COP19 closed last week with some key decisions reached. One of them is related to deforestation. Specifically, the conference agreed a multi-billion dollar framework to tackle it. So, negotiators agreed rules on financing forest projects in developing nations, paving the way for investments from governments, funding agencies and private firms.
The agreement on “results-based” funding for Reducing Emissions from Deforestation and Forest Degradation (REDD) was a rare breakthrough at the climate talks in Warsaw, but now it is a reality.
Money will flow into host-country coffers when they can prove they have reduced carbon emissions without harming local communities or biological diversity. Nations also agreed rules on how to measure and verify the emissions cuts from forest projects.
Deforestation has played an increasingly important role in climate negotiations, because the loss of forests accounts for nearly a fifth of global greenhouse gas emissions that scientists blame for global warming.
The Norwegian government has already paid out $1.4 billion in bilateral deals with nations such as Brazil, Democratic Republic of Congo, Guyana and Indonesia. The World Bank, the Global Environment Facility and a growing number of private-sector firms have also launched projects. The governments of Britain, Norway and the United States earlier this week allocated $280 million to a World Bank-led fund operating REDD projects.
Climate talks in Warsaw agreed the outlines of a deal to be reached in 2015 to combat global warming
Around 195 countries ended a two-week meeting in Warsaw on Saturday evening to agree the outlines of a deal meant to be reached in 2015 to combat global warming.
Divisions between developed and developing countries have appeared so deep thought the conference, but, finally, some key decisions have been reached.
First of all, countries agreed to announce plans for curbs on greenhouse gases beyond 2020. “Warsaw has set a pathway for governments to work on a draft text of a new universal climate agreement, an essential step to reach a final agreement in Paris, in 2015,” said Marcin Korolec, the Polish host of the conference.
There was a key change in the text. The word ‘commitment’ changed to ‘contributions, without prejudice to the legal nature’. The change is believed to have been made to accommodate China and India.
Secondly, the talks agreed a new ‘Warsaw International Mechanism’ to provide expertise, and possibly aid, to help developing nations cope with losses from extreme events related to climate change. The exact form of the mechanism will be reviewed in 2016.
Thirdly, the conference agreed on a measure that could boost demand for the ailing mechanism, encouraging countries without legally binding emissions targets to use carbon credits called Certified Emission Reductions (CERs).
Finally, the conference agreed a multi-billion dollar framework to tackle deforestation. The fledgling Green Climate Fund will play a key role in channeling finance for projects to halt deforestation to host governments, who in turn must set up national agencies to oversee the money.
Everybody knows that climate change particularly affects developing countries, but its effects on health are still very hard to predict. For that reason, the QWECI project set out to assist medical practitioners and public health decision-makers in allocating resources and implementing preventative measures ahead of disease epidemics. The project was coordinated by the University of Liverpool in the United Kingdom.
The QWECI project brought together researchers from 13 European and African research institutes to integrate data from climate-modelling and disease-forecasting systems. The project focused on climate and disease in Senegal, Ghana and Malawi and aimed to give decision-makers the necessary time to deploy intervention methods and help prevent large-scale spread of diseases such as malaria and Rift Valley fever. It is expected to help predict the likelihood of a malaria epidemic four to six months in advance.
The overall objective of QWECI was to combine state-of-the-art climate models, weather-dependent infection-control data for key African diseases, and local knowledge about population behaviour, disease, vectors and transmission patterns. The outputs could thus generate maps of infection risk appropriate to the decision-making of health professionals on the ground and the policy-making of governments in susceptible countries.
QWECI’s value-added resides in the integration of the most reliable climate-based prediction models with models of climate controls on disease risk variables for ‘vector-borne diseases’ (VBDs) on medium and long timescales. This results in unique and meaningful information which can be rapidly conveyed to end-users and allows for the quantification and prediction of the impact of climate and weather on health in Africa.
