A practical approach to offset permits in post Kyoto climate policy

International Carbon Offsets from developing countries and emerging economies such as permits from the Clean Development Mechanism (CDM) will potentially play an important role for cost containment in domestic greenhouse gas regulation schemes in industrialised countries. We analyse the potential role of offset permits assuming that major emitters such as the USA, Canada, Japan, Australia and New Zealand install domestic greenhouse gas regulation schemes to achieve the emissions reductions pledged in the Copenhagen Accord and seek cost containment. We estimate a potential demand for offset permits of 627 to 667 MtCO2e p.a. from industrialised countries. To describe the supply structure, we derive marginal abatement cost curves for developing countries and emerging economies. We find that developing countries and emerging economies can supply 627 to 667 MtCO2e p.a. at costs of approximately EUR 10 (in 2004 EUR), neglecting transaction costs and country specific risks. The highest potentials for the generation of carbon offsets are present in China, India and the rest of Asia. --emissions trading,offsets,CDM,marginal abatement costs,climate policy

A Window of Opportunity for GMO Regulation: Achieving Food Integrity Through Cap-and-Trade Models from Climate Policy for GMO Regulation

GMOs are the links of our centralized food system, largely dependent on international trade. GMOs are inherently unsustainable because they reduce biodiversity, harm the environment, and empower positive feedback loops between monocultures, industrial agriculture, and biodiversity depletion, thereby jeopardizing food safety, security, and sovereignty. Conglomerates of multi-national companies, in short BigAg, shape multi-lateral food trade and flood international markets with their small array and enormous volumes of crops, while controlling large aspects of agriculture and food production world-wide. Zooming in on the trans-Atlantic dispute about GE crops, this paper uses comparative law to explore how a cap-and-trade model borrowed from climate change policy might help to decentralize the current food system, thereby potentially restoring locally-oriented agriculture and food integrity. GMOs are under-regulated in the US and international trade frameworks enable the centralization of trans-Atlantic food systems, dominated by the US. This is possible because of the free trade/biotechnology policy in the US and the agricultural exceptionalism, which are, in theory, obstacles to food integrity. By comparison, the precautionary and protectionist approaches in the EU facilitate some food integrity, albeit not enough as a result of US trade pressures. The pressures could be partially lifted if there were a cap on those crops that enable the centralization of the system, namely GE crops patented and produced by US-American BigAg conglomerates. Essentially, when GE corn, soy, wheat, rice were capped in permissible trade volumes, other non-GE crops may enter the market, thereby diversifying and decentralizing food systems, encouraging local agriculture, and opening pathways where more sustainable practices could be instituted. In an effort to contextualize the herein proposed cap-and-trade upstream model regulation of GMOs borrowed from climate change policy, this paper explains the distinctions between GE and conventionally bred crops, between agriculture and food law, between the US free trade and the EU protectionism approaches (including the bedrocks of each legal framework) to trading GE crops, as well as the inherent dangers of the widespread use of GMOs in the trans-Atlantic food system. A likely conclusion of this paper will be that a cap-and-trade model, as proposed, may take decades to be passed into law, if ever, but it also highlights that the links between preserving food integrity, mitigating climate change, and maintaining open food trade are ripe for progressive and pro-active review

The EU Climate Policy after the Climate Package and Copenhagen - Promises and Limits. Egmont Paper No. 38, September 2010

This paper aims to provide a global assessment of the European Union’s climate change policy after the Climate Package and Copenhagen. In order to do so, the paper firstly describes the climate threats for Europe as well as the birth and objectives of the EU climate and energy package adopted in 2009. Then, the different components of this package are highlighted: the EU Emissions Trading Scheme (ETS), the obligations of the non-ETS sectors, the 20% renewable energy objective, the promotion of carbon capture and storage and the framework on environmental subsidies. Thirdly, the other EU climate policy legislations are examined, comprising: energy efficiency, the GHG emissions of cars, the GHG emissions of fuels, and the Strategic Energy Technology Plan (SET-Plan). Next, adaptation to climate change is discussed, before examining the international aspects of the EU actions after Copenhagen. As a way of conclusion, the paper assesses the EU climate policy throughout four main questions: What has the EU achieved until now? What will be the costs? What will be the impact on the European Union? And, is the EU action sufficient

The Kyoto Protocol and Global Environmental Strategies of the EU, the U.S. and Japan: A Perspective from Japan,

Despite the objection of the Bush administration to the U.S.'s ratification of the Kyoto Protocol, its entry into force has come to be realistic due to the Bonn Agreement in July. The purpose of this paper is first to survey the framework of the Protocol, and then to analyze the strategic positions of the EU, the U.S., and Japan in negotiations for designing the details of the Protocol. Finally, this paper intends to consider the due strategy of Japan, as well as to identify the problems of the Protocol, which will be a help for designing a new framework that will enable the participation of developing countries.

