UK Carbon Budget: more cynicism about offsets

The UK government has set "the world´s first carbon budget" which includes a worthy, if tautological, aim to meet its domestic emissions reductions obligations domestically.

We are told that it will "Aim to meet the carbon budgets announced today through domestic action alone, and consistent with this, setting a zero limit in the non-traded sector on offsetting through international credits for the first budget period."

The Department of Energy and Climate Change (DECC) had previously commissioned an "impact assessment" of the EU Climate and Energy Package. It is written in dull economese, and with lots of questionable assumptions. But on the use of these carbon offsets it makes an interesting point:

101. Analysis of the effort required in the non-traded sector presented in Section 3.3 shows that under the projected emissions scenario modelled there is sufficient negative-cost abatement potential available to meet the anticipated shortfall. This suggests that there would be no requirement to use project credits, as sufficient abatement at lower (negative) cost is available. Therefore, under this, there would be no need to use project credits, and subsequently no additional cost of constraining their use

(emphasis mine)

In other words, the UK government is spinning "a restriction on the use of offset credits in non-traded sectors" as something pro-active, but its own study finds that "there would be no requirement to use project credits" anyway.

Why? The impact assessment talks of cost-neutral efficiency savings or those that result in net gains - and it is certainly true that many such possibilities exist (which begs the question: why are business decision makers so sclerotic that they don´t even make climate change measures that would make them money?)

There are also a couple of more basic reasons. The "first budget period" for the UK carbon budget runs to 2012. The UK is well below this target - and European Environment Agency data shows that the main reason for this is basically that energy production saw a shift from coal to gas in the early 1990s as a result of coal mines closing.

Second, it is also worth noting that offsetting is still very much a practice within sectors that are included in the EU Emisions Trading Scheme. As the National Audit Office explains,

UK installations can buy allowances from participants in other EU Member
States and may also utilise up to 91 MtCO2 of project credits over the five year period, which represents 60 per cent of the emission reduction effort required in Phase II.

Project credits are offset credits. Loosely translated, more than half of the UK´s emissions reductions obligations can be met outside the EU, and the remainder could be met elsewhere within the EU (where surplus credits are plentiful thanks to post-1990 economic restructuring in Central and Eastern Europe, and the current recession). These figures also need to be viewed in a context of a changing industrial structure, where the tendency has been towards de-industrialisation (meaning that more of the UK´s emissions are "outsourced" to the global South), and in a context where international aviation (although this is finally changing, in part) and shipping are simply excluded altogether from the figures.

So while the UK talks of a "revised target to reduce emissions to at least 34% below 1990 emissions by 2018-22," the actual figure is far lower.

(A revised, article-length version of this post can be found here)

Ad Hoc Working Group on Kyoto Protocol update, aka how to expand carbon markets and count emissions increases as reductions

I´ve discovered the latest cure for insomnia, which is freely downloadable in the form of the Chair´s summary of the "AD HOC WORKING GROUP ON FURTHER COMMITMENTS FOR ANNEX I PARTIES UNDER THE KYOTO PROTOCOL," Seventh session, Bonn, 29 March to 8 April 2009

(Incidentally, the Chair in question is Harald Dovland who until fairly recently had a consultancy on carbon markets for Poyry plc.)

Don´t fall asleep just yet, though, because it´s a real shocker! Pretty much every half-baked scheme for expanding carbon markets is under discussion - a bore for ordinary climate-concerned citizens, but a wet dream for carbon traders.

At present, there´s fairly broad agreement that the Clean Development Mechanism (CDM) isn´t working (International Rivers have produced a good summary of how and why it fails, and you´ll also find more materials at www.carbontradewatch.org). When you´re in a hole, the best advice is normally to stop digging and climb out while you can. Unfortunately, the solutions being considered by the UN amount to throwing away the shovel and rolling in a JCB... taking the very worst elements of the current system, such as the unknowable fictions of "additionality," and generalising them. The net result would be a massive expansion of carbon markets that would, in the process, redefine all manner of hypotheticals and even pollution increases as "emissions reductions."

