With such a small portion of existing water being fit for consumption, there is no need to further justify the arising need for water conservation and purification. With the world population growing at an uncontrolled rate, the pressure on water resource has been mounting, further, fuelling the demand for water conservation practices.

With the social awareness for water conservation on a rise, more and more companies are entering into this arena, all set to offer water-efficient technological interventions that would bolster the water conservation endeavors across the globe. Today the solutions involve not merely water-efficient equipment but also elaborate systems that slash water usage and wastage.

Some studies classify water conservation activities into pre consumer and post consumer based approaches. Pre consumer based approaches mainly entail enhancing the efficiency of water extraction, storage and conveyance. Generally a huge amount of water is wasted either through evapotranspiration or seepage during transport or transfer from the point of extraction to the point of usage. Using technologies that can minimize losses such as reducing evaporative losses from reservoirs, seepage losses from canals and water application losses prior to the water being used for economic purposes, can conserve a vast amount of water. On the other hand, post consumer approach mainly involves efficient usage of water for minimum wastage and maximum utilization. [2]

One such post consumer technology is called recycling which basically means utilizing water previously used for one purpose again in a different application, before it ends up in a natural waterway or aquifer. Recycling can help in increasing the productivity of each litre of water. Recycling of the cooling water is quite existing in many industrial plants. Some water-efficient industries process water a number of times, and treat it before discharging the waste water. Recycling helps in cutting the volume of waste water produced and simultaneously lowers the wastewater treatment costs significantly. [3]  

Water can be recycled from different sources like rainwater, stormwater (rainwater that has reached the ground), greywater (from the bath, shower, basin and kitchen) and treated effluent (from a sewage treatment plant). The water recycled from such sources when treated, are deemed fit to be used for several purposes like irrigating grazing land and crops, in horticulture, industrial processing, in residential dual pipe schemes, and greening the public and recreational spaces. [4]

Several interventions can be introduced to improve the water consumption of the residential or commercial complexes.

• An important one can be water metering, done through installed meters. The idea behind water metering is that measurement facilitates water management and encourages consumers to conserve water. Flushing of toilets contributes to above 30% of domestic water use. Low-flush toilets, mandatory in new installations under UK’s Water Supply (Water Fittings) Regulations 1999, lowers water use through flushing by 35%. However, ultra-low-flush toilets, operating on a 4.5 litres flush compared with a 6.4 litres dual flush, can cut down consumption by another 15%.

• Another technology which lowers water consumption for sanitary purpose deals with low-water or waterless urinals. Urinals operated without proximity sensors flush every 20 minutes, every day and with sensors flushes can be reduced by 50%. Low-water urinals contain a retrofit cartridge lined with bacteria and enzymes that removes odours between flushes and can bring down the number of flushes to 10 a day. Waterless urinals typically use low-density oils to provide a seal against odours.

• Water conservation fittings offers options like spray taps, low-flow shower heads, etc. In public buildings, sensor-controlled taps is a preferable option to cut consumption.[5]

In residential sector, water for clothes washing is the second largest use by volume. The installation of a high-efficiency washing machine can help in achieving an average reduction of circa 40% in the wash volume, along with a large reduction in energy consumption. Similarly, water and energy conservation can be enjoyed by using a high-efficiency dishwasher. It is further advisable to use the dishwasher and washing machine with full loads only, to have the fewest wash runs necessary.[6]

Sustainable urban drainage systems further offer a plethora of opportunities for rainwater capture and storage in addition to managing storm run-off. Several technologies exist today but the key technologies include cellular storage, which can be used as a loadbearing rainwater capture tank as opposed to more conventional tank construction.[7]

Although a wide platter of technological and behavioral interventions are available which can help achieve water conservation. However, what is lacking is the basic understanding and real motivation to adopt those in our lives and daily operation, in case of industrial sector. In a country like UK, where water scarcity is still an alien issue, infusing this basic understanding is the biggest hurdle to be crossed if sustainable water usage is to be achieved.  

The Green Deal also has an underlying caveat, ‘The Green Deal’s Golden Rule’, which is considered the backbone of the scheme. The rule clearly demands that the energy savings a property makes in the 25 year period after the adoption of energy efficiency measures must equal or exceed the entire initial cost of installing the improvements. Furthermore, the rule dictates that these improvements can only be carried out by accredited ‘Green Deal Installers’ so the owners are saved from investing money in measures that have low potential savings.²

How Does the Scheme Work?

To initiate the Green Deal process a consumer (a property owner or renter) must have a Green Deal Assessment (GDA) carried out on their property by an accredited Green Deal Assessor or advisor. The Green Deal Assessment is based on an EPC (Energy Performance Certificate) which includes information about a property and its energy use. The assessment also analyses characteristics of the occupants and their styles of energy use. All this information is included the Green Deal Advice Report (GDAR), illuminating the potential improvements and the expected energy savings.³

Once the consumer receives the GDAR, they can approach a Green Deal Provider. This provider recommends a bundle of measures with associated costs, and on consensus, arranges an accredited installer to install the decided energy efficiency measures. Once the installation work is done, the Green Deal provider notifies the consumer’s energy supplier, who then starts adding a Green Deal charge to the consumer’s energy bill. The energy supplier then passes the Green Deal payment back to the Green Deal provider. The Green Deal Charge stops being levied on the energy bills once the payment for the installations is completed.⁴

Around 45 different improvements are currently eligible for the Green Deal, shown in the table below.

The UK Government has set up the not-for-profit Green Deal Finance Company to offer financing to consumers via the providers and has a set interest rate of 6.96%. However, eventually, the rate charged by the providers is different and varies between 6% and 9%. Each Green Deal plan also has a set-up charge of £63, and an annual operating charge of £20⁵. This rate of interest has not been well accepted by the citizens. Estimates have placed the average at about 7.5%, however, householders may end up spending much more depending on the loan amount and time period for which it has been borrowed.⁶ According to an estimate based on a £5,000 loan with an interest rate of 7%, householders would need to pay £10,600 over 25 years and would therefore eventually require annual energy efficiency savings of £425 to manage their annual repayments.⁷

Illustrating with an example, DECC explains that if someone is residing in large detached property off the gas grid, gets solid wall insulation (external, type 2) and loft insulation installed under the Green Deal, then the entire work would cost £10,193. DECC projects that the work would result in a saving of £1,388 a year. But considering an interest rate of 7.5% and a 20-year repayment period, the annual Green Deal plan repayment would be merely £1,000, resulting in an annual net saving of £388.⁸

In order to further incentivise people to take up the Green Deal, the government has also introduced a cash back incentive scheme (which is a first come, first served offer) where the early adopters can claim cash back from the Government. The Department of Energy and Climate Change has earmarked £125 million for the cash back scheme.⁹

Despite all this, since its launch, the Green Deal has been a subject of heated discussion in the UK with the deal facing much censure for varied underlying caveats that form the very basis of the scheme. The main point of controversy is that the loan is attached to the property. Thus, if the property is sold, then the debt is passed on to the new owner. This condition really raises questions on the saleability of a property. The high interest rate is already a bone of contention. Another dampening point is the early-payment charges that can be levied in order to compensate the provider with the loss of interest that would have accrued over time if the consumer decides to pay off the loan early.

Although it is very easy to lash out a vehement criticism, it is wise to consider the tremendous environmental potential of the Green Deal scheme. The UK currently has some of the most inefficient housing stock in Europe with 19% of UK householders spending over 10% of their income on heating¹⁰. The Green Deal can act as the panacea to this pervasive issue and herald an energy efficiency revolution in UK.

References

1. http://www.energysavingtrust.org.uk/Take-action/Find-a-grant/Green-Deal-and-ECO
2. http://www.greendealinitiative.co.uk/about-the-green-deal/the-green-deals-golden-rule/
3. http://www.greendealinitiative.co.uk/2013/02/green-deal-offers-cash-back-for-early-adopters/
4. http://www.thegreendealhub.co.uk/what-is-green-deal/
5. http://www.guardian.co.uk/money/2013/jan/28/green-deal-home-improvement
6. http://blog.cat.org.uk/2013/02/06/the-green-deal-what-you-need-to-know/
7. http://www.telegraph.co.uk/finance/personalfinance/consumertips/household-bills/9817638/Green-deal-Only-two-sign-up-despite-1000-cashback.html
8. http://www.guardian.co.uk/money/2013/jan/28/green-deal-home-improvement
9. http://www.greendealinitiative.co.uk/2013/02/green-deal-offers-cash-back-for-early-adopters/
10. http://blog.cat.org.uk/2013/02/06/the-green-deal-what-you-need-to-know/

Nanotechnology comes with a promise to develop innovative products and improve the performance of existing ones across sectors. The technology offers interventions in a variety of domains like water, energy, health, agriculture and environment.¹

Green nanotechnology is all about developing products and associated processes that are good for the environment. The green products of nanotechnology have either direct or indirect environmental applications. Direct environmental applications include monitoring using nano-enabled sensors, remediation of hazardous waste sites with nanomaterials, or treatment of wastewater and drinking water with nanomaterials, among others. On the other hand, indirect environmental applications result in energy savings linked with either lighter nanocomposite materials in transport vehicles or reduced waste from smaller products.²

The intersection of nanotechnology and clean technology is increasingly important due to pervasive global issues of climate change, increasing energy demand and environment management. The increasing contribution of the technology in this domain is signaled by the continuous rise in the number of nano-enabled cleantech patents.

As per the ‘‘Roadmap Report Concerning the Use of Nanomaterials in the Energy Sector’’, a report funded by the European Commission, nanotechnology showcases the greatest potential for energy sector improvements including energy conversion, solar photovoltaics, hydrogen conversion and thermoelectric devices. ³

Nanotechnology in the field of solar PV systems has helped in slashing the manufacturing and installation costs. Several solar PV technologies based on ‘nano-science’ have penetrated the market, including Crystalline and Amorphous Thin-Film Solar Cells, Cadmium Telluride (CdTe) Composite Nanocrystal Cells, Copper Indium Gallium Selenide (CIGS) Thin Film Cells, Organic Graetzel Cells and Polymer Solar Cells. ⁴

Solar technologies are currently based on silicon which is relatively expensive, leading to high prices. In fact, cost, rather than its low efficiency, has been a greater deterrent for investors to adopt solar technologies. Organic thin film solar cells, produced on a polymer substrate, are more economical substitute in this case.⁵

Energy saving measures has not only leaded to just fuels savings, but has also helped in abating pollution linked to energy production. Nanotechnology has facilitated energy savings by offering several technological interventions. Ultra-low density, transparent and with remarkable insulating properties, aerogel, a nanostructured material, posses 40 times more insulation power than fibre glass. As a result, it is used in structures ranging from houses and commercial buildings to oil pipelines and space probes. Technological improvements over time have made this material more commercially viable.⁶

Lighter, more resistant, and stronger materials, developed using nanotechnology have led to lower emissions and energy savings. Vehicles constructed from nanocrystalline ceramic composites such as zirconium, silicon nitride and silicon carbide alloys, or from plastics reinforced with nanoparticles, are much lighter and stronger, consume less fuel, save more energy, and emit fewer pollutants. Furthermore, nanotechnology has contributed major improvements in Light Emitting Diode (LED) technology through innovations like Quantum dot LEDs and Organic LEDs, which are far more energy efficient than any ordinary illuminating device. ⁷

Despite having such overwhelming advantages and future opportunities, the commercialization of nanotechnology faces several barriers, which hinder its wider application and adoption, especially at a commercial scale. Some of the obstacles include:

• Lack of proper design guidelines for researchers in initial discovery phases of green nanoscience
• Many green nanomaterials require new commercial production techniques, which increase the need for research and greater coordination between the industrial and research communities
• Green nanotechnologies often face higher regulatory barriers than existing or conventional technologies
• Lack of clarity over the end-market demand, especially since there are only a limited number of commercial grade products that can be compared to conventional materials in terms of performance ⁸

Thus, the need of the hour is to create a more favorable policy environment through collaborations between public and private research sectors, in order to allow the world to benefit from the untapped potential of these existing nanotechnologies.

The world is currently plagued by pressing demands like mitigating climate change, reducing dependence on fossil fuels, and ensuring energy security. With an ever-mounting pressure on governments to address these issues by adopting ambitious targets for greenhouse gas emission reduction and renewable energy capacity expansion, nanotechnology can play an instrumental role in achieving these goals as evident from the above discussion.

References

1. http://www.teriin.org/nano-uploads/D5_NT_Development_in_India_Apri_2010.pdf
2. http://iopscience.iop.org/0957-4484/23/29/290201/pdf/0957-4484_23_29_290201.pdf
3. http://www.ecoseed.org/technology/15859-synergy-nanotechnology-and-renewable-energy
4. http://www-docs.tu-cottbus.de/pressestelle/public/Forum_der_Forschung/Heft_22/161-168-SCREEN.pdf
5. http://www.cientifica.eu/files/Whitepapers/NanotechCleantech0307.pdf
6. http://www.azonano.com/article.aspx?ArticleID=3131
7. www-docs.tu-cottbus.de/pressestelle/public/Forum_der_Forschung/Heft_22/161-168-SCREEN.pdfialon
8. http://www.onami.us/PDFs/nano-whitepaper.pdf

Population Growth & Urbanisation

According to UN estimates, the global population will reach 9.3 billion by 2050 – some 2.3 billion more inhabitants on our planet than we have today. This demographic trend is expected to be associated with rapid urbanisation and thus, most of this population growth is expected to be absorbed in urban areas. Currently, more than half of the world’s population lives in urban areas. However, this trend is not consistent across all regions of the world, but is expected to be reached in Asia by 2020 and in Africa in 2035.

With this growing population and inevitable development around the world, issues of environment, energy, climate change and sustainability will be kept at the utmost priority. Because economic growth is fuelled by quickly-depleting natural resources, many think economic growth and environmental integrity cannot exist simultaneously. But is that really true? There are environmentally-friendly approaches that can, and have tackled poverty, inequality, and sustainability. Opportunities range from developing and maintaining low-carbon, zero-waste cities and infrastructures to improving and managing biocapacity, ecosystems, lifestyles and livelihoods.

Fossil Fuel vs. Renewable Resources

Today, one of the largest threats to our environment and the main driver of climate change is the unchecked consumption of fossil fuels. If we intend to build a sustainable future, it is necessary that we end our dependency on fossil fuels and shift to cleaner sources of energy. With the use of existing technologies like solar, wind, tidal and geothermal energy generation, and other not-so-popular ones like artificial photosynthesis, the use of renewable energy sources must rise in the post 2050 world to reduce harmful emissions. It’s a common perception that significant technological breakthroughs are necessary to harness enough clean and renewable energy to power our global energy demands. However, a recent study called "Transition to a Fully Sustainable Global Energy System," published in Energy Strategy Reviews, makes an ambitious case for sustainable energy sources providing 95% of the global energy demand by 2050 without the need for any extraordinary breakthroughs.

Urban Energy Developments: Supply & Demand

This study examines demand scenarios for the major energy use sectors - industry, buildings, and transport - and calculates the feasibility of fulfilling this demand with renewable supply sources. To achieve such a large goal, we need to combine aggressive energy efficiency on the demand side with accelerated renewable energy supply from all possible sources. This requires a paradigm shift towards long-term, integrated strategies that will not be met with small, incremental changes.

Apart from generating cleaner energy, saving energy will be equally important. Energy efficiency is the low-hanging fruit which needs to be harnessed to reduce the ever increasing energy demand and the consequent emissions. More sustainable cities have to be developed and more efficient buildings will have to be designed to reduce energy waste and harness the power of natural environments. Green buildings offer the most economical paths to saving energy and reducing CO2 emissions. Communities will reside in greener cities integrated with revolutionised public transit systems. China is developing a new-age green city where any two locations would be within a 15 minute walking distance of each other. Concepts and innovative ideas like this will revolutionise urban living.

Political Shifts = Social Sustainability + Environmental Developments

Social sustainability will be important if economic and environmental developments are to be carried together in a sustainable manner. Better access to resources, corporate governance, human rights and labour rights will lead to a better world by 2050. Elements such as Socially Responsible Investing (SRI) will be the norm; fair-trade might be an obsolete concept as the trade becomes more glocalised (a portmanteau concept of globalisation and localisation). Because capitalism and other economic models have failed in delivering their promises of a balanced growth, there is an open door to rethink and evaluate these models. In this view, a UK law firm proposed the concept of ‘sustainable capitalism’. This idea incorporates putting a price on natural resources like carbon, which will allow a positive effect in long-term environmental development and economic sustainability. The model of sustainable capitalism suggests that it is important for environmental and social costs to be counted in products and services, ensuring that balance and sustainable growth are maintained.

While the global focus is on environment and sustainability, we can act boldly to break the current unsustainable model of growth. By 2050, we can replace it with a model of growth based on the use of renewable resources and recycling. The pathway to this sustainable world contains opportunities and risks, and will radically change how we and future generations interact with the world. Collaboration, conviction and courage will be required to visualise and implement the radical changes needed for long-term prosperity while succeeding in current conditions. Global leaders need to lean towards sustainability, and we should invite political and civil society leaders to join national and international leaders in this challenging and exciting journey.

Technical details

The project activity was installation of a 7.5 MW natural gas based co-generation system. The incorporation of the project activity results in substitution of higher carbon intensive fuel oil based power generation with comparatively cleaner mode of power generation and subsequently utilisation of sensible heat content of the waste gas emanating from the gas turbine for thermal energy generation. The cogeneration system thus replaced the existing system of individual fossil fuel based thermal and electrical energy generation.

Before installing natural based co-generation unit, the electricity demand was met partially through grid and partially through FO based generator sets. Grid is also a source of electricity dominated by fossil fuel based power plant. The thermal energy requirement was met through dedicated natural gas based boiler and natural gas based thermic fluid heater.

The gross electricity generation capacity of cogeneration unit is 7.5MW, however, after auxiliary power consumption and loading, about 7MW power is generated. Also, the exhaust heat from the steam turbine is used to meet the thermal energy demand of the unit. The cogeneration unit has a steam recovery unit which recovers heat to run a boiler of capacity 11TPH at 10 bar pressure as well as thermic fluid heater of capacity 1.4 million Kcal/hr.

Evidently, carbon intensive options such as grid and FO were replaced as well as steam recovery unit saved additional fuel combustion in the boiler and thermic fluid heater. And thus, the project established to be a cleaner option.

CDM Specific Details

The project contributes towards sustainable development through social, economical, environmental and technological well being. Social well being as infrastructure development due to the project, economical well being as project resulted in employment generation, environmental well being as project resulted in reduction of GHG emission and pollutants and technological well being as this project act as a clean technology demonstration project to encourage and promote the deployment of efficient cogeneration system in similar type of industry.

The project proponent prior to the deployment/incorporation of the project activity contacted the stake holders for obtaining their consent for setting up the project activity. Identified stakeholders mainly consisted of municipal commissioner, secretary of local co-operatives, Gujarat CDM cell, gas suppliers, members of pollution control board, members of state electricity board, CDM consultant, equipment supplier, local inhabitants, employees of Sintex and contractor. A formal stakeholders meeting was conducted and all the queries of the stakeholders were addressed satisfactorily. There were no negative comments obtained.

The project was small scale project activity but for this kind of project activity, there was no small scale methodology available. Hence, large scale methodology AM0014 was applied. The title of the methodology was “Natural Gas based package cogeneration ( AM0014 – version 04)”. The project activity comes under the purview of Sectoral Scope- 1 (Energy Industries (Renewable/Non renewable) Sectoral Scope-4 (Manufacturing industries).

The baseline scenario of the project activity was continuation of current practice of meeting up of the thermal and electrical demand i.e. electricity from grid and FO based generator and thermal energy from boiler and thermic fluid heater.

On the basis of methodology AM0014, baseline emission was estimated to be 71,358 tCO2/annum and project emissions to be 46,236 tCO2/annum. Therefore the emission reduction due to this project activity was calculated as 25,122 tCO2/annum. In other words, the project has a potential to generate 25,122 CERs annually. Fixed crediting period of 10 years was chosen for the project activity.

Why this project was first of its kind

It was the first project to be registered under methodology AM0014. Prior to this no other project from India adopting this methodology could make it to registration with UNFCCC. Till now, only six projects have been registered from all over the world. Out of these six, two are from India.

Challenges

Since, it was the first project from India under this methodology, there were many problems faced during the project development phase under CDM. Main challenges were calculation of emission reduction and devising an appropriate monitoring plan. It actually required a lot of brainstorming and use of analytical skills. In monitoring plan, a lot of parameters were to be monitored such as quantity of natural gas consumed, electricity generated by the unit, auxillary power consumption, net electricity supplied, output steam temperature , output steam pressure , steam flow rate, inlet temperature of thermic fluid, outlet temperature of thermic fluid, flow rate of thermic fluid and electricity generated by FO based generator.

Demonstration of additionality as per the CDM glossary, was also a cumbersome job but it was also completed aptly. Auditors of the project raised various queries upon the additionality as well as monitoring plan of the project activity. All of them were satisfactorily answered.

The demand for finite resources continues to mount in the wake of the relentless escalation of the world’s population, the constant evolution of technology, the overwhelmingly rampant expansion of the global consumer base, increasing purchasing capacities, and the rapid development of emerging economies. To compound the problem, the supply of natural resources, such as crops, water, energy, and minerals, has continually been constrained by factors including political instability and the repercussions of environmental degradation and climate change.

The growing chasm between supply and demand has pinned a big question mark on the future profitability of a business world overly dependent on finite material resources. This dependence may paralyse the whole manufacturing and business world, including its subsidiary supply chains, if a significant transformation in the basic operational strategy, towards more resource- and energy-efficient business models, is not witnessed in the imminent future.

Outlook for natural resources by 2020 and 2030

When analysing the demand scenario, it is important to take into consideration the potential increase in the world’s population in the coming years. According to UN Department of Economic and Social Affairs estimates, the world’s population is likely to increase to about 9.1 billion by 2050¹, with under-developed and developing countries expected to be responsible for the majority of this increase. Moreover, the demand for resources is expected to increase enormously, both in developed and wealthy countries, as well as in emerging economies like those of India, China, Brazil, South Africa, and others, for commodities such as energy, food crops, mineral resources, as well as meat and dairy products².

According to The World Development Report released in 2008 the demand for food is projected to rise by 50% by 2030, with that for meat rising by an even larger than 85%³. However, with average crop productivity growth rates having dropped from 2% for the period 1970-1990 to 1.1% for 1990-2007, and being projected to decline further in light of the falling amounts of land on offer, the food crop supply is expected to experience increasing constraints⁴.

The BP’s latest Energy Outlook 2030 forecasts that global energy demand is likely to grow by 39% by 2030 or 1.6% annually, in non-OECD countries, while energy consumption in OECD countries is expected to rise by just 4% over the same period⁵.

While the debate over the capacity of the world’s current oil and natural gas reserves to meet rising demand levels has never really been put to rest, the increasing political instability in major oil-exporting countries has encouraged further scepticism about the future availability of fossil fuels, and pushed countries to embrace renewable energy sources on much larger scales.

Meanwhile, UNESCO is forecasting that global water usage will increase by 32% between 2000 and 2025. At the same time UNDP estimates highlight that global water use has been rising nearly twice as quickly as have population levels for more than the last century, with the trend expected to continue. Another study has suggested that, by 2050, about 1.8 billion people would be subjected to absolute water scarcity, with up to two-thirds of the world’s population, mainly in non-OECD countries, residing in water-stressed conditions⁶.

Over the past few years, the world has gradually increased its inclination towards a low-carbon global economy as a response to the looming dangers posed by climate change. This low-carbon shift majorly depends on a large number of metals that are themselves getting scarcer and are unfortunately hard to substitute. These metals include indium and tellurium, used in solar PV thin films, neodymium, used in permanent magnets, and cobalt and lithium, which are used in batteries⁷.

