The European Commission said on Monday a proposal to limit the use of some carbon credits from industrial gas projects in its emissions trading scheme might be unveiled during a United Nations climate summit in Mexico next week. The European Union Emissions Trading Scheme is the largest multi-national emissions trading scheme in the world. The trading scheme currently covers more than 10,000 installations with a net heat excess of 20 MW in the energy and industrial sectors which are collectively responsible for close to half of the EU’s emissions of CO2 and 40% of its total greenhouse gas emissions.

Under the Trading scheme, large emitters of carbon dioxide within the EU must monitor and annually report their CO2 emissions, and they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions in that year. In order to neutralize annual irregularities in CO2-emission levels that may occur due to extreme weather events (such as harsh winters or very hot summers), emission credits for any plant operator subject to the Trading Scheme are given out for a sequence of several years at once. Each such sequence of years is called a Trading Period. The 1st Trading Scheme Trading Period expired in December 2007. Since January 2008, the 2nd Trading Period is under way which will last until December 2012.

The carbon market is looking for clarity over the use of U.N.-backed carbon credits from some controversial projects which destroy the potent greenhouse gas hydrofluorocarbon-23 (HFC-23).

A U.N. panel is scrutinizing such projects over fears that some project developers were adjusting their plants to produce more of the gas and then destroying it to climate profitable carbon credits.

The EU Commission is discussing whether to propose curbs or a ban from 2013 on such offsets in its carbon trading scheme.
The European Commission was due this month to propose curbs or a ban from 2013 on the use of offsets from industrial gas projects in the European Union trading scheme. It wants to stop exploitation of the system by project developers, in countries including China and India, who are suspected of adjusting facilities to produce more of potent greenhouse gas hydrofluorocarbon-23 (HFC-23) and then destroying it to claim profitable carbon offsets.

HFC-23 is a waste by-product from manufacturing refrigerants.

In January 2008, the European Commission proposed a number of changes to the scheme, including centralized allocation by an EU authority, a turn to auctioning a greater share (60+ %) of permits rather than allocating freely, and inclusion of other greenhouse gases, such as nitrous oxide and perfluorocarbons. These changes are still in a draft stage; the mentioned amendments are only likely to become effective from January 2013 onwards. Also, the proposed caps for the 3rd Trading Period foresee an overall reduction of greenhouse gases for the sector of 21% in 2020 compared to 2005 emissions.

Article by Andy Soos, appearing courtesy Environmental News Network.

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Seven years after opening, North America’s only national market trading all six greenhouse gases will close its doors at the end of this year.

The Chicago Climate Exchange (CCX), a voluntary but legally binding system where members commit to annual greenhouse gas emission reduction targets will not be able to function in the absence of federally-enacted cap-and-trade, reports The Financial Times.

Atlanta-based Intercontinental Exchange, which purchased CCX in April, reportedly will keep the separate Chicago Climate Futures Exchange, a clearinghouse for carbon offsets and credits, open until at least the end of 2012, when the carbon credits provision of the Kyoto Protocol is set to expire.

“The bulk of the users have said to us that they really don’t want to continue to trade voluntarily in the absence of any credit for their work by the current administration,” said Jeff Sprecher, chief executive of IntercontinentalExchange.

IntercontinentalExchange purchased CCX, the Chicago Climate Futures Exchange and the European Climate Exchange in April for about $634.5 million

Sprecher said he remains bullish on emissions trading in Europe, where the European Climate Exchange is profitable, but he’s far less enthusiastic about carbon trading on a national scale in the U.S., where any discussion of a national cap-and-trade these days is a non-starter, especially with big Republican wins in last week’s midterm elections.

While the only national carbon market in the U.S. will close at the end of this year, regional markets like the Regional Greenhouse Gas Initiative in the East and the Western Climate Initiative in the West and Canada may still have a chance at thriving. Because they do not require buy-in from all fifty states, and because the politics of energy in the U.S. usually break down along regional divisions, as opposed to partisan ones, there may be more cohesion in smaller markets rather than a single national one.

