Avoiding ExtinctionThe Kyoto Protocol Carbon Market
- reflections by its author -
Graciela Chichilnisky
Columbia University & Global Thermostati-Sup2014 Brussels - September 2 2014
Human Dominated WorldHuman Beings are today the largest geological force in the planet
We are changing the planet’s atmosphere, its body of waters, and the complex web of species that makes life on earth
Climate Change
Global Risks• Climate Change• Biodiversity Extinction• Clean Water scarcity• Life in the Seas going extinct
Avoiding Extinction
URGENCY
Why are we being called to respond to
The Climate Question
Catastrophic Risks• Global sea level raise threatens the survival of 43 island
nations • Polar Caps melt - accelerating warming trend• Record breaking tornadoes, floods, droughts and
devastating fires• 30 million climate migration in 2011 • National Security at Risk US Pentagon 2009
Oceans - the origin of life – going extinct
Are Humans Next?• Need Action Now• Waited too long• Industrial economies 20% of world population
cause most of world’s C02 emissions
Energy from fossil fuels is 45% of global emissions
Clean Energy is the Only Solution
The AnthropoceneThe change we are producing is caused by economic forces – but will be read in rock formations for thousands of years
A new geological era - the ‘Anthropocene’ – follows the Holocene –it started in 1945
The Bretton Woods Institutions after WWII led to
Globalization of Western Economics
A Brief History of Western Economics
How an individualistic frontier societyGrows Interconnections & the Global Commons
Western Economicsan
Individualistic frontier Society
• Lacks connections with natural resources• Lacks connections between present and future• Lacks connections between people
Western Market Economics based on
– Competitive Markets - individualistic consumers trade private goods: no connection between people
– Optimal Growth Theory -- exponential growth of population and resource use – a frontier society without limits: no connection between the economy and ecological systems
– Cost Benefit Analysis and Financial Models Discount the Future – a short term vision: no connection between the present and the future
Dictatorship of the Present
So far Western economics
• Lacks connections between people • Lacks connections between economy and
environment• Lacks connections across generations
Sustainable Development requires building connections
WHY?
Because humans dominate the planet
• For the first time in recorded history• Following an era of rapid globalization
Humans dominate Planet Earth
• We are connecting and changing the planet’s atmosphere, its bodies of water, and the complex web of species that makes life on Earth
This means natural resource limits
• As we reach natural resource and environmental limits
The survival of humankind is at stake
• Need connections with the ecology, between people and with the future of our species
Can Western Economics adjust?
Can Markets become Sustainable?
Sustainable Economics
How to do it
Changes needed
• Change Economics – Sustainable
• Change GDP - environmental markets that provide prices - value the global commons.
• Change International Law - UNFCCC KP process
We CAN DO IT
Changes Articulated by the
United Nations
Kyoto Protocol
The Missing Signal• If we destroy all trees & make toilet paper our economy improves – why?• Because Toilet Paper has Market Value & Trees do not.
We lack Market Prices
New Market prices = New ValuesNew costs and New benefits
The Carbon Market Provides the Missing Signal
• 1997: UN Kyoto Protocol Placed Limits on industrial emissions• 2005: KP Carbon Market became International Law – now in 4 continents
December 2011:Kyoto Protocol extended 3 years
in Durban UN COP 17
• Existing KP limits valid until 2015
• New limits pledged for 2020
• UN COP 19 Warsaw 2013 confirms the North South nature of the earth’s climate crisis
Who Should Abate?
• The rich nations of the North?20% of the global population consume most natural resources and caused the majority of the global emissions
• The poor nations of the South?80% of the global population extract most of the world resources and export to rich nations could cause most emissions in the future.
The Carbon Market
•What is it?
•What it is not
Emission Limits are the basis of Carbon Market
How does it Work
CHANGES THE ENTIRE
GLOBAL ECONOMY
$25/TON EMITTED
CARBON PRICES ARE THE Missing
Signal
Carbon Makes Clean
Energy profitable
Dirty Energy expensive
and Undesirable
Dirty pays clean – ZERO
overall costs
The Carbon Market• EU ETS trades $250 Bn/year
• Reduced 30% EU emissions since 2005
• Its CDM transferred over $100 Bn for clean energy projects in poor nations
Carbon MarketLinks to Global Economy
Everything is made with energy Economic growth = Energy Use
Link to EnergyCarbon Market provides Missing Signal
New Market Prices = New Values
FOCUS of Carbon Market• Capping Emissions
• We can’t get there without emissions reductions
Markets for trading a Global Public Good: Using the planet’s Atmosphere
Creating Equity with Efficiency
REDD• Reducing Emissions from Deforestation and
Forest Degradation
• Limited effect on Climate
• Mot Important effect on Biodiversity
Not International Law
Where are We?