Given all this, what might be termed a ‘sheer ostrichism’ on the part of corporates around the world may not exactly be deemed a prescient business attitude. A 2012 survey-based report, released by PricewaterhouseCoopers (PwC), highlights that business leaders across the global manufacturing sector are aware of the rising scarcity. Mineral and metal scarcity (77%), as well as energy scarcity (75%), is of high priority for top executives, while water (57%) and land (35%) scarcities are considered to be relatively less significant. The minerals which were placed on the critical list include:

• Beryllium, used in military equipment and the aerospace industry
• Tantalum, used in mobile phones, computers, and automotive electronics
• Lithium, used in wind turbines and lithium-ion batteries in hybrid cars
• Flurospar, used in manufacturing of cement, glass, iron, and steel castings
• Cobalt, a material used in industrial manufacturing

Impending scarcity is expected to destabilise supply over the next few years, and the resultant impact is likely to trickle downwards throughout the entire supply chain⁸.

Recently, resource scarcity has slowly taken centrestage in the policy agendas of many countries. Out of this, major pushes towards energy and resource efficiency, as well as the promotion of large-scale recycling and metal substitution, have been witnessed. Moreover, global calls for more sustainable practices in the production and consumption of goods have been issued through international platforms such as the United Nations’ Conference on Sustainable Development (UNCSD). They further highlight the growing need for new business models and lifestyle changes, such that concerns over sustainability might be addressed more swiftly and more extensively.

Resource:

1. http://www.un.org/esa/population/publications/wpp2008/wpp2008_highlights.pdf
2. http://www.cic.nyu.edu/scarcity/docs/evans_multilateral_scarcity.pdf
3. http://siteresources.worldbank.org/INTWDR2008/Resources/WDR_00_book.pdf
4. http://www.growthforce.orgwww.growthenergy.org/images/reports/USDA_Global_Agricultural_Supply_and_Demand.pdf
5. http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7073055
6. http://siteresources.worldbank.org/EXTWDR2011/Resources/6406082-1283882418764/WDR_Background_Paper_Evans.pdf
7. http://www.sei-international.org/mediamanager/documents/Publications/SEI-ProjectReport-Dawkins-MetalsInALowCarbonEconomy-2012.pdf
8. http://www.pwc.com/en_GX/gx/sustainability/research-insights/assets/impact-of-minerals-metals-scarcity-on-business.pdf

Carbon capture and storage (CCS) is one such mitigation tool which has lately been a subject of heated discussion both amongst the international scientific community and within the global climate change brigade. CCS technology involves the capture of millions of tonnes of carbon dioxide, which might potentially amount to 90% of what is generated from the use of fossil fuels in power plants and other industrial units across the world¹ . Due to the pressure exerted by the mounting demand for energy, fossil fuels appear likely to be a necessary evil, and its consumption figures are expected to rise up until 2035². Given such a scenario, CCS technology may arrive as a panacea of sorts, since it offers an opportunity to limit the emissions that result from the increased consumption of fossil fuels.

The CCS process primarily consists of 3 components: capturing carbon dioxide, transporting it, and finally storing it underground. The technology used to capture the gas involves separating it (in pure, highly-concentrated form) from the other gases generated after combustion of fossil fuel. This carbon dioxide is then transported to and stored in a suitable site from which it cannot escape into the atmosphere. The options for CO2 sequestration include saline formations and oil wells which use captured CO2 in enhanced oil recovery³. At present, there are three main technology options for carbon capture from fossil fuel combustion:

• Post-combustion capture
• Pre-combustion capture, and
• Oxy-fuel combustion

Post-combustion capture is most technologically proven and widely tested method of carbon capture. It uses chemical or physical solvent to isolate and capture CO2 after combustion of fossil fuels. Flue gas, a by-product of fossil fuels combustion, is passed through a liquid which causes a chemical reaction and separates the CO₂ ready for transportation and storage. This process of separating CO₂ from the flue gas is called scrubbing. Post-combustion capture technology is most suitable for pulverized coal, supercritical and ultra super critical power plants. It can also be retrofitted to existing fossil fuel power stations.

In Pre-combustion capture technology CO₂ is separated or removed prior to the burning of fossil fuels. This method converts fossil fuels into a gas made up of CO₂ and Hydrogen (H₂). These gases are then separated through scrubbing, just like in the post-combustion capture process. Hydrogen thus obtained can be used to fuel the power plant and the CO₂ is captured, ready for transportation and storage. This method is mostly applicable in IGCC (integrated gas combustion cycle) power plants, chemical and fertilizer industries.

In oxy-fuel combustion method fossil fuels are combusted in presence pure oxygen, instead of air, to eliminate the nitrogen (N2) contained in combustion air. The flue gas thus produced only contains CO₂ and steam, which are then separated by a cooling process. Though this method can reduce carbon emission to almost nil, it is a highly energy intensive process. This technology of oxy-fuel combustion can be applied to both, new and existing fossil fuel power stations.

According to the International Energy Agency (IEA), global emissions should peak by 2020 at the latest and then be more than halved by 2050 relative to 1990 levels if the increase in global temperature is to be capped at 2ºC. One-fifth of this required emissions reductions would arise from CCS, otherwise emissions reduction cost would increase by more than 70% annually. The IEA projects that in order to meet this 2050 goal, 100 CCS projects would need to be established by 2020, with the number to rise to over 3000 before 2050. Another benefit which may result from the deployment of CCS is the creation of a big job market. The entire supply chain involved in CCS can create a wide palette of jobs for local communities. The UK government estimates that the market resulting from the adoption of CCS processes could create a market worth £6.5 billion per year by 2030, and provide some 100,000 jobs⁴.

However, there exist major barriers against the adoption of this technology - exorbitantly high capital investment and high operational costs. It is hence imperative that governments lend a helping hand, in the form of a favorable policy environment, if CCS technology is to see widespread deployment.

To promote CCS, the UK government has established a policy which mandates that all new coal-fired power stations must be CCS-enabled for at least a proportion of their capacity. Furthermore, all new thermal power plants (coal, gas, biomass, oil) with capacities of over 300MW must be designed to be “Carbon Capture Ready” (CCR) in order to receive a planning permit. On top of this, UK law has moved to incorporate the ‘EU CCS Directive’, which provides a legal framework for the safe geological storage of carbon dioxide. The UK government is presently also contemplating the introduction of an Emissions Performance Standard (EPS) to regulate the carbon dioxide emitted by power plants per unit of electricity output. If implemented, this EPS would help to further promote CCS and its technology applications in the power sector⁵.

More importantly, the UK has one of the most comprehensive governmental intervention programmes aimed at delivering cost-competitive CCS infrastructure in the 2020s. The five integral components of the programme are:

• A CCS Commercialisation Programme, with £1 billion in capital funding to support commercial-scale CCS. Its major objective is to enable private electricity producers to adopt CCS technology (by investing in CCS equipped fossil-fuel power stations) in the 2020s without requiring capital subsidies from the government. This would allow them to produce power at prices that are competitive with other low-carbon generation technologies. The government announced in October 2012 that it was assessing and negotiating four of the eight full bids it received to undertake work on carbon capture, transport and storage. It will soon decide which projects to support further in 2013⁶.
• A £125m, 4-year R&D and innovation programme to bring into the market the best ideas for increasing the cost-effectiveness of CCS-related processes, and the establishment of a new UK CCS Research Centre.
• Development of a market for low-carbon electricity. This market is expected to be created through the Electricity Market Reform (EMR), and will include ‘Feed-in Tariff Contracts for Difference’ which apply to low-carbon electricity, so as to take care of CCS-equipped fossil fuel power stations.
• Intervention to address key barriers to the deployment of CCS, which will include measures to improve the CCS’ supply chain and its transport and storage networks, to enable its industrial application, and to guarantee a regulatory framework for CCS.
• International engagement for the exchange of knowledge on CCS technology.

Although experts worldwide are working extensively on CCS and its technology, progress has been slow. Presently only eight large-scale integrated CCS projects are in operation in the world. Most of these projects involve the extraction of carbon dioxide from gas processing and fertilizer plants, which is then injected into older oil wells to push out the otherwise-inaccessible crude oil. This technique is known as enhanced oil recovery (EOR)⁷.

Four of these eight operational projects are located in the USA; of the remainder, two are in Norway, while one project is functional in North Africa and Canada each. The Sleipner plant located in Norway’s North Sea has been operational since 1996, and injects into the seabed over 1 million tonnes of CO2 annually. The Snøvit plant in northern Norway, operational since 2008, has a capture and storage capacity of 700,000 tonnes of CO2 per year⁸.

Although the current number of CCS projects is small, the imminent future is expected to bring significant increases in the level of activity in the CCS domain. The technology received nods from the climate change brigade represented at the UN Climate Conference at Durban in 2011, as it was granted acceptance under the Clean Development Mechanism.

References

1. http://www.ccsassociation.org/what-is-ccs/
2. http://www.worldenergyoutlook.org/media/weowebsite/factsheets/factsheets.pdf
3. http://www.c2es.org/technology/factsheet/CCS#_edn17
4. http://www.globalccsinstitute.com/insights/authors/judith/2010/11/29/economic-and-social-benefits-ccs
5. http://www.ccsassociation.org/faqs/uk-policy/
6. http://www.decc.gov.uk/en/content/cms/emissions/ccs/ukccscomm_prog/ukccscomm_prog.aspx
7. http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/11/so-you-want-to-stash-your-carbon-emissions-underground
8. http://www.ccsassociation.org/faqs/viability-and-timescale-of-developing-ccs/

The following are some of the major issues discussed at the COP:

• Kyoto Protocol - Phase II: The Kyoto Protocol is the only treaty that binds industrialised nations to the obligatory reduction of their emissions. The protocol, adopted in Kyoto, Japan, in 1997 encompasses the well-known Clean Development Mechanism (CDM). The first commitment period under the protocol, which begun in 2005, was supposed to expire at the end of 2012. At Doha, an extension to the protocol was agreed, and this is seen as one of the major outcomes of the conference. The protocol has been extended for the next eight years, and the new period will run from the 1st January 2013 to 31st December 2020.
  
  More than fifteen national or regional carbon markets are currently being developed across the world. An extension to the protocol is expected to provide a platform upon which further capacity for the implementation of such markets may be created. Furthermore, after a binding commitment comes into force in 2020, there is the possibility of linking these national schemes via an overarching international framework.
• Loss and Damage: The new concept of ‘Loss and Damage’ took the limelight during the COP18 session in Doha, as a new international insurance-like mechanism was discussed. This new mechanism is expected covers loss and damage from disasters related to climate change occurring in regions most affected by it. This will help provide assistance, beyond mitigation and adaptation, to the states most vulnerable to climate change, and especially Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
• International post-2020 treaty: A legally-binding deal applicable to all countries was agreed upon in COP17 in Durban, last year. COP18 in Doha witnessed significant progress towards this post-2020 climate treaty. The first draft of the treaty will be ready before May 2015, and will be adopted by both the developing and the developed nations in 2020.
• Raising ambition: Critics claim that the Doha Convention failed to deliver on its promise to increase levels of ambition. Many reports, including the World Bank’s Turning Down the Heat, were released before the COP. They stressed the need to raise ambitions such that, as scientists have recommended, the temperature rise may be capped at 2 degrees.
• Climate Finance: COP18 was criticised for failing to deliver on its mandatory climate finance commitments which provide assistance to communities in developing nations. Doha’s final decision only urged developed nations to maintain their financial commitments towards technology transfer and other climate change related actions. Germany, the UK, France, Denmark, Sweden, and the EU Commission, have pledged to provide $6 billion up to 2015.
• NAMAs: To help tackle climate change, developing nations have agreed upon Nationally Appropriate Mitigation Actions (NAMAs), which will be based on individual countries’ capacity to address climate change. Over 35 NAMAs being designed throughout the world were discussed at COP18.

Although the Doha conference seems to have delivered on several fronts, it is termed a missed opportunity by many industry experts. Dirk Forrester, CEO of the International Emissions Trading Association (IETA), has however provided a contrasting voice in declaring that the COP was good for the carbon market in general, and that the inclusion of New Market Mechanisms (NMMs) in the process of c negotiations highlighted the presence of upcoming opportunities for the carbon markets.

Though the developed countries were highly criticised for failing to commit to higher emissions reduction targets, there remains the opportunity to encourage higher levels of ambition in the coming period. It was decided in Doha that the UN Secretary General, Ban Ki-moon, will organise a session, at which this very topic will be discussed, with the heads of the various countries in coming years.

Emission reduction potential between 2012-2020 (million tonnes of CO2_e)

The events of COP18 have at least made it evident that countries are embracing more voluntary measures in their bid to contain emissions. As Connie Hedegaard, EU commissioner for Climate Action, said, the COP was not revolutionary, but it made moderate progress towards the long-term goal. Opportunities for both market-based and non-market-based mechanisms are being developed as 2020’s new global agreement approaches.

The UK played a leading role in the climate change negotiations in Doha, and pledged £2.9 billion up to 2015 towards international interim climate finance. The UK delegation also announced it would be initiating two renewable energy programmes in Africa, namely Green Africa Power (GAP) and Global Energy Transfer Feed-in Tariffs (GET FIT). It also assured that the country was on track to meet its £1.5 billion Fast Start Finance commitment for 2012.

After the COP18 session, Edward Davey, UK Energy and Climate Change Secretary, said, "This round of international climate change talks was a modest step forward. We always knew they would be very tough after the breakthrough at the same conference in clast year. We can be pleased that we have maintained the momentum towards a new legally-binding agreement for 2020, after the Kyoto Protocol has expired.” He also confirmed that the UK, as part of the EU, will be working very hard over the next year to ensure that the next climate talks yield even more progress and that the nation plays its part in lowering global emissions.

An arguable disappointment was New Zealand’s decision to drop out of the Kyoto. However, the Oceanic nation has pledged a voluntary emission reduction target outside the protocol. It might hence be expected that there will be an increased demand for offset units outside the mechanism, since countries which have not signed the second phase of the protocol will not have access to units generated under its mechanisms.

China has been criticised for the continual increase in its per capita carbon intensity, but the country has been proactively taking steps to contain its rising emissions. At the Doha COP, the Chinese delegation announced that the country’s per capita emissions will be reduced by 5% in 2013. The second phase of the country’s pilot emissions trading scheme is likely to see the addition of 29 more planned pilot schemes to the seven ETS that are already in place. Recent reports, however, suggest that emissions in some regions of the country will peak in 2020, with the likelihood of country-wide emissions peaking in 2025.

Japan has renamed its Bilateral Offset Credit Mechanism (BOCM) as the Joint Credit Mechanism, and is in talks with Mongolia, Vietnam, Bangladesh, and several other countries as it seeks partners to implement the scheme.

The message regarding the urgency of climate change is increasingly clear, even though the current economic scenario has seen countries hesitate to make major financial commitments. It was evident at the end of the conference that carbon offsetting would remain one of the most important measures directed at achieving global emission reduction target. This presents hope for carbon markets as the world moves forward and continues to combat climate change. The latest set of estimates from International Monetary Fund (IMF) has outlined the need for an intervening mechanism if genuine progress is to be made on this front: for temperature rises to be held at 3.5 degrees, carbon needs to be priced at $20/tonne; for a 3-degree target, the carbon price must be $40/tonne; in order to ensure the current recommendation of 2-degree limit is actualised, the carbon price needs to be much higher.

The final decisions taken at COP can be lauded for maintaining the momentum towards long-term climate change mitigation. Countries have come forward and assumed the responsibility of driving the world onto the path of ‘green’ development.

Christmas joys are deeply entwined with an increase in energy consumption which is largely attributed to the copious usage of decorative lights. The extended usage periods of both indoor and outdoor Christmas lighting, along with the higher-than-average usage of home appliances, severely impacts a family’s energy budget, and thereby increases its carbon footprint.

The US Department of Energy has reported that Christmas lighting uses up more than six terawatt-hours of energy annually, which equates to the cumulative monthly power consumption of about 500,000 homes¹. It is hard to ignore the environmental detriments that accompany the excessive consumption of electricity on such a scale. Several studies have tried to measure the carbon footprint left behind by Christmas lighting: the Energy Saving trust of Great Britain has calculated that 15,500 hot air balloons can be inflated with the carbon dioxide that Christmas lights alone produce.²

Furthermore, the centuries-old tradition of having a Christmas tree has high carbon emissions associated with itself because of the footprint resulting from the entire cycle of Christmas tree farming, harvesting, distribution, and eventually disposing off. Moreover, the resulting carbon footprint from the wastage of food and the excessive wrapping and packaging of gifts and is another dampener. A calculation of the carbon footprint that UK leaves behind over Christmas claims that food, travel, lighting, and gifts generate about 650 kg of carbon dioxide emissions per capita, and this amounts to about 5.5% of the nation’s annual carbon footprint³.

Data source: http://www.surreyheath.gov.uk/environment/energyefficiency/carbonfootprint.htm

While – in spite of the above – there has never been any suggestion that we ought to stop basking in festivity and enjoying customary Christmas indulgences, the growing importance of climate management should prompt us to minimise our environmental footprint by adopting some of the following measures:

• Switch to LED lights: The increase in power consumption can be brought under control if we use LED lights when decorating for Christmas. LED lights consume only about 10% of the outmoded and energy-inefficient incandescent bulbs, and have a much longer lifespan of more than 20,000 hours⁴. Moreover, LED lights, being comparatively cooler than the filament-dependent incandescent bulbs, help reduce the chances of household fires at Christmas, caused generally due to the combination effect of hot bulbs, dried paper, and Christmas trees⁵.
• Self grown ‘Live’ tree for Christmas: Plastic trees, though reusable for years, are made of PVC and consume a lot of resources during their manufacture and transportation. Moreover, the non-biodegradable plastic content clogs up landfills long after the trees are discarded. ‘Live’ trees, self- grown at home in pots or portable containers help avoid use of non-environment friendly practices. Moreover, being locally grown they also help avoid high emission related to farming, harvesting and high-polluting transport for distribution of commercially grown Christmas trees.
• Use recycled materials for Christmas tree decorations. Such recycled and organic decorative items can be obtained from online retailers and charity shops.
• Try turning off the lights in the room when Christmas tree lights are switched on, and then turning off the Christmas tree lights before going to bed.

The adverse ramifications upon the environment of gift-giving, long regarded as indispensable for Christmas, might be greatly reduced by observing the following guidelines when gift-shopping:

• Choose locally made gifts, particularly those crafted from recycled materials. Shun the imported goods which flood today’s marketplaces, as the GHG emissions associated with their transportation are enormous.
• Choosing gifts consisting of recycled materials will have less of an impact on waste streams.
• Opting for battery-free gifts can also be a green approach, as discarded batteries are a major environmental and health hazard.

Wrapping paper is considered to be one of the most profligate aspects of Christmas. 25,000 trees would be saved were we to recycle rather than purchase 50% of the gift-wrapping we use (currently 8,000 tonnes)⁶. A recent analysis has suggested that a surprising 80 sq. km of wrapping paper is discarded across the UK every Christmas⁷. Taking note of the following pointers might help improve the situation:

• It is more environmentally-friendly to use brown recycled paper, newspaper, or wrapping paper constructed of fibres such as hemp.
• Remove any adhesive tape before throwing the wrapping paper away. If you can help it, go for reusable ribbons over adhesive tape.
• Avoid using metal-based wrapping materials which are hard to recycle

Among the main excesses and indulgences associated with Christmas is the food, of which surplus quantities are often bought and eventually discarded. Better and more realistic planning of meals would help minimise leftovers. Should leftovers still arise, composting should be adopted to lower the burden on waste streams.

In order to go green this Christmas, look to recycle as far as possible. Recyclenow.com has estimated that English households discard an additional 3 million tonnes of waste over the Christmas season, most of which can be recycled. Recycling anything and everything, from clothes to cards, and wrapping papers to jute bags, helps reduce the amount of waste created over the festive season, and thus minimises our carbon footprint.

References:

1. http://www.azocleantech.com/article.aspx?ArticleId=310
2. http://www.guardian.co.uk/environment/ethicallivingblog/2007/nov/08/christmaslights
3. http://www.surreyheath.gov.uk/environment/energyefficiency/carbonfootprint.htm
4. http://www.cereplast.com/wasted-energy-the-environmental-consequences-of-holiday-lighting/
5. http://www.guardian.co.uk/environment/ethicallivingblog/2007/dec/12/toptipsforagreenchristmas
6. http://www.guardian.co.uk/environment/ethicallivingblog/2007/dec/12/toptipsforagreenchristmas
7. http://www.walesonline.co.uk/go-green/go-green-green-living/2012/11/07/plan-now-to-make-your-christmas-as-green-as-possible-91466-32178538/

The CFA event this year was jointly organised by Koelnmesse and the International Emissions Trading Association (IETA), as a means of convening governments, industry, and the civil society for the purposes of discussing climate change. After a two-year run in Singapore, the event was held in Bangkok on 30th and 31st of September, 2012. Explaining the shift, Event Director Michael Dreyer explained that the government of Thailand has been very active in CDM and implementing domestic measures.

The focus of the forum remained on the issue of compliance in Asia, and its effect on global carbon markets. The topics discussed were:

• New Market Mechanisms (NMMs)
• The future of the CDM and JI mechanisms.
• China’s pilot Emissions Trading Scheme (ETS).
• Japan’s take on carbon markets after Fukushima.
• The benefits of choosing carbon trading over carbon tax.

The timing of the conference was very crucial, since there have been significant developments. Australia has introduced the carbon tax and plans to roll out an ETS by 2015. The introduction of the Carbon Farming Initiative (CFI) has also provided additional revenue streams for the agriculture sector. According to the World Bank, carbon market grew in total value by 11% in 2011, to $176 billion, and where transaction volumes reached a new high of 10.3 billion tons of carbon dioxide equivalent.

China is currently developing 7 pilot Emission Trading Schemes in high-emissions cities and districts, and these will anchor a broader programme on a national level expected to be launched by 2015. It has been reported that the scheme is designed in such a manner as to allow it to be ‘linked’ to other international schemes. The World Bank has since confirmed in an interview that the development of carbon markets in various parts of the world is paving the way for potential linkages that might underpin a future global market. The market-based mechanisms to be introduced to combat carbon emissions in Indonesia, South Korea, and other parts of the world also seem to be steps in this direction.

The highest participation at this year’s event came from Asia (74%), followed by Europe (16%), and then Oceania and North America (8% and 2% respectively). This shows that interest is growing rapidly outside the traditional markets of the west, as the east embraces the idea of voluntary emissions control. Dreyer confirmed that the scale of the event is growing year-on-year, and that there is an increasing demand for national events to support the growth of carbon markets. The presence of delegates from industries ranging from finance to manufacturing underscored the growing commitment to sustainability that both industry and governments are demonstrating.

At this year’s event, the most well-represented category of guests was the buyers, sellers, brokers, and traders from the carbon-offset market. The list of companies and organisations that were represented included South Pole Carbon Asset Management, NetBalance, LRQA, DNV, the London Business School, the Gold Standard Foundation, and others.

Sector-wise participation in Carbon Forum Asia 2012 (%)

According to the Regional Manager (South-East Asia) of the Gold Standard Foundation, Ellen May Zanoria Reynes, “The conference enjoyed a qualitatively focused group of actors who had an order of business in the carbon markets, and was a great venue to learn about the various new mechanisms being considered amongst the different regions, particularly in Japan and Australia”. Gold Standard found the conference to be of great use, and expressed interest in attending the CFA next year.

The need for such events is growing, with companies increasingly coming to understand commitments to climate change not only as CSR activities, but also as a means of reducing baseline costs through improved energy efficiency and other measures. Growing awareness about sustainability is also affecting consumer choice across various industries.

