More hot air

1
More hot air?

• A look at the global Carbon Market

By Eshwar Sundaresan
2
Summer of 2007

• The Arabian Sea went into a purple rage
• Cyclone Gonu
• Category-5 the first recorded super cyclone of
  the region
• Oman and Iran 54 casualties
• Damages in Oman alone over 1bn
• Cyclone Yemyin 25 days later
• Coastal areas of Sindh and Balochistan severely
  affected
• Karachi, a usually dry city, experienced heavy
  rainfall that caused extensive damage
• Lasted around six weeks
• At least a dozen seaworthy vessels sank into the
  Arabian
• Around 25 sailors lost their lives
• Scores of Indian and Pakistani fishermen drowned.
  For once, they werent victims of geopolitics
• Affected areas in the subcontinent Karachi,
  Porbandar, Mumbai, Goa, Mangalore, Kozhikode,
  Kochi, Trivandrum
• The complete western strip of the peninsula
• Affected vessels included those from Albania and
  Eritrea

My experiences while researching the Fury of the
Arabian
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Some indicative facts regional

• Obtained from scientists
• National Institute of Oceanography (NIO), Goa
• Centre for Atmospheric and Oceanic Sciences
  (CAOS), Bangalore
• Sea-level along the Indian coastline has risen at
  the rate of 2.5 mm/year since 1950
• By 2050, the mean sea level along the Indian
  coastline might rise by 15 to 38 cm
• The sea-level temperature of the Arabian Sea has
  risen by 0.2 to 0.8 deg C in the past ten years
  increase in temperature will almost certainly
  increase the intensity of cyclones
• Global Climate Change will almost certainly
  result in substantial regional changes
• Like the fury of the Arabian Sea
• Like the submerging of parts of the Rajasthan
  desert due to freak rains. Sand dunes became
  islands!
• Like Mumbai receiving 900 mm of rain in one day
  in 2005?!
• Question since Global Climate Change is, well,
  global, wont all the regional changes result in
  pan-global changes?

4
Some indicative facts global

• 2005 NASA research extensive snow areas as
  large as California had melted in the deep,
  interior reaches of west Antarctic
• Even more recently, Buenos Aires and Johannesburg
  experienced snowfall
• Weve had 17 consecutive years of shrinking
  glaciers
• The temperature is rising much more rapidly at
  the higher latitudes than the tropics
• Top 5 warmest years worldwide since the 1890s
• 2005, 1998, 2002, 2003, 2006
• Why?
• Greenhouse gases on the rise
• Atmospheric CO2 in pre-industrial times was 280
  ppm
• Atmospheric CO2 currently around 387 ppm a
  level unreached in the past 4 million years
• Might be anywhere between 535 to 983 by the end
  of the century

5
Environmental refugees a sub-species of the
future?

• Red Cross estimates that around 25 million people
  worldwide are currently classifiable as
  environmental refugees
• Half a million Bangladeshis were rendered without
  a habitat in 2005, when the island of Bhola was
  flooded permanently
• A good proportion of them moved into the slums of
  Dhaka
• Rise in sea level is also pushing out residents
  of the Carteret Islands of Papua New Guinea
• Like most atolls, these are low-lying islands,
  created by vegetation that grip on the shallower
  parts of the reef
• Government-funded relocation began in 2003
• Its still going on.
• The islands of Tuvalu, Kiribati and Maldives are
  extremely vulnerable to sea-level rise
• Maldives wants bilateral agreements to ensure
  against the worst-case scenario
• Extensive rise in sea-level will see many more,
  larger, islands disappear. These include islands
  in the Caribbean and the Asia-Pacific

Q How long have we known that climate change is
such a serious threat?
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A media sample

• The amount of carbon dioxide in the air will
  double by the year 2080 and raise the temperature
  an average of at least 4. The burning of about
  two billion tons of coal and oil a year keeps the
  average ground temperature somewhat higher than
  it would otherwise be. If industrial growth
  extended over several thousand years instead of
  over a century only, the oceans would have
  absorbed most of the excess carbon dioxide. Seas
  circulate so slowly that they have had little
  effect in reducing the amount of gas as mans
  smoke-making abilities multiplied during a
  hundred years.
• All this and more came out in the course of a
  paper that Dr. Gilbert N. Plass of John Hopkins
  presented before the American Geophysical
  Union... thus man tends to make his climate
  warmer and drier should there be a decrease in
  carbon dioxide, a cooler and wetter climate would
  result... All this reinforces a theory advanced
  in 1861 that decreases in carbon dioxide explain
  the growth and advance of glaciers at various
  intervals in the earths history.

