tag:theconversation.com,2011:/us/topics/carbon-trading-23408/articlesCarbon trading – The Conversation2023-11-29T13:51:37Ztag:theconversation.com,2011:article/2172972023-11-29T13:51:37Z2023-11-29T13:51:37ZClimate action for Africa in 2023: three big developments<p>2023 is highly likely to be the <a href="https://www.carbonbrief.org/analysis-greater-than-99-chance-2023-will-be-hottest-year-on-record/#:%7E:text=Based%20on%20Carbon%20Brief's%20analysis,Earth%20and%20Copernicus%2FECMWF%20datasets.">hottest year ever recorded</a>. And climate change is <a href="https://assets.ctfassets.net/cxgxgstp8r5d/3Ol753QygKfVTuCC28qgij/b97aacad87ca66289e06e2176b7af567/-Climate_Central_report-_The_hottest_12-month_stretch_in_recorded_history__Nov_2022_to_Oct_2023_.pdf">to blame for one-quarter</a> of the global population being exposed to dangerous levels of extreme heat. </p>
<p>We need signs that countries are taking steps to address this. Specifically, we need <a href="https://www.ipcc.ch/report/ar6/syr/">climate action</a> that helps us adapt and that cuts greenhouse gas emissions, if we want to minimise the escalating losses and damages from climate change.</p>
<p>This year, there were three developments across Africa which highlight a mix of progress, priorities and potential pitfalls. As an expert on climate-resilient development for Africa, I’ve chosen these specific moments as I believe they reflect the role Africa can take on climate action over the coming decade.</p>
<h2>Three big developments</h2>
<p><strong>Kenya pushes for a new climate finance strategy</strong></p>
<p>At the <a href="https://africaclimatesummit.org/">Africa Climate Summit</a>,
Kenya’s president William Ruto made a big announcement that could boost <a href="https://www.president.go.ke/wp-content/uploads/AT-THE-OPENING-OF-THE-AFRICA-CLIMATE-SUMMIT-MINISTERIAL-CONFERENCE.pdf">global investment in Africa’s renewable energy</a>.</p>
<p>Ruto highlighted the need for more favourable <a href="https://media.africaclimatesummit.org/Final+declaration+1709-English.pdf?request-content-type=%22application/force-download">climate finance which would enable African countries to transition</a> to a green industrialisation that accelerates uptake of solar and wind power and development of mineral resources that support this transition. This included a call to increase finance from multilateral development banks for climate action to at least US$500 billion per year. Global climate finance need is estimated to be <a href="https://www.oecd.org/environment/cc/climate-futures/policy-highlights-financing-climate-futures.pdf">at least US$6 trillion every year</a>. But disbursements fall way short at US$1.3 trillion in 2021/2022.</p>
<p>Ruto also called for a <a href="https://www.theguardian.com/world/2023/sep/06/african-leaders-call-for-debt-relief-to-help-tackle-climate-change">global debt relief deal</a> that will give a 10-year grace period to heavily indebted African nations. These countries would not be able to invest in climate action while under severe debt distress, particularly since climate change has already negatively affected economic growth in African countries. An important dimension of this change is the call for increased representation of African and other countries in the governance of multilateral banks.</p>
<p><strong>Carbon offsets and Africa’s new carbon markets</strong></p>
<p>This year, there’s been a lot of new <a href="https://www.bloomberg.com/news/articles/2023-09-05/uae-pledges-4-5-billion-to-help-finance-africa-climate-projects#xj4y7vzkg">interest in Africa’s carbon markets</a> and a growing sentiment that Africa cannot be “<a href="https://www.afdb.org/en/news-and-events/press-releases/african-leaders-commit-pursue-green-and-inclusive-growth-nairobi-declaration-64198">nature-rich but cash-poor</a>”. </p>
<p>A carbon market is a system designed to reduce greenhouse gas emissions by allowing companies and countries <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Carbon%20Market%20Quick%20Facts%20%20ACF%202012.pdf">to compensate for their carbon emissions</a> by financing projects that reduce emissions or remove CO₂ from the atmosphere somewhere else.</p>
<p>Africa has a potentially enormous and untapped carbon market due to its size, biodiversity and range of ecosystems. If used well, funds could <a href="https://wedocs.unep.org/bitstream/handle/20.500.11822/43796/adaptation_gap_report_2023.pdf?sequence=1&isAllowed=y">help countries to adapt</a> to climate change and protect their biodiversity.</p>
<p>This year, the United Arab Emirates (UAE) – the host of this year’s UN climate change conference, <a href="https://www.cop28.com/">COP28</a> – allocated <a href="https://www.bloomberg.com/news/articles/2023-09-29/zimbabwe-uae-firm-sign-1-5-billion-carbon-credit-financing-mou#xj4y7vzkg">US$1.5 billion for investment in Zimbabwe</a> to fund forest protection and rehabilitation projects. This was part of a broader commitment of US$4.5 billion in investments across multiple African countries including Kenya, Liberia, Tanzania, and Zambia. It could make the UAE the single largest investor in African carbon markets. </p>
<p>In addition, the Johannesburg Stock Exchange – Africa’s largest stock exchange – opened trading on its <a href="https://bd.pressreader.com/article/281487871066118">new voluntary carbon market</a> in mid-November. The South African voluntary carbon market intends to accelerate the creation of carbon offset projects for anyone seeking to offset their greenhouse gas emissions. For example, for every tonne of carbon emitted, you can now buy an equivalent to a tonne of carbon captured by a forest restoration project.</p>
<p>Carbon markets, however, are not a silver bullet.</p>
<p>Carbon market investments can be <a href="https://www.bloomberg.com/news/articles/2023-10-27/shaky-zimbabwe-project-puts-whole-carbon-market-at-risk">abused by high-emitting countries or companies, particularly when implemented in contexts with poor governance</a>. Countries with high emissions can use carbon markets as a “green-washing mechanism” to avoid deep and rapid reductions. </p>
<p>Carbon markets have also been criticised for <a href="https://www.bbc.com/news/world-africa-67352067">violation</a> of human rights. For instance, the projects they fund may lead to the forced displacement of indigenous communities from their ancestral lands. </p>
<p>Carbon markets therefore need to be carefully scrutinised. Specifically, they need to be checked for elite capture, outcomes for affected communities and their inclusion in carbon markets.</p>
<p><strong>South Africa’s climate change bill is passed</strong></p>
<p>Five years in the making, <a href="https://www.parliament.gov.za/storage/app/media/Bills/2022/B9_2022_Climate_Change_Bill/B9_2022_Climate_Change_Bill.pdf">South Africa has finally passed its landmark Climate Change Bill</a>. The bill aims to enable the development of an effective climate change response and a long-term transition to a low-carbon and climate-resilient economy. This is an important step for Africa’s highest emitter of greenhouse gas as it joins 19 other African countries with <a href="https://www.ipcc.ch/report/ar6/wg2/figures/chapter-9/figure-9-010">dedicated climate change laws</a>.</p>
<p>Notably, the bill treats climate change adaptation and mitigation as equally important. It provides for substantially scaled up support for adaptation to climate change across all levels. It also gives support to a just energy transition away from coal and towards renewable energy sources.</p>
<p>It shows a substantial advance in how the government is addressing climate change. Importantly, it takes into account the risks and opportunities that are expected to arise as a consequence of inadequate, slow or inequitable national climate change response.</p>
<p>There is a chance the bill may become an Act of Parliament before COP28 ends on 12 December 2023.</p>
<h2>Who will benefit?</h2>
<p>Across these three developments, the range of emphases between climate change adaptation and greenhouse gas mitigation reflects contrasting priorities and strategies. </p>
<p>They also reflect a diversity of interests – from global actors looking to use African investment opportunities to offset their carbon emissions, to African governments looking to boost investment in key adaptation and mitigation sectors.</p>
<p>What’s critical is that African countries are able to access finance so that they can adapt to climate change. The UN recently reported that <a href="https://wedocs.unep.org/bitstream/handle/20.500.11822/43796/adaptation_gap_report_2023.pdf?sequence=1&isAllowed=y">adaptation costs for developing countries are estimated at up to US$387 billion annually this decade</a>. Further, the needs of developing countries are 10 to 18 times higher than the current flow of public financing. This dwarfs current climate finance commitments and highlights the need for a focus on finance for adaptation as well as mitigation.</p>
<p>African countries must have enough to address their funding gap, not just finance for offsetting the emissions of high-polluting countries.</p><img src="https://counter.theconversation.com/content/217297/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nicholas P. Simpson receives funding from the South African Research Foundation.</span></em></p>There were three important moments in Africa this year which highlight a mix of progress, priorities and potential pitfalls in the fight against climate change.Nicholas P. Simpson, Senior Research Fellow, Climate and Sustainability, ODI, Overseas Development InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2124012023-09-05T17:02:15Z2023-09-05T17:02:15ZWhy we won’t be able to prevent climate breakdown without changing our relationship to the rest of the living world<figure><img src="https://images.theconversation.com/files/545041/original/file-20230828-17-ropd8p.jpg?ixlib=rb-1.1.0&rect=17%2C22%2C1899%2C1253&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Not only is deforestation unsightly. Fewer trees also mean less precious carbon sinks to absorb anthropogenic greenhouse gas emissions. </span> <span class="attribution"><a class="source" href="https://www.rawpixel.com/image/3326154/free-photo-image-garden-reforestation-asheville-field-office">Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Because of its growing impact on society, global warming has taken centre stage in the public debate. While most of us have not read the reports by the <a href="https://www.ipcc.ch/report/ar6/syr/">Intergovernmental Panel on Climate Change</a> (IPCC), heat waves, intensifying storms and the multiplication of extreme events remind us of the scale of climate disruption and the urgency of action.</p>
<p>Despite being documented by the <a href="https://www.ipbes.net/about">Intergovernmental Sciences Policy Platform on Biodiversity and Ecosystem Services</a> (IPBES), the equivalent of the IPCC for biodiversity, we know little about how biodiversity erosion might affect us and the rest of the planet. Its links and interactions with climate change are underestimated, and any policy to address either in isolation will miss the mark. It’s impossible to take effective action against global warming without addressing our impact on the rest of the living world, and vice versa.</p>
<h2>Fossil carbon, living carbon</h2>
<p>IPCC scientists have been explaining since their <a href="https://www.ipcc.ch/site/assets/uploads/2018/05/ipcc_90_92_assessments_far_full_report_fr.pdf">first assessment report</a> (1990) that climate change is a stock problem. To halt global warming, it is not enough to slash greenhouse gas emissions. We need to stabilise their stock in the atmosphere. To achieve <a href="https://christiandeperthuis.fr/n-comme-neutralite-climatique/">reach net zero</a> we must reduce emissions – the inflow into the stock – to the level of the outflow, which is made up of CO<sub>2</sub> absorption by carbon sinks (forests and oceans) and the elimination of non-CO<sub>2</sub> greenhouse gases at the end of their life cycle.</p>
<p>This requires that we adopt a two-pronged plan, aimed both at cutting down our reliance on both fossil <em>and</em> living carbon. The former feeds the vast majority of the world’s pollution, with coal, oil and natural gas accounting for <a href="https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_Chapter02.pdf">70% of the world’s greenhouse gas emissions</a>. Tackling it will require that we take on the so-called <a href="https://www.iea.org/topics/global-energy-transitions-stocktake">energy transition</a>.</p>
<p>On the other hand, a quarter of greenhouse gas emissions come from “living carbon”, mainly as a result of specific agricultural emissions (unrelated to fossil fuel use) and tropical deforestation and other land use changes that erode carbon sinks. There is no way to achieve carbon neutrality without a profound transformation in the use of living resources, to ensure the reflux of agricultural emissions and better protection of carbon sinks. This is the challenge of what we might call the <a href="https://www.frontiersin.org/articles/10.3389/fsufs.2021.709401/full">agroclimatic transition</a>.</p>
<p>One of the major difficulties of the ecological transition is to carry out these two transformations simultaneously, as they involve distinct economic mechanisms. For fossil carbon, we need to introduce scarcity by reducing the use of coal, oil and natural gas to the absolute minimum. For living carbon, we need to reinvest in the diversity of ecosystems to reduce agricultural emissions and protect carbon sinks as part of a bioeconomy.</p>
<h2>From adding to subtracting</h2>
<p>Since the start of the Industrial Revolution, energy transitions have followed one another. They have all involved adding new energy sources to a system initially based on the use of biomass. The result has been a massive increase in the amount of energy used worldwide.</p>
