Carbon markets 101 introduces the market mechanisms under the Kyoto Protocol and related initiatives. It helps executives and managers understand emerging business issues around carbon trading, emission reduction projects and carbon monitoring.
4. What causes Global Warming? Visible light (solar radiation) enters the atmosphere and makes contact with earth’s surface. Atmosphere 1. 2. 3. The surface heats and emits infrared radiation into atmosphere. Some radiation stays in the atmosphere and some is lost to space. Greenhouse gases trap and remit some of the infra red radiation back to the surface. This causes the temperature of earth to be about 30 deg C greater than it would have been otherwise. What are the green houses gases? Mainly water vapor, but also CO 2 , methane and ozone. Increasing industrialization is increasing the concentration of greenhouse gases thus increasing this warming effect Sun
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7. Kyoto Protocol: Greenhouse gases targeted These are groups of gases Used as alternative to ozone-depleting CFCs in refrigeration systems Hydroflurocarbons (HFCs) and Perfluorocarbons (PFCs) Used in the electrical insulator, freezing agent, heat conductor. Sulfur hexafluoride (SF6) Emitted from the use of nitrogen fertilizers, from burning fossil fuels and from some industrial and waste management processes Nitrous oxide (N20) Comes from landfills, coal mines, oil and natural gas operations, and agriculture. Methane ( CH4) By far the most important GHG . Generated from burning fossil fuels and deforestation. Over 80% of US GHG emissions comes from CO2 generated from burning fossil fuels Carbon Dioxide ( CO2) Description Green House Gas (GHG)
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11. CDM Process Project Design Document National Approval Validation Certification/CER issuance Registration Verification Project Developer Designated National Authority Designated Operational Entity Executive Board Designated Operational Entity Designated Operational Entity Activity Responsible Authority The Executive Board (EB) is the core organization responsible for the CDM mechanism All countries must have a Designated National Authority (DNA) which approves CDM project activities Designated Operational Entity (DOE) are independent private organizations accredited to act as external controllers The key CDM principle is Additionality : a project should only be able to earn credits if the greenhouse emission reductions would not have occurred without the expectation of revenue carbon credit sales. CER (Certified Emission Reductions), are carbon credits with each CER representing the abatement of one tonne of carbon dioxide equivalent
12. CDM Project Statistics China and India are the major CDM project hosts 4733 CDM projects are in the works out of which 1596 have been registered Source: UNFCC site Source: http://www.cdmpipeline.org Renewable energy forms the major chunk of projects HFCs,PFCs and N20 reductions consititute only 2% of projects but 25% of CERs by 2012
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14. JI Projects Statistics 203 JI projects are in the works out of 176 are Track 2 projects Russia and Ukraine dominate the JI market. Methane reductions (mainly loss in natural gas pipelines) forms major chunck of projects as well as ERUs
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21. Other US Voluntary markets status Source: Wikipedia 7 Northeastern and Mid-Atlantic states is the first mandatory U.S. cap-and-trade program for carbon dioxide. Targets capping carbon dioxide emissions at current levels in 2009, and then reducing emissions 10% by 2019. Allowances have been auctioned in 2008. Regional Greenhouse Gas Initiative (RGGI) 6 Midwestern states 1 Canadian province. The design of the program is due to be completed in 2009. Midwest Greenhouse Gas Reduction Accord (MGGRA) 7 US states and 4 Canadian provinces. Target of 15 percent below 2005 levels by 2020. Cap and trade program will start by Jan 2012 Western Climate Initiative (WCI) Scope and Status Initiative
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25. Carbon Funds: market classification FE Global Asia and Clean Energy Services Fund Private Energy Market Fund – 2 Asia Carbon Fund Russia Carbon Fund EcoSecurities Camco Ag Cert Climate Change Capital Carbon Fund European Carbon Fund KfW Carbon Fund Prototype Carbon Fund Merzbach Carbon Finance Austrian CDM Project facility Climate Cent Foundation Danish Carbon fund Bio Carbon Fund Japan Carbon Facility Irish Carbon Fund Spanish Carbon Fund … Invest directly in projects along with bringing know- how Buy carbon credits from project developers for resale National governments or private companies to meet commitments Sell side – Project Development Buy Side- Intermediary Buy Side - Compliance
26. Carbon Software companies There are about 40 cos in this pace including IBM and Cisco which overlaps with smart grid. Look out for our Smart Grid Overview soon! On demand software to Track energy usage and emissions across the enterprise Verisae Draper Fisher Jurvetson (DFJ) Carbon modeling software to manage emission reduction strategies Planet Metrics Novak Biddle Venture Partners and Kinetic Ventures: now being acquired by SAP Measure and manage carbon emissions and other environmental impacts Clear Standards O’Reilly AlphaTech Ventures, Union Square Ventures,The Accelerator Group. Aggregation platform to measure and track carbon emissions. Allows developer to build their own applications AMEE NGEN Partners and Swiftsure Capital Manage emission inventories and carbon projects Carbonnetworks @Ventures, Clean Pacific Ventures, OVP Venture Partners and Meridian Energy Manage CDM & Voluntary carbon projects CarbonFlow Investors Software to… Company
27. Carbon Consultants There are several small localized companies in this space. Services include: Helping businesses (and individuals) assess their emission status (carbon footprint) and helping them buy requisite credits. EcoSecurities is the only large listed player in this space Australia Brokers Carbon Now part of the JP Morgan Environmental Markets group Cimatecare SFO, US 3Degrees US/UK Carbon Advice Group Montana, US HCS Carbon Netherlands Climate Focus US Climate Action Partners Helsinki/SFO,US /Shanghai Climate Wedge India/SE Asia Emergent Ventures India WW presence EcoSecurities (listed In London) Offices in Company/Firm
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