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When was this published?

• New York Times article titled How industry may
  change climate
• Appeared on 24 May 1953!!
• The first time that global climate change was
  linked with commercial human activity
• Questions
• Did we snooze for half a century??
• Or did we resort to some well-founded cynicism?
• Is the global climate change part of a cyclical,
  natural phenomenon Our Ice Age

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Our Ice Age

• Glaciologically speaking, an Ice Age implies the
  presence of extensive ice sheets in the northern
  and southern hemispheres
• So, by this definition, Greenland and Antarctica
  imply that were still in the ice age
• There have been at least four ice ages in the
  past
• During the Cryogenian period (850 to 630 million
  years ago), the entire planet was covered in ice.
  GHGs such as CO2, produced by volcanoes, ended
  this ice age
• The current ice age started about 2.58 million
  years ago
• Since then, the planet has seen cycles of
  glaciation ice sheets advance and retreat on
  40,000- and 100,000-year time scales called
  glacials (glacial advance) and interglacials
  (glacial retreat)
• Were currently in an interglacial the last
  glacial period ended about 10,000 years ago
• Hence the cynical viewpoint
• Our planet is thawing! Were in a naturally
  warming period. CO2 is good for us. Without it,
  our planet would be 30 degrees cooler. We
  wouldnt exist. And the trees wouldnt exist.
• As recently as March 2009, a study conducted by
  the University of Wisconsin, Milwaukee, theorized
  that global climate is shifting under a natural
  cycle and that global temperatures have leveled
  off since 2001
• The Ice Age probably tells us, In the long run,
  were all fish food! But dont we want a long
  run?

9
Caution substitutes for cynicism

• Sobering scientific lingo in the summer of 2007
  (while researching the Fury of the Arabian)
• We cannot pin down specific events to global
  climate change
• Each climate model gives its own interpretations,
  so we cannot reach firm conclusions
• We cannot predict or even simulate the present
  conditions, forget predicting the future effects
  of global climate change
• We dont know what will happen when the CO2 level
  goes past the tipping point we dont even know
  what the tipping point is!
• But IPCCs Fourth Assessment Report has a
  different view on global climate change

10
IPCCs fourth assessment report

• Released in Feb 2007
• Unequivocally declared that the world is heating
  up beyond any natural cyclical variations
• 90 certainty that climate change is caused by
  anthropogenic factors
• Brought together research and data of around 2500
  scientists, through a panel representing 130
  countries
• Yvo de Boer, the head of the UNFCCC The fourth
  assessment report had clearly dispelled the
  argument that we do not know enough to move
  decisively against climate change.

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Governments change their stance

• Bushs Energy Secretary accepted the findings
• But the White House still refused to set national
  caps on GHG emissions
• Canadian PM Stephen Harpers Environment Minister
  a clear need for action and some form of
  regulation of GHGs
• But the first goal would be to stabilize, not
  reduce emissions
• Australian PM Howard reversed his stance to
  acknowledge that carbon trading mechanisms would
  be integral to the response to climate change
• But the journey to this point has been long and
  difficult

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Geopolitics
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The geopolitical journey

• Began in earnest during the Earth Summit held in
  Rio de Janeiro in June 1992
• 172 governments participated, many of them
  sending their heads of state
• How successful was it?
• Kick-started the process of moving towards
  unleaded products (fuel, paint, drinking water
  etc)
• Tabled the use of alternative sources of energy
• Highlighted the growing scarcity of water
• Created the UNFCCC, which owns the climate
  change debate and the change mechanisms,
  including the Kyoto Protocol
• Created the Convention on Biological Diversity
  (conserve, sustain, share), which became a
  crucial indicative document for the debate on
  Sustainable Development
• So, yeah, the Summit was a success.