The project team has taken malaria modelling driven by seasonal-scale ensemble prediction systems to the operational cusp. The region’s capacity to use and interact with malaria-modelling technologies was also developed through local parameter settings from field studies in the region, and methods including long-range WiFi to communicate the results to local users.
For more information you can visit: http://www.liv.ac.uk/qweci/
The European Commission has published information concerning Track 1 ERUs: Companies will be able to use emission reduction units (ERUs) issued before 2013 to comply with EU carbon caps, causing offset prices to drop sharply.
The European Commission will soon mark these ERUs as eligible for compliance in the EU emissions trading system (ETS) emission. The operation will be carried out on 21 November.
ERUs from projects located in countries without post-2013 legally-binding emission reduction commitments are eligible for use in the EU ETS only if they represent emission reductions which took place before 2013.
In order to apply quality restrictions to offset credits in the union registry, the Commission decided to label them as “eligible” or “ineligible” for compliance purpose.
However, a “significant” proportion of track 1 ERUs – where emissions credits are approved by the host country itself – issued before 2013 by non-EU parties to the Kyoto Protocol was marked as “pending/ineligible” while the Commission worked to obtain complete information on them. “The data has now been provided for ERUs issued by all third parties and the status of ERUs issued before 2013 will be changed from pending/ineligible to eligible,” the Commission said on Friday.
This announcement has had consequences: Offset prices crashed. “This was the last thing the market needed,” said one trader at a bank. A second source at a trading house said that many participants had to buy additional ERUs when those they held in the registry were marked as pending, in order to be sure to be able to cover their selling orders for delivery in December, and following the announcement they found themselves with extra credits they could sell.
DG CLIMA indicates that further details regarding ERUs marked as “pending” or “ineligible” which will have to be moved to a KP account, will be made available on their website by 20 December 2013.
Deforestation of Brazil’s Amazon increased by 28% between August 2012 and last July, after years of decline, according to Brazilian government. The total land cleared during the period amounted to 2,255 sq miles (5,843 sq km), compared to 4,571 sq km (1,765 sq miles) in the previous 12 months.
The result frustrated the government’s expectations, although, despite the interruption of the decline sequence started in 2009, the latest deforested area still remains the second lowest ever recorded.
Environmentalists say the controversial reform of the forest protection law in 2012 is to blame for the upwards trend. The changes reduced protected areas in farms and declared an amnesty for areas destroyed before 2008. They also say that the government’s push for big infrastructure projects like dams, roads and railways is pushing deforestation.
However, Ms Teixeira said the destruction rate was “unacceptable”, but denied President Dilma Rousseff’s administration were to blame. “This swing is not related to any federal government fund cuts for law enforcement,” she told.
As soon as she returns from Poland, where she is representing Brazil at the United Nations summit on climate change, Ms Teixeira said she would set up a meeting with local governors and mayors of the worst hit areas to discuss strategies to revert the trend.
The Brazilian government made a commitment in 2009 to reduce deforestation in the Amazon by 80% by the year 2020, in relation to the average between 1996 and 2005. It is very important to carry out initiatives like this, because the Amazon is an abundant source of the world’s oxygen and fresh water and considered by scientists to be a crucial buffer against climate change.
Microsoft and Ford invest in $1 billion bond for climate projects and Morgan Stanley launches sustainable investing institute
Companies around the world are becoming more aware of climate change. For that reason, they invest millions in green projects.
One example is the case of Ford and Microsoft. They were among 50 investors in a $1 billion green bond launched last week to support “climate smart” investments in emerging markets.
It marks the second $1 billion green bond transaction this year from the International Finance Corporation (IFC), member of the World Bank Group and an international financial institution which offers investment, advisory, and asset management services to encourage private sector development in developing countries.
Proceeds of IFC green bonds are used for private sector investments in renewable energy, energy efficiency and other areas that reduce greenhouse gas emissions, such as installing solar and wind power capacity and providing financing for technology that helps produce energy more efficiently.