Australia and many other countries has also recently stressed that climate finance is not a donation, but an investment. This marks a clear paradigm shift, which underlies the need to have events such as what CFA has been organising. The carbon market, both compliance and voluntary, will greatly benefit from such events due to the increased interest and awareness among various segments of the industry. The statistics from this year’s event reflect participation from across a widening range of industries.

The prominence of China, Australia, and Japan amongst the event’s representatives highlights a growing interest in these countries in tackling the challenge of climate change. This prompts the hope that pledging oneself to the cause of environmental sustainability – by addressing the issue of carbon emissions – will become a norm among companies of the future.

At this year’s 8th Annual Clinton Global Initiative, a gathering of 1000 leading thinkers from the spheres of politics and industry, amongst others, contemplated the implications of increasingly ‘short-termist’ business practices geared towards immediate results (over 2-3 years) rather than long-term benefits (over 10-15 years).² With the current economic slowdown, even the conventionally investment-inclined pension funds and insurance companies are prioritising immediate returns and taking on far larger risk burdens³.

Carbon markets are thinly-traded (Illiquid) and require patience. A thinly-traded market is one in which the volumes traded are low compared to other markets because of the low number of buyers and sellers. Consequently, prices are more volatile and assets may be defined as illiquid. Illiquid assets cannot be sold quickly because of the relative lack of ready buyers, unlike other assets such as stocks and bonds.

Yet trading in thinly-traded commodities, such as carbon credits, is not without (many) advantages. For one, they offer potentially better returns. Roger Ibbotson, a professor of finance at Yale School of Management, led a research project which demonstrated that thinly-traded stocks tend to do better over time than more actively-traded stocks. In an interview in the Forbes magazine, he explained that the comparison of stocks dating from as far back as 1972 produces the conclusion that thinly-traded stocks out-perform highly liquid ones in all four quartiles (ranked by size). The spread, according to Ibbotson, ranged from 12 percentage points per annum between the least and most actively traded micro-caps, to 2.8 percentage points between the least and most popular mega-caps.

The expectation of future increase in the volume of turnover contributes to the interest generated by thinly-traded markets such as carbon markets. The carbon market has grown thirteen-fold between 2005 and 2012, and in 2011 voluntary carbon markets witnessed transactions exceeding $572 million in value, according to a report by Ecosystem Marketplace report ⁴. In addition, Bloomberg projects that trading volumes in voluntary markets will rise from 94 million, to 600 million tonnes by 2020⁵

The recently released Kay Review concludes “that short-termism is a problem in UK equity markets, and that the principal causes are the decline of trust and the misalignment of incentives throughout the equity investment chain. ⁶”

The same can be said for climate markets, where the focus on immediate results compromises firms’ long-term fortunes. The reduced investment undertaken by individuals and corporations in assets - the items which really provide them with their competitive edge - increases their susceptibility to long-term risks and negative consequences.

With perceptions of unfairness being identified by the Kay Review as a key contributor to short-termist mentalities, research carried out by the London School of Economics has explored how governments can begin to ameliorate these concerns through improved policy-making and communication⁷.One of the key recommendations which this report makes is to price carbon at around GBP 30 per tonne of carbon-dioxide-equivalent. Another suggestion is to have policies “which promote innovation and appropriate infrastructure investment.”

Encouragingly, the commitments to sustainable practice exhibited by a number of companies are a sign that long-term investment strategies exist as more than paper-talk concepts, and that firms recognise the long-term benefits that might accrue to them through emissions reductions in the present. A case in point is Marks & Spencer’s Plan A, through which the firm aims to reduce its carbon footprint and hence achieve its ultimate goal of becoming the world's most sustainable major retailer. Launched in January 2007, with 100 objectives spread across 5 years, it has now been expanded to include 180 targets to achieve by 2015. Through Plan A, M&S is working with customers and suppliers to combat climate change, reduce waste, use sustainable raw materials, trade ethically, and help promote healthier lifestyles⁸. In 2012 M&S reported that Plan A generated GBP 70m in 2011 and GBP 105m in net benefit. M&S’ innovations include: clothes exchange programmes; extra charges for carrier bags; and the option of purchasing carbon-neutral items in their various product ranges, with chocolates a well-known example⁹

Marc Bolland, Chief Executive Officer of M&S, has said, “After five years of Plan A we have made good progress. By achieving 138 of our sustainability commitments we have made Marks & Spencer more efficient and innovative, whilst also benefiting society and the environment. Today, Plan A is integral to our strategy for future growth. We are pleased with our progress so far but not complacent; the biggest challenges still lie ahead.”¹⁰

M&S’s CO2 emissions in 2006-07 and 2011-12

The solidity of the carbon market may be gauged from the fact that it is projected to triple from its 2010 size by 2020, when it will be worth some $2.2 trillion¹¹.The benefits of balancing immediate with long-term objectives are thus extremely clear. Not all investments produce results overnight; the best of them might just be those that mature over a longer span of time.

Risk Warning: This blog is for information only and does not constitute investment advice. Holding carbon credits for the purpose of financial gain is speculative and involves risk. There is currently a thinly traded market for carbon credits.

References:

1. http://www.harveymackay.com/tag/how-to-meet-your-goals/
2. http://www.huffingtonpost.com/brian-r-weinberg/5-take-aways-from-clinton_b_1935716.html
3. http://www.scotsman.com/business/banking/skeoch-pours-cold-water-on-hopes-of-ending-city-s-short-term-culture-1-2541188
4. http://www.forest-trends.org/documents/files/doc_3166.pdf
5. http://www.businessgreen.com/bg/news/2207705/arctix-warms-to-voluntary-offsetting-opportunity
6. http://bis.gov.uk/assets/biscore/business-law/docs/k/12-917-kay-review-of-equity-markets-final-report.pdf
7. http://www2.lse.ac.uk/GranthamInstitute/publications/Policy/briefingNotes/PDFs/carbon-pricing-bowen_briefingNote.pdf
8. http://plana.marksandspencer.com/about
9. http://plana.marksandspencer.com/media/pdf/ms_hdwb_2012.pdf
10. http://plana.marksandspencer.com/media/pdf/ms_hdwb_2012.pdf
11.http://www.research.hsbc.com/midas/Res/RDV?ao=20&key=wU4BbdyRmz&n=276049.PDF.

Sustainable Investing is a complete incorporation of environmental, social and governance (ESG) parameters into investment analysis and decision making. It focuses on achieving premium long-term investment performance by clubbing stringent ESG analysis with traditional financial analysis. By earmarking the companies around the world which are excelling in sustainable business practices, it provides sustainable investors an opportunity to tap into the promise of long-term returns associated with such companies.

Even if the social and governance factors do not compel investors to consider sustainable investment options, the systemic and sector-specific risks associated with climate change are fast drawing investors’ attention to the influence that environmental concerns may exert upon business. In addition to the risks associated with climate change, those resulting from poor environmental performance on the part of certain organisations can be a matter of great concern for investors.

With the stage all set for the COP18 at Doha in December this year, certain epochal decisions are expected from the Climate Conference. But whatever the outcomes and decisions that emerge from this eagerly-anticipated conference, a surge in investments into greener and cleaner technologies looks very likely.

Thus, it might be understood that climate change and environmental degradation is not merely an adversity, but actually a hidden opportunity for investors to cash in on efforts to tackle the aforementioned global predicaments.

One avenue thought to be promising is that of investing in companies which deal in the lucrative world of managing climate and environment-related problems. With many countries today – whether or not bound by international agreements and reductions targets – confronting global warming by targeting the emission of carbon dioxide and other greenhouse gases, a raft of governmental measures have appeared, including greener energy policies, market interventions (emissions markets, for instance), and fiscal manipulations. The upsurge in the number and range of mitigation activities has pulled many firms into the ambit of the climate change sector.

Once the preserve of the world’s leading developed nations, the fight against climate change has now been joined by developing countries such as China, India, and Brazil, who are beginning to adopt some of the policies that have proven popular elsewhere.

In India, policy interventions like the National Action Plan on Climate Change provides a strong incentive to investors in clean and green technology space. India’s march towards a greener world has seen it implement ambitious renewable energy targets, renewable energy obligations (RPO), and regulations for enhanced energy efficiency in the industrial and residential sectors (which have bred schemes like the introduction Renewable Energy Certificates, Perform Achieve and Trade, etc.). The resulting policy environment underlies the promise of good returns on investment held by India’s green sector.

An aspect to sustainable investment of perhaps more universal relevance is the need to shield one’s organization from climate and environment induced risks which can impact the price and supply of energy, water, raw materials, and food, as well as the global infrastructure. It is therefore the companies which have embraced more sustainable production and operation practices – which may include low-carbon technologies, the use of renewable energy, water conservation, waste-to-energy conversion, the adoption of energy efficiency measures, sustainable transport, and agricultural technologies – that tend to attract greater investment. Whether through investment funds or through relatively higher risk direct investment with commodity-exchanged traded funds, investment in such companies is rising in popularity among investors with a range of risk-taking attitudes and profiles.

Refuting the prevalent notion that sustainable undertakings cannot produce high financial returns, a 2011 Harvard Business School study claims that firms that manage their environmental and social performance can financially outperform their less sustainable competitors and eventually generate more value for their shareholders. The study compared a matched sample of 180 US-based firms, 90 of which were classified as high-sustainability – with the others deemed low-sustainability – on the basis of their adoption of environmental, social, and governance (ESG) policies. Over an 18-year period, the high-sustainability firms showed an annual above-market average return of 4.8% higher than that of their counterparts and with lower volatility. These companies also exhibited superior performance for their returns on equity and assets.

Such studies are further bolstered by the voluntary adoption of sustainability initiatives by companies which provide leadership in their respective sectors. Marks and Spencer can in itself be a convincing business case for sustainability. Since launching sustainability initiatives in 2005 under its much-lauded ‘Plan A’, the firm has managed to earn £185m in net benefits. GE’s sustainability initiative, Ecomagination, is a business strategy focused on investing in innovative solutions to environmental challenges and delivering valuable products and services to customers while generating growth for the company. Major giants like Boeing, BMW, UPS, and L’Oreal are also investing heavily in sustainability measures which have helped them to achieve substantial profits by increasing their resource-efficiency.

Globally, myriad exchange traded funds exist which deal in varied technology space. The PowerShares Global Water ETF entails water-based giants like Veolia Environment and Waters Corp. Those more inclined towards clean energy may consider Market Vectors Alternative Energy ETF, which holds a wide palette of energy, water, and utility companies. The PowerShares Cleantech Portfolio also incorporates some major giants from various energy sectors. However, those, who have a stronger interest in investing directly in companies, can reckon several enterprises who are currently the leaders in their respective sectors.

Green investment programmes that have been launched by different investment firms clearly underscore the increasing global recognition being given to the sustainable investment sector. One such programme, which was launched by KKR & Co. L.P., the KKR Green Portfolio Program, has been a significant success. Its portfolio includes 23 companies, 13 of which released their results in 2011. On the whole, these companies have attained financial savings above $365 million and abated 810,000 metric tonnes of GHG emissions while reducing waste production by 2.2 million tonnes and water consumption by 300 million litres.

Of late, several multilateral agencies and NGOs have joined hands to pressurise the business community to address issues relating to their environmental performance, and to encourage a shift in corporate sensibilities to an approach based upon considerations of sustainability.

The United Nations-backed Principles for Responsible Investment Initiative (PRI) is one such alliance of international investors collaborating to practice the six Principles for Responsible Investment. This alliance gives due consideration to the impact created by the incorporation of ESG issues into investors’ decision-making and ownership practices. As of April 2012, over 1000 investment institutions have become signatories, with assets under management valued at approximately US$ 30 trillion.

The Carbon Disclosure Project (CDP) is another non-governmental initiative which leverages market forces, including shareholders, customers, and governments, to influence the environmental management practices of companies and cities across the world. It aims to encourage firms and cities to assess and disclose both their greenhouse gas emissions and their strategies to mitigate climate change and environmental risks. CDP’s reporting framework helps investors as well as companies to understand and prepare better for such unanticipated risks. CDP is currently engaged with thousands of companies and 655 institutional investors who collectively hold US$78 trillion assets under management.

The Sustainable Stock Exchanges (SSE) is another initiative which was launched in 2009 by the United Nations Global Compact Office, the United Nations Conference on Trade and Development, the United Nations-backed Principles for Responsible Investment, and the United Nations Environment Programme Finance Initiative. It encourages global exchanges to publicly commit to the promotion of sustainable investment practices, and aims to augment the role played by considerations of ESG (environmental, social and corporate governance) issues in investment-related decision-making. Last October, the Bombay Stock Exchange joined this initiative and pledged to promote sustainable investment in India.

In addition, the BSE also launched the first-ever ‘live’ Carbon Index BSE-GREENEX in India earlier in 2012. A system which measures the performances of companies with respect to their carbon emissions, the new index will include the top twenty companies ranked on their greenhouse gas emissions numbers, Free Float Market capitalisation, and turnover. This index will assist asset managers in creating varied products to facilitate investment in India’s green and clean technology space. In addition, it will help address the increasing concern in the global community with screening ‘green investments’ and helping investors make more informed investment-related decisions.

Thus, given current international trends, it might be concluded that the incorporation of sustainability as a principle of investment can be a major contributor to sound and prudent decision-making. It is to the aforementioned ETFs, global initiatives such as the SSE, as well as more local interventions like BSE-GREENEX in India, that investors should look, as they seek to profit from the ‘green wave’ sweeping the globe with increasing fury.

Risk Warning: This blog is for information only and does not constitute investment advice. Holding carbon credits for the purpose of financial gain is speculative and involves risk. There is currently a thinly traded market for carbon credits.

While CER prices have been in free-fall since last year, prices of voluntary carbon offsets have remained stable. CERs closed trading on the Paris-based Bluenext at their lowest-ever price of €1.13 on 19 October 2012 . Market analysts have predicted that CER prices will average €1.60 from now until 2020, with further lows of €0.50 to be expected along the way . By a Barclays estimate, CERs, whose oversupply lately led to prices under €1.50, will never again exceed €3 in value even with market intervention from European governments . In contrast, voluntary emission reduction (VER) prices have remained largely constant for the last year.

Zurich-based project developer South Pole Carbon’s chief executive Renat Heuberger has pointed out that the post-2009 dip in VER prices was far less severe than recent movements in the CER market “A few years ago we saw VER prices in the €7-12 range. There was a dip after 2009 because several players scaled back their offset programmes. But the massive price dip that has occurred in the CER market has not happened in the voluntary market — it has not had such a downward trend.” He added that companies’ interest in corporate social responsibility has spurred interest in the voluntary market. “Buying carbon credits is extremely attractive for companies, it is not extremely expensive and it is very tangible. We see the voluntary market growing. In terms of size, the voluntary market is nothing compared with the compliance market.” The voluntary market does not have the “massive” HFC and N20 projects in the CDM, but rather more small projects, he noted .

CDM has projects generating millions of CERs every year, which are based on industrial gases whose additionality has frequently been disputed . On the other hand the credibility of voluntary-sector projects has not been called into question in quite the same way. Comparing the number of offset certificates generated by the CDM against that generated by the VCS (the most widely-known voluntary carbon standard) is instructive: while more than a billion CERs have been issued by the UNFCCC under the CDM, VCS has issued a mere 100 million offset certificates.

On the other hand, a heavy supply of CER is being compounded by problems of low demand. Analysts estimate that the current oversupply of carbon credits, generated by the Clean Development Mechanism (CDM) and Joint Implementation (JI) and eligible within the EU’s emissions trading scheme (ETS), could potentially measure around 1.4 billion for the period up to 2020.

It might perhaps be fitting to conclude with an observation made in an interesting online discussion that occurred a few days ago. One of the commentators on a professional networking site said that CDM EB had completely killed off the CDM market due to flawed methodologies and that Gold VERs were fetching a higher price than CERs.

Moreover, with a proposed future international climate agreement still in doubt, governments worldwide are turning to voluntary carbon markets to provide the strong foundations needed to shape tomorrow’s regulated carbon markets.

At least 21 such government programmes are currently underway, with nine of these having emerged in the last four years, according to a recent report .

Fifteen countries have joined the World Bank’s Partnership for Market Readiness, while six other countries, including Brazil, Colombia, Chile, Mexico, Indonesia and South Africa, are potentially looking to use voluntary carbon market mechanisms as a support or supplement to future regulations. Such unstinting confidence demonstrated by national governments clearly bodes well for the future integrity and stability of voluntary carbon markets.

Number of projects registered under VCS

The increase in China’s CO2 emissions was mainly due to a continued high economic growth rate, with related increases in fossil fuel consumption. For example, from 2000 to 2009, China’s coal-dominated energy consumption increased at an annual rate of 9%, driven mainly by economic development, such as building construction and infrastructure. China's thirst for economic development may make curbing it's demand for environmentally harmful resources difficult, notably coal, which is directly related to China’s CO2 emissions -- China pumps out more carbon than any other country, about 22 percent of the global total.

China thus directly contributes to world fossil fuel emissions, such as the 3% increase in world fossil fuels emissions in 2011, and half of the annual emissions growth. Thus, China's CO2 emissions are of central concern in efforts to combat global climate change.

To reduce China's dependence on coal, China is investing in and providing policy for:

• Renewables
• Efficiency targets
• CDM
• Carbon trading/carbon tax

Renewables

In 2006, China adopted a target for 15% share of primary energy to come from renewables by 2020, up from 8% in 2006. This target has now been revised in two respects:

1. The new target is for a 15% share of final energy consumption. This change puts China’s target on the same accounting footing as the European Union, which adopted a target in 2008 for a 20% share of final energy by 2020.

2. However, the second revision to the China target changed the scope from renewables to non- fossil-fuel sources which includes nuclear. Nuclear power currently provides less than a 0.3% share of final energy in China, but will increase by 2020, so the net impact on total renewables by 2020 of the target change is complicated to assess.

The Central Government’s current draft plan, calls for a total of 500 GW of renewable power capacity by 2020: 300 GW of hydropower, 150 GW of wind power, 30 GW of biomass power, and 20 GW of solar PV. This would account for nearly one-third of China’s expected total power capacity of 1600 GW by 2020.

Emissions reduction

China has been implementing a national policy of energy conservation and emission reduction since 2006.

During 2005-2009, over 50 GW of small and energy-inefficient electricity-generating units were shut down, and all newly built units were large (300 MW or above) and comparatively energy efficient. These include coal-fired power generation, cement production, and iron & steel production. Thus, China has avoided about 1.6 billion tonnes of CO2 emission through energy intensity reduction during its 11th FYP.

These emission reductions controls were reflected positively in decreased carbon emissions relative to generation or processing in various high-emissions sectors.

China and the CDM

Overseen by the United Nations, the CDM allows companies in industrialized nations to sponsor greenhouse gas emissions-reducing projects in developing countries. As a result, the sponsor offsets emissions with a lower cost, while the host country obtains cash from implementing low-carbon technologies.

China has quickly become the dominant CDM carbon credit supplier. By July 2011, China had approved 3,154 CDM projects, mainly focusing on new and renewable energy, energy conservation and the enhancement of energy efficiency, methane recycling and reutilisation and other areas. A total of 1,560 Chinese projects have been successfully registered with the CDM Executive Board, accounting for nearly half of the world’s total registered projects, and the resulting certified emission reductions (CERs) has reached an annual issuance volume of 328 million tonnes of CO2e, accounting for 64 percent of the global total.

However there are some shortcomings to the CDM, specifically for China itself:

1. Buyers are almost exclusively from outside of China , and thus it does not encourage competition within sectors or between regions in China to find low-cost ways to reduce carbon intensity and increase energy efficiency.

2. The CDM means much less for China in terms of actual emission reductions.

3. Uncertainty over the future of the CDM, is an increasing concern and consequent driver for China to develop its own stand-alone domestic trading system, while at the same time staking out its position in a global trading system.

4. Lastly, envisioning the growing importance of the global carbon market, many in China now argue that, in the long run, being able to participate adeptly in international trading will be more profitable than selling CERs at a very low prices under CDM China’s CDM Fund is currently working with its partners to determine which sectors are best to be included in a carbon trading system. The CDM Fund, managed by the Ministry of Finance, is also providing grants to different regional pilots.

China and carbon trading

China officially launched carbon trading in 2011 “to help it meet its 2020 carbon intensity target." According to the country’s National Development and Reform Commission (NDRC), it was agreed to start trading during its 12th Five-Year Plan period (2011-2015).

In November 2011, the NDRC ordered seven Chinese cities and provinces to set up pilot carbon trading systems during the 12th FYP, including Beijing, Shanghai, Tianjing, Chongqin, Shenzhen (the five cities) and Guangdong and Hubei provinces.

After the provinces submit their implementation plans at the end of 2012, the goal is to have pilot carbon trading at a regional level by 2014 and at a national level by 2016. During the pilot phase, local governments can decide upon the means of capping and select capped sectors themselves.

However, NDRC said as a developing country, China does not shoulder legally binding responsibilities to reduce carbon emissions, according to the basic principle set by the United Nations Framework Convention on Climate Change.

During the 12th FYP, it is also highly probable that China will initiate environmental/carbon taxation, either for pilot testing or to be adopted nationally. While this is feasible, it is unclear how taxes will be integrated and coordinated with the carbon trading market.

The pilot provinces and cities that will take on and test various modes of trade, are currently at different stages of development, and are opting for different implementation paths. For example, Guangdong Province aims to design China’s first regional carbon market with trading in key sectors, emphasising heavily methods drawn from the EU ETS.

Sectors are also being considered for possible trading implementation, such as coal- fired power generation. The power sector has piloted several important projects. For instance, two of the top five power companies (Datang and Guodian) have started piloting GHG emissions measurement and reporting in preparation for future trading. And in 2010, China implemented “inter-grid trading” among regional grid companies to save energy; this programme adjusts the distribution and usage of electricity across regions.

However, there currently is no consensus on whether an emission cap should be absolute or intensity- based.

Some recent developments in carbon trading are:

-In September, Guangdong Province released details of its carbon trading scheme: 827 enterprises and nine industries, which together account for over half of the province's power consumption, will take part. Companies that emit more than 20,000 tonnes of Co2/yr are required to participate. Next year Shenzhen city will launch an emissions trading scheme with 800 enterprises from 26 industries that exceed 20,000 tonnes/year, accounting for over 54% of the city's carbon emissions.

-Also in September, the European Union declared that it will work with China to cut greenhouse gas emissions via projects including China's carbon trading scheme.

Carbon trading challenges

The success or failure of domestic carbon trading in China under the 12th FYP will to a large extent determine the future (at least the near future) of carbon markets development in China, and will have a great impact on the potential for China to meet defined carbon and energy intensity goals and the global effort of climate mitigation.

Although several cities, such as Beijing, Shanghai and Tianjin, started testing voluntary carbon trading two years ago, the infrastructure in China is virtually nonexistent. China still lacks:

- essential legislation , such as trading rules, monitoring, enforcement and punishment for non-compliance.

- third-party verifications to support domestic carbon trading.
- accurate emission measurement
- administrative capacity, such as cross-level and cross-sectoral coordination.

Conclusion:

Developments in carbon reduction, clean technology and their implementation over the 12th FYP are of stark importance not only to China but to the world.

Not only to China as the second largest economy, but now as the largest emitter of fossil fuel-related emissions. China has taken large steps to curb its carbon emissions, for example the annual industrial output of the energy saving, environmental protection and recycling sectors is expected to reach 4.6 trillion yuan between 2011 and 2015.

However there are logistical and ideological challenges that China must contend with, such as its economic drive and its current lack of legal and administrative oversight for environmental projects.

