Outcome of the Fourteenth Conference of Parties to the UN Framework Convention on Climate Change and Fourth Meeting of Parties to the Kyoto Protocol

On the last day of the Poznań Conference, delegates were pleased to that the European Union has reached an agreement on climate change. The EU would stick to its pledge to reduce its emissions by 20% by 2020. The EU's climate change package, covering the period from 2013 to 2020, lays down rules for the third phase of the EU Emissions Trading Scheme (ETS), details individual emission targets for EU member states in sectors not covered by the ETS, and contains a 20% target for renewable energy, a 10% target for biofuels and a 20% target for increasing energy efficiency by 2020.

Also the finishing touches were put to the Kyoto Protocol's adaptation fund, thereby enabling the fund to receive projects in the course of 2009. Parties agreed that the fund (CDM), fed by a share of proceeds from the Kyoto Protocol's clean development mechanism and voluntary contributions, would have a legal capacity granting developing countries direct access

But Parties were unable to reach consensus on scaling up funding for adaptation by agreeing to put a levy on the other two Kyoto mechanisms, Joint Implementation and Emissions Trading. The expected review and improvements in the third mechanism – Clean Development – also were not adopted.

While Barack Obama's victory in the US Presidential elections was a reason for optimism in Poznań, because of his positive stance on climate change mitigation, in Poznań the US was still represented by the Bush administration and remained relatively subdued during the official negotiations. Some felt that uncertainty about the US position in 2009 caused other countries to refrain from making significant political advances in Poznań, and few expect developing countries to make significant moves before developed countries have clarified their positions on emission reductions and financing.

Moreover, while many agreed that the Poznań meeting resulted in some progress and positive steps forward, the general feeling was that negotiators had not achieved any major breakthroughs. Agreement on the most critical issues, including mid- and long-term emission goals and finance, will not be reached before Copenhagen.

All Eyes on Poznań!

The much-awaited Poznań Conference which is supposed to offer a road-map to the final Copenhagen talks that decide the fate of post-2012 climate-change commitments, will conclude today in Poznań, Poland.
Poznań was intended to be a milestone, a landmark event that illuminated a new and shared vision for a new climate change regime. But in these times of global recession, it is proving hard to convince the involved parties to prioritize climate change. Rumblings are already being heard from the EU about adopting a more lax climate change policy in order to ease the economic burden on players already affected by the global economic downturn. The EU has been a leader in climate change mitigation efforts and its cap and trade system, which aims to reduce greenhouse gases in its industrial sector, is the largest carbon market in the world. Clean technologies from the developing world find funding and support from the EU carbon market. It also supports the reduction of greenhouse gas emissions internally, within the EU by making industries pay for each ton, which was above the designated limit, of carbon dioxide that they emitted into the atmosphere.
Even the EU today is cautious and hesitant to play a lead role in any action plan for slowing global warming. USA, under the Obama government, has pledged to reduce U.S. emissions to 1990 levels by 2020 and then a further 80 percent by 2050. It remains to be seen how the Government will achieve this reduction.
Poznań was supposed to have paved the way towards the formulation of a strong, dedicated, consensual international climate change treaty in Copenhagen. Instead Parties have stuck to status quo and Poznań seems to function only as a buyer of time until Copenhagen for world leaders.
The outcome of Poznań will be clearly known in the coming hours. We will remain tuned in to see the final results.

DNV Gets Suspended

In its last Executive Board meeting held towards the end of last month, the UNFCCC Panel suspended one of the largest designated operational entity – Norway's DNV - for non-conformities. This was an interesting development. While the Clean Development Mechanism (CDM) has been criticized by some independent experts including the leading non-governmental environmental organization, the World Wide Fund For Nature (WWF), the suspension of DNV was unexpected.

The suspension is seen as a sign of the EB getting stricter and more willing to take on reforms in response to the criticism directed at the CDM. Project developers though have been adversely affected by this decision. The EB has disallowed DNV from submitting any new registration or issuance requests. This will hurt project developers who have projects currently in verification and issuance stages with DNV. Project developers will now have to start the process again with another DOE, which is not only time-consuming but also very expensive. Project developers have already been reeling under the delays in the UN CDM certification process and the sudden suspension of one of the largest DOEs is going to further upset the purveyors of carbon credits.

DNV has validated close to half of the projects registered by the UN. The CDM pipeline shows that projects verified by DNV had an average issuance success of 81% and in 2008, of the 342 projects registered by the UN, 136 were validated by DNV. In India 30% of the projects at validation stage have been validated by DNV.

