Green Climate Fund and CDM

Early last month, South Korea’s Songdo hosted to the latest meeting of the Green Climate Fund (GCF). CDKN’s Christina Elvers observed that compared to last year’s disappointing meeting in Zambia, GCF managed to make some major progress with the US signing the first tranche ($500m) of their commitment to the GCF. Riding on the momentum of the Paris Agreement, 2016 should be a very important year for the fund as it committed itself to take funding decisions worth $2.5 bn in 2016 for mitigation and adaptation projects. The main challenge is whether the fund delivers to those nations most in need.

GCF’s stated aim of providing direct access to developing countries, and thus bringing about a “paradigm shift” in terms of access to finance for vulnerable countries. However many developing countries would need support in preparing the proposals, as the President of Kiribati rightly pointed out in the Guardian early this year. At the moment, many of these small developing nations do not have means to access the fund directly but only though accredited private entities such as banks and multilateral institutions approved by GCF. Understandably simplifying the accreditation process is not on the table, as accountability to donors as well as to poor people is of prime importance, point out Harjeet Singh from Action Aid. It is therefore a positive development that GCF has finally approved a readiness support to Rwanda whose direct access entity, MINIRENA, received a $1.5m grant to prepare the proposals.

Many questions though whether it is the right decision to spend such large amount on preparation support and this is where carbon market frameworks come in the pictures. In 2012, the CDM High-Level Panel on the CDM Policy Dialogue proposed that GCF shall build on “CDM standards and methodologies in accounting for payments for verified results, so as to leverage the achievements, knowledge, and resources of the CDM”. While some part of their recommendations, such as purchase of CDM credits clearly cannot be considered due to the additionality criteria, it might worth to reflect on the lessons learned on this long-standing mechanism of emission reductions. Besides CDM, Gold Standard can also provide GCF with knowledge on how to set the standard which enables project developers to deliver high-impact, community focused emission reduction projects in developing countries. It is only by learning from these institutions’ past experience that GCF will be able to design a financial response that would truly lead to a paradigm shift.

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The Paris Agreement: Look beyond the imperfection

 

On Saturday December 12, 2015, applause and cheers broke out throughout the conference hall at COP21 in Paris. It was celebration mixed with relief. The result is the first agreement requiring all nations, rich and poor, to pledge action on climate change, with the aim of restricting global warming to “well below 2C above pre-industrial levels”, and to strive to “limit it to 1.5C”.

The Paris Agreement represents a marked shift when juxtaposed against the last 21 years as the climate circus rolled on from place to place, conference to conference, with very little to show for itself. Each of these spectacles, Berlin Mandate, Kyoto Protocol, Marrakech Accord to name a few (notice the change in outcome name for political purposes) have been hailed by the climate champions and politicians as major breakthroughs. Their overall impact plus or minus, zilch.

I should probably admit that over the last number of years I believed the publically financed jamboree that is COP should be declared defunct and unfit for purpose, with emancipation a necessary pre-condition for progress on managing climate change. But the COP circus beat on, boats against the current. Or so it seemed.

Fast forward to December 2015. The Paris Agreement and the supporting decisions are a diplomatic triumph, an act of true global co-operation of historic significance. The diplomats have done their job and have set ambitious climate goals. The Paris agreement points the world in the right direction with sophistication and clarity, against a backdrop of 21 years of negotiations that achieved very little. A remarkable outcome. Our first question is, how did this happen?

The climate community and wider debate has matured. It has done away with a top-down deal and instead replaced it with a voluntary bottom-up deal. This bottom-up approach is made up of voluntary intended nationally determined contributions (INDCs in UN jargon) from all 195 signature countries. Unrealistic, top-down absolutism has been replaced with pragmatic, bottom-up flexibility. The importance of this should not be understated. It became clear to the UN climate envoy that a legally binding top down deal in which a global per-capita carbon budget was divided up between nation states was doomed to fail. The only framework that would be accepted was one which was essentially voluntary. This should not be misrepresented as the global community reducing overall ambition on climate change. It was simply the result of a growing understanding of methods in which ambitious climate goals might actually be met, rather than procrastinated about. After all, the Kyoto Protocol was binding, and when it suited them Canada, Russia and Japan simply walked away from it, with no penalties whatsoever. Binding is not the solution in this context. Action is the solution. Imperfect action, but action nonetheless.

