tag:blogger.com,1999:blog-21810741606029313382024-03-14T11:32:58.279+01:00Oscar ReyesCarbon trading, climate finance and other random musingsOscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.comBlogger99125tag:blogger.com,1999:blog-2181074160602931338.post-71028168056661475202014-12-10T22:57:00.003+01:002014-12-10T22:58:22.499+01:00Dirty deals flag need for climate finance rules<span id="tab-container-landscape"><span id="tab-container"></span></span><br />
If
you stick a dollar bill under a microscope it is full of dirt. It turns
out something similar is true of climate finance - the billions of
dollars developed countries pay to help developing countries cope with
the effects of climate change and create cleaner energy systems,
industry and cities.<br />
<br />
Last week, the Associated Press (AP) broke <a href="http://bigstory.ap.org/article/07b1724c91604b0d8a3d272424912580/climate-funds-coal-highlight-lack-un-rules">a story</a>
that nearly $1 billion in loans earmarked by Japan as climate finance
have been used to fund the construction of three coal-fired power plants
in Indonesia. Burning coal is one of the most intensive ways to
contribute to climate change.<br />
Indonesian coal plants are not the only dirty deals
masquerading as climate finance, an Institute for Policy Studies
analysis can reveal.<i> </i><br />
<br />
As part of the same “fast start” financing examined by AP,
the Japanese Bank for International Cooperation (JBIC, the country's
export credit agency) gave a $600 million loan to Brazilian state <a href="http://www.reuters.com/article/2012/10/15/petrobras-japan-loan-idUSL1E8LFCRA20121015">oil company Petrobras</a>.<br />
<br />
<i>Full article at </i><i><a href="http://www.trust.org/item/20141210001825-ezxvn/?source=jtBlogs" target="_blank">trust.org</a></i>Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-73421954471631253582014-11-26T22:54:00.000+01:002014-12-10T22:55:45.487+01:00Rich Countries Pony Up (Some) for Climate Justice It’s one of the oldest tricks in politics: Talk down expectations to the point that you can meet them.<span id="more-137973"></span><br /><br />
And it played out again in<span class="apple-converted-space"> </span>Berlin<span class="apple-converted-space"> </span>as 21 countries—including the<span class="apple-converted-space"> </span>United
States—pledged nearly 9.5 billion dollars to the Green Climate Fund, a
U.N. body tasked with helping developing countries cope with climate
change and transition to clean energy systems.<br />
<br />
<div style="-webkit-text-stroke-width: 0px; background: white; orphans: auto; text-align: start; widows: auto; word-spacing: 0px;">
<span style="color: #222222;">The
total—which will cover a four-year period before new pledges are
made—included three billion dollars from the United States, 1.5 dollars
billion from Japan, and around one billion dollars each from the United
Kingdom, France, and Germany.</span></div>
<div style="-webkit-text-stroke-width: 0px; background: white; orphans: auto; text-align: start; widows: auto; word-spacing: 0px;">
<br /></div>
<div style="-webkit-text-stroke-width: 0px; background: white; orphans: auto; text-align: start; widows: auto; word-spacing: 0px;">
<span style="color: #222222;">That’s a big step in the right direction. But put into context, 9.5 billion dollars quickly sounds less impressive.</span></div>
<br />
Full article at <a href="http://fpif.org/rich-countries-pony-climate-justice/" target="_blank">Foreign Policy in Focus</a> Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-21685969876817988012014-07-29T17:11:00.000+02:002014-07-29T17:11:09.020+02:00Passing the bucks: the Green Climate Fund, country ownership and the role of international financial institutions<em>What role will international
financial institutions like the World Bank play in channelling the
resources of the UN’s Green Climate Fund? And what does that mean for
the concept of “country ownership”? This is the second of a series of
three blogs on critical issues facing the GCF. <a href="http://climatemarkets.org/blog/filling-the-green-climate-fund.html">The first </a>looked at how much money the fund is likely to contain and who is likely to provide it. <a href="http://climatemarkets.org/blog/is-black-the-new-green-the-green-climate-fund-and-dirty-energy-financing.html" title="Is black the new green? The Green Climate Fund and dirty energy financing">The third</a> in the series considers whether the fund is likely to support fossil fuels and other forms of “dirty energy”.</em>
<br />
The Green Climate Fund is intended to be “country-owned and driven”,
with national governments playing a key role in setting priorities and
overseeing how funds are deployed. But the emerging structure is
increasingly at odds with this commitment, and it looks increasingly
likely that a majority of its funding would be channeled via
international financial institutions (IFIs) rather than local and
national ones. That’s a significant reversal for a fund that was
conceived as an alternative to the current system, which is built around
a mix of multilateral financing passed through the World Bank and other
multilateral banks, and bilateral financing. The shift in favour of
IFIs is a blow to attempts to take climate finance out of the hands of
institutions that invest heavily in fossil fuels and other forms of
‘dirty energy’ (see more<a href="http://climatemarkets.org/blog/is-black-the-new-green-the-green-climate-fund-and-dirty-energy-financing.html" title="Is black the new green? The Green Climate Fund and dirty energy financing"> here</a>). It also risks taking decision-making power away from the people most affected by climate change.<br />
<br />
In part, the turn to IFIs reflects ambiguities in the definition of
“country ownership”, a concept borrowed from the development aid field.
According to the 2011 <a href="http://www.oecd.org/dac/effectiveness/busanpartnership.htm">Busan Partnership</a>
for Effective Development Cooperation, developing countries should be
responsible for defining their own development model, with approaches
“tailored to country-specific situations and needs”, and national
institutions playing a leading role. The World Bank has adopted a
similar-sounding definition, claiming that “Country ownership means that
there is sufficient political support within a country to implement its
developmental strategy, including the projects, programs, and policies
for which external partners provide assistance.” In practice, though,
there are key differences between a process that allows national actors
to define their needs, with resources channeled directly via accountable
national institutions, and “external partners” assisting in the
creation, and shaping of, a strategy, which is then sold to the
recipient country after the fact.<br />
<br />
The GCF <a href="http://gcfund.net/fileadmin/00_customer/documents/pdf/GCF-governing_instrument-120521-block-LY.pdf">Governing Instrument</a>,
a constitution-like document that sets out principles for how it will
operate, veers towards the stronger definition of country ownership. It
states that GCF financing should be consistent with national climate
strategies, and support the creation of such strategies where none
exist, and suggests that a “national designated authority” (NDA),
typically an environment ministry, should be a key channel for advancing
proposals and ensuring consistency with such strategies. Beyond this,
recipient countries should be able to nominate institutions that can
directly access GCF financing, including those at sub-national and
national levels.<br />
<br />
The primacy of national institutions has been chipped away by
successive decisions of the GCF Board, however. In June 2013, the
insistence on countries appointing an NDA was relaxed, and it was
decided that a “focal point” (often just a single person) would suffice.
This option has been the springboard for arguments that the role
assumed by the NDA or focal point should be minimal, restricted to
little more than providing written consent that a country does not
object to a particular project or program taking place within its
territory.<br />
<br />
The importance of a national approval process – dubbed a
“no-objection” procedure – has also been watered down as over time. When
the GCF was formally established at the UN Climate Change Conference in
Durban in December 2012, the <a href="http://unfccc.int/resource/docs/2011/cop17/eng/09a01.pdf#page=55">creation of a no-objection procedure</a>
was set out as a per-requisite for financing to commence. In October
2013, a proposal was tabled to establish such a procedure, which would
give NDAs or focal points a key role in appointing and approving
“implementing entities and intermediaries” through which funding would
pass, and making formal written approval a condition for GCF financing.