The New American President

Barack Obama's election as President has heralded a new era not only in politics but also in environmentalism. The League of Conservation Voters has given Barack Obama the highest lifetime rating of anyone currently running for president. As per his election campaign, Obama has promised to make combating global warming a top priority. Obama's stance includes ensuring that 10 percent of America's electricity comes from renewable sources by 2012, and 25 percent by 2025; implementing an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050 and helping create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.

The environment movement could not have found a better ally. Especially in these times when the financial crisis is making even the most die-hard environmentalist rethink his/her commitment to the cause. As markets worldwide slow down, industries in the developed world are putting pressure on their governments in the industrialized world to be less stringent about climate change goals. But as we have written earlier, the fight against global warming can not and should not be stopped, nor should there be any reduction in the intensity of the efforts.

In this context, it is heartening to have a man who believes in the importance of safeguarding the environment and who understands the urgency of the need for action, as President. Of course, it is not going to be smooth sailing and certainly Obama will encounter road-blocks and hiccups. But we can be assured that he will definitely make the strongest effort to rein in climate change.

Article in Times of India on 6th Nov, 2008

Article of Mr.Krish R Krishnan in IVCJ

Climate Change and the Financial Crisis

The crash of banks in USA has had a domino effect, with economies worldwide taking a downturn. Every sector has gotten affected. The carbon market has escaped relatively unscathed. The prices have not experienced a dramatic fall and the market has been stable.

This is heartening news. The fight against climate change can not be stopped. And the financial crisis can not turn into an excuse to slide back emissions reductions goals. As governments tighten their belts, environment is usually the first sector which gets left behind in the scramble for limited federal funds.

EU leaders agreed last year to reduce emissions of greenhouse gases by 20 per cent in 2020 from 1990 levels. This is a laudable goal especially as EU countries are among the worst polluters in the world. To mitigate effects of climate change, global levels of greenhouse gases need to be reduced and the leading nations of the world such as the EU countries need to show the way in this.

To meet this goal however EU industries will need to show innovation and invest in cleaner technologies. In this age of financial credit freeze, it will be hard for companies to find the extra cash needed to implement carbon-capture and reduction technologies. But it is essential that industries continue exploring new options for funding and join governments in moving towards a green economy.

Mr. Barroso, the President of the European Commission, eloquently explained EU's role in fighting global warming in light of the financial market crash. Mr. Barroso said he can understand that in the difficult financial moments, governments become more defensive, but climate change does not disappear because of the financial crisis. He added that the EU should not be flexible in the objectives but it would be possible to show flexibility on how to achieve them.

Will economic slowdown adversely effect carbon market growth?

The credit crunch has had a huge impact on the oil prices which have now dropped to $100 per bbl. Early July carbon prices experienced significant price rise due to increasing oil prices and now these prices have stablised with oil price becoming relatively steady. Although economic growth and thus the industry output is witnessing a slowdown but an increasing rate of electricity demand pushes the power sector to continue to generate more electricity and thus emit more carbon dioxide. The slowdown may cause a 1% or 2% carbon emissions decrease in large power plants but the total emissions would still be higher than last year. Increasing carbon emissions calls for more carbon permits. Clearly, the demand for carbon credits would continue to grow in near term.

However, negative investor sentiments and high-priced debt could lead to a cut in supply of fund to renewable energy projects which would deter the growth of carbon market in medium term.

Liquidity crisis means that the banks and other lenders are less willing to give loans as they are skeptic about their loans being repaid. The flow of capital has slowed down in across all the sectors in the industry. Loan for renewable energy sector could also witness short-supply. Many project developers in such a scenario would look at other financing options - pension funds & equity investors. However, in a long run the clean energy sector appears to be a more competitive sector vis-à-vis the others considering rising energy demand & global warming which is know acknowledged by more & more nations.

The Far-reaching Impacts of Climate Change

That climate change will severely affect the Third World is an oft-repeated fact. For instance, Bangladesh, which already suffers from devastating natural disasters, is predicted to bear some of the worst effects of climate change. Rising sea-levels threaten to inundate the low-lying regions in Bangladesh and erratic weather patterns will intensify the impacts of the cyclones that hit Bangladesh's populated coast.

But the effects of climate change are not going to be restricted only to developing countries. As Hurricane Ike hit countries in the Caribbean (Haiti, Cuba, and Turks and Caicos) and then the southern US coast, it is obvious that the developed world of USA is not immune to climate change either.

Ike killed more than 70 people in the Caribbean, with Haiti, an already impoverished country, being the hardest hit. There has been widespread destruction of property in all the Caribbean nations. In the US, an estimated one million people were evacuated to escape the storm which made landfall at the Gulf Coast of Texas. The storm caused damage worth US$ 10 billion in USA.

