Here is a list of some topics that I feel should be pursued whilst the diplomats continue to negotiate a climate change treaty in Copenhagen this December. These are practical measures that would build technical confidence and social understanding in anticipation of the time when an agreement between the different interests can be concluded. I would not expect this to occur much before 2011.
- Encourage transitioning economies and developing countries to develop national or regional emission reporting schemes. This will assist a more factual assessment of what is occurring globally. For now mandatory reporting by industrial users is limited to the EU, with the US system due to commence in 2010. Canada and Australia have voluntary programs, but without the means to record across the world, it will be difficult to implement reduction plans when they are agreed.
- Task an agency to develop an international classifications standard for the instrument systems needed to meter and report emissions of greenhouse gases. It is an essential requirement for the future operation of any system (be it cap and trade or a carbon tax) that the methods and the equipment used be capable of recording in real time and to a fiscal standard. This is presently not the case for the emissions trading system used in Europe - see earlier article - whereas there is some expectation that metering standards set by the US Environmental Protection Agency (EPA) for use with its Mandatory Reporting Rule (MRR) will be more robust.
- Identify what kind of offset system could be deployed to replace the Clean Development Mechanism (CDM) and Joint Implementation (JI) schemes when these expire in 2012. These were set-up under the Kyoto Protocol to assist Annex I countries offset some of their industrial emissions, but it was not intended that they should be used as a mechanism to avoid real investment in lower carbon technologies. There is now a fresh concern that the future operation of a market could be seriously distorted if for example, nations such as those in the former Soviet Union are allowed to market emission quotas unused from the 1990's. In practice, it is also extremely difficult to verify that real reductions in carbon emissions have occurred. This creates opportunities for fraud in the offset market.
- Sponsor research to develop new financial reporting and accounting methods. These include activities in the following typical areas:
- Complete work on an international standard to account for Scope 3 emissions.
- Conclude deliberations on how to account for the value of emission permits in a way that does not distort a process that should encourage investment in lower carbon technologies and infrastructure. Experience these last few years has shown that most organisations in receipt of permits have simply traded the value of such intangible assets via the profit and loss account. There is a major risk that this process will continue once the US implements a cap and trade system and the international financial sector's huge monetary resources are brought to bear on the market.
- Develop corporate disclosure standards for greenhouse gases
- Develop tools that will allow us to make informed life-cycle cost comparisons between competing lower carbon technologies.
- Raise the quality of the debate in the media so that people in the developed world can begin to understand why it may be necessary to restrict the emissions of carbon dioxide and with it, potential changes to their lifestyles. In this regard, the public is still extremely unwilling to sanction the deployment of technologies such as wind turbines, nuclear power or new coal fired power plants that would serve to reduce emissions
It is to be hoped that people will understand that the wealth of nations is dependent on the consumption of energy, the major part of which involves the combustion of hydrocarbons that release carbon dioxide into the atmosphere. Developed nations have been responsible for the lion's share of these emissions over the last two hundred years (see figure below), but more recently have externalised a portion by using nations such as China to manufacture the goods they consume. The moral consequence of this, is that the developed world does need to take a lead in cutting global carbon emissions. At the same time, developing nations do need to concern themselves about the release of greenhouse gases and to start thinking about how they might frame economic development in ways that are not so heavily reliant on the consumption of hydrocarbons and the manufacture and utilisation of cement.
Kyoto Protocol Countries
Source: Point Carbon Carbon Market Overview
NB: Options for trading offsets under the Kyoto protocol include:
+ CDM projects generate Certified Emission Reductions (CERs)
+ JI projects produce Emission Reduction Units (ERUs)
+ Annex B countries can trade Assigned Amount Units (AAUs)
Annual Global Emissions of Carbon Dioxide from Combustion
of Fossil Fuels and Production of Cement: 1751-2006
Source of data: Carbon Dioxide Information Analysis Center (CDIAC.org).
NB: This graph excludes details of CO2 emissions associated with change of
land use, including deforestation.
Items that will have to wait
It seems fair to assume that agreement on the following points will not be completed at Copenhagen. The important thing is that nations are talking and negotiating a way forward on these topics:
- Binding emission reduction targets for developed nations.
- Actions by developing nations to slow the growth rate of their emissions.
- Access to the technology developed by the richer nations.
- Financial assistance to help poor nations adapt to the effects of global warming.
- The development of governance structures to ensure countries keep their promises.
- Agreement on a long-term global emissions target.
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