This document discusses climate change and climate policies. It begins with an overview of climate change, including the greenhouse gas effect and the key causes and consequences of climate change. It then discusses the political response to climate change, including international agreements like the UNFCCC, Kyoto Protocol, and Copenhagen Accord. It provides details on carbon markets and mechanisms like emissions trading and the Clean Development Mechanism. Overall, the document provides background on climate science, impacts, and the evolution of international climate policies and agreements.

1. Climate Change and Climate Policies
Arnaud Brohé (CO2logic/ULB)
1

2. Agenda
1) Climate Change: greenhouse gas effect, causes and consequences
2) Political response
3) Zoom on carbon markets
4) CO2logic: case studies
2

3. What changes climate?
• • Changes in:
Changes in:
– Sun’s output
– Sun’s output
– Earth’s orbit
– Earth’s orbit
– Drifting continents
– Drifting continents
– Volcanic eruptions
– Volcanic eruptions
– Greenhouse gases
– Greenhouse gases
3
© The COMET Program

4. “Greenhouse effect”
• Changes in:
– Sun’s output
– Earth’s orbit
– Drifting continents
– Volcanic eruptions
– Greenhouse gases
4
© The COMET Program

5. Increasing greenhouse gases trap more heat
• Changes in:
– Sun’s output
– Earth’s orbit
– Drifting continents
– Volcanic eruptions
– Greenhouse gases
5
© The COMET Program

6. Greenhouse gases
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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© The COMET Program

7. Could the warming be natural?
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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8. Trends in atmospheric CO2 concentration
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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9. Is it real?
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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10. Hottest Years
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
10

11. Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
11

12. IPCC FAR (2007)
• Warming of the climate system is unequivocal
• Very high confidence that global average net effect of
human activities since 1750 one of warming
• Human-caused warming over last 30 years has likely had
a visible influence on many dioxide and biological
Carbon physical
Nitrous oxide
systems Methane
• Continued GHG emissions at or above current rates
would cause further warming and induce many changes
in the global climate system during the 21st century that
would very likely be larger than those observed during
the 20th century.”
Water
Sulfur hexafluoride
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13. What the future holds for our climate?
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
13

14. What the future holds for our climate?
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
14

15. Where do GHGs emissions come from?
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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16. Another look at GHG emissions
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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WRI

17. Another look at GHG emissions
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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WRI

18. CO2 emissions by source
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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19. GHG emissions by source
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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IPCC 2007

20. GHG emissions by source
Nitrous oxide
Methane
Water
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WRI

21. Trends
Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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22. Energy challenge
Ecofys, energy scenarion, Dec. 2010
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23. Energy challenge
Ecofys, energy scenarion, Dec. 2010
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24. Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
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25. Natural consequences