<p>The climate is forcing us to break with this logic. Lowering emissions is not a matter of adding decarbonised sources to the energy system. It’s about removing fossil fuels. We need to switch from a logic of addition to one of subtraction.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Russian tractor in a field in Ethiopia" src="https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/544215/original/file-20230823-27-kbjahm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Deforestation and agriculture are the source of ‘living’ carbon emissions.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/ifpri/14328252948">Ifpri/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>From an economic viewpoint, this means massively reconverting brown assets linked to the production or use of fossil fuels, through a double movement of investment in green and disinvestment in brown. The heaviest cost for the economic system is not the hundreds of billions invested in wind or solar farms, battery gigafactories or hydrogen electrolysers. It’s the cost of disinvestment that forces us to downgrade or reconvert brown assets: financial assets, of course, but also physical assets and, above all, the human assets on which the energy transition depends.</p>
<p>Multiple instruments will have to be called upon to bring about such a transformation. Pricing carbon from fossil fuel use is a key way to reflect the increasing scarcity of the atmospheric capacity to store carbon. Whether obtained through taxation or emission trading schemes, such taxation raises the cost of using fossil fuels, without returning the resulting rents to producers, as happens, for example, when oil prices soar on energy markets. On the demand side, it is a powerful stimulus to energy efficiency and sufficiency; on the supply side, it encourages a shift away from carbon assets.</p>
<p>The main difficulty with fossil carbon taxation lies in controlling its distributive impact. As the <a href="https://theconversation.com/us/topics/gilets-jaunes-movement-63133">“gilets jaunes” protests in France showed</a>, fossil carbon taxation without redistribution to the most vulnerable poses more problems than it solves. Only a <a href="https://theconversation.com/comment-reconcilier-taxe-carbone-et-pouvoir-dachat-111019">redistributive carbon tax</a> will be socially acceptable. Similarly, if carbon pricing is to be extended on an international scale, the proceeds must be returned on a massive scale to the countries of the South.</p>
<p>The distributional impacts of regulated carbon markets should also not be underestimated. Within the European Union, the extension of the emission trading scheme to the transport and buildings sector will increase household energy bills. This is why the proceeds from allowances sales at auction must be redistributed to the most vulnerable households via a <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7796">“social fund”</a> which will be the pillar of the regulation to be put in place.</p>
<figure class="align-center ">
<img alt="Yellow vests’ protest in Paris in January 2019" src="https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/543741/original/file-20230821-17-rfxvjq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Yellow vests’ protest in Paris in January 2019.</span>
<span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/thumb/3/34/Paris%2C_Gilets_Jaunes_-_Acte_IX_%2846724068321%29.jpg/1024px-Paris%2C_Gilets_Jaunes_-_Acte_IX_%2846724068321%29.jpg">Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>While fossil carbon taxation accelerates the energy transition, negative carbon taxes – in other words, <a href="https://www.iea.org/reports/fossil-fuels-consumption-subsidies-2022">fossil fuel subsidies</a> – delay it. Following the outbreak of war in Ukraine, these subsidies reached unprecedented levels in the European Union, with the multiplication of “tariff shields” erected as a matter of urgency to protect Europeans from the worst of the cost of living crisis.</p>
<p>Another pernicious form of subsidy to fossil fuels is the free allocation of CO<sub>2</sub> allowances in the European trading scheme, which <a href="https://sandbag.be/2021/12/17/why-free-allocation-in-the-eu-ets-must-stop-urgently/">hampers the emergence of a green industry</a>, a lever for the competitiveness of tomorrow’s Europe.</p>
<h2>Investing in the diversity of living beings</h2>
<p>Let’s imagine for a moment that the world has eradicated all use of fossil fuels in 2050. Would we automatically be in a situation of climate neutrality? Everything depends on what has been achieved on the second front of the transition, that of living carbon, the source of a quarter of the world’s greenhouse gas emissions.</p>
<p>Pricing fossil carbon is hardly useful for the agroclimatic transition. Worse, it could even prove counterproductive: using a CO<sub>2</sub> price based on energy criteria, it would become profitable to transform the Amazon rainforest (or the centuries-old oaks of the French Tronçay forest) into short rotation coppice to produce energy! The reason is simple. Agro-climatic transformation means finding ways to reinvest in biological diversity, in other words, in the abundance of living things. But the price of CO<sub>2</sub> does not reflect the value of this diversity. We therefore need to use other instruments, which are more complex to implement.</p>
<p>On land, forests are the main carbon sink. Their capacity to soak up atmospheric CO<sub>2</sub> is weakened by a combination of climatic and anthropogenic factors. In <a href="https://www.citepa.org/wp-content/uploads/publications/secten/2023/Citepa_Secten_ed2023_v1.pdf">France</a>, for example, the CO<sub>2</sub> storage capacity of forests has been divided by three since 2005, mainly due to climatic factors. There is therefore an urgent need to adapt forest management methods in anticipation of the severity of tomorrow’s climates. Worldwide, the main anthropogenic impact on forests is tropical deforestation. Its main cause is the expansion of land for crops and livestock. This is why the key to halting deforestation lies in changing agricultural practices.</p>
<h2>The key issues of agriculture and food</h2>
<p>The impact of farming systems on the net balance of greenhouse gas emissions is not limited to deforestation. Depending on the techniques used, farming systems may themselves release carbon into the atmosphere (deep ploughing, draining of wet soils, etc.) or, on the contrary, store it in living soils (conservation agriculture, agroforestry, etc.). The former erode biodiversity by specialising farmers according to industrial-type logics. The latter use living diversity to intensify production and regenerate the natural environment.</p>
<p>These agroecological techniques also make it possible to better withstand tougher climatic conditions, while reducing methane and nitrous oxide emissions from agricultural sources. In economic terms, their promotion requires investment in innovation, research and development, the establishment of dedicated farm advisory networks and, above all, incentivisation to reward farmers for the ecosystem services they provide to society. This is not something that happens spontaneously on the market. It requires public intervention and dedicated funding.</p>
<p>As in the case of energy, the agroclimatic transition implies, on the demand side, that we consume smarter and less. The foods we eat have contrasting climate footprints. There can be no successful agroclimatic transition without finding ways to dramatically reduce emissions associated with the most polluting ingredients, including industrially processed foods and animal products, especially those from ruminant breeding. The use of food rations might be one way of achieving this, according to the recommendations of the <a href="https://www.who.int/news-room/fact-sheets/detail/healthy-diet">world’s health authorities</a>.</p>
<h2>Remembering the ocean</h2>
<p>Last but not least, the agroclimatic transition will have to take into account the management of the oceans and marine biodiversity, which are currently the blind spots of climate policies. Global warming and certain human practices (overfishing, pollutant runoff, etc.) are altering marine biodiversity, a crucial component in the storage of CO<sub>2</sub> by the oceans. Protecting the ocean sink is vital to stabilise tomorrow’s climate: it is estimated that the continental biosphere contains <a href="https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Chapter05.pdf">four times more carbon</a> than the atmosphere. For the oceans, it’s 47 times.</p>
<hr>
<p><em>The authors thank Frank Convery for his insightful review</em></p>
<hr>
<p><em>The Climate Economics Chair of Paris Dauphine-PSL University is organising, in partnership with the Toulouse School of Economics and the National Museum of Natural History, the 24th Global Conference on Environmental Taxation, which will take place from September 6 to 8, 2023 and will have as its theme “Climate & Biodiversity: Tackling global footprints”.</em></p><img src="https://counter.theconversation.com/content/212401/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>Any smart climate strategy will need to simultaneously move away from fossil fuels and protect biodiversity, including through carbon sink preservation and a shift toward sustainable agriculture.Christian de Perthuis, Professeur d’économie, fondateur de la chaire « Économie du climat », Université Paris Dauphine – PSLÉdouard Civel, Chercheur au Square Research Center et à la Chaire Economie du Climat, Université Paris Dauphine – PSLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2012872023-03-08T02:30:29Z2023-03-08T02:30:29ZThe Greens aren’t grandstanding on a new coal and gas ban – they’re negotiating well<p>This fortnight, Australia’s parliament is considering an amendment to the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/Australias_climate_safeguard_mechanism">safeguard mechanism</a>, which is the main way we’ve tried to cut emissions over the last nine years. As you may already know, it <a href="https://theconversation.com/australia-may-be-heading-for-emissions-trading-between-big-polluters-188799">hasn’t done</a> what it was meant to do. </p>
<p>The mechanism was meant to force our largest greenhouse gas polluters to buy carbon credits if they emitted over a baseline. But almost no one ever paid, as the baselines were set very high. That’s why Labor wants to tighten up Australia’s overly flexible <a href="https://www.cleanenergyregulator.gov.au/Infohub/Markets/Pages/About-Carbon-Markets.aspx">carbon trading scheme</a> as part of this bill. </p>
<p>But to pass it, the government needs support from most of the crossbench, which is unlikely, or from the Greens, given the Coalition has refused to support it. Australia’s third largest party has offered to “<a href="https://youtu.be/fyE7fxZh7ok?t=1087">support the bill tomorrow</a>” – if the Albanese government agrees to stop <a href="https://greens.org.au/safeguard">all new coal and gas</a> projects. </p>
<p>Labor won’t agree to this. But it <a href="https://www.afr.com/policy/energy-and-climate/carbon-credits-for-emitters-could-be-blocked-by-greens-20230111-p5cbv7">will need</a> to negotiate to have any chance of success. </p>
<p>Are the Greens grandstanding, as some commentators have suggested? Hardly: they’re negotiating hard to try to get the best outcome for the climate. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-adam-bandt-is-wedged-by-greens-overreach-on-emissions-legislation-200083">Grattan on Friday: Adam Bandt is wedged by Greens' overreach on emissions legislation</a>
</strong>
</em>
</p>
<hr>
<h2>The trouble with negotiating strong carbon market rules</h2>
<p>If the Greens were in power, they might choose a different approach. But they are limited by what Labor is offering: the ability to improve the rules of Australia’s <a href="https://www.youtube.com/watch?v=m5ych9oDtk0">carbon market</a>. </p>
<p>In 2023, our methods of driving down emissions are still limited. Labor has decided to focus on improving the safeguard mechanism, which is a <a href="https://www.oecd.org/env/tools-evaluation/emissiontradingsystems.htm">baseline-and-credit</a> carbon offset scheme <a href="https://www.legislation.gov.au/Series/F2015L01637">first legislated </a> by the Abbott Coalition government in 2014. </p>
<p>Because of <a href="https://theconversation.com/nearly-30-of-australias-emissions-come-from-industry-tougher-rules-for-big-polluters-is-a-no-brainer-190264">very loose</a> baselines given to the 215 major emitters covered by the scheme, emissions actually grew. The previous government also bought carbon credits through the flawed <a href="https://theconversation.com/australias-emissions-reduction-fund-is-almost-empty-it-shouldnt-be-refilled-92283">Emissions Reduction Fund</a>.</p>
<p>What <a href="https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6957">Labor proposes</a> is to make the mechanism function more like the carbon market set up by the Rudd/Gillard Labor governments over a decade ago. </p>
<p>How? By adding rules to allow new flexibility options for crediting and trading of carbon rights. The current safeguard bill also adds a “reserve” carbon budget for new fossil fuel projects, which would allow them to be built.</p>
<p>At the same time, the <a href="https://www.dcceew.gov.au/climate-change/emissions-reduction/independent-review-accus">Chubb review</a> into our carbon offset laws is recommending <a href="https://www.theguardian.com/environment/2023/jan/09/chubb-review-recommends-new-integrity-body-for-australian-carbon-credits-scheme">more oversight</a> into the scheme following <a href="https://www.theguardian.com/environment/2022/mar/23/australias-carbon-credit-scheme-largely-a-sham-says-whistleblower-who-tried-to-rein-it-in">integrity questions</a>. </p>
<p>In sum, though, climate change minister Chris Bowen’s proposed amendments are <a href="https://theconversation.com/labors-scheme-to-cut-industrial-emissions-is-worryingly-flexible-197525">still too flexible</a>. </p>
