(Reuters) – A United Nations agency cut its forecast on Wednesday for pre-2012 Kyoto Protocol carbon offsets by 3 percent, estimating that only 981 million tonnes will come to market by the end of 2012.

Under Kyoto, efforts to cut greenhouse gases can be outsourced to emerging countries such as China and India through investment in clean energy projects registered under the UN’s Clean Development Mechanism (CDM) scheme.

Investors receive offsets in return, called Certified Emissions Reductions (CERs), which can be used toward emissions reduction goals or sold for profit.

“The issuance in July was extremely low, only 2.5 million CERs. Due to this and the 22 projects rejected (recently) … we decreased our projection for the amount to be available by the end of 2012,” the UNEP Risoe Center said on its website.

Around 76 million more CERs could come soon from projects on the issuance waiting list, it added.

CER supply forecasts are of particular interest to utilities and industrial firms in the European Union, which can use CERs for compliance under the bloc’s emissions trading scheme.

Issuance dropped in July due to the phase-in of new procedures, a UN spokesman said last month.

The UN’s climate change secretariat has issued a total of 423.6 million CERs to date.

Future issuance may be in jeopardy after the CDM’s executive board last week rejected 22 projects seeking approval under the scheme, which would have cut 12.5 million tonnes of carbon dioxide by 2012, and said it would conduct another spot check at the offices of the CDM’s largest emissions cut verifier.

Det Norske Veritas was suspended in late 2008 for three months for procedural breaches. Analysts said this and subsequent suspensions at three other emissions auditors since have choked the flow of CERs to market.

UNEP Risoe estimated in July that 1.012 billion CERs would be issued by the end of the 2012, when Kyoto’s first leg ends. That was up from a record low prediction of 975 million made in June.

The agency’s pre-2012 CER estimate has been sliding steadily as it has trimmed over 100 million CERs since the beginning of the year. The estimate is now around half the number predicted in 2007.

Supply concerns have caused the CER futures curve to become backwardated, with spot prices at 12.18 euros a tonne on Wednesday, trading around 10 cents above the Dec-10 futures and nearly 40 cents above the Dec-12s.

Average wholesale CER prices, or the initial price paid to the project owners, were around 9.50 euros per tonne late last week, according to analysts IDEAcarbon.

Article by Michael Szabo; edited by Jane Baird; appearing courtesy Reuters.

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Most people are familiar with automobile air emissions. Perhaps one day there will only be electric cars and no car air emissions. But there are many on other engines in use by commercial and industrial operations that may cause air emissions. In general these are called reciprocating internal combustion engines, or RICE.

On February 17, the Environmental Protection Agency issued a final rule that will further reduce emissions of toxic air pollutants from existing diesel powered stationary reciprocating internal combustion engines.

The EPA estimates that there are more than 900,000 of these engines that generate electricity and power
equipment at industrial, agricultural and other facilities. Industrial facilities use these engines to generate electricity for compressors and pumps as well as grind wood and crush stone. They also are used in emergencies to produce electricity to pump water for flood and fire control.

Diesel oil when burned will emit small amounts of unburnt organic material. These might include formaldehyde, acetaldehyde, acrolein, and methanol.

The intent of the new rules is to further reduce these types of air emissions.  These toxic air pollutants, also known as hazardous air pollutants or air toxics, are those pollutants known or suspected of causing cancer and other serious health effects.

Operators of non-emergency engines will be required to add on additional control devices to reduce these air emissions by as much as 70 percent. Selected engines will also have to be of a certain horsepower and age.

All regulated engines will also have to burn ultra low sulfur fuel oil. Burning such a fuel will reduce diesel particulates air emissions that are formed as sulfates.

For further information: EPA fact sheet (PDF)

Article appearing courtesy Environmental News Network.

photo: Greg Chiasson

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Delegates from developing nations at the Copenhagen conference were incensed after reading a leaked document purporting to show that a group of wealthy nations intends to sideline the UN in future climate change negotiations and place CO2 emissions restrictions on poorer nations.

The Guardian reported that the so-called “Danish text” — reputedly drafted by wealthy nations including the United States, the United Kingdom, and Denmark — would abandon the principles of the Kyoto Protocol requiring industrialized nations to commit to binding greenhouse gas emissions while poorer nations were not compelled to act. The draft text would hand control over financing climate change projects in the developing world to the World Bank and would make funds given to poorer nations for climate change adaptation contingent on those nations taking actions to reduce emissions.

The Guardian reported that the draft text also would limit per capita carbon emissions in poor countries to 1.4 tons by 2050 while allowing citizens of rich countries to emit 2.7 tons. One diplomat told the newspaper that the draft text was “a very dangerous document for developing countries. It is a fundamental reworking of the UN balance of obligations.”

Meanwhile, the European Union said at the Copenhagen talks that it was withdrawing an offer to reduce CO2 emissions 30 percent below 1990 levels by 2020 because other nations, including the U.S., had made inadequate emissions reduction offers in the past month. The EU is still standing by its 20 percent reduction commitment.

