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Govts Inch Towards Framework For Global CO2 Market
Source: Reuters – Thu, 13 Jun 2013 04:44 PM Author: Michael Szabo and Andrew Allan Environmental activists stage an open-air carbon auction in front of the European Parliament in Brussels, April 9, 2013. REUTERS/Francois Lenoir BONN, June 13 (Reuters Point Carbon) – Governments may this year launch a global framework to tie together national and regional greenhouse gas reduction efforts, a move that U.N. climate negotiators meeting in Germany this week said could lay the groundwork for a global carbon market. The plan would unite schemes currently being developed in nations including the United States and China onto a single platform, encouraging governments to share ideas with the view of eventually designing a global market to help fight climate change. “The idea is to start to road-test a framework for including various mitigation approaches around the world,” said one senior negotiator who spoke on condition of anonymity. “It would be (open to) anyone that wants to voluntarily connect to this framework, to see if the software and hardware is there to build (something) bigger.” The U.N. climate talks are tasked with launching new market mechanisms that will leverage billions of dollars of private sector finance to help poor countries grow economically in a sustainable way. But the negotiations have made little progress in the area, prompting Poland to first float the idea to other governments earlier this year. The plan could include launching a pilot scheme to examine developing common standards that could, for example, join existing and future carbon markets with mitigation efforts or initiatives to slow deforestation rates in developing countries. “It started as an ambitious idea but it’s been adjusted towards a more general approach following a few rounds of consultations with parties,” said Sven Braden, a negotiator for Lichtenstein. “The hope is it will eventually bring in different mechanisms to try to find common ground and assist in producing proposals for new market-based approaches.” Other member states said the concept remains vague and will need further work at U.N. climate talks in Poland in November, or at a yet unscheduled two-day workshop before or after the meeting. “At the moment, it’s very sketchy as there’s not much detail. It will depend on formal negotiations (in Warsaw) in terms of what happens to it,” said Artur Runge-Metzger, lead EU negotiator at the climate talks. MARKETS Existing international carbon markets under the Kyoto Protocol, such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) are used only by the 35 or so signatories to the 1997 agreement to meet their climate goals. As such, countries that never ratified the treaty (United States), pulled out of it (Japan), or were not forced to cut emissions by it (China) cannot use credits from those markets to meet existing or future climate goals. Any new framework to be launched in Warsaw would be under the U.N. Framework Convention on Climate Change, meaning any of the 190 or so parties could take part. Frustrated with Kyoto’s markets, Japan has designed its own offset scheme and is pushing for international recognition that reductions made under it would count against the nation’s pledge to cut emissions by 2020. One Japanese negotiator said his nation would support the Polish proposal if it allowed Japan to offset emissions via its Joint Crediting Mechanism. “We’re implementing a real scheme, so if this proposal is for a test phase with no specific meaning for 2020 (goals), we wouldn’t have much interest,” said Yuji Mizuno, a director at Japan’s environment ministry. Green groups were opposed to Poland’s idea and called for a review of existing carbon markets before launching new ones, noting the CDM, JI and EU carbon markets are suffering from record low prices due to weak national pledges. “It’s a recipe for disaster,” said Kate Dooley, a campaigner with Third World Network. “Instead of learning from these failures and figuring out what went wrong and (how) fix that, northern governments in particular are pushing forward this discussion of markets … with even looser rules and very broad eligibility criteria.” Continue reading
Greener Pastures For Biopower
June 10, 2013 By Mackinnon Lawrence, principal research analyst, Navigant Research Recent data released by the Energy Information Administration (EIA) paints a cloudy picture for electricity produced from biomass — or biopower — in the United States. According to EIA, total net electricity generation from wood biomass reached 37.54 TWh in 2012, increasing less than 0.2 percent over 2011 totals (37.45 TWh). Relative to wood biomass production, electricity produced from waste biomass jumped to 20.03 TWh in 2012, representing a 4.2 percent increase over 2011 totals (19.22 TWh). Both segments trail growth rates observed among competing renewable technologies like wind and solar. Installed biopower capacity across Europe is nearly four times that of the U.S. and, according to Navigant Research forecasts, electricity generation from biomass in the region is expected to reach nearly 300 TWh by 2020 under an aggressive scenario. Sluggish expansion in the U.S. belies biopower’s potential as a renewable source of baseload power production. Dedicated large-scale facilities — defined as power stations with installed capacity in excess of 50 MW — for a time, were hailed as potential cornerstone players in emerging renewable energy portfolios. Using either wood biomass or the biogenic fraction of municipal solid waste (MSW), these facilities have substantial potential. Waiting for Harvest Proponents point to a range of potential biomass sources across the country that could support broader scale-up efforts. The thinning of forests across the Western U.S. produces an abundance of fuel while reducing the threat of wildfires, a danger that has ravaged many Western states in recent years. Pine beetle infestation across the Rocky Mountain region has led to efforts to identify potential markets for millions of acres of dead timber. ______________________________ The biopower industry must galvanize support in Washington despite a checkered public image. ____ _______________________ Despite the availability of this fuel at no cost, save for the expense of aggregating and collecting it, access has proven to be