This shift in acceptance of the necessary imperfection in the Paris Agreement has not been universal. Idealists and cult like climate change ultras still exist in activist groups, academic circles and around negotiating tables. These groups would seek to sacrifice action on the sanctum of perfection. Unfortunately for them the truth is, the developed world is never likely to penalise itself for its historical carbon emissions profligate as they so long for. Of course there is merit to the fact that it should (see link to a previous blog of mine) but unrealistic to think it will. Neither will the rich world allow the developing world a turn at the emissions helm and allow them to run the planet close to the edifice as the older nations struggle to compete and grow. What matters most is that developed and developing countries have agreed to be pragmatic.

This new pragmatism matters. It embraces a certain reality. A zero carbon, zero fossil fuel world, has more in common with the simulated reality in the movie The Matrix than it has with Planet Earth at the present time. Fossil fuels are the main source of CO2 emissions. Fossil fuels represent circa 80% of global energy consumption. They are at the absolute heart of our economies. However, 2015 is the first year that the world could dare to dream about a clean energy low carbon future. The cost of clean energy has been coming down rapidly. This falling cost of clean energy technologies gave policy-makers at Paris growing confidence that shifting to a low-carbon future is not an unaffordable pipe dream, but something that can, gradually, be delivered.

The Paris Agreement should also be seen as a product of the year 2015. In what was a momentous year for clean energy growth, oil prices took a huge nosedive hitting 11 year lows, with the hydrocarbon industry in disarray in some quarters. Advocates of clean energy however, must restrain their Schadenfreude at this sight. False solutions such as divestment need to be avoided. As far as divestment goes it is fine. But that is not very far. Paris did not nor should it ever have looked to deliver an extinction event for fossil fuels. To wish for this as some have is to underestimate the scale of the challenge ahead. Fossil fuels have done mankind a service, in broad accord with the political consensus of an earlier time. Paris should be seen as the first step in what will no doubt be a difficult divorce between the world economy and fossil fuels, a divorce that is well and truly underway.

Of course, there is still room for the cynics, the extremists who would seek to deride Paris as a sham agreement, to focus on the inherent imperfections of an agreement involving 195 different parties. At this point we must openly acknowledge the truth, grim as it is. The voluntary INDCs at the heart of the agreement do not yet add up to a 2C limit, much less a 1.5C limit. Furthermore, it is not obscene to suggest the Paris Agreement could end up a failure. Or it could partially succeed, with current commitments honoured and future ambitions diluted. Determined as some of the INDCs are, far more ambition will be needed in future to hit its goals. But anyone who thinks that this is a Achilles’ heal is thinking obtusely. The Paris Agreement contains a powerful ratchet mechanism, repeated every 5 years, for ever-increasing ambition. Forces now at work will act inexorably to push up not rein back ambition on climate. Ambition. Ambition. Ambition.

Global agreements are necessary for global problem-solving and collaboration around a shared goal. The urgent, long overdue challenge of implementation now begins. We would do well to look beyond any imperfection and acknowledge that the Paris Agreement is a turning point in the world’s fight against unmanaged climate change.

The time is now…

Discussions continue in Paris this week at the 21st Conference of Parties (COP) as politicians from all over the world begin their final push to reach a new global accord for action on climate change. Negotiations are due to conclude on Friday but could roll on in to the weekend with some sleepless nights as many key disagreements are yet to be settled.

Though major steps forward have been made, it is becoming clear that the agreement in Paris will only form part of the solution and also, how businesses will be one of the most influential actors on climate change. Just this week there has been calls from many sectors for businesses to aim carbon neutrality by 2050 and limit global warming to 1.5°C.

Now, with the new international agreement on the horizon and wide calls for global price on carbon, businesses are beginning to see value-at-stake from action on climate change. Changing public perceptions, increased energy costs and changing weather patterns, all represent risks to businesses and should be treated as such.  By measuring carbon footprints and investing both internally in energy efficiency and externally in climate change mitigation to offset carbon emissions that cannot be reduced, there are multiple benefits to be realised.

Last week ICROA, of which CO2balance are members, launched a series of videos from just a few businesses that have recognised the benefits of offsetting as part of broader carbon management strategy, setting out the clear business case. Endorsed by Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), it will feature at this year’s COP to highlight offsetting as a vital part of the solution set to meet global emission reduction goals.

By supporting carbon-offset projects, businesses are investing in the local environment, communities and benefits that extend far beyond the carbon reductions. We now look forward to the conclusion of this week’s negotiations and hope for a strong, binding agreement that sets a clear path to a low carbon future.

ESOS – Up and Running in 2015

The Environment Agency’s ESOS Compliance Portal is now live as you can see from the timeline below;

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ESOS requires all large UK enterprises to have an organisational energy audit every four years.  In December, the Environment Agency launched its compliance portal through which all submissions must be made in time for the January 2016 start date.In mid 2014, the Energy Savings Opportunity Scheme (ESOS), the latest EU-led compliance legislation was transmuted into UK statute, with the Environment Agency as the key administrators of the scheme.

