This Week In V-Carbon: Is The COP Glass Half Full Or Half Empty?

The weeks following the 19th international climate negotiations have left countries struggling with what to make of the few decisions that came out of Warsaw. After positive signals on REDD+ but mixed ones on the Clean Development Mechanism, China launched two new (previously planned) subnational carbon markets, and Mexico dispatched a carbon trading platform.

The weeks following the 19th international climate negotiations have left countries struggling with what to make of the few decisions that came out of Warsaw. After positive signals on REDD+ but mixed ones on the Clean Development Mechanism, China launched two new (previously planned) subnational carbon markets, and Mexico dispatched a carbon trading platform.

This article was originally published in the V-Carbon newsletter. Click here to read the original.

11 December 2013 | Is the COP glass half full or half empty? Depends on your perspective. The United Nations Framework Convention on Climate Change (UNFCCC), held in Warsaw in November, ended on a positive note for some observers when negotiators managed to reach a certain level of agreement on key issues. But the outcome of the 19th international climate conference (COP19) was not seen as a cause for celebration by several COP veterans, given the increasingly tense discussions between developed and developing countries over who should foot the climate bill and how.

“Can I say it was disappointing?” asked Charlotte Streck, director of Climate Focus. “Probably not, because that would mean that I had expectations.”

Streck’s question and answer prompted nervous laughter from a full house at last week’s debrief that Ecosystem Marketplace, McGuireWoods and the International Emissions Trading Association (IETA) held in Washington, DC to take stock of the recent COP negotiations. Dirk Forrister of IETA, Vikram Widge of the International Finance Corporation, and Marnie Funk of Shell joined Streck on the panel to discuss questions such as WTF? (standing for Where’s the finance?, of course) and whether the UNFCCC is in fact the correct forum for addressing problems such as loss and damage from climate change, which is quickly becoming a large-scale international finance issue.  

Here at Ecosystem Marketplace, we’ve been doing our own COP19 unpacking through ongoing news and analysis of what went down inside the soccer stadium in Warsaw. We’ve paid closest attention to long-anticipated progress on Reducing Emissions from Deforestation and forest Degradation (REDD+) and what it means, and we’ve covered the clear emergence of a landscape approach that recognizes that farmers need to make a living in order to keep forests intact.

UNFCCC Executive Secretary Christiana Figueres sees a role for market-based mechanisms such as REDD+ and the Clean Development Mechanism (CDM) in the 2015 climate agreement. However, COP19 left many project developers checking the CDM for vital signs after proposals to set a price floor and to have financial institutions such as the Green Climate Fund buy the (now very cheap) Certified Emissions Reductions (CERs) both fell through.

Many of the articles in this week’s edition of V-Carbon explore how countries are grappling with the CDM’s uncertainty. China, for instance, launched two new subnational carbon markets directly after the COP and will allow Chinese project developers to recertify CDM credits as China-specific ones. Mexico, which launched its MEXICO2 carbon trading platform in late November, also hopes to facilitate the trade of CERs originating from in-country projects. New Zealand, however, has taken the uncertainty in the opposite direction and announced the restriction of CDM credits in its national emissions trading scheme as of June 2015.

These and other stories from the voluntary carbon marketplace are summarized below, so keep reading!

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—The Editors

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V-Carbon News

Voluntary Carbon

Green for green

Ecosystem Marketplace’s 2013 State of the Forest Carbon Markets report tracked 19.7 million tonnes of carbon offsets purchased by voluntary buyers – enough to offset the emissions of Honduras or Niger. Who are these buyers, and what motivates them to invest in forests? An Ecosystem Marketplace series will get inside the psyches of four high-profile buyers of forest carbon offsets to explore their processes and preferences: publisher Macmillan, carpet manufacturer Interface, conservation non-profit National Geographic and international logistics company DHL. The intro to the series explains offsetting in context and why many companies are willing to pay a bit more for forest carbon offsets.

Read the intro to the series
Read the Interface case study

Clean cooking is in fashion

UK retailer Marks & Spencer has signed on as the first buyer of the carbon offsets from UNICEF’s clean cookstove project in Bangladesh. The initiative aims to distribute 40,000 fuel-efficient stoves, each of which is expected to reduce one tonne of carbon emissions (and produce one offset) annually. Local people will be trained to manufacture and market the stoves, creating an estimated 150 domestic jobs. Ecosystem Marketplace’s report for the Global Alliance for Clean Cookstoves revealed that more than half of the 8.2 million clean cookstoves distributed in 59 countries in 2012 were at least in part paid for by carbon finance.

Read more
Read Ecosystem Marketplace’s clean cookstove report

Soil carbon on trial

AR Carbon, a project financed by the UK government, is seeking 10 to 15 farms to take part in a soil carbon trial that will support farmers in increasing the carbon content of their soil – and then in selling carbon credits into the European Union’s Emissions Trading Scheme. “We want to be able to tell people that the carbon you’ve got in your soils is a tradeable asset,” says Richard Page, co-founder of AR Carbon. “We’d really like farms of all shapes and sizes to come forward.” The project is looking for farms of various soil types in order to create a UK-wide soil carbon map.