This approval should also have contained confirmation that “appropriate
consultation processes” had taken place. But no agreement was reached,
mainly due to concerns raised by the USA that it would be too
time-consuming.<br />
<br />
Subsequent iterations have proposed only a “tacit approval” process,
with consent assumed after a period of as little as three weeks if no
objection is raised, but the final decision will not be taken before
October 2014. A possible compromise suggests that countries could choose
a “tacit” procedure if they prefer. As with the designation of “focal
points,” this is sold in part as providing countries with maximum
flexibility – but in order to allow for this, the overall importance of
the procedure is diminished.<br />
<br />
In place of national governments, other intermediaries are gearing up
to take an increasingly central role. The Governing Instrument mentions
“financial intermediaries” just once, in the context of local actors
supporting private sector activities. But the funding structure agreed
in Songdo gives intermediaries a central role. In the “initial” phases
of the GCF, at least, financing will pass through “implementing
entities”(which could be national bodies or UN agencies) that can provide
grant-support, and “intermediaries” that can provide concessional loans
and, potentially, other financial instruments if (as many Board
members, and the Fund’s<a href="http://gcfund.net/fileadmin/00_customer/documents/MOB201406-7th/GCF_B07_10_Report_of_PSAG_to_the_Board_of_the_GCF.pdf"> Private Sector Advisory Group, advocate</a>)
those are subsequently approved. Beyond this, intermediaries will be
allowed to “blend” financing with their own resources – a means that
institutions like the IFC have used to combine concessional funds with
their own non-concessional lending products.<br />
<br />
Two issues dominated the debate on intermediaries at the GCF’s Songdo
Board meeting. Significant concerns were raised (by the Board member
for Zambia, amongst others) that the proposed bar for accrediting as an
intermediary was being set so high that only IFIs (and commercial banks)
would be able to qualify. This concern was recognized, to some extent,
in the final decision in Songdo, which calls for an approach that would
more closely tailor the financial management capabilities of the
intermediary with the scope and complexity of the onward lending they
would engage in. <br />
<br />
Second, there was controversy over a proposed “fast track” procedure
for accreditation, which the USA suggested should be extended to <a href="http://www.equator-principles.com/index.php/members-reporting/members-and-reporting">Equator Principles banks</a>,
a grouping of 79 commercial banks. Signatories to this voluntary code,
which is based on IFC standards, include Bank of America, Citigroup and
many of the world’s largest fossil fuel financiers, a number of which
have backed projects with well-documented human rights abuses. The “fast
tracking” of Equator Principles banks was blocked in Songdo, but their
potential to be a major channel for GCF financing remains.<br />
<br />
Some key questions in the design of the GCF remain to be addressed at
the next meeting of its board – notably, the extent to which grants
will be used compared to concessional lending, the financial terms on
which these will be offered, and whether other financial instruments
will be brought into the mix. Much also depends on how the
sometimes-vague Board agreements are applied in practice – including how
generously the “fit-for-purpose” rules on accrediting “implementing
entities and intermediaries” will be interpreted, which should shape how
accessible financing is to national governments and specialist
agencies, regional and city governments. A narrow application could
favor IFIs – but the emerging pipeline of intermediaries seeking
accreditation and potential projects is also likely to see the GCF
channeling funds via bilateral institutions like the UK’s Green
Investment Bank, national development banks like BNDES (the Brazilian
Development Bank) and second-tier regional institutions regional
institutions such as the West African Development Bank.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-50713385338765646122014-04-21T20:41:00.001+02:002014-04-21T20:41:14.823+02:00IPCC on mitigation: A roadmap to survivalGreenhouse gas emissions are rising, and our addiction to fossil fuels is to blame.<br />
<br />
That, in a nutshell, is the conclusion of an authoritative new UN
report published on April 13th. Emissions have not only continued to
increase, but have done so more rapidly in the last 10 years. While the
growing reliance on coal for global energy supplies is chiefly to blame
for the latest increase, the broader picture is that “economic growth
has outpaced emissions reductions.”<br />
<br />
(Full article on IPCC report, written for Foreign Policy in Focus,<a href="http://fpif.org/roadmap-survival/" target="_blank"> continues here</a> )<br />
<br />Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-23002210555755175222014-04-21T20:39:00.000+02:002014-04-21T20:39:51.202+02:00EU climate plans lack ambition... what could be done instead of carbon trading?Followers of climate change policy are used to getting their
disappointment early. With the launch of the EU’s 2030 climate and
energy plan, the European Commission offered several years’ worth of
let-downs in one handy package. <a href="http://europe.redpepper.org.uk/eu-climate-plan/" target="_blank">This article</a> for Red Pepper magazine parses the European Commission's 2030 climate policy proposals.<br />
<br />
In far greater depth, this report on <a href="http://europe.redpepper.org.uk/eu-climate-plan/" target="_blank">Life Beyond Emissions Trading</a>, written for Corporate Europe Observatory, looks at what would fill the void if the EU ETS were allowed to collapse.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-90759194251658223542014-04-21T20:33:00.000+02:002014-04-21T20:33:06.855+02:00Recent articles on the UN’s Green Climate Fund<br />
<br />
In advance of its Bali Board meeting in February, I published a summary of <a href="http://climatemarkets.org/blog/7-things-to-look-out-for-in-the-uns-green-climate-fund.html" target="_blank">7 things to look out for in the UN's Green Climate Fund</a>. The issues in question are: Is the GCF a Fund or a Bank? Will the GCF fund fossil fuel infrastructure? Whatever happened to the promise of civil society participation? Will the GCF balance mitigation and adaptation? What protection will GCF environmental and social safeguards offer? What are “intermediaries” and why does their role keep expanding? How concessional will GCF concessional lending be?<br />
<br />
Just one of those questions was answered in Bali, where progress was made on committing the Fund to financing a greater proportion of adaptation than is typical of most climate financing. <a href="http://climatemarkets.org/blog/green-climate-fund-progress-on-adaptation-but-key-decisions-delayed.html" target="_blank">This article</a>, co-authored by Robert Muthami from the Pan African Climate Justice Alliance, examines the latest decisions taken about the fate of the GCF.<br />
<br />
My IPS colleague Janet Redman and I explored the question of the Fund's potential fossil fuel lending in <a href="http://fpif.org/devils-bargain-climate/" target="_blank">this article</a> for Foreign Policy in Focus.<br />
<br />
Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-73851494813170494052013-07-18T01:19:00.000+02:002013-07-23T11:59:11.233+02:00Songdo Fallout: Is Green Finance a Red Herring?<div class="lede print-yes">
<i>With the latest Green Climate Fund talks in Songdo,
wealthy countries have taken another step toward financializing the
world's response to climate change.</i></div>
<div class="lede print-yes">
<br /></div>
From the 29<sup>th</sup> floor of Songdo, South Korea’s jagged
“G-Tower,” one can glimpse the endless construction sites and vacant
parks of an emerging “global business utopia,” to use the city’s adopted
slogan. The newly built city, home to the UN’s nascent Green Climate
Fund (GCF), proudly promotes its green credentials, including an
impressive network of underused bike lines. Unfortunately, these run
alongside 10-lane boulevards ruled by Hyundai limos and Korean airline
buses.<br />
<br />
Songdo, in short, is a monoculture plantation of skyscrapers, shorn
of the diverse ecosystem that characterizes living cities. And the
G-Tower is the symbol that tops the lot: a skyscraper with a
Pac-Man-like cutaway, as though the institution is running from the
ghosts of the World Bank and other multilateral development banks. Like
the Fund itself—a centerpiece of the international climate finance
regime, designed to fund climate mitigation projects in the developing
world—it is currently empty.<br />
<br />
A few streets away from the G-Tower, Songdo’s convention center
recently played host to the fourth meeting of the GCF’s governing board.
There, the GFC’s 24 board members (government officials selected on a
regional basis) made several key decisions. These include how the Fund
will be managed (should money ever arrive), by whom, and according to
what rules.<br />
<br />
...<br />
<br />
The key structural decisions taken in Songdo concerned the GCF’s
Private Sector Facility (PSF), which was created to encourage private
investment in projects that reduce both the causes of climate change (by
mitigating greenhouse gases) and its impacts (by adapting to a warmer
world). These decisions walked a diplomatic tightrope—advancing the
creation of the institution while carefully avoiding debates over which
private sector the Fund is actually meant to target.<br />
<br />
On one side, the developed countries represented on the GCF board
advocate a PSF that appeals to capital markets, in particular the
pension funds and other institutional investors that control trillions
of dollars that pass through Wall Street and other financial centers.