26. Carbon dioxide
Nitrous oxide
Methane
Water
Sulfur hexafluoride
26

27. 27

28. Socio-economic consequences

29. August 3-14 2003

30. Political response
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31. 31

32. Political Context
• 1972: Stockholm (first UN conference on the Human Environment).
Establishment of UNEP
Principle 1
Man has the fundamental right to freedom, equality and adequate conditions of life, in an environment of
a quality that permits a life of dignity and well-being, and he bears a solemn responsibility to protect and
improve the environment for present and future generations. d.
Principle 2
The natural resources of the earth, including the air, water, land, flora and fauna and especially
representative samples of natural ecosystems, must be safeguarded for the benefit of present and future
generations through careful planning or management, as appropriate.
Principle 3
The capacity of the earth to produce vital renewable resources must be maintained and, wherever
practicable, restored or improved.
Principle 5
The non-renewable resources of the earth must be employed in such a way as to guard against the
danger of their future exhaustion and to ensure that benefits from such employment are shared by all
mankind.
Principle 8
Economic and social development is essential for ensuring a favorable living and working environment for
man and for creating conditions on earth that are necessary for the improvement of the quality of life.
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33. Principle 11
The environmental policies of all States should enhance and not adversely affect the present or future
development potential of developing countries, nor should they hamper the attainment
of better living conditions for all, and appropriate steps should be taken by States and international
organizations with a view to reaching agreement on meeting the possible national and international
economic consequences resulting from the application of environmental measures.
Principle 14
Rational planning constitutes an essential tool for reconciling any conflict between the needs of
development and the need to protect and improve the environment.
Principle 18
Science and technology, as part of their contribution to economic and social development, must be applied
to the identification, avoidance and control of environmental risks and the solution of environmental
problems and for the common good of mankind.
Principle 19
Education in environmental matters, for the younger generation as well as adults, giving due consideration
to the underprivileged, is essential in order to broaden the basis for an enlightened opinion and responsible
conduct by individuals, enterprises and communities in protecting and improving the environment in its full
human dimension.
Principle 20
Scientific research and development in the context of environmental problems, both national and
multinational, must be promoted in all countries, especially the developing countries.
Principle 22
States shall cooperate to develop further the international law regarding liability and compensation for the
victims of pollution and other environmental damage caused by activities within the jurisdiction or control
of such States to areas beyond their jurisdiction.
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34. Political Context
• 1980s: several intergovernmental conferences on CC are organized
• 1987: Brundtland report
• 1988: IPCC is established (by WMO and UNEP)
• 1990: First Assessment Report by IPCC
• 1992: Earth Summit (Rio)
• Agenda 21
• Conventions on Climate, biodiversity and desertification
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35. UNFCCC
Introduced in 1992 in Rio at the ‘Earth Summit’. It commits governments
to a voluntary “non-binding aim” to reduce atmospheric concentrations
of greenhouse gases to prevent man-made interference with Earth’s
climate system.
The Convention entered into force on the 21st of March 1994 and has
been ratified by 196 countries.
The Convention divides countries (referred to as parties) into three main groups
according to differing commitments:
Annex I: Include the industrialized countries.
Non-Annex I: This group is comprised of mostly developing countries. The 49
countries classified as least developed countries (LDCs) by the United Nations are
given special consideration under the Convention on account of their limited
capacity to respond to climate change and adapt to its adverse effects.
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36. Political Context
36

37. The Kyoto Protocol
• Protocol to the UNFCCC
• Inspired by (US) The Clean Air Act (market based instruments)
• First Draft of a Global Emissions Trading System
• Cap and Trade system
• Target emission level: 5.2% below 1990 emissions on average
during “First Commitment period” 2008 – 2012
• Two categories of countries:
Capped countries (developed countries) a/o all EU
members, Russia, Ukraine, Japan, Canada, New
Zealand, Australia:
• Targets to reduce emissions
Non-capped countries (a/o Brazil, China, India):
• No obligation to reduce, but incentive to do so
through the “Clean Development Mechanism”....
• Complex rules to define the baseline
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38. The Kyoto Protocol
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39. What is in the Copenhagen Accord?
The Copenhagen Accord is a short single document of just over two pages.
• On the politics: acknowledgement of the seriousness of the problem and need for urgent
collective action in line with existing principles
• On the science: endorsement of the IPCC’s recommendation that global temperature
increase be kept below 2 deg C
• On adaptation: agreement that developed countries will provide adequate and predictable
financial, technical and capacity-building support to developing countries.
• On developed country mitigation: agreement that Annex 1 parties will commit to
quantified economy–wide emission reduction by 2020 (although with no individual or
aggregate targets given).These targets as well as financing to support developing country
climate action, are to be monitored, reported and verified.
• On finance levels: commitment by developed countries to provide US$30 billion in short-
term financing between 2010 and 2012 and to mobilize US$100 billion per annum by 2020.
This will be from public, private, multilateral and alternative sources. Funding will be used
for mitigation, adaptation, technology transfer and capacity-building in developing
countries.
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40. Durban conference
 agreement on a second commitment period for the Kyoto Protocol (under which
developed countries would take on legally-binding commitments post-2012);
 progress on a broader, comprehensive agreement that includes all major emitters
 progress in operationalizing new institutions such as the Technology Mechanism
and Green Climate Fund
 Japan, Canada and the Russian Federation have all recently declared that they will
not join in a second commitment period under the Protocol. With the US never
ratifying, only a diminished group —the EU, Norway, Switzerland and a few others—
now appear willing to sign on the dotted line
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41. EU Climate Policies – 20/20/20
In 2007 EU leaders made a unilateral commitment that Europe would cut its emissions
by at least 20% of 1990 levels by 2020. This commitment is being implemented through
a package of binding legislation.
The EU has also offered to increase its emissions reduction to 30% by 2020, on
condition that other major emitting countries in the developed and developing worlds
commit to do their fair share under a future global climate agreement. This agreement
should take effect at the start of 2013 when the Kyoto Protocol's first commitment
period will have expired.
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42. Zoom on carbon markets
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43. Internalize externalities
3 main approaches
- Standards and regulations
- Pigouvian Tax/subsidies
- Define property rights and establish a market (Coase, 1960)
(e.g. SO2 and NOx allowances in the US, CO2 market in the EU…)
Brohé et al., 2009, Carbon Markets