What comes Next?GREEN CAPITALISM
Economy, the Earth and our Species
• Need to develop connections with the earth’s resources, between people and with the future of our species
Basic needs• The Basic Needs of 80% of Humankind who live in developing nations• Undermined by resource intensive economics: over-extraction of raw
materials from the poorest nations in Africa and Latin America• Resources exported and over-consumed by 20% of world population
in the industrial world
Women and Survival• Women are the only Link to the Future• War on Women • Threatens the Survival of the Human Species• Women key to the New Economy• Green Capitalism• Survival of the Human Species
What to do?
• Change International Law• Change Economics
We just have to do it
• For the survival of our Species
Change International LawBasic Needs
• In 1974 I created the Bariloche Model of the World Economy
• Based on my new concept of Basic Needs• Was the basis of Sustainable Development voted by
150 nations at the 1992 UN Earth Summit in Rio Brazil• Adopted by the G – 20 in 2009
Sustainable Development
Change International LawThe Carbon Market
• The Carbon Market I designed and wrote into the UN Kyoto Protocol in 1997- international law since 2005
• Productive clean CDM transfers to developing nations $50 Bn since 2005
• EU ETS Trades $200 Bn/year, decreased 37% EU emissions since became law in 2005
• Makes profitable the use of clean energy for the production of all goods and services
• Changes the energy foundation of the Global Economy• China ratified the Kyoto Protocol and since 2005 leads the World
in Solar and Wind markets• US did not and we are left behind in clean technology
The Green Power Fundbecame international law in Durban
• I proposed it in 2009 Copenhagen COP15• Was accepted and officially endorsed by Hillary
Clinton US Sec of State two days later at COP 15• It is a $200 Bn per year Fund to build carbon
negative power plants in Africa, LA and Small Island States - economic growth that cleans the atmosphere
• The technology exists, and the funding exists in the EU ETS trading system - $250Bn/year
Need political support to make my Green Power Fund a reality
• It is already international law since Durban 2011• Must be linked to UN Kyoto Protocol to use the
$250 Bn/year to fund negative power plants in LA Africa and AOSIS
Key: promote new technology & new economics create growth while cleaning the atmosphere
Changing Economics is Key
HOW?
• Provide Missing Connections• Between people, with the environment • Between the Present & the Future
Sustainable Development
The Present and the Future
• Cost Benefit Analysis and Optimal Growth theory exist that do not discount the Future
A Formal Theory of Sustainable Development has been developed that provides
Equal treatment for future generationsConnects the present and the future
I created the formal Theory of Sustainable Development in 1996
Sustainable Development (Chichilnisky 1996, 2000, 2006, 2009, 2010)
Formal Theory of Sustainable DevelopmentCreated in Chichilnisky 1996*
Axioms for Sustainable DevelopmentA mathematical formulation
• 1. No Dictatorship of the Present• 2. No Dictatorship of the Future• 3. Continuity and Linearity
* Chichilnisky “What is Sustainable Development” Social Choice and Welfare, 1996
A complete characterization of all Criteria that satisfy all my three axioms
• Theorem (Chichilnisky 1996)There exists criteria of optimization that satisfy all of my three axioms. They are new, and they are all of the following form:
New types of Markets + New GDP• Market economics can be made consistent with sustainable goals• But markets themselves must change
• Individualistic markets must evolve into new types of markets that I postulated - markets for public goods – which incorporate
connections between people and value Valuing the Global Commons
• They are slowly emerging due to new scarcities: carbon market I created within the Kyoto Protocol, international law since 2005
trading $200Bn/year; SO2 markets in CBOT, new markets for water and for biodiversity (Chichilnisky (1992, 1996, 2000, 2002, 2009, 2010, 2011)
Global markets that value privately produced public goods the Global Commons
The Carbon Market Changes the measurement of GDP
• Carbon Market puts a (new) economic value to a clean atmosphere that changes GDP
• With the carbon market, in two identical nations the one that produces clean energy has a much higher GDP
New Markets change Capitalism
• Markets trading privately produced public goods are new
• They combine equity with efficiency
Connecting People• They require limits on resource use
Connecting Economics with Ecological Systems
Green Capitalism in the 21st Century
• The basis exists: international law and economics