<p>If Labor gets its amendments through unchanged, big industrial emitters <a href="https://www.themonthly.com.au/issue/2023/march/nick-feik/great-stock-n-coal-swindle">will likely</a> be able to avoid actually having to reduce how much carbon dioxide and methane they can pump into the skies through loose baselines and unlimited offsets. </p>
<h2>Is ‘no new coal and gas’ viable?</h2>
<p>Since the early 2000s, the environment movement have campaigned for “<a href="https://www.routledge.com/Climate-Action-Upsurge-The-Ethnography-of-Climate-Movement-Politics/Rosewarne-Goodman-Pearse/p/book/9781138941595">no new coal</a>”. As the gas industry surged in the 2010s, environmentalists called for limits on fracking and exports. </p>
<p>It’s entirely reasonable for the Greens to push the government to come clean about plans for emissions-intensive industries. Mining workers <a href="https://www.afr.com/policy/energy-and-climate/no-one-is-coming-clean-on-climate-20220214-p59wa3">want to know</a> what the future will hold. Labor voters are <a href="https://www.smh.com.au/national/nsw/labor-nod-to-fossil-fuels-is-betrayal-of-voter-trust-20220824-p5bcgg.html">also wondering</a>.</p>
<p>The Greens want a <a href="https://greens.org.au/news/media-release/greens-launch-full-climate-and-energy-plan-powering-past-coal-and-gas-0">managed transition plan</a> out of thermal coal by 2030 and coking coal (used for steelmaking) by 2040, with packages to help workers change jobs. They want Australia to be the first major fossil fuel exporter to limit production. </p>
<p>That’s what they want. But what can they get, given carbon-pricing mechanisms like the safeguard mechanism leave these decisions <a href="https://www.abc.net.au/news/2010-11-17/gillard-lauds-genius-of-carbon-market/2339564">to the market</a>? </p>
<p>This week, the Greens and the Coalition are forcing the government to <a href="https://www.theguardian.com/australia-news/2023/mar/07/coalition-and-greens-team-up-to-force-labor-to-release-emissions-modelling">release its modelling</a> of the future of emissions-intensive industries. </p>
<p>How big does the government expect fossil fuel production facilities to be in the future? How much will big emitters rely on offsetting rather than reductions at the source?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="pilbara gas export" src="https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=292&fit=crop&dpr=1 600w, https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=292&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=292&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=367&fit=crop&dpr=1 754w, https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=367&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/514089/original/file-20230308-2352-6mqsou.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=367&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In the last 15 years, Australia’s gas exports have skyrocketed.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Trading offset reform for no new coal and gas?</h2>
<p>Crossbencher David Pocock is pushing for <a href="https://www.thesaturdaypaper.com.au/post/max-opray/2023/03/03/pocock-insists-offsets-overhaul">reforms on carbon offsets</a>. But the Greens have offered to “<a href="https://www.abc.net.au/news/2023-02-15/greens-offer-support-for-safeguard-mechanism-coal-and-gas-bans/101971888">put aside</a>” their concerns about offsets if Labor moves to ban new fossil fuel projects. </p>
<p>If the Greens were successful in strengthening safeguard rules to introduce a zero-carbon limit on all new coal and gas mines, new fossil fuel projects would have to find carbon offsets for 100% of their emissions each year. But if Labor keeps refusing this approach, compromise may have to come elsewhere.</p>
<p>Greens leader Adam Bandt says they are making “<a href="https://www.abc.net.au/news/2023-02-19/greens-leader-adam-bandt/101995392">an offer, not an ultimatum</a>”. They want to bargain. </p>
<p>What could this look like? </p>
<p>Labor might seek to group Pocock and the 12 Green senators together to negotiate limits on permissible carbon offsets. If so, the Greens would end up where they were in 2009–11, trying to ensure carbon market rules minimise use of offsets. </p>
<h2>What are the most likely deals we could see?</h2>
<p>We could see four other compromises. In order of likelihood, they are: </p>
<p><strong>Pausing new coal and gas mine approvals until environmental laws are stronger</strong></p>
<p>Our biodiversity and environment laws are <a href="https://www.canberratimes.com.au/story/6812019/how-did-our-environmental-laws-get-so-broken-and-what-can-we-do-to-fix-them">not up to the task</a>. Labor <a href="https://www.theguardian.com/australia-news/2022/may/20/labor-to-set-up-independent-environmental-protection-agency-and-restore-trust-and-confidence">has pledged</a> to fix them. </p>
<p>Making federal environmental laws stronger is arguably a clearer way to reducing fossil fuel expansion. Why? These laws overlay state planning laws which keep churning out new mining licences. The Greens will want influence here. </p>
<p><strong>The ‘climate trigger’</strong></p>
<p>The Greens want to create a climate trigger modelled on the “<a href="https://www.dcceew.gov.au/environment/epbc/our-role/what-is-protected">water trigger</a>” negotiated by former independent MP Tony Windsor. </p>
<p>A climate trigger, if it got up, would mean future projects would be assessed on greenhouse impact. But it wouldn’t be the same as a <a href="https://theconversation.com/the-greens-climate-trigger-policy-could-become-law-experts-explain-how-it-could-help-cut-emissions-and-why-we-should-be-cautious-187998">direct ban</a> on new coal and gas. The Greens have a climate trigger bill <a href="https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=s1344">before parliament</a>, which would permit the climate change minister to reject large mines. </p>
<p><strong>Replacing offsets</strong> </p>
<p>Offsets are often rubbery. But there are other ways to <a href="https://theconversation.com/carry-over-credits-and-carbon-offsets-are-hot-topics-this-election-but-what-do-they-actually-mean-116748">finance carbon cuts</a>. A decarbonisation fund could permit democratic decision-making about carbon and biodiversity improvements.</p>
<p>Given carbon offset credits have <a href="https://www.theguardian.com/environment/2022/nov/13/australia-risks-being-a-state-sponsoring-greenwashing-if-it-relies-on-carbon-offsets-expert-warns">political risks</a> for the government and <a href="https://www.afr.com/markets/debt-markets/inside-the-billion-dollar-market-for-junk-carbon-offsets-20221121-p5c053">corporations</a>, there’s merit to returning to fixed carbon pricing. </p>
<p><strong>Negotiate with the states about fossil fuel industry transition</strong> </p>
<p>Labor could offer to negotiate with the states about managing the path away from coal and gas. Talking about what we have to do to stay in <a href="https://www.smh.com.au/national/the-climate-clock-what-s-the-world-s-carbon-budget-and-what-s-australia-s-share-20211021-p5924q.html">our carbon budget</a> could foster parliamentary good faith and end finger pointing. </p>
<h2>Climate wars – or real progress?</h2>
<p>The Greens have a long history of pushing back against weak climate policy. Labor, in turn, has a history of criticising what they see as doctrinaire refusal. But when the cameras are off, these two parties have managed to achieve compromise and progress. It’s happened before, and it will most likely happen again.</p><img src="https://counter.theconversation.com/content/201287/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rebecca Pearse receives funding from the Australian Research Council and the National Recovery and Resilience Agency. </span></em></p>Labor has ruled out banning new fossil fuel developments. Even so, there are many climate deals the government and the Greens could strikeRebecca Pearse, Lecturer, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1920192022-12-22T02:49:22Z2022-12-22T02:49:22ZIndonesia’s ‘blue carbon credits’ are crucial for global climate mitigation. Here’s how to help them flourish<figure><img src="https://images.theconversation.com/files/491879/original/file-20221026-13-6z4mer.jpg?ixlib=rb-1.1.0&rect=11%2C5%2C3982%2C2646&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Basri Marzuki/Antara</span></span></figcaption></figure><p>Indonesia’s mangroves and seagrass are one of the key to global climate mitigation efforts, as they store <a href="https://link.springer.com/article/10.1007/s11273-015-9446-y">around 17% of the world’s “blue carbon”</a>. </p>
<p>“Blue carbon” refers to marine and coastal ecosystems that <a href="https://theconversation.com/can-blue-carbon-help-indonesia-meets-its-2030-emission-targets-147272">absorb carbon from the atmosphere</a> and <a href="https://oceanservice.noaa.gov/facts/bluecarbon.html#:%7E:text=Blue%20carbon%20is%20simply%20the,dioxide%2C%20which%20contains%20atmospheric%20carbon.">store it in the ocean and its sediment</a>.</p>
<p>However, <a href="https://www.nature.com/articles/nclimate2734">mangrove</a> and <a href="https://pubmed.ncbi.nlm.nih.gov/29627551/">seagrass</a> ecosystems in Indonesia are endangered due to conversion and degradation. </p>
<p>Failure to halt the conversion and degradation of these ecosystems will exacerbate climate change, as it will result in long-accumulated carbon and other greenhouse gases being released into the atmosphere.</p>
<p>Indonesia needs a sustainable source of funding to conserve and restore its blue carbon ecosystems, and carbon credits are one of the viable funding options.</p>
<p>Conservation and restoration projects on blue carbon ecosystem can actually <a href="https://journals.plos.org/climate/article?id=10.1371/journal.pclm.0000061">generate money</a> in the forms of carbon credits that can be sold to individuals or companies seeking to compensate their emissions.</p>
<figure class="align-center ">
<img alt="Seagrass ecosystem is facing human-induced degradation" src="https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=422&fit=crop&dpr=1 600w, https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=422&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=422&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=530&fit=crop&dpr=1 754w, https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=530&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/491884/original/file-20221026-4224-j6xzhq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=530&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">One of Indonesia’s crucial seagrass ecosystems.</span>
<span class="attribution"><span class="source">BRIN</span></span>
</figcaption>
</figure>
<p>To sell a carbon credit in a domestic market, a project needs to meet <a href="https://jdih.menlhk.go.id/new/uploads/files/2022pmlhk021_menlhk_10252022143318.pdf">the standards set by the government</a>. For global markets, a project should also follow the rules set by the government and standards created by an independent third party, such as <a href="https://verra.org/">Verified Carbon Standard (Verra)</a> or <a href="https://www.planvivo.org/">Plan Vivo Foundation</a>, and be registered in the <a href="https://srn.menlhk.go.id/index.php?r=home%2Findex">National Registry</a>. </p>
<p>Last year, Verra registered <a href="https://verra.org/press-release-verra-has-registered-its-first-blue-carbon-conservation-project/">its first “blue carbon” conservation project</a>, aiming to sequester almost one million tonnes of carbon dioxide over 30 years in coastal ecosystems in Colombia. Verra’s move into this type of project is expected to bring a stream of blue carbon credit investments and initiatives into Indonesia.</p>
<p>Indonesia is <a href="https://ses.library.usyd.edu.au/bitstream/handle/2123/16146/Cribb%20&%20Ford%20Indonesia%20as%20an%20Archipelago.pdf;jsessionid=F07AE83E6E2157E288AFC1E3605001EF?sequence=2">the world’s largest archipelagic state</a>, with more than 18,000 islands. That means Indonesia has the potential to harness more carbon credits from its blue carbon ecosystems to support its conservation and restoration efforts. </p>
<p>We highlight two aspects that need to be addressed so Indonesia’s blue carbon credit can flourish.</p>
<h2>Better regulation and cooperation to track carbon credits</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/491886/original/file-20221026-8248-3r2eme.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The proboscis monkey, locally known as ‘Bekantan’, is vital to mangrove ecosystem biodiversity in Tarakan, North Kalimantan Province.</span>
<span class="attribution"><span class="source">Galih Pradipta/Antara</span></span>
</figcaption>
</figure>
<p><a href="https://peraturan.bpk.go.id/Home/Details/187122/perpres-no-98-tahun-2021">The Presidential Regulation No. 98 of 2021</a> and <a href="https://jdih.menlhk.go.id/new/uploads/files/2022pmlhk021_menlhk_10252022143318.pdf">The Ministerial Regulation No. 21 of 2022</a> serves as a legal basis for Indonesia’s carbon economy, but the authority responsible for blue carbon protection and restoration requires more detailed arrangement.</p>
<p>That regulation states that climate mitigation activities for blue carbon and marine sector fall under the authority of Ministry of Marine Affairs and Fisheries. </p>
<p>Yet mangroves, which are also part of the blue carbon ecosystem, fall under the Ministry of Environment and Forestry’s authority, as <a href="https://kkp.go.id/djprl/p4k/page/4284-kondisi-mangrove-di-indonesia">most mangroves in Indonesia are situated within the country’s forest areas</a>.</p>
<p>Recently, both ministries have agreed to <a href="https://www.cifor.org/publications/pdf_files/infobrief/8615-Infobrief.pdf">divide</a> their responsibilities – Ministry of Marine Affairs will take care of mangroves outside of forest area.</p>