They hope that the Fund will ultimately use a broad range of financial
instruments.<br />
<br />
There is a troubling circular logic underlying this, however. The
complex repackaging of debt to hide systemic risk was a key contributor
to the financial crisis in developed countries, resulting in huge
bailouts that increased their indebtedness. As a result, many developed
countries now claim that they have little money available for climate
finance, and that the GCF should look to financial markets to make up
this shortfall.<br />
<br />
On the other side, many developing countries and non-governmental organizations have suggested that the PSF should focus on <a href="http://www.foe.org/news/archives/2013-04-pro-poor-climate-finance-is-there-a-role-for-private" target="_blank" title="“pro-poor climate finance”">“pro-poor climate finance”</a>
that addresses the difficulties faced by micro-, small-, and
medium-sized enterprises in developing countries. This emphasis on
encouraging the domestic private sector is also written into the GCF’s <a href="http://gcfund.net/fileadmin/00_customer/documents/pdf/GCF-governing_instrument-120521-block-LY.pdf" target="_blank" title="Governing Instrument">Governing Instrument</a>, its founding document.<br />
<br />
The purpose of the PSF remained unresolved in Songdo, but many of the
rules needed to start its operations were agreed upon. A major dividing
line related to whether or not the PSF would have its own “governance
structure.” This was opposed by many developing countries amidst
concerns that it would give the private sector the largest voice in
determining how this part of the Fund is run—potentially opening the
door to both generous corporate subsidies and excessive financial
risk-taking.<br />
<br />
<i>Continue reading at <a href="http://fpif.org/songdo-fallout-is-green-finance-a-red-herring/" target="_blank">Foreign Policy in Focus</a></i><br />
<br />
<i>Background: <a href="http://climatemarkets.org/glossary/green-climate-fund.html" target="_blank">What is the Green Climate Fund?</a> </i><br />
Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com2tag:blogger.com,1999:blog-2181074160602931338.post-3150522964187353902013-07-16T16:48:00.002+02:002013-07-16T16:48:44.474+02:00Climate markets <img alt="Climate Finance Markets Site - www.climatefinance.org" height="364" src="http://www.ips-dc.org/files/5991/Untitled%202.jpg?width=500" title="Climate Finance Markets Site - www.climatefinance.org" width="500" /><br />
<br />
At the Institute for Policy Studies, we've set up a new website on Climate Finance and Markets (<a href="http://www.climatemarkets.org/">climatemarkets.org</a>)
to help climate activists and advocates understand financial markets, as well as monitoring the Wall Street-friendly solutions currently being dreamed up by the World Bank, the
Green Climate Fund and others.<br />
<br />
The site offers a range of materials, including a<a href="http://climatemarkets.org/a-glossary-of-climate-finance-terms"> glossary</a> and a <a href="http://climatemarkets.org/reader">Reader</a>, looking at the new financial tools that are emerging, the role
of key private sector actors (from banks to private equity funds),
attempts to “leverage” private investment, and alternatives to this Wall
Street-driven approach.<br />
<br />
<br />Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-81685924864919003632013-07-16T16:36:00.000+02:002013-07-16T16:36:13.163+02:00Climate Change PLC<i>This article was written for the <a href="http://www.morningstaronline.co.uk/news/content/view/full/132055">Morning Star</a> as part of the launch of WDM's <a href="http://www.wdm.org.uk/carbon-capital">Carbon Capital</a> campaign</i><br />
<br />
From offshore drilling to gas fracking, it's boom time for fossil fuels - and the City of London is at the heart of it.
<br />
<br />
Oil exploration and production requires huge reserves of cash, which first comes from selling shares and bank lending.
<br />
<br />
The London Stock Exchange provides a platform to channel investors'
money, much of it from ordinary people's pension funds and insurance
policies, to fossil fuel companies.
<br />
<br />
Shell and BP are the largest and third-largest companies in the FTSE 100, but they are far from alone.
<br />
<br />
Almost a fifth of the index is made up of companies directly involved in
extracting oil, gas or coal, while another fifth of the FTSE 100
consists of financial services companies investing in these activities.
<br />
<br />
London is also one of the world's main banking hubs, hosting the global
headquarters of HSBC and Barclays, and the European, Middle Eastern and
African operations of every leading US investment bank. Between them
they lend billions every year to fund new extraction projects.
<br />
<br />
The City of London and Canary Wharf also play host to an enormous
supporting cast of financial analysts, ratings agencies, corporate
lawyers and accountants.
<br />
And if things go wrong, Lloyd's of London is the world's biggest
insurance market, covering everything from oil leaks to the "political
risk" that extractive projects may face civil disturbances or state
repatriation.
<br />
<br />
To see how this plays out let's take the example of Tullow Oil, a small
company by the standards of the oil industry, but still the 40th-largest
player on the FTSE 100.
<br />
<br />
Fans of Sunderland football club might know it via Invest in Africa, a Tullow-run front charity that sponsors their shirts.
<br />
<br />
But Tullow is only really a household name in Ghana, where the company's
offshore discoveries turned oil into the number one issue in recent
elections.
<br />
As the history of nearby Nigeria's "oil curse" shows, it's mainly
foreign corporations, politicians and security firms who strike it rich
when oil is discovered, while poor people remain poor.
<br />
<br />
Production in Ghana began in 2010, and the early signs don't look good.
Against a backdrop of inadequate environmental regulations, flaring -
burning off toxic waste gases - is already widespread.
<br />
<br />
Tullow gets its funding from a mix of equity - selling shares to raise funds - debt and sales revenues.
<br />
<br />
The vast majority of its shares are held by "institutional investors."
The largest of these is BlackRock, whose 11 per cent stake in the
company is distributed across a dozen or more of its funds, which manage
money for anyone from large insurance companies to rich individuals.
<br />
<br />
Pension firms including Prudential, Legal & General and Scottish Equitable are also major shareholders.
<br />
<br />
The combined value of Tullow's shares, currently over £7 billion, is
mostly based on the company's estimates of how much oil it can extract
from drilling sites including Ghana, Uganda and Kenya.
<br />
<br />
While some of the biggest corporations issue bonds - large "I-owe-you"
slips - Tullow is typical of companies its size in agreeing a loan
package with a syndicate of lenders.
<br />
<br />
Last year it set the seal on a deal with 27 major banks, including RBS
and Lloyds TSB - in which the British government owns significant stakes
- and the World Bank's International Finance Corporation (IFC),
allowing it to borrow over £2.2bn until 2019.
<br />
<br />
Revenue from oil sales translates into large profits - £445 million
post-tax in 2011 - which are paid out to shareholders and reinvested in
further exploration and production. The oil is mostly sold as futures
ahead of actually being extracted, with Tullow using London's network of
brokers and commodity traders to find buyers, many of whom will use it
as the basis for financial speculation.
<br />
<br />
A whole host of Tullow's support services can be traced back to London's financial services industry too.
<br />
<br />
City law firm Ashurst is helping the firm to sue the Ugandan government for a £250m tax claim.
<br />
<br />
Several City insurance firms limit Tullow's liabilities in case of oil
spills. Investment banks, including Barclays, and specialists structure
"mergers and acquisitions" that free up cash for new exploration.
<br />
<br />
The City of London is a financial services hub that helps fossil fuel
companies to maximise profits and minimise accountability.
<br />
<br />
Shareholder activism can shine a spotlight on abuses, like the recent
protests at GCM Resources over its controversial coal mine planned in
Bangladesh.
<br />
<br />
But companies won't really change unless the rules governing them
change, which means we need to push the British government and the EU to
alter course.
<br />
Even small measures could help, such as "publish what you pay" rules to
force extractive industries on the London Stock Exchange to disclose
their payments to foreign governments.
<br />
<br />
This could help campaigners in the global south to track unfair deals and government kickbacks.
<br />
<br />
Britain could set an example by using its board positions at the
European Investment Bank, IFC, RBS and Lloyds TSB to force through
cleaner lending policies.
<br />
<br />
It could help create an international tribunal that holds firms and
their executives accountable for any environmental and human rights
abuses they commit.
<br />
<br />
It could even take a lead in pushing the European Union to decarbonise electricity supplies and transport.