• Theoretically and in practice• New markets for the global commons, new
growth theory, new cost benefit analysis and new GDP measures, new international law
• Need to implement it through carbon market and Green Power Plants through UN COP
The Global Commons
New Economics
From maximizing profits toeconomic progress
that ensures survival of our species
Technology Urgently Needed
• To Reduce Carbon from the Atmosphere
• In a Profitable Way
The Word needs Energy
CLEAN ENERGY FOR DEVELOPING NATIONS
Global Thermostat Pilot Plant, SRI International - Menlo Park CaliforniaFebruary 2011
What is a Carbon Negative Solution
Global Thermostat Company Confidential Page 45
Carbon Neutral is not enough• Neutralizing emissions does not prevent
further increases in atmospheric CO2
• Even the most aggressive efficiency improvements and renewables adoption are unlikely to keep CO2 concentration at the generally agreed 450ppm to avoid catastrophic climate risk
Negative Carbon is the solution1
• Air capture enables direct and rapid reduction of CO2 concentration
• GT allows for the capture of even more CO2 than we are loading into the atmosphere or that the earth’s systems can absorb – Negative Carbon GT’s technology directly reduces
carbon concentration in the air, making carbon negative possible
Pre-Ind Ti
mes2030
20800
100
200
300
400
500
600
700
800
Reducing CO2 Concentrations in the Atmosphere
Business as UsualConstant GrowthWedges Approach / StabilizationGlobal ThermostatHazardous Level 450 ppm
CO2
Part
s per
Mill
ion
(PPM
)
1 United Nations Headquarters, New York, November 12, 2009. Presentation by G. Chichilnisky on"The Rising Tide at Copenhagen: A Win-Win Solution for Industrialized and Developing Nations"
Closing the Carbon Cycle• GT Technology Captures Carbon from Air• Inexpensive: Uses Low Process Heat • Cogenerates Power Production withCarbon Capture• The More Power is Produced – the More Carbon is
reduced• Makes Coal Plants Carbon Negative• Makes Solar Power Plants even more Carbon
Negative
GT’s Air Capture TechnologyThree-Step Process Produces Concentrated CO 2 Stream
Step 1Air Input
Transport and Injection
Compression Other Applications
Key to GT’s technology is cogeneration using
low temperature process heat to
capture CO2
Subsequent steps are shared by all CO2 capture methods though pipelining costs can be reduced by co-locating
where CO2 is stored or used
Step 2CO2 Capture
Step 3CO2
Regeneration
Absorbing CO2
Pipes to oil well or algae
UP
Releasing CO2
Pipes to oil well or algae ponds
DOWN
Applications & Markets for Captured CO2
Global Thermostat Company Confidential Page 50
Storage Enhanced Oil Recovery*
Algae-Based Biofuels*
Hydrogen-Based Fuels
Products cement, fertilizer, plastics,
greenhouses
*EOR and Algae-based biofuels represent most
significant opportunities for commercial applications
of CO2 captured using GT’s technology
Unique Advantages of GT’s Technology
Measurable advantages over other forms of carbon capture
Low-Cost Provider•Powered by low cost & widely available process heat
Scalable Design•Modular design adapts to different sized applications
Carbon Negative Solution•An energy or industrial plant can capture even more CO2 than is emitted – a carbon negative solution
Flexible Integration• Fossil, renewable, nuclear plants, industrial plants, (cement, steel) – anywhere heat is available
GT Pilot Plant at SRI - October 1, 2010
Global Thermostat Company Confidential Page 52
2nd GT Carburetor Demo Plant – Commissioned January, 2013
– Uses heat, and captures CO2, from SRI’s power plant
5 Global Thermostat 53Confidential, May 2013
Strategic Partners
Global Thermostat & Algae Systems
Global Thermostat Company Confidential Page 55
Desalination
CO2
Wastewater
Algae Production Dewatering Fuel
Production
Fuels,Electricity &
Biochar
TreatedWastewater
Drinking Water
•Produces carbon negative transportation fuels (gasoline diesel)•Treats municipal wastewater and produces drinking water•Generates green electricity and biochar fertilizers
GT is developing fully-integrated biorefinery in partnership with Algae Systems
Provides critical municipal services while producing energy
As Green As It Gets
Solar Energy
Closing the Carbon Cycle
Carbon Negative Power Plants – reduce 45% of the global CO2 emissions caused by power plants
Green Power Fund provides PPA to build Carbon Negative Power Plants
Channel EU ETS $250Bn/year funding to poor nations through Carbon Market CDM
Carbon negative fuels – the more you drive and fly the cleaner is the atmosphere
Economic Growth that cleans the atmosphere
Creating the Future
Green CapitalismThe carbon market
Environmental Markets for Biodiversity and Water
Implement Sustainable DevelopmentFunding from Carbon Market can build carbon negative power plants and fuels
globally