<p>Still, these two ministries need to sit together to agree on clear standards and procedures for managing mangroves to avoid regulatory overlap between ministries. This overlap can lead to <a href="https://link.springer.com/chapter/10.1057/9780230511989_5">an increase in expenses</a> for future project developers, deterring potential investment. A <a href="https://www.icctf.or.id/bappenas-optimalkan-mangrove-32-juta-ha-melalui-ibcsf/">strategic framework</a> to coordinate different functions and roles of multiple agencies and local government could help to gain optimum benefits of Blue Carbon ecosystems.</p>
<hr>
<p>
<em>
<strong>
Baca juga:
<a href="https://theconversation.com/can-blue-carbon-help-indonesia-meets-its-2030-emission-targets-147272">Can blue carbon help Indonesia meets its 2030 emission targets?</a>
</strong>
</em>
</p>
<hr>
<p>In addition, data and information on Indonesia’s blue carbon ecosystems are scattered in various institutions, including the Ministry of Environment and Forestry, Ministry of Marine Affairs and Fisheries, the National Research and Innovation Agency, and regional governments. </p>
<p>Blue carbon research and data integration across institutions is essential to accelerate progress, since available and reliable data is crucial to set a baseline and target to properly measure the effectiveness of a carbon credit project. Indonesia’s <a href="https://redd.unfccc.int/files/2nd_frl_indonesia_final_submit.pdf">mangrove emissions data</a> has been documented, but much work is still needed for seagrass. </p>
<p>Non-governmental actors including environmental organisations, research institutions, and finance and business entities also play an essential role in blue carbon conservation and restoration. <a href="https://www.sciencedirect.com/science/article/pii/S0308597X22000021">Proper coordination and collaboration</a> between these actors could results in impactful blue carbon projects.</p>
<h2>Community participation and benefit sharing</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/491887/original/file-20221026-19-n47s8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A mangrove seed station in Bali’s Mangrove Forest Park.</span>
<span class="attribution"><span class="source">Nyoman Hendra Wibowo/Antara</span></span>
</figcaption>
</figure>
<p>Carbon credits projects in coastal wetlands could generate revenue for climate financing and, if managed properly, could bring prosperity to coastal communities. Coastal communities are among <a href="https://kbr.id/nasional/12-2021/angka_kemiskinan_di_wilayah_pesisir_lebih_tinggi_dan_kompleks__upaya_pemerintah_/107146.html">the most vulnerable populations</a> in Indonesia.</p>
<p><a href="https://www.sciencedirect.com/science/article/pii/S0308597X15003905#!">A 2016 research</a> led by Lindsay Wylie from American University School of International Service has proven how strong community involvement can lead to successful blue carbon projects around the world. </p>
<p>For example, the community-led project <a href="http://www.planvivo.org/project-network/mikoko-pamoja-kenya/2015">“Mikoko Pamoja”</a> has succeeded in restoring 117 hectares of a mangrove ecosystem in Gazi Bay, Kenya. The project has also generated income from its carbon credits. The money has been spent to build a school and install water pumps.</p>
<p>The Indonesian government can emulate these success stories by engaging with local communities in blue carbon conservation initiatives, because the sustainability of these projects will depend on coastal communities who directly benefit from it.</p>
<hr>
<p>
<em>
<strong>
Baca juga:
<a href="https://theconversation.com/gender-matters-in-coastal-livelihood-programs-in-indonesia-127747">Gender matters in coastal livelihood programs in Indonesia</a>
</strong>
</em>
</p>
<hr>
<p>To do that, the government could establish and implement <a href="https://www.cifor.org/publications/pdf_files/Flyer/REDD-safeguards-1.pdf">safeguards</a>: a set of principles, rules and procedures designed to protect impacted communities against unwanted risks of the project, as well as to improve their wellbeing.</p>
<p>The project must also secure consent from the community before its implementation. Establishing a channel for the community to express concerns, submit their complaints regarding project implementation, as well as to pay more attention to gender issues, are also pivotal for the success of the projects.</p>
<p>Civil society organisations play <a href="https://www.sciencedirect.com/science/article/pii/S0308597X22000021">a central role</a> in building trust with the community in the implementation of blue carbon projects.</p>
<p>To ensure local community participation, projects must be creative to provide various forms of benefit-sharing. </p>
<p>For example, silvofishery – a combination of aquaculture and mangrove rehabilitation – can be a win-win option. This type of project <a href="https://catalog.lib.kyushu-u.ac.jp/opac_download_md/1955666/p433.pdf">allows</a> local communities to obtain economic benefits while ensuring the health of mangrove ecosystems.</p><img src="https://counter.theconversation.com/content/192019/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Some of the ideas in the article were developed during the IORA Indian Ocean Blue Carbon Hub's 2022 Early Career Visiting Professional Fellowship Program</span></em></p><p class="fine-print"><em><span>Bimo Dwisatrio does not work, consult, own stock or receive funding from any company or organization that would profit from this article, and have disclosed that they have no affiliations other than the academic affiliations listed above.</span></em></p><p class="fine-print"><em><span>Sandy Nofyanza does not work, consult, own stock or receive funding from any company or organization that would profit from this article, and have disclosed that they have no affiliations other than the academic affiliations listed above.</span></em></p>As the world’s largest archipelagic state, Indonesia has great potential to earn carbon credits to protect its endangered mangroves and seagrass – which now store around 17% of global “blue carbon”.Karizki Hadyanafi, Perencana, National Development Planning Agency (BAPPENAS)Bimo Dwisatrio, Senior Research Officer, Centre for International Forestry ResearchSandy Nofyanza, Researcher, Centre for International Forestry ResearchLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1902642022-09-15T20:03:56Z2022-09-15T20:03:56ZNearly 30% of Australia’s emissions come from industry. Tougher rules for big polluters is a no-brainer<p>Australia’s historic climate law passed the Senate last week and enshrined an economy-wide target to reduce emissions. But an important measure to reduce Australia’s industrial emissions is still up for debate: the “safeguard mechanism”.</p>
<p>Introduced by the Abbott government in 2014, the safeguard mechanism is supposed to stop Australia’s largest greenhouse gas polluters from emitting over a certain threshold. But the policy has been frequently <a href="https://www.accr.org.au/news/safeguard-mechanism-consultation-will-be-feeding-frenzy-for-industry-lobby/">criticised</a> for lacking teeth. The Labor government has promised to strengthen the mechanism, and is currently <a href="https://consult.industry.gov.au/safeguard-mechanism-reform-consultation-paper">reviewing it</a>.</p>
<p>Industry has <a href="https://www.theaustralian.com.au/business/mining-energy/anglo-american-has-misgivings-about-labors-climate-safeguard-mechanism/news-story/140b2f75015007365c7a0dec3676750f">raised concerns</a> over any toughening of the policy. Meanwhile, the Greens <a href="https://www.theguardian.com/environment/2022/aug/18/greens-signal-fresh-fight-over-fossil-fuels-as-labor-revamps-safeguard-mechanism-to-cut-industrial-emissions">will push</a> Labor to strengthen it further.</p>
<p>The safeguard mechanism covers the grid-connected power stations with a sectoral target. It also <a href="https://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/safeguard-data/safeguard-facility-reported-emissions/safeguard-facility-reported-emissions-2020-21">applies to 215</a> of Australia’s largest industrial emitters. Together, these 215 facilities produce almost 30% of Australia’s total annual emissions. So a stringent policy to curb this pollution is crucial to climate action.</p>
<h2>Wait, what’s the safeguard mechanism?</h2>
<p>The safeguard mechanism works by setting a limit on the emissions individual enterprises can produce in a year. This limit is put into place with “baselines” that get set in a number of different ways, depending on the type of company involved. Such companies might include a mining company, aluminium smelter, steelworks or airline. </p>
<p>If the company emits beyond their limit, they can buy carbon credits to compensate for, or “offset”, the excess emissions.</p>
<p>The mechanism covers hard-to-abate industries which are regulated on an individual basis, such as new <a href="https://theconversation.com/opening-10-new-oil-and-gas-sites-is-a-win-for-fossil-fuel-companies-but-a-staggering-loss-for-the-rest-of-australia-189374">coal, oil and gas projects</a>, steel, aluminium, manufacturing and transport. These include Woodside’s Northwest Shelf gas project, Qantas, Chevron’s Gorgon gas project, Port Kembla steelworks, and AngloAmerican coal mines in central Queensland.</p>
<p>Coal fired power remains our biggest <a href="https://www.cleanenergyregulator.gov.au/NGER/Pages/Published%20information/Data%20highlights/2020-21%20factsheets/Electricity-generation-sector-emissions-reported-over-time-2018-21.aspx">industrial source of emissions</a>, but is regulated separately. A “<a href="https://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism/Baselines/Sectoral-baseline">sectoral baseline</a>” has been set for all electricity generators connected to the national grid at 198 million tonnes of CO₂ equivalent each year. </p>
<h2>Rubbery baseline emissions</h2>
<p>Historically, the safeguard mechanism hasn’t put strong obligations on industrial emitters to reduce their emissions. Indeed, industrial emissions <a href="https://www.energycouncil.com.au/analysis/reforming-the-safeguard-mechanism-the-opportunities-and-challenges/">have increased</a> since the mechanism began in 2016.</p>
<p>Imposing a genuine carbon limit on high-emitting companies requires a clear definition and enforcement of the baselines. But the safeguard mechanism provides enormous scope for expanded production and, therefore, expanded emissions.</p>
<p>The government’s <a href="https://www.cleanenergyregulator.gov.au/NGER/The-safeguard-mechanism">review paper</a> identifies a major problem with how baselines have been set in the past. Namely, many facilities have been allowed to set their baseline emissions well above their actual emissions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/1-in-5-fossil-fuel-projects-overshoot-their-original-estimations-for-emissions-why-are-there-such-significant-errors-177714">1 in 5 fossil fuel projects overshoot their original estimations for emissions. Why are there such significant errors?</a>
</strong>
</em>
</p>
<hr>
<p>Baselines for each facilities’ emissions are currently measured according to “production-adjusted” emissions intensity. So, for example, a coal mine’s baseline is measured per tonne of coal commodity produced. This means over time, baselines rise or fall in proportion to a company’s expected production. </p>
<p>The government’s <a href="https://consult.industry.gov.au/safeguard-mechanism-reform-consultation-paper">consultation paper</a> reports that in the 2020-21 financial year the combined baseline emissions recorded for non-electricity grid emissions under the safeguard mechanism was estimated at 180 million tonnes of CO₂ equivalent. </p>
<p>But <em>actual</em> emissions in the same period were 137 million tonnes of CO₂ equivalent. </p>
<p>It should also be noted that <a href="https://theconversation.com/1-in-5-fossil-fuel-projects-overshoot-their-original-estimations-for-emissions-why-are-there-such-significant-errors-177714">research</a> suggests up to one in five fossil fuel projects are underestimating their actual emissions. But regardless, the high baselines mean there’s no regulatory pressure for companies to reduce their emissions.</p>
<p>The current review paper seeks feedback on these issues. Removing the head room for facilities with baselines well above their actual emissions is on the cards. </p>
<h2>Carbon credit questions</h2>
<p>The government <a href="https://www.afr.com/policy/energy-and-climate/steelmakers-smelters-may-be-paid-to-cut-emissions-20220817-p5bamh">is poised</a> to propose significantly expanding carbon credit trading under the safeguard mechanism.</p>
<p>Carbon credits are granted to projects that reduce, store or avoid greenhouse gas emissions. These credits can be sold to the federal government or to private companies to offset a project’s own emissions. </p>
<p>Under the current safeguard mechanism, if a company exceeds its baseline emissions, then it can purchase Australian carbon credits to offset this.</p>
<p>These carbon offsets, however, are plagued with credibility problems. In fact, another federal government <a href="https://www.theguardian.com/australia-news/2022/jun/29/chris-bowen-to-announce-review-of-carbon-credits-system-after-expert-labelled-it-a">review is underway</a> to examine the issues. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/untenable-even-companies-profiting-from-australias-carbon-market-say-the-system-must-change-190232">'Untenable': even companies profiting from Australia's carbon market say the system must change</a>
</strong>
</em>
</p>
<hr>
<p>There are calls to strongly limit or remove questionable offsets linked to the safeguard mechanism.</p>
<p>For instance, climate science professor Mark Howden <a href="https://www.canberratimes.com.au/story/7873353/big-emitters-should-not-get-a-free-ride/">argued recently</a> that offsets should not be used to give big emitters a “free ride” to continue polluting if they invest in carbon sequestration projects, at this stage.
