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A Look At South Africa’s Carbon Trading Potential
2 August 2013 – According to Glenn Hodes-senior program manager (UNEP), the carbon market in South Africa will help to level the playing field by making renewable projects more attractive to investors. Small-scale renewable projects (less than 50 MW) which are pursued in South Africa due to dispersed populations, have struggled to obtain finance from large companies and banks. However, with carbon trading, more attention will be brought to these projects. “This would certainly deal with the poverty issue more effectively as the power is closer to where the demand is,” Hodes says. But, how will carbon trading benefit South Africa’s renewable energy projects? Hodes says that if there is a price on carbon, whether through tax or a trading regime, private companies will be incentivised to invest in renewable energy projects and technology. “I think the private sector is for carbon trading. It sets a clear market signal.” But why hasn’t carbon trading taken off? Hodes blames this on uncoordinated attempts, regulatory and policy challenges. He explains that the implementation thereof and global connections can make it a challenge for carbon trading to work. There have also been circumstances under which baseline-and-credit CDM schemes have resulted in the maltreatment of indigenous peoples and their environment. There have also been cases of trade fraud and accounting discrepancies. Low levels of awareness as to how to access this market as well as a poorly resourced department are also to blame, according to the experts. South Africa has already missed a number of opportunities as it failed to capitalise on the first commitment period (2008 to 2012) of the Kyoto Protocol. Until the 17th international annual climate conference, COP17 in 2011, opportunity for South African carbon project developers was mostly to generate and sell carbon offsets (CERs). These CERs were sold from countries classified as developing countries to companies in developed countries which are bound by the emissions reduction targets of the Kyoto Protocol to reduce annual greenhouse gas emissions. The Clean Development Mechanism has in the past given South Africa the opportunity to benefit from registering carbon credits or CERs. Other developing countries such as China, India and Brazil managed to register hundreds of emissions reduction projects under the CDM and got developed European countries to finance sustainable development in their countries. Currently, only 22 South African Project Design Documents (PDDs) have been registered by the CDM executive board as CDM projects, with only nine having actually issued CERs. In comparison to other developing countries, South Africa seems to have missed out on significant clean development opportunities. However, when the 2015 South African carbon tax comes in to effect, the demand for carbon credits via the voluntary market in South Africa will impact the country’s carbon trading. To ensure increased tax free thresholds, companies will be encouraged to reduce their CO2 emissions. To help them reduce their emissions to reduce tax liabilities, South African companies will most likely be able to purchase carbon credits from verifiable projects to offset a proportion of their carbon obligation. This means that there is scope for South African carbon projects to sell their credits in South Africa to local companies via a regional carbon trading scheme. There is talk that companies will be able to offset their tax liability by buying local carbon credits equivalent to 5% to 10% of their carbon tax liability. This will have an impact on the liquidity of the local market as a result of increased demand for local credits which will see a boost to local carbon project development. Continue reading
Bloomberg-EDF analysis: Mandates Plus Markets Could Make Airlines’ Emissions Goals Readily Affordable
By ANNIE PETSONK | BIO | Published: AUGUST 1, 2013 The aviation industry can affordably meet and beat its goal of halting carbon emissions growth from 2020 if it uses high-quality, low-cost carbon offsets, according to a new analysis from Environmental Defense Fund (EDF) and Bloomberg New Energy Finance (BNEF) . Airlines’ goal of “carbon-neutral growth from 2020” could be so readily affordable that governments justifiably could hold airlines to a much tighter emissions target. Image source Our analysis comes on the heels of a consolidated industry call for the governments of the International Civil Aviation Organization (ICAO) to commit, at their next triennial Septe mber meeting, to adopt a mandatory global program to limit aviation’s carbon pollution by 2016 at the latest. While forecasts are inherently uncertain, best estimates indicate that while new technologies, operations and infrastructure can help industry dampen emissions growth, substantial increases in aviation emissions are likely