What follows is a point by point summary, with annotations and key clauses pulled out

Sinks, nukes and Carbon Capture and Storage in the CDM?
This first section has to do with debates on what can additionally be included in CDM - possible reforms to LULUCF provisions (land use, land use change and forestry); and a debate on the inclusion of Carbon Capture and Storage (CCS) and nuclear power in the Clean Development Mechanism (CDM). This is bad enough, potentially, although the more troubling parts are what follows...

Sectoral carbon markets
Like all of what follows, these are not agreed measures, but simply what is under discussion. So it is not too late to kick up a stink about it.

However, if sectoral carbon markets come into existence, this is what is proposed:

12. A sectoral crediting mechanism is established. A non-Annex I Party may propose to the CMP a crediting target for emissions or removals within a defined sector to be achieved through national actions. Reductions in emissions by sources in the sector below the crediting target, or enhancements in removals by sinks in the sector above the crediting target, shall result in the generation of credits which may be used by Annex I Parties to meet their emission commitments under Article 3, paragraph 1.

In other words, a target for emissions within a specific sector in the South can be treated as and traded for a reduction in industrialised countries. But there is no provision in this or the subsequent paragraphs for this to actually be a reduction - it is simply decided to be so by an expert group that reports to the CMP (which is the Meeting of Parties to Kyoto Protocol).
This potentially allows for a massive expansion of carbon trading beyond the "project-based mechanisms"

How is the target set? It explains...

14. A crediting target shall be [set below the level of projected anthropogenic emissions by sources of GHGs within the sector boundary or above the sum of the projected changes in carbon stocks in the carbon pools within the sector boundary] [as a carbon intensity target below the level of the projected carbon intensity of emissions by sources of GHGs within the sector boundary].

In other words, a reduction may be defined as anything below projected emissions... in essence, generalising "additionality" to whole sectors, while at the same time removing the need for even a cursory project-by-project assessment. Alternatively, and even worse, the target could be an "intensity" target, which is actually a ratio of emissions relative to economic output (expressed as GDP). The key point with the latter is that it is not absolute, so if GDP grows then the allowable amount of emissions grows with it... meaning that increased emissions can be traded as "reductions" (!)

15. The sector boundary for a sectoral crediting activity shall encompass all anthropogenic emissions by sources and removals by sinks of GHGs that are reasonably attributable to the defined sector.

Here sinks are treated as emissions reductions - in other words, what counts are not actual emissions but the net effect when the offsetting of tree-sinks, gas capture (and CCS, if is allowed, which is not just for coal but is also being pushed for major industries like steal).

Targets would be determined on a country-by-country basis.

Crediting on the basis of nationally appropriate mitigation actions

24. [The baseline for a NAMA registered as a CDM project activity shall be the scenario that
reasonably represents the anthropogenic emissions by sources of GHGs within the NAMA boundary, or the sum of the changes in carbon stocks in the carbon pools within the NAMA boundary, that would occur in the absence of the project activity.] [A portion of verified emission reductions that result from a NAMA may generate NAMA credits.]

Square brackets in these kinds of negotiations mark out those parts of the negotiating text that are not agreed, typically the more contentious text.

The NAMA proposal is another means of generalising the fiction of "reductions" beyond simply the project-based mechanisms. At the moment, each project has to tell a story of how emissions would have increased if the project didn´t exist, and show that carbon financing is necessary for it to happen. The problem is that no one knows the future, and all manner of implausible fictions can be elaborated ("we would have burnt coal if we didn´t burn biomass," etc.). This type of scheme generalises that same flawed Enron-accounting, and abstracts even further from the actual local context. Now, a story of how a whole sector in a whole country would otherwise develop can be taken as the basis for calculating reductions...

This proposed "NAMA crediting" seems to incorporate existing programmatic CDM (pCDM) proposals, as well as overlapping with the sectoral mechanism described above. Some of how it might work is rather obscure though.