Progress is being made with bonds of all sizes, ranging from relatively small issues from individual companies to the huge issues being orchestrated by the likes of IFC. Earlier this year, green power company Good Energy raised $24 million to expand its renewable energy portfolio — three times its initial target — while in April the European Investment Bank secured $80 million from a bond issue to invest in renewable power and energy efficiency projects.
On the other hand, Morgan Stanley has decided to get into sustainable investments in a big way, announcing the Morgan Stanley Institute for Sustainable Investing.
The goal is to advance market-based solutions to economic, social and environmental challenges by bringing sustainable investments to significant scale.
There are three areas of focus: financial products that make it possible for clients to invest in sustainability-focused strategies while getting strong risk-adjusted financial returns; thought leadership that helps mobilize significant capital; and strategic partnerships that build capacity and best practices in scalable sustainable investing.
The Institute’s first major commitments are: A goal of $10 billion in client assets through Morgan Stanley’s Investing with Impact Platform in the next five years; an annual Sustainable Investing Fellowship at Columbia Business School, coupled with a hands-on internship at Morgan Stanley, will develop thought leadership and investment strategy for the effort; and a $1 billion investment in a sustainable communities initiative that provides rapid access to capital to preserve and enhance quality affordable housing that’s either deteriorating into uninhabitable conditions or becoming unaffordable to low- and moderate-income households.
There have been a lot of meetings to solve the problem about the oversupply of allowances in the EU carbon market, which covers around 11,000 installations across the 28 member states. Finally, the EU Council has approved plans to consider a temporary fix to the bloc’s troubled carbon market.
Officials from member states voted almost unanimously to start discussions with the EU Parliament to remove 900 million carbon allowances from circulation until 2020. This measure is known as backloading.
Prices of carbon allowances have plummeted over the past two years due to the glut and the economic crisis. They fell below €3 earlier this year – less than a tenth of the price analysts say is needed to drive low carbon investment on a large scale. The Commission is expected to table a more permanent solution to prop up the market by the beginning of next year.
The 28 EU governments and the European Parliament must approve the backloading proposal before it becomes law, so market participants do not expect permits to be withdrawn until the middle of next year.
EU Climate Action Commissioner Connie Hedegaard showed his happiness on Twitter: “Finally! Endlich! #Backloading through in Council! Common sense prevailed. Almost unanimous support from MSs. Moving toward a stronger #ETS”, she wrote.
The amount of forest conserved by carbon finance grew to 26.5 million hectares in 2012, a new report says
Carbon finance supported the management of forests spanning 26.5 million hectares worldwide as businesses in 2012 injected $216 million into projects that plant trees, avoid deforestation, improve forest management and support low-carbon agriculture, according to the 2013 State of the Forest Carbon Markets report released by non-profit researchers Forest Trends’ Ecosystem Marketplace this week in London.
All these projects (162 in 58 countries), a key defense against the ecological and socio-economic impacts of climate change, were financed by the sale of 28 million tonnes of carbon offsets. While market size grew 9%, the global average price for forestry offsets was $7.8/tonne – down from $9.2/tonne in 2011, but still higher than prices paid by voluntary buyers for other offset types ($5.9/tonne).
So, this year’s report findings illustrate growing corporate interest in incentive payments to protect forests as a climate response “This reports demonstrates that financing forests’ conservation and sustainable management is not just about license to do business, or image. It can directly benefit companies’ infrastructure, suppliers, and bottom lines”,says Forest Trends president and CEO Michael Jenkins.
Projects that reduce emissions from deforestation and degradation (“REDD”) saw heightened demand in 2012, as private companies like The Walt Disney Company and clothing brand Puma invested millions to support REDD projects in developing countries. A total of 8.6 million REDD offsets were transacted, tying with tree planting activities as 2012’s most popular project types. Projects that improve forest management climbed in popularity, while carbon finance for sustainable agriculture remained muted. However, the private sector and negotiators are increasingly attentive to agricultural carbon projects’ strong business case and benefits to avoided deforestation.