As the second day of the summit got underway, news from Washington still created a stir among the 15,000 people in attendance at the conference. Reuters analyzes the announcement by the Obama administration on Monday that it plans to regulate greenhouse gases as a threat to human health, even if Congress doesn’t take action to reduce emissions. The announcement, made on the opening day of the Copenhagen meeting, was intended as a clear signal from the Obama administration to the world that it plans to tackle the problem of climate change.

The Wall Street Journal reports that many businesses and industries are sharply critical of the announcement, saying that it would place an unfair burden on commerce as the country struggles to rebound from recession. Despite the outcry from many businesses, the Journal reports that comments submitted to the Environmental Protection Agency supporting the regulation of greenhouse gases ran three to one in favor of clamping down on CO2 emissions.

As the delegates debated these developments, the World Meteorological Organization (WMO) and the UK’s Met Office announced that the first decade of this century has been “by far” the warmest decade on record.

Refuting claims from global warming deniers that the world has in fact been cooling for the past decade, the two meteorological agencies said that 2009 will almost certainly be the fifth-warmest year since record keeping began 160 years ago. The WMO said that global temperatures in the past decade were .79 degrees F above the long-term average.

Article appearing courtesy of Yale Environment 360

[image credit: jackfrench]

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Obama administration officials say they will offer provisional CO2 emissions reductions goals at the upcoming Copenhagen climate conference, although the targets are likely to be far more modest than those proposed by the European Union and other industrialized nations. U.S. officials, not wanting to show up at Copenhagen empty-handed, said the administration will propose U.S. emissions cuts roughly in line with those being considered in legislation before Congress.

Those reductions would be 20 percent below 2005 levels by 2020, 42 percent by 2020, and 83 percent by 2050. The EU has said it will cut emissions by 20 to 30 percent below 1990 levels by 2020, with steeper reductions to follow. The Obama administration has been widely criticized for not committing itself to sharp reductions in greenhouse gases, but an administration official told reporters,

“We don’t want to get out ahead or be at odds with what can be produced with legislation.”

Obama is considering traveling to the Copenhagen conference to show the U.S. commitment to fighting climate change and to lay the groundwork for signing a climate treaty in 2010.

Article appearing courtesy of Yale Environment 360

[photo credit:emmajg]

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Amid a growing call for reducing atmospheric concentrations of CO2 to 350 parts per million, a group of economists maintains that striving to meet that target is a smart investment — and the best insurance policy humanity could buy.

The climate change news from Washington is cautiously encouraging. No one in power is listening to the climate skeptics any more; the economic stimulus package included real money for clean energy; a bill capping U.S. carbon emissions emerged, battered but still standing, from the House of Representatives, and might even survive the Senate. This, along with stricter emission standards in Europe and a big push for clean energy and efficiency standards in China, provides grounds for hope for genuine progress on emissions reduction.

But while climate policy is finally moving forward, climate science is moving faster. One discovery after another suggests the world is warming faster, and climate damages are appearing sooner, than anyone had expected. Much of the policy discussion so far has been aimed at keeping the atmospheric concentration of CO2 below 450 parts per million (ppm) — which was until recently thought to be low enough to prevent dangerous levels of warming. But last year, James Hansen, NASA’s top climate scientist, argued that paleoclimatic evidence shows 450 ppm is the threshold for transition to an ice-free earth. This would imply a catastrophic rise in sea levels, eventually flooding all coastal cities and regions.

To avoid reaching such a crisis stage, Hansen and a growing number of others now call for stabilizing CO2 concentrations at 350 ppm. The world is now around 390 ppm and rising; since CO2 persists in the atmosphere for a long time, it is difficult to reduce concentrations quickly. In Hansen’s scenario, a phaseout of coal use, massive reforestation, and widespread use of carbon capture and storage could allow the world to achieve negative net carbon emissions by mid-century and reach 350 ppm by 2100.

Can we afford to reduce atmospheric concentrations of CO2 to 350 ppm by the end of this century? To address this question, Economists for Equity and Environment (www.E3Network.org) — a group dedicated to applying and developing economic principles to protect human health and the environment — conducted a study of “The Economics of 350.”

Why the wide range of cost estimates?

At first glance, there is a bewildering range of estimates of the costs of climate protection. Look more closely, however, and there are just a few projections of economic disaster, out in right field by themselves. Other estimates range from modest costs to small net economic gains.

The outliers are the handful of private consultant studies funded by partisan lobbying groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers. Using proprietary models (or their own adaptations of standard models), and pessimistic economic assumptions, these studies forecast that even mild U.S. proposals, such as last year’s Lieberman-Warner bill, would cost many thousands of dollars per household and would cause widespread unemployment and economic dislocation. An analysis by journalist Eric Pooley documents the excessive, often uncritical attention given to these studies by the media.

These projections of economic ruin have not been reproduced by any major academic or non-profit research group. Many economic models find that the modest steps called for in recent U.S. proposals would have very small costs and virtually undetectable effects on total employment — as documented in a report by Nathaniel Keohane and Peter Goldmark for the Environmental Defense Fund.