Thus, the need for a concerted global effect to fight climate is now even stronger. Climate change is not limited to few corners of the globe but instead has the potential to wreak havoc on entire sections of the world. In light of this fact, it is shocking that the developed world might not even fulfill it's obligation under the Kyoto Protocol.

With this year being election year in USA, it will be interesting to see what kind of a role climate change plays in the campaigns of the Presidential candidates. The US has already gotten notoriety for refusing to be a part of the international climate change treaty – Kyoto Protocol. But with hurricanes lashing the US with ever-increasing ferocity, this might just be the wake-up call that America needs.

Article in TImes Of India, Mumbai on 15th Sept, 2008

Highlights from the recently concluded international climate change talks in Accra, Ghana

Phase I of the Kyoto Protocol will draw to a close in 2012. Negotiations for a follow-up protocol have already been started internationally. The key talks in this negotiation series will be held in Copenhagen in the end of 2009. As a run-up to these crucial talks, the UN held an international climate change meeting in Accra, Ghana from 21 to 27 August 2008. Around 1,600 participants, including government delegates from 160 countries and representatives from environmental organizations, business and industry and research institutions, attended this meeting.

The Accra talks have been positive and encouraging. Governments made it clear in Accra that they regard deforestation to be an important factor towards climate change and signaled a readiness to tackle deforestation. The issue of deforestation will thus be very much on the table in the Copenhagen Meeting.

Discussions at Accra also seriously looked at ways to improve the CDM process. Lack of substantial CDM investment in Africa was cited as one of the shortcomings of the current CDM. Climate change can not be mitigated without including Africa in the fight against climate change. It is essential that Africa does not get left behind.

Countries also focused on "sectoral approaches" - through which countries can address emissions from a whole sector of their economy. But it was clearly emphasized that such approaches should not lead to binding targets for developing countries and it should be up to the country to decide if it wants to implement sectoral policies (or not).

The above main conclusions of Accra clearly indicate the agenda for the next round of climate change talks which will be held in Poznań, Poland in December 2008 in preparation of the grand finale talks in Copenhagen in end of 2009.

The Carbon Benefits of Forests

Preserving the natural environment is one of the surest ways to mitigate the effects of climate change. Forests are a natural carbon sink: through the process of photosynthesis, trees absorb the carbon-dioxide from the atmosphere, releasing oxygen in exchange. Trees thus effectively sequester carbon, which is why protection of forests should be a key point in any climate-change strategy.

The UNFCCC has also recognized the importance of forests as climate-change-mitigation weapons. Afforestation and reforestation projects are included in the UN's CDM mechanism and the UN has defined rules and methodologies for quantifying the emissions reductions available from forestry activities.

While trees sequester carbon during their life-times, forest fires, deforestation and other such human-related activities which destroy forests and fell trees, releases this stored carbon back into the atmosphere. It is believed that deforestation accounts for about 20 percent of all greenhouse gas emissions. And with most of the world's major forests located in the developing world, it will be a challenge to prevent the deforestation of these forested lands, as there is constant need of this land for agricultural, industrial, livelihood purposes.

The World Bank has developed a unique programme, known as the Forest Carbon Partnership Facility (FCPF), to prevent deforestation in the developing world. The FCPF became functionally operational on June 25, 2008 and was recently launched in 14 developing countries: six in Africa (the Democratic Republic of Congo, Gabon, Ghana, Kenya, Liberia, Madagascar); five in Latin America (Bolivia, Costa Rica, Guyana, Mexico, Panama); and three in Asia (Nepal, Lao PDR, and Vietnam).

Under this programme, the Bank will work closely with national governments to devise a national strategy that focuses on preventing deforestation while preserving the livelihoods of communities that are dependent on forests. Moreover, the Bank will advise UNFCCC on how to incorporate deforestation projects into the CDM mechanism. Initially the Bank will buy the carbon-credits generated from the forestry projects, from the national governments. In this manner, countries will get further financial incentive to conserve their forests. For poor, developing countries, the carbon-finance derived from conserving their national forests is economically important.

Programme of Activities (PoA)

In June of last year, at its 32^nd meeting, the Executive Board (EB) of the UN Clean Development Mechanism (CDM) adopted procedures regarding the registration of a programme of activities as a single CDM project activity and issuance of certified emission reductions for a programme of activities. Since then, the Board has published guidance documents and project design documents to facilitate better understanding of PoA and enable registrations of CDM projects as PoA. And from this month onwards, the CDM pipeline shall be including PoAs in its monthly analysis of CDM projects.