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The UNFCCC

• The basic framework which determines the nature
  of the global Carbon Market today. Proposes
  common, but differentiated responsibilities
• Annex I countries industrialized, responsible
  for reducing emissions
• Annex II countries a subset of Annex I, will
  foot the bill for the developing countries
• Developing countries no reductions, no funds
  required.
• Focus on improving socioeconomic indicators
• Voluntary reductions sponsored by the developed
  nations (funding technology)
• Leverage on lower cost of implementation
• Since 1995, the year after the FCCC was ratified,
  it has been meeting annually in Conferences of
  Parties (COP)

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Shifting action, shifting gears
COP15 Copenhagen
COP11 Montreal
COP6 The Hague Bonn
COP2 Geneva
COP14 Poznan
COP1 Berlin
COP5 Bonn
COP9 Milan
COP3 Kyoto
COP7 Marrakech
COP8 New Delhi
COP4 COP10 Buenos Aires
COP12 Nairobi
COP13 Bali
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The progress of the COPs

• COP1 1995 Berlin Mandate acknowledges
  exemption of non-Annex I countries collectively
  the largest GHG emitters in 15 years time
• Most significant. Why?

17
Overall consumption (2004)
? 3.92 trillion
18
Per capita consumption (2004)
19
The progress of the COPs

• COP2 accepted the US demand for flexible
  mechanisms
• What would the inflexible mechanisms have
  looked like?
• A hefty carbon tax that would encourage
  businesses to move away from fossil fuels
• A strict cap on a nations net emissions
• Advantages
• Net emissions will decrease effective immediately
• The largest polluters would reinvest immediately
  no room for delay
• Easy to monitor, implement. And to measure?
• Disadvantages
• Resistance from businesses
• Fear of businesses relocating to non-Annex I
  countries loss of jobs and revenue
• The US wouldnt play!
• Pre-empts immediate participation of non-Annex I
  countries
• Would be a challenge to bring in them into the
  framework later in the future
• Couldnt the lower cost of implementation in
  non-Annex I countries be utilized? In other
  words
• Couldnt the appetite for energy in these
  countries be tapped into, for the benefit of
  businesses in the north as well as the
  environment?
• Overall, politically unviable

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Whats a flexible mechanism?

• Emissions Trading (according to the US)
• Derived from the US sulphur (SO2)trading scheme,
  first conceptualized in 1968
• Coal-based power plans emit SO2
• The scheme implemented a cap-and-trade mechanism
• No concept of offsets simply buy the rights to
  pollute
• Advantages
• Cost-effective for businesses
• Ensured a national limit
• Limited number of SO2 polluters measuring and
  monitoring was possible (very different for the
  GHG gases being discussed under the UNFCCC)
• Disadvantages
• Low level of reductions
• 35 reductions expected in the US by 2010
• Germany, which opted for regulation, will achieve
  90 reduction by the same time

Net result flexibility was accepted in COP2, but
Europe put Emissions Trading on a wait and
watch mode.
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The progress of the COPs

• COP3 the Kyoto Protocol adopted
• Legally binding commitments for the reduction of
  4 GHGs (CO2, methane, nitrous oxide, suphur
  hexafluoride) and two groups of gases
  (hydrofluorocarbons and perfluorocarbons)
• Reductions collectively at 5.2 below 1990
  levels, to be implemented between the years
  2008-12
• The amount of reduction mandated vary for each
  country
• EU 8 US 7 Japan 6 Russia 0
• Increases allowed for Australia (8) and Iceland
  (10)
• But Clinton never sent the treaty to Congress for
  ratification
• Many COPs and tactical maneuvers later, the
  treaty entered into force in Feb 2005

22
The progress of the COPs

• COP6 The Hague meet suspended due to deadlock
  resumed seven months later at Bonn.
• W was now President
• The US, consequently, became observers in the
  meeting
• Incredible progress made!!
• Flexible mechanisms Emissions Trading, JI and
  CDM
• Carbon sinks made part of the credit process, but
  cap on forest management credits (as a set
  percentage of a nations 1990 net emissions) and
  additionality rule for carbon sequestration
• Additionality would the project be shelved
  without funding?
• A pro-US deal without the involvement of the US!
• Some subtext here
• Growing recognition in Europe that Emissions
  Trading is the only feasible tool to meet
  reduction targets
• So the incorporation of Emissions Trading in the
  Kyoto Protocol was now seen as a good thing