<br />
<br />
As a first step, the World Development Movement is demanding that the
government force banks, pension funds and other finance companies to
come clean on the impact of the dirty energy projects they finance.
<br />
<br />
New regulation coming into force later this year will mean these
businesses will have to disclose the carbon footprint of the lightbulbs
in their London offices, but they won't have to report on the carbon
emissions from the coal and oil projects they finance around the world.
<br />
<br />
The government must be put under pressure to start holding the finance
sector to account and to make banks disclose the carbon footprint of
their investments.
Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-68319926826947895892013-07-16T16:33:00.000+02:002013-07-16T16:33:07.351+02:00City of London and Climate Change
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I've written a new booklet for the <a href="http://www.wdm.org.uk/carbon-capital">World Development Movement</a> looking at how the City of
London organises the fossil fuel investments for destructive fossil
fuel projects that are leading to runaway climate change, and asks
what we can do to stop it. Its aim is to inform campaigners and equip
them to take action. You can find it online by <a href="http://www.wdm.org.uk/carbon-capital">clicking here</a>. </div>
Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-6374072972291492342013-04-20T19:34:00.002+02:002013-04-20T19:34:36.751+02:00New climate policy course needed as EU carbon trading flagship sinks<i>The European Union’s Emissions Trading System (ETS) is the world’s
largest carbon market, and the model for similar schemes in California
and worldwide. But it has hit the rocks and should be replaced, writes
Oscar Reyes.</i>
<div class="content clearfix">
<br />
The Emissions Trading System (ETS) is the European Union’s flagship climate policy and it is sinking fast.<br />
<br />
The stated aim behind the ill-fated “cap and trade” scheme was to
set an overall legal limit on greenhouse gas emissions (a “cap”) and
then grant industries a certain number of licenses to pollute
(“emissions allowances”). Companies that do not meet their cap can buy
permits from others that have a surplus (“a trade”). The idea is that a
scarcity of permits to pollute should encourage their price to rise; and
the resulting additional cost to industry and power producers should
then encourage them to pollute less.<br />
<br />
But for seven of the eight years in which the EU ETS has been in
operation, the number of allowances circulating has exceeded the “cap” –
a result of corporate lobbying, large offset allowances that allow
companies to buy cheaper emissions credits from beyond the EU, and the
effects of the economic downturn. As a result, the carbon price has
collapsed. Today, it reached <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://www.reuters.com/article/2013/04/16/eu-ets-vote-idUSL5N0D31ZM20130416">record lows</a></span></span> of €2.62 (compared with highs of around €32).<br />
<br />
The latest collapse follows a European Commission proposal to
re-float the scheme involved delaying (“backloading”) planned auctions
of carbon allowances, making them temporarily more scarce in order to
sure up carbon prices in the short term. The European Parliament
rejected this, with center-right Members of the European Parliament
(MEPs) from across the continent voting against the measure. Their
stated aim was to avoid market “intervention,” but their scarcely
concealed intent was to give European industry a free ride from climate
obligations.<br />
<br />
Conservatives are not alone in their objections. Increasing numbers of <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://scrap-the-euets.makenoise.org/">non-governmental organizations</a></span></span>,
and some left-of-center MEPs are also calling for the ETS to be
scrapped. “The vote on backloading is the wrong debate,” according to
Hannah Mowat from FERN, an NGO specialized in forest policy. “No amount
of structural tinkering will get away from the fact that the EU has
chosen the wrong tool to reduce emissions in Europe. It is inherently
too weak to get the EU to where it needs to be in the necessary
timescale.” In short, it’s no use reaching for some buckets when we
should be heading for the lifeboats.<br />
<br />
These criticisms face particular opprobrium from those who believe
that the only realistic course is to “save” the ETS. Opponents are
treated as “useful idiots” playing right into the hands of those opposed
to any climate legislation. But eight years on, and several reforms
later, the ETS is still failing to reduce emissions, and at the same
time has even <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://corporateeurope.org/news/eu-ets-failing-third-attempt">rewarded polluters</a></span></span> with large subsidies. Why should we expect different results from doing the same thing over and over again?<br />
<br />
Saying “no” to the ETS is not the end of the story. It’s simply a way
of refusing a forced choice, rejecting the terms of a debate that falls
between rejecting legislation to address climate change and pursuing a
policy that has been shown to achieve nothing. In Europe, we’ve <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://www.guardian.co.uk/environment/2011/jun/17/european-energy-emissions-trading-row">already seen</a></span></span>
how “protecting” emissions trading has been used as an excuse to water
down energy efficiency policies, which would be far more effective in
reducing emissions. Emissions trading also <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://www.theecologist.org/blogs_and_comments/commentators/Dan_Box/438579/having_both_emissions_trading_and_feedin_tariffs_is_a_waste_of_time.html">contradicts policies like feed-in tariffs</a></span></span> which, when applied correctly, create far better price incentives to stimulate the uptake of renewable energy.<br />
<br />
Scrapping the ETS does not mean that climate policy will fall into a
vacuum. Energy policy is largely controlled by EU member states rather
than the Commission itself, and there are important lessons to be shared
at a national level. Germany’s <span style="color: navy;"><span style="text-decoration: underline;"><a href="http://energytransition.de/2012/10/key-findings/">Energy Transition </a></span></span>(<i>Energiewende</i>)
has seen the share of renewable energy rise from 6 to 25 per cent over
10 years, with the biggest shifts driven by community and local
investment rather than the energy multinationals. This has not been
driven by the ETS, but rather by a guarantee that renewables will gain
access to electricity grids, providing certainty for investors.<br />
<br />
At the EU level, the Commission should re-focus on securing more
ambitious climate targets now that “backloading” is dead in the water.
Removing the ability to circumvent domestic action by buying carbon
offsets would help considerably with that goal.<br />
<br />
There are significant lessons, too, for other states that are
considering emissions trading. Attempts to patch up the ETS ignore the
schemes more fundamental failings. These start with the very notion <span style="color: black;">of abstracting “carbon” as a </span><span style="color: black;">tradable</span><span style="color: black;">commodity,</span><span style="color: black;"> which </span><span style="color: black;">frames </span><span style="color: black;">climate
change as a problem of cost adjustments that can be managed by a market
that is assumed to allocate goods efficiently, rather than as a
historically embedded problem of the dominant fossil fuel-based
development model.</span><br />
<br />
Ultimately, the EU and other industrialized countries need to massively reduce its overall consumption of energy, including its<span style="color: navy;"><span style="text-decoration: underline;"><a href="http://www.guardian.co.uk/environment/georgemonbiot/2013/apr/12/escalating-consumption"> outsourced emissions</a></span></span>,
which have continued to rise irrespective of emissions trading. This
doesn’t require “flagship” emissions trading schemes, but rather a
sea-change in our thinking about how policymakers can help to address
climate change.<br />
<br />
<em>A version of this article was first published by the <a href="http://euobserver.com/opinion/119821">EU Observer</a>.</em></div>
Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-91877188004382650372013-04-12T16:45:00.001+02:002013-04-12T17:09:13.809+02:00What's the private sector up to on "climate finance" and what are the issues with that?Climate policymakers are now exploring ways to encourage private sector finance for climate action in developing countries, i.e. investment in projects to reduce greenhouse gas emissions and build capacity to adapt to climate change impacts. <br />
<br />
<a href="http://www.bond.org.uk/data/files/Bond_Development_and_Environment_Group_-_climate_finance.pdf">Here's a paper</a> I wrote for the UK Bond Development and Environment
Group on these issues. It examines the evidence from existing channelling of development and climate finance via private sector instruments to identify the probable risks and benefits of such approaches. The particular aim of this paper is to stimulate debate within the UK context.<br />
<br />
Download <a href="http://www.bond.org.uk/data/files/Bond_Development_and_Environment_Group_-_climate_finance.pdf">here</a> or <a href="http://www.cafod.org.uk/Policy-and-Research/Environment-and-climate-change">here</a>.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-26806738638084035912012-11-23T10:25:00.002+01:002012-11-23T11:05:22.790+01:00What Next: Climate, Development and EquityA copy of this arrived in my post box yesterday.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://www.whatnext.org/Publications/Volume_3/Volume_3_main_files/stacks_image_178.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="http://www.whatnext.org/Publications/Volume_3/Volume_3_main_files/stacks_image_178.png" width="229" /></a></div>
<br />
It can arrive in yours too if you contact info [at] whatnext.org, or request via the website of the <a href="http://www.dhf.uu.se/">Dag Hammerskjold Foundation.</a><br />
<br />
That site also offers a free download, as does the <a href="http://www.whatnext.org/Publications/Volume_3/Volume_3_main.html">What Next Forum.</a><br />
<br />
I've contributed a chapter on carbon trading, which surveys the latest in the EU Emissions Trading System and the (near-)collapse of the Clean Development Mechanism, as well as explaining how carbon is actually traded.<br />
<br />
There are many excellent chapters. I'm still working my way through, but Kevin Anderson's chapter (based on a talk that you can listen to and watch a slideshow of <a href="http://www.slideshare.net/DFID/professor-kevin-anderson-climate-change-going-beyond-dangerous">here</a>), and Dale Wen's article on China.<br />
<br />
<b>Full contents are: </b><b><br />
</b><br />
Foreword John Vidal<br />
<br />
Introduction Niclas Hällström<br />
<br />
<b>Part I » Setting the Context – Climate, Development and
Equity Challenges</b><b><br />
</b><br />
Climate change going beyond dangerous – Brutal numbers and
tenuous hope<br />
Kevin
Anderson...............................................................................