logistically challenging. Much of this biomass is located on federal land, which under existing federal regulations and protected by a complex patchwork of laws designed to support broader conservation efforts. The hard-to-harvest nature of these resources, which are scattered across millions of acres of variable terrain, also prevents their aggregation at a price point that can simultaneously pay for the service while also competing with incumbent fossil fuel resources. Beyond logistical challenges associated with feedstock aggregation, challenging economic conditions have also led to anemic growth in recent years. Shale gas, in particular, has emerged as a cheap and abundant source of fuel for baseload power generation across the U.S., and could serve as a bridge fuel for renewable power generation technologies, just as a slew of coal-fired plants are scheduled to sunset or shutter operations due to tightening emissions regulations under proposed Environmental Protection Agency (EPA) regulations. Meanwhile, the logistics associated with collecting, aggregating, transporting and processing biomass feedstock drive up the cost of biopower production considerably. Based on the National Renewable Energy Laboratory’s transparent levelized cost of electricity (LCOE) database, dedicated biopower facilities operations and maintenance (O&M) costs are on average 40 percent to 240 percent more expensive than natural gas. Project developers indicate that biopower facility economics decline rapidly once feedstock is sourced beyond 50 miles. Combined with a lack of 24/7 applications for heat c-produced at biopower facilities, the cost of unsubsidized electricity generation from biomass can be prohibitive. Greener Pastures While larger dedicated biopower facilities face significant headwinds, a number of biopower-related opportunities are beginning to materialize across the United States. Growing demand for biomass that has been compressed, or “densified” to support aggressive bioenergy targets across the European Union, is driving a boom in the pellet production capacity in the U.S. Southeast. Unlike the Western U.S., much of this forest cover sits on private land and is already harvested for commercial purposes by a well-established lumber industry. Supporting biopower stations of more than 100 MW across the European Union, European utilities such as RWE and Drax have vertically integrated their operations by owning and operating pellet production facilities in Georgia and Louisiana. United States pellet production is expected to expand from three million tons in 2009 to 10 million tons by 2015. Integrated biorefineries, which are primarily designed to produce advanced biofuels and biochemicals, represent a potential growth area for electricity production from biomass as well. First-of-a-kind facilities have recently commenced production providing electricity for onsite consumption and export to the grid. Under an optimistic scenario, Navigant Research forecasts that nearly 5 GW of new cogeneration capacity at biorefineries could come online by 2020 in the United States. This represents an eleven-fold expansion over installed generation capacity in 2012 (465 MW). To realize potential growth in these segments, the biopower industry must galvanize support in Washington despite a checkered public image. Scrutiny over emissions, sustainability, and deforestation has led to the cancellation of projects in several states and made policymakers reluctant to extend the incentives needed to support industry growth. Ultimately, biopower’s future in the U.S. remains promising, but for now the sector lacks the right mix of incentives and market signals to drive faster expansion. About the Author Mackinnon Lawrence is a principal research analyst contributing to Navigant Research’s Smart Energy practice, with a focus on advanced biofuels and bioenergy. Lawrence has extensive experience as an attorney, consultant, and analyst with deep expertise on topics ranging from environmental policy and international affairs to clean energy. Continue reading
Gold Standard Acquires CarbonFix In Bid To Reshape Forest Carbon Landscape
Author: Molly Peters-Stanley Even as the market for forest carbon offsets continues to spawn new standards for project development, two existing standards are tying the knot – and tying into the global carbon market’s next big question: how to view (and credit!) forest carbon projects as the sum of their many parts? 18 September 2012 Ever since their inception, the Gold Standard for carbon offsets has focused on projects that deliver energy-efficient technology while the CarbonFix standard has focused on projects that plant trees. Today, however, the Gold Standard made a bold move beyond its traditional role as an energy-only carbon offset standard – announcing that it has acquired CarbonFix to integrate into a (literally) greener Gold Standard version 3.0. This represents the first effort of its kind to begin consolidating demand and expertise under one brand – in a market that otherwise continues to proliferate new standards for project certification. Carbon offsets certified to the Gold Standard, which are eligible for use by compliance as well as voluntary buyers, are well recognized by consumers for their contributions to sustainable development. In recent years, the standard has held its own among the top three standards most sought-after by corporate voluntary offset buyers, according to the State of the Voluntary Carbon Markets annual report . The CarbonFix Standard, first tracked by Ecosystem Marketplace in 2007, maintains a significantly smaller market share but a high average price (averaging in $17/tCO2e range in 2011). When combined, market observers say a new land use-ready Gold Standard could give existing forestry standards a run for their market share. “Gold Standard is recognized for its great reputation – especially among voluntary buyers who remain the world’s dominant source of demand for land use, land-use change and forestry projects (LULUCF),” says Jason Patrick, Head of Commercialization at forest carbon investment firm Permian Global. “If they can bring that kind of consumer recognition to forestry, I think it will be a positive development for the land use market broadly defined, and voluntary buyers specifically.” Also today, The Gold Standard announced an MOU with its sibling Forest Stewardship Council (the FSC and Gold