The EU energy commission intends to speed up reduction of energy allowances doled out by Brussels. This is the first legislative step in delivering on the EU's target to reduce greenhouse gas emissions by at least 40% domestically by 2030 as part of its contribution to the new global climate deal due to be adopted in Paris this December. One of the key measures was a legislative proposal to remodel the region’s carbon-emissions trading system for the period after 2020, by speeding up the reduction of the number of emission allowances the EU doles out. Under the new measures, the EU wants to shrink the overall number of emission allowances at an annual rate of 2.2%, faster than its current rate of 1.74%. This measure is intended to drive up the price of allowances, which currently trade at €7.74 a metric ton of carbon dioxide emitted, and reduce overall emissions.EU Commissioner for Climate Action and Energy Miguel Arias Cañete said: "My message to our global partners ahead of the Paris climate conference: the EU stands by its international commitments. And my message to investors, businesses and industry: invest in clean energy; it's here to stay and continue to grow. With these proposals, Europe is once again showing the way and leading the global transition to a low-carbon society."To achieve the 40% EU target, the sectors covered by the EU ETS will be reducing their greenhouse gas emissions by 43% compared to 2005. To this end, the Commission proposes
0 Comments
The White House last week tweaked its Social Cost of Carbon (SCC) metric, asking federal agencies to factor in a price per ton of CO2 of $36 when making regulatory decisions involving GHG reductions. The SCC – a range of price estimates the Obama Administration puts on the long-term damage of GHGs – has been in use since 2009, and in that time its base case price has ranged between $24 and $38. By now, just about everyone accepts that carbon dioxide emissions from burning fossil fuels are warming our planet and changing our climate in harmful ways. Transitioning to a lower carbon economy is an essential step toward reducing these costs. The social cost of carbon (SCC) is a tool that helps Federal agencies decide which carbon-reducing regulatory approaches make the most sense—to know which come at too great a cost and which are a good deal for society. The SCC is a range of estimates, in dollars, of the long-term damage done by one ton of carbon emissions.
Companies, governments, and individuals voluntarily spent just under $4.5 billion on conservation and clean energy over the past decade by purchasing nearly 1 billion carbon offsets, finds the Forest Trends Ecosystem Marketplace report, Ahead of the Curve: State of the Voluntary Carbon Markets 2015. The voluntary markets have served as the testing ground for compliance carbon pricing programs all over the globe. The pricing of voluntary carbon offsets has experienced peaks and valleys over the last decade. The global average price peaked at $7.3/tonne in 2008 as momentum appeared to be building toward the United States implementing a national cap-and-trade system to reduce these emissions. But prices generally began to decline as carbon trading legislation faltered in the U.S. Senate and nations failed to ratify another phase of the Kyoto Protocol, eventually reaching an all-time low of $3.8/tonne in 2014. From year to year, the project type most in demand has changed, driven by policy signals and supply-demand fundamentals. Wind projects topped the charts in 2011 and 2012 due to their relative cost-effectiveness compared to other project types, but have since been overtaken by avoided deforestation (REDD) offsets, which traded an all-time high of 25 million tonnes in 2014. Over the last decade, the United States experienced the largest volume of voluntary offset transactions (136 million tonnes of offsets valued at nearly $700 million), followed by Brazil (40 million tonnes valued at $233 million). The role of the voluntary carbon markets is inextricably linked to the global climate talks as the up and down cycles these markets have experienced over the past decade have been driven in large part by policy signals – or the lack there of. But the progressive actions of voluntary buyers can also inform and shape the international negotiations, as they have at the national and subnational levels, the Ecosystem Marketplace report demonstrates. Offset buyers have commonly been criticized for “buying their way out of the problem” instead of undertaking direct emissions reductions. However, the data tells a different story (according to a new report by Ecosystem Marketplace). Across all categories, offset buyers are more engaged in direct emissions reductions activities compared to companies that don’t offset. In 2013, offset buyers spent $41 billion to make their buildings and processes more energy efficient, install low-carbon energy, switch to cleaner transportation, design more sustainable products, and engage customers and employees around behavior change. Companies that didn’t purchase offsets did all of these things too, but at a consistently lower rate. So which comes first, direct emissions reductions or offset purchases? The answer varies by company, of course. Some companies may use offsetting as a last resort, squeezing every last tonne of carbon dioxide out of their own operations before investing externally. For others, offset purchases may function as a bridge, buying time as they figure out additional ways to reduce emissions directly. Either way, it’s clear that offsetting is less akin to buying “indulgences” and more an indicator that a comprehensive carbon management strategy is in place. In fact, 87% percent of offset buyers have established some form of emissions reductions target, compared to 75% of non-offset buyers. Offset buyers have implemented an internal price on carbon, and that price is often directly connected to offset purchases. These buyers, which include Microsoft, The Walt Disney Company, TD Bank, Aviva, and Barclays, finance offset purchases by charging business divisions according to their proportionate contribution to emissions. The majority of offset buyers – 59% – have an absolute emissions reductions target, meaning they are aiming for a reduction in actual emissions in a future year, compared to a base year. This is in contrast to an intensity target that aims to reduce emissions relative to a normalized metric, such as per product or per unit of revenue. Thirty-two percent of offset buyers have both absolute and intensity targets, compared to 18% of non-offset buyers that have both types of targets. |