23
The progress of the COPs

• COP7 the Marrakech Accords US still
  observing treaty ready for ratification
• Need 55 countries representing 55 of emissions
  by developed countries in 1990
• COP11 first MOP of the Kyoto Protocol
• The Montreal Action Plan begins to look the
  future beyond 2012. More cuts.
• The EU Emissions Trading System was operational
  by then

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The Washington Declaration

• 2007, the year of COP13 saw the meeting between
  the G8 and the five top emerging economies
  (India, China, Brazil, South Africa and Mexico)
  termed the G8 5 and in this meet, a
  non-binding agreement was inked
• Agreement stated that
• There should be a global system of emission caps
• Emissions Trading must apply to both developed
  and developing nations
• The group hoped that this thought process would
  be incorporated into the successor of the KP

25
The progress of the COPs

• COP13 the Bali Action Plan
• A roadmap for an international climate treaty
  that will succeed the Kyoto Protocol
• Created partially due to the challenge posed by
  Kevin Conrad, Papua New Guineas special envoy
  and Executive Director of the Coalition of
  Rainforest Nations (CfRN)
• He argued that deforestation in the developing
  world accounts for 20 of GHGs
• Norway pledged 2.8bn to fight deforestation
• COP14 Poznan, Poland
• Agreement on funding for poorest nations to cope
  with climate change
• Mechanism to incorporate forest protection

26
The all-important COP15

• Will happen in December 2009 at Copenhagen
• Significant progress expected on the successor
  treaty to the Kyoto Protocol
• Those with commercial interests in the Carbon
  Market expect a longer tenure for the treaty,
  unlike the 5-year tenure for the KP
• The conditions are far more favourable
• Due to the recession and the unfettered
  capitalism leading up to it
• The world is much readier for sustainable
  solutions
• The leaders are trying to align together and
  believe in concerted actions (The recent G20
  summit meet being a case in point)
• The Obama Presidency is expected to be more open
  to combat Climate Change
• As an aside, the Obama stimulus package promises
  large investments in renewable energy which, in
  the long run, will help create a new generation
  of green professionals

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The flexible mechanisms
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Three of them

• Emissions Trading
• CDM
• JI

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Factors in offset projects

• Permanence
• Eg Carbon sequestration projects reforestation
  should be planned for the long-term, so that
  actual benefits are seen
• Different species of plant life take different
  amounts of time to become effective carbon sinks
• And eventual deforestation will wholly nullify
  the reductions
• Fire, rotting, felling, feeding by insect can all
  release the carbon stored in trees
• The recent bushfires in Australia have reportedly
  released the equivalent of 1/3 of the countrys
  annual emissions
• Forest fires are becoming more frequent in recent
  years due to global climate change
• Additionality
• Would the project have gone ahead without
  external funding?

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Types of projects

• Elimination of industrial emissions
• Eg HFC23
• Loose legislation in the developing world pave
  the way for CDM funding
• Methane capture
• Coalmine, landfills, animal farms, organic
  industries (Eg EECOPALSA, using closed
  digesters in a palm oil industry in Honduras)
• Animal husbandry is a major source of GHG due to
  two reasons
• Animal waste
• Clearing of vegetation to create pastures
• Carbon sequestration (sinks)
• Reforestation, preservation
• Carbon capture and storage (CCS)
• Unproven technology, debatable
• No-till farming
• The jury is still out on this
• Renewable energy
• Bio-mass/solar/hydel/tidal/wind
• Energy efficiency
• Eg Switching over to a cleaner fuel
• Rural communities in the developing world can
  benefit if CDM is used to subsidize cleaner
  stoves, CFL bulbs and similar lifestyle products

Price of CERs depend on the type of project, the
country where its hosted and the maturity
period of the project
31
Types of projects market share
All figures are percentages
32
GWP figures
Not all GHGs are born equal. Some are more potent
than others. The table below Provides the Global
Warming Potential of the various gases included
in the Kyoto Protocol.
33
CERs host market share
- Mainly Malaysia, Thailand and South Korea
Note All figures are in terms of traded CER
volumes
34
Dominant CDM hosts

• As per a market expert, the following are the
  reasons for the dominance of India and China in
  the CDM
• Large geographical size results in more
  opportunities
• Significant demand for energy
• Diverse range of industrial activities suited to
  CDM initiatives
• Broad and mature domestic market
• A vibrant export market catered to by
  export-oriented entrepreneurs