44. Internalize externalities
Price
Pigou tax
Supply
Demand
Q optimum Q market Quantity

45. A new market mechanism
A B A+B
Abatement Cost
Gain A
MACA Gain B
Permit price = MACAB
MACB
QA QB QA+QB
Purchased Sold permits Emission
permits reductions

46. Abatement Cost Curve
McKinsey
46

47. Carbon trading in one minute
Company/country A Company/country B
- 10t + 10t
 Evolution from a “free and universal right to pollute”
 Emissions from every company/country are capped
 One can reduce further than its cap at a lower cost
 The other one does not meet its target and pay for the extra reduction made by the
first
 Globally GHG emissions are reduced at a lower costs

48. Carbon trading in one minute
Brohé et al., 2009, Carbon Markets

49. The Characteristics of Kyoto’s market
• Ceiling and Period • Allowances and credits
(AAU, CER, ERU, RMU)
• General Principles
• Allocation (grandfathering)
• European Bubble
• Monitoring and reporting
• Exclusion of Forestry
• National Registry and ITL
• Inclusion of all Greenhouse Gases
• Flexibility in setting the year of • Sanctions
reference
• Exclusion of international aerial
and maritime transportation
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50. The Kyoto Protocol: Objectives
Countries (Appendix I) Objectives
EU-15, New Member States, and Switzerland 8% decrease
Canada, Japan 6% decrease
New-Zealand, Russia, Ukraine 0% constant emissions
USA 7% decrease
Norway 1% increase
Australia 8% increase
50

51. Brohé et al., 2009, Carbon Markets 51

52. Clean Development Mechanism (CDM)
Brohé et al., 2009, Carbon Markets 52

53. Clean Development Mechanism (CDM)
 Developed by the United Nations under the Kyoto Protocol, completed with the Marrakesh
Accords
 Historical Pollution Responsibility of Developed Countries
 Developing Countries will be most affected by Climate Change
 Lower Cost Emission Reductions
 Advantages from moving quickly
 Transfer of Technology to LDCs
 CDM EB, DOE, DNA, etc.
 PIN, PDD and additionality test
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54. Clean Development Mechanism (CDM)
Brohé et al., 2009, Carbon Markets 54

55. Issues with the CDM
 Transaction costs
 Geographical distribution of projects
 Industrial projects (HFCs, dam, etc.)
 Insufficient capital flows
 Social equity and sustainable development goals are far from achieved
 Overall climate impact and additionality
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56. Geographical distribution
UNEP RISØ OCTOBER 2011
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57. Geographical distribution
UNEP RISØ OCTOBER 2011
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58. Project type (% of expected credits until 2012)
UNEP RISØ OCTOBER 2011
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59. Programmatic CDM
 E.g.: soft loans programs to promote energy efficiency measures or renewable
energy (solar cookers, efficient cookstoves, insulation programs, motor
replacement, biofuel, etc.)
 The program is the project
 Pro: broaden the scope, reach the household, transportation and SME sectors in
particular in LDC and poor communities
 Program can be a private sector initiative or a government measure
 Program can be voluntary or mandatory
 Type, size and timing of the actions may not be known at the point of registration
59

60. Programmatic CDM
UNEP RISØ OCTOBER 2011 60

61. Programmatic CDM
UNEP RISØ OCTOBER 2011
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62. EU Emission Trading System political context
• Kyoto Protocol Ratification
• Incertitude over the Entry Into Force of the Protocol
• Failure of a Carbon Tax
• Development of Different National Initiatives (UK, Denmark)
62