16<br />
<br />
Climate debt – A primer<br />
Matthew
Stilwell..............................................................................
41<br />
<br />
The North-South divide, equity and development – The need for
trust-building for emergency mobilisation<br />
Sivan Kartha, Tom Athanasiou and Paul
Baer.................................... 47<br />
<br />
<b>Part II » The Climate Negotiations </b><b><br />
</b><br />
A clash of paradigms – UN climate negotiations at a crossroads<br />
Martin Khor
...................................................................................76<br />
<br />
Why Bolivia stood alone in opposing the Cancun climate agreement<br />
Pablo
Solón...................................................................................
106<br />
<br />
‘The Great Escape III’<br />
Pablo
Solón...................................................................................
108<br />
<br />
What happened in
Durban?.........................................................
110<br />
<br />
Weak ambitions and
loopholes.....................................................115<br />
<br />
India and Africa at COP 17 – The false dichotomy of ‘survival
vs.development’<br />
Sivan
Kartha...................................................................................118<br />
<br />
Climate finance – How much is needed?<br />
Matthew
Stilwell............................................................................
120<br />
<br />
China and climate change – Spin, facts and realpolitik<br />
Dale Jiajun
Wen.............................................................................
125<br />
<br />
Climate change, equity and development – India’s dilemmas<br />
Praful
Bidwai.................................................................................
147<br />
<br />
<b>Part III » What Next? – On Real and False Solutions</b><b><br />
</b><br />
Climate as investment – Dead and living solutions<br />
Larry
Lohmann.............................................................................
164<br />
<br />
What goes up must come down – Carbon trading, industrial
subsidies and capital market governance<br />
Oscar
Reyes...................................................................................185<br />
<br />
Darken the sky and whiten the earth – The dangers of
geoengineering<br />
ETC Group – Pat Mooney, Kathy Jo Wetter and Diana Bronson.......
210<br />
<br />
Ecological agriculture, climate resilience and adaptation – A
roadmap<br />
Doreen Stabinsky and Lim Li
Ching.............................................. 238<br />
<br />
A global programme to tackle energy access and climate change<br />
Tariq Banuri and Niclas
Hällström................................................. 264<br />
<br />
Reclaiming power – An energy model for people and the planet<br />
Pascoe Sabido and Niclas
Hällström............................................... 280<br />
<br />
<b>Part IV » Movement Towards Change</b><b><br />
</b><br />
Beyond patzers and clients – Strategic reflections on climate
change and the 'Green Economy'<br />
Larry
Lohmann.............................................................................
295<br />
<br />
Civil society strategies and the Stockholm syndrome<br />
Pat[zer]
Mooney............................................................................
327<br />
<br />
Leaving the oil in the soil – Communities connecting to resist
oil extraction and climate change<br />
Nnimmo
Bassey.............................................................................
332<br />
<br />
Riding the wave – How Transition Towns are changing the world
and having fun<br />
Teresa
Anderson.............................................................................
340<br />
<br />
Contributors.................................................................................
348<br />
<br />
Glossary.......................................................................................
352<br />
<br />
<br />
<br />
<br />Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-13979487720340312312012-06-17T19:10:00.001+02:002012-06-17T19:10:59.522+02:00Blogging and tweeting from Rio+20I'll be blogging for the Institute for Policy Studies from Rio+20.<br />
<br />
My first post, asking "What's at Stake with the Green Economy" is <a href="http://www.ips-dc.org/blog/rio20_earth_summit_green_economy">now online here</a>. It claims that simply obtaining measures to implement the commitments made 20 years
ago would be better than creating any new corporate-driven initiatives
or issuing yet more empty promises.<br />
<br />
The post also highlights and links to some key reading ahead of the Rio Summit.<br />
<br />
I'd also recommend following the blogs from the<a href="http://wdm.org.uk/"> World Development Movement</a>. <br />
<br />
And finally... I appear to be the latest victim to succumb to twitter, where I'm tweeting from #Rioplus20 as @_oscar_reyesOscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-41576917483571625622012-06-07T14:03:00.000+02:002012-06-07T14:03:15.131+02:00World Bank Group Environment Strategy 2012 – 2022 at first glance<div style="margin-bottom: 0in;">
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Rather than waiting on the outcomes of
Rio+20, the World Bank has announced just announced it’s new
environment strategy for the next decade. The full document can be <a href="http://siteresources.worldbank.org/ENVIRONMENT/Resources/Env_Stratgy_2012.pdf">downloaded here</a>. Here are some very rough notes, on first reading, for anyone who's interested in this type of thing:</div>
<div style="margin-bottom: 0in;">
</div>
<ul>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
There seems
to be a very weak interconnection between the Bank's environment strategy and its
“core infrastructure business,” beyond some waffley rhetoric.
