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Howard Jeandenis
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The Speaker
Kyoto, past and present
Basics of Carbon Trading
Geopolitical Factors and Impact
Is carbon trading green?
Outlook for the Industry
Conclusion
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BS in Economics-Finance, MBA in GlobalBusiness Bentley U.
Banking, Finance, commodities exp.
Part of a team which established a U.S. Carbon
trading desk
Founded Green Competitive Advantage LLC
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UNFCC creates Kyoto Protocol
Why? Growing consensus that greenhouse
gases were caused by human activity
Sets binding targets for industrialized countries
181 Countries ratified this agreement
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Commit to reduce 5% below 1990 levels
37 Industrialized countries commit
(whom represent 64% of global emissions)
First Kyoto Commitment Period, 2008 2012
(The United States did not ratify/commit)
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Name Abbreviation Global WarmingPotential
% of totalemissions
Carbon dioxide C02 1 77%
Methane CH4 21 14%
Nitrous Oxide N20 310 8%
SulfurHexafluoride
SF6 23,900
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Greenhouse gases trap heat in atmosphere
Atmospheric C02 content has risen from pre-industrial to post-industrial drastically
Unknown variables future temp increases,atmospheric concentrations, local andinternational effects, damages and costs
We must do something about this!
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Carbon emissions Trading
Clean development mechanism (CDM)
Joint Implementation
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Program to create projects in developingcountries
3,500 Projects worldwide
Annex 1 entity finances the project while the
Non-annex performs the project
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% of Projects
AsiaLatin America
Africa
East Europe
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Reforestation
Waste Handling
Alternative Energy
Fugitive Emissions from Fuels
Agricultural Processes
Energy Efficiency
Industrial (N20, and HFC)
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Cap and Trade
Emissions Allowances and Offsets
EU ETS, Japan, Canada, Australia
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Identify Sectors
Determine total emissions and sources
Issue Allowances (offset provision)
Companies abate, trade, or hold
The cap is lowered in subsequent periods(making allowances scarcer and forcing
reductions) Assess the results
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Permit to emit one metric ton of CO2e
A tradable environmental commodity
Assigns an economic value to pollution
Proposed solution to offset climate change?
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Regulator
Emitter
Bank
Trader
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Comprehensive Cap and Trade
Covers 27 Member States
Cap was 2.2 bn tCO2/year (covers 46%emissions)
Sectors Power and Heat, refineries, metals,minerals, pulp and paper
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Dependence on Legislation (compliance)
Issues (additionality, over-allocation, etc..)
Voluntary Market
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Main drivers - weather, fuel prices, economicgrowth
Policy and Regulation Issues
The price of carbon must be sufficiently high to
encourage companies to switch to cleantechnologies
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$0.00
$5.00
$10.00
$15.00
$20.00$25.00
$30.00
$35.00
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
EUA Price
EUA Price
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Liebermann Warner Bill
AB 32 Law passes, Low carbon fuel standard
Pre-compliance period anticipating a Law
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Pre-compliance activity
Regional greenhouse gas initiative
Midwestern greenhouse gas accord
Western Climate Initiative
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Strong support by democratic candidates in2008, but this slowed due to Senate opposition
National Carbon Law never passed
EPA
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Source % of total emissions
Electricity and Heat 43%
Industry and Transportation 29%
Forestry 20%
Waste 2.5%
Agriculture 5.5%
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Voluntary, 400 Members, cover 6 major ghgs
Commit to 6% reductions by 2010
Price Trend (highest) $7.50 - $0.10 (lowest)
Due to inactivity and controversy Closed inJuly 2010, now defunct
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Cap and Trade starts in January 2012
North American participants (U.S. andCanada)
Size is half of the EU-ETS (focus on California) Includes nat gas + liquid transportation fuels
1st comp. period 700 million tons/year
2nd comp. period 1.4 billion tons/year
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Abate emissions internally
Buy Surplus emissions allowances
Buy CERs offsets
Pay high penalty for non-compliance
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Emissions
Cap02468
10121416
Emissions
Cap
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IPCC 1988
UNFCC 1992
Kyoto Protocol 1997
First Emissions trading Scheme 2005
U.S. Carbon Law rejected 2008-2009
Kyoto Commitment Period 2008 - 2012
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Emissions Levels 1995 -2005
Emissions during first Kyoto Period
Analysis of Causes: Recession, abatementthrough sustainability, new technologies..