The ways in which credits might be generated is listed as follows:

29. [Types of NAMA that can generate NAMA credits include but are not limited to:
(a) Sustainable development policies and measures, economy- or sector-wide mitigation
programmes, and mitigation activities and projects;
(b) Low-carbon development plans and programmes;
(c) Sector-based mitigation actions and standards;
(d) Actions under paragraph 1 (b) (iii) of the Bali Action Plan;
(e) Technology deployment programmes;
(f) Relevant standards, laws, regulations and targets at a national or sectoral level;
(g) Voluntary cap-and-trade schemes in non-Annex I Parties.]

For example, it is not clear at what stage carbon credits would be issued for "plans and programmes" - at the point at which they are drawn up, or at the point at which they have been implimented?

Here, as elsewhere in the document, social criteria seem weak or non-existent.

Encourage the development of standardized, multi-project baselines

33. [The CDM Executive Board] [A dedicated body constituted by the CMP and operating under its authority] [One or more dedicated bodies established by the CDM Executive Board and operating under its authority] shall define standardized baselines for specific project activity types and specific sectors or subsectors under the CDM by establishing parameters, including benchmarks, and procedures and making them available for [mandatory] [optional] use by project participants and designated operational entities (DOEs) in the determination of additionality and the application or development of baseline methodologies.

In other words, the new criteria for generating carbon credits will be even more lax, in that they would only need to be judged according to generalised and context-free "benchmarks"

Improve access to clean development mechanism project activities by specified host Parties
and
Promote co-benefits for clean development mechanism projects by facilitative means

These two sections address how to waive the rules for certain (to be specified) countries to encourage more carbon market projects there.

Various exemptions are considered. These include waiving "additionality" criteria and a fast-track process for projects.

The co-benefits section is rather confused, in particular this:

46. A DOE shall, as part of its validation of a project activity, confirm [that the designated national authority of the host Party has confirmed that its stipulated co-benefits are demonstrated by the project activity] [that the proposed project activity demonstrates one or more of the following co-benefits:
(a) Energy efficiency;
(b) Technology transfer;
(c) Environmental services such as air pollution reduction, improvement of water quality, proper treatment and reduction of waste, conservation of biodiversity, and management of hydrological resources;
(d) Poverty alleviation;
(e) Economic growth;
(f) Social benefits;
(g) Strengthening human and institutional capacity.]

This seems truly bizarre, and I can´t fully make sense of it. The way it reads, it would mean that a DOE (Designated Operational Entity, ie. consultancies like DNV and Tuv Sud) could verify that a project contributes to "economic growth" (criteria (e)) and, on the basis of this, authorise that other criteria for the project be waived. The result would be that projects leading to "economic growth" in LDCs (say, expansion by a large TNC / extractive industry) could be bought and presented as the same thing as "emissions reductions" in the North?!?!

Introduce multiplication factors to increase or decrease the certified emission reductions issued for specific project activity types

2+2 = 5

Joint Implementation

JI relates mainly to former Soviet countries, although if you look at the JI pipeline (database of current projects) in conjunction with a map you´ll see that some of the largest registered projects are located in the former West Germany.

They are considering including nuclear in JI.

Emissions Trading

This section relates to Annex 1 countries, ie. most of the rich industrialized ones.

Much of this is a reiteration of what went before, with the aim of rendering emissions trading consistent with the sectoral proposals in relation to CDM.

What it also proposes, though, is that a means be established for "Non-Annex I Parties" to directly involve themselves in cap-and-trade schemes, which opens the door (without need for further international agreement) for the linking up of these in order to create a global carbon market

60. Non-Annex I Parties may participate in emissions trading on the basis of agreed emission targets established for sectors. The emission target for a sector shall be set below the level of projected anthropogenic emissions by sources of GHGs within the sector boundary, or above the level of projected enhancements in removals by sinks of GHGs within the sector boundary, and shall be based on the most recent available data. The sector boundary shall encompass all anthropogenic emissions of GHGs that are reasonably attributable to the sector in question.