On the other hand, offset buyers strongly supported forest projects that deliver benefits beyond carbon sequestration, such as alternative local livelihoods and habitat protection for threatened species. However, even with strong growth in forestry offset demand in 2012, forest project developers reported 30 million tonnes that remained unsold at year’s end. Though developers predict strong market growth, their projects’ emissions reductions are expected to outstrip historical offset demand, with developers expecting to reduce another 1.4 billion tonnes of emissions over the next five years. And most of these reductions will come from REDD projects.
The State of the Forest Carbon Markets 2013 is freely available. You can download the report here: http://www.forest-trends.org/fcm2013.php
China is willing to work with U.N to fight against climate change and it wants to establish a new global deal about this issue. However, the country’s top climate change official, Xie Zhenhua, has said that the key to progress is getting rich nations to keep pledges to fund mitigation steps by poorer countries.
Representatives of more than 190 nations are going to meet in Warsaw from Nov 11 to 22 to push towards a new global deal to cut climate-warming greenhouse gases. It is set to take effect by 2020.
Last month, the United States’ chief climate change envoy, Todd Stern, urged a more flexible approach over a new pact to succeed the Kyoto Protocol, saying nations should be allowed to set individual timetables and commitments. And Xie Zhenhua is agreed with him. “As long as it is fair, and accords with the principle of ‘common but differentiated responsibilities’, we have a very flexible approach,” he told.
However, Xie has insisted that funding was critical to solving the disputes, with richer countries still not having released funds promised in 2009 to help poorer nations adapt to climate change and to cut their own emissions. The measures included “fast-start” funds of $30 billion by 2015 and an annual fund of $100 billion to developing countries by 2020.
Developing nations would only be obliged to meet climate change pledges once funding from richer nations was in place, the National Development and Reform Commission (NDRC) said in a document issued ahead of the news conference. “Although the developed countries have not lived up to their commitments, developing countries have taken active measures to combat climate change, especially China,” Xie said.
Xie confirmed that three cities and provinces in China – Beijing, Guangdong and Shanghai – would launch emissions trading markets before the end of the year, adding to a carbon trading scheme introduced in Shenzhen in June.
Mexico’s Senate has approved a new tax on fossil fuel use that will allow companies to buy and surrender U.N. -backed carbon credits instead of paying the charge. The bill had already passed a vote in the lower house last week and is likely to have to return there for final approval before President Enrique Pena Nieto can pass it into law.
The bill requires companies from next year to pay around $5 per tonne of carbon dioxide they emit. It exempts crude oil and natural gas producers but it will apply to producers of byproducts including gasoline, diesel, propane, butane and coal. However, companies can surrender an equivalent amount of Certified Emission Reductions (CERs) from carbon cutting projects hosted in Mexico.
The law is expected to boost demand for carbon credits from Mexican projects registered under the U.N.’s Clean Development Mechanism (CDM). The CDM allows investors in CO2 reduction projects located in developing nations to earn carbon credits that governments and companies can use to offset their emissions.
“If this bill is signed into law the way it is now, as seems that will be the case, a Mexican carbon market will ‘de facto’ be created,” said Eduardo Piquero, who is developing a platform to host carbon trade for the exchange. “It will be a market with demand and offerings from private and public Mexican companies,” said Piquero.
Mario Alberto Santillan, who coordinates a CDM project at coal mines owned by Minerales Moncloya, said the firm planned to use all of the expected 300,000 CERs/year from the project to help avoid the tax. Some 210 Mexican projects currently in the CDM pipeline are expected to earn more than 200 million credits by 2020. “We have possibilities for additional CDM projects that could generate some 3.5 million credits, and now I think we should speed up those plans,” Santillan said.
So, it is clear that industrial companies likely to face the tax had lobbied for the inclusion of the offset provision to help limit cost.