How Much Market Do Market-Based Instruments Create?: An Analysis for the Case of "White" Certificates

In the context of economic instruments for more energy efficiency and climate protection, tradable certificates have been investigated for renewable energy and for a number of emissions. In contrast, tradable energy efficiency - or "white" - certificates have only lately been considered as a market-based tool to foster energy efficiency as compared to standards and labelling, for example. Theoretically, there is little doubt about the advantages. In practice, however, somefundamental problems arise. Critical issues are the design of an efficient artificial market for "white" certificates, its compatibility with the European emissions trading system, the identification of a suitable target group for an energy efficiency obligation and the measurement of energy savings as compared to a reference use of energy. We use the theoretical framework of Transaction Cost Economics to elaborate these issues. We conclude that transaction costs and investment specificity will restrict markets for "white" certificates in practise. Long-term contracts rather than spot trade will be the prevailing form of governance for energy efficiency investments.Tradable certificates; Energy efficiency; Transaction cost

Using Data Envelopment Analysis to Assess the Relative Efficiency of Different Climate Policy Portfolios

Within the political, scientific and economic debate on climate change, the process of evaluating climate policies ex-ante, during and/or ex-post their lifetime, is receiving increasing attention from international institutions and organisations. The task becomes particularly challenging when the aim is to evaluate strategies or policies from a sustainability perspective. The three pillars of sustainability should then be jointly considered in the evaluation process, thus enabling a comparison of the social, the environmental and the economic dimensions of the policy’s impact. This is commonly done in a qualitative manner and is often based on subjective procedures. The present paper discusses a data-based, quantitative methodology to assess the relative performances of different climate policies, when long term economic, social and environmental impacts of the policy are considered. The methodology computes competitive advantages as well as relative efficiencies of climate policies and is here presented through an application to a sample of eleven global climate policies, considered as plausible for the near future. The proposed procedure is based on Data Envelopment Analysis (DEA), a technique commonly employed in evaluating the relative efficiency of a set of decision making units. We consider here two possible applications of DEA. In the first, DEA is applied coupled with Cost-Benefit Analysis (CBA) in order to evaluate the comparative advantages of policies when accounting for social and environmental impacts, as well as net economic benefits. In the second, DEA is applied to compute a relative efficiency score, which accounts for environmental and social benefits and costs interpreted as outputs and inputs. Although the choice of the model used to simulate future economic and environmental implications of each policy (in the present paper we use the FEEM RICE model), as well as the choice of indicators for costs and benefits, represent both arbitrary decisions, the methodology presented is shown to represent a practical tool to be flexibly adopted by decision makers in the phase of policy design.Climate, Policy, Valuation, Data envelopment analysis, Sustainability

‘Yes-in-my-backyard’: Spatial differences in the valuation of forest services and local co-benefits for carbon markets in México

Forests provide many and large benefits, including cost-efficient climate change mitigation. However international carbon markets have not stimulated the demand for forestry offsets. Domestic market-mechanisms are emerging inmany countries and forests could be highly valued through these policies asmost of the benefits produced by forests are enjoyed locally. Here, a choice experiment explores drivers of valuation and willingness to pay for forest carbon services in voluntary markets in Mexico by comparing the valuation of citizens from four regions to test geographical preference for projects (n = 645). Findings from multinomial-logit models show valuation of forest carbon services is transferable and citizens would pay more for offsets from projects closer to their homes. Proximate forests provide a range of co-benefits to local users, including environmental services and opportunities for recreation. Factors related to valuation include sense of responsibility, previous knowledge of carbon emissions, previous visits to the sites, regional identification and the valuation of local environmental services (e.g. improvements in local air quality). Knowledge of spatial heterogeneity in valuation of the use of forest services can help to design market-based instruments by identifying highly valued areas for environmental services programs and carbon markets

Level and Trend Uncertainties of Kyoto Relevant Greenhouse Gases in Poland

The Kyoto Protocol is often described as a good first step towards reducing greenhouse gas (GHG) emissions into the atmosphere. The Protocol endorses emissions trading, joint implementation including "bubbling" between Annex I Parties, an a clean development mechanism that allows Annex I and non-Annex I Parties to act together to reduce emissions. However, the anticipated permit market will not function if uncertainties are not rigorously assessed and considered in any compliance process. With no reliable verification tool, it is impossible to effectively assess the different mechanisms and activities mentioned under the Protocol. Thus, it is very important to study the uncertainties underlying the Kyoto relevant GHGs, here with reference to Poland, because without the consideration of uncertainty robust verification can not occur. This paper presents information about the data used in the calculations as well as the methods favored by the Intergovernmental Panel on Climate Change (IPCC). The so-called Tier 1 method of the IPCC for the evaluation of uncertainties is described in more detail. This paper also provides a first quantitative overview on the Polish uncertainties of three Kyoto relevant GHGs, namely CO2, CH4, and N2O, for 1988, 1990 and 1999. The main goals of the paper are to present the analytical calculations as well as additional calculations that are carried out to improve the evaluation of uncertainties. Recommendations are presented to reach these goals