Instead, the immediate priorities should be limiting fossil fuel combustion burning, and making concrete plans for other industries to transition.</p>
<p>Despite this, the federal government is considering expanding trade in these and potentially other types of carbon credits. </p>
<p>The government <a href="https://consult.industry.gov.au/safeguard-mechanism-reform-consultation-paper">is proposing</a> a new type of carbon credit for companies emitting below their baseline. For instance, if an aluminium smelter reduced its emissions over 2024 and 2025, it could be granted credits to sell to others in the carbon market. </p>
<p>The government is also considering <a href="https://www.smh.com.au/politics/federal/no-need-for-international-carbon-credits-in-booming-local-carbon-market-analysis-20220814-p5b9o7.html">allowing companies</a> to trade carbon credits on an international level, pending reforms to address integrity issues in safeguard mechanism like the baseline headroom problem. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-may-be-heading-for-emissions-trading-between-big-polluters-188799">Australia may be heading for emissions trading between big polluters</a>
</strong>
</em>
</p>
<hr>
<p>The international trade in carbon credits has been plagued with problems for 20 years. A <a href="https://iopscience.iop.org/article/10.1088/1748-9326/abdae9/meta">2021 literature review</a> found little evidence demonstrating causal effect of carbon trading markets on emissions reduction. </p>
<p>It puts a strong case forward <a href="https://www.nature.com/articles/543484a">against linking carbon markets</a> internationally, after Europe, Quebec and California case studies show linking carbon markets has led to price crashes and volatility – not stability.</p>
<h2>The risk of a weak carbon trading market</h2>
<p>We can expect industry to continue to lobby for a weak safeguard mechanism and carbon credit rules. But if the Labor government is genuine about wanting to reduce Australia’s emissions, our biggest polluters cannot be allowed to carry on emitting as usual.</p>
<p>And there is no role for a carbon trading policy that excuses big emitters from making clean energy transition plans.</p>
<p>Labor <a href="https://www.afr.com/policy/energy-and-climate/albanese-stares-down-greens-as-bandt-says-safeguard-fight-has-begun-20220818-p5bax3">may need</a> the numerous pro-climate independent senators or the Greens to make changes signalled in the safeguard consultation paper. They are unlikely to be satisfied with a weak carbon trading scheme. </p>
<p>Any proposed changes that undermine Australia’s emissions reduction goals will not easily be passed.</p><img src="https://counter.theconversation.com/content/190264/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rebecca Pearse receives funding from the Australian Research Council and the National Recovery and Resilience Agency.</span></em></p>The safeguard mechanism is supposed to stop Australia’s largest polluters from emitting over a certain threshold. It’s been widely criticised for lacking teeth, and is finally under review.Rebecca Pearse, Lecturer, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1887992022-08-18T03:19:35Z2022-08-18T03:19:35ZAustralia may be heading for emissions trading between big polluters<figure><img src="https://images.theconversation.com/files/479793/original/file-20220818-1653-6nv5bh.jpg?ixlib=rb-1.1.0&rect=42%2C64%2C4701%2C3100&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Veeterzy/Unsplash</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Could Australia soon have a form of emissions trading? Yes, if Labor’s <a href="https://consult.industry.gov.au/safeguard-mechanism-reform-consultation-paper">much-anticipated paper</a> on fixing Australia’s mediocre emissions-reduction framework, released today, is any guide. </p>
<p>At present, Australia relies on the controversial <a href="https://www.dcceew.gov.au/climate-change/emissions-reporting/national-greenhouse-energy-reporting-scheme/safeguard-mechanism#:%7E:text=The%20Safeguard%20Mechanism%20requires%20Australia's,reporting%20and%20record%20keeping%20requirements.">safeguard mechanism</a> to encourage big emitters such as fossil fuel power plants and manufacturers to reduce their pollution. This framework – alongside the <a href="https://theconversation.com/the-governments-2bn-climate-fund-a-rebadged-rehash-of-old-mistakes-112412">Emissions Reduction Fund</a> – was introduced during the Coalition years to reduce carbon dioxide pollution at low cost. </p>
<p>The problem is, it didn’t work. Emissions from large polluters have remained <a href="https://consult.industry.gov.au/safeguard-mechanism-reform-consultation-paper">high</a> since it was introduced in 2016. As the discussion paper states:</p>
<blockquote>
<p>Emissions limits, known as baselines, have allowed business-as-usual operations and aggregate emissions from Safeguard facilities to grow.</p>
</blockquote>
<p>Labor’s discussion paper flags ways to make the mechanism work as intended – most significantly by letting companies sell credits created by cutting emissions by more than they are required to. Companies finding it harder to slash emissions can buy these. Creating this market would effectively create a very useful carbon currency.</p>
<p>You might think this sounds abstract. It’s not. Fixing this mechanism would have a major impact on our future emissions – and the likelihood of reaching our committed emission goals. Getting this right matters. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="emissions" src="https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/479796/original/file-20220818-318-s72dou.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The current safeguard mechanism has not worked as intended, with emissions still high.</span>
<span class="attribution"><span class="source">Pexels</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>So what is the safeguard mechanism and why does it matter?</h2>
<p>The safeguard mechanism is a framework to control emissions from large polluters – defined as those emitting more than 100,000 tonnes of carbon dioxide equivalent annually. </p>
<p>This includes industries such as electricity generation, mining, and oil and gas extraction.</p>
<p>It works by giving each facility a benchmark level of emissions they are not allowed to exceed. </p>
<p>If a facility does exceed their benchmark, the regulator gives them a few easy options: reduce emissions, ask for their benchmark to increase, or buy and surrender Australian Carbon Credit Units. These credits come from someone else’s emissions reductions, which the original polluter has to pay for. </p>
<p>The problem is the current safeguard mechanism is not fit for purpose. </p>
<p>As I’ve previously <a href="https://theconversation.com/australias-emissions-reduction-fund-is-almost-empty-it-shouldnt-be-refilled-92283">pointed out</a>, the system is easily gamed. Many high-polluting firms have simply asked for larger benchmarks – and often got them. You can see the incentive – asking for a larger, “better fitting” benchmark is the cheapest option of all, requiring absolutely no change on the company’s part.</p>
<p>This is the fundamental flaw: there is no economic incentive for large polluters to cut their emissions. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1560065497537794048"}"></div></p>
<p>Better systems already exist in other countries. For instance, large polluters in the <a href="https://www.rggi.org/">United States</a> and <a href="https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets_en">European Union</a> are targeted using <a href="https://doi.org/10.1016/j.jeem.2022.102620">pollution markets</a> that have robust economic incentives. </p>
<p>In such schemes, companies that find it very expensive to reduce pollution can buy pollution credits from the market. Alternatively, companies that find it cheap to reduce emissions can sell their credits and make money. Labor’s new discussion paper draws heavily on these successful schemes.</p>
<p>Even better, the government can raise serious revenue from this market by initially <a href="https://doi.org/10.1086/717898">auctioning off</a> pollution credits. It’s a win-win: polluters pay and gain a strong incentive to reduce emissions, and the government obtains much-needed revenue at a time when budgets are stretched from the pandemic.</p>
<p>The public funds raised can be significant: the carbon market set up by 12 states in the eastern US has auctioned off pollution allowances since 2008, raising A$5.45 billion to date.</p>
<p>If we want to reach Labor’s <a href="https://theconversation.com/labor-has-introduced-its-controversial-climate-bill-to-parliament-heres-how-to-give-it-real-teeth-187762">target</a> of cutting emissions by 43% (relative to 2005 levels) over the coming eight years, we need a fully functional market-based approach. </p>
<h2>So what are the proposed changes?</h2>
<p>The paper sets out the main proposals for developing the safeguard mechanism, including how to set a baseline of emissions for polluters (and how this should decline over time), the use of offsets, and the introduction of trading.</p>
<p>Trading would be the most significant change. Some companies will pursue emissions reduction with greater vigour – or may find it easier to do so than those in harder-to-abate sectors such as aluminium smelting or steel-making. The ability to sell these avoided emissions rewards these companies. The companies buying the credits have an incentive to cut emissions over time to avoid this cost. </p>
<p>Another proposal is to allow banking and borrowing of these credits over time. This would allow firms reducing emissions today to save credits for the future or, if needed, borrow some from the future.</p>
<h2>The big question: will it work?</h2>
<p>From an economist’s perspective, this is good news.</p>
<p>Allowing firms to trade credits will make the safeguard mechanism more cost-effective and create incentives to actually cut emissions – something lacking in the old version.</p>
<p>But it could work even better.</p>
<p>Under the current proposal, companies in the scheme cannot trade with firms outside it. This cuts the number of market participants and could limit the cost-effectiveness of the scheme. Labor should look at widening the scope and creating a fully fledged market. </p>
<p>And while banking and borrowing pollution credits has been shown to work reasonably well in other <a href="https://doi.org/10.1016/j.reseneeco.2012.05.004">countries</a>, we know it has to be managed well.</p>
<p>If the scheme isn’t properly managed, companies could borrow credits and simply never pay them back. Banked carbon credits could actually lead to higher emissions in the future, when companies draw down on them. </p>
<p>In the EU this became a real concern when the stockpile of banked allowances grew too large. In response, the European scheme’s regulator had to <a href="https://doi.org/10.1086/717898">remove them</a> from the market. The Australian government must learn from this and design the scheme carefully. </p>
<p>But overall? Take this as good news. It is a step towards a goal that has long been out of reach: a well-functioning pollution market.</p><img src="https://counter.theconversation.com/content/188799/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian A. MacKenzie has received funding from Australian Research Council focusing on managing
carbon offsets to improve Australian climate policy effectiveness.. </span></em></p>Right now, the safeguard mechanism meant to reduce emissions is not fit for purpose. Labor is exploring ways to fix it - and create a proper pollution market.Ian A. MacKenzie, Associate Professor in Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1829952022-05-23T19:52:18Z2022-05-23T19:52:18ZOther casualties of Putin’s war in Ukraine: Russia’s climate goals and science<p>As the European Union moves closer to an <a href="https://theconversation.com/europe-is-determined-to-cut-fossil-fuel-ties-with-russia-even-though-getting-hungary-on-board-wont-be-easy-182502">embargo deal on Russian oil</a>, there is much talk about the impact of war-related sanctions on <a href="https://www.theguardian.com/environment/2022/may/18/eu-plans-massive-increase-in-green-energy-to-rid-itself-of-reliance-on-russia">Europe’s energy transition</a> and the world’s <a href="https://www.eenews.net/articles/will-the-russian-invasion-accelerate-peak-oil/">decarbonisation efforts</a>.</p>
<p>But the sanctions also have strong implications for Russia’s already slow and rather unsure green transition, be it the modernisation of its energy sector or climate science. What Russia does or does not do matters for the rest of us: the world’s eleventh-largest economy also happens to be the <a href="https://edgar.jrc.ec.europa.eu/report_2021">fourth-largest emitter of greenhouse gases</a>, the <a href="https://www.iea.org/reports/russian-supplies-to-global-energy-markets/oil-market-and-russian-supply-2">second-largest crude oil exporter</a>, and the world’s <a href="https://www.iea.org/countries/russia">largest gas exporter</a>. The Russian economy is strongly dependent on the exploitation of energy-intensive industries and fossil fuels, with oil and gas alone accounting for <a href="https://www.bbc.com/future/article/20211115-climate-change-can-russia-leave-fossil-fuels-behind">35-40% of the federal budget revenue</a> in recent years. Hydrocarbons fuel Russia’s elite’s wealth and power but are also framed as a source of energy security and welfare for the country’s citizens.</p>
<h2>Russia’s decarbonisation at risk</h2>
<p>Until recently, Russia had long been seen as a <a href="https://www.opendemocracy.net/en/odr/what-can-we-expect-from-russia-at-cop26/">country with a lacklustre position in international climate negotiations</a>, at best a passive player and at worst an active saboteur of worldwide ambition. However, things have changed over the past years, most notably from November 2021 when its government adopted a <a href="http://static.government.ru/media/files/ADKkCzp3fWO32e2yA0BhtIpyzWfHaiUa.pdf">framework climate legislation</a> with a net-zero target by 2060. That year alone also saw it introduce a greenhouse gas emission reporting system for large emitters, adoption of its first national Climate Adaptation Plan and initiation of a carbon-trading experiment in its <a href="https://www.reuters.com/article/us-climate-change-russia-carbontrading-t-idUSKBN2AJ0NX">remote far Eastern region</a> aimed at reaching carbon neutrality by 2025.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/464520/original/file-20220520-12-hx9n1h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The government of the Russian island region of Sakhalin, in the Pacific Ocean north of Japan, has been experimenting with carbon trading and green technology in a bid to reach net-zero emissions by 2025.</span>
<span class="attribution"><span class="source">Angelina Davydova</span></span>
</figcaption>
</figure>
<p>Some will argue the impulse for these initiatives comes from outside the country. For example, as part of the European Union’s Green Deal package, the <a href="https://www.energymonitor.ai/policy/carbon-markets/eus-cbam-to-impact-russia-china">Carbon Border Adjustment Mechanism</a> (CBAM) is set to place a carbon price on imports entering the European single market from non-EU countries such as Russia from 2026. The border tariff, which would see imports covered by carbon pricing equivalent to Europe’s carbon market, the Emissions Trading System, has been credited with inspiring the Russian government and industry to finally take climate change seriously.</p>
<p>However, with every passing day of war these external incentives lose traction, making Russia’s domestic climate policy more uncertain than ever.</p>
<h2>Could Russia leave the Paris Agreement?</h2>
<p>On the one hand, it would be mistaken to claim all that is left of Russia’s climate policy is a tabula rasa. The truth is, today’s policy programmes and “green” business strategies do not fully hinge on foreign pressure. Although Russia’s parliament, the Duma, debated leaving the Paris Agreement <a href="https://iz.ru/1335953/valerii-voronov/eko-delo-v-gd-predlozhili-otkazatsia-ot-parizhskogo-soglasheniia">earlier this week</a>, there remains political will to uphold it. The chairman of the Duma’s Committee on Ecology, Natural Resources and Environmental Protection, Vyacheslav Fetisov, for example, has said:</p>
<blockquote>
<p>“Russia does not plan to withdraw from the Paris Climate Agreement [and] is not going to abandon the implementation of this most important environmental international legal instrument.”</p>
</blockquote>