Up till now, only four PoAs have been sent to the UNFCCC. None of these have been approved; all are at validation stage. The PoAs are:

• Installation of Solar Home Systems in Bangladesh
• Methane capture and combustion from Animal Waste Management System (AWMS) in Mexico
• New Energies Commercial Solar Water Heating Programme in South Africa
• Smart Use of Energy in Mexico (CUIDEMOS Mexico: Campana De Uso Intelegente De Energia Mexico)

Beginning this week, the CDM Board launched a call for public inputs on Programme of Activities (PoA) to seek comments on issues associated with the development of the Programme of Activities as a CDM Project Activity and difficulties in the validation and submission for registration of a PoA. These comments will be considered by the Board at its next meeting.

The PoA has been a very innovative programme launched by the CDM Board. It is expected to solve the important bottlenecks of registration backlog at the UNFCC and expensive fees for CDM projects. It will be interesting to see how this programme futher develops especially in relation to CDM projects.

UN Introduces New Rules In The CDM Registration Process

The CDM Executive Board has decreed that all CDM projects requesting for registration will now have to show prior consideration of the fact that CDM benefits were considered necessary in order for the proposed CDM project activity to be successful.

The Board decided that for project activities with a starting date on or after 02 August 2008, the project participant must inform a Host Party DNA and/or the UNFCCC secretariat in writing of the commencement of the project activity and of their intention to seek CDM status. Such notification must be made within six months of the project activity start date and shall contain the precise geographical location and a brief description of the proposed project activity. Similarly the Board has issued a set of rules to demonstrate prior consideration of CDM for project activities with a start date before 2 August 2008. Complete details of these new rules can be found at: http://cdm.unfccc.int/EB/041/eb41_repan46.pdf (EB 41, Annexe 46)

The UN registration process for CDM projects is already suffering from protracted delays and it has received a fair share of criticism for its lengthiness, bureaucratic tape and lack of absolute clarity. Adding another step to the already long (and expensive) CDM registration process, will only lead to further delays. Small scale projects will be the hardest hit as project proponents usually do not have the resources to navigate the already complex UN CDM registration process.

It will be interesting to see how this extra step helps the Executive Board in making stronger and clearer assessments of a given CDM project.

UK's Carbon Reduction Commitment (CRC) Scheme

While the EU has taken a lead role in the global arena in tackling climate change, it looks like UK is taking a lead role in tackling climate change within the EU. UK has promulgated first-of-its-kind domestic legislation on climate change. UK's Carbon Reduction Commitment (CRC) scheme targets any (business and public sector) organization, including any parent company and its subsidiaries, which spends more than £500,000 a year in the UK on electricity. The CRC establishes a domestic carbon trading scheme and requires firms to purchase allowances, initially at a set price of £12 per tonne, in correspondence to the cap on emissions levels imposed on them by Defra (UK Department of Energy, Food and Rural Affairs). Firms that then exceed their emissions cap will have to buy in extra credits to cover excess emissions before surrendering their credits back to Defra at the end of each year, while those that come in under their cap will be able to sell their unused credits

The regulation comes into force in October 2009 and the introductory auction phase starts in 2010. It is expected to save at least four million tonnes a year of carbon dioxide equivalent (CO₂e) by 2020, according to an official at the UK environment ministry.

The UK is thus showing praise-worthy initiative in tackling climate change which is one of the greatest environmental challenges facing the world today. It is hoped that more countries within the EU and elsewhere follow UK's excellent example.

CDM Trends in India

India has the second largest number of total projects in the CDM pipeline, after China. But while China controls more than 50 per cent of the total carbon credits market (by volume), India barely controls 15 per cent.

There are a number of reasons for this discrepancy: the Indian government has not been as proactive and aggressive as the Chinese in courting foreign investments in CDM; it is harder to receive public funding for CDM projects in India, etc.

And now, a new survey by the international tax advisory and auditing firm, KPMG, tells us that Indian companies have also not been aggressive but have shown limited initiative in tackling climate change. The KPMG survey of 70 CEOs found their response to climate issues was driven largely by the need to comply with expected regulations, while leaving the leadership role in tackling global warming to the government. The survey included top companies from power, automobile, petroleum, cement, mining, and construction sectors.

Moreover, the KPMG survey showed that only 17 percent of the respondents saw the growing market for low-energy/carbon products and services as motivation to reduce their carbon footprints.

Globally, many of the top industries have undertaken self-imposed cuts on their emissions and have reduction targets for themselves. In India, however, only 41 percent of the respondents had some qualified reduction goals to be achieved by 2010, while about 38 percent had no such goals.

Thus it is not surprising that despite high potential, India's performance in the global CDM market is mediocre. With even the leading industries refusing to get serious about investing in emissions reductions measures, it is difficult for India to capture a substantial share of the global CDM market.

Biofuels: Green or Not?