Again, sinks are treated as the same as reductions

61. A participating non-Annex I Party shall be issued with emission allowances corresponding to its sectoral target. Parties may devolve emission targets and allowances to legal entities.

"Legal entities" is the polite term for corporations. It is not yet clear what the implications of this clause might be. Any suggestions?

Introduce emissions trading on the basis of nationally appropriate mitigation actions

66. [CERs] [Credits] that are generated on the basis of a [NAMA registered as a CDM project activity] [NAMA] may be transferred and acquired under international emissions trading pursuant to Article 17.9

A CER is a CDM reduction unit. This clause is a legal provision to ensure that the whole vast swathe of new "sectoral" credits are "fungible" (ie. exchangeable with) reductions in the Annex 1 (rich, industrialised) countries.

Introduce modalities and procedures for the recognition of units from voluntary emissions trading systems in non-Annex I Parties for trading and compliance purposes under the Kyoto Protocol

69. Where a national or regional emissions trading scheme implemented on a voluntary basis by a non-Annex I Party or non-Annex I Parties meets specific eligibility requirements, emission allowances [and other units] issued under the scheme may be transferred and acquired internationally, and may be used by Annex I Parties to meet their emission commitments under Article 3, paragraph 1.

Please, somebody, send the UNFCCC a dictionary with the definitions of the words "mandatory" and "voluntary" highlighted...

Relax or eliminate carry-over (banking) restrictions on Kyoto units

All possible banking options (except no banking) are on the table, including this: "There shall be no restrictions on the carry-over of Kyoto units to a subsequent commitment period."

The problems with this are illustrated by what could already happen under the first commitment period (to 2012). Currently, through a combination of “hot air” credits (emissions reductions from Ukraine and Russia due to industrial decline and restructuring since the 1990 baseline established by the Kyoto Protocol) and the US non-ratification of Kyoto, there is likely to be a significant surplus of Assigned Amount Units (AAUs, Kyoto reduction units) by 2012. If these are carried over, it would represent a serious loophole in any post-2012 scheme – allowing historical reductions as a result of economic restructuring in the former Soviet bloc, and over-estimations based on the behaviour of George Bush, to be counted as equivalent to future domestic actions by the UK and other Annex I countries...

Other possible improvements to emissions trading and the project-based mechanisms under the Kyoto Protocol

There´s more to come! This last section contains a list of other live issues, some of them positive (restrictions on CDM, JI, etc), some negative, a number contested as to whether it is within the mandate of the AWG-KP to discuss them.

There are a few worrying ones in there too. These include a range of proposals for JI similar to what is detailed for CDM. Perhaps worst of all is this:

III. Emissions trading
A. Eliminate restrictions on the trading and use of certain Kyoto unit types under national and regional emissions trading schemes

In other words, a legal provision that would prevent discrimination on the types of units. For example, in the EU Emissions Trading Scheme, the use of CERs originating from 20MW large scale hydroelectric dams is restricted, etc. The above proposal would seek to overturn that decision.

And that´s all folks. Tune in next time... another round of UN climate negotiations takes place in June 2009 in Bonn, Germany.

Moscow: a worm-hole and a Red Rectangle

Don’t try looking for a shower in Moscow. Our mission to get clean cost us four of our eight hours in the city, via a non-responsive hostel (thanks, Lonely Planet) and an over-priced taxi ride to an extortionately priced hotel… where a room booking for a shower would have required taking out a (non-sub-prime) mortgage. Sometimes when you get to a new city the whole experience is so confusing that it can take several hours of wandering endlessly to adjust. This was the Moscow worm-hole: a parallel reality where metros only ran in the wrong direction, and maps consistently failed to match up to places on first attempt. The fact that the taxi played Hotel California and Moon River added to the sense of things being curiously out of time.