Businesses that qualify for ESOS compliance are required to submit their data before 5th December 2015. Importantly, with this development, businesses can be registered as fully ESOS compliant from 1st January 2015 and begin to make savings from their investment.

As of 2015, Lead Assessors managing ESOS compliance are now able to submit finalised data on behalf of businesses. The main role of the Lead Assessor is to ensure that organisations are ESOS compliant and that the recommendations being made are technically accurate and of true benefit to the client.  The ESOS organisation is ultimately responsible for the accuracy of its compliance.

Paul Chiplen, coordinating ESOS strategy here at CO2Balance, says, “I am looking forward to working with ESOS clients to help reduce their operational costs and their carbon.  ESOS is a fantastic opportunity to really make a difference to energy usage in UK organisations. CO2Balance acting as Lead Assessor can play an important role in overseeing the ESOS process, using their extensive experience to audit through site visits and project timelines.”

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Throughout 2015, using our Optimised ESOS Plan (see above), CO2Balance is mobilising to make savings for their ESOS clients that will result from implementing the measures recommended in their audits. If you are one of the many companies currently unprepared and perplexed for ESOS first off, you are not alone. Approximately 50% of the 9,000 companies in scope are also in your position. Even here at CO2Balance there are still many questions to be answered on ESOS and the energy efficiency policy landscape in general in the UK. However we are here to help and guide you through your ESOS compliance and energy performance in 2015.

For further information please contact Paul Chiplen, to learn more and get ready.

Climate Change and Equity: Understanding Common but Differentiated Responsibility (CBDR)

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“In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities”. [Principle 7 of the Rio Declaration at the first Rio Earth Summit in 1992]

A majority of us will be familiar with the Conference of the Parties (COP) international climate change talks that take place every year (i.e. Copenhagen, Durban, Doha, Warsaw, and Paris in 2015). Not widely known is arguably the most important COP decision ever came at COP 1 in Berlin in 1995. It was called the Berlin Mandate. It resulted in the principle of Common but Differentiated Responsibility (CBDR) being cemented into the UNFCCC framework. CBDR directs developed countries to the lead in process of mitigating climate change. Under CBDR, Annex I (Developed) countries that have cumulatively produced (and benefited from) emissions that created climate change, bear a disproportionate burden to solve the problem. The resistance of some developed nations (chiefly the US, Canada, Russia, Australia) to any deal that does not break from current CBDR status (i.e. including emission reduction commitments from non-Annex 1 countries) is perhaps the main roadblock for a successful international climate change legal framework going forward.

In the run up to 2014 COP in Peru and more importantly Paris 2015, it is important to investigate whether the concept of CBDR is still an equitable way of dividing the countries of the world around climate change commitments especially focusing on limiting average warming to 2°C or the carbon budget that gives us a “coin flip” chance of achieving this legally binding target (agreed in Copenhagen Accord 2009, and Camp David Declaration 2012). So how important is the concept of historical responsibility? While also being across nations, could a division of CBDR be based within nations, or across national populations? Can CBDR help us to understand who the high carbon emitters are?

First off, we must never forget the notion of historical responsibility, i.e. developed nation’s historical contribution of emissions. Historic data shows that developed nations have emitted approximately 75% of cumulative emissions in the atmosphere since the industrial revolution. Furthermore, if developed nations ceased emitting entirely this year (which is impossible) they will still have emitted more than half of cumulative global emissions in the context of the “coinflip” carbon budget that keeps us below 2°C warming by 2050. Let’s ask:

 Who are the high emitters? Applying Pareto’s 80:20 Rule

[The following analysis is broadly based on work led by Kevin Anderson from the UK Tyndall Climate Change Centre].

There are 7.125 billion in the planet in 2014 (UN, 2014). The interesting question is how many of these 7.125 billion people would need to make substantial changes to their lifestyles and level of greenhouse gas emissions in order to avoid warming greater than 2°C? It is interesting now to consider Pareto’s 80:20 rule. This rule states that 80% of something relates to 20% of those involved. This is a surprisingly useful and robust rule of thumb. In the context of climate change this would mean that 80% of emissions (40 Billion tonnes CO2e per annum) derives from 20% of world population (1.425 billion people). As well as across nations (for instance Developed vs Developing) Pareto’s 80:20 rule also holds within nations (wealthy vs poorer people).