Further work is needed to see how the environment strategy maps onto and relates
to Bank’s energy and infrastructure strategies.</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
The Strategy
assumes a continuing (expanded?) role for the Climate Investment Fundss – with no
“sunset” in sight. By way of background, these controversial funds were started with a "sunset clause," which should mean that they disappear once a Green Climate Fund is up and running.</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
Wealth
Accounting and Valuation of Ecosystem Services (WAVES) is the
first of 7 strategic focusses identified in the Strategy. The
Bank looks set to push policy advice that “focuses on the
value of natural capital and integration of “green accounting”
in more conventional development planning analysis. ” Very
briefly, this approach looks to have elements of a positive framing
(moving beyond GDP as a measure) but is ultimately wound back into a
policy-promotion framework that encourages the <i>financialisation
of nature.</i><span style="font-style: normal;"> The WAVES
framework (the first phase of which is funded by the UK’s
DfID) is something the Bank looks keen to launch at Rio, in
the form of proposing “</span>an international program of
action on Ecosystem <span style="font-style: normal;">Accounting”
at the Summit.</span></div>
</li>
<li>
<div style="font-style: normal; font-weight: normal; margin-bottom: 0in;">
“Blue carbon” (relating to coastal regions and
wetlands) is increasingly a part of the Bank’s “green” agenda;
while soil carbon is a critical concern for the Bank’s work in
Africa.</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
There’s a lot
on REDD (Reducing Emissions from Deforestation and Degradation) and some “innovations” to support REDD are
foreseen. These include “wildlife premiums” (Zoellick’s
proposal from Cancun on “charistmatic species”) as well as
instruments (including bonds) that could support a REDD market
in the current context of virtually non-existent demand for
credits </div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
Despite the
obvious failings of carbon markets, the Bank shows no sign of
retreat (it currently holds a $2.7 billion portfolio of carbon
funds). Quite the opposite, in fact: “Developing access to
carbon finance for low-income countries will be the
centerpiece of the WBG’s strategy.” (p.61). The Bank envisages
a 3-fold approach: (1) encouraging policies and simplified
regulations to “accelerate speed to market” (irrespective of
contradictions with environmental integrity); support for
developing countries’ development of “capacity, technical
knowledge, and carbon market infrastructure”; and support for
“building up the potential supply for a scaled-up future
carbon market” so as to “avoid possible future market
dysfunctions resulting from supply shortages. ” Setting aside
all of the major critiques of carbon markets for a moment,
this is quite an extraordinary and unjustified focus given the
obvious <i>over-supply</i> problems that the market faces.</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
The WB
highlights the following carbon funds as key in moving
forwards: Carbon Partnership Facility (including support for sectoral approaches),
Forest Carbon Partnership Facility (REDD readiness),
Partnership for Market Readiness (piloting new market
instruments, and “increasingly... examining the possibilities
for carbon trading between domestic markets on a bilateral or
multilateral basis. ”); BioCarbon Fund Tranche 3 (BioCF T3)
(next generation): (including developing new methodologies for
forestry and agriculture); Carbon Initiative for Development (CI-Dev)
(capacity building, technical assistance, and financing to the
seller entities behind the programs). </div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
This confirms
a trend that’s already been apparent for the last couple of
years – namely, that the Bank is shifting it’s emphasis beyond
project-based funding to support new market infrastructures
across whole economic sectors, plus putting guarantees/funding
to the investors (rather than purchasing credits directly).</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
The IFC is
becoming more involved in climate-related activities. “While
the IFC’s investment and advisory work in energy efficiency,
renewable energy, and resource efficiency will remain the
mainstay of its climate change activities, it also aims to
grow its Cleantech venture investment portfolio. ... The IFC
is working on several initiatives to mobilize commercial and
concessional funding to support private sector climate
investments in the form of equity, debt, and technical
assistance.” It will also build on its post-2012 Carbon
facility (which targets European utilities and energy
companies).</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
Carbon
neutral greenwashing is being upscaled (p.63) : “As with the
headquarters, the carbon emissions of country offices will
also be offset, along with emissions from staff travel. ”</div>
</li>
<li>
<div style="font-weight: normal; margin-bottom: 0in;">
Climate risk
insurance (p.64) is likely to form a key part of the Bank’s
adaptation agenda</div>
</li>
</ul>Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-62073212302962281862012-06-01T09:06:00.000+02:002012-06-01T09:06:07.602+02:00UK aid to Morocco will fund electricity for EuropeMoney taken from the UK aid budget is to be used by the World Bank to
finance the Ouarzazate solar project, designed to prioritise export to
Europe rather than to ensure that ordinary Moroccans can access
affordable electricity.<br />
<br />
The project is part funded the World
Bank’s Clean Technology Fund, which receives 14 per cent of its money -
or £385 million – from the UK overseas aid budget.<br />
<br />
Investment
in renewable energy is essential to the fight against climate change.
But measures to tackle climate change will only work if they also
address poverty and inequality. By setting in place an export-led model
that is likely to see electricity costs for the Moroccan people
increase, and by asking the Moroccan government to subsidise the
creation of a risky mega-project, Ouarzazate could make it more
difficult for ordinary Moroccans to access electricity, especially in
rural areas. And yet the project is being funded from the UK’s overseas
aid project, the very purpose of which is to reduce poverty.<br />
<br />
You can read this new report, published by the World Development Movement, by <a href="http://www.wdm.org.uk/sites/default/files/Power%20to%20the%20people%20II.pdf">following this link</a>.<br />
<br />
It's the second in a series called Power to the People?, looking at the World Bank's Clean Tech Fund. The first report, on a wind project in Mexico, can be <a href="http://www.wdm.org.uk/sites/default/files/Mexico%20Oaxaca%20La%20Ventosa%20-%20FINAL.pdf">found here</a>.<br />
<br />
<br />Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-59406642074076370732012-05-31T01:31:00.000+02:002012-05-31T01:31:17.854+02:00World Bank State and Trends of the Carbon Market 2012: market growth is more spin than substanceThe World Bank's annual State and Trends of the Carbon Market report is out, and can be found <a href="http://siteresources.worldbank.org/INTCARBONFINANCE/Resources/State_and_Trends_2012_Web_Optimized_19035_Cvr&Txt_LR.pdf">here</a>:<br />
<br />
It's a very useful source of data which, like all WB stuff, needs to be treated with caution.
The spin is all about a growing carbon market, rising to $176 billion, an 11% increase on the previous year's figures for 2010. (see, for example, <a href="http://www.reuters.com/article/2012/05/30/world-bank-carbon-idUSL5E8GUGBQ20120530">how Reuters picked it up</a>)
However, it is worth noting that :<br />
<ul>
<li>The largest proportion of the "carbon market growth" is accounted for by a change in how the World Bank counts the figures, the explanation for which is buried in an annex:
“Instead of using external data, however, in 2012 the authors calculated the volumes and values for 2010... . The calculation resulted in higher volumes and values, particularly for EUA and secondary CER transactions. Instead of the global carbon market of US$142 billion reported in 2010, the revised calculations resulted in a global carbon market that is greater by about US$17 billion year on year (yoy). A higher value in the EUA market accounted for about US$14 billion, 80% of the difference. This year’s calculation also resulted in a secondary CER market greater by US$2 billion in 2010 yoy. The remaining differ- ence is explained by the value of the post-2012 CER transactions, not reported last year, which reached over US$1 billion in 2010. ” (p.124) </li>
<li>That said, the market still grew a bit, and the reason given for that is a rise in hedging and speculative trades:
“Trading volumes soared in 2011, coinciding with the second decline in verified emissions in three years. A considerable portion of the
trades is primarily motivated by hedging, portfolio adjustments, profit taking, and arbitrage." (there's quite a useful box explaining this around p.39) </li>
<li>It's also worth noticing that the Bank has massaged the figures to overcome the embarrassment of a shrinking CDM
Last year's "primary" CDM market (ie. the value of the credits generated by projects; rather than the cumulative value of further trading in these credits) was $900 million, the lowest ever (comparisons below - figures in US$billions)
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2011
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0.9<br />
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2010
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1.5
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: none; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0in; padding-top: 0in;" width="73">
2009
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0.04in; padding-top: 0in;" width="49">
2.7
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: none; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0in; padding-top: 0in;" width="73">
2008
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0.04in; padding-top: 0in;" width="49">
6.5
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: none; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0in; padding-top: 0in;" width="73">
2007
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0.04in; padding-top: 0in;" width="49">
7.4
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: none; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0in; padding-top: 0in;" width="73">
2006
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<td style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: none; padding-bottom: 0.04in; padding-left: 0.04in; padding-right: 0.04in; padding-top: 0in;" width="49">
5.8
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2005
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2.6<br />
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</tbody></table>
</li>
<li>The Bank then boosts this figure by adding another $1.9 billion for forward pCER post-2012" value - "call options" on credits that are not yet issued. Put simply, it's counting an option to buy a credit that does not yet exist as part of the value of the CDM. A lot of carbon is actually traded this way, although the press doesn't exactly get very far in explaining this. But the real massaging of the figures is revealed here (p.49) : “without a brighter market outlook, it is unlikely that a substantial proportion of these post-2012 ERPAs will be exercised at the indicative prices and volumes established in these documents. ” (ie. the figures written to Emissions Reduction Purchase Agreements, which are the basis for this $1.9 billion, would generally - I'd wager almost exclusively - mean that options would not be taken up with CDM credits going for less than €3.50 per ton, as at present). </li>
<li>With the CDM, too, the story is one of greater financialisation.
The biggest trade in CDM credits passes through the UK and Switzerland (where a lot of the financial intermediaries are based
"Entities in the UK transacted the largest share, accounting for 47Mt or 39% of pre-2013 pCERs and 44Mt or 26% of post-2012 pCERs. The primary catalyst for this was the high concentration of buyers in the UK. However, a large portion of these vol-umes are known to be redistributed upon deliv-ery. Switzerland had a robust increase in 2010 and in 2011 in both pre-2013 and post-2012 markets compared to previous years. The Swiss market share came right after the UK, for the
same reasons as the latter." (p.55)
</li>
</ul>Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-29408693388251009292012-05-26T18:28:00.001+02:002012-05-26T18:28:39.930+02:00Carbon Markets After Durban - The Atmosphere BusinessThe most recent issue of the journal <a href="http://www.ephemeraweb.org/journal/index.htm">ephemera</a> is a special issue on “The atmosphere business”. It takes a critical look at "climate capitalism".