Though biofuels have been touted as a viable substitute for fossil fuels, a recent report from the Organisation of Economic Co-operation and Development (OECD) has advocated energy efficiency and conversation measures rather than biofuels as a viable solution to fossil fuels.

Biofuels have been generating controversy recently. Earlier this year they were cited as one of the causes of increase in food prices around the world. It was estimated that larger amounts of agricultural lands are getting diverted to the cultivation of corn for use in biofuels rather than food. Moreover, the greenhouse gas emissions reduction benefits of biofuels have also come under increasing attack in the past few months as scientists debate the true environmental costs of producing biofuels. While it was earlier believed that biofuels have lesser greenhouse gas emissions than fossil fuels, the bigger picture (according to some studies) shows that the production of biofuels has a greater greenhouse cost because of the conversion of virgin land, forested land and even scrubland into cropland for biofuels. Furthermore the related refining and transportation costs of biofuel also increase their greenhouse effect.

The recent report from the OECD raises the same concerns on the greenhouse compatibility of biofuels. It will be interesting to see where the future of biofuels is headed. As oil-prices rise, there is heightened interest in alternatives and much hope has been banked on biofuels. But with the new doubts about the eco-friendliness of biofuels, it is unclear how big a role biofuels will play in solving the energy conundrum.

India's CDM status till date

At 345 registered projects, India currently has the highest number of registered CDM projects (according to the CDM pipeline data for July 2008). But the total number of CERs generated by these projects is less than half of China's 221 registered projects. Moreover India currently only has 576 projects in the validation stage which will generate 1,75,442 kCERs, while China has 943 projects with a potential of 7,16,338 kCERs.

Thus, though India has the highest number of registered projects and the second highest number of projects at validation stage in the CDM pipeline, it is lagging significantly behind China in terms of the CERs generated. With its high numbers, China is currently ruling the carbon market and is supplying more than 50 per cent of the total volume.

Interestingly, if one only looks at the small scale CDM market, then India has the highest share and is ahead of China. India is supplying around 32 per cent of the CERs in the small scale CDM market, while China is supplying around 23 per cent. India should focus on its small scale sector and further build its expertise in this market. Indeed, small scale projects are more than 60 per cent of India's total CDM projects. And now the IPCC has started a new CDM category – Programme of Activities (POA) – wherein one only needs to register once for any number of projects which use the same baseline and monitoring methodology. This category will be especially useful for small scale projects as it cuts down costs while at the same time enabling a project developer to apply his small scale activity in multiple locations.

G8 Leaders Pledge To Reduce Greenhouse Gas Emissions

The G8 members – Russia etc – pledged to cut down their emissions of greenhouse gases by 50 per cent by 2050, at the recently concluded G8 summit in Toyako in northern Japan. While this commitment is applause-worthy, it has come under criticism as it is vague (for example, it does not state whether the emissions will be cut down 50 per cent from the 2000 levels or the 1990 levels) and unclear about the roadmap for cutting emissions by 2050. Moreover, the G8 leaders did not announce any short term goals or numerical targets for reducing emissions in the coming years. Without these targets, it is uncertain how the G8 will achieve any significant emissions reductions.

The major development at the Summit however was the participation of USA in the climate change talks. This is the first time that President Bush has publicly supported cuts on emissions of greenhouse gases. With even President Bush, who has been a long-time opponent of reducing emissions, agreeing on cuts, it is obvious that the next President of America will promulgate serious laws on tackling climate change both domestically and internationally.

The other main development was that developing countries such as China and India agreed to take emissions-caps in the long term, a stance that they have been resisting as climate change has been caused substantially by the developed world who should take the onus for mitigation.

With these two main developments, the stage is now set for the next round of climate change negotiations which will be held in Poznan, Poland, in December this year,.

India launches National Action Plan on Climate Change

Earlier this week, the Indian government released its action plan for fighting climate change. The plan focuses on technological solutions rather than mandating emissions caps. India's per capita emissions continue to remain low, especially in comparison to per capita emissions of the industrialized world. India is thus focusing on harnessing technology to mitigate effects of climate change instead of issuing obligatory national carbon emissions caps. India has however categorically stated that her per capita emissions will at no point be allowed to exceed the per capita emissions of developed countries.

The plan has been prepared under the guidance and direction of the Prime Minister's Council on Climate Change. The action plan emphasizes on energy efficiency and cleaner technology and includes eight national missions on solar energy, enhancing energy efficiency, sustainable habitat, water conservation, for sustaining the Himalayan ecosystem, creating a "Green India", sustainable agriculture, and establishing a strategic knowledge platform for climate change.