Overall the Tyndall Research Centre have found that 40-60% of world emissions comes from approximately 5% cent of the world population. Admittedly, this is very rough calculus; but it provides a broad and practical guideline. Resulting from this analysis we understand that the bulk of carbon emissions come from a small percentage of the world’s 7 billion people. This most likely comes as no surprise to you. Yet, in the West (Europe, North America) one often hears statements such as ‘Oh yes, but the Chinese are becoming rich, everyone wants a fridge and a car…’. It is true that people want (and moreover deserve) these things. There are however two major misconceptions about common but differentiated responsibility and Chinese development in the context of climate change.

Firstly, carbon consumption not carbon production is a measure of a person/countries carbon footprint. The table below of Global Carbon Project’s 2014 consumption-based statistics

Annual emissions in tonnes of CO2 per person

World                           5.0
China                          5.9
France                         8.1
EU28                           9.4
UK                             10.1
Norway                      11.1
Germany                   11.4
Japan                        12.5
Australia                    14.9
USA                           17.7

This analysis highlights that carbon emissions from an average Chinese person’s lifestyle are only 18% higher than the global average, are 36% lower per capita than those of a typical European and just a third of the emissions from a US citizen. The lifestyles of UK, German and Japanese citizens emit, respectively, 110%, 90% and 70% more carbon than do their Chinese counterparts. Even with widespread low carbon nuclear energy, French emissions per capita are still over 35% higher than those of an average Chinese person.

Secondly, by the time the mode person (not the mean) – mode being the ‘normal’ person in China, has obtained a car or a fridge, a dramatically overhauled low-carbon energy system would already have to be in place in order to limit global temperature rise to below 2°C. It will take China 20 or 30 years, even at 10% annual growth rates (2013 GDP growth rate was 7.6%), to get its mode population to that level. Essentially this means that the poor cannot move fast enough to affect the basics of the maths for 2°C warming.

It seems logical then to ask; Are we the wealthy ‘few per cent’ – principally, the developed countries of the world sufficiently concerned to pass the necessary legislation and make substantial personal sacrifices and changes to our lifestyles now in order to safeguard the planet for the rest of the population and future generations? Since we know who needs to change, could policies be aimed specifically at the “few per cent” that are currently emitting significantly and disproportionately as part of an equitable international climate change regime? This requires vast political mobilization and an unprecedented step change on the scale of which we have not seen historically but could it also offer policy makers hope in realising actual emissions reductions, something they have consistently not delivered.

Overall, if the global community is serious, in its repeated commitment to ‘stay below a 2°C temperature rise’, the mitigation challenge for all nations will be extremely demanding. Mitigation needs to be delivered first in the US, the EU and other wealthier nations whose citizens typically live higher-carbon lifestyles, with China, India and other parts of the developing world only following suit much later. We cannot abandon the concept of Common but Differentiated Responsibility however tempting and politically palatable it may seem.

Carbon Expo

Our Managing Director, Mark Simpson and Sales Manager, Paul Chiplen are  currently attending Carbon Expo – the largest annual gathering of the global carbon market, held in Germany this year. This international trade fair and conference brings together all major policy and market players – including keynote speakers Christiana Figueres, Executive Secretary of UNFCCC, and US Secretary of State, John Kerry.  Starting from the 28th of May, the 3-day event hosts the world’s leading experts on sustainability, energy and finance with an agenda focusing on three key areas this year: Policy and Markets, Climate Finance and Sustainable Energy.  We are hoping that meeting will drive new opportunities and partnerships and soon we can blog about promising new carbon projects too….

Global Alliance for Clean Cookstoves Conference

Part of the co2balance team spent today attending the National Clean Cookstoves and Fuel Conference in Nairobi, Kenya hosted by the Global Alliance for Clean Cookstoves. The Alliance’s goal is to catalyze the adoption of clean and efficient cookstoves and fuels by households through a market-based approach that will achieve the following objectives:

  • Reduce household air pollution
  • Reduce environmental degradation
  • Empower women and improve livelihoods

20140204_161045[1]The meeting kicked off with presentations from the US Ambassador to Kenya, Robert Godec as well as representatives from the United Nations and the Kenyan Government. These were proceeded by informative talks ranging from the recent Customer Segmentation Study conducted by co2balance  to clean cookstove standards, distribution models and financing options.

It is safe to say that after a full day of talks all the delegates, including co2balance, left with a lot to think about and a renewed sense of purpose to achieve the target of 7 million households in Kenya using improved cookstoves by 2020.

Left to Right:
Charles Ruto, Moses Maina
and Lloyd Archer