My contribution on "Carbon Markets after Durban" can be found<a href="http://www.ephemeraweb.org/journal/12-1/12-1reyes.pdf"> here</a> It starts out fro, the contradiction of the push for new market mechanisms in the context of offset prices crashing to all-time lows and carbon branded the ‘world’s worst performing commodity’.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-15110955230326042662012-03-25T18:05:00.003+02:002012-03-25T18:08:48.369+02:00After COP17: Where now for civil society engagement in UNFCCC climate negotiations?I recently contributed to a report, commissioned by <a href="http://www.earthlife.org.za/?p=1776">Earthlife Africa Johannesburg </a>, to reflect on civil society’s impact on the United Nations Climate Change Conference (COP17) in Durban, and to spark an internal reassessment of global civil society’s actions towards the UNFCC; for whatever we are doing, it is not working.<br /><br />If there is a single message about the engagement with the United Nations Framework Convention on Climate Change that comes out of this report, it is that civil society should stop looking at the COP process as a “quick fix” for climate change. Instead, civil society needs return to the hard, expensive and time-consuming work of grassroots mobilisation to create real and substantial mass movements that have the sheer weight of numbers to force change. National governments need to go to a COP knowing that their populaces want a global deal on climate change and will not take kindly to them returning from a COP with only empty promises and a hollow text.<br /><br />The full report can be <a href="http://www.earthlife.org.za/wordpress/wp-content/uploads/2012/03/COP17-review_web.pdf">downloaded from here</a>.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-87554670723844289362012-02-24T19:21:00.001+01:002012-02-24T19:22:46.329+01:00After Durban: All talked out?The current issue of Red Pepper includes my assessment of the COP17 UN Climate Change Conference in Durban. Read the full article <a href="http://www.redpepper.org.uk/after-durban-all-talked-out/">here</a><br /><br /><br />If a lexicon of international climate conferences is ever written, Durban will be listed right after the words debacle, delusion, disaster and disillusionment. Even the disappointments were not surprising at the 17th Conference of the Parties of the United Nations Framework Convention on Climate Change, which took place in South Africa last December. Instead, they followed the usual script: two weeks of ineffectual jargon-filled bickering followed by an agreement to delay action on climate change beyond the political lifespan of most of the governments presentOscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com1tag:blogger.com,1999:blog-2181074160602931338.post-56387351874306521652012-02-24T19:19:00.001+01:002012-02-24T19:20:31.951+01:00Paying the polluters: EU emissions trading and the new corporate electricity subsidiesIndustry lobbying on EU climate policy looks set to secure further subsidies for energy-intensive industries through the reform of State Aid, according to a new report, Paying the Polluters: EU emissions trading and the new corporate electricity subsidies, published by Corporate Europe Observatory and Carbon Trade Watch. The report shows how the Commission's proposals have opened the door to millions of euros of subsidies to help some of the biggest polluters pay their energy bills.<br /><br />Read the full report <a href="http://corporateeurope.org/publications/paying-polluters">here</a>.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-77972413218692316142012-01-20T21:11:00.001+01:002012-01-20T21:12:43.202+01:00EU on Kyoto: not really an "agreement"Isn't it funny how, when it comes to determining how to interpret EU emissions trading rules, the Durban Package is insufficient to be defined as an "international agreement"<br /><br />http://ec.europa.eu/clima/news/articles/news_2012011101_en.htm<br /><br /><blockquote>The adoption of a second commitment period of the Kyoto Protocol without a legally binding agreement for the period beyond 2012 under which other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries commit themselves to contributing adequately according to their responsibilities and capabilities is therefore not an international agreement as referred to in Article 11a(7) of the EU ETS Directive and Article 5(3)of the Effort Sharing Decision.<br /></blockquote>Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-3822021534734797352011-11-28T18:11:00.002+01:002011-11-28T18:16:29.803+01:00Unclean Development Mechanism: How African Carbon Markets are FailingThe following article was published as part of a debate hosted by the Heinrich Boell Stiftung. To read it in context, click <a href="http://boell.org/downloads/Perspectives_4.11.pdf">here</a><br /><br />Stories of the carbon market’s potential to mobilise billions of dollars in investment for projects to reduce emissions and contribute to sustainable development in the developing world tend to rely on aggregate figures about the value of the global carbon market, which was US$142 billion in 2010. There is a major discrepancy between this headline value and Clean Development Mechanism (CDM) financial flows, however, and this gap has continued to increase. In 2010, the “primary trade” in CDM offsets was worth $1.5 billion, its lowest level since the Kyoto Protocol entered into force in 2005. This is generally taken as an estimate of how much money goes to projects, although a recently leaked World Bank report suggests that the actual financial flows may be five times lower ($300 million) if the real purchase prices of credits are used instead of estimates.<br /><br />The geographical scope of the CDM is also highly uneven, with over 80 per cent of registered CDM projects (and almost 86 per cent of credits issued) in the Asia-Pacific region. By contrast, Africa hosts 1.9 per cent of projects, issuing 1.3 per cent of credits, according to data from UNEP Risoe. These regional figures mask significant discrepancies between countries as well as regions. The majority of credits issued in Africa so far have gone to Egypt, but South Africa has the largest number of registered projects (19). By contrast, the rest of Sub-Saharan Africa hosts just 31 projects, amounting to 0.9 per cent of the total projects globally and just 0.005 per cent of credits issued to date.<br /><br />On the north coast of Egypt, Africa’s largest fertilizer factory generates more carbon offsets than the rest of the continent combined, which are sold to coal-fired power stations in Germany’s industrial heartland to help them avoid cutting their greenhouse gas emissions. In 2010, the Abu Qir factory made an estimated US$25 million profit from these offset sales, while the power stations avoided 3 million metric tonnes of carbon dioxide reductions.<br /><br />The story of Abu Qir is a snapshot of how the carbon offset market under the UN’s CDM has worked to date. Most credits are generated by industrial gas reduction projects, using cheap end-of-pipe technologies that generate far more money from the sale of carbon credits than they cost to buy and run. The largest buyers of these credits, in turn, are European energy producers keen to extend the lifespan of their coal-based power plants.<br /><br />The fact that such a high proportion of Africa’s credits come from one factory illustrates just how marginal Africa is to the carbon market, and that the carbon market has been largely irrelevant to the continent's efforts to tackle climate change.<br /><br />Project developers point to a lack of capacity in African states, but the main explanation for these disparities is economic. The largest global investors direct their efforts to the most profitable projects. Economies of scale invariably point to the larger projects, and since offsets represent “avoided emissions”, these involve heavy industries or power sector projects in countries where grid energy already register significant greenhouse gas emissions. Such project opportunities rarely exist in sub-Saharan Africa, which is not dirty enough or does not consume enough to compete successfully within the CDM.<br /><br />This picture is clearly borne out in projections of how the scheme is likely to look by 2020. African projects already in the CDM pipeline would issue fewer than four per cent of credits by 2020. Almost half of these would come from a handful of gas-flaring projects in the Niger Delta, which looks set to overtake Egypt as the country with the highest number of credits by the end of the decade. The economic fundamentals limiting African involvement in the CDM as it is currently structured remain firmly intact, with project developers gravitating towards large-scale extractives and the industrial sector.<br /><br />Various rule changes are on the table in Durban, which could exacerbate this trend. The inclusion of Carbon Capture and Storage (CCS) could depress offset prices that have already fallen so low as to be the “world’s worst performing commodity”, according to Reuters. The early beneficiaries would be in South Africa, where Sasol is looking at the possibility for its gas-to-liquids/coal-to-liquids plants; and in Algeria, where BP, Sonatrach and Statoil run the world’s largest onshore CCS demonstration project on their gas fields.<br /><br />The other major changes could affect agriculture and forestry projects, which advocates for increasing the use of CDM in sub-Saharan Africa have identified as the sectors with the greatest “potential”. The World Bank is hoping to expand CDM to cover carbon storage in the soil as part of its proposals for “climate smart agriculture,” its version of the agricultural deal that the South African presidency hopes to be Durban’s main legacy. The World Bank claims that soil carbon storage will see small holder farmers “benefiting from significant payments for emission reductions.” However, its flagship pilot project in Kenya would see over 40 per cent of the costs spent on monitoring and registering the project, with $1.05 million spent on these “transaction costs”, leaving just over $1 per year for each farmer involved.