Posts Tagged ‘cap and trade’

Peru climate summit to draft global climate business plan for next thirty to fifty years, says UN climate chief

Monday, September 29th, 2014

By Felix von Geyer

Energized by over 300,000 climate demonstrators who marched through New York ahead of United Nations General Secretary Ban Ki-Moon’s climate summit last week, Christiana Figueres, the Executive Secretary of the UN Framework Climate Change Convention (UNFCCC) told a Montreal audience on Friday to expect a draft global agreement in Peru this year to address climate change.

“We must, can and will” address climate change, Figueres told the 600 delegates assembled at the Principles for Responsible Investment conference on Friday morning before she listed a host of pledges and commitments that had poured from the New York summit earlier that week.

Three major pension funds committed to invest up to $31 billion into renewable energies to help decarbonize the energy sector in the battle against climate change was one major initiative. A further $100 billion of pension funds were likely to be divested from fossil fuels. The eagerness of 75 of the world’s governments alongside 1,000 global corporations to call for carbon pricing, whether through a cap and trade emissions trading scheme or carbon tax was another major step forward, said Figueres.

Moreover, if the Rockefeller brothers whose ancestor JD Rockefeller founded Standard Oil that later split into what is now Exxon Mobile and ChevronTexaco could divest the Rockefeller Foundation’s investments from oil as they announced last week, then “there is something in the air,” said Figueres.

Figueres asked PRI’s delegates to help her by undertaking three tasks in her quest to find a major global climate agreement in Paris in 15 months’ time.

“Help me to scrub the lobbying practices to avoid systemic risk and avoid human pain,” she said, referring to the lobbying process of the fossil-fuel industry that has helped prevent progress on addressing climate change beyond a broad commitment at the 2009 Copenhagen summit to avoid exceeding two degrees Celsius increase in average global temperatures.

Moreover, Figueres called on investors to maximize their ability to influence Finance Ministers around the world and make them realize that any draft text Peru’s Environment Minister is looking to craft for agreement in Paris in December 2015 is “not an environment agreement but a major technological, economic and risk opportunity,” she said.

Only the previous day, the PRI members had made the ‘Montreal Carbon Pledge’ to track the carbon intensity and profile of $3 trillion of its funds that are otherwise estimated at a total of $22 trillion. Figueres’ third request was direct: “Take that Montreal Carbon Pledge to $22 trillion,” she stated.

Ultimately replacing the old fossil fuel infrastructure with a new energy infrastructure would transition to a better quality of life for everybody by reducing energy insecurities; immigration costs; transportation costs and health costs.

“To get there, we must have the future very, very clear,” said Figueres as she called for “global peaking (of emissions) over the next ten years and then carbon neutrality to restore what the Industrial Revolution disturbed.”

Later during a lunchtime talk at CORIM, the Montreal Council for International Relations, Figueres spoke of further commitments made in New York: the forestry sector pledged to halve deforestation by 2020; palm oil producers committed to zero net deforestation by 2020 while 500 million farmers worldwide sought to move to smart agriculture. Furthermore, an 8,000 kilometre energy corridor through Africa would provide renewable energy and six transnational oil companies were committed to best practices and reporting in acknowledgement that “We’re part of the problem but we can be part of the solution,” Figueres told the diners.

Any global climate agreement in Paris would need to chart the course for the next thirty to fifty years – “way beyond the electoral cycles of anyone,” stressed Figueres who asked the room to put pressure on their subnational governments to address climate change and not to give up on national governments.

“Here’s the truth: the transformation in the energy sector and other sectors will be so huge that we cannot afford to leave behind a country, a family or a person,” the UN’s climate chief declared.

Quoting Montreal-born singer/songwriter and poet Leonard Cohen’s song ‘Everybody Knows,’ Figueres added that “Everybody knows – that we can do it. And everybody knows that deep in your heart that we have a choice about the future,” she said, stressing society had a choice to move into a low-carbon future either by crashing into physics or developing its policies.

“And everybody knows that it’s in everybody’s interest to move into that future with fifteen months to get this right. If not, it will take ten years to get around the table again and we will have economic disruption and a political crisis,” predicted figueres.

When a tax is not a tax, Mr Harper

Sunday, September 23rd, 2012

Canada’s government is wrong about carbon pricing – Felix von Geyer

Where politics is about power and interests and who controls the agenda and message in their own image, ideology and self-interest, issues are usually presented as essentially contested concepts that cannot be transcended – the art of the impossible is in fact to do precisely that, transcend them.

So, when a spokesman for Canada’s Conservative government, Fred Delorey accused Canada’s official opposition, the New Democrats, of wanting to impose a carbon price, the biggest thing on show was in fact Prime Minister Stephen Harper’s highly efficient spin machine.

How much longer a government can live on spin and courtesy of a divided majority opposition is a different question to answer. Crucially, the message given this week by the Conservative Party’s strategist and spokesman, Fred Delorey that any price on carbon is a carbon tax is, in short, designed to mislead. In the language of playwright Tennessee Williams, it’s downright mendacity.

Quite simply, the government is wrong. Selling 100,000 carbon credits on the market at, for example, $15/tonne is not a tax. It is an incentive to reduce greenhouse gas emissions at less than $15/tonne.

Back in 2007, former US President Bill Clinton told New Orator that carbon taxes are great because no-one can avoid them: but cap and trade is better as it energizes entrepreneurs.

Some weeks later after he made a speech advocating a carbon tax over cap and trade, Mayor Michael Bloomberg told New Orator a carbon tax would also energize entrepreneurs.

The IMF’s 2008 WEO stated a carbon market is better than a carbon tax if you want a global price for carbon as having the best part of 200 governments agree a carbon price is nigh impossible.