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Climate change

Let's first look at climate change. It is generally agreed that fossil fuels and industry are the main sources of carbon dioxide. Globally, total emissions from fossil fuels and cement increased in 2011 by 3%; That is less than the rise in 2010, [when emissions shot up by 5% as the world economy bounced back from recession,] but higher than the average annual increase for the past decade, which stands at 2.7%. This suggests that efforts to curb global emissions have so far failed to make any impact. The continued steep rise in global carbon emissions will make it even more difficult for the world's nations to fulfil their stated aim of limiting temperature rise to 2C, considered a danger threshold after which the risks of irreversible climate change increase.

Provincial Emissions 2005-2009

During 2005-2009, the emission growth rates of the coastal provinces are estimated to have been lower than those of interior provinces, although the absolute emissions of the interior provinces were generally small in comparison.

The largest absolute emissions are found in coastal provinces in east and north-central areas including Shandong, Jiangsu, and Hebei, reflective of the size of their economies and their population densities. In 2005, east, north-central, and south-central China, covering only 35% of the country’s territory but containing 69% of the national population and responsible for 78% of China’s GDP, are estimated to account for 73% of the national emissions of anthropogenic CO2 (as demonstrated with the pie graphs).

Per capita emissions

Per capita emissions in China increased by 9% in 2011 to reach 7.2 tonnes per person, only a fraction lower than the EU average of 7.5 tonnes. Compared to EU countries, China's per capita emissions in was roughly equivalent to that of Portugal and Sweden.

Comparative per capita emissions

In East Asia and Oceania, Brunei and Australia have the largest in the region of 27.54 and 18.57 thousand metric tonnes of CO2, respectively. China is the eleventh largest emitter in this region.

Comparative CO2 intensity – China and the EU27

In terms of CO2 intensity, China is near the top by 2008 with Estonia, Cyprus and Poland. This high level of emissions based on fuel combusted is mainly linked to industry and a coal-dominated fuel mix.

Cap-and-trade mechanisms customarily limit firms’ emission levels according to the quantum of emissions allowances they possess. Emissions beyond this maximum will necessitate the purchase of offsets. Although the programme kicked off on January 1, 2012, the imposition of emissions caps is only due to start in 2013² for electric utilities and large industrial facilities, with distributors of transportation, natural gas, and other fuels are expected to join them in 2015. 2012 emissions levels are merely used as a benchmark for the pegging of target levels for subsequent years. A two-percent year-on-year drop, to be enforced for 2013 and 2014, precedes an acceleration of the programme which will see the imposition of a three-percent annual target for the years 2015-20.

Allowances will in the initial stages be distributed free of charge for the large industries and electric utilities to whom the caps apply, before they will have to be bought at auctions, the first of which is expected to take place in November 2012. The volume of the allowances provided for each industrial sector will be set at about 90 percent of the given sector’s average emissions.

Some 350 businesses, representing between them 600 facilities, are expected to be affected by the programme. Of these, the companies thought most likely to have to dip into the carbon market include Chevron U.S.A Inc., ExxonMobil, NRG Energy, PG&E, California Dairies, P&G Paper Products Co., Shell Oil Products US, Kimberly Clark Worldwide Inc., Conoco Phillips Refining, Dow Chemical Company, Saint-Gobain Containers, Mitsubishi Cement, USS-POSCO Industries, Lockheed Martin Corporation, and California Institute of Technology (Cal Tech)³ . Firms will be able to enter the market to offset emissions totalling no more than eight percent of its full emissions quota. At least for the initial phase, only projects in the following four fields are deemed eligible for use for offset purposes: forestry, urban forestry, dairy digesters, and the destruction of ozone-depleting substances⁴.

Given the stiff reductions requirements, a healthy demand for compliance offsets is expected. A recent study conducted by Winrock International and the American Carbon Registry (ACR) has suggested that the scope of offset projects will have to be broadened beyond the present four sectors in order to avoid serious market shortages. According to the study, the expected demand levels will cause a 29% shortfall (7.6 MMTCO2e1) during Compliance Period 1 (CP1), and a 67% (134 MMTCO2e) shortfall for Compliance Period 3 (CP3)⁵. The presence of viable additional types of offset projects will only put pressure on market regulators to eventually sanction their inclusion. In a feature article published in the Sacramento Bee, Winston Hickox, a partner with California Strategies, has claimed that “there are numerous other project types that can help meet these goals. Some use various means to capture methane, a potent greenhouse gas, from landfills. Another project type allows natural gas exploration companies to replace old leaking pneumatic valves with new more efficient ones that are not mandated by regulation⁶. ”

Table: Compliance periods and allowances available under the California cap-and –trade mechanism⁷

As the Californian carbon market takes shape, it is expected to assume a prominent role in the shaping of global climate change policy and practice. The recent announcement of an agreement between Australia and California to work together towards the development of regional and global carbon markets, to exchange experiences on climate policy and, more significantly, to explore options for linking their carbon markets in the long-term. This was announced by Australia's Secretary for Climate Change and Energy Efficiency, Mark Dreyfus, after he met with officials from the California Environmental Protection Agency and the California Air Resources Board⁸. Whatever future compliance and regulatory challenges there may be, it seems that, for now, Californian authorities are making all the right noises.

References

1. http://www.reuters.com/article/2011/02/17/us-california-carbon-idUSTRE71G3R220110217
2. http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm
3. http://www.arb.ca.gov/cc/capandtrade/covered_entities_list.pdf
4. http://www.arb.ca.gov/newsrel/2011/cap_trade_overview.pdf
5. http://americancarbonregistry.org/acr-compliance-offset-supply-forecast-for-the-ca-cap-and-trade-program/at_download/file
6. http://www.sacbee.com/2012/09/20/4836657/offsets-for-states-cap-and-trade.html
7. http://www.arb.ca.gov/cc/capandtrade/meetings/121409/capcalc.xls
8. http://www.climate-connect.co.uk/Home/?q=Australia%2C%20California%20to%20collaborate%20on%20emissions%20trading%20schemes%3B%20eye%20linkage%20

Although countries must meet these targets primarily through national measures, the Kyoto Protocol offers them three alternative market-based mechanisms:

* Emissions trading – known as “the carbon market"
* Clean development mechanism (CDM)
* Joint implementation (JI)¹

As mentioned above, the first compliance period expires in 2012. A new agreement is needed to take the fight against rising GHG emissions into 2013.

Discussions ongoing with a view to launching this second Kyoto phase have foundered upon critical issues including the duration of the proposed second phase,the specific countries to be set emissions reduction targets, and the criteria by which countries are to be deemed eligible for the usage of carbon credits. The Doha Amendments, deriving their name from the location of the end-of-2012 Conference of Parties, must necessarily be passed if the Protocol is to stay alive²

Compliance Phase 2 of the Kyoto Protocol was a major focus of attention at the recently-concluded Climate Change Conference in Bangkok³. Some of the major points that were discussed are outlined below⁴.

While consensus was attained, with the African countries, island-states, Australia, and the European Union all in agreement, for a 1 January 2013 start date for the second compliance cycle the duration of the second compliance period was a point of contention. The European Union pushed for an eight-year second phase ending in 2020, while the island-states sought a 2017 end-date. The BASIC group of countries was ambivalent and indicated no preference between the two lengths.

One thing which was extremely clear was the countries’ conviction that carbon markets must continue to operate even if the start of the second compliance period were to be delayed. The European Union explicitly asked the conference “to confirm that emissions trading and the project-based mechanisms will also continue pending the entry into force of the second commitment period.” The parties were equally eager to avoid a legal gap between the first and second compliance periods, with several groups seeking the cooperation of various countries in taking immediate and necessary action.

The island nations urged that eligibility to use various offset instruments such as CERs be reserved only for countries which have submitted binding targets to the UN. The Doha conference, due to take place from Monday, 26 November, to Friday, 7 December 2012, is expected to produce final decisions on these various amendments to the Kyoto Protocol⁵.

Kyoto Protocol participation map for first compliance period⁶

Research carried out by Deutsche Bank has predicted that, given a scenario in which an EU-wide target were to be imposed of 20% reductions upon 2005 emissions levels, demand for carbon offsets is likely to total 560 million units. However, should the reductions targets be 30%, upon 2005 levels, demand would total a much higher 735 million units⁷ . Analysts at Point Carbon have suggested that prices of UN offsets are likely to hit a low of 50 cents by 2020, and average Euro 1.6, owing to an increasing supply and declining demand⁸.

Japan Russia and Canada will not be participating in phase 2 of the Kyoto Protocol⁹.

The 15 EU Member States at the point of the Kyoto Protocol’s initiation (the "EU-15") had committed to reducing their collective emissions of a basket of six greenhouse gases by 8% upon 1990 levels during 2008-2012. In 2010, the latest year for which comprehensive data are available, EU-15 emissions stood at 11% below their respective levels in Member States' chosen base years (1990 in most cases). With the European Environment Agency (EEA) estimating a further decrease (to 14% upon base-year levels), it seems increasingly likely that the EU-15 will exceed their Kyoto targets¹⁰.

Bloomberg has recently reported that Japan is on course to reach its Kyoto reductions target, which comprises a 6 percent drop upon 1990 levels for the period of fiscal years 2008-2012¹¹.

The inability thus far to secure an extension is the major threat faced by the Kyoto Protocol. Though a majority of the countries are in favour of an extension, it remains to be seen if consensus can be found on a few amendments that need to be made before ratification can be achieved. Intensive debates are expected, particularly on the issue of the duration of the second phase. Furthermore, the tough economic situation is unlikely to encourage ambitious emissions reduction target-setting, while prices remain low in the carbon markets to the detriment of clean technologies.

References

1. http://unfccc.int/kyoto_protocol/items/2830.php
2. http://newsletter.unfccc.int/en/aug2012.html
3. http://unfccc.int/meetings/bangkok_aug_2012/meeting/6812.php
4. http://unfccc.int/files/meetings/ad_hoc_working_groups/kp/application/pdf/
draft_elements_with_text__2012.09.05_at_16.30.pdf
5. http://unfccc.int/meetings/doha_nov_2012/meeting/6815.php
6. https://trading.electrabel.com/protected/tpm/public/ProductsAndServicesCdmJiProject.aspx
7. http://www.ifri.org/downloads/comptes_rendu/fichiers/85/icurien.pdf
8. http://www.pointcarbon.com/news/1.2010122
9. http://www.ft.com/intl/cms/s/0/b473ba36-20f2-11e1-8a43-00144feabdc0.html#axzz293g6TUcN
10. http://ec.europa.eu/clima/policies/g-gas/index_en.htm
11. http://www.bloomberg.com/news/2012-10-05/japan-may-meet-kyoto-emissions-cut-target-ministry-estimates.html

A memorandum of understanding was signed between the Verified Carbon Standard (VCS) and Colombia, two parties which have agreed to work together to build the necessary foundation for a robust voluntary carbon market in Colombia. This market will recognise Verified Carbon Units (VCUs) as one of the main credits to be transacted.

"As the chief executive of the world’s largest and most respected carbon standard, we are honoured to have the chance to work closely with Fundación Natura to help establish a voluntary market in Colombia," said VCS Chief Executive Officer David Antonioli. "The forests of Colombia and South America represent some of the world’s best opportunities for emission reductions and carbon sequestration. Additionally, bringing carbon finance to the forest and agricultural sectors could bring new opportunities for development and conservation in Colombia.¹"

The new markets are essentially 'cap-and-trade' systems. These systems cap the overall level of emissions allowed but allow their participants to supplement their allowances by buying credits, or sell their own surplus allowances. These allowances are the common trading 'currency' at the heart of the system. One allowance gives the holder the right to emit one tonne of CO₂ or the equivalent amount of another greenhouse gas. Capping the total number of allowances creates scarcity in the market.

At the end of each reporting period, installations must surrender allowances equivalent to the level of their emissions. Companies that keep their emissions below the level of their allowances can sell their excess allowances. Those facing difficulty in keeping their emissions in line with their allowances are made to choose between taking measures to reduce their own emissions – such as investing in more efficient technology or using less carbon-intensive energy sources – or buying the extra allowances they need on the market, or a combination of the two. Firms are likely to make such choices based on cost comparisons. In this way, the aim of cost-effectiveness will drive emission reduction efforts.

These new markets are at various stages of development. Australian markets, for example, are sufficiently developed as to be national in scale. Australia also has in place its own offset programme under the Carbon Farming Initiative. On the other hand, China has merely initiated seven pilot carbon trading schemes in various provinces and cities, and hopes to link them into a national programme sometime between 2015 and 2020.

The entities to be affected by California’s cap-and-trade programme, some 360 businesses representing 600 facilities, currently contribute 85 percent of the state's greenhouse gas emissions. From 2013, the scheme will include all major industrial sources, along with electricity production plants and utilities providers. From 2015, distributors of transportation fuels, natural gas, and other fuels will also be included. It is estimated that $1 billion worth of greenhouse gas emission allowances will distributed by auction during the first year of California’s cap-and-trade scheme.²

The new and emerging carbon markets provide an excellent opportunity for investment. The value of the Australian carbon market, for example, is predicted to rise to $15 billion by 2015³. Similarly, the Californian carbon markets are expected to attain a value of $10 billion by 2016⁴. HSBC estimates that China will be the fastest-growing low-carbon market in the world over the next decade, and have a market potential of $664 billion by 2020⁵.

New markets for carbon trading mean a widening demand base, and ultimately an increased demand, for carbon offsets in a market once largely restricted to Europe. Freefalling carbon certificate prices in Europe in recent months, which reflect both a reduced demand for offsets and an oversupply of carbon allowances, may be revived by the opening up of this new market. Should such a turnaround attract greater investment in the renewable energy sector, prospects of realising a green economy will receive a major boost.

Recently, the European Union has announced plans to link its emissions trading scheme with that of Australia. Many other countries are mooting similar tie-ups with other countries: Australia is in talks with New Zealand, while California’s discussions with Australia are in addition to its memorandum of understanding with Mexico which incorporates credits from forestry projects in Mexico into its cap-and-trade mechanism.

Such interconnectivity is expected to provide a broad-based market in which high levels of investor confidence are sustained by drastically-reduced price volatility.

Appearance of various schemes over timeline and their linkages⁶

References

1. http://www.climate-connect.co.uk/Home/?q=VCS%20establish%20voluntary%20carbon%20market%20in%20Colombia
2. http://www.arb.ca.gov/newsrel/2011/cap_trade_overview.pdf
3. http://www.invest.vic.gov.au/Assets/766/1/IV-CarbonMarket-May09.pdf
4. http://www.pointcarbon.com/aboutus/pressroom/pressreleases/1.1496967
5. http://www.research.hsbc.com/midas/Res/RDV?ao=20&key=wU4BbdyRmz&n=276049.PDF
6. http://blogs.shell.com/climatechange/2012/09/link/

At the opening session of FICCI 2012, a background paper, entitled ‘Climathon: From Durban to Doha’, was circulated. This document focused on several issues, including the journey from Durban to Doha, Indian market mechanisms, international carbon markets, and Indian actions at national and state levels.

The event came at a crucial time, when, with CER prices crashing as low as €1.6 (as on 17th September, 2012), discussions on possible implications were prominent in the international press. Addressing the meeting, the secretary of the Indian Ministry of Environment and Forests, Dr. Chatterjee, stressed India’s opposition to the idea of discounting the value of CERs generated in developing countries. India has the second-largest number of registered CDM projects (after China), but is due to be affected by new regulations which will see the EU cease to buy CERs from post-2012 CDM projects in India and China.

The event was also attended by Ms.Naina Kidwai, Senior Vice President of FICCI, who reiterated the expectations that Indian industries expressed at the Doha Conference. These expectations included an awareness of the importance of carbon markets, and the facilitation of technology transfer to developing countries. Kidwai pointed to the introduction of the Renewable Energy Certificate (REC) Scheme and the promotion of energy efficiency through the Performance Achieve Trade (PAT) as examples of the nation’s commitment to sustainable energy use.

Leading figures in the Indian industry, including Mr. Sai Baba, CEO of Lanco Solar, were also in attendance. Baba expressed his concern about interest rates in India and asserted that lower interest rates, rather than further subsidies, were more likely to enhance Indian industry’s international competitiveness and to help renewable energy achieve grid parity with the conventional means of power generation. Also present at the meeting was Mr. Farooq Abdullah, Minister of Renewable Energy, India.

Germany’sFranzjosef Schafhausen, Deputy Director General for Environment and Energy, Environment Ministry, took the opportunity to reiterate Germany’s support for carbon markets. Mr. Schafhausen said, “The carbon market in Germany holds an important place and the nation has been using emissions trading since 2005. Almost 50 per cent of the emissions in Germany are covered by emission trading.”He further highlighted the economic importance of carbon markets to Germany and the government’s commitment to a carbon-neutral world, a stance lent greater importance by recent carbon price movements.

Mr. Neeraj Prasad, representing the World Bank, again affirmed the organisation’s commitment to the aim of facilitating technology and knowledge transfer from developed to developing nations, for which it maintains a market preparedness team operational in some 25 countries. Mr. Prasad claimed, “The World Bank is focusing on climate-smart agriculture, off-grid solutions and low-emission development strategies. We need to prepare for a world with different climate impacts, look for different business opportunities, and focus on trade opportunities”.

At the carbon conclave, a session on South-South Cooperation also took place. This was attended by delegates from Sri Lanka, Thailand and India. The three nations expressed their interest in triangular cooperation, especially in the field of technology transfer. Responding to a question about her country’s potential contribution to such a venture, the Sri Lankan delegate explained that Sri Lankan companies, many of whose marketing and branding strategies have incorporated the targeting of carbon neutrality, are a very strong knowledge base on corporate environmental responsibility.

One of the meet’s highlights was the plenary discussion on the topic of unilateral measures for climate change; in particular, policies regarding the aviation and maritime industries came under the spotlight. Mr. Robert Donkers, the EU’s Minister Counsellor for Environment in India, defended the EU’s decision to include the aviation industry in its latest ETS framework. The liability of foreign airlines to the increased levies mandated by this policy had attracted criticism from India and China, two countries expecting the highest growth in their own aviation industries. Donkers declared that while the EU remains open to discussion with authorities from India and China, it stands by its original decision in the belief that the EU-ETS is the most efficient mechanism possible until an international treaty on aviation is agreed upon.

The meet’s success lay in bringing to the surface issues pertaining to carbon markets and the long-term success of CDM, to future expectations enunciated at the Doha Summit, and to support from multilateral institutions and the new Green Climate Fund. Industries, governments, and multilateral institutions seized the opportunity to underline their commitment to combating climate change. Many are looking to Doha for definitive answers to the many important questions that continue to evade consensus.

A paper published in the peer reviewed journal, Science in August, 2005² , states that technically speaking the various factors which the insurance sector faces from climate change includes:

• Shortening duration between loss events
• Changing variability of losses
• Changing structure of types of events
• Shifting spatial distribution of events
• Damage functions that increase exponentially with weather intensity (e.g., wind damages rise with the cube of the speed)
• Abrupt or nonlinear changes in losses.
• Widespread geographical simultaneity of losses (e.g., losses from tidal surges arising from a broad die-off of protective coral reefs or disease outbreaks on multiple continents).
• Increased single events with multiple, correlated consequences³.

The various climatic impact against which insurance companies collect premiums and are therefore liable for payments in case of occurrence include: human morbidity and mortality, wildfire, massive crop losses, and the curtailment of electric power plants owing to the high temperature or lack of cooling water.

It has also been observed that over the years the proportion of global losses related to weather events have been increasing compared to premium received on life and property insurance. This means that the insurance industry now has a reduced capacity to absorb shocks compared to earlier.

Insurance major Swiss Re states that over the last 40 years global insured losses from climate-related disasters have jumped from an annual US$5 billion to approximately US$60 billion in 2011⁴ .

Megan Linkin, Natural Hazards Expert, Swiss Re, say: "We are already vulnerable to the impact of weather-related natural catastrophes. There is evidence of that all around the world, we expect climate change to compound the problems we are already experiencing so the time to act is now."

Mark Way, Head Sustainability for Swiss Re in the Americas, adds: "In almost all cases, society picks up a large portion of the costs involved with climate-related weather events. Over the last ten years about 53 per cent of the loss in the developed world has been covered by insurance. In the developing world, this figure is less than 7 per cent. This underlines the need to expand the use of insurance to help manage climate risk and make society more resilient to severe weather."

A survey conducted by Zurich Financial Services has found that that climate risk is regarded as a concern that merits broader management and engagement of other departments within firms. On the other hand, the survey results also found that many firms were in early stages of designing their climate risk management strategies⁵.

Figure1: Increasing incidence of natural disasters (1970 to 2011)⁶.

A report by the Chartered Insurance Institute, London, has found that: climate change will enhance the risk of insurance market failure; small- and medium- sized enterprises (SMEs) are not prepared for the impact of climate change; as small businesses are more vulnerable to climate shocks, major companies are equally vulnerable to climate change as the employment of sophisticated technologies and systems, location of facilities and suppliers makes them reliant on developing countries. The report adds that two major innovations in the area of alternative risk transfer (ART) products offer the potential for major new insurance markets associated with climate change: catastrophe bonds and weather derivatives. In order to exploit these markets, better weather data sets are needed. If the insurance sector shows willingness to design products for risk transfer, this will give impetus to the public sector to provide the information, with multiple benefits⁷.

The major sectors at risk include:

Construction: With climate change, sea level increase and intrusion of sea water inland are real risks. This poses danger in the insurance cover to buildings. Apart from sea level rise, the incidence of extreme events has also been observed to be increasing.

Oil and gas: Exploration and mining of gas and energy is shifting into more remote and climatically risky areas and regions of the globe, with little left in easy-to-find locations. This means risk assessments not only for individual plants but also for portfolios.

Agriculture and forestry: Both these sectors will be impacted by climate change as a result of droughts, flooding, pests and forest fires. Insurers will need to deal with an elevated risk of these impacts.

Tourism: With climate change, old and favorite locations for vacations might change and the new risks will need to be assessed and reviewed for new locations under a new set of climatic and weather-related conditions.

It is expected that the laws governing emissions will become more stringent with time at a global level. The targets will be stricter in developed economies such as UK. In this regard, the insurers can advise their clients on moving towards more climate-friendly designs and products and towards investing in reducing their direct and indirect emissions. In-house reduction of emissions is possible through various means such as increasing the efficiency of energy use and greater use of renewable energy sources. Apart from this insurers, may advise their clients on offsetting their emissions through voluntary market. The carbon offset certificates are generated through sustainable energy projects in the developing countries. Thus, their purchase not only helps the insurance sector’s clients in reducing their emissions but indirectly also provides financial support for communities in the lesser developed economies, which form the supply base in many of the industries.

References

1. http://www.theage.com.au/news/business/insurers-embrace-the-winds-of-change/2007/08/11/1186530670431.html
2. http://evanmills.lbl.gov/pubs/pdf/insurance_and_climate.pdf
3. http://evanmills.lbl.gov/pubs/pdf/insurance_and_climate.pdf
4. http://www.swissre.com/rethinking/climate/fostering_discussion_climate_change_risks.html
5. http://www.zurich.com/internet/main/SiteCollectionDocuments/insight/ceres_zurich_report.pdf
6. http://media.swissre.com/documents/sigma2_2012_en.pdf
7. http://www.cii.co.uk/ciiimages/public/climatechange/ClimateChangeReportForeword-Summary.pdf

The Gillard Government has said that the EU and Australia have agreed to link their carbon markets from July 2015. As per the plans disclosed by the Australian Government, Australian companies can buy European carbon permits from 2015, whereas European companies can buy from 2018. Companies can buy half of carbon credits with international units, but placed a limit of 12.5 percent from UN backed Kyoto units.

The Australian Government has dropped the A$15 carbon floor price because the concern from business is that they will pay a higher price compared to Europe.