Standard are both endorsed by the World Wildlife Fund), which will see the two organizations leverage their respective approaches to social and environmental safeguards and carbon certification. This is particularly relevant given the Gold Standard’s aim to eventually move beyond CarbonFix’s traditional focus on Afforestation and Reforestation (A/R) projects to also support Improved Forest Management (IFM) and climate smart agriculture projects – possibly in combination. Changing with the compliance landscape Michael Sahm, Head of Communications for project proponent Forest Carbon Group, suggests that all of these maneuvers may help the Gold Standard keep pace with a rapidly changing compliance marketplace – where the Gold Standard is the only independent standard traditionally applied to some energy projects that generate credits under the UN’s Clean Development Mechanism (CDM) and that wish to certify their contributions to sustainable development. “With changes in the CDM market starting 2013 (i.e. excluding notable volumes of carbon credits from China and India), the focus is shifting from industrial type of projects in Asia to land use based projects in poorer countries in Africa, Latin America and Southeast Asia,” Sahm points out. “There, you don’t find an industrial infrastructure for technology-driven climate change mitigation activities – those countries’ assets are forestry and agriculture.” The Gold Standard is indeed looking to grow its presence within the still-small compliance forest carbon offset markets – and to this end finds itself on the same page with a major market player, the World Bank’s BioCarbon Fund, which remains the largest buyer of CDM forestry credits. In recent interviews, both the Gold Standard and BioCarbon Fund representatives have spoken about the need for “landscape level” accounting that accounts for and credits multiple mitigation activities within a single project area, instead of treating each project activity separately. “Whether the project approach includes A/R or forest management and agriculture or renewable energy, these activities should all be streamlined for use in combination,” explains Gold Standard CEO Adrian Rimmer. “Given our background in energy, combined with the CarbonFix approach to forest carbon accounting and FSC’s experience with forest management and forest stakeholders, this is a place where we’re well positioned to play a role in making all of the elements of a project work together.” The BioCarbon Fund’s Ellysar Baroudy notes that the announcement is well timed, given the Fund’s similar considerations to landscape scale approaches – which were described in its submission today to the UN’s Subsidiary Body for Scientific and Technological Advice (SBSTA) that recommends more generic accounting principles should be used for landscape approaches in developing countries. “When we talk about A/R, we can no longer talk about it in isolation from other project activities, so we think this is a great step,” she says. “Breaking down sectoral silos to ensure a more practical way to achieving better land management through climate-smart agriculture, rural energy projects and others, will lead to an integrated and more effective approach to development,” Baroudy says, adding that the BioCarbon Fund looks forward to working with the Gold Standard to further this development. To this point, Baroudy notes that landscape level project accounting may be a component of projects that the BioCarbon Fund explores for the third tranche of projects it will support, though the discussion is still in its infancy. The Fund already branched out from its traditional support of CDM A/R projects to also invest in REDD activities and climate smart agriculture within its second tranche of project-level investments. Many forests, many approaches Project-level REDD and climate smart agriculture projects haven’t yet been formally recognized for crediting under the existing UN framework – both project types currently rely upon voluntary carbon offset buyers to finance project development and activities. Several forest carbon offset standards underpin existing and pipeline voluntary market projects, including CarbonFix and over a dozen other independent and country-specific approaches. None has a larger market share than the Verified Carbon Standard (VCS) which, often in combination with the Climate, Community and Biodiversity Standards (CCB), was the market’s leading standard for both REDD and A/R project certification in 2011. While the Gold Standard plans to explore methodologies for climate smart agriculture, a venture into the REDD market does not appear to be on its near-term land use agenda. Rimmer says that the Gold Standard will consider integrating other elements of the Gold Standard within its land use program – like a micro-scale project approach that may help reduce transaction costs for small scale forestry projects. Several market players have expressed relief that the Gold Standard’s acquisition of CarbonFix avoids the creation of yet another forest carbon offset standard – and suspect that at least a few A/R projects may consider transitioning from the VCS to the Gold Standard/CarbonFix. Says one major verifier currently working with both VCS and CarbonFix projects, “If the Gold Standard adopts the CarbonFix standard, we may see some projects that currently operate under the VCS make the switch – simply because the CarbonFix program has seen fewer changes over the last several months and newer project developers seem to think that it’s an easier approach.” Projects that wish to transition from CarbonFix to the Gold Standard should anticipate a few changes of their own, between now and when the Gold Standard aims to launch version 3.0 of its standard in mid-2013. Pieter van Midwoud, CarbonFix Executive Secretary and latest addition to the Gold Standard team, explains that existing CarbonFix projects will continue to be assessed as CarbonFix projects while the two standards conduct a “technical alignment of CarbonFix with Gold Standard procedures, governance structures and infrastructure.” Then, qualifying projects will transition to the Gold Standard as pilots. He says it also means that, as of today, projects seeking Gold Standard accreditation can begin work under the CarbonFix Standard with the aim of being grandfathered into the new system when that becomes a possibility. Continue reading