35
The Carbon Market
36
The EU ETS

• Currently the largest Emission Trading Scheme in
  the world
• Began operations in January 2005, a month before
  the KP came into force
• Initial leg lasted till end of 2007
• A pilot, more a mechanism to get businesses on
  board
• Allowances (credits) doled out to businesses by
  individual member states
• Too many credits given and for free
• Partly to assuage the businesses, partly because
  of unreliable data regarding current emissions
• From its peak of 30 Euros in April 2006, cost of
  1 credit (the right to emit 1 ton of CO2)
  plummeted to as low as 4 Euro cents by end of
  2007!
• Energy companies made windfall profits
• Half the pollution in the continent covered in
  the scheme
• Sectors not covered (agriculture, household,
  small businesses, transport etc) to be addressed
  by individual member states using domestic
  policies
• Important to meet the Kyoto commitments
• Kyoto-certificates (CERs) now accepted in the
  scheme
• Instruments and processes compatible with those
  of UNFCCC
• 1 EUA (EU Allowance Unit) 1 AAU (Assigned
  Amount Unit under KP)
• The EU ETS has tightened its screws for Phase II
• How much tighter? remains a debatable question
• Energy companies, despite still getting a good
  proportion of their allowances for free, have
  upped the cost of electricity
• Overall, it still does not encourage industries
  to move away from fossil fuels

37
Possible changes in the EU ETS

• Centralized allocation by an EU body
• Auctioning the majority (60 or more) of
  allowances
• Inclusion of other GHGs like nitrous oxide and
  perfluorocarbons
• Including the airline industry within its ambit
  by 2010
• This will increase demand by 10-12mn tons
• Industries want carbon sinks (reforestation
  projects etc) to be incorporated into the scheme
  the NGOs are opposed
• The incorporation of this change uncertain as of
  now
• Most changes might be incorporated starting 2013
• The third Trading Period
• With the KP having expired

38
Exchanges northern

• Chicago Climate Exchange (CCX)
• Established 2003
• Voluntary, but legally binding
• Participating companies pledge to reduce
  aggregate emissions by 6 by 2010
• Coverage equivalent to 4 of the US GHG emissions
• European Climate Exchange
• Trading began in April 2005
• Sister concern of the CCX, both owned by Climate
  Exchange Plc
• Handled 87 of the global carbon trading in 2007
  a sign that its the most liquid
• European Energy Exchange
• Established in 2002
• Largest energy exchange in Europe
• Provides a broad range of energy and related
  products for power, natural gas and CO2 emission
  allowances for the short-term (Spot Market) as
  well as the long-term (Derivatives Market)
• AIM (Alternative Investment Market)
• A sub-market of the London Stock Exchange, with
  more flexibility and less regulation
• Nord Pool (the Nordic Power Exchange)
• Based in Oslo, used by Norway, Denmark, Sweden
  and Finland
• Focuses on the power industry
• There are a few more in Australia, New Zealand
  etc

Thanks to Europes thriving Emissions Trading
model, CERs-trading is just 20 of the global
Carbon Market
39
Exchanges southern

• The southern countries are opening/have opened
  up exchanges in their backyards due to the
  following reasons
• To induce transparency and a fair price
  intermediaries working out bilateral agreements
  between the host and the buyer typically create a
  buyers market atmosphere
• Financial centers in the developing countries
  want to profit from this growing market
• Lack of local demand for CERs might hamper growth
  prospects
• Japan is the only Asian country actually buying,
  since its an Annex I country
• Incidentally, Japanese businesses has one of the
  highest energy efficiencies in the world, so
  improving further is a challenge it would be
  cheaper for these businesses to buy CERs from CDM
  projects
• Limited role played by these counters so far

40
Exchanges southern

• Multi Commodity Exchange of India Ltd. (MCX)
• Has a strategic alliance with the CCX since 2005
  i.e the beginning of carbon trading in India
• Launched futures trading in early 2008
• The South Korea Stock Exchange is planning a
  counter
• Singapore reportedly wants to become Asias
  carbon trading hub
• Many consultancies/brokerage firms have a
  presence in Singapore
• Hong Kong Stock Exchange is conducting a
  feasibility study to open a counter
• The main obstacle seems to be Chinas refusal to
  allow Hong Kong, Macau and Taiwan to generate
  CERs from CDM projects hosted in China
• In other words, China sells primary CERs directly
  to foreign buyers
• In August 2008, China announced the launch of
  counters in Shanghai and Beijing
• The Beijing counter
• Will initially focus on the limited-appeal SO2
  and COD market
• Deals only with state-owned equities and this
  will be so for carbon trading as well
• The Tianjin counter was aborted due to a
  reluctance to allow the CCX a minor share, but
  this counter might be created sometime in the
  future