Greg Combet, the Australian climate and energy minister, said the agreement “reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions.”

Connie Hedegaard, the EU’s climate commissioner, hailed it as “the first full international linking of emission trading systems” and said it would “build further momentum towards establishing a robust international carbon market.”

Ref: http://www.ft.com/cms/s/0/68d0d31a-f0f5-11e1-b7b9-00144feabdc0.html#ixzz264OGKbQd

Energy storage located near the demand center could help offset the investment required for new power distribution infrastructure. Power transmission and distribution infrastructure requires highly intensive investment of capital and other physical resources.

Replacing large-scale transmission and distribution infrastructure with distributed energy storage can considerably reduce the transmission and distribution losses of a system. Such an advantage proves crucial especially in the developing and underdeveloped countries where these losses are still significantly high.

As the load on the existing infrastructure is significantly lowered the problem of congestion is also reduced substantially. This improves the overall health of the grid. The eventual results of reduced congestion is increased availability and shorter and fewer outages.

Additionally, the existing infrastructure could be used to support load growth in new and upcoming demand centers. With the ever-increasing demand for electricity in the urban areas, additional transmission and distribution capacity can play a crucial role in economic and human resource development.

A distributed energy storage, insulated from the grid disturbances can play significant role during a contingency. The storage facility can provide support during ‘black start’ or the re-initiation of the power stations.

Distributed energy storage also plays crucial role in integration of renewable energy power sources. Rooftop solar PV projects are now being implemented in various cities across the world. Such systems enable the proliferation of renewable energy and encourage the concept of ‘self-generation.’

In urban areas, electricity from distributed renewable energy projects can be stored during off-peak hours and during peak hours the electricity can be supplied to balance the load profile.

In rural areas, energy storage could play significant role in economic and infrastructure development. Remote rural areas lack transmission and distribution infrastructure, especially in the developing and underdeveloped countries. Expanding existing transmission infrastructure in these areas may not be the most economical option as the load profile is very different from the urban areas. Thus, to promote inclusive growth in these areas, distributed energy storage could prove to be a financially efficient solution.

A recent report published by the International Energy Agency states that the distributed renewable energy are increasingly becoming attractive. “Small-scale distributed and off-grid applications, such as biogas and solar PV, enjoy good economic attractiveness versus small diesel generators. Moreover, residential solar PV competes increasingly well with retail prices in areas with good solar resources.”

While the capital costs of installing distributed power generation projects, especially renewable energy projects, having an energy storage system can help reduce the payback period of the entire system. An energy storage system not only increasing the reliability and efficiency of the entire system, but can also increase the revenue generation.

Several countries, like Germany, have introduced the feed-in tariff scheme for small-scale solar and wind energy projects which are mostly installed by homeowners. Under this scheme, homeowners consume power generated from the rooftop solar PV projects and supply the surplus electricity to the utility at a preferential tariff rate. With an integrated energy storage system, the homeowners can sell even more electricity and generate additional revenue.

The proliferation of renewable energy power sources is on the rise across the world. But the existing transmission infrastructure in most countries is not well-suited for integration of these sources which are unique from the conventional power generation sources in many ways.

Additionally, transmission networks are overburdened by the rising power demand which can lead to grid collapse and prolonged outages. Local generation, combined with storage facilities, can help reduce this load and enhance the operational life of the grid.

Annual renewable distributed energy generation installed capacity by region

Richard Rogers, the architect behind the Lloyd’s Building, and Norman Foster, the architect behind the Gherkin (also known as Swiss RE Building and 30 St Mary Axe), founded their prestigious careers in London. Both from places outside of London, they were partners in the architectural firm Team 4 during the 1960’s, and have since designed buildings that have become symbols of contemporary London: Foster is known for buildings such as Wembley Stadium, City Hall, and the Millenium Bridge -- all London landmarks. Rogers has been just as prolific, whose works include the Millenium Dome, Heathrow Terminal 5, and the Centre Pompidou in Paris.

In these “worst of times” of an economic recession, we still try and see the wisdom and “best of times” laid out before us. Rogers and Foster created works of art just as Dickens had two hundred years ago. And as trendsetters of the carbon market, we have taken modest office facilities in two buildings that boast an impressive commitment to green standards.

The Gherkin is promoted as “London’s first ecological building” on Foster + Partners’ website, with the aim to “use 50% less energy than a traditional prestige office building”. According to Venugopal Tatikunta, our chief environmental analyst and member of carbon reduction team for the building, the entire structure was designed around “cleverly integrated passive and active environmental controls.” Assisted by the building’s aerodynamic shape and spiralling lightwells, the building includes a natural ventilation system, passive solar heating, and triple layered glazing with a ventilated cavity and 180 thermal wheels, which together keep internal temperatures even and environmental costs low. The building also features light level and movement sensors to prevent unnecessary lighting, thus reducing energy consumption and cooling loads.

The Lloyd’s Building, though built in the late 80’s before the concept of green building really took off, has retroactively set standards for environmental responsibility. According to the Corporation of Lloyd’s, their “most significant environmental impact is through the Lloyd’s Building in the City of London” because it houses the Lloyd’s Underwriting Room, as well as over 60% of Corporation of Lloyd’s employees. To reduce their environmental footprint, they have decided to use 100% renewable electricity in the building, recycle over 85% of the the waste from their UK offices, as well as improve energy efficiency (reduced 10.7% compared to 2008 in electricity consumption and related carbon emissions) and have an Environmental Working Group. Insurance companies such as Aviva, only a stone’s throw away from our Leadenhall Street offices, have recognised the need for sustainability and are acting as a catalyst in their sector to bring positive change for the environment.

We hope that the forward-thinking and imagination used by Norman Foster and Richard Rogers to design buildings such as the Gherkin and the Lloyd’s Buildings serve as wisdom and innovation for us as we work with our clients to grow sustainably.

Günter Verheugen,
Member of the European Commission
Responsible for Enterprise and Industry

SME is an abbreviation for small and medium size enterprises. The common definition was introduced by the European Commission in 1996 in the recommendation paper and expanded in 2003 including economic development.

SME’s contribute substantially to the European economy. Of the 25 European Union Countries there are 23 million SME’s which represents 99% of total number of enterprises. In the UK this number is even higher, reaching 99.9%. In 2009 this accounted for 59.8% of work places in all private sector jobs. SME’s can pose a serious threat to the environment through their business activities, hence, it is important to encourage businesses to take action and think about the environment in every day trades. There are a number of small and medium firms which already contribute to sustainability; many, however, are still reluctant to reveal their reports on their sustainable approach.

Unlike the big companies with their Social Corporate Responsibility agenda and Sustainability Reports, many SME’s have hesitated to manifest their sustainability performance. Big enterprises have managed to benefit from Corporate Social Responsibility, for instance, Marks and Spencer has saved £50 million due to its environmental policy plan introduced in 2007. Big corporations are not the only ones that can benefit from implementation of sustainability measures.

According to a report published by the government called “The Plan for Growth” there is a great opportunity for companies to save £23 billion a year through resource saving. The government particularly focuses on SME’s as they may struggle to find suitable waste and recycling services and information how to cut energy bills. Research conducted by the Department for Environment and Rural Affairs (DEFRA) indicates that with little or no investment companies which use resources efficiently could also save money. The £23 billion of potential saving includes £18 billion savings in less waste generation and recycling, £4 billion through energy efficiency and the remaining £1 billion could be saved as a result of responsible water usage. As reported by DEFRA, as much as 13% of Greenhouse gas emissions could be avoided due to implementation of sustainable measures. This accounts for 90 million avoidance of CO2 emission a year.

Many SME’s have already introduced resource efficiency measures. For example Jag Pankhaniathe owner of the Look in Video Shop who received from Richmond Council a £ 1000 Energy Efficiency grant, used that money to change lighting throughout his shop to energy efficient. He saved £ 2.282 in his annual bill and avoided 8.52 tonnes of CO2 emissions. His business also became more efficient as the energy efficient lighting brought stronger light. After introducing the changes he said that "The lighting is much brighter and it looks like natural light. More people have been coming into the shop so I've noticed business has improved as well."

The government urge SME’s to calculate their greenhouse gas emissions as a first step to reduce these emissions. The detailed information and guidance for business on calculations is provided by DEFRA. The Carbon Trust Standard is awarded to companies which reduced their carbon and make commitment for further reductions. Greenhouse gas emissions disclosure is a great opportunity for companies to communicate sustainability with stakeholders, customers and employees. Advice on recycling is provided on Waste and Resources Action Programme (WRAP) founded by DEFRA. Free information about current legislation and environment and which applies to business could be found via business link. Assessment of social and environmental impact of business is measured by the Environmental Management System (EMS). The system helps companies to reduce their environmental impacts, save money through resource efficiency, comply with the current environmental regulatory and in marketing. There are three common standards accredited by the UK.

These are:

• ISO 14001
  This is an internationally recognised standard and the most popular of all standards. It is a family of voluntary standards for environmental management which helps organisations to control its impact of business activities on the environment regardless of size and type.
• The EU Eco-Management and Audit Scheme (EMAS)
  This is a voluntary European scheme similar to ISO 14001. Both standards focus on environmental policies. The main difference between those two is that the EMAS is open to the public dialogue and is obliged to publish Public Environmental Statement.
• BS 8555
  This is a British Standard designed for small and medium size companies. It is divided into 6 phases which lead step by step either to ISO14001 or EMAS.

Storage at hydro power plants has traditionally been the most dominant form in the global energy storage sector. However, companies are now moving towards new and innovative energy storage technologies like batteries, flywheels and molten salts. These technologies, although quite nascent in nature, could eventually ensure almost 100% availability of renewable energy at all times.

The energy storage technology which has become very popular over the last few years and has found increasing application for large-scale purposes is battery-based storage. Battery storage systems not only enable renewable energy projects to provide consistent supply of power throughout the day but also provide crucial support of the grid at the time of overloading or frequency fluctuations.

The importance of energy storage systems has been highlighted following the two massive grid collapses in India in July 2012.

Large-scale projects like the 32 MW lithium battery storage facility connected to a 98 MW wind energy project in West Virginia, United States supply emissions-free renewable energy and clean, flexible, operating reserve capacity to large power grids. Another project located in Alaska, United States using Nickel Cadmium batteries can supply 27 megawatts of power for 15 minutes in the event of a generation or transmission related outage, that’s enough time for the co-op to start up local generation.

Such a back-up system coupled with renewable energy projects like solar and wind power projects could possibly have prevented the July 2012 grid collapse in India. With the support of large-scale energy storage systems the time to restart the conventional power plants could be reduced to minutes instead of hours.

Another significant application of battery-based energy storage projects is frequency regulation. Grid discipline can be a major issue especially in the developing and under-developed countries. Overloading of the grid and significant variation in the operational parameters compared to the ideal grid parameters can lead to grid collapse. Energy storage projects can be used for frequency regulation and maintaining grid discipline.

Energy storage projects based on compressed air can have even higher capacities and can be used for providing power at peak hours thus reducing the load on other power generation units. In such projects, off-peak power may be used to generate compressed air which is subsequently stored in natural formations like depleted gas reservoirs. The stored compressed can be used to generate power through a turbine during peak electrical demand periods, unexpected generation outages, and can help correct balances in the grid.

A 110 MW project based on compressed air energy storage in Alabama, United States utilizes nuclear-sourced off-peak electricity to generate compressed air. The compressed air, stored in a cavern, can support power supply for up to 26 hours.

A common form of energy storage technology used in solar thermal power projects is based on molten salts. Salt mixtures like sodium nitrate, potassium nitrate and calcium nitrate exhibit the property of absorbing large amount of heat. These salts are compatible with the high temperature and pressure of the steam turbine. During cloud cover or at night, these salts can be used to generate steam using a heat exchanger. The steam thus generated is fed in to a steam turbine and power is generated. With the use of molten salts, a solar thermal power plant can generate power for 24 hours a day.

The United States is among the leading markets for energy storage technologies. The US Department of Energy has given grants worth millions of dollars to project developers looking to set up energy storage projects. At least 51 grid-connected energy storage projects are operational, under construction or approved in the US. Only three of these projects are based on pumped hydro storage.

According to KEMA, applications like load shifting, energy cost management, grid congestion relief and renewable capacity firming have the highest market potential.

Renewable energy project developers can also earn more revenue by employing energy storage technology. In the long-term the revenue generation from the project could offset the one-time investment for energy storage infrastructure.

Renewable energy sources are expected to play a very important role in the power generation sector across the globe. But renewable energy sources are highly intermittent and their integration with the existing power transmission infrastructure could be very difficult. Use of energy storage systems can help smoothen the process of integration.

Energy storage systems could find high level of application in developing economies where the rising demand of electricity is out pacing the rate of capacity addition. Energy storage can help increase grid security, reduce load on fragile power infrastructure and help utilities manage the demand more efficiently.

People and companies are now more aware of the advantages of incorporating energy-efficient and clean-energy applications in their properties. Energy-efficient infrastructure is widely seen as one of the cheapest ways of reducing greenhouse gas (GHG) emissions. This has resulted in many governments around the world backing financial schemes to support implementation of energy-efficient applications in the household and commercial sector.

Use of clean-energy applications for power generation at small scale and other purposes is also being promoted. These applications help in offsetting GHG emissions, reduce dependence on conventional fuels and increase the self-sustenance of a building complex.

Heating and cooling needs of a building can be reduced significantly by using wall insulation applications. Cavity wall insulation is among the most effective thermal insulation application and is comprises of two walls instead of one with a small air gap in between. The air present in the gap acts as an insulator shielding the building from external temperature fluctuations. It is highly advisable to use cavity walls for the south side of a building (in the northern hemisphere) as it faces the sun throughout the day.

Increased use of transparent materials on exterior of the building helps in increasing the daylight available inside a building. Such an arrangement reduces the lighting cost substantially and would increase the sustainability aspect of the building.

Use of glazed windows is essential when a large number of windows are being used in a building. Glazing includes an air gap between the glass panes which again acts as an insulator. The air between the glass sheets allows the visible light to pass through but retains the infrared rays. This reduces the amount of cooling required inside the building.

By using earth as a heat source in winter and heat sink in summer, the heating and cooling needs of the building can be met in a sustainable way. The temperature below the earth's surface a few meters beneath the ground level remains constant. Using heat pumps, air can be transferred between the building and the ground as per the requirements.

Building sector energy savings by 2050, by sector & end-use

A study by the International Energy Agency (IEA) on energy efficiency in the building sector revealed that globally there is a potential to reduce energy consumption by 1,509 million TOE and carbon emissions by 5.8 gigatonnes by 2050. About 61 per cent of these savings would be contributed by space heating/cooling and ventilation in the residential and services sector.

Governments around the world have recognised the importance of energy-efficient infrastructure and many have taken steps to incorporate energy efficiency measures into energy-related legislations and policies.

Last year, the United Kingdom passed The UK Energy Act which included the Green Deal, aimed at improving energy efficiency and reducing energy usage by businesses and home, has now become a law. The Green Deal will be launched later this year and will target improved energy efficiency measures for at least 682,000 homes and offices across the UK.

The Green Deal is likely to play a significant role in reducing energy use. According to the data released by the Department of Energy & Climate Change, about 50 per cent of UK homes lack proper insulation. Between 1970 and 2008, the energy used for space heating has increased by 40 per cent and constituted 65.7 per cent of the total energy use in 2008.

Commenting on the development, UK’s climate change minister Greg Barker said, “As well as helping people save money through home energy improvement, the Green Deal will be a massive business opportunity. It’s expected to attract capital investment of up to £15 billion in the residential sector alone by the end of this decade and at its peak, the Green Deal could support around 250,000 jobs.”

Consumers would not be required to pay upfront for the energy efficiency measures implemented in the buildings but would be charged over time through a charge on the energy bill. To make available cheaper finance to the consumers looking to implement energy efficiency measures, a consortium of 16 companies announced the launch of the Green Deal Finance Company, which will provide loans to households and businesses at low interest rates. The company is expected to offer loans at about 6 per cent interest rate.

The World Bank and Global Environment Facility have supported a program to improve the energy efficiency of heating systems of buildings in Tianjin province of China. Measures such as external wall insulation and heat metering has helped several homes and business to realize significant savings and brought in additional benefits as well.

The project has also motivated developers by covering a portion of the incremental costs associated with their energy efficiency innovations. Wang Jian, Vice President and Chief Engineer of Tianjin Huasha Construction & Development Company, says his company has gained good experience that can be used in future work.

“Participating in this project has also strengthened our company’s brand,” he says. The benefits go beyond energy savings, he says. “This project also inspired us to explore resource-saving measures in a broader scope. For example, we built a water recycling system in this complex.”

In Surrey, British Columbia (Canada), the local authorities launched the Greenbrook Sustainability Project to upgrade a public housing complex with 127 units. The project, which required an investment of CAD 21.8 million, included several energy efficiency measures like upgraded insulation levels for all buildings, solar photovoltaic panels on south facing roofs, air-source heat pumps, heat recovery ventilation systems, high-efficiency hot water heaters and new energy-efficient light fixtures. The project is expected to reduce the greenhouse emissions from the housing complex by 90 per cent and increase the life of the complex by 30 years.

Improving the energy efficiency of the built environment not only reduces the energy consumption but also reduces the carbon, energy and water footprint of a building. With rapidly depleting natural resources, energy efficiency measures have gained immense importance in infrastructure planning.

Corporate Social Responsibility (CSR) is on the agenda and a sustainable stock exchange plays an important role in achieving sustainable development. Therefore, in order to encourage responsible, long term approaches which are also beneficial for business, the Sustainable Stock Exchanges (SEE) initiative was launched in 2009. The organisation’s aim is to assist investors, regulators and companies to enhance corporate transparency and performance on sustainability issues which addresses environmental, social and corporate governance (ESG) issues. The initiative celebrated its official opening during the first conference in New York which was opened by the UN Secretary-General Ban Ki-Moon. The project was co-organised by four United Nations organisations: United Nations Conference on Trade and Development (UNCTAD) Division on Investment and Enterprise; United Nations Global Compact, Principles for Responsible Investment, United Nations Environment Programme Finance Initiative (UNEP-FI).

Seven the most common indicators of sustainability performance during transactions which need be taken into account are:

• Energy
• Greenhouse gases emissions
• Water
• Waste
• Lost time injury rates
• Payroll cost
• Employee turnover rate

According to research conducted by the Sustainable Stock Exchange team a number of small, medium and large-sized companies disclosed their sustainability indicators (see below). The large companies however, were reluctant to voluntarily reveal those metrics. The latest figures show that Finland is the best performer and has the highest disclosure rate of four out of seven sustainability indicators. The Netherlands performs best in a blend of disclosures; disclosure timeliness, and disclosure growth which exceeds Denmark, Finland and Spain. There is a great opportunity for business to expand in the area of sustainability, and while many companies already participated in a sustainability indicators disclosure, the market still has vast space to expand.

SOURCE: SUSTAINABLE STOCK EXCHANGE REPORT, 2012

The main find of Sustainable Stock Exchange research is that a small number of mid, large and mega-sized companies disclose all seven indicators. In 2010, only 52 (representing $2 trillion of market capitalisation) out of 4,001 mid, large and mega-sized companies with a market capitalisation of $44 trillion fully participated in the initiative and disclosed all indicators. Great number of companies, however, discloses only one or two sustainability indicators and therefore such data was not included in the research.

Danish trading companies are the fastest in disclosing sustainability reports. During the last quarter of 2011 financial year 57% of the largest Danish companies published their sustainability data by May 1, 2012. Australia follows closely behind Denmark by submitting only 1% less reports followed by the Netherlands (48%), Sweden (45%) and Singapore (43%) which closed the list of top five performers.

TIMELINES OF SUSTAINABILITY DISCLOSURES

Moreover, the high rate of certain disclosure indicators in some countries can reflect successful sustainability policy. For instance, in Portugal 73% of companies disclosed their rate of water consumption in 2010; Italy had the highest figure in employee turnover (42%) and Finland submitted 78% reports on energy reports disclosure. Environmental policies and practices also influenced the London Stock Exchange and other stock exchanges worldwide.

During the Rio+20 Conference on Sustainable Development, held in Rio de Janeiro, the Deputy Prime Minister Nick Clegg announced that all UK businesses listed on the London Stock Exchange are required to submit a mandatory report on their level of greenhouse gas emissions. The regulations will come into force from April 2013. The UK is the first country to introduce obligatory reporting for levels of greenhouse gas emissions disclosed in annual reports. The new regulations will help companies to deal with and to reduce emissions as well as reducing future costs due to energy efficiency and encouraging businesses to reduce their carbon footprint. The decision was welcomed by the Carbon Disclosure Project (CDP), the not-for-profit organisation which works with 655 investors to drive greenhouse gas reduction and sustainable water use by business and cities. According to DEFRA research the majority of businesses welcomed mandatory carbon reporting.

Another positive outcome in Rio de Janeiro, Brazil is Sustainable Stock Exchanges (SSE) Global Dialogue conference held at the Windsor Barra Hotel during 14-18 June -- just days before the Rio+20 Summit. On 18 June the core group of five stock exchanges NASDAQ OMX, BM&FBOVESPA, the Johannesburg Stock Exchange (JSE), the Istanbul Stock Exchange (ISE) and The Egyptian Exchange (EGX) signed and committed to the Sustainable Stock Exchange. These five stock exchanges are comprised of 4600 listed companies from developed and emerging markets.

In recent years environmental issues have become a fundamental concern of the trading community. Sustainability is on the agenda and is becoming popular among mid, large and mega-cap companies. The sustainable stock exchange is a widely used framework with the ability to grow further. Transparency in sustainability measures is perceived as a good practice which attracts buyers who take into account environmental awareness while making transactions.

At the 2012 Rio+20 Summit, heads of state and government from 191 countries participated in discussions addressing climate change and sustainable development. Around 12,000 delegates contributed to a total number of 45,381 summit participants. 592 world leaders and representatives were present, and were represented by 57 Heads of State and 31 Prime Ministers. However, heads of government from the most influential countries were absent. The summit in Rio lacked the UK and German prime ministers and the president of the US. Unlike the summit two decades earlier, this time business sat at the table willing to participate in the discussions.

Two decades after the initial Rio+20 meeting the environmental problems addressed are still valid. During the Rio+20 Conference two main topics dominated:

1) The transition to a green economy as a key to achieve sustainable development and poverty eradication and;

2) Working towards strengthening the institutional framework for sustainable development on all levels: local, regional, national and global.

The seven most debated themes during the summit were: green job creation, sustainable land use in order to ensure food security, clean energy, sustainable cities, clean water access, marine life protection and disaster-resilience. Due to the current economic situation the conference focused on the economic aspect of environmental protection leaving less time for the climate change issue.

The most important and discussed document was The Future we Want, which was debated and eventually agreed on by Member States. The document promotes corporate sustainability, supports sustainable development on all levels, encourages engaging stakeholders, and stresses the importance of sustainable development in the context of poverty eradication. Delegates agreed to accept new Sustainability Development Goals (SDG) which will replace existing Millennium Development Goals (MDG). The SDG aims to be a logical continuation of the MDG and will replace the existing system after 2015. Unlike the MDG mechanism, SDG addresses holistically social, economic and environmental aspects of sustainable development in order to eradicate poverty but with particular stress on protection of resources and the importance of the environment.

The Future we Want text of the Rio+20 Outcomes Document became the conference's main formal declaration. The paper stresses the growing demand for energy and highlighted the importance of clean energy development. Also discussed in Rio was the Sustainable Energy for All initiative, which was launched in September 2011 and aims to engage the private sector to invest in clean energy to tackle world poverty. The initiative project highlights three main objectives, which need to be achieved by 2030:

• To provide energy access to all
• To double global energy efficiency
• To double the share of renewable energy in the global energy mix

During the summit the UN Global Compact and the Sustainable Energy for All initiatives have received over 700 voluntary commitments available on-line, including private and public sector, governments and NGOs, to achieve sustainable development. Of these more than 150 commitments were submitted via Sustainable Energy for All. Over $500 billion were pledged at Rio by governments, major groups and all other organisations, including civil societies and business to achieve sustainable development.