<p>State agencies, companies, think tanks and other institutions that have developed “green” strategies over the past years, <a href="https://rawi.ru/2022/03/sohranit-li-biznes-v-rossii-kurs-na-dekarbonizaciyu/">insist on their enduring relevance</a> for the global fight against climate change, but also climate impacts on Russia and future trade prospects. The climate head of WWF Russia, Aleksey Kokorin, has even voiced optimism that gas surpluses resulting from sanctions could be used to substitute the country’s coal and prompt the country’s greenhouse gas emissions to drop.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/464521/original/file-20220520-13-on209d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Russian state is strongly dependent on the exploitation of fossil fuels. Here, a photograph shows the Utrenneye field located on the Kara Sea shore line in the Arctic circle, some 2500 km from Moscow.</span>
<span class="attribution"><span class="source">Natalia Kolesnikova/AFP</span></span>
</figcaption>
</figure>
<p>And yet, it is undeniable that the <a href="https://theconversation.com/war-in-ukraine-russias-reputedly-sanction-proof-economy-shows-signs-of-stress-181109">economic crisis</a>, sanctions and strengthened anti-Western rhetoric brought on by the war have made it more difficult to pursue decarbonisation plans. Politicians and lobbyists who had already opposed decarbonisation efforts have seized the moment to <a href="https://spravedlivo.ru/12016310">demand a withdrawal from the Paris Agreement</a>.</p>
<p>Many businesses are taking advantage of the situation to pressure the government to roll back environmental regulation in a bid to help them cope with harsher economic circumstances, with <a href="https://greenpeace.ru/blogs/2022/04/22/v-rossii-oslabljajut-jekologicheskoe-zakonodatelstvo/">recent bills already pointing in this direction</a>. More specifically, there have been reports of <a href="https://iz.ru/1326653/valerii-voronov/terpiat-otlagatelstv-v-rossii-khotiat-otsrochit-sokrashchenie-parnikovykh-vybrosov">talks between the government and energy companies</a> over the possibility of relaxing greenhouse gas emission reporting and verification. For example, one of the country’s biggest oil suppliers, Lukoil, has pushed the government to scrap a legislation compelling large energy companies to verify their reporting on greenhouse gas emissions with an independent company starting from 1 January 2023.</p>
<p>Import restrictions on technology, the dwindling of foreign capital sources and the freezing of international programmes have further stalled plans to modernise the country’s old industries. Russia’s fledging renewables sector has also taken a hit, with some international investors (including Vestas, Fortum and ENEL) halting their plans in Russia or withdrawing from the country completely.</p>
<p>This has prompted politicians, businesspeople, and scientists to discuss alternatives to foreign technology and <a href="https://www.ng.ru/economics/2022-05-04/100_155304052022.html">domestic options to finance the energy transition</a>.</p>
<h2>Bleak future for Russia’s climate science</h2>
<p>Moreover, the sanctions have taken a serious toll on climate science in Russia, which matters to those who implement practical decarbonisation measures in Russia, but also to the global science community. It is particularly jarring in relation to other instances in Russian history when scientists succeeded in overcoming political tensions with the West. Despite the <a href="https://www.tandfonline.com/doi/full/10.1080/14682745.2021.1885377">Cold War</a>, climate scientists managed to advance global climate science within the 1972 US-USSR environmental agreement enabling the exchange of data, equipment and joint publications.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=388&fit=crop&dpr=1 600w, https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=388&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=388&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=488&fit=crop&dpr=1 754w, https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=488&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/464755/original/file-20220523-42302-8xjk15.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=488&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">US climatologist Alan D. Hecht (1944-2019) and the USSR’s Mikhail I. Budyko (1920-2001) discussing their joint publication on climate change in 1989.</span>
<span class="attribution"><span class="source">Alan D. Hecht</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>In contrast, governments and science bodies worldwide have now sanctioned Russian research institutions. Meanwhile, the EU has suspended Russia’s participation in its flagship research programme <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1544">Horizon Europe</a> and national research councils of several European states paused collaborations with Russia.</p>
<p>Research areas that rely on foreign equipment are particularly affected. For instance, Germany’s Max Planck Institute (MPI) has received a <a href="https://www.zeit.de/2022/12/wissenschaft-ukraine-krieg-deutschland-russland-forschung">64-page list with electronic devices</a> that the EU forbids scientists to share with Russian colleagues on the grounds they could be used for military purposes. In early February, the Russian government announced <a href="https://www.themoscowtimes.com/2022/02/09/russia-aims-to-invest-79m-in-climate-research-by-2030-a76316">plans to invest 5.9 billion roubles</a> (at the time of writing, approximately $92 million) into climate and decarbonisation research, and create Russia’s own system to track carbon emissions.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/465007/original/file-20220524-24-qjue68.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A research station on the Island of Samoylov, northeastern Siberia.</span>
<span class="attribution"><span class="source">Anne Morgenstern/Alfred-Wegener Institute</span></span>
</figcaption>
</figure>
<p>However, Alexander Chernokulsky, a climatologist from the Institute of Atmospheric Physics at the Russian Academy of Sciences, told us the future of the project is unclear in the absence of foreign equipment. Similarly, for years Russian and German scientists have been measuring CO<sub>2</sub> concentration changes in the atmosphere from a tall tower observatory, <a href="https://www.zottoproject.org/">ZOTTO</a>, in the southwest Siberian region of Krasnoyarsk, considered a “hot spot” because of its potential for large carbon storage or leak. Here again, in an e-mail exchange with us, MPI scientist Sönke Zaehle has warned that the medium- and long-term future of the station are at risk from a lack of maintenance support from the German side.</p>
<p>Research in the Arctic is particularly crucial for our understanding of climate change. At least a dozen international collaborations with Russia have been stalled, here, too. The maintenance of long-term measuring systems crucial for climate modelling poses particular concerns. “There is this fear of a blind spot, no matter what research topic in the Arctic you approach,” Anne Morgenstern, a coordinator of the German Alfred Wegener Institute’s scientific cooperation with Russia, told us.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=470&fit=crop&dpr=1 754w, https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=470&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/464511/original/file-20220520-20-i7fpgo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=470&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A weather station in Russia’s northernmost region, Taymyr Peninsula in Siberia.</span>
<span class="attribution"><a class="source" href="http://www.grida.no/resources/2768">Peter Prokosch</a></span>
</figcaption>
</figure>
<p>Climate scientists in Russia have also lost access to the Climate Data Store, which provides a single point of access to a wide range of climate datasets for past, present and future climates, including satellite observations, in-situ measurements, climate model projections and seasonal forecasts. They can no longer either access supercomputers based in other countries, and the departure of technology companies such as <a href="https://www.intel.com/content/www/us/en/newsroom/news/russia-business-statement.html">Intel</a> will eventually lead to a deterioration of computing capacities in general, according to Evgeny Volodin, a climate modeller at the Institute of Computational Mathematics at the Russian Academy of Sciences.</p>
<p>Environmental concerns are at risk of being laid aside during wartime. However, as we stand at a point in earth history at which opportunities to mitigate climate catastrophe are fading, we believe subordinating climate issues to the dictates and temporalities of war is not an option. Attempts to stop the war have to stand alongside efforts to advance transnational climate cooperation and action, despite the damages and dilemmas caused by Russia’s war. Ambitious international climate agendas, including <a href="https://www.iisd.org/articles/analysis/phase-out-oil-gas-production">phasing out oil and gas production as quickly as possible</a>, are crucial to <a href="https://www.theguardian.com/environment/ng-interactive/2022/may/11/fossil-fuel-carbon-bombs-climate-breakdown-oil-gas">increase pressure on the fossil fuel industry</a> and the war machine, and to support those forces within Russia that are still holding on to decarbonisation.</p>
<hr>
<p><em>This article was co-written with Angelina Davydova, an environmental and climate journalist. She is currently a fellow of the Berlin-based <a href="https://mict-international.org/">Media in Cooperation and Transition (MICT) programme</a> and a coordinator with <a href="https://gijn.org/member/n-ost-germany/">N-ost</a>, a network for cross-border journalism.</em></p><img src="https://counter.theconversation.com/content/182995/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Vorbrugg a reçu des financements de Swiss National Science Foundation (SNSF). </span></em></p><p class="fine-print"><em><span>Katja Doose ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>The war in Ukraine threatens to turn back the clock on Russia’s climate progress, with some calling on the country to leave the Paris Agreement and roll back environmental regulations.Katja Doose, Senior researcher, University of FribourgAlexander Vorbrugg, Geographer, University of BernLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1748212022-01-19T15:32:08Z2022-01-19T15:32:08ZThere’s a massive bubble in the price of carbon – and yet it won’t bring down emissions any faster<figure><img src="https://images.theconversation.com/files/441527/original/file-20220119-15-1q7hozd.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Too many industries have been exempted from carbon rules. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/distant-view-yorkshire-wolds-uk-power-1691651902">Coatesy</a></span></figcaption></figure><p>Carbon trading was supposed to encourage companies to reduce their emissions. Yet for many years, the carbon price was trading well below €20 (£17) per tonne on the EU Emissions Trading System (ETS), which is by far the most established market for trading carbon in the world. Most agreed that this did not send any financial signals to carbon-intensive industries to invest in green technologies. </p>
<p>But since the onset of the pandemic in 2020, the carbon price has rocketed to close to €90, taking everyone by surprise, including EU climate policymakers. So why has this happened, what are the likely consequences – and what can we expect to happen to the price in the coming months?</p>
<p><strong>The price of carbon (€ per tonne)</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=302&fit=crop&dpr=1 600w, https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=302&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=302&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=380&fit=crop&dpr=1 754w, https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=380&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/441250/original/file-20220118-23-1qezqrp.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=380&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Based on the price of ICE EUA Dec 22 futures.</span>
<span class="attribution"><span class="source">Trading View</span></span>
</figcaption>
</figure>
<h2>The changing market</h2>
<p>The carbon price is based on demand <a href="https://www.offsetguide.org/understanding-carbon-offsets/">for carbon credits</a>. These are awarded to organisations which have removed a quantity of carbon dioxide from the atmosphere, through, say, tree planting or building a wind farm, by the EU or other authorities with newer ETSs such as <a href="https://www.offsetguide.org/understanding-carbon-offsets/other-instruments-for-claiming-emission-reductions/allowances/">the US</a> and <a href="https://www.nature.com/articles/d41586-021-01989-7">China</a>. Some people and companies buy offsets voluntarily, such as travellers paying a premium to offset carbon emissions in an air ticket. </p>
<p>Large polluters, on the other hand, are required to buy <a href="https://www.offsetguide.org/understanding-carbon-offsets/other-instruments-for-claiming-emission-reductions/allowances/">carbon allowances</a> when they exceed a so-called cap. The EU ETS was badly undermined for years because <a href="https://www.ieta.org/resources/Resources/Case_Studies_Worlds_Carbon_Markets/euets_case_study_may2015.pdf">many industries were exempted</a>, free allowances to polluters <a href="https://carbonmarketwatch.org/2021/12/17/eu-must-stop-subsidising-polluters-with-hundreds-of-billions-in-free-emissions-allowances-green-groups-demand/">were issued</a>, and the market was flooded by <a href="https://www.theguardian.com/sustainable-business/blog/why-are-carbon-markets-failing">cheap (and dubious) offsets</a>. The EU’s new “<a href="https://www.cleanenergywire.org/factsheets/understanding-european-unions-emissions-trading-system">Fit for 55</a>” package aims to reset the EU ETS. It is a step in the right direction but it’s not clear whether it will bring about the rapid decarbonisation we urgently need.</p>
<p>There were three main reasons for the rapid increase of the price of carbon in 2021: political pressure, high energy prices and a flood of speculation from traders. </p>
<p><strong>1. Political pressure</strong></p>
<p>The political pressure to act on climate change has increased immensely since 2018, when <a href="https://extinctionrebellion.uk/">Extinction Rebellion</a> launched and Greta Thunberg’s <a href="https://www.theguardian.com/world/2019/mar/11/greta-thunberg-schoolgirl-climate-change-warrior-some-people-can-let-things-go-i-cant">School Strike for the Climate</a> got underway. Both actions have erupted into global movements, buoyed by big names like David Attenborough also <a href="https://www.bbc.co.uk/news/science-environment-59039485">calling for</a> more urgent climate action. Weather events such as the intense rainfalls and subsequent flooding <a href="https://www.jbarisk.com/flood-services/event-response/summer-floods-in-europe-2021/">in Germany</a> in July 2021 further drove climate change to the top of the political agenda.</p>
<p>In <a href="https://www.cleanenergywire.org/factsheets/polls-reveal-citizens-support-energiewende">various opinion polls</a>, European citizens now express increasing concern over climate change, prompting politicians to make greater commitments to take action. Members of the business community, too, have been falling over each other in declaring <a href="https://www.gov.uk/government/news/third-of-uks-biggest-companies-commit-to-net-zero">“net zero”</a> targets. This means more demand for voluntary offsets and the prospect of tougher ETS cap rules that will lead to more mandatory offsets in the near future, all of which has encouraged traders to bid up carbon prices. </p>
<p><strong>2. ESG speculation</strong></p>
<p>There has generally been huge investor interest in what the financial community calls ESG (environmental, social and governance), which is broadly about ethical business. There has been high demand in the past two years for companies that score well on ESG, and investment funds that focus on such companies.</p>
<p>For example, Tesla is <a href="https://docs.google.com/spreadsheets/u/1/d/1HflVng6sYIb6Gs4pOKiDGtqU5YJ2-hgdM4pRNaT62gs/htmlview">worth more than</a> the next nine global car manufacturers combined. This reflects the financial community’s view that electrified greener transport is here to stay – and probably also the billions of dollars <a href="https://www.autocar.co.uk/car-news/industry/inside-industry-how-selling-emissions-credits-helps-tesla-grow#:%7E:text=Hidden%20in%20what%20you%20might,7%25%20of%20the%20company's%20revenue.">Tesla receives</a> from more polluting automakers needing to buy carbon permits from greener rivals. This shows the carbon market in action, pushing carbon prices higher. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="white Tesla model X on display with its doors open" src="https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/441529/original/file-20220119-27-hoe92z.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tesla is doing very well out of carbon trading.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/berlin-october-2-2017-photo-image-729205330">franz12</a></span>
