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Is This The End Of Carbon Trading, Or Just A Hiccup?
Ratcliffe-on-Soar power station: carbon markets are supposed to be effective, not just hot air. PA/David Davies Just as scientists almost universally agree greenhouse gases contribute to the planet’s changing climate, economists almost universally agree the problem is made worse because polluters don’t pay for the mess they make. A carbon tax is one way to force companies to pay for their pollution. A carbon market is another, established by a “cap and trade” system where a limited number of permits (or “allowances”) are sold or given away each year. Every company must surrender one permit for every tonne of carbon produced. The capped limit is lowered over time to reflect the aim of steadily lowering emissions. The resulting carbon price ensures total emissions do not exceed the limit. Market logic suggests that if permits become more scarce relative to demand, then the cost of the permits, the effective “carbon price”, will rise (and vice versa). Carbon markets have been set up around the world, in Australia and California, Kazakhstan and China. In the UK, companies are covered by the European Union Emissions Trading Scheme (EU ETS). Each system is designed slightly differently, and the resulting carbon prices vary widely. Some policy-makers hope that these systems will one day join to form a global carbon market , so that polluters everywhere pay the same price for their pollution and cannot simply move operations to somewhere cheaper to pollute. But despite a recent agreement on a link between the Australian and EU markets, a global market remains a distant prospect. A really distant prospect, perhaps, given recent headlines that pronounced the EU ETS dead in the water – carbon prices previously above €30 per tonne (which some economists considered too low) have tumbled to below €5 where they have languished for months. In April the European Parliament considered a plan to increase short-term carbon prices by delaying the issue of 900 million permits; MEPs rejected the move and the EU carbon price fell to €2.7 per tonne. Dead, or just sleeping? How has the carbon price fallen so low that it needs “rescuing”? A low carbon price would be a sign of the scheme’s success if it meant companies had developed clean technologies to reduce pollution cheaply over the long-term, lowering demand for permits whose price would fall. Instead, carbon prices are low because the recession has dented economic output, and consequently emissions are lower. Low carbon prices present no incentive for companies to make long-term investments in clean energy, arguably the aim of the EU ETS. When the carbon price rises or falls to extremes, politicians are tempted to interfere with the supply of permits. This means carbon prices can move significantly depending on political developments, as well as factors such as economic output and the weather (cold weather means more carbon is generated as the heating is turned up). This has led some economists to argue that carbon taxes are a more suitable tool for a problem like climate change. A stable carbon tax would give companies a predictable incentive to reduce emissions, year after year. It would avoid the wild price swings of a market. True, taxes don’t guarantee that a set limit on emissions will be achieved – carbon markets have been preferred because they provide this guarantee. But the EU ETS only limits emissions for the five to ten years; what really matters is that emissions fall considerably over the next few decades. A tax that was set to increase gradually over time, with the plan for review after ten years, could meet the overall objective of reducing emissions and send a much clearer message. But supporters argue that carbon markets work well if designed well ; they just need some additional features to keep a lid on wild price fluctuations. For instance, prices might be stabilised by transparent rules that define how many permits are released onto the market as carbon prices rise or fall. Fewer permits would be released onto the market when prices are low, and more when prices are high. The UK has unilaterally implemented something similar, introducing a domestic “ carbon price floor ” in April. This ensures that most UK companies (there are various exemptions) have to pay a carbon price of at least £16 per tonne this year, rising to £30 by 2020. In an EU-wide market, however, the effect is simply to shift emissions out of Britain and into Europe, possibly driving energy-intensive industries abroad in the process. An EU-wide price floor would sensibly prevent the risk of price crashes, leaving only the problem of price spikes to be addressed. In the short term, efforts to “save” the EU carbon market continue. German Chancellor Angela Merkel said recently that she favours systematic changes that would solve these problems once and for all, rather than a temporary fix of withholding permits. But her finance minister opposes intervention. The politics are messy, but the stakes are high. If carbon prices do not provide an incentive for companies to move to cleaner production now, the transition will be forced on them later, with greater urgency, and at much greater cost – to us and them. Continue reading
Virgin Australia, Brisbane Airport And SkyNRG To Create "Bioport"
Taylor Scott International Continue reading
Carbon Farming Could Restore Australia’s Southern Coastal Wetlands