<br /><br />This cost profile is fairly typical of agricultural projects, which fetch far lower than average offset prices due to issuance uncertainties, and restrictions imposed on these project types due to difficulties in accounting for forest and agricultural carbon. As a result, the cards in this sector are also stacked in favour of agribusiness, which have better economies of scale. For example, the largest of a handful of CDM “reforestation” projects proposed (but not yet approved) would see the replacement of grasslands in Ghana with large-scale biodiesel monoculture plantations. In response, campaigners suggest that the inclusion of agriculture, forests and soil carbon in the CDM could lead to a “triple lose” for farmers, leaving them dependent on unpredictable carbon prices, increasingly vulnerable to land grabs, and left shouldering the burden of a climate crisis that they did not create.<br /><br />In summary, the CDM is not failing Africa because of the inertia of policy makers and the CDM Executive Board. The CDM is failing in Africa because the economics of carbon markets create regional imbalances and favour large projects – subsidising the extractives sector and heavy industry, which are generally highly polluting and socially harmful. These same dynamics, if extended to agriculture, would favour agribusiness over small farmers. Various capacity-building initiatives are under way but these cannot alter the market fundamentals, and serve to merely divert scarce public resources away from directly addressing climate change.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-16495311823920542732011-10-21T13:54:00.003+02:002011-10-21T13:59:17.638+02:00MiFID II: carbon trading included, many problems unaddresedThe European Commission is proposing that trading on the carbon market should be governed by the revised Markets in Financial Instruments Directive (MiFID II), a set of new laws governing financial speculation.<br /><br />The move comes amidst continued volatility in the $142 billion per year carbon market, most of which is traded in the EU, and follows a series of fraud cases in recent years.<br /><br />The proposal to classify carbon as a financial instrument would bring the whole market - including “spot” and "derivatives" trades - under a single regulatory framework. These proposals were subject to significant corporate lobbying, as revealed in a <a href="http://www.corporateeurope.org/publications/letting-market-play"> report</a> from Carbon Trade Watch and Corporate Europe observatory released last week.<br /><br />A compilation of the new measures on emissions trading included in MiFID can be <a href="http://www.scribd.com/doc/69722167/MiFID-II-on-Emissions-Allowances">found here</a>. I've also compiled a similar <a href="http://www.scribd.com/doc/69722014/Market-Abuse-Directive">document</a> in relation to the Market Abuse Directive.<br /><br />Treating carbon as a financial instrument is a welcome recognition of the problems in this market, but it is no panacea. Emissions trading has not driven investments in cleaner energy and there is no sign of it meeting environmental goals, as the latest carbon price slump shows.<br /><br />The inclusion of carbon in MiFID II leaves key exemptions in place, however. For example, MiFID does not cover trading on “own account” and so fails to capture speculation engaged in by energy companies, which are the largest players on the carbon market.<br /><br />This issue is covered in more depth in <br /><a href="http://www.corporateeurope.org/publications/letting-market-play">Letting the market play: corporate lobbying and the financial regulation of EU carbon trading </a>Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0tag:blogger.com,1999:blog-2181074160602931338.post-72893502770178233242011-10-16T20:26:00.002+02:002011-10-16T20:30:50.053+02:00Corporate lobbying and the financial regulation of EU carbon tradingThe European Union is changing its rules on how carbon is traded in response to a series of fraud cases and the financial crisis.<br /><br />My <a href="http://www.corporateeurope.org/publications/letting-market-play">new report</a> analyses these changes, and looks at how corporate lobbies are trying to influence this process.<br /><br />It shows that the European Commission initially took a light-touch approach to regulating carbon markets, putting increases in the volume of trade ahead of security concerns. In so doing, it failed to anticipate the specific opportunities for gaming and fraud posed by creating a large market in an intangible commodity. A series of carbon fraud cases, and the role played by “derivatives” in triggering the financial crisis, has made this position untenable and ushered in a new wave of regulation. This brings together measures designed to address fraud and gaming, with others designed to limit the destabilising effects of speculation. These may clean up the market’s image, but they do not address the core problems with carbon trading.<br /><br />The measures proposed to tackle fraud focus on tightening registry security – in essence, regulating more strictly who can trade in carbon so that it is no longer possible to simply register as a trader from a home computer, steal funds, then disappear without trace. This much is sensible, although the fact that it took a series of fraud cases to bring about these obvious protections casts Commission decision-makers, and the lobbyists who pressured them to avoid regulation, in a poor light.<br /><br />More controversially, the Commission’s package of security measures manages to include changes that hide serial numbers. The City of London Corporation, not known for its radical pro-regulatory stance, reports surprise at this decision, stating that “It is not understood how this will aid security as it prevents the market from identifying the provenance of the allowances.” Indeed, it is hard to find explanations that do not point towards a cover-up. In making it impossible to anyone except law enforcement agencies to trace individual allowances, the Commission has reduced transparency across the whole scheme, making it harder for civil society to reveal evidence of fraud and gaming, or the perverse effects of the system, and making it impossible to trace the volume of permits re-issued as a result of theft. These reissued permits would, in turn, further inflate the already generous emissions limits that the scheme establishes.<br /><br />Significant fraud and gaming risks remain, despite these changes. Holes in registry security mean that there is still a risk that carbon trading could be used for money laundering. This is a particular problem across different legal jurisdictions. While the EU is trying to close the door to registry fraud within its borders, it is at the same time attempting to link it’s carbon market to other emerging markets (eg. Australia), as well as allowing offsets to be traded within its scheme – increasing the potential for carbon fraud globally.<br /><br />Fraud risks, in this narrow sense of deliberate deception for unlawful gain, are potentially less significant than those posed by “gaming” - deliberate deception that is legally sanctioned. As we have shown elsewhere, the lobby pressure to freely allocated large surpluses of emissions permits has resulted in windfall profits for industry and the power sector. The offset markets are notorious for the same practice. CDM credits are issued in relation to “additionality” claims that are impossible to prove. A recently leaked US cable gave dramatic evidence of the scale of this problem, reporting from a meeting in Delhi that “all interlocutors conceded that all Indian projects fail to meet the additionality in investment criteria and none should qualify for carbon credits.” These interlocutors included the Chair of the national CDM authority, as well as some of the country’s largest project verifiers and developers. In a nutshell, carbon trading schemes are awash with paper “reductions” that do not correspond to actual reductions of greenhouse gas emissions in the real world, and this is a systematic problem. Gaming results in windfall profits and undermines efforts to address climate change.<br /><br />On the side of financial speculation, the key regulatory proposal is to classify carbon as a “financial instrument.” This would bring it under the scope of the Market in Financial Instruments Directive, a key component of EU market legislation that is currently under review. The International Emissions Trading Association (IETA) and other financial sector lobbyists have vigorously opposed this change, fearing that it could limit some avenues for financial speculation on carbon. A leaked draft of the proposed Directive suggests that the Commission may not side with the lobbyists, although some key exemptions remain in place. Most notably, leaving it to national authorities to set “position limits” would be ineffective: the majority of trades pass through the UK, which is opposed to this concept and would not implement it in any meaningful way. The restriction to trading on “own account” fails to capture speculation engaged in by energy companies, which are the largest players on the carbon market.<br /><br />More fundamentally, though, restrictions on speculation shed critical light on the flawed purpose of the carbon market in the first place: it introduces speculation by design, undermining the stated objective of long-termer clean investment decisions. To really address these issues requires bolder steps to de-financinalise climate policy and move away from the carbon market model.Oscarhttp://www.blogger.com/profile/07113835742745351419noreply@blogger.com0