Read more

Offsetting is for humans

To those who think carbon offsetting “has had its time,” The Guardian says, ‘look again.’ Project types such as water filters and clean cookstoves are growing in popularity due to the dual humanitarian and environmental benefits that they offer, according to offset retailer ClimateCare. Though even individuals can purchase offsets, ClimateCare says that it’s seeing more companies interested in financing the development of a new project so that they have more ownership of its social benefits – a new clean cookstove project costs around 125,000 euros. Aviva, the UK’s largest insurer, has purchased 126,000 tonnes of emissions reductions over the past two years through ClimateCare.

Read more in The Guardian

Climate North America

RGGI makes a federal case

Cap-and-invest works was the message in a letter sent last week by the nine northeastern US states participating in the Regional Greenhouse Gas Initiative (RGGI) to the Environmental Protection Agency (EPA). The EPA should allow states considerable flexibility in using market-based mechanisms to achieve the new emissions limits for existing power plants, the letter argues. The “invest” part refers to the fact that participating states are using money raised at auctions to invest in energy efficiency technology and facilitate the transition from coal to natural gas, which has occurred faster in northeastern states than other regions of the US. The latest RGGI auction sold 38.3 million allowances at a price of $3/t, raising about $115 million for reinvestment in energy efficiency, renewable energy, direct bill assistance, and greenhouse gas (GHG) abatement programs.

Read the letter
Read coverage in The National Journal
Read the latest RGGI auction results

MEXICO2 trading up

Through MEXICO2, an electronic forum, Mexico now has a platform where polluting industries can purchase and trade carbon credits from emissions reduction projects. Those involved in the platform expect transactions on the order of a million carbon credits in the first year, jumping to two million in the second year, especially with Mexico’s recent passage of a carbon tax on fossil fuels. MEXICO2 may also help to create demand for credits from CDM projects, 200 of which are located in Mexico. After Costa Rica, Mexico is the second country in Latin America to launch a carbon exchange.

Read more

A silent auction

The mood at Quebec’s first auction of carbon allowances last week was unexpectedly quiet, with bidders purchasing only one million of the nearly three million permits offered at the price floor of $10.75 per metric ton. “Quebec has done a pretty poor job of signaling the start of their cap-and-trade scheme,” said William Nelson, an analyst at Bloomberg New Energy Finance. The environment ministry, however, promises that future auctions will be livelier since compliance entities will still need to meet the emissions cap for the 2013-2014 period. Quebec’s carbon market will be linked to California’s next year.

Read more

Hiking the Appalachian Trail

California’s Air Resources Board is still on the fence as to whether it will approve the Mine Methane Capture (MMC) protocol that would allow coal companies that capture and destroy methane ventilating from mines and then sell emissions reduction credits on the state’s carbon market. But just in case, the Appalachia coal industry is ready. First-movers like Consol Energy’s Enlow Fork mine in Pennsylvania are poised to invest millions of dollars in MMC technology but say that their project “depends 100 percent” on the revenue from carbon credit sales in California. Another company, Verdeo, would foot the bill for the equipment in exchange for the right to sell the carbon credits. However, “without a price on carbon, none of these projects will happen,” John Savage of Verdeo said.

Read more

Kyoto & Beyond

CDM sleeping with the fishes

Jorund Buen of project developer Differ lamented the lack of progress in determining the future of the CDM at COP19. Proposals to set a price floor and to have financial institutions such as the Green Climate Fund buy up the (now inexpensive) CERs both fell through. “As a tradable commodity, it’s in a coma and will be unless and until a 2015 agreement wakes it up,” he said. However, text coming out of Warsaw did clarify that CERs could be used to meet voluntary emissions targets – a positive step given that many CDM project developers are already looking to the voluntary market for demand.

Read more

Global Policy Update

China trading gathering steam

Three out of China’s seven proposed carbon markets are now up and running, with the launch of the Shanghai and Beijing markets. (Shenzhen’s market began in June, and Guangdong’s will begin later this December.) In the first transaction on Beijing’s market, state-owned PetroChina bought 10,000 offsets from wind power producer Longyuan. In this deal, the Chinese Certified Emissions Reductions (CCERs) sold at 16 yuan (USD$2.62) per tonne – about six times the going price of CERs. China is home to more than 60% of the 1.4 billion offsets issued under the CDM, and the government is now allowing project developers to re-register their credits as CCERs to fetch the higher price.

Read more about the first deal
Read more about how China’s carbon markets work

Jumping off a sinking ship

The Warsaw negotiations left New Zealand even less confident in the longevity of international carbon markets, and last week the country’s climate change minister announced that it will restrict trade of CERs in its Emissions Trading Scheme (ETS) starting in June 2015. This uncertainty about international mechanisms such as the CDM, however, is in part New Zealand’s own fault because the country opted out of the second commitment period of the Kyoto Protocol last year. New Zealand Units on the ETS were trading at $3.65/t as of the end of October, up from just 24 cents in May but far off from the $25/t price cap originally intended to protect industry against skyrocketing costs that never came to pass.

