

“Include developing “Include developing countries in the countries in the

decrease of carbon decrease of carbon emissions and emissions and improve their improve their

situations” situations”

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

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

HOW DOES CARBON TRADING HOW DOES CARBON TRADING COLONIZATION WORKCOLONIZATION WORK??

1. 1.

trees.

1. 1. The carbon credit “production”

companies locate an extension of “empty”

land that may be useful for plating

trees.

2. 2. 2. 2. These companies build a “population inclusion” program

and buy the land and the workers to plan and take care for the land for the next 100

years or more.

3333. Years after, the population does

not have any more money to maintain

the plantations and try to finish

the contract, ineffectively.

From the Netherlands to the Andes: the Ecuadorian situation.

NO SILVER BULLET: NO SILVER BULLET:

• The reorganisation of society away from fossil fuel dependency:

Land use planningLand use planningImproving public transport Improving public transport

systemssystemsIncreasing renewable energy use Increasing renewable energy use

and energy and energy efficiencyefficiency

• Subsidy Shifting• Conventional Regulation• Green taxes

ENABLING SUSTAINABLE BEHAVIOUR:

•Land use planning•Mixed use areas•Public transportation systems•Encouraging energy efficiency and renewable energy use

CARBON TAXES CARBON TAXES • Existed internationally for

20 years•• Aims:Aims:

a) Reduce GHG emissionsb) Raise revenuec) Change consumer

behaviour•• Revenue:Revenue:

a) Carbon mitigationb) Individuals- reducing

income taxc) Supplementing Gov. budget

•• CritiqueCritique--regressive regressive taxationtaxation

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

http://app1.hkicpa.org.hk/APLUS/0904/Carbontrading.pdf• Jitendra Kumar Singh CLEAN DEVELPOMENT MECHANISM (CDM) AND CARBON TRADING

IN 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-objective Presentation. Carbon trading: history and stakes. BlueNext, 22nd January 2008. Christian de Perthuis - Mission Climathttp://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 Michaelowa in Intereconomics (2004). The EU emissions trading scheme - issues and challenges.

• Tierra resources. http://tierraresourcesllc.com/industry-facts/• Steven Sorrell. 2003. CARBON TRADING IN THE POLICY MIX. Oxford Review on Economic

Policy. Available at: http://oxrep.oxfordjournals.org/content/19/3/420.short• Henrik Hasselknippe. 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 Forest Conservation. Available at: http://onlinelibrary.wiley.com/doi/10.1111/j.1744-7429.2006.00229.x/abstract;jsessionid=C89E4AD79D29285E0E35D5F08A800471.d01t03?userIsAuthenticated=false&deniedAccessCustomisedMessage=