The action plan is also expected to launch a domestic market in energy trading. The plan mandates energy benchmarks for each industrial sector and allows trade in energy saving certificates. Thus, it aims to create a market-based mechanism that will encourage energy saving and efficiency by allowing energy-conservative industries to earn profits by selling their energy certificates to energy-inefficient industries. This market based system might well be the driving force behind energy reform in the Indian industrial sector.

Aviation industry comes under the climate change scanner… finally

The pressing issue of climate change has induced change in various industrial sectors. From thermal plants to dairy farms, each industry has gotten involved, either willingly because it believes in eco-friendly practices or unwillingly because it is required under governmental regulation, in the movement to safeguard our planet from the effects of climate change. But surprisingly, a certain industrial sector which is an important emitter of greenhouse gases, has managed to escape the climate change scrutiny. We are talking about the aviation industry. Between 2 to 3 percent of global greenhouse gas emissions are by airplanes. And even though technological advancement has significantly reduced aircraft fuel consumption and emissions on a per passenger basis over the last decades, emissions from the airline industry are still increasing nearly 5 percent a year according to a report last week from the European Environment Agency. Between 1990 and 2005, the last full year from which data were available, total carbon dioxide emissions from aviation in the European Union grew by 73 percent.

In view of these facts, there is growing support to include international aviation in any successor treaty to the Kyoto Protocol. The EU has already taken steps to regulate emissions from airplanes. The new EU regulations which will go into effect in 2012, will cap carbon dioxide emissions for European and foreign airplanes alike, while allowing airlines to buy and sell emissions credits in the EU carbon market.

It is expected that the new EU regulation along with growing public concern over climate change, will mobilize the airline industry into becoming more environmentally responsible. It will be interesting to see how low cost flights, whose revenues have flourished in the last few years, will absorb the costs of the new EU regulation. Moreover, one will have to wait and watch to see how the aviation industry adjusts its financial bottom-line to the increasing pressure on reducing its carbon-intensive operations

Price of oil is influential factor in the carbon market

It will be interesting to see how the industrialized world fulfills its carbon reduction obligations now that the price of crude oil has climbed over U$130/ barrel. With oil prices reaching record-highs (and predicted to yet rise), power companies may have to switch from oil to coal, which is a cheaper but dirtier fuel. Coal based plants emit more carbon dioxide. This will increase greenhouse gas emissions and make it harder for industrialized nations to meet their emissions reduction targets.

Industrialized nations will have to work harder to find methods to reduce their emissions. Further research and investment in breakthrough technologies that are clean and offer effective internal abatement solutions, is required. In the mean time, industrialized nations will have to participate in carbon trading to buy offsets that can neutralize their emissions. While the preference for carbon trading for industrialized nations will be other industrialized nations, it is expected that these countries will also look into buying verified and reliable carbon credits from the developing world, giving a boost to the carbon market there.

The Carbon Market Incentivises Eco-friendly Business Practices

One of the big successes of the carbon market is that it has converged together environmental concerns and financial trends. The carbon market has put a price on emission of greenhouse gases and this is making companies finally take note of their emissions and to become more environmentally responsible.

The success of the EU carbon market is noteworthy in this regard. The EU's strict compliance laws have made the EU's emissions trading scheme (ETS) dominate the global carbon market; moreover, these stringent caps are compelling the European private sector to get serious about its emissions. European companies are not only aggressively partaking in carbon trading but are also earnestly exploring opportunities to reduce emissions. Investment decisions by European industries now take into account the carbon price and the related cost of polluting the air with greenhouse gases. 73 per cent of the EU ETS respondents in the Carbon Market Survey 2008 by Point Carbon said that the carbon price is relevant to investment decisions. As the carbon market matures further, we can expect the carbon price to play an even stronger role in the investment and financial decisions of companies.

Similarly, in the developing world, the carbon market is creating lucrative incentives for companies to adopt green policies and to reduce their polluting activities. Industries of the developing world can now earn ready cash for every pollution-saving measure they undertake.

This is a win for the environmental movement. Traditionally private companies have known to be committed to their profit margins and not to environmental concerns. But the carbon market has meshed environmental causes with economic profitability and the private sector is now batting on the same side of climate change policy as the environmentalists.

Thus, for the first time, market forces are working in tandem with governmental regulatory forces and environmental causes. And one can be confident that this trend will not only continue but also get stronger in the near future.

Article in Business India - Issue 4th May, 2008

Article in Times of India, Mumbai on 25th March, 2008

Green Ventures ropes in European companies
25 Mar 2008, 0033 hrs IST,Namrata Singh,TNN

MUMBAI: The Green Ventures Carbon Fund has tied up with a few major European financial partners and are actively looking for Indian strategic partners and project developers either for carbon credits or to jointly set up environment friendly projects.