63. Characteristics
The principal response from the EU to achieve Kyoto targets in EU MS
• EU has passed through its obligations and imposed limits for greenhouse gas
emissions on site level.
• The EU ETS is therefore a sub-market of the Kyoto market.
 +10,000 installations in the EU (main emitters)
 Cap and Trade system:
 Installations are entitled EU Allowances (EUA)
 At the end of each year, companies have to surrender an EUA for each
ton of emissions (CO2) they emit
 High penalty for non compliance - EUR 100/ton CO2
 3 phases/ periods: 2005 - 2007 / 2008 - 2012 / 2012 – 2020, more to follow
63

64. Characteristics
• Directive 2003/87/EC
• National Allocation Plan (over-allocation, favoritism, complexity)
• Linking Directive (EUA=CER=ERU)
• Monitoring and reporting (calculate or measure)
•Registry and CITL
• Penalties (no price cap!)
64

65. Company A (in EU) Company B (in EU) Company C
Allowance: 100 tCO2 Allowance: 100 tCO2 (OUTSIDE ANNEX I)
Real Emissions: 110 tCO2 Real Emission: 90 tCO2 Allowance: NA
Shortage: 10 tCO2 Surplus: 10 tCO2 Emissions before: 100 tCO2
Project reduces emissions:
Option 1: -10 tCO2
Company A reduces its own emissions by 10 t Emissions after: 90 tCO2
CERs: 10 tonne CO2
Option 2:
Company A buys 10 tonnes of Allowances from company B
Option 3:
Company A buys 10 Certified Emission Reductions (CER’s) from company C
65

66. Price evolution
66

67. Brohé et al., 2009, Carbon Markets 67

68. Brohé et al., 2009, Carbon Markets 68

69. Impact of CO2 Prices on Energy
• Influences the order of preference (natural gas precedes coal)
• Windfall profits (if allowances are allocated at no cost)
Clean darkspread and clean sparkspread in the UK in 2005
69

70. Developments of the EU ETS
• Enlargment to other countries (EEA)
• Inclusion of the aviation sector
•Expansion to other gases (NOx, PFCs)
•Exclusion for smaller installations
•EU wide cap
•New project mechanism
•Flexibility with a future international agreement
70

71. Limitation of GHG emissions in non – EU ETS sectors in 2020 with regards to 2005
(% of emissions with regards to year of reference)
Germany 86 France 86 Netherlands 84
Austria 84 Greece 96 Poland 114
Belgium 85 Hungary 110 Portugal 101
Bulgaria 120 Ireland 80 Czech Republic 109
Cyprus 95 Italia 87 Romania 119
Denmark 80 Latvia 117 United Kingdom 84
Spain 90 Lithuania 115 Slovakia 113
Estonia 111 Luxembourg 80 Slovenia 103
Finland 84 Malta 105 Sweden 83
71

72. Criticisms of markets: use of discount rates
72
Brohé et al., 2009, Carbon Markets

73. Criticisms of carbon markets: use of discount rates
• High uncertainties even in accounting (several gases, uncertain
GWP, deforestation and LULUCF accounting rules)
• High complexity ( not democratic, a few experts and groups with vested
interests control the market) + risk of fraud
• Irrationality
• Do not work for diffuse sources
73

74. A fragmented carbon world
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75. A fragmented carbon world
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76. CO2logic
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77. 77

78. Dolfin: LCA of a chocolate bar

79. CO2 reductions strategy

80. Reduce
1. Change a light: Change regular light bulbs for compact fluorescent light bulbs.
2. Drive less: Walk, bike, carpool, or take public transport more often.
3. Recycle more
4. Use less hot water: It takes a lot of energy to heat water.
5. Avoid products with a lot of packaging
6. Adjust your thermostat
7. Eat less meat
8. Turn off electronic devices
9. Flight less

81. CO2 audit of the elections

82. Communication experience

83. Want to know more
83

84. Act Now!
Contact:
Arnaud Brohé
arnaud@co2logic.com
+32 (0)488 58 77 68
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