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330
340
350
360
370
380
390
400
1990 2000 2001 2003 2011
C02 (ppm)
C02 (ppm)
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(US) Burning fossil fuels costs $120Billion/year in health care for prematuredeaths caused by air pollution
Kyoto targets lead to average rises of 26% inelectricity prices in Italy, UK, Germany, Spain
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Country % of GDP Absolute Euros
Germany -0.8% -18,000,000,000
Spain -3.1% -26,000,000,000
Italy -2.1% -27,000,000,000
United Kingdom -1.1% -22,000,000,000
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Effectiveness of reductions requirecollaboration
President Bush vs. the world
Bali Action Plan and Roadmap
Will developing countries (BRIC) emissionsswamp global emissions efforts?
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High level talks in 06- 07
Called discussion of high emitting nations
Meetings in Hawaii Jan 07, Paris Apr 07
End result No agreement on concrete targets,focus was on cutting trade barriers to cleantechnologies
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Inconvenient Truth Gore
Clinton Foundation LEED Platinum
International Green Superstar Gore
Clinton Global Initiative - Clinton
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Change we can believe in
Announced Energy, Climate change and
Environment Plan
One million advanced vehicles by 2015
Obama Announced that EPA wouldimplement GHG reduction program in 2013
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New Fuel economy standards causing onaverage $3,000 savings per consumer
1,000 miles of scenic rivers and millions ofacres of wilderness preserved by OmnibusPublic Lands Act
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9 Billion investment in clean energy
1/3 reduction in Oil imports by 2025
Electricity from Clean sources
increase from 40% to 80% by 2033
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Coal States (Unless CCS)
Oil and Gas (want their subsidies)
Climate Change Deniers
Proponents of other social causes
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EU committed, seeks action from others
Canada follows U.S., has a trading scheme,
significant source of emissions (tar sands)
U.S. unwilling to ratify protocol but
increasingly active, waiting on China
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Japan- committed, however not excited aboutpost Kyoto without U.S./China
G77 Developing countries are active butreluctant to compromise their growth
BRIC (Brazil/Russia/India/China) Veryactive but have their issues
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Additionality is controversial
Results
Environmental impact of projects
Footprint of the participants
Yes??/No????
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The COP (Conference of Parties) announcedlong term collaboration on emissionsreductions
NAMAs (nationally appropriate mitigationactions)
REDD (Reductions emissions fromdeforestation and forest degradation)
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UN Secretary Ban ki moon A comprehensivelegally binding agreement could be out ofreach
Xie Zhenhua (negotiator from China) wasstrategically coy
Many parties were talking of delaying anagreement until 2020
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Green Climate fund was discussed, this wouldprovide support to developing countries
GCF could be key as it attempts to mobilize 100billion in funds by 2020
Hopes for continuation of Protocol are in doubt
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Melting of Ice Glaciers and Ice Sheets inGreenland and Antarctica
Low level coastal regions at risk Vietnam,Bangladesh, Tuvalu, India, china, Vanuatu,Philippines, Indonesia
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Sea Level Rise projected to increase from 20thcentury rate (15-20 centimeters/year)
Warming Ocean, average global temp to riseabout 4 degrees by 2100
Reduced Albedo leading to advanced solarradiation absorption
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Ocean Acidification
Marine ecosystems at risk - 1,000 of species
need calcium carbonate
Atmospheric CO2 concentrations need to stay
less than 450ppm
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Global Carbon Price is clouded in uncertainty
There is not enough investment from
Bankers, Traders
Renewable Energy is becoming new focus
Carbon Tax is an alternative
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Post Kyoto Period is coming
Investors are looking for strategies that drive
revenues instead of adding costs to doingbusiness
Sustainability in the workplace
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Howard Jeandenis
Green Competitive Advantage LLC
www.greenca.org