Though names of the partners was not revealed, Green Ventures India MD Krish R Krishnan told TOI : "We can leverage this strategic relationship to effectively become more aggressive investors and assimilate a larger carbon credit portfolio in India now and for a much longer term."

TOI had reported in its edition dated January 14, 2008, that the New York-based Green Ventures International has dedicated its first Asian fund of $300 million to India. The objective is to monetise carbon credits from clean development mechanism (CDM) projects across the country.

"We continue to make significant strides in our mission to serve as India's carbon commerce catalysts. In particular, we continue to both sponsor as well as initiate our own slew of renewable energy Initiatives," said Krish R Krishnan.

The plans include development of a 5mw wind farm in the wind corridor in the Tirunelveli district in Tamil Nadu.

Further, based on the latest incentives announced by the Centre on new and renewable energy to support solar power, Green Ventures is exploring the option of setting up a 5 Mega Watt solar farm in the next quarter in Tamil Nadu.

There is also continued activity supporting development of a 120mw run of the river hydro plant in Indo-Nepal border, which is the largest independent power project currently in Nepal and a 100% export oriented site with the power slated for the Indian grid.

Green Ventures will source carbon credits from Indian projects, which have adopted cleaner methods of manufacturing to reduce emission of greenhouse gases, and in turn sell them to other global buyers.

Futures Trade in Carbon Credit

Indian companies implementing clean development mechanism (CDM) projects to earn carbon credits have till now been conservative about entering the forward market to sell the credits.

The forward market was thus practically non existent. However, a fresh beginning is being made by certain companies entering into forward contracts to sell carbon credits.

According to carbon market consultants, the price in the forward market ranges between Euro 10 to Euro 14, depending on the nature of the project and as to whether it is registered with the UNFCCC (United Nations Framework Convention on Climate Change) or is in the process of being registered. The price in the forward market is lower than the prevailing prices at which carbon credits are being sold, i.e. around Euro 17.

"Companies entering into forward contracts are those who feel that prices may fall in the future. Those who feel there is room for further appreciation in prices, are not entering forward contracts,"

While names of companies which have entered into such contracts were not forthcoming, companies like Konark Power, Amrit Biotechnologies, Yash Paper, to name a few, are understood to have entered into such deals with foreign buyers.

Since these are largely bilateral deals, there is a confidentiality factor attached to such deals. However, as per rules the ministry of environment is informed about every transaction taking place in the carbon market, be it in the forward market or current market.

Indian companies have been shy of entering the forward market in anticipation of appreciation in prices of carbon credits. However, consultants are advising clients to follow prudent strategies and adopt a more balanced portfolio of carbon credits, in which nearly 2/3rd of the portfolio is hedged in the forward market.

In its primary stage, certain prototype carbon projects which required funding had, in 2001-02, entered into forward contracts which were then securitised with banks to raise funds. After that, however, as activity on CDM projects gathered momentum, and prices appreciated, the forward market took a backseat.

Now, there seems have been a revival with fresh funding requirements on the rise for CDM projects.

Sources said that banks are open to lending to companies in need for funds against forward contracts. "Companies are entering into forward contracts even when the project is not registered, because there are takers for carbon credits from Indian projects. Some buyers are even willing to enter into contracts till 2012," said sources.

While currently prices of certified emission reduction (CERs) are stable, certain factors such as global political uncertainty and the quantum of emission reduction units (ERUs) from the joint implementation (JI) market, are some of the factors which could impact prices.

Article in Mint, Mumbai on 29th January, 2008

Article in Times of India, Mumbai on 14th Jan, 2008

US co to invest $300m in Indian carbon market

Namrata Singh | TNN

Mumbai: New York-headquartered Green Ventures International, an emissions commodity fund management company, has dedicated its first Asian fund of roughly $300 million (around Rs 1,150 crore) to India, with the primary objective of monetising carbon credits from clean development mechanism (CDM) projects across the country.
This comes at the onset of the second phase of Kyoto Protocol (the UN treaty regulating the reduction of global greenhouse gases) which lasts up to 2012. India—a signatory to the protocol—is expected to generate carbon credits of a larger proportion during the year as compared to 2007. This is attracting a number of global buyers of carbon credits to the Indian market.
“Green Ventures has adopted a different approach to the whole business of carbon. To meet the global demand, we decided to go to the source of certified emission reductions (CERs), or carbon credits, rather than accessing the same from the general markets,’’ Green Ventures, managing director, Krish R Krishnan told TOI. The objective is to source carbon credits from India and sell them to other global buyers. Since the process does not involve intermediaries, Green Ventures feels that this will enable the buyers to get a better price realisation.
Green Ventures also plans to assist in developing and funding initiatives that reduce carbon emissions, in addition to accessing technology from its global network. As part of its business plan in India, the firm is exploring setting up an integrated renewable energy project on its own.
Green Ventures is in the process of building a global carbon trading enterprise in Asia, with the India fund being the first to be launched.
The expected average annual CERs from India is currently at over 28 million, which is 15% of the overall CERs generated globally.