Moreover, fourteen countries made voluntary commitments via Sustainable Energy for All, of which half were received by the government of Brazil. This included investment of $235 billion US dollars in renewable energy over the next ten years. Other commitments included projects such as planting 100 million trees by 2017.

The UK was represented in Rio de Janeiro by Deputy Prime Minister Nick Clegg. The UK announced that all UK businesses listed on the London Stock Exchange are required to submit a mandatory report on their level of greenhouse gas emissions. The regulations will come into force from April 2013. The UK is the first country to introduce obligatory reporting for levels of greenhouse gas emissions disclosed in annual reports. The new regulations will help companies to deal with and to reduce emissions as well as reducing future costs due to energy efficiency and encouraging businesses to reduce their carbon footprint. The decision was welcomed by the Carbon Disclosure Project (CDP), the not-for-profit organisation which works with 655 investors to drive greenhouse gas reduction and sustainable water use by business and cities. According to research made by DEFRA, the majority of businesses welcomed mandatory carbon reporting.

Although the Rio +20 on Sustainable Development Conference did not result in any significant agreements or set targets for pressing issues such as climate change, food security and water scarcity, there are some positive outcomes from the meeting. Primarily, world leaders agreed on The Future we Want text and an outcome document has been signed. Secondly, the protection of the environment is perceived in a wider dimension where whilst world poverty elimination is deemed the most important issue, there is a more holistic approach with social, economical and environmental aspects taken into account in order to achieve sustainable development. Moreover, the importance of a green economy has been recognised and acknowledged as significant by the business community.

REFERENCES:

Climate Connect. (2012) Rio20+ Summit 2012, Summary Note

Green Alliance. (2012) Rio+20: Where it should lead. Green Alliance publication

more..

The London 2012 Olympics are estimated to have a carbon footprint of 3.4 million tonnes of carbon dioxide equivalents (3.4MtCO2e).

Contribution to GHG emissions of London 2012

It is speculated that most of the carbon emissions will occur in pre‑games phase. These arise from construction of venues, delivery of transport infrastructure, and fitting out and ‘dressing’ of the venues and Olympic Park. Most of the remaining operational activities and emissions attributable to spectators occur at time when the games are on. Given the pledge taken by the London Olympic Committee to make the games as benign as possible from a climate perspective, a number of steps have been taken to reduce emissions. Some of these include: ticketholders will be able to participate in BP Target Neutral for free and offset their emissions, wrapping to be produced by Dow Chemicals, which will be up to 35 percent lighter and have a lower carbon footprint when compared to conventional materials. The Olympic Delivery Authority (ODA) will invest more than £1million in carbon-reduction measures for local housing and schools, EDF Energy will supply electricity from low carbon sources, a fleet of cars that not only meet the Euro 6 emissions standard but also beat the maximum average of 120g CO2/ km provided by BMW.

The total investment made in the preparation for the Beijing Olympics is estimated at US$17.5 billion. This includes investments in urban environmental infrastructure, pollution sources control, pollution control facilities operation cost, and environmental management capacity building. The carbon footprint of the Beijing Olympics was 1.2 million tonnes of carbon dioxide equivalents (1.2MtCO2e). A total of 22,000 tonnes of emissions were avoided during the games due to various measures including: clean fuel in public transportation system, clean fuel buses in Olympic Green district, solar energy power generation and hot water system, green lighting system and geo-thermal (wastewater) heat pump.

The sports sector is taking actions for sustainability in a much broader sense beyond the Olympics as well. One example in Britain is the evaluation of the ecological footprint of the 2004 FA Cup Final at the Millennium Stadium in Cardiff. Football World Cups in Germany and South Africa also had their carbon footprint studied. Apart from football, the highly popular Wimbledon Championships are taking steps to assess their carbon emissions.

Car maker, Volkswagen, has started an eco-contest for another year in the hopes of creating more environmental consciousness among drivers. The Think Blue Challenge app, which looks like a racing simulation, helps raise awareness about eco-driving and records in-game performance behind the wheel. Winners will be invited to the international final on a real road from San Francisco to Los Angeles, to be held in California from November 24-28 this year. The driver with the least fuel consumption to complete the course and who has best put into practice the environmental tips in the app will be hailed as the eco-driving world champion.

As is clear from above, sports can play a major role in addressing issues of sustainability and raising awareness levels of the masses to take action. Individuals can play their part but taking up the responsibility of offsetting their emissions by supporting quality projects in underdeveloped regions of the world.

According to the study done by the European Cyclists' Federation (ECF) and using TNO data, the bicycle is not completely emissions free when one takes into account the carbon emissions from production and manufacture. However, a life cycle assessment of various modes of transport: the bicycle, bus, and car shows how drastically different in CO2 emissions each mode of transport is. The study made by ECF looks at the life cycle (including production, operation, and maintenance phases) of bicycles, buses, and cars. A bicycle (an average commuter bicycle was used in this study weighing 19.9kg, composed of 14.6kg of aluminum, 3.7 kg of steel and 1.6kg of rubber and to last 8 years and cover a distance of 2,400km each year) was found to release about 21 grams of CO2e per passenger per kilometre travelled, whereas a bus emitted 101g and a car 271g CO2e per passenger-kilometre -- over ten times more than a bicycle!

London has seen a steady rise in the number of cyclists, with an increase of 70 per cent compared to 2001 and 6 per cent more than 2009 to 2010. That means that daily there are roughly 54,000 cyclists on the road in London. However, in London the Mayor’s Low Carbon Zones Programme, meant to take a “community approach to cutting the capital’s carbon footprint” does not include cycling. Instead, cycling’s “revolution” is stated in the Mayor’s Transport Strategy: “There will be unprecedented levels of investment in cycling over the next 10 years to improve cycle infrastructure and information. This will help secure the health, environmental and congestion benefits of a cycle revolution.”

The EU has made climate mitigation an important policy measure. By 2050, the EU has set about reducing its GHG emissions by 80 to 95% compared to 1990 levels. However, transport remains a challenge: between 1990 and 2007, greenhouse gas emissions from transport in the EU increased by 36%, while greenhouse gas emissions from other sectors decreased by 15% during the same period. Despite the increase in GHG transport emissions, the EU will have to reduce emissions in the transport sector by an estimated 60%. An increase in cycling is believed to help greatly in meeting these transport targets. In what ways could these targets be met through the bicycle?

The ECF study, for example, gives evidence towards EU policy goals being met by an increase in cycling through an “avoid and shift” policy measure (ie drivers should avoid or reduce taking trips by car, shift towards less carbon-intensive and privately motorised means of transport. Both can be met through transport planning and use integration). London is pursuing a similar type of strategy by aiming to improve bicycle infrastructure, provide better information, and promote behaviour change/’mainstreaming’ bicycling.

In terms of carbon finance, at the moment projects that could help mitigate emissions and increase bicycle traffic would be through the CDM, nationaly appropriate mitigation actions (NAMAs) or the voluntary carbon market. Other means such as the voluntary carbon market have been explored as well: The CDM has not yet worked to stimulate mitigation actions in transport. As of May 2011 only 0.6% of CDM project activities were transport related, and of the projects registered only 0.2% took place in the transport sector. This limited application of transport projects under the current CDM is in large part due to difficulties in methodology and finance. NAMAs are voluntary emissions reduction measures by developing countries that are directly reported to the UNFCCC. The Partnership on Sustainable Low Carbon Transport is a proponent for NAMAs in transport policy since in developed and devloping countries “only a long term strategy and planning will result in conditions that make people to choose for walking and cycling instead of a car or motorised two-wheeler.” Again, finance here is an issue, however the Partnership psuhes for pilot NAMAs and to realise the long term cost benefits of building sustainable, low carbon transport. The voluntary carbon market has recently been explored as a means as well. A methodology is currently under development for “determining GHG Emission Reductions through Bicycle Sharing Projects”.

Many cities in developing countries, such as Cape Town (South Africa), Delhi (India), Rio de Janiero (Brazil), and Antalya and Sakarya (Turkey) have made cycling and cycling infrastructure a transport initiative. For example in Delhi, all new transport policies must include cycling and pedestrian facilities. This is headed by the National Ministry of Urban Development and partially funded by low-carbon funding. In Turkey, the cities of Sakarya and Antalya both were able to develop a cycling-inclusive transport policy through the Dutch group Interface for Cycling Expertise. Implementation of the pilot cycling routes began in 2011. It is hoped that these cities and others in the developing world may be able to catalyse their cycling initiatives further as a fully accredited NAMA project.

Despite the impressive rise in cyclists in London (visible since I moved to this city four years ago), there is still a far way to go. Air pollution and the high use of transport vehicles within the city remains as issues for the Mayor. Furthermore, London currently only has a two per cent modal share. In cities such as Copenhagen, Amsterdam, Beijing, and lesser known cities such as Oulu (northern Finland), Trondheim (Norway), and Groningen (Holland) all have cycling levels in excess of 10% modal share. In fact, all except Norway exceed 25% modal share, and some Chinese cities and Groningen exceed 50%. London hopes to reach only 5 per cent by 2026. Perhaps more than government initiative is needed to spur development in cycling infrastructure and pro-cycling behaviour in the capital?

http://cycling-intelligence.com/
http://www.ecf.com/wp-content/uploads/ECF_CO2_WEB.pdf
http://www.london.gov.uk/priorities/environment/climate-change/low-carbon-zones
http://www.london.gov.uk/sites/default/files/MTS_Chapter_5_pt2.pdf

Production:

http://www.guardian.co.uk/environment/bike-blog/2012/mar/15/lifecycle-carbon-footprint-bike-blog
http://www.bikeradar.com/gear/article/the-not-so-green-bike-carbon-fibers-carbon-footprint--31898/

Cycle Calculator:

http://www.ecf.com/co2-calculator/

Many experts believe that developing an approach where different governments develop their own frameworks is better as it leads to a framework which is designed keeping the local needs in mind. This gives a bottom up approach for a global framework a better chance to evolve as compared to a top down approach being pursued by the United Nations Framework Convention on Climate Change (UNFCCC).

“Agriculture is the heart of Oklahoma, and…this program benefits both agriculture producers and natural resources,” says Stacy Hansen, director of the Oklahoma Conservation Commission's Oklahoma Carbon Program, which oversees the project. “People appreciate our non-regulatory approach.”

Nine of the 21 programs have emerged just in the last four years, showing the growing trend. Several other nations apart from the US, such as Costa Rica, South Korea and South Africa could consider allowing offsets of voluntary origin for use under its proposed carbon tax.

“In a few short years, governments have shifted from skepticism to acceptance of the voluntary carbon offset market as a valid complement to regulation,” says Ecosystem Marketplace’s Carbon Program Manager Molly Peters-Stanley. “Some voluntary programs are even writing the rules for regulated carbon markets as governments outsource a growing list of market functions to independent bodies – leaning on their accumulated experience with carbon offset projects.”

“Many of these programs are both unique and innovative, but have gained very little attention globally. We analyzed these various government programs with the goal of highlighting and clarifying their domestic efforts to reduce greenhouse gas emissions,” explains Ecosystem Marketplace Director Katherine Hamilton. “In many cases, governments are setting up trading programs not only to support corporations and citizens seeking to offset emissions, but also as a means of testing carbon trading as a regional compliance tool.”

Many of the national governments have also had support from World Bank’s new Partnership for Market Readiness, which is a capacity-building trust fund to assist developing countries that wish to take on GHG reduction targets.

A survey reported in Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market states that respondents reported a total 6.3 MtCO2e transacted as a result of their programs or guidance in 2011. This equates to 11% of the total volume of credits voluntarily transacted over-the counter worldwide, as of Ecosystem Marketplace’s 2011 State of the Voluntary Carbon Markets report.

The report adds that China’s voluntary markets saw transaction of 148,000 tCO2e in 2011 with 11 participants and adds that by 2015 it is estimated to reach 4 million tCO2e.

The cost of voluntary carbon is much higher in developed countries as compared to developing ones. For example, Japan’s voluntary carbon certificates, the Japan- Verified Emission Reductions (J-VERs) have been trading at a price of $ 95-130 per tCO2e. One of the reasons why the cost of carbon is high in case of J-VER is because it is expensive to operate emissions reduction project in developed countries such as Japan. The project implementation costs are higher as both the price of the material used as well as the employment costs are quiet high. Therefore, it makes sense to invest in voluntary emission reduction projects in developing countries where the prices of the emission reductions are lower and social benefits co benefits are also much more, due to lower socio economic conditions to begin with.

The report also finds that governments have expanded their purview from just providing oversight for voluntary offsetting programs to now engaging in services as diverse as certification of projects and development of methodologies that reduce greenhouse emissions – to registering offsets and educating buyers.

International aviation and shipping sector are major and fast-growing sources of greenhouse gas emissions. The sectors’ combined emissions were over one GtCO2 in 2007 and are expected to rise to around 1.7 GtCO2 by 2020. Business-as-usual projections by the International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO) suggest that in the absence of policies to control them, emissions could triple by 2050. Such unchecked emissions would take up a substantial proportion of any global carbon budget, and undermine the chances of avoiding temperature rises of 2°C, let alone 1.5°C.

The Committee on Climate Change, an independent statutory body to advise UK Government on setting and meeting carbon budgets and preparing for climate change, recommends that emissions from both aviation and shipping should be included in UK Carbon Budget. The committee has set the 2050 target of reducing total UK attributable emissions down to around 160 MtCO2e by 2050, a cut of 80 per cent below 1990 levels. Emissions from international aviation and shipping were initially left out of carbon budgets and the 2050 target when the Climate Change Act became Law in 2008, with the decision on inclusion delayed to 2012.

Figure 1: International aviation and shipping (IA&S) are expected to be a large share of emissions by 2050

Emissions from international aviation and shipping are mitigation problems of major concern. They are large and fast-growing sources of emissions with no overall regulatory framework to control them.

Delivering such policies will require substantial political will, as the sectors are not amenable to rigid distinctions between Annex I and non-Annex I of the Kyoto Protocol. But since their emissions do not belong to any particular country, co-operative action to tackle them will set a precedent for the treatment of emissions that do belong to individual parties.

Below are the possible options for emission reduction in these sectors:

• Aviation: On the supply side, options include improvements in engine, aircraft and operational efficiency, and some use of biofuels. Further emissions reductions could be achieved through limiting demand growth (e.g. via carbon pricing and/or capacity constraints).
• Shipping: Abatement options include technological and operational improvements to fuel efficiency (including use of larger ships), together with some use of biofuels.

Airbus and Air Canada have performed North America’s first “Perfect Flight” over international borders, with the goal of cutting CO2 emissions by more than 40 percent compared to a regular flight. The commercial flight on an Airbus A319 aircraft from Toronto, Canada to Mexico City combined the use a modern, state-of-the-art aircraft, powered by sustainable alternative fuels, guided by streamlined Air Traffic Management procedures and facilitated through best practice operations to under-pin the industry’s four pillar strategy to tackle carbon emissions. “[The] flight with Air Canada proves that the aviation industry is in a strong position to reduce emissions and fly many more Perfect Flights,” said Fabrice Brégier, Airbus President and CEO. “To make this a day-to-day commercial reality, it requires now a political will to foster incentives to scale up the use of sustainable biofuels and accelerate modernization of the air-traffic-management system. We need a clear endorsement by governments and all aviation stakeholders to venture beyond today’s limitations.”

Lufthansa, launch customer for the Boeing 747-8 Intercontinental, initiated commercial service of the new Jumbo jet along the inaugural route of Frankfurt (FRA) to Washington. "The Boeing 747-8 Intercontinental is an exceptional aircraft," said Christoph Franz, Chairman and CEO of Deutsche Lufthansa AG. "With its addition to our fleet, Lufthansa has created a product that is not only in line with our company's commitment to innovation, technology and efficiency, but that also offers qualities and features that are sure to maximize our passengers' in-flight experience.”

Azul Brazilian Airlines, in partnership with Amyris Inc., Embraer and GE, made a demonstration flight today using an innovative, renewable jet fuel produced from Brazilian sugarcane. Heading to Rio de Janeiro Santos Dumont Airport, the Embraer E195 jet operated by Azul departured from Campinas Viracopos Airport and has flown over the “Marvelous City” of Rio, which is hosting the U.N. Conference for Sustainable Development (Rio+20) this week. “Azul’s commitment to reducing our dependency on volatile petroleum products goes beyond reducing our costs. The main objective is to innovate in our service offerings, using the best technologies to reduce our carbon footprint as well as raise awareness among our customers that they are not just choosing an airline that is merely concerned about the environment but is taking steps to preserve it,” said Flavio Costa, Chief Operating Officer of Azul Airlines.

Given under are examples of the actions being taken up by various airlines:

Air Canada: An Airbus 319 headed from Toronto to Mexico City used for the very first time biofuels in an effort to greener transportation. It used recycled cooking oil and jet fuel for the journey, which the aircraft maker says could cut carbon dioxide emissions by more than 40 percent. It will require political will to foster incentives to scale up the use of sustainable biofuels.

SriLankan Airlines: SriLankan Airlines formulated its Corporate Environment Policy in January 2009 to address a range of issues on an on-going basis. The focus has been on the most critical of areas of Aviation Fuel Management & Conservation through the adoption of best practices. The performance of every aircraft is closely evaluated to ensure optimum operational efficiency. The measures adopted to reduce fuel consumption during 'pushback', taxiing, descend, landing, the use of ground power units while stationary and increasing efficiency through heightened engine maintenance and aircraft servicing, are some of the current measures.

easyJet: British airline easyJet has announced that it has completed the forward purchase of emission allowances to cover the total carbon emissions of its operations in 2012 under the EU ETS Aviation scheme. The airline also said that the financial burden of the scheme would be around £7 million for 2012.

The shipping industry is not far behind. Recently news has broken that Panasonic Corporation, Mitsui O.S.K. Lines and Mitsubishi Heavy Industries have developed a new car carrier ocean going liner which uses 160 kW solar modules and lithium-ion batteries storing about 2.2 MWh apart from a diesel powered engine. The hybrid system allows the liner to have zero emissions in the harbor area.

• Interface between industry, technology & climate, and carbon finance
• Meeting point of the green technology and climate financing
• Global crossroads for climate policy development around the world

The total value of the carbon market (compliance plus voluntary) grew by 11 percent year-on-year to US$176 billion from US$148 billion, and transaction volumes reached a new high of 10.3 billion tonnes of carbon dioxide equivalent (CO2e).

Several new domestic and regional carbon market initiatives gained traction in both developed and developing economies in 2011. Five new jurisdictions passed legislation adopting cap-and-trade schemes. “It is heartening to see that, while leading economies continue to experience difficulties and the carbon market faces major challenges, we see increasing interest in, and support for, new market-based mechanisms to mitigate climate change in the long term,” said Joëlle Chassard, Manager, Carbon Finance Unit, World Bank. “Together, these initiatives will drive substantial resources towards low-carbon investments and they have the potential to unleash a truly transformational carbon market in support of a global solution to the climate challenge,” said Alexandre Kossoy, Senior Financial Specialist, Carbon Finance Unit, World Bank.

"It has been proven again that this (Cologne) is the place to be for information on the latest ideas and trends on climate finance and carbon markets. The Carbon Expo remains the best knowledge platform for carbon market stakeholders", said Joëlle Chassard, Manager of the World Bank's Carbon Finance Unit, Dirk Forrister, President and CEO of IETA, and Dr. Christian Glasmacher, Senior Vice President of Koelnmesse, in a joint statement.

Mr Simon Andrews, MD of The Trend Is Blue stated: "Attending the Carbon Expo 2012 in Cologne was a great learning experience. It was interesting to see the intensity in the Carbon markets.It was real pleasure to meet again all our international friends. The lessons learnt at the Expo will be used to provide cutting edge services of international standards for our clients." He added "Carbon Expo 2012 makes it clear that the future is bright, particularly seeing the strong demand for carbon offsets from the corporate sector."

The Carbon Expo opened with a full house and rousing call to action from Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC).

"We're into year four of international financial turmoil, and despite that, governments are persevering - slowly, but step by step - in evolving the climate regime to where we all know that it has to go", said Figueres. "They're persevering basically because they, and we, know that there is no other option."

Figueres applauded the continued commitment of participants in the carbon market. "Participation in today's market is not for the faint of heart," she said. Figueres added, "There is no such thing as the impossible - it's just a matter of attitude."

Conference participants agreed that offset markets and emissions trading have a future despite a tough market currently, and those who can survive will reap the rewards. The expectation is that market demand, in particular, will increase as a future regulatory framework is created with a number of possible options to address greenhouse gas (GHG) emissions efficiently and effectively. Such an emergence of a suite of simplified instruments both on local and global levels will provide confidence to establish more ambitious targets by countries required to reach the agreed global target of two degrees Celsius.

Though many of the visitors were at the Carbon Expo to share their thoughts on the future, hectic activity was noticed with buyers and sellers of carbon credits finalising deals before the end of the year.

The Carbon Expo 2012 saw the release of “State of the Voluntary Carbon Markets 2012” report by Ecosystem Market Place and Bloomberg New Energy Finance. The report analysed the trends of the voluntary carbon market and highlighted new initiatives, project types, and sources of demand of voluntary offsets. We will take a look at some of the salient features of the report.

The report identifies The Trend is Blue as one of the important voluntary carbon market players providing feedback for the renowned report. According to the report, in 2011 more than $576 million was transacted in the voluntary carbon markets. This figure was a three-year high. The total volume of carbon traded stood at 95 MtCO2e. 2011 saw the highest value ever attributed to OTC (Over the Counter) transactions at $574 million. The total amount of GHG transacted in 2011 stood at 93 MtCO2e. If one excludes a single low-priced, high-volume outlier from the 2010 market, this represents a 28% percent increase over 2010 levels. Despite the debt crisis, European buyers increased their demand, even if at lower prices, while buyers in the US made up for the shortfall.

European buyers transacted 33 MtCO2e, which was worth $204 million. The US topped thje list on a country level, purchasing 19 MtCO2e for purely voluntary purposes, with 12.4 MtCO2e going directly to end users. Australia and New Zealand showed increased offset transactions. Around 7 per cent of market share was due to voluntary offsets transacted in developing countries in Asia, Latin America and Africa. This fall in volumes from 2010 volumes was attributed to the fewer transactions by buyers in Latin America.

Table 1: OTC Volume and value traded by buyers as per region
(Data Source: Developing Dimension: State of the Voluntary Carbon Markets 2012)

Due to various economic factors, many European buyers were attracted to the comparatively inexpensive Asian clean energy projects. Europeans were also the largest supporters of projects in Latin America and Africa. Buyers from developing countries purchased voluntary offsets locally to offset supply chain emissions in their roles as exporters or to prepare for domestic GHG regulations. According to the report, prices of voluntary carbon offsets varied greatly by standard, location and technology, ranging from under US$1 to over US$100 per tonne of CO2e.

Corporates were the largest buyers of voluntary carbon offsets, with a share of 92per cent. Majority of the buyers (54 per cent) purchased voluntary offsets for CSR, public relations and branding purposes. Other reasons for purchase of voluntary carbon offsets included resale (22 per cent), anticipation of direct regulation (12 per cent) and ‘greening’ of supply chain (3 per cent).