Since launching in 2003 CCX has grown to 450 members, attracting a diverse array of companies in both size and business sector to trade emissions of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons and hydrofluorocarbons.

Article by Timothy B. Hurst, appearing courtesy Earth & Industry.

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According to Bloomberg New Energy Finance, tax fraud is the carbon trading market’s most egregious form of cheating, affecting about seven percent of this $125 billion market in 2009.

In August 2009, seven people were arrested near London for not paying tax on the sale of carbon permits, for a total of £38 million (about U.S. $63 million). The taxes were levied as part of the European Union Greenhouse Gas Emission Trading System, created in January 2005 and based on Directive 2003/87/EC, which was enforced beginning Oct. 25, 2003.

Carbon emissions trading, or cap-and-trade, is a system whereby governments tell industry how much carbon dioxide a particular factory or operation can emit. If the factory or operation manages to emit less than the mandate allows, it can sell its excess on the open market, but either it or its designated seller is required to report the transaction and pay taxes on it, as on any financial gain.

Where industrial operations emit more than their share of carbon emissions, they must buy carbon credits, and their purchase – usually also from a designated carbon trader – is also reported to the appropriate agencies, who carefully regulate the buying and selling of credits.

In the European Union, trading has been moving toward centralization since 2008. The E.U. Emissions Trading System is currently in the second trading period of 2008 – 2012, with hopes that centralization can be achieved during the third period. Centralization would hopefully prevent the windfall profits and tax fraud generated by the first and second periods, during which carbon allowances were given freely to all E.U. member countries.

The E.U. Emissions Trading System currently trade for about 15 euros ($21) per ton. The 2009 carbon emissions tax evasion scheme involved traders and companies who bought carbon credits outside E.U. countries which applied the Value Added Tax, or VAT –- or where VATs were lower –- then sold them (usually in the United Kingdom) with the VAT added, without subsequently paying the tax back to the government.

The same thing occurred again this past April, albeit on a larger scale, involving 22 people in the United Kingdom (13 in England, eight in Scotland, and one detained on an E.U. arrest warrant) as well as an unreported number so far in Germany. The investigation also overflowed into other E.U. countries, namely Belgium, the Czech Republic, Cyprus, Denmark, Finland, Norway, Portugal, Spain and the Netherlands.

In Germany, officials and tax investigators swept 230 offices and residences, including Deutsche Bank AG, Munich-based HVB Group (the second largest private German financial institution and retail bank), and RWE AG, a German electric and natural gas public utility headquartered in Essen.

All detentions and raids across the European Union occurred on April 28 in an aggressive attempt to round up carbon emissions trading cheaters at every level. In this particular sweep, Germany is looking at 180 million euros ($239 million) in tax evasions by 150 individuals at 50 companies. In the United Kingdom, the Revenue & Customs office, or HMRC, targeted 81 sites.

The VAT tax varies according to the E.U. country levying it, and the product or the nature of the service delivered. Thus it is possible to buy carbon credits without the tax (or at a lower tax rate, i.e., Poland), and resell them in high-VAT countries.

The E.U. carbon emissions trading fraud is huge, but perhaps nothing compared to the potential for cheating that will become available in the United States once Waxman-Markey, or some similar scheme for reducing carbon emissions, emerges from the Senate to become law.

One current contender for that slot is the American Power Act, which aims for an 83 percent reduction in carbon emissions below 2005 levels by 2020, and permits only exchange-traded and cleared transactions at a value of between $12 and $25 per tonne, with the Commodity Futures Trading Commission having jurisdiction. A tonne is 1,000 kilograms, roughly 2,204 pounds, and the gap between $12 and $25 is significant enough to be disconcerting, but overall this act seems the most promising of the bunch to curb chicanery.