</figcaption>
</figure>
<p>Yet at the same time, there is clearly a lot of speculation at play. The Financial Times <a href="https://www.ft.com/content/c6346a90-6c3c-48f9-bec3-5ae5057e1ed7">cautioned recently</a> that a bubble might have formed in ESG, and it’s easy to make the same argument about carbon prices. </p>
<p><strong>3. High energy prices</strong></p>
<p>Natural gas has been in <a href="https://theconversation.com/energy-prices-are-unlikely-to-fall-in-2022-or-beyond-not-until-major-importers-get-serious-about-green-transition-174437">short supply worldwide</a>, triggering <a href="https://www.iea.org/news/coal-power-s-sharp-rebound-is-taking-it-to-a-new-record-in-2021-threatening-net-zero-goals">more use</a> of coal. Coal has <a href="https://group.met.com/fyouture/natural-gas-vs-coal/66#:%7E:text=According%20to%20the%20U.S.%20Energy,amounts%20of%20CO2%20while%20burning.&text=Natural%20gas%20also%20emits%20less%20carbon%20dioxide%20when%20combusted%20than%20fuel.">much higher</a> carbon emissions than gas, requiring power generators to buy more carbon allowances, pushing the carbon price higher. </p>
<h2>The bad news</h2>
<p>There are reasons to doubt that the surge in carbon prices will achieve the stated aim of ETSs, namely a faster decarbonisation of the economy. A <a href="https://www.openbookpublishers.com/product/1488">lot of evidence</a> suggests that many carbon credits are not worth the paper they are written on. There is a lot of <a href="https://theconversation.com/double-counting-of-emissions-cuts-may-undermine-paris-climate-deal-125019">double-counting</a> going on, in which those buying and selling offsets both count them as reducing carbon emissions, and there are other <a href="https://www.vox.com/2020/2/27/20994118/carbon-offset-climate-change-net-zero-neutral-emissions">loopholes</a>, particularly in <a href="https://energypost.eu/can-carbon-offset-loopholes-be-fixed-with-better-evaluation-and-rules/">questionable carbon offsets</a>. What happens, for example, if – in a warming climate – a <a href="https://www.ft.com/content/3f89c759-eb9a-4dfb-b768-d4af1ec5aa23">forest burns down</a> whose carbon-saving potential was sold to companies?</p>
<p><a href="https://www.theguardian.com/business/2021/nov/20/polluters-face-price-pain-as-global-carbon-trading-system-moves-forward">The integrity</a> of these markets will be even further challenged as the various regional ETSs seek to link up to create more global carbon trading. To achieve this, new global rules were agreed at the <a href="https://ukcop26.org/delivering-high-integrity-inclusive-voluntary-carbon-markets-for-1-5c/">recent negotiations</a> at the COP26 climate conference in Glasgow. These have been welcomed <a href="https://www.woodmac.com/news/the-edge/carbon-markets-cop26-breakthrough/">by industry</a>, but <a href="https://carbonmarketwatch.org/2021/12/10/faq-deciphering-article-6-of-the-paris-agreement/">critics say</a> the agreement opens the door to sub-standard carbon offsetting schemes that will make the system unreliable.</p>
<p>At a time when higher energy prices are squeezing businesses, they have an added incentive to push for a global carbon-trading system that goes easy on them. Higher energy costs are also creating a lot of <a href="https://lordslibrary.parliament.uk/rising-energy-costs-the-impact-on-households-pensioners-and-those-on-low-incomes/">energy poverty</a> among consumers (and higher carbon prices are a contributing factor because it means that power providers have to pay more for offsets). This conflicts with consumers’ desire for more urgent climate change action, creating political pressure to slow the climate transition. </p>
<p>As for the price of carbon, I expect speculators to keep pushing up carbon prices as long as there is enough liquidity in the market – meaning credit they can borrow to make trades. This liquidity has been partially driven by all the money being created by central banks’ <a href="https://theconversation.com/will-the-bank-of-englands-reliance-on-quantitative-easing-work-for-the-uk-economy-149581">quantitative easing</a> (QE) programmes. When it disappears, the bubble will burst.</p>
<p>In other words, the price is not higher because ETSs are functioning well yet. To quote a recent comment from <a href="https://www.cnbc.com/2021/05/18/why-europes-carbon-market-is-experiencing-a-boom-like-never-before.html">one market analyst</a>:
“I’d say that industry by-and-large for the last 16 years since the [EU] carbon scheme had been up and running in 2005 have really done pretty much nothing in terms of carbon emission reductions.” </p>
<p>If just a fraction of all the <a href="https://www.wri.org/insights/quantitative-easing-economic-recovery-must-consider-climate-change">QE money</a> would have been spent on climate goals, we would have made a lot more progress with climate mitigation over the past decade. The ETS system is only going to work if loopholes are removed so that many more companies have to pay for the carbon they emit. In the end, it’s all about political will and process.</p><img src="https://counter.theconversation.com/content/174821/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steffen Böhm has received funding from the British Academy, UKRI and the Swedish Energy Agency. </span></em></p>Emissions trading systems are supposed to speed up decarbonisation, but they are not yet capable of doing so in practice.Steffen Böhm, Professor in Organisation & Sustainability, University of ExeterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1739222021-12-17T16:50:58Z2021-12-17T16:50:58ZCOP26 agreed rules on trading carbon emissions – but they’re fatally flawed<figure><img src="https://images.theconversation.com/files/438215/original/file-20211217-27-193qg9l.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6000%2C3071&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/jiujiang-china-jan10-2021-smoky-smokestacks-1891775509">Humphery/Shutterstock</a></span></figcaption></figure><p>One surprise from COP26 – the latest UN climate change conference in Glasgow – was an agreement between world leaders on a new set of rules for regulating carbon markets. This would allow countries to trade the right to emit greenhouse gases.</p>
<p>Carbon trading is part of how countries intend to meet their obligations for reducing emissions under the Paris Agreement. Unfortunately, the manner in which countries agreed these rules may hobble the Agreement in its goal of averting catastrophic warming.</p>
<p>Carbon markets were central to the design of the Paris Agreement’s predecessor, the 1997 Kyoto Protocol, which created three different mechanisms for trading carbon. Developing countries had become accustomed to attracting investment via one called the “Clean Development Mechanism” (CDM) which allowed industrialised countries to invest in projects to reduce emissions in developing countries and count them against their own targets under the Kyoto Protocol. Many industrialised countries wanted to retain this sort of flexibility in how they met their own treaty obligations.</p>
<p>As a result, most governments were keen to keep carbon markets as part of the Paris Agreement. In Paris in 2015, the bare bones of mechanisms similar to those in the Kyoto Protocol were agreed, but without the details needed to put them into practice.</p>
<p>Why then did it take six years to agree the rules which would govern these markets? This was more than the four years it took countries to do the same in the Kyoto Protocol and, in effect, they were recreating the same mechanisms. The problems in reaching an agreement this time were three-fold, and they weren’t satisfactorily resolved in Glasgow.</p>
<h2>Going backwards from Kyoto</h2>
<p>Various states, and many environmental campaign groups, suspect that carbon markets weaken the overall effort to reduce emissions. As climate change has accelerated over the past decade these concerns have become more acute. Why trade emissions if everyone is trying to get them to zero? There is <a href="https://iopscience.iop.org/article/10.1088/1748-9326/abdae9/meta">considerable evidence</a> that carbon offset projects – such as wind farms, which emissions trading can fund – have failed to deliver a reduction in overall emissions. A 2017 study led by the EU Commission found that <a href="https://ec.europa.eu/clima/system/files/2017-04/clean_dev_mechanism_en.pdf">85% of projects</a> funded by the CDM hadn’t reduced emissions. </p>
<p>There are also fundamental design issues in the Paris Agreement that make setting up carbon markets under it much more difficult. The Kyoto Protocol expressed the obligations of industrialised states to reduce their emissions as targets. These could be translated into a fixed number of emissions allowances that provided carbon markets with a clear set of accounting rules and indicators of market demand.</p>
<p>No such set of rules exists in the Paris Agreement. Instead, all states submit their nationally determined contributions (NDCs) – national plans for reducing emissions. They may or may not have an emissions target and they vary in how they account for emissions or which sources of emissions they include in their plans. How can a market function if there is no clear way of measuring what is being traded? And how should a country trading with another adjust its own NDC to avoid double-counting, when the design of each country’s NDC varies so much?</p>
<p>And what should countries do with all the credits created in the Kyoto Protocol’s system? Should they just be rolled over to be used in the new markets? Should they be simply abandoned? Or is there some way of allowing them in but controlling their use? A lot of CDM credits in particular remain, and they could flood the new markets and undermine the integrity of the NDCs.</p>
<h2>A cop out</h2>
<p>In the first week of COP26, it looked like these issues would continue to dog the negotiations. India supported unrestricted use of CDM credits in the new mechanism while the Solomon Islands (representing the Least Developed Countries group) opposed using them at all. In week two, these issues were either fudged or hastily agreed. The <a href="https://www.ieta.org/page-18192/12124951">carbon traders were happy</a>, as were the managers of the COP26 process – the UN secretariat and the UK government. We can now see the cost of failing to grapple with these thorny issues.</p>
<p>The Glasgow decisions on both Article <a href="https://unfccc.int/sites/default/files/resource/Art._6.2%2520_draft_decision.pdf">6.2</a> and <a href="https://unfccc.int/sites/default/files/resource/Art.6.4%2520draft_decision.v4.pdf">6.4</a> of the Paris Agreement are extraordinarily unclear compared with the equivalent ones for the Kyoto Protocol. Specialists in this field are still decoding precisely what they mean in practical terms. It’s likely that states will be able to use this opacity to double-count and claim credit for the same emissions-reducing activities.</p>
<p>Countries are supposed to set new NDCs regularly. At the same time, countries will be negotiating individual emission trades. The possibility for a country to game its NDC – making it appear more ambitious than it really is by counting already agreed trades within them – is impossible to avoid. It’s hard to see how this doesn’t fundamentally weaken the ambition of countries when updating their NDCs.</p>
<p>Monitoring how these mechanisms work in practice and whether they have the desired effect will be important over the coming years. While heralded at the time as a breakthrough in implementing significant tracts of the Paris Agreement, the Glasgow pact on carbon markets might instead be remembered as its undoing.</p>
<hr>
<figure class="align-right ">
<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><strong><em>Don’t have time to read about climate change as much as you’d like?</em></strong>
<br><em><a href="https://theconversation.com/uk/newsletters/imagine-57?utm_source=TCUK&utm_medium=linkback&utm_campaign=Imagine&utm_content=DontHaveTimeTop">Get a weekly roundup in your inbox instead.</a> Every Wednesday, The Conversation’s environment editor writes Imagine, a short email that goes a little deeper into just one climate issue. <a href="https://theconversation.com/uk/newsletters/imagine-57?utm_source=TCUK&utm_medium=linkback&utm_campaign=Imagine&utm_content=DontHaveTimeBottom">Join the 10,000+ readers who’ve subscribed so far.</a></em></p>
<hr><img src="https://counter.theconversation.com/content/173922/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Paterson is a member of the Green Party. </span></em></p>The dust has settled on COP26 and one of the summit’s few achievements looks decidedly less impressive.Matthew Paterson, Professor of International Politics, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1729742021-12-02T15:11:11Z2021-12-02T15:11:11ZVital Signs: Albanese to come clean on emissions targets, but a carbon price is still hush-hush<figure><img src="https://images.theconversation.com/files/435214/original/file-20211202-25-4tu0qn.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4918%2C2462&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Anthony Albanese in Nimbin, NSW, on November 12 2019 amid a season of a catastrophic bushfires. </span> <span class="attribution"><span class="source">Jason O'Brien/AAP</span></span></figcaption></figure><p>The Australian Labor Party is set to announce its target for cutting greenhouse gas emissions today.</p>
<p>At the <a href="https://www.theguardian.com/australia-news/2016/apr/27/labor-proposes-two-emissions-trading-schemes-costing-555m">2016</a> and <a href="https://theconversation.com/compare-the-pair-key-policy-offerings-from-labor-and-the-coalition-in-the-2019-federal-election-116898">2019</a> elections, Labor promised net zero emissions by 2050 and a cut of 45% on 2005 levels by 2030. Among the promises it adopted to get it there in 2019 was a target of 50% renewable energy by 2030.</p>
<p>But it lost those elections. So up to now Labor has refused to say what policies it will take to the 2022 election. We should know by the end of the day. </p>
<p>The Coalition’s position is clear – sort of.</p>
<p>Formally the government is sticking with its long-settled position of delivering a cut of 26-28% on 2005 levels by 2030 (as well as net zero by 2050).</p>
<p>But Prime Minister Scott Morrison is having a bet each way, by also saying the government will do better. As he said on <a href="https://www.pm.gov.au/media/press-conference-st-marys-nsw">November 15</a>:</p>
<blockquote>
<p>We are going to achieve a 35% reduction in emissions by 2030. That is what we’re going to achieve. That is what actually matters. What matters is what you actually achieve. We are well above our target.</p>
</blockquote>
<p>This leaves Labor, which has consistently taken a stronger stance than the Coalition, with three broad options. </p>
<h2>Targets, predictions, safeguards</h2>
<p>Option 1 is to match the 35% reduction but make it a formal target, not a prediction.</p>
<p>Option 2 is to go a little higher with a prediction – say 40% – and claim this is achievable given announced Labor policies such as electric vehicles and upgrading the electricity grid (“rewiring the nation”).</p>
<p>Option 3 is set a more ambitious target – perhaps 45%, as Labor did at the last election, along with a change to the so-called “safeguard mechanism” <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1819/Australias_climate_safeguard_mechanism">introduced by the Coalition</a> in 2016 as part of its alternative to a price on carbon.</p>
<p>The safeguard mechanism requires Australia’s largest greenhouse gas emitters to keep their net emissions below a certain cap. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-governments-net-zero-modelling-shows-winners-weve-found-losers-171502">The government's net-zero modelling shows winners, we've found losers</a>
</strong>
</em>
</p>
<hr>
<p>At the 2019 election Labor proposed to cut the eligibility threshold for the cap from 100,000 to 25,000 tonnes of carbon dioxide a year, and extend it to more emitters.</p>
<p>The difference between now and 2019 is that this time the business community is behind the approach. </p>
<p>In fact, the Business Council of Australia’s <a href="https://www.bca.com.au/achieving_a_net_zero_economy">climate plan</a>, published in October 2021, is to do exactly this. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=160&fit=crop&dpr=1 600w, https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=160&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=160&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=200&fit=crop&dpr=1 754w, https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=200&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/435258/original/file-20211202-19-jnfzsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=200&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.bca.com.au/achieving_a_net_zero_economy">Business Council of Australia</a></span>