8 May 2013, 6.35am EST Carbon farming could restore Australia’s southern coastal wetlands Restoring our southern wetlands as carbon farms would have many additional benefits to the ecosystem and the public. Catherine Lovelock Australia’s southern coastal wetlands are more diverse than most people realise. In a recent paper , Paul Boon suggests they provide valuable ecological services that exceed those of inland wetland ecosystems. But these wetlands face enormous pressures from urban development and climate change. Fifty percent of coastal wetlands have been lost from the east coast of Australia. Despite this staggering loss we don’t know enough about them to manage or restore them effectively because of years of under-valuing, under-researching, under-funding and under-managing them. We now have an opportunity to redress the poor treatment of our southern coastal wetlands. Wasted wetlands to carbon farms Coastal wetlands store and sequester large amounts of carbon in their soils. “ Carbon farming ” is encouraged in the land-based environment to improve condition of the landscape and provide offsets for activities that emit carbon dioxide. Carbon farming could be encouraged in coastal wetlands, with restoration and improved management providing the possibility of benefits for biodiversity, fisheries, coastal protection and recreation. The carbon value arises because the plants of coastal wetlands are highly productive in contributing their own carbon to the soils. They can also “trap” carbon from other locations that is delivered with water flows. Additionally the low oxygen levels in their waterlogged soils inhibits decomposition of the carbon in the organic matter that is deposited leading to large stores of carbon in their soils. Recent studies of the carbon gains of restoration of saltmarsh in Australia indicates that about 0.6 – 1.4 tonne of carbon per hectare per year is stored in these wetlands ( Howe et al. ) compared to 0.1 – 0.3 tonne per hectare per year in agricultural soils when management is improved ( CSIRO agricultural soils report ). With the restoration of these ecosystems the potential for carbon sequestration far exceeds that of land-based ecosystems on a per hectare basis. Rogers et al. estimate that opening flood gates and allowing sea water with sea level rise into the Hunter River system could result in an additional 750,000 tonnes of carbon sequestered by 2100. Saltmarshes and mangroves are only two of the sixteen coastal wetland types listed in Boon’s paper. Other types, such as estuarine wetlands and melaleuca forests are known to have highly organic soils and are also likely to sequester large amounts of carbon. Siezing the opportunity Including coastal wetlands in the Carbon Farming Initiative (CFI) would not require any changes in the current legislation, because restoring drained wetlands is already listed as an eligible activity. This could be extended further to include restoration of degraded wetlands. The possibility of carbon sequestration projects in wetlands has already been established, with mangrove projects operating under the international voluntary carbon markets. Additionally, it is feasible that insurance can be obtained for carbon in wetlands. Multiple benefits would flow from including restoration in the CFI. Many coastal wetlands in southern Australia are contained within privately-owned properties, and recognising the carbon sequestration values of well managed wetlands can have a positive impact on property values. The Department of Climate Change and Energy Efficiency’s recent assistance package to regional Natural Resource Management groups could be used to explore the benefits from carbon farming by restoring coastal wetlands. Better still would be to include in the CFI a mechanism for including restoration of wetlands on public lands. This would go some way to reversing the degradation and loss that is occurring. National benefits Although coastal wetlands are currently managed mainly at the level of state and local government as well as by private landholders, they are a vital national asset. The Australian Government will benefit from coastal wetland restoration because of improved habitat for biodiversity, flood control and water quality improvement. But also the Government stands to benefit from the new wetlands accounting framework of the IPCC that is currently under review and likely to be ratified in October 2013. In this document the conversion and degradation of coastal wetlands will have an established carbon cost, and their maintenance and restoration will assist in Australia’s carbon balance. Although the Australian and state governments have legislative control over coastal wetlands, often the cost of day-to-day management of coastal wetlands is at local government level with a plethora of demands placed on their limited resources. A modified Carbon Farming Initiative that can include restoring publicly-owned wetlands may provide badly needed resources for local governments to manage wetlands in a way that increases their carbon sequestration with the additional benefits to biodiversity, fisheries, water quality, flood control and recreation. Ultimately our whole society benefits from having intact, functional and diverse wetlands. Colin Creighton of the Fisheries Research Development Corporation, Neil Saintilan of the NSW Office of Environment and Heritage and Anissa Lawrence of TierraMar Consulting also contributed to this article. Continue reading