41
The voluntary market

• Salient features
• Opaque processes, monitoring is difficult
• Quality variable, so is the price
• But its less expensive to operate this market,
  as it does not have to adhere to stringent CDM
  guidelines and processes
• Flexible
• Can complement the CDM-driven market, if
  implemented the right way
• Makes sense to keep the audit/monitor process as
  close to the mainstream mechanisms (CDM, JI) as
  possible
• Potential target segments
• Retail individuals, small projects wanting to
  go carbon neutral
• Projects without sufficient volumes to take the
  CDM route
• Project types not covered in the CDM
• Could potentially fund a majority of grassroots
  innovations
• The UK government introduced a code of practices
  in Jan 2007 to make this market more transparent
• Other standards exist. Examples
• The Voluntary Carbon Standard
• Developed by The Climate Group, the International
  Emissions Trading Association and the World
  Business Council for Sustainable Development
• Gold Standard offers a quality label to CDM/JI
  as well as voluntary projects
• Developed by WWF, SSN and HELIO International in
  2003 a non-profit organization

42
Market size
43
External factors affecting price

• Policy
• Price of fossil fuels
• Crude oil, coal, natural gas, others
• Price of EUAs (and other equivalents, as other
  markets become more active)
• Foreign exchange fluctuations
• Global economic growth
• The current recession has dented the demand as
  northern businesses experience zero or negative
  growth
• Weather patterns
• Energy needs depend on weather patterns extreme
  weather conditions led to increased use of energy

44
Drawbacks of the market

• Excess allocations in Europe have, at best,
  resulted in a 2-5 reduction of emissions during
  the first phase
• Allocations have to be stringent and fair in the
  future
• They have to be accurately calculated, based on
  the business type, country etc
• Allocations will become even complicated when the
  concept is extended to the developing world
• Many projects operating in the voluntary market
  do not result in environmental benefits
• More auditing, monitoring required
• The retail investor needs to be educated
• At a high-level, the retail investor shouldnt
  get the impression that buying VERs online will
  automatically save the planet!
• The retail investor must also learn how to
  differentiate between low-quality and
  high-quality VERs
• The model plugs into the existing capitalistic
  framework
• The current recession has prominently highlighted
  the flaws in this framework
• The wide-scale changes therein need to be applied
  to the Carbon Market as well
• In other words, much tighter regulations are
  required the UK is the only country to have a
  carbon audit regime at this point tighter,
  centralized audit might be a good idea
• Speculation and manipulation of prices must be
  reined in

45
Drawbacks of the market

• Businesses plying CDM projects can be
  unscrupulous
• Additionality needs to be verified
• Past ethical behavior needs to be factored in
• DuPont, for instance, has made excess money from
  its customers to eliminate HFC23 from one of its
  plants
• More transparency required
• Without sufficient information, prices are prone
  to fluctuation and manipulation by intermediaries
• As mentioned before, Emissions Trading does not
  offer as much benefit as sterner measures like
  taxation
• The CDM/JI approach allows the largest polluters
  to delay reinvestment required to migrate to
  cleaner/renewable energy
• The usual issues of displacement/exclusion etc
  (of rural people in the CDM host venues) apply
• The CDM model must tap into its flexibilities to
  make it more inclusive and sustainable for local
  communities
• In other words, the other goals of UN poverty
  alleviation etc can and must be addressed
  through the CDM process
• The registration and certification of CDM/JI
  projects require plenty of time, effort,
  expertise and money, putting it out of reach for
  the small-scale project developer
• Due to the gestation time of CDM/JI projects, it
  primarily operates on a futures trading model
• This could lead to further speculation long-term
  buyers would be better for the market whereas
  speculators operating the secondary CERs market
  might make the market unstable and
  counterproductive
• Conversely, a majority of investors might move
  their money to more dynamic instruments