In the United States, carbon credits are currently traded exclusively on the Chicago Climate Exchange, or CCX. Once trading is approved by law, other trading forums will undoubtedly spring up, leading the larcenous to find ways to defraud not only industry and the government, but one another as well. Of course, the United States doesn’t have a VAT tax per se. But as Bloomberg notes, a carbon trading market organized around derivatives (sometimes known as credit default swaps, or CDS) is “open to manipulation,” in the words of billionaire hedge fund investor George Soros.

In fact, some old-school environmentalists see the whole carbon trading scheme as not a way to curb climate change, but merely a way to make the rich even richer at the expense of the rest of us. As Larry Lohmann, the founding member of the Durban Group for Climate Justice, says, “Dishonesty is rife throughout the carbon offset market.”

In January, investigators from Belgium said that in some E.U. countries, 90 percent of the market volume in carbon trading was based on criminal activities.

Article by Jeanne Roberts appearing courtesy Celsias.

photo: Kevin H.

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What makes energy start-ups succeed or fail? Are energy investments wise for venture capitalists? What will shape energy finance innovations and the adoption of the smart grid?

The 2009 Wharton Energy Conference will explore these questions and more October 30 in Philadelphia. CleanTechies is excited to serve as a media partner of this one-day conference and career fair.

Three keynote speakers include CEO Michael Allman of Sempra Energy, which continues to expand its renewable energy portfolio with solar and wind power projects. He is joined by H. Jeffrey Leonard, president of the Global Environment Fund, a leading energy and environment private equity firm, and Federico F. Peña, former secretary of energy and secretary of transportation, now a senior advisor with Vestar Capital Partners.

More than a dozen speakers are confirmed from companies including First Solar, BP Wind, Tendril, OwnEnergy, Finite Carbon, Plextronics, Blue Source, IBM Global Business Services, Element Partners, VantagePoint Venture Partners, the Assabet Group and Braemar Energy Ventures.

Panel discussions will cover the promises and pitfalls of entrepreneurship, energy finance innovations and obstacles, the future of the electricity grid, and the venture capital perspective on energy investments.

Themed discussion tables may cover topics such as nuclear energy, carbon credit trading and energy policy in developing markets.

In its third year, the Wharton Energy Conference is expected to draw more than 400 students and energy industry professionals to the Union League of Philadelphia. The student-run Wharton Energy Club at the University of Pennsylvania’s Wharton School of Business sponsors the event.

For more clean technology conferences and events, visit the CleanTechies Events Calendar.

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“No doubts remain. Climate change is real and the build-up of greenhouse gases in our atmosphere is increasingly at an alarming rate.” With these words, Rafael Quiroga, General Manager of Accion RSE, initiated the seminar “Corporate Strategic Management of Climate Change and Greenhouse Gas (GHG) Emissions.” This is not another “green business” seminar from a European or North American city, it took place here — in Santiago, Chile.

The event brought together speakers from the Chilean private sector that gave concrete examples of their companies’ climate change and GHG management initiatives. First, it showed how Essbio, a water purification company, has been dealing with the ever-prescient and escalating challenges of decreasing water reserves due to climate change.  Second, it illustrated the emissions and energy reductions Xstrata Copper, a mining company, has committed to and the steps it has taken to minimize the release of contaminants in its industrial processes. Third, it explained what Natura cosmetics has done since 2007 to become a “carbon neutral” business by calculating all GHG emissions in the company’s supply chain, transportation, and production of its various cosmetics products, and purchasing the equivalent amount of CO2 tonnage in carbon credits on the international carbon markets.

Although Chile is officially considered an Annex B, “developing” country under the dual classification of the Kyoto Protocol, the smaller country of 16 million inhabitants has been no stranger to addressing the climate change issue in recent years. In addition to private companies’ activities noted above, Chile has also completed some 40 projects via the Kyoto Protocol’s CDM market since 2004. These 40 projects have ranged from landfill methane gas capture, to a nationwide energy efficiency CFL lightbulbs installation project, to agricultural methane capture, and to a wind energy project – yielding a total of US$300 million in traded carbon credits for Chilean enterprises.

