Saturday, September 10, 2011

Emissions Trading Scheme

Emissions Trading

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How emission trading came about
Many changes in how Greenhouse Gases (GHG's) are being treated are due to policies proposed at UNFCCC conferences held at Rio de Janeiro, Kyoto, Buenos Aires, and other places. This convention meets to address the growing suspicion that some gases are trapping heat in earth's atmosphere, possibly altering normal climate behavior.

Emissions trading were introduced as a means to lower the global production of greenhouse gases. Recent US proposals to build capacity for this new sector are
the Climate Stewardship act and other legislation.

Emissions trading do not mean an exemption from reductions. Trading moves an emission reduction from one place to another, while participants report their reduction schedule. A global accounting system keeps track of what trades were made and whether participants are meeting their reduction targets.

How emissions trading are applied
Over 30 countries have agreed to reduce annual greenhouse gas emissions by an average of 7%. These countries (so called Annex countries) can trade ERC's with each other to level out the cost of achieving emission reductions. For example, a country where there is plenty wind can put up turbines, generate large amounts of emissions free energy and sell the reduction credits to a country where there is less wind and possibly higher costs to achieve reductions with similar turbines.

Each country reports yearly to the IPCC its total emissions and emission reductions. If they are on track with their reductions, they maintain trading privileges. If not, penalties or sanctions may be imposed.

Not all countries have committed to emission reduction schedules. These countries are not sure how to achieve reductions and still grow their economies without hurting themselves. To enable reductions in this second group of countries, one-way trades are permitted. For example, a wind-farm is placed in India, and the credits are automatically transferred to Denmark, where the money for the project came from. So bi-lateral trading is OK between the group with emission reduction commitments, and the second group without commitments.

Rules and modalities
Key to emissions trading is keeping track of what is being traded. Rules defining reporting measures, compliance standards etc., are being agreed upon, and soon there will be an internationally recognized game plan.

The ICBE is anticipating this market and documenting RE systems and the emissions they reduce. We expect that many RE producers will be able to claim benefits when domestic and international trading schemes start up.


Kyoto Protocol

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The Kyoto Protocol treaty was negotiated in December 1997 at the city of Kyoto, Japan and came into force February 16th, 2005.

"The Kyoto Protocol is a legally binding agreement under which industrialized countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990 (but note that, compared to the emissions levels that would be expected by 2010 without the Protocol, this target represents a 29% cut). The goal is to lower overall emissions from six greenhouse gases - carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, HFCs, and PFCs - calculated as an average over the five-year period of 2008-12. National targets range from 8% reductions for the European Union and some others to 7% for the US, 6% for Japan, 0% for Russia, and permitted increases of 8% for Australia and 10% for Iceland."


India Emission Trading Scheme

India is the third largest emitter of Green House Gas (GHG) in the world, next only to China and USA. Unlike the US that lacks a national emission trading scheme, both India and China have established their nationwide emission trading scheme to help curb the menace of climate change through mandatory GHG emission reduction.

On July 2010, India formally announced its market-based carbon trading scheme called Perform, Achieve and Trade (PAT). This scheme was implemented on April 1, 2011 and will continue through to 2014.

Through PAT, the government has set mandatory targets for 563 facilities, which include power plants, which account for 54 per cent of India’s energy use. Businesses that need more energy can buy certificates, known as Escerts, from those that use less. This trading scheme will help India reduce carbon emissions by 100 million tons a year, according to government estimates, and save about 19 gigawatts of energy.

Apart from PAT, India also has a Renewable Energy Certificate (REC) trading scheme for wind, solar and Biomass power plants. While coal is still the major source of energy for the fast growing economy, renewable sources of energy have climbed up the ladder to stand at 8 per cent of the total power generation.

The REC trading happens once a month. On May 25, 14,000 RECs were traded on the Indian Energy Exchange, with a $4.6 value, while in April only 260 units were traded. Through the REC trading scheme amongst others, the government hopes to be able to generate 72.4 gigawatts of renewable energy, out of which 20 gigawatts would be from solar power, by 2022.


BMC Is The First To Get India Tech Excellence Award

The BMC has received India Tech Excellence award for closing its 19.6 hectare Gorai dumping ground in a scientific manner. BMC is the first civic body in country that has encased carbon credit reducing greenhouse gas emission and earned Rs24.50 crore.

India Tech Excellence award is given by the central government for innovative work in urban development sector. The award was given by President Pratibha Patil. “We are really happy that our work has been endorsed by this prestigious award. We feel very proud. BMC is first civic body that has earned Rs24.50 crore by tapping methane before it goes in to the environment. We have to keep doing it for at least ten years. We are hoping to earn almost Rs80 crore from this entire process,” said Bhalchandra Patil, chief engineer of BMC’s solid waste management.

BMC expects to earn Rs 72 crore from carbon credits by 2015

The BMC received its first cheque of Rs 24, 51, 39, 862 in September 2009 from Asian Development Bank (ADB), with whom the administration has signed an Emission Reduction Purchase Agreement in 2008, where in the Certified Emission Reductions (CERs) or carbon credits generated at the Gorai dump would be sold to.

Intergovernmental Panel on Climate Change


The Intergovernmental Panel on Climate Change (IPCC) is the leading international body for the assessment of climate change. It was established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) to provide the world with a clear scientific view on the current state of knowledge in climate change and its potential environmental and socio-economic impacts. The UN General Assembly endorsed the action by WMO and UNEP in jointly establishing the IPCC.

The IPCC is a scientific body. It reviews and assesses the most recent scientific, technical and socio-economic information produced worldwide relevant to the understanding of climate change. It does not conduct any research nor does it monitor climate related data or parameters.

Thousands of scientists from all over the world contribute to the work of the IPCC on a voluntary basis. Review is an essential part of the IPCC process, to ensure an objective and complete assessment of current information. IPCC aims to reflect a range of views and expertise. The Secretariat coordinates all the IPCC work and liaises with Governments. It is supported by WMO and UNEP and hosted at WMO headquarters in Geneva.

The IPCC is an intergovernmental body. It is open to all member countries of the United Nations (UN) and WMO. Currently 194 countries are members of the IPCC. Governments participate in the review process and the plenary Sessions, where main decisions about the IPCC work programme are taken and reports are accepted, adopted and approved. The IPCC Bureau Members, including the Chair, are also elected during the plenary Sessions.

Because of its scientific and intergovernmental nature, the IPCC embodies a unique opportunity to provide rigorous and balanced scientific information to decision makers. By endorsing the IPCC reports, governments acknowledge the authority of their scientific content. The work of the organization is therefore policy-relevant and yet policy-neutral, never policy-prescriptive.