Article in Economic Times, Mumbai on 11th Jan, 2008

BREATHE EASY

People’s car not that polluting

Going by evidence & maths, environmentalists can relax

Shishir Prasad & Ashish Kumar Mishra

IN SPITE of what Ratan Tata might say, Sunita Narain and RK Pachauri would have spent an uneasy night. The prospect of hundreds and thousands of Nanos trundling down the roads of various Indian cities spewing carbon dioxide and nitrous oxide would have been nightmarish for them. Are their worries justified? Not really, if the evidence and maths are taken into consideration. But that is getting ahead of the story.
For some experts, Tata Nano is actually a good thing. After all, had the Tata Nano not come along, there would have been another car to take its place. “India is a growing economy and so people will buy cars. It is a good thing that they will perhaps be buying a smaller car which is complying with more stringent norms rather than a much larger car or a two-wheeler that follows less stringent norms,” says Krish Krishnan, managing director, Green Ventures, a venture fund that invests in green initiative. Mr Krishnan has been an entrepreneur in sustainable environment development.
But let us get to the heart of the argument and look at it clinically. After all, how much pollution will the Nano cause? Automobiles produce many pollutants: carbon monoxide, unburnt hydrocarbons and nitrous oxides. To
make things simple, all of these
have to be converted into equivalent amounts of carbon dioxide
(CO₂ ) — the Mr Evil of environment today. Now Euro IV compliant cars, which the Tata Nano is,
produce one (1) gramme of carbon monoxide and 0.08 gramme
of nitrous oxide. To convert them
into CO₂ equivalent, a conversion factor recommended by IPCC (Intergovernmental Panel on Climate Change) of which Mr Pachauri is chairman) is applied. It is 3 for carbon monoxide and 310 for nitrous oxide. Once all the maths is done, we get 30 grammes per kilometre.
So each time the Tata Nano moves a kilometre, it will release 30 grammes of CO₂ equivalent material into the atmosphere. This is 40% less than what all others cars produce (50 grammes/kilometre or more) — and there are more than 5 million cars in India today. But let us take the argument into a zone where the naysayers would be comfortable: on the total amount of CO₂ equivalent that Tata Nanos will produce over the next five years. This involves a bit of some assumptions.
So assume that Tata will from the next year sell 1,00,000 cars a year for five years and reach a total of 5,00,000 — half the size Mr Tata thinks a car at one-lakh price point may sell. Now let us take a range that the Tata Nano runs between 1,000 kilometres and 8,000 kilometres a year. If all those half-a-million cars run 1,000 kilometres then the total CO₂ produced will be 15,000 tonnes annually. If they all run 8,000 kilometres then the total CO₂ equivalent will be 1,20,000 tonnes. In reality, the figure should be closer to 25-30,000 tonnes because our assumptions of car sales and annual mileage are on the higher side.
So are these numbers large? Taking the worst case — 5,00,000 on roads and each running 8,000 kilometres annually — the total CO₂ equivalent will be less than 8% of India’s total CO₂ emission. And if we take a more realistic assumption then it will be less than 1% of India’s total CO₂ emission. Environment guys would do well to go after the other 99%.

Global Warming: Predictions for 2008 Equals Wild Weather

We can expect some very wild weather in 2008 and you can be assured that if it is hot or cold, wild or mild it will be the fault of America and human caused by global warming. Certainly it is all our fault and if that asteroid happens to slam into Mars that will be the fault of human beings on planet Earth. Everyone except Al Gore of course, who has purchased carbon credits to offset his massive use of fossil fuels in the American state of Tennessee.

That seems to be the message from John Tierney of New York Times. Of course if he is talking this type of nonsense he must be in the pocket of Big Oil. That always seems to be the argument that is put forward to debunk any debunker, no matter how light.

Al Gore spoke earlier and declared from his throne that the "Debate is over." Looks like some people missed the memo. The crowd that is pushing global warming as the end of the world as we know it always sees the answer as giving them control over other people's lives with taxes and changes in behavior. They usually exempt themselves from any behavior modification, though.

Global warming may soon leave the language lexicon as frigid temperatures make it the butt of jokes. But don't worry, the "Chicken-Little" crowd won't go away. They have already started using "Climate Change" so that when the patterns don't fit their view of Armageddon they can move their behavior modification agenda forward under the new umbrella.