Eventually we gave up on the washing plan, checked in our left luggage at Yaroslavl station (where the Trans-Manchurian and other Trans-Siberian trains leave), and headed to Red Square – or ‘Red Rectangle’, as one of my friends more accurately dubbed it. We arrived at night to find the building opposite the Kremlin lit up like a Christmas tree, which somewhat spoils the post-Soviet ambiance of the whole scene. That building is now a shopping centre, with a ‘Cartier’ store standing directly opposite Lenin’s tomb. The old man must be turning in his mummified grave.

3 October

Amsterdam to Moscow: borders and bogies

The journey started from Amsterdam (where I live) on 1 October with the relatively short 6 1/2 hour train journey to Berlin. From there we travelled onwards to Kiev. One thing you quickly learn to appreciate is how small Western Europe is – with Berlin its outermost border. We left the Amsterdam train at the city’s impressive new Hauptbahnhof (central station), but the Kiev train starts at the distinctly less fashionable Gesundbrunnnen. The surly, square-hatted, blue-uniformed train assistants lining the platform welcomed us to the former Communist bloc.

As the train crossed the Polish border, we passed a fleet of Volkwagen vans being imported into Germany. The train passed through Poznan and Warsaw on that first night, and when I awoke it was a beautiful autumn day in the countryside of south-east Poland.

Not long after we passed another border – into Ukraine. The border police there scan your passport with expensive-looking EU-funded equipment (by contrast, the Russian and Chinese officials later in the trip just stand you up and stare at you long and hard). The train then crossed no man’s land and back again, reversing and entering a train shed where the bogies are changed. I have no idea why they are called this, but it refers to the whole undercarriage of the train. As we remained in our carriages, the train was taken apart, with each carriage lifted up to have one set of wheels rolled out and another set rolled back in.

Aside from the curiosity of the train-lifting show, I marvelled at the administrative logic that presumably underpins this whole exercise. If the point is passenger convenience, then surely changing trains rather than a long border stop would be preferable. If the point is practicality, then I would have thought that adjustable wheels or twin sets of wheels that could be raised and lowered should be more convenient. So I’m tempted to think the whole scheme – which is repeated on the Russia-China border – has been designed by committee, then entrenched by years of repeated practice until that is just the way these things are done.

The Ukrainian countryside was also bathed in autumn sunlight and, aside from discovering courtesy of two British travellers that Chernobyl is now a tourist destination, the remainder of the trip to Kiev passed uneventfully.

We arrived late at night, but to a busy station whose grandeur showed no signs of fading. English got us nowhere with the station staff here, or in Moscow, but we managed to book an onward sleeper train leaving shortly after midnight. The attractive wooden carriages ushered us comfortably to Moscow, where we arrived the next afternoon.

1 to 3 October.

Russia before Russia, and the perils of ‘ethical travel’

My first experience of Russia was in The Hague. We were there to get visas as the Russian consulate, an anonymous doorway in the city’s embassy district. A man in a shiny suit opened the door and said nothing, but his eyes were saying – in an accusatory tone – what do you want? We waited for some words… and waited, the silence being a game of who would flinch first. ‘Is this the consulate?’ we flinched. Our reaction produced no words from our Russian companion, but he reached behind him and thrust two visa application forms into our hands. He requested a photo, monosyllabically (quite an achievement for a two syllable word). We didn’t have them. His stare was eloquently unimpressed. Eventually we managed to communicate that we simply want to ask some questions about visa applications, and were ushered in. The woman at the counter was exceedingly helpful and friendly.