But to reach 350 ppm, we will have to go far beyond the emission reductions considered in recent U.S. proposals. How much will it cost to reach this more ambitious target? Until recently, most economic research focused on higher targets such as 450 ppm or more. There are, however, four major climate economics modeling groups — all at European universities — that have analyzed the costs of reaching 350 ppm.

One group starts from the (realistic) assumption of high unemployment, and finds that long-run employment and economic growth would be

Needed emissions reductions will cost 1 to 3 percent of world economic output, some studies find.

increased by a program of public investment in green technology and emissions reduction that leads to 350 ppm. The other three groups adopt the common assumption that short-run unemployment can be ignored in long-run models. They generally find that the needed emissions reductions will cost an average of 1 to 3 percent of world economic output, for some years to come.

Other studies have reached more optimistic conclusions about costs. McKinsey & Company, an international consulting firm, has carried out detailed studies of the costs of hundreds of emission-reducing technologies. They find that some emissions can be eliminated for no cost or even an economic savings; more than half of worldwide business-as-usual emissions in 2030 could be eliminated at very small total cost. The net costs of reducing carbon emissions (i.e. investment costs, minus the value of energy saved) go down when the price of oil goes up, and vice versa. McKinsey’s entire package of reductions, eliminating more than half of world emissions, would have zero total cost if the price of oil were $90 per barrel.

Studies from major environmental groups, including Greenpeace and the Union of Concerned Scientists (UCS), have reached even more optimistic conclusions than McKinsey. Both Greenpeace and UCS project substantial economic savings from emission reduction, with fuel savings much larger than the costs of investment. Both assume high oil prices — up to $140 per barrel for Greenpeace — along with rapid change in emissions-reduction technologies.

Deciding whether it’s worth the price

The range of cost estimates for reaching 350 ppm, combined with uncertainties about oil prices and future technologies, make it difficult to choose a single estimate of the total economic cost. Suppose that, for the sake of argument, 2.5 percent of world output must be spent on climate stabilization for years to come. Is that an unacceptably large number?

Imagine an economy growing at 2.5 percent every year (a little slower than the recent U.S. average). Suppose it skips one year’s growth — all too easy to imagine in 2009 — and then resumes growing. That makes GDP 2.5 percent smaller than it would have been, forever. So the “skip year” has the same effect as spending 2.5 percent of output on climate protection every year. Household incomes would take 29 years to double, instead of 28.

Alternatively, we know we can afford to devote 2.5 percent of income to protection against a remote but disastrous threat — because we already do,

We can afford to protect the climate, and leave a livable world to future generations.

year after year. In 68 countries, military spending exceeds 2.5 percent of GDP. In the United States and China, the top greenhouse gas emitters, military spending absorbs more than 4 percent of GDP. Both countries would be safer, not more vulnerable, if they diverted half of their defense spending to defense against climate crisis.

The most important conclusion of our research involves what we did not find. There are no reasonable studies saying that a 350 ppm stabilization target will destroy the economy. This is not surprising. The ominous recent research on potential climate damages does not examine the cost of doing something; instead, it looks at the cost of doing nothing about emissions.

If the worst happens, our grandchildren will inherit a degraded Earth that does not support anything like the life that we have enjoyed. On the other hand, if we prepare for the worst but it does not quite happen, we will have invested more than was absolutely necessary — in perfect hindsight — in clean energy, conservation, and carbon-free technologies. Which extreme presents the greater danger?

Climate risk and insurance

Think about climate risk as an insurance problem. You don’t buy fire insurance because you’re sure your house will burn down; rather, you are not, and cannot be, sure enough that it will not burn down. Likewise, projections by Hansen and others of dangerous climate risk from staying above 350ppm CO2 are not certainties; they are necessarily uncertain (although becoming more likely as temperatures rise).

The analogy to insurance is important but inexact; there is no climate insurance company to which the world can hand 2.5 percent of output, if that is what it costs. There is, however, a need for large-scale investment, both in proven emissions-reducing technologies and in research and development.

The role of government in climate policy is not only to set appropriate price signals through a carbon tax or cap-and-trade system; the public sector must also guide research on clean energy technologies. Despite free-market mythology to the contrary, this has worked well in the past. Wind power is profitable today as a result of decades of government investment in the United States and Europe. In another arena, the U.S. government essentially invented microelectronics in the 1950s and 1960s: At first, almost all transistors, integrated circuits, and the like were bought by agencies such as the Pentagon and NASA, because no one else could afford them. Just a few decades of massive government purchases of these items turned microelectronics into the premier private-sector success story of the late-20th century, transforming everyone’s life in countless unexpected ways.

The climate crisis challenges us to do it again, to invent the new technologies and industries that will transform life in the mid-21st century and beyond. We know it’s possible: We can afford to protect the climate, and leave a livable world to future generations.

Author Frank Ackerman is senior economist with the Stockholm Environment Institute at Tufts University. He is also a co-founder of Economists for Equity and Environment (E3), and the lead author of E3’s “Economics of 350” study.

Article appearing courtesy of Yale Environment 360

[photo credit: pfala]

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