after 2020. Consequently, to meet their proposed mandatory goal of “carbon-neutral growth from 2020,” it is very likely that airlines will need some kind of carbon offsetting mechanism . An offset mechanism that limits credit supply to high-quality carbon units currently available and expected to come on-line in the future, could let airlines meet their emissions target at very modest cost. If governments adopt tough criteria ensuring that offsets represent real reductions in net carbon emissions, and if industry moves swiftly to capture those carbon units, the costs to airlines could be quite low – e.g., less than 0.5% of projected total international airline revenue in 2015 , and less than a third of the fees airlines collected last year for checked bags, legroom and snacks. In the current round of talks, the aviation industry is asking governments to mandate caps on airlines’ emissions at 2020 levels. Our analysis finds that a well-designed, high-integrity carbon offset program would make carbon-neutral growth from 2020 so affordable, that governments justifiably could hold airlines to a much tighter emissions target. That could mean putting back on the table a target the industry had proposed several years ago , namely cutting emissions 50% by 2050. As my report co-author, Bloomberg New Energy Finance chief economist Guy Turner, said : These findings show that the international aviation sector can control its CO2 emissions easily and cheaply by using market based mechanisms. The relatively small cost and ability to pass any costs through into ticket prices, should encourage the international aviation sector to accelerate and deepen its emission reduction pledges. More ambitious emission reductions now look much more doable, than mere stabilization from 2020. Our analysis offers context to the costs of such a global market-based mechanism using offsets with strong environmental integrity, which the aviation industry called on ICAO last month to adopt to keep the industry’s net emissions stable from 2020 on. Such an offset program would allow the airlines to meet their emissions targets by both making emissions cuts within the aviation sector, and drawing on offsets that represent real emission cuts in other sectors. Blog-exclusive addendum: effect on ticket prices A well-designed global offset program, using high-quality offsets that represent real reductions in emissions, could add only a few dollars to a typical international fare: From Paris (CDG) to Beijing (PEK): $1.90 – $3.00 From Paris (CDG) to Delhi (DEL): $1.50-$2.30 From Paris (CDG) to Cape Town (CPT): $2.40-$3.70 From Paris (CDG) to Buenos Aires (EZE): $2.70-$4.30 From New York (JFK) to Buenos Aires (EZE): $2.10-$3.20 Read more in our press release and the full BNEF-EDF analysis, Carbon-Neutral Growth for Aviation: At What Price? – See more at: http://blogs.edf.org…h.LWzQqdaa.dpuf Continue reading
California And Australia Bolster Carbon Trading Ties
Memorandum of understanding comes weeks after Australian Prime Minister Kevin Rudd pledged to accelerate introduction of emissions trading scheme By Jessica Shankleman 31 Jul 2013 California and Australia have agreed to step up efforts to work together to link their respective carbon markets, just weeks after Australia’s prime minister announced he would accelerate plans to replace the country’s carbon tax with an emissions trading scheme. California’s Air Resources Board and Australia’s Clean Energy Regulator yesterday signed a memorandum of understanding that aims to establish a working relationship for the two organisations to co-operate on efforts to curb greenhouse gas emissions . The agreement builds on existing work over the last year, which has seen the two organisations share some of the practical experiences gained introducing a new carbon market. The new framework focuses on measures to increase investment in clean energy generation and improve market integrity, as well deepening collaboration between the two agencies. For example, it will allow the organisations to share information on designing and running carbon pricing programmes and discuss how they could link their markets in future . Mary Nichols, chairwoman of CARB, said the agreement would continue California and Australia’s “productive relationship” as both jurisdictions seek to expand their carbon markets. “It is another step forward in California’s efforts to establish relationships with other programs to continue sharing information and best practices to fight the global danger of climate change,” she said. The agreement comes just weeks after Prime Minister Kevin Rudd said Australia would replace its carbon tax with an emissions trading scheme (ETS) a year earlier than planned if his Labor party were to win this year’s election. Rudd wants the fixed price on carbon to end on 30 June 2014, rather than 2015, with a floating market linked to the European Union’s ETS opening the following day. Continue reading