Moreover, in early December 2008, President Bachelet, alongside her Environment Minister, unveiled Chile’s official “National Climate Change Action Plan” for 2008-2012. The plan includes activities for

1) studying impacts and vulnerabilities,
2) funding adaptation measures, and
3) strong support for mitigation endeavors, including the creation of a Center for Renewable Energy, establishing an increase of funds for a national energy efficiency program, further studies into harvesting biofuels, and increasing bicycle lanes for transport.

Although, historically, Chile has not contributed much to the total build-up of greenhouse gases in the atmosphere – actually 0.2% of total global GHG emissions for the last year tallied, 2004 – the country would like to see itself as a Latin American forerunner on confronting the issue.  President Bachelet’s new Action Plan not only concretely addresses the country’s increasing climate change concerns, but also demonstrates to the international community that Chile, too, is progressive and environmentally conscientious.

However, even with the formidable growth in the renewable energy sector, and a bit less so in CSR and ‘green business strategy,’ in Chile over the past 3-4 years, there is still an internal conflict and complexity as to how the “green” the country is truly progressing. As Mr. Quiroga pointed out at the seminar, Chile’s growth rate of GHG emissions in the past 10 years has been among the highest on the planet, alongside that of China and India. The main culprits for this have been

1) the booming energy intensive mining sector,
2) an increase in automobile use with economic growth, and,
3) an increased reliance on coal in recent years with disruptions in imported gas supplies from Argentina.

One recent study from the University of Chile actually found that Chile’s national GHG footprint is projected to jump 4.2 times its current amount by 2030.  This conclusion assumes the country continues on its current pace and manner of economic development, and with the increased reliance on new coal plants that are currently in different stages of construction.

So, yes, not only are the effects of climate change real in Chile but so too is a growing movement and public consciousness to reduce people’s and companies’ carbon footprints. In addition to Essbio, Xstrata, and Natura, there are other enterprises in Chile making efforts to reduce GHG emissions in their industrial processes or take action in other local environmental issues.  Yet, it is safe to say that such “climate change conscious” companies are still a small minority here in Chile.  And, even though President Bachelet and the Minister of Energy are making genuine, good-faith efforts to bring the latest solar and geothermal energy technology to Chile such as with partnerships with California and the US Department of Energy, the situation of increasing national GHG emissions reveals a deeper complexity we all need to address:

How can a middle-income economy, such as Chile, afford the latest in clean and renewable energy technology to reduce its climate change footprint, while at the same time, continuing to address more pressing needs of economic and social development?

In other words, a country such as Chile still needs to put its food on the table by mining the copper, whether imported gas or a cheaper “clean” energy solution is currently available; and, if they are not available, a bunch of coal will certainly do.

[photo credit: Cheo!]

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Large, low-emission buses being introduced in developing cities from Mexico City to Ahmedabad, India are reducing congestion on crowded roadways and cutting pollution and carbon dioxide emissions, all at a much lower cost than constructing subways.

In Bogota, Colombia, city leaders took control of two to four center lanes of major boulevards for the TransMilenio rapid transit system. Small walls isolate the “tracks” of the bus lines from other traffic, and passengers are able to board the long, segmented buses from the center platforms of modern stations.

Since 2001, the TransMilenio bus system has allowed the city to remove 7,000 small private buses from roadways and has slashed fuel use by more than 59 percent, according to a New York Times report. As a result, TransMilenio last year became the only large transportation system allowed by the United Nations to generate and sell carbon credits.

Climate researchers say that emissions reductions related to transportation will become increasingly urgent in coming decades, particularly in the developing world. According to a recent report by the Asian Development Bank and the Clean Air Institute, carbon emissions related to transportation are expected to increase more than 50 percent by 2030. And 80 percent of that increase will happen in developing cities. Projects similar to Bogota’s TransMilenio are planned in Cape Town, Mexico City, and Jakarta, Indonesia.

This article originally appeared on Yale Environment 360 at http://e360.yale.edu

[photo credits: DianaCats]

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