46
Market with few options?

• The Det Norske Veritas (DNV) case
• The company currently accredits almost half the
  CDM-certified projects
• In late 2008, the CDM executive board suspended
  DNV from playing this role after spot checks
  revealed glaring flaws in its auditing process
• The company was reinstated once it tightened
  its processes

47
Plenty of hope
48
To each its model Denmark

• Denmarks move to wind-generated energy
• Reaping the winds of plenty
• 19 of the nations electricity is wind-generated
• Leaders in wind-turbine technology
• Championed by the government (as early as 1979)
  through subsidies and loan guarantees to the
  industry
• Also guaranteed purchase of wind energy at a good
  price
• Carbon emissions down 13.3 since 1990
• All this because the nation, following the 1973
  oil crisis, decided to reduce reliance on fossil
  fuels

49
To each its model Guyana

• Guyanas model to propel its economy using its
  rain forests
• 75 of the nations land occupied by the rain
  forest
• This land would be opened for public and private
  investments
• Generate carbon credits, ecotourism projects,
  create herbal/medicinal products
• The mantra preserve, utilize, profit
• Estimates suggest that upto 6 of the nations
  GDP can be generated using this model
• Revenue can be partially utilized to fortify the
  vulnerable coastline with dykes!
• Championed by its President Bharrat Jagdeo

50
To each its model US?

• The US can potentially become a renewable energy
  superpower, thanks to its abundant natural
  resource. It can tap into
• The winds in its prairies and plains
• The scorching sun in its deserts
• The tides hitting its coastlines
• Newer infrastructure such as transmission lines
  need to be created
• A compounded growth rate of 26 possible for
  solar power generation till 2030
• The solar industry in itself could employ 4
  million people!
• As per the UNFCCC, the solar industry creates
  7-11 times more jobs per MW than coal or gas!! In
  investment terms, each 1mn invested creates 21.5
  new jobs, as compared to 11.5 for gas.

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The green celebrities

• Arnold Schwarzenegger, Governor of California
• Guilt doesnt work!
• Owns two Hummers one runs on bio-fuels, another
  on hydrogen
• Has set a cap on emissions in California
• Signed agreements with Canada, Mexico and the UN
  to cooperate on green-tech
• Republican Americas only green action hero!

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The green celebrities

• Al Gore
• Tireless crusader
• An Inconvenient Truth (2006) has become a
  reference guide for most casual followers of the
  green debate
• A more lasting legacy than the man who defeated
  him in the Presidential elections?

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We solved the ozone issue!

• The ozone layer a 3mm air cushion that shields
  us from deadly UV rays
• Ozone depletion is the breakdown of stratospheric
  ozone molecules due to synthetic chemicals
  released into the atmosphere
• These chemicals (halocarbons) were in widespread
  use in aerosols, refrigerants, solvents, foam and
  insulating products
• CFC was the most popular halocarbon, so stable a
  compound that it could reach those stratospheric
  heights and kill the ozone molecules
• The phenomenon was first reported in 1974
• In 1977, the UNEP and WMO (World Meteorological
  Organization) hosted a meeting on ozone depletion
• Not incidentally, the same combination has given
  us the IPCC
• In 1985, the Vienna Convention on the Protection
  of the Ozone layer was adopted
• 1987 Montreal Protocol
• CFC gave way to HCFC not as lethal, but still
  damaging
• HCFC gave way to HFC completely harmless for
  the ozone layer, but a potent GHG as weve
  already seen!
• Now, CDM allows HCFC to give way to CO2!!
• Before the new millennium began, we had managed
  to slow down the rate of depletion.
• The depletion will reach its peak by 2010
• Without this combination of international
  bureaucracy and decisive action, wed have fried
  in our own juices by 2065, according to a recent
  report released by NASA!

54
A new awakening

• Greenism enters pop culture
• 2006 the New Oxford American dictionary chose
  carbon neutral as its word of the year
• 2009 the UN has designated it the year of
  climate change

55
Summary

• The UNFCCC has created the software the
  political framework that can actually make a
  difference
• Markets have been made flexible enough they must
  now be tightly regulated in order to achieve the
  ultimate goals
• The COP15 at Copenhagen in December 2009 needs to
  set the tone for the future
• More developing nations must be encouraged to
  explore the CDM model
• Burying our heads in the hot sand is no longer an
  option!

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Thank you!
Questions? Contact eshwar.sundaresan_at_gmail.com