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=