Harper’s press secretary Andrew MacDougall did not respond to New Orator’s comments and questions concerning Delorey’s and the government’s myopic perspective on carbon pricing.

However, Canada’s resource-based sister economy Australia has recently introduced a carbon reduction scheme that at $15 per tonne expects to triple tax-free personal income tax thresholds to AUD$18,000 per year. In Canada, you could almost have free university education for that – and very topical it would be in Quebec as well as allowing more funds to be channeled into education, R&D, environmental science and technology.

According to the government’s own statistics for 2009, GDP was C$1,286 billion and its GHG emissions 690 million tonnes. That equivocates to just under 537 tonnes per C$million turnover. Therefore a C$50/tonne price on carbon would equal about 2.5% of GDP, less than the government’s own estimation of Canada’s 2008-2009 economic shrinkage caused by the global financial crisis.

At $50/tonne, what revenue neutrality and fiscal shifting could be achieved and also invested in a low-carbon future? In short, much.

The political reality however is that any government addressing the carbon tax or cap and trade will face a barrage of pressure against either. Iron pelletizers will cry foul play that they have incorporated more carbon footprint for the benefit of their downstream supply chain. Ditto aluminium producers will argue their carbon intensity has benefits for their downstream clients in terms of lighter transportation, although RioTintoAlcan will likely demand early action credits for emissions reductions resulting from implementing their innovative technologies since 1992.

RioTintoAlcan’s carbon footprint may be good in Quebec where Lac St Jean provides their hydro power, but in coal-fired South Africa, the reality is far different.

Data analyst company Trucost noted in 2009 that the average carbon footprint of mutual and hedge fund investment targets was 335 tonnes per million turnover; the worst offender China’s biggest coal-fired polluting power stations with over 1,500 tonnes per $million turnover. At $50/tonne, 335 tonnes equivocates to $16,750 per $million turnover, 1.675 per cent of corporate turnover – and that would be to address all emissions, not just reduce them between 25-40 per cent.

Each industry sector faces its own challenges; its own opportunities. Aviation emissions require better navigation and direct flights, otherwise technology improvements will gradually reduce energy consumption, a shift towards biofuels and alternative fuels is the only other alternative and large-scale take-up is difficult to project.

The mining and metals industry can achieve a lot, particularly in metals processing where waste heat recovery technology can make certain reductions; Alcan’s Pecheny technology has again set out to achieve a further 20 per cent emissions reduction over and above the original Pecheny 35 technology that reduced emissions from 6 tonnes of CO2/tonne of aluminium to 2.8 tonnes of CO2.

The cement industry has made its own advances.

It does not take much imagination for the Canadian, or any government yet to seriously address its greenhouse gas emissions, to devise sector-based targets that are deeply science-based, these days trending towards the higher end of the 25-40 per cent reduction target below 1990 levels, and then offer a 1% corporation tax reduction for companies who achieve them.

On face value, it would cost companies nothing if they choose to make no reductions at all.

Importantly, however, the signal to investors is that if they want to maximize their return on investment (ROI), they will need to demand their executive boards to achieve these targets. They will ask for no excuses or otherwise they will start to identify alternative investment targets that are capable of reaching these standards.

More curiously, companies who just miss qualifying for their corporation tax reduction might start to ask for a carbon market in order to buy the surplus emissions from companies over achieving their reductions targets but who qualify for no further reward. This could kick-start both an informal market price for carbon emissions, create a multiplier effect hopefully within the economy among companies addressing their emissions but furthermore sow the seeds for a grass-roots call for a carbon market.

Also, depending on where thresholds are set could include more than just the big emitters, instead embracing a wider selection of Small and Medium Enterprises (SMEs) The subsequent need to verify, audit and report corporate energy and emissions profile would create its own service industry as well as reduce operating costs of companies identifying emissions reductions and energy improvements who  can seek to reduce emissions accordingly, whether through fuel-switching in the case of a power station or reducing sales representatives’ mileage.

So the answer Fred Delorey is that a any carbon price at all is far from a tax. Technology push and market pull or a vice versa scenario of market push and technology pull just requires good government policy, not irresponsible spin.

Quebec flies in face of Canada to launch its cap and trade

Friday, December 16th, 2011

While Canada may have announced it wants to withdraw from the Kyoto Protocol, the French-speaking province of Quebec announced its cap and trade scheme to combat its own greenhouse gas emissions.

Where Canada’s greenhouse gas emissions are some 25 percent above 1990 levels when its Kyoto target should be 6 percent below 1990 levels by 2012, Quebec`s actual emissions are 2.5 percent below 1990 levels, all the more remarkable as the province has approximately 95 percent hydro-electricity power-generation which means that fuel switching to cleaner sources of fuel is not an option.

Instead so-called ‘final mile’ emissions reductions, the ones that are hard to achieve, have been implemented.

In January, Quebec will commence a transitory pilot-phase to its cap and trade scheme under the California-led Western Climate Initiative scheduled to be rolled-out in full in 2013.

In the initial phases of the scheme, industries producing 25,000 tonnes of greenhouse gas emissions per year will be included in the scheme and, as of 2015 and similar to the original proposals of the Waxman-Markey legislation defeated in the US, fuel distributors for transportation and buildings that emit over 25,000 tonnes or more of carbon dioxide equivalent (CO2e) emissions will also be included.

Emissions allowances will be ‘grandfathered’ or provided free in the first instance and will then be capped by 1 percent and then 2 percent until 2015.

Companies emitting more than their allowances must invest either into clean technology or buy emissions credits.

Liberal Prime Minister Jean Charest has committed to reducing Quebec’s provincial greenhouse gas emissions by 6 percent below 1990 levels by 2012, in keeping with Canada’s Kyoto Protocol target that Stephen Harper’s Conservative government abandoned in 2007.