One other vignette to set the tone for my trip: it almost didn’t happen. The ‘ethical’ travel agent I was advised to use for bookings to the conference, who then claimed to have booked my trip, called me back after I was told I had a confirmation and unilaterally cancelled it: ‘the itinerary was too complicated, and how about I take a plane instead?’ The delay killed off any plans to travel via Mongolia, and confirmed that I would bypass Belarus, since getting the visas for those two countries plus Russia and China would prove too time consuming. So in the end I bought up the tickets separately, with the aid of seat61, Amsterdam station, a Trans-Siberian specialist (Trans-Sputnik in The Hague), the China International Travel Service (for the return leg - rather delightfully for this age of streamlined bureaucracy, you collect the tickets from a filing cabinet on the 8th floor of a Beijing skyscraper), a much improved Rail Europe website (for my final leg from Italy), and the rest en route. In the meantime, I gained two wonderful travel companions for the outward leg.

ps. at some point I will get around to augmenting this blog with pictures – and maybe even some videos.

To Beijing and back by train: why bother?

Why did I just travel to Beijing and back? By train? Via Athens? I have, by now, several well-rehearsed short answers to this question. Climate change. Curiosity. A need to escape the internet. A book project to work on. None of these quite captures the whole picture, but each carries a grain of truth. First things first, though, I simply needed to go to both places for work – the Asia Europe People’s Forum (www.aepf.info) in Beijing, and an anti-corruption conference in Athens. So why not travel over land? ‘It seems a waste of time’ is the most obvious comeback – but it isn’t as if you enter a state of suspended animation as soon as the train door slams shut, as this blog will hopefully explain. Nor is , it just a ‘tourist outing’. There are many pleasurable ways, I’m sure, to do this trip touristically, but non-stop is unlikely to be the best of them. In fact, the Trans-Manchurian trains themselves are distinctly tourist-free, at this time of year at least: on the 13 carriages (give or take the odd attachment and detachment) that travelled from Beijing to Moscow, a grand total of three people – including myself – were not Russian or Chinese.

To start with the obvious: if you work on climate change, you should try not to fly. This is true, but trite. In spending any time tracking global processes, you are likely to end up with a hypocritically large carbon footprint (this is probably not the occasion for me to discuss how many ineffectual air miles are chalked up in maintaining a ‘global civil society’) and the best way to mitigate this is simply to think carefully what trips you really need to take, and which can easily be skipped. Having a sense of your own replaceability can definitely help too. But in the end, that still leaves an unhealthily large share of travelling – which, if you consider that a collective effort is necessary to achieve structural changes, hopefully outweighs the negatives of individual practice. Beyond that, I feel strongly that flying shouldn’t be the default instinct – as it is still is for many ‘activists’, even on short European trips. There are several ways to travel over land or sea, and www.seat61.com is an indispensable starting point for these (although I am still looking for advice on how to cross the Atlantic cheaply without breaking the bank).

The other reasons – writing, escape, meetings – I’ll come to as this story progresses. The one I keep coming back to, though, is to gain a sense of perspective. Travelling across Europe, then through the world’s largest country and on to the capital of the world’s most populous one, gives a sense of scale that no A to B tin-can hop from airport to airport can match.

World's largest biofuel plant will not be veggie friendly

I just finished an article on agrofuels for the next Red Pepper... but since there are a lot of nuggets that I left out I may post a few here. I started with a theme of "what are the world's largest agrofuel producers?" That changed a lot, mainly because there have been several recent policy developments to report... but in the process I found a few interesting things.

Here's one: the Finnish-based Neste Oil is currently developing the world's largest biodiesel refinery in Singapore. Opening in 2010, it will process 800,000 tonnes a year. This will be joined by a similar-sized refinery in Rotterdam by 2011.

Both plants will process the company's NexBTL blend of biodiesel. This is made from a blend that includes palm oil. The Singapore plant is strategically located near production sites in Indonesia and Malaysia... which are hugely destructive, since much of this is produced on recently deforested land. In Indonesia's Riau province, which I visited last year, the land is a deep peatland - which makes the whole process massively damaging in climate terms, because peat is a rich carbon sink. Aside from palm oil, the blend is made from rape seed oil and... vegetarians beware... animal fat?!

A second nugget of info, which may be of interest to Premier League football fans.... Dubai Investment Group, who tried but failed to by Liverpool FC, have major investments in palm oil in Malaysia. They're still after a Premier League club...