Table 2: OTC Market Share by Project Type
(Data Source: Developing Dimension: State of the Voluntary Carbon Markets 2012)

35 MTCO2e or 45 per cent of the transacted volumes were through renewable energy projects. Out of this, wind projects took the lead to amount for 23.5 MtCO2e. This was mainly due to the demand for lower-priced credits, which increased the demand for older Asian renewable energy credits. Afforestation and reforestation projects accounted for the second highest volumes at 7.6 MtCO2e. Landfill projects too were popular, according to the report, but they saw fewer transactions than in 2010.

There is a positive forecast on the status of the voluntary carbon markets by industry players. According to a survey carried out by Ecosystem Marketplace and Bloomberg New Energy Finance, it was predicted that 227 MtCO2e would be transacted in 2012, up 70 per cent compared to 2011. This shows that demand for voluntary offsets is still high. Large corporations such as the Cooperative group, HSBC are striving to offset their emissions and thus stoking the demand for quality voluntary offsets from high-value projects such as efficient cook stove projects in Cambodia and manual irrigation pumps in India. Microsoft too announced plans to purchase offsets funded by imposing a carbon fee internally. Such demand from major corporate players continues to help voluntary markets prosper.

However, thinly traded commodities also have a lot of advantages. Some argue,they offer better returns. For example, Roger Ibbotson, a professor of finance at Yale School of Management, led a research demonstrating that thinly traded stocks tend to do better over time than more actively traded stocks. In an interview in Forbes, he explained that when one compares stocks from as long before as 1972, one reaches the conclusion that thinly traded stocks beat highly liquid ones in all four quartiles ranked by size. The spread ranged from 12 percentage points a year between the least and most actively traded micro-caps to 2.8 percentage points between the least and most popular mega-caps, Ibbotson says.

Data Source: Financial Advisor Magazine, www.fa-mag.com

As evident from the above table, low liquidity and small-cap stocks outperformed their higher liquidity counterparts in the long run from 1972 to 2009. Extrapolating this result to the carbon markets, which too is a comparatively low-cap illiquid market, shows that it makes good sense to look at carbon over the longer term.

Thinly traded commodities have the advantage that it takes very few players to create movement in prices as usually the commodity is in very few hands. This leads to volatility in prices, which is a very good attribute if one wishes to get into trade. Quick trading also prevents losses as one does not need to hold the position for long.

What’s more, it has been shown that it is even more profitable to invest in thinly traded commodities and certificates if one is doing it through a specialised agency quite similar to an exchange-traded fund (ETF).

Risk Warning: This blog is for information only and does not constitute investment advice. Holding carbon credits for the purpose of financial gain is speculative and involves risk. There is currently a thinly traded market for carbon credits.

Carbon trading is the sale and purchase of carbon credits to offset Greenhouse Gas (GHG) emissions. As awareness about global warming and the environment grows, carbon trading has become an important financial tool to address it. The industry is further boosted by pressure from customers and investors on corporations to reduce their emissions and implement environment friendly activities. The volume of overall carbon traded has continued to grow, in 2012 volumes increased by as much as 13% and it is forecasted to grow further, making carbon one of the top tradable commodities in the world. Most of the carbon credits are traded over the counter (OTC) by large organisations looking to offset emissions or meet regulatory requirements from their activities; for example, Microsoft recently announced plans to ensure each of its divisions is carbon neutral, through the purchase of carbon credits, beginning 2013.

Like any large market, the carbon markets too have seen their share of scams and individuals who try and cheat their way into making the quick buck. Fraudsters and scammers have been attracted to this burgeoning market and have tried to dupe and trick investors. Financial services regulatory bodies such as the Financial Services Authority (FSA) in the UK have been trying to help new investors avert the risks associated. Even though the risks exist, if one is savvy and informed one can prevent themselves from falling prey to the unscrupulous elements in the carbon markets.

Here are some tips to keep in mind before investing in carbon:

Ethical & candid market information

• Seek advice from independent financial advisors before making any investments. It is also always good to read up on the market to get an understanding of how the sector works and the various risks involved.
• The carbon markets are a thinly traded market and thus one should expect frequent and large fluctuations in price as a norm and not be bothered too much. According to a recent study at Yale, thinly traded commodities have outperformed higher volume ones by as much as 12% between 1970 and 2010.
• One should always buy in spot carbon offsets rather than in futures.
• There are strong indications that carbon markets will continue to grow exponentially, however there are no guarantees, which is similar to any other market commodity.
• Carbon credits should be viewed as a medium to long-term hold. One should realize that since the market is growing, it might be difficult to sell credits quickly until the market matures further.
• Ask for reports and pictures of the projects highlighted in marketing documents.

Check the company

• Most of the firms sell carbon credits that are held in an account in a registry. One can check a registry to verify that the company and credits exist.
• One should always check whether the company, one is looking to use has the appropriate authorization and should ideally be based in the local country. The payments for the credits should also go directly to the provider or seller of the credits and not to a third party escrow account or agent.
• Always utilize companies that are more publicly visible.
• It is important to assess the quality of company employees before making any selection. For example, do they have the appropriate education and qualifications /
• Companies that publish scientific reports, provide technical studies, have scientists or a research team are ideal to use. A good website too says a lot about an organisation. For example, check to see the quality of followers on twitter. Are they fellow professionals, industry leaders and household names.Are they invited by their peers to domestic and international seminars i.e, Do they hobnob with the best in their field?
• Does the company advise corporations on environmental and corporate social responsibility policies? Do they have quality testimonials both Government and corporate.
• The FSA in the UK does not regulate the sale or trading of spot carbon credits, a firm promoting or selling them does not necessarily have to be authorised by the FSA, although it is always good business sense to invest in an organisation that is authorized by the FSA or other local regulatory bodies eg. London stock exchange. However, international registries NYSE Blue, CDC, Markit insist all clearing houses should be regulated entities. It is advisable that you only clear carbon credits through a regulated entity.
• It should be checked if the company selected explains how to assess the integrity of credits and has qualified specialist to carry out due diligence to ensure the credits are fit and proper.

Sustainable projects

• It is advisable to invest in small-scale projects such as biomass rather than HFC or large hydro as such projects have a more positive impact on the sustainable development of the region they are located in. For purpose of ethical/environmental integrity certain offsets are best avoided namely Industrial gases: N₂0, HFC, CF₄, C₂F₆, SF₆ .Large hydro dams which cause significant environmental and human risks. Carbon offsets from coal plants because they are based on flawed methodology.
• Projects that meet “additionality” requirements of validation companies have maximum positive impact on the environment and it is best to purchase carbon credits from such projects.

Reliable Standards

• It is advisable to invest in carbon credits that have been validated and verified by renowned standards such as the Verified Carbon Standard or the Gold Standard.

Education of paramount importance

Finally, the prime objective for any good offset provider ought to be educating the public about climate change. It is important to ensure that the company is part of the solution to climate change and not the problem. Some questions to consider.

• Is the company passionate about promoting sustainable growth?
• Does it offer advice on how to avoid, reduce and offset emissions?
• Do they offer energy saving tips
• Have they created youtube presentations offering guidance and education?
• What impact “Klout” (Klout measures influence online) do they have on social media sites. Do they release informative blogs and publish newsletters on a regular basis.
• Do they make available their own carbon calculator complying with government standards e.g., DEFRA
• Do they offer internships to students?

The above combination of sound market advice and reliable information on company, projects and standards should go a long way in clearing doubts in any buyers mind.

Good luck with your selection.

The Carbon Floor Price would result in organisations paying a minimum price for GHG emissions. This would be in contrast to the European Union’s Emission Trading Scheme where there is no minimum set on the price of Carbon. The main goal of setting a floor price is to reduce revenue uncertainty and increase investment in low carbon technologies and measures.

At present Carbon prices are languishing around the 6 Euro mark (Compliance credits) which is very low to influence business decisions. The UK government hopes that a floor price would increase the price to the 25-40 Euro figure and lead to adoption of GHG abatement measures across industries. Furthermore, according to the budget, it will raise £740 million for the Treasury in 2013-14, rising to just over £1 billion in its second year and £1.4 billion in its third year. Even while there have been protests against introduction of a floor price, more countries such and Denmark, Germany, Sweden, Portugal, Spain and Greece have also called for such a measure.

If at all a Carbon Floor price is established in the UK, it will only increase the price of compliance carbon offsets such as the UN issued CERs (Certified Emission Reductions) to the 16 Euro mark in the first year. It will have no direct impact on the prices of voluntary offsets in the carbon market. Rumors that Voluntary carbon prices too will increase 3-4 times are false and no such increase in price is expected.

While it is true that a Floor Price in the compliance market will stimulate the entire Carbon market, no direct effect is expected on the prices of voluntary carbon offsets. Buyers of voluntary offsets are not bound to offset their emissions but do so under their Corporate Social Responsibility (CSR), brand building and enhancing the brand value. This is particularly true for European countries where awareness among its citizenry and industry regarding climate change issues is amongst the highest and people’s perception is favorable towards green companies. A recent study by University of California also found that the value of a company rises as it discloses green growth information.

As elaborated above the prices of voluntary carbon offsets are based on pure market principles of supply and demand and a UK carbon floor price will not have any direct effect on voluntary offset prices. The increase in prices for voluntary offsets is as a result of the high demand for voluntary offsets and relatively low supply. The high demand in offsets is because of pressure on companies to disclose their sustainability measures as a result of initiatives such as the CDP (Carbon Disclosure Project) and to become carbon neutral. This, along with reduced supply of voluntary carbon offsets from developing countries as a result of fewer GHG abatement projects is the reason for the increase in prices of voluntary carbon offsets.

Some of the well-known validation and verification firms include SGS, TÜV NORD, Det Norske Veritas (DNV), Bureau Veritas Certification Holding SAS (BVCH), Lloyd’s Register Quality Assurance Ltd. (LRQA), TÜV SÜD and many others. Most of these firms have been involved in the field of certification and validation for a long period and gained vast expertise. SGS, for example has been involved in the inspection business since 1878. Similarly, DNV’s history goes back to 1864, BVCH was formed in Antwerp in 1828, the London based LRQA also traces its origins to the 1800s. Because of their vast experience in certification and validation, regulatory bodies have entrusted the task of validation and verification with these firms and as the carbon markets have evolved, these firms have had a major role to play, SGS, has been involved in the registration of more than 400 Clean Development Mechanism projects under the UN.

The regulatory bodies accredit various auditing firms under various sectors. The audit firm is then able to validate or verify any project belonging to that sectoral scope. For example, under the Verified Carbon Standard (VCS) there are 15 scopes, ranging from Energy and, Manufacturing Industries to Fugitive emissions from Industrial gases. A Validation and Verification Body (VVB) as the audit company is known as under VCS may be accredited to audit all or a part of the scopes based on their area of expertise, while DNV’ s accreditation covers all scopes, Ernst & Young Associés can only work with projects under Agriculture, Forestry and Land use.

The table below gives a list of a few validation and verification companies under the Verified Carbon Standard (V-C-S) and the sectors for which they are accredited.

List of Sectors:

1. Energy (renewable/non-renewable)
2. Energy distribution
3. Energy demand
4. Manufacturing industries
5. Chemical industry
6. Construction
7. Transport
8. Mining/Mineral production
9. Metal production
10. Fugitive emissions from fuels
11. Fugitive emissions from industrial gases
12. Solvents use
13. Waste handling and disposal
14. Agriculture, Forestry and Land Use
15. Livestock and manure management

From our man in San Francisco
Every year Climate Action Reserve organizes the largest carbon conference in North America titled, ‘Navigating the American Carbon World’. This year too the conference was held from the 10th of April to the 12th in San Francisco. The conference provided a good opportunity for regulators, climate academicians and corporations amongst others to get together and discuss the state and future trends of the American carbon markets.

The Climate Action Reserve (CAR) is a premier carbon offset registry for the North American carbon market. It is involved in establishing standards for carbon offset projects, overseeing verification, issuance of offsets and transaction. Till date, CAR has issued just under 23 million Climate Reserve Tonnes (CRTs) to various GHG mitigation projects. One CRT is equal to one tonne of carbon dioxide equivalent (CO2e) emissions reductions.

This year’s conference began with verification bodies, auditing firms having discussions on the verification of Scope 3 emissions. A meeting of all Climate Action Reserve Account Holders, to discuss policy updates and guidance on project registration, followed this. Throughout the day various sessions were held on areas such as the California Markets, Western Climate Initiative (WCI), the UN CDM market etc. During day 2 of the event sessions were held on topics such as ‘Developing SubNational REDD+ Policies and ‘Transaction Structure and Pricing’. The California Air Resources Board (CARB), R20, Shell Energy were just some of the organisations which were represented at the events.

The last day of the conference provided insights into sectors such as Agriculture and offsets arising from such projects and ‘Policies and Paths to California’s Mitigation Goals’. During the three day event, some of the distinguished speakers included Linda S. Adams, former Secretary of the California Environmental Protection Agency (Cal/EPA) and Founding President of R20, Dirk Forrister, Incoming President and CEO, International Emissions Trading Association, Mary Nichols, Chairman, California Air Resources Board and many others.

Source: www.thetrendisblue.com

Overall, the conference was a valuable event in the carbon market calendar. Because of the launch of the California Cap and Trade Program, this year’s conference was even more important. The focus was also on linkages between international programs and the voluntary markets as companies prepare to meet compliance requirements.

The Trend’s philosophy is to
1. Invest in our experts, occupy only modest office space and offer substance: learned reports, market updates and detailed blogs to our clients.
2. To save on unnecessary travel, by utilising regional support services and to outsource where possible, helping to avoid and reduce emissions and thus save money.

As the great Statesman Pericles say’s

“We are lovers of beauty without extravagance and lovers of wisdom without unmanliness”

 However we have to be pragmatic in all things. This is a global business with international clients.

Therefore the Trend has, after some deliberation, contracted to take modest office facilities at Lloyds of London which will be our new flagship address.

Being of such historical importance our international clients will understand the significance of Lloyds and appreciate the modernist architecture of Sir Richard Rogers. Furthermore as the Insurance industry is set to suffer major losses from the impact of Global warming and as FTSE 100 insurance companies such as Aviva have recognised the importance of carbon neutrality we feel this is an excellent location that will enable us to advise more domestic and international companies on the importance of sustainable growth.

We can reassure all our followers that the facilities are modest and have been kept to the very minimum.

It is with the greatest delight and honour that we wish to announce that The Trend is Blue have been invited by Ecosystems ,the authors of the definitive international report on the “State of the Voluntary Markets and The Forest Carbon Markets” ,to participate by forwarding our learned opinion for inclusion in their benchmark 2012 Survey and it is with great privilege we take this responsibility.

Both of these reports are benchmarks (causes cé·lè·bres) in the carbon markets and are cited throughout the year by major news outlets, private- and public-sector decision makers, and other market players and observers.

In 2012, Ecosystem Marketplace aims to again offer insights into the voluntary and forest carbon marketplaces.

We wish to congratulate our qualified international experts for their outstanding work and dedication in helping to educate on the importance of Sustainable growth and Climate change.

Please take a few minutes to visit http://www.thetrendisblue.com/climate-change-be-part-of-solution.html  and learn how you too can be a meaningful part of the solution to Global warming.

The agenda for the Rio+20 conference will be securing a renewed political commitment to sustainable development from global leaders, assessing the progress and implementation gaps in meeting already agreed commitments, and addressing new and emerging challenges.

Official discussions will focus on two main themes: Building a green economy in the context of poverty eradication and sustainable development, and improving international framework for sustainable development. Governments are expected to adopt clear and focused practical measures for implementing sustainable development based on the many examples of success seen over the last 20 years.

Another effort towards keeping development in check with the environment is the Earth Hour initiative. Earth Hour is a global event organized by World Wide Fund for Nature (WWF) encouraging households and businesses to turn off their inessential lights for one hour, raising awareness towards the need to take action on climate change. It is held on the last Saturday of March every year and this year it will take place on March 31st from 8:30pm to 9:30pm. The idea of Earth Hour was first conceptualised by WWF and The Sydney Morning Herald in 2007, when 2.2 million individuals and more than 2,000 businesses turned off lights for one hour in Sydney, Australia. It was an instant hit as it showed that everyone, from children to CEOs and politicians, has the power to change the world they live in.

Earth Hour 2011 turned out to be largest-ever voluntary action for the environment. It is estimated that more than 1.8 billion people across 5,251 cities in 135 countries in all seven continents participated, switching off lights for an hour. This voluntary move has saved billions of electricity units and millions of tonnes of carbon emission over the past five years.

Last year, Dubai Earth Hour celebrations saved a record 204,000 kWh and 122 tonnes of carbon emissions. Bangkok decreased electricity usage by 73.34MW, the equivalent to 41.6 tonnes of CO2 emissions. Ontario used approximately 900 MW hours less electrical energy during Earth Hour.

Earth Hour is a unique opportunity for living sustainably and doing something constructive for the environment. It’s not just about saving energy for an hour or reducing the associated carbon emissions. Rather it’s about going beyond the Hour with lasting, behaviour-changing actions for a sustainable planet.

So, are you switching off your lights this year?

In general CSR is based on the idea that corporations can no longer act as though they are isolated economic entities operating without consideration of the broader society in which they operate. If implemented well CSR gains a business an understanding of the social and environmental impacts its business operations have both now and in the future. This knowledge enables a business to act responsibly in a positive, moral and sustainable way to the benefit of a wide range of stakeholders and not work purely towards financial gains for shareholders and investors. Some of the many well cited advantages of a good CSR code include: strong brand reputation, greater employee retention, operational efficiency, managed risk and increased investor interest. These are shown to be interlinked, for example M&S by increasing operational efficiency in its factories was able to pass on the savings to its employees creating a better working environment for them, which in turn created a higher turnover of product and a lower turnover of staff. The additional advantage, which cannot be quantified, is with the positive effect these actions have on their brand.

The Trend is Blue has produced a thorough guide to Corporate Social Responsibility that well help organisations better understand what CSR is and how it will help to achieve sustainable business growth.

According to the latest Carbon Disclosure Project (CDP) India Report 2011, Indian companies are now more willing to disclose details on their climate-related strategies and actions, thus suggesting a real progress in implementing low-carbon practices. This progress is substantial as Indian companies currently do not face any mandatory emissions reduction or energy efficiency targets. Ten Indian companies reported offsetting 6.2 million tonnes of carbon emissions and realised US$85 million in financial savings.

Of the total companies which participated in the CDP India 2011, a third already have emission reduction targets in place while 24 per cent are in the process of developing emissions reduction targets. Companies like Oil & Natural Gas Corporation (ONGC) have been involved in voluntarily offsetting the carbon footprint generated from corporate events. The company has also implemented Gas Flaring Reduction projects at all onshore and offshore installations, which has resulted in reduction of over 1.47 million tonnes of carbon emissions. ITC has taken steps to enhance its “carbon-positive” status by continuously improving upon its specific energy productivity, which is closely monitored and benchmarked.

One of India’s largest IT companies, Tata Consultancy Services (TCS), discussed the various factors that drive it to address the issue of environmental sustainability. “Clearly, the drive to engage in Climate Change mitigation starts from the top within the group. In addition to this the increasing customer and shareholder pressure for TCS to disclose and improve its carbon as well as overall environmental performance has influenced our approach to the subject.”

An integrated oil company in India, Essar Oil Limited (EOL), explained the additional benefits of disclosing the carbon and environmental performance. “Reputation is an intangible asset and no potential financial implication can be ascertained for this opportunity. EOL has initiated continuous reporting of its emissions in global forums such as CDP and is in the process of implementing a continuous emission monitoring and management system.”

In China, companies are also gearing up to limit their carbon emission output as the Government, too readies its emissions trading scheme. According to the Carbon Disclosure Report China 2011, the Government is also planning to launch regulations on Voluntary Greenhouse Gas (GHG) Emission trading activities in China. Companies like Shanxi Town Star Group and Shenhua Group are looking to lower their emissions while improving on their energy efficiency. Both these companies have conducted independent carbon inventories in 2011 and have had their data verified by independent third parties.

The number of Chinese companies reporting specifically about climate change-related issues in their CSR reports has increased remarkably in the recent years. Companies have established governance or leadership teams to address climate change, energy savings and emissions reductions.

The awareness of Chinese companies towards the risks posed by climate change has increased. However, they continue to remain concerned mainly about the regulatory and corporate risks associated with a comparatively dormant approach to reduce their carbon emissions and improve energy efficiency.

Companies in other emerging economies like Brazil and Russia have also shown positive trends towards voluntary emissions reporting and incorporating a climate governance theme in their operations. Even though the CDP has suggested that many companies in Brazil are not yet fully equipped to evaluate and report their GHG emissions inventory, many companies have expressed willingness to achieve that capability in the near-future.

In Russia, several leading companies admit that increasing carbon emissions and climate change pose threat to the industrial sector. However, the companies see great opportunities as well. Many Russian companies are looking to identify the risks and modify their corporate strategies to eliminate those risks through carbon management programs, energy efficiency and efficient use of resources to cut production cost.

Companies in developing countries have been voluntarily taking steps to reduce carbon emissions, increase use of clean energy and improve energy efficiency as they look to improve their corporate image, answer the concerns of stakeholders and win new investors who are becoming increasingly aware of the carbon liabilities of the industrial sector.

      Initiatives by leading Indian and Chinese companies

Firstly may I take this opportunity to welcome you to our country. I am pleased to acknowledge The Trend is Blue, a socially responsible consultancy that shares our environmental plans to achieve a global equilibrium of emissions.

India has a strong emphasis on sustainability which is ingrained in its philosophy and culture, ancient scriptures exemplify this. In 1992 The Government of India participated in the Earth Summit in Rio de Janerio where it endorsed Agenda 21, which remains a powerful long term vision for balancing economic and social needs with planetary capacity.

India has laid out strong policies and domestic arrangements to achieve social growth and meet the needs of 1.2 billion citizens. The National Environment Policy of 2006 is a clear example of India's obligation on clean environment in which it addresses environmental concerns in all development activities. Increasing forest coverage in India from 728 km2 in 2005 to 1,106 km2 in 2009 is just another way in which Indian is combating climate change. Implementation of the National Solar Mission (NSM), a key renewable energy incentive, developers are offered an attractive financial compensation to sell solar power to the grid, which is again an emission reducing scheme. The NSM has led to the spread of renewable energy, accounting for 11% of the total grid, as of March 2011.Future projections of the solar industry are bright. According to Bridge to India's new India Solar Handbook, by 2022 33.4 GWs of solar will be in place in India, thus making the country less reliant on expensive fossil fuel.

India, being part of the BRICs, has some excellent projected growth rates of 8% in the next decade, it has the potential to become the third largest economy by 2025, with a 17% share of global GDP, which I am glad you have recognised. True potential exists here in India and it is those intuitive business minds that grasp the opportunity to be a part of our fast developing nation.

We have a shared interest in green technologies and I look forward to exchanging ideas and information with you, especially that on renewables; such as wind, hydro, solar and biomass energy. Your specialist reports have been of great interest to me and provide much information on the new low carbon world.

Your importance in developing boutique carbon reducing projects to meet social and development needs of key workers in India especially interests me. India always places social needs first and these projects will greatly help our goal to eradicate poverty and improve health and well-being.

It is already clear that you have made a good starting point in the south of the country; Hyderabad is a fine place to begin. Hyderabad, being one of the fastest growing urban cities in India, offers world class environment, best infrastructure and high skilled manpower, as well as boasting the Hyderabad International Airport for global connectivity. Your plans to expand to North India will prove both socially and economically enriching for another area of our country.

Many Indian companies are now making a commitment to the Carbon Disclosure Project, together I am sure we can encourage many more, what with your connections in London, Hong Kong and Latin America.

I look forward to your future plans and being kept updated with your progress. I hope to speak to you again soon.