Read more about the first deal

Aussie freebie

The cornerstone of Australia’s Direct Action Plan to cut GHG emissions 5% under 2000 levels by 2020 is its AU$2.55 billion Emissions Reduction Fund, which is poised to pay companies to reduce their emissions intensity against a baseline. However, a recent analysis by Reputex finds that AU$2 billion (USD$1.8 billion) of that money could be spent in vain, since emissions intensity is already falling in Australia. A tighter baseline would be needed to curb the supply of “grey credits” from industry, the study claims, otherwise the fund acts as a handout to polluting companies without the benefit of real emissions reductions.

Read more

Carbon Finance

Ready, Set, REDD

The World Bank’s Forest Carbon Partnership Facility yesterday signed off on a new Methodological Framework for its Carbon Fund, which lets loose the $390 million that developed countries have already committed to REDD+ pilot programs. “This is ready, set, go for the largest international REDD fund in the world,” said Duncan Marsh, The Nature Conservancy’s director of international climate policy. The funding provides an incentive for countries that have begun the readiness process to follow through with Emissions Reduction Programme Idea Notes, which must be developed by the end of 2015 in order to tap into the funding. The Methodological Framework includes best practices for establishing reference levels based on historical rates of deforestation and supports jurisdictional/subnational approaches.

Read more in Ecosystem Marketplace

Costa Rica’s PES recipe

After 20 years of payment for ecosystem services (PES) policies, Costa Rica’s forest cover has bounced back to over 50% of the country’s land area, up from just over 20% in the 1980s. Recent research out of the Norwegian Institute for Nature Research examines the factors that make Costa Rica’s PES “recipe” a successful one. One reason, the study says, is that PES walks the line between incentives and regulations — drawing from aspects of both types of policies. Also, landowners and public authorities have a motivation to engage with PES beyond just the money as PES programs have helped to clarify land tenure in Costa Rica.

Read more

Featured Jobs

Tenure and REDD+ Specialist – Food and Agriculture Organization

Based in Italy, the Tenure and REDD+ Specialist will work with the Food and Agriculture Organization of the United Nations to support the implementation of the tenure component of the UN-REDD Global Programme. The position requires identifying and liaising with governments and counterparts of REDD countries interested in receiving support on tenure in Latin America, Asia-Pacific, and Africa. The successful candidate will have an advanced degree, five years of relevant work experience, and working knowledge of English, French, or Spanish, with proficiency in one of the other two.

Read more about the position here

Senior Technical Consultant – Horn of Africa Regional Environment Centre and Network

Based in Addis Ababa, Ethiopia, the Senior Technical Consultant on Environmental Services and Climate Change Analyses will be responsible for the effective and efficient establishment and implementation of the Ethiopian Panel on Climate Change’s governing and technical bodies. The ideal candidate will have an advanced degree in climate science, significant experience working within the Intergovernmental Panel on Climate Change, and a strong understanding of the business climate in Ethiopia. Fluency in English is required; working knowledge of Amharic is an advantage.

Read more about the position here

Landscapes Support Specialist – Tetra Tech

Based in Indonesia, the Landscape Support Specialist will support the Indonesian government in its commitment to lower GHG emissions through the conservation of high-value forests and peat lands. The position requires a master’s degree in natural resources management or a related discipline; at least 10 years of professional experience promoting conservation and low emissions development; experience working at the community level in Indonesia; and fluency in English and Bhasa Indonesian.

Read more about the position here

Technical Analyst – Clean Air Task Force

Based in Boston, Massachusetts or Washington, DC, the Technical Analyst for Climate Pollutant Emissions will work to quantify current emissions of methane and black carbon and the costs of reducing emissions. The position requires gathering and interpreting data on emissions from a range of sources, analyzing data using spreadsheets and programming tools, and presenting results clearly in writing and through graphics. The successful candidate will have three years post BA/BS training through education or relevant work experience.

Read more about the position here

Natural Resource Specialist – USDA Forest Service

Based in Washington, DC, the Natural Resource Specialist will help catalyze innovation in ecosystem services approaches and provide technical assistance on the topic within the USDA Forest Service. The position requires building public- and private-sector partnerships, reviewing and recommending policy positions within the USDA, and representing the Forest Service at conferences and various public events.

Read more about the position here

Carbon Sourcing – The CarbonNeutral Company

Based in London, the Carbon Sourcing position within The CarbonNeutral Company involves sourcing emissions reduction projects; structuring and negotiating commercial deals; contributing to technical assessments and measurement of co-benefits; and being an internal subject matter expert, communicating effectively with colleagues. The ideal candidate will have an advanced degree and a minimum of three years of experience working within the carbon markets (not carbon footprinting/assessments).

Read more about the position here


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