Yours sincerely,
Shri.T.Harish Rao
Indian Legislative Assembly

The Trend is Blue is pleased to announce their entry into Bharat: the land of the Vedas, with the opening of its office in Hyderabad, Southern India. This is a most exciting progression for our company due to India’s rapid growth in carbon markets and the country’s strong focus on sustainability.

The growth of four economically dynamic countries: Brazil, Russia, India and China: known by the acronym BRIC’s is propelling world growth in these historically depressive times. Investors and businesses need to harness the benefits afforded by these thrusting dynamos with urgency, while there still exists a small window of opportunity.  Some of the world’s leading brands are already enjoying the fruits of the sub-continent, including Aviva, Suzuki, Hilton Hotels, Adidas, Samsung, Vodafone, Honda, Gucci and Benetton to name but a few.

For centuries India was a leader in agriculture, science, sports, astrophysics, space, defence, literature, entertainment, ideology and philosophy. India was in fact where the numerical system originated, the system which is the basis for mathematics as we know it today. As Albert Einstein once said “We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made.” The Ancient Civilisation, the birthplace of some of the greatest intellects and which until the mid-1850’s was the greatest exporter in the world, is now resuming its rightful place as a rising super-power.

Modern India is one of the fastest developing countries with growth rates of eight percent; it has enormous potential for carbon credits and can assist developed nations to meet their carbon reduction targets. The Trend is Blue, with its presence in India and soon China, has the capacity to source and tailor make projects in order to best meet the needs of our clients.

The details of The Trend is Blue specialist consultants in India are:

Mr Praveen Chandra BEng (IIT Kanpur)

Praveen has four and a half years in the field of Clean Development Mechanism. With a strong technical background he has developed his career working across various projects which include wind, biomass, natural gas and methane recovery. He has registered a natural gas based co-generation project for Sintex Industries which was the first of its kind in the world.

Mr Praneeth Reddy CA

Praneeth is a chartered accountant by profession and a member of the Institute of Chartered Accountants of India (ICAI). He has a keen interest in carbon reducing technologies and believes that offsetting forms a key part of the solution.

In order to further inform and keep our clientele up to date on growth and progress in India, we will be authoring a number of articles, blogs and tweets that we are sure will be of interest to you.

Following our meeting regarding biofuels at the Argentinian Ambassador’s residence our interest has increased in the future of this alternative energy source, we hope this blog will also spark your interest.

In recent times biofuels have received increased attention and have been promoted as a means to mitigate climate change and alleviate global energy dependence on oil.

Biofuels are a fuel derived from living matter, such as plants. They are a renewable source of fuel, due to the fact that their raw material or feedstock as it is commonly referred to, can be grown with relative ease year in, year out. As these plants grow they absorb carbon dioxide in a process called photosynthesis. This absorbed carbon dioxide was initially suggested to balance the carbon dioxide emitted when the biofuel is combusted thus creating a smaller carbon footprint than oil. However it has not worked out quite this simple.

There are issues surrounding biofuels which dampen their green and social credentials. One such concern is the internationally discussed 'food vs. fuel' debate, in which the impact of the biofuels industry on the food supply chain is deliberated at length. Another important debate is over the carbon footprint of biofuels, where the indirect or direct land use change associated with growing the ‘fuel’ crop can create a biofuel with a greater carbon footprint than the fossil fuel itself.

Fortunately, the development of second generation biofuels counters many of these worries. Waste agricultural products can be used as feedstock instead, which evidently is far more in keeping with the intention that biofuels will aid sustainability.

There are also advancements in the development of algae oil. This alternative fuel source is generating increased interest because it has the potential to absorb much CO₂ from the atmosphere whilst algae is grown and also has less environmental impact when used to produce oil. This procedure is argued to be commercially viable, but as yet is still in its developmental infancy.  

Biofuels are of importance to all countries that rely on imported oil. This is due to the predicted decline in available oil and the political unrest or uncertainty within the major exporting countries. The transport sector is vital to most economies, if not all and as such so is the supply of oil. The idea of a country able to grow its own fuel is therefore of great interest for reducing dependency on imported oil and is why biofuels draw such attention.

To all our friends in China and especially Hong Kong:

Gong Xi Fa Cai

Gong Hay Fat Choi

Happy New Year of the Dragon

The Dragon is a creature of myth and legend. A symbol of good fortune and sign of intense power, the Dragon is said to be a deliverer of good fortune and a master of authority. Therefore, those people born in Dragon years are to be honoured and respected.

An EMS identifies and manages an organisation’s impacts on the environment. Implementing an EMS can increase an organisation’s efficiency, ensure compliance with current and future environmental legislation and provide benchmarks for improving an organisations performance.

Business Benefits

Implementing an Environmental Management System can have multiple benefits including:

• Cost Savings
• Recognition of Leadership and Improved Performance
• Reduced Legal Risk and Potential Liabilities
• Reduced Future Liabilities and Constraints
• Better Lending Rates
• Opportunity for Continual Improvement

Accreditation Schemes

There are a wide range of EMS accreditation schemes available to organisations with some standards more suitable to particular kinds of organisation and others generally applicable to any organisations.

There are two general EMS schemes, ISO 14001 and EMAS. These schemes have been developed by the International Standards Organisation and the EU respectively. Individual organisations are certified against a standard by one of the numerous appointed verification bodies.

There are also a number of complementary EMS schemes. These schemes are designed to guide organisations through the process of developing an EMS by breaking it in a series of smaller tasks with recognition at each stage. This is particularly useful for smaller companies that may not have the resources to implement an EMS within a short timeframe.

Organisations may also choose to implement a Sustainable Management System (SMS). Like to an EMS, an SMS will address the impact that an organisation has on the environment but it will also address the organisation’s impact on society and the economy whilst considering issues around the organisation governance.

The Carbon Reduction Commitment Energy Efficiency Scheme affects some 5,000 medium to large energy using organisations in UK. Under the scheme’s rules there is an incentive to achieve accreditation with the Carbon Trust Standard or an equivalent standard as approved by the Environment Agency. These schemes are generally designed to assess the carbon foot print of an organisation and in some cases require either evidence of, or a commitment to make, a reduction in carbon emissions over a given period. All differ to some degree though some are intended to simply meet the minimum requirements of the CRC at the lowest possible price whilst other are intended to offer further medium and long term value to the organisation.

Recommendations

The selection of the right standard is critical in ensuring success in improving an organisation environmental performance and will affect the quantity and the quality of the benefits received. Selecting the wrong standard can waste valuable time and resources and could risk delivery of an EMS that does not challenge the organisation in a meaningful way or even fails to receive certification.

Further Information

The Trend Is Blue has created a useful guide to Environmental Management Systems that will help organisations better understand what EMS are, why they are relevant to businesses and which standard is most appropriate to your business.

There has been a rise in the number of companies reporting reduced greenhouse gas emissions and growing awareness at board level of the link between energy efficiency and increased profitability is accelerating.

Research by McKinsey & Co establishes a correlation between climate change disclosure and strong financial performance i.e. it makes good business sense to reduce carbon emission. A Bank of England inflation report points to an expected 10-15% increase in energy prices by the end of this year. With OFGEM and the Sunday Times respectively predicting 80% and 100% price increases by decade end. Therefore, it is possible to argue the cost of energy and carbon is set to increase exponentially.

With this in mind, we have released our new report, Peak Oil, authored by our in-house specialists. We are in the process of releasing two new expert reports for the benefit of our commercial clients; the first being A Guide to Environmental Management Systems by Conor Molphy BA(Hons) Msc and the second is a specialist report on The Significance of Biofuels by Jillian Watt Bsc (Hons) MSc.

The haulage firm, which employs over 300 people and operates over 120 HGVs across four sites in UK, lists the UKs largest supermarkets amongst its clients. In the announcement, Michael Warren, Managing Direct of Warren’s Warehousing & Distribution explained why The Trend Is Blue was selected to drive forward this important part of their business strategy.

Mr Warren said that The Trend Is Blue’s “experts are particularly knowledgeable about government regulations and policy in relation to the haulage industry and gave us a deep insight into the risks and the opportunities that companies will face in this new carbon constrained world.”

The road transport sector is responsible for an increasing amount of UK and EU greenhouse gas emissions. In 2009, the road transport sector was responsible for 20% of total UK and EU greenhouse gas emission. There is currently no EU regulation of greenhouse gas emissions from HGV’s and the EU Commission intends to put forward a strategy for addressing these in the near future.

The haulier’s new Carbon Management Strategy will seek to manage and reduce the firm’s past, present, primary and secondary emissions. The Trend Is Blue’s expert team will work closely with Warren’s to develop a bespoke Carbon Management Strategy that meets their needs and the needs of their stakeholders. The new strategy will help to make efficiency savings across the business, strengthen Warren’s relationship with its clients whilst also protecting the haulier from the risk of future regulations negatively affecting their business.

Mr Warren went on to say that Warren’s

“would be happy to recommend (The Trend Is Blue’s) services to the (Road Haulage) Federation, other hauliers and our most important clients.”

Argentina is the second largest country in South America (11 times the size of England); it has the third largest economy in Latin American, with a high rating in doing business. Argentina is the leading exporter of soybean, wines, cereals, beef, motor vehicles and parts, chemicals and medicine. The seminar’s aim was to highlight investment opportunities in Argentinian agriculture; this included detailing developments in the production of biofuels in the country, thanks to soybeans. Due to strong soybean oil exports, Argentina companies have been used as the main feedstock for biodiesel production. The country’s sugar and corn industry also act as strong drivers for bio ethanol production. Here at The Trend is Blue we were most interested to hear of this growing market and of the increasing number of projects that have the potential to produce carbon credits.

Increasing oil prices are forcing many countries to look for alternative energy sources and bio fuels fit very well to meet the demand. Argentina is well placed to meet demand globally. This year, Argentina has announced it will add 460,000 tons of additional bio-diesel, making fourth largest producer of biodiesel.

The Trend is Blue has recognised the global opportunity of biofuels and our Senior Environmental Analyst, Jillian Watt, is currently preparing a special report on biofuels which will be published in the New Year.

The province criticized the federal government for withdrawing from Kyoto earlier in the week, and announced their own plans for an independent emissions regulation scheme. Provincial Environment Minister Pierre Arcand believes the move to be pro-active, taking the view that there will eventually be a global carbon market.

“I think Canada should absolutely be showing more leadership, be showing more ambition”

This is at odds with the federal government who won’t enter into a carbon market without America.

The new legislation will start with a one year transition phase from Jan 1st 2011, allowing large emissions to adjust to the new scheme, which starts in full in 2013.

The new provincial program is run in conjunction with the Western Climate Initiative and will apply to large industrial emitters. From 2011 it will require them to either reduce their carbon footprint or buy clean-air credits at CAN$10 per tonne of greenhouse gases.

The announcement has drawn criticism from local industry. The Conseil du patronat, Quebec's largest business group, called it hasty and risky for Quebec and California to jump in without anyone else in the market. Whilst they support the idea of an eventual carbon market in theory, they warn that entering alone could put the province’s businesses at a disadvantage.

It is currently unclear whether any of the other Canadian provinces will start similar climate legislation.

Source: The Globe & Mail

The Committee on Climate Change (CCC) have analysed the breakdown of increasing energy bills for UK households now and in the future in a government report published today.

The CCC state that whilst current household fuel bills are on the increase, most of these additional costs are a result of the increase in the wholesale price of gas.

They also predict that by 2020 energy bills will rise by £190, but that the costs of delivery renewable technology such as wind farms will contribute just £110, not the astronomical figures proposed by opponents to the Green measures.
David Kennedy, Chief Executive of the CCC states that the analysis disproves some of the speculative claims of sharp bill rises caused by low-carbon measures. 

Analysing the dual fuel bill rises for the last six years (2004 - 2010) the CCC found that 80% of price increases was unrelated to renewable energy technology, with rising gas prices contributing the majority of the additional cost. Costs directly related to the UKs heavy  reliance upon fossil fuels & other non-renewable energy sources.

Further claims, dubbed “scaremongering” by Greenpeace that future costs will spiral with implementing low-carbon energy provision are also untrue. They calculate the average cost attributed to green measures to be around £110, with additional longterm benefits to the United Kingdom.

The report comes at a time when its believed approximately 1.5m people in the UK are in fuel debt.

Via: BBC News, The Guardian

Originally founded at the end of the 19th century as the Coal Smoke Abatement Society, Environmental Protection UK (EPUK) has been forced to shut its doors in the wake of local authority cuts.

Britain’s oldest Non-Governmental Organisation (NGO) are champions of healthy air in the UK, providing expert analysis on air pollution & contamination, together with climate change. The Brighton-based organisation brings together academics, policy makers and environmental professionals to inform debate and influence change in green practice & policy, but have been struggling financially for the last few years.

Trustees announced that they couldn’t continue to operate as a staffed organisation, due to their funding suffering from the extreme cuts to the budgets to the local authorities who purchase their services. Trustees hope that a volunteer staff will be able to maintain a skeleton organisation following closures in March 2012.

The MP for Brighton pavilion and a vice president of EPUK Caroline Lucas said:

As reported in the Guardian, the news of the NGO’s closure comes two weeks after the European Environmental Agency (EEA) calculated the cost to Britain of health & environmental damage from air pollution caused by industry between £3.4bn and £9.5bn.

Chief secretary to the Treasury Danny Alexander announced financial incentives worth £200 Million to early adopters of their drive to make draughty property more energy efficient through refurbishment. British homes are currently some of the least energy-efficient in Europe and the aim with these measures and the broader aspects of the deal is to keep UK homes warmer on less energy.

The detail of the green deal plan was provided by climate change secretary Chris Huhne, including the “golden rule” that repayments for the loans for any energy efficiency measures would be lower than the amount of money saved from energy bills.

The wider aims of Huhne and the coalition government is to put a secure energy system in place in the UK, that keeps energy bills lower than a system solely reliant on non-renewable sources such as fossil fuels.

This news came the day after Google announced that they were shelving their own energy efficiency project Renewable Energy Cheaper than Coal after four years. The project had aimed to make solar energy systems cheaper than coal, but has been retired with several of the search giant’s other unpopular sideline products.

The UK treasury was also the focus of Tim Yeo MP chair of the Energy & Climate Change Parliamentary Committee. In a letter to the Chancellor Yeo urged him to defy the calls to scrap the planned air passenger duty (APD) made by self-interested airlines. Dismissing the airlines claims of falling passenger numbers Yeo believes it is key not to abandon the duty, but to revise it, making it a more efficient measure at tackling aviation industry emissions in the process. In some forecasts aviation emissions are set to triple by the end of the decade, and Yeo is adamant that airlines not be exempt from compliance measures so easily:

REDD+, is a United Nations collaborative program which stands for Reducing Emissions from Deforestation and forest Degradation. Its goal is to reduce emissions through deforestation in the developing world by creating a financial value for the carbon stored in forests. The remit of REDD+ extends beyond deforestation to include conservation, careful sustainable management and wood carbon stocks.

The program has currently been funded by bilateral and multilateral commitments, including about $US 5.5 Billion from countries including Norway and Australia, but experts worry that this cash flow won’t be sufficient to scale these schemes to a level to produce meaningful emission reduction. According to Andrea Tuttle, a director at the Pacific Forest Trust: “Like it or not, if we expect real climate gains from REDD, it means a carbon market”. Estimates from The United Nations Environment Programme (UNEP) put the price needed to halve current rates of deforestation by 2020 at between $US 17 - 30 Billion.

As reported in the Centre for International Forestry Research, countries already drafting new regulations and reduction measures in anticipation of REDD+ may benefit from voluntary carbon markets, some experts believe the demand for carbon credits will truly peak when a binding international agreement on emission targets, such as the Kyoto Protocol, is reached.

There is data to back up the urgency of measures that aim to reduce the rate of deforestation. According to research published in the journal Science back in August, forests remove 2.4 billion tons of carbon per year from the atmosphere. This is equivalent to one third of the annual emissions from the use of fossil fuels in energy production.

UN Secretary-General Ban Ki-Moon also stressed that the schemes such as REDD+ are no substitute for Greenhouse Gas Emissions reduction. In his remarks on climate change to Central Kalimantan, Indonesia on November 17th the Secretary-General explained:

Ban Ki-Moon hopes that implementations in Indonesia will stand as an example to the world on what can be achieved with the will and adequate support. It is hoped by many in the talks that the detail on the financing of this support will be agreed upon during the upcoming climate change conference in Durban.

Interviews carried out by the studies authors and blue chip companies suggest that the adoption of cloud computing services is likely to be even faster than previously thought, tripling in the next two years. Cloud storage allows these companies to invest less in hardware, and make use of cheap servers to store, manage and process their companies' data.

These private sector plans mirror those announced by the UK government by cabinet officer minister Francis Maude,  who aims to reduce government IT costs by £460m per year by using cloud computing. The G-cloud initative aims to “exploit cloud computing to transform the Government ICT estate into one that is agile, cost effective and sustainable”.

The UNDP’s annual Human Development report focuses on environmental degradation and its potential impact on human development. It is primarily concerned with the impact of environmental deterioration on people who directly depend upon the environment for their livelihood, particularly as they predict this affected group may rise in the coming months.“Even people who do not normally engage in such activities may do so as a coping strategy during hardship.”

The report argues that access to renewable energy supplies isn’t exclusively or primarily an environmental issue, but a basic human right. As well as achieving a sustainable way of living for current and future generations the report also argues that health,education, and gender equality must also be tackled.

The report states that higher living standards in these developing nations need not follow the pattern of the richest countries and be driven by high carbon usage. It presents evidence that while in recent decades carbon dioxide emissions have been closely linked with national income growth, fossil-fuel consumption does not correspond with other key measures of human development, such as life expectancy and education.
They go further arguing that many advanced industrial nations now manage to maintain growth whilst continuing to reduce their carbon footprints.

"Growth driven by fossil fuel consumption is not a prerequisite for a better life in broader human development terms," Helen Clark said. "Investments that improve equity—in access, for example, to renewable energy, water and sanitation, and reproductive healthcare—could advance both sustainability and human development.

Evidence can already be seen of some of the action taken by groups composed from some smaller, developing countries particularly vulnerable to climate change. The Proactive group, Climate Vulnerable Forum ,headed up by the Maldives continue to pledge towards alleviating poverty and improving renewable energy sources regardless of the actions of larger nations. Their motivation? “hoping that the richer countries – as well as big emitting developing countries – will follow their lead.”

In addition to these somewhat altruistic and optimistic actions, Christiana Figueres, the head of the UN climate change secretariat, believes the key motivation in spurring action will be the markets. In a statement before the CBI Green Business Dinner  Figueres suggested that the carbon market will play a significant role in bridging gaps between the political motivations of the industrialised and developing world. “[the carbon market] was created out of a political agreement, therefore the future of this commodity needs to respond to the future agreements that are in the making.”

The Telegraph reported that animals are shrinking due to climate change. Based on research published in the journal Nature Climate Change by the university of Singapore, there’s evidence suggesting that the lower levels of sea ice are causing polar bears to shrink. Various plant and animal species have been shrinking over the past century due to the change in climate. The worry now is that the accelerated rate of change may mean some species risk extinction, if they aren’t able to adapt to their new environmental conditions fast enough. http://tgr.ph/pF5A4g

Here at alternate investment specialists The Trend is Blue we launched the first in our series of specialist reports: An Introduction to Carbon Policy. Produced by our in-house environmental research analysts, the guide is aimed at enlightening the new investor in the background of carbon policy. It covers the impact of Kyoto and the resulting carbon legislation, such as the EU Emission Trading Scheme. Download your free copy of the report here:  http://bit.ly/carbon-policy

The Guardian reported on the new “so-called” clean-tech arms race, as China & India outstripped the developed world in turbine capacity for the first time. According to the General Wind Counsel China now leads the way and has the most wind generated energy capacity in the world, largely due to their government incentives. http://bit.ly/owXVcn

The motor manufacturer Chevrolet is funding the reforestation of an area of woodland lost in a 2003 fire, at a cost of $40 million. It’s an experiment to see how effective the newly planted forest will be at capturing carbon dioxide, as part of parent group General Motors environmental goal to remove 8 million tonnes of carbon emissions. http://bit.ly/mX9Ext

Lastly, the BBC published the findings of an independent study by the Berkeley Earth Project, confirming global warming. The project was launched in the wake of the 2009 “Climategate” affair, when eminent physicists worried that previous climate researchers hadn’t been open with their data. The new team started afresh and again found the same worrying trends in global temperatures as reported by previous climate research groups. http://is.gd/0NGmlG

Carbon Allowances to be auctioned as early as August 2012

According to analysts Thomson Reuters Point Carbon the Californian Carbon Allowances (CCAs) already trade on a forward basis at $20 per tonne, and are expected to rise to $36 per tonne during 2013-2020 during the markets first phase. Its predicted that the CARB will begin auctioning these CCAs from August 2012, following the setup of a series of market monitors and operators.

Implementation will begin from January next year, but compliance will not begin until 2013, targeting the heaviest polluters in the first round. At that stage companies will be required to comply with strict emission caps, and required to purchase additional carbon allowances on the open market if they exceed those limits.

A detailed analysis of the biodiesel and global ethanol opportunities together with the key challenges facing the biofuels industry in the Pike research report concludes that the biofuels market could be worth $185 billion by 2021. is.gd/NFe02Q

In another first Air France conducted the world’s lowest CO2 flight yesterday. The flight from Toulouse-Blagnac to Paris-Orly was powered by a sustainable, renewable fuel: a mix of traditional kerosene with biokerosene made from used vegetable oils. tinyurl.com/3ps6f46

The Guardian environment section worried over the wider implications to the climate fight, if governments around the world fail to sign up for a second Kyoto commitment period when the first expires next January. bit.ly/nQVxuB

And finally, a coalition of green activist groups in the US have made good on their recent threat to sue the Obama administration, following the controversial decision to abandon new clean air quality regulations which would have tightened Ozone standards. is.gd/VKP16i

The law which comes into effect on July 1st 2012 will force up to 500 of the biggest polluters to pay a tax on each tonne of Carbon Dioxide they release into the atmosphere. The market-based carbon trading scheme will then start in 2015.

It is a significant move, and represents the most ambitious carbon tax scheme outside of Europe. Australia is the world’s biggest coal exporting nation and also a major sufferer of natural disasters linked to climate change: droughts, bush fires & floods. Australia accounts for only around 1.5 per cent of global carbon releases, but is the developed world's largest per capita polluter deriving 80% of its electricity generation from coal.

The carbon price is integral to the Australian government’s strategy to cut carbon emissions by 2020, some 159m tonnes of CO2. Triumphant Prime Minister Julia Gillard believes this will lead to:

The bill is not without its local critics. The Australian Coal Association believe the carbon tax will undermine the competitiveness of Australian coal industry whilst the Australian Retailers Association worry that the carbon law will hit consumer’s retail spending.

Further reading from around the web:

On the BBC:
http://www.bbc.co.uk/news/world-asia-pacific-15269033
On the Telegraph:
http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/australia/8821426/Australian-parliament-passes-historic-carbon-tax-law.html
Australian International Business Times:
http://au.ibtimes.com/articles/229487/20111012/australian-mines-carbon-tax-is-like-doomsday.htm

It was also announced that over the past 15 months China had invested $34 Billion in solar power whereas the whole of Europe had only managed a paltry $6 Billion.

 We have also seen the first British commercial flight using biofuels taking off from Birmingham under the Thomson Airways flag to Lanzarote.  The company hopes to introduce daily biofuel flights on the route from 2012.   Also the New Delhi metro has become the first in the world to earn carbon credits, it caterers to a staggering 1.8 Million people per day using the service.

 On a lighter note we saw the reconciliation between Barbie and Ken; no please stick with me, after a row due to Barbie’s shameful deforestation habit back in June.   The full story can be found at www.greenpeace.org.uk/blog/forests/mattel-and-barbie-drop-deforestation-20111005