</figcaption>
</figure>
<h2>Pitfalls abound</h2>
<p>Each one of these options have pitfalls. Option 1 looks weak, and gives the government a free pass on climate. It’s hard for Labor politicians to campaign on the government not doing enough if they aren’t willing to do more themselves.</p>
<p>Option 2 (perhaps the most likely) is a hedge: Labor will do more because it cares about the planet, but not too much more because, you know, politics.</p>
<p>Option 3 is the bravest of the likely targets. It’s a bigger number that would make for more meaningful change. It also now has air cover from the Business Council of Australia. </p>
<p>But it’s also the option taken to the last election, which Labor lost. Maybe that was due to other reasons, such as the retiree tax, but it still seems politically risky.</p>
<h2>No talk about a carbon price</h2>
<p>One option you can bet Labor will not adopt is a price on carbon. </p>
<p>That’s the best way to balance what’s good about emissions (economic growth and development) with what’s bad about emissions (climate change).</p>
<p>This has been off the table with Labor since it lost government in 2013 – in no small part due to Tony Abbott exploiting the issue with his “great big tax” campaigning.</p>
<p>But a funny thing has happened on the way to the 2022 election. A few months ago the Coalition inserted a price on carbon into its own plan. </p>
<p>As The Conversation’s <a href="https://theconversation.com/how-government-modelling-found-net-zero-would-leave-us-better-off-171743">Peter Martin</a> put it, the plan assumed emissions reductions “the same as what would be expected if Australians faced a carbon price (or tax) that climbed to A$24 per tonne of carbon dioxide equivalent by 2050”.</p>
<p>If Energy Minister Angus Taylor is trying to hide this, he is not being particularly stealthy about it.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-government-modelling-found-net-zero-would-leave-us-better-off-171743">How government modelling found net-zero would leave us better off</a>
</strong>
</em>
</p>
<hr>
<p>Page 6 of the <a href="https://www.industry.gov.au/sites/default/files/November%202021/document/australias-long-term-emissions-reduction-plan-modelling.pdf">government document</a> outlining the modelling and analysis behind the plan acknowledges it models voluntary emissions reductions “as an abatement incentive which is taken up across the economy and rises to $24/t CO2-e in 2050”.</p>
<p>It says behaving “<a href="https://www.industry.gov.au/sites/default/files/November%202021/document/australias-long-term-emissions-reduction-plan-modelling.pdf">as if</a>” there was a carbon price of A$24 per tonne in place would get emissions down by 85%.</p>
<p>To get them down further to net zero would require <a href="https://www.afr.com/politics/federal/morrison-s-dirty-secret-he-s-matched-labor-s-2013-carbon-price-20211115-p5990m">an even higher carbon price</a>: about A$80 per tonne on the model’s logic.</p>
<h2>Labor could take its cue from the Coalition</h2>
<p>So why doesn’t Labor do what it knows to be right – announce a price on carbon? It could say it will start at the government’s own figure of $24/tonne, and take any needed subsequent increases to future elections.</p>
<p>That won’t happen on Friday. Or any time soon. We should reflect on why.</p>
<p><iframe id="5ewrO" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/5ewrO/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/172974/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is President of the Academy of the Social Sciences in Australia.</span></em></p>The Australian Labor Party has options on emissions reduction targets, but it is still running scared from the best mechanism to achieve them.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1718102021-11-15T01:45:16Z2021-11-15T01:45:16ZCOP26: the Glasgow climate summit demonstrates an appetite for change Australia simply can’t ignore<p>COP26 president Alok Sharma has described the pivotal United Nations talks, which <a href="https://theconversation.com/five-things-you-need-to-know-about-the-glasgow-climate-pact-171799">concluded</a> over the weekend, as only a “fragile win” for ambition on climate change. But, against the odds, the summit produced the goods on several important aspects of international climate policy. </p>
<p>It resolved tricky outstanding issues for implementing the Paris Agreement. And most importantly, it reinforced the multilateral consensus that much stronger climate action is needed in both the short and long term.</p>
<p>Stabilising the climate depends on a lot more than the outcome of multilateral negotiations like Glasgow. But those agreements set a frame for real-world decisions. </p>
<p>Here’s a preliminary interpretation of some of the decisions at COP26 on climate change mitigation, and the implications for Australia. </p>
<figure class="align-center ">
<img alt="woman at lectern looks at woman holding banner" src="https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=517&fit=crop&dpr=1 754w, https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=517&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/431833/original/file-20211114-59858-1b49u1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=517&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some were unhappy with the COP26 outcome, but it created momentum for change.</span>
<span class="attribution"><span class="source">Alastair Grant/AP</span></span>
</figcaption>
</figure>
<h2>Coal power “phase down”</h2>
<p>Global climate negotiations are usually a relentless grind, with occasional fireworks. One such firework moment came in the final session when <a href="https://youtu.be/v9paeHNZkLk?t=15702">India</a>, supported by China, demanded the <a href="https://unfccc.int/sites/default/files/resource/cop26_auv_2f_cover_decision.pdf">Glasgow Climate Pact’s</a> language on coal should be weakened from “phase-out” to “phasedown” of unabated coal power. </p>
<p>To prevent the disagreement scuttling the entire deal, the revision was agreed to, despite bitter protests by many countries intent on stronger action.</p>
<p>The wording of United Nations agreements is cumbersome, but deliberate. Here’s the full reference to coal in the final COP26 text. It calls on the parties to the Paris Agreement to:</p>
<blockquote>
<p>accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phase-down of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognising the need for support towards a just transition.</p>
</blockquote>
<p>(By way of definition, “unabated” coal power refers to the absence of carbon capture and storage in power stations. This technology is very expensive for power generation and unlikely to be used at large scale.)</p>
<p>So what does the above text mean, exactly? At the core of it, the international community is spelling out an expectation that countries strive to greatly reduce the use of coal in electricity generation, and to stop subsidising fossil fuels. The original “phase-out” language would obviously have meant nations should stop using unabated coal power altogether. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/are-you-kidding-india-your-last-minute-glasgow-intervention-wont-relieve-pressure-to-ditch-coal-171809">Are you kidding, India? Your last-minute Glasgow intervention won't relieve pressure to ditch coal</a>
</strong>
</em>
</p>
<hr>
<p>On the face of it, the change in wording makes a big difference. But the signal to investors in coal mining and coal power plants is the same: the international community has decided coal-fired power must fall, and its end is coming.</p>
<p>No previous United Nations climate change decision has so directly called for action to cut fossil fuels. So even the weakened language is unprecedented. </p>
<p>What’s more, nations can act independently of – and more ambitiously than – the wording in the COP agreement.</p>
<p>For example, China recently <a href="https://www.globaltimes.cn/page/202111/1238071.shtml">pledged</a> to rely much less on coal power and <a href="https://www.bbc.com/news/world-asia-china-58647481">stop building</a> coal-fired power stations abroad. And the surprise US-China joint <a href="https://www.state.gov/u-s-china-joint-glasgow-declaration-on-enhancing-climate-action-in-the-2020s/">declaration</a> on climate change announced at Glasgow enshrines the “elimination of support for unabated international thermal coal power generation”.</p>
<p>The international market for thermal coal – the type burned for electricity – will shrink and could do so quickly. Australia is the world’s number two <a href="https://publications.industry.gov.au/publications/resourcesandenergyquarterlyseptember2021/documents/Resources-and-Energy-Quarterly-September-2021.pdf">thermal coal exporter</a> behind Indonesia. We’d better get used to the fact the business is in decline.</p>
<figure class="align-center ">
<img alt="industrial scene with smoke billowing" src="https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/431834/original/file-20211114-15515-15l0dpj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The market for thermal coal is likely to shrink quickly.</span>
<span class="attribution"><span class="source">Li Bin/AP</span></span>
</figcaption>
</figure>
<h2>Ratcheting up 2030 targets</h2>
<p>Another key aspect of the Glasgow pact is the <a href="https://unfccc.int/sites/default/files/resource/Overarching_decision_1-CMA-3_0.pdf">call for</a> stronger 2030 emissions targets and short-term action. </p>
<p>By the end of next year, nations are asked to strengthen their 2030 targets to align with the 1.5°C temperature goal. This puts big pressure on Australia.</p>
<p>The federal government still retains the very weak target of a 26-28% emissions reduction by 2030, based on 2005 levels, and recently said the target will be <a href="https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Australia%20First/Australia%20Nationally%20Determined%20Contribution%20Update%20October%202021%20WEB.pdf">exceeded by up to 9%</a>. Prime Minister Scott Morrison’s <a href="https://www.reuters.com/business/cop/australian-ministers-say-2030-emission-target-fixed-will-be-beaten-2021-11-14/">insistence</a> on Sunday that the target is “fixed” will not cut it over the next year.</p>
<p>Almost all other developed countries have strengthened their targets already, some greatly so. An important reference point is the United States, which has adopted a 50-52% reduction target in the same time frame.</p>
<p>In yet stronger language, the Glasgow pact “urges” countries that haven’t yet submitted a long-term emissions-reduction strategy to do so by next year’s conference. </p>
<p>This puts the onus on the federal government. Its recent “plan” to reach net-zero by 2050 falls far <a href="https://theconversation.com/scott-morrison-attends-pivotal-global-climate-talks-today-bringing-a-weak-plan-that-leaves-australia-exposed-170842">short of the mark</a> of what constitutes a real national strategy.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/government-assumes-90-of-australias-new-car-sales-will-be-electric-by-2050-but-its-a-destination-without-a-route-171741">Government assumes 90% of Australia’s new car sales will be electric by 2050. But it's a destination without a route</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="wind farm" src="https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/431835/original/file-20211114-59662-1phu0ea.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Countries without a long-term emissions-reduction strategy should address this by next year.</span>
<span class="attribution"><span class="source">Alex Plaveski/EPA</span></span>
</figcaption>
</figure>
<h2>International carbon trading</h2>
<p>COP26 managed to resolve an issue that had proven extremely difficult since the Paris talks – rules for future international carbon markets.</p>
<p>The compromise reached appears to largely close loopholes for <a href="https://theconversation.com/double-counting-of-emissions-cuts-may-undermine-paris-climate-deal-125019">double-counting</a> of emissions reduction. What kind and extent of international emissions markets will emerge under the Paris Agreement framework remains to be seen. However, the rules to underpin them are now available.</p>
<p>From an Australian perspective, an outcome on international emissions markets is very positive. Australian governments and negotiators have worked to help make it happen. </p>
<p>It opens the door to Australian companies or governments purchasing emissions reductions achieved in other countries, if this turned out cheaper than acting more strongly to cut emissions at home. It will also help Australia work with countries in the Pacific and Southeast Asia to reduce emissions there, and to share the resulting emissions reductions between countries.</p>
<p>Australia’s large land mass and unlimited potential for cheap renewable energy means it’s better positioned than most countries to become a net-negative emissions economy in the long term. In other words, Australia could one day remove more greenhouse gases from the atmosphere than it emits. </p>
<p>So an international carbon trading framework means Australia could eventually sell emissions reduction credits to other countries, and the revenue could fund large-scale CO₂ removal from the atmosphere.</p>
<h2>A momentum that cannot be ignored</h2>
<p>Earth’s climate will not be determined by what is agreed at global climate talks, but by the actions that businesses and people take, and the policies governments put in place. </p>
<p>The Glasgow outcome, however, shows there is global resolve to get on top of the problem. Governments that might prefer the old ways of a carbon-intensive economy cannot ignore that momentum.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cop26-leaves-too-many-loopholes-for-the-fossil-fuel-industry-here-are-5-of-them-171398">COP26 leaves too many loopholes for the fossil fuel industry. Here are 5 of them</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/171810/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo leads and has led research projects funded by a variety of funders. None present a conflict of interest on this topic.</span></em></p>Stabilising Earth’s climate depends on a lot more than deals struck at conferences like Glasgow. But those agreements set a frame for real-world decisions.Frank Jotzo, Professor, Crawford School of Public Policy and Head of Energy, Institute for Climate Energy and Disaster Solutions, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1711942021-11-11T22:05:48Z2021-11-11T22:05:48ZCOP26: New Zealand depends on robust new rules for global carbon trading to meets its climate pledge<figure><img src="https://images.theconversation.com/files/431467/original/file-20211111-17-1p3uta1.jpg?ixlib=rb-1.1.0&rect=80%2C74%2C4412%2C2916&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock/rafapress</span></span></figcaption></figure><p>As the <a href="https://ukcop26.org/">COP26</a> climate summit draws to a close, debate continues on one key issue in particular: a new rule book for global carbon trading to allow countries to purchase emissions reductions from overseas to count towards their own climate action.</p>
<p>The world has generally welcomed headline-grabbing <a href="https://www.theguardian.com/environment/2021/nov/07/so-what-has-cop26-achieved-so-far">agreements</a> on halting deforestation and tackling methane and <a href="https://ukcop26.org/end-of-coal-in-sight-at-cop26/">coal</a>. Likewise ambitious commitments from some large polluters, most notably <a href="https://www.theguardian.com/environment/2021/nov/07/so-what-has-cop26-achieved-so-far">India’s pledge</a> to reach net zero carbon by 2070. </p>
<p>But the devil is in the detail and there is serious concern that some of these commitments are only voluntary, while others look unachievable. </p>
<p>Defining the rules for international carbon trading is a contentious agenda item — but one that will partly determine whether countries can meet their pledges and collectively limit global warming to <a href="https://www.theguardian.com/environment/2021/nov/05/president-of-paris-summit-says-18c-commitment-is-only-hypothetical">as close to 1.5°C as possible</a>.</p>
<p>The new rules, known as <a href="https://www.carbonbrief.org/in-depth-q-and-a-how-article-6-carbon-markets-could-make-or-break-the-paris-agreement">Article 6</a> under the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a>, will be important for New Zealand. </p>
<p>During COP26, New Zealand announced its new Nationally Determined Contribution (<a href="https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs/nationally-determined-contributions-ndcs">NDC</a>) to reduce emissions by <a href="https://www.nzherald.co.nz/nz/politics/climate-change-conference-emissions-to-be-cut-by-50-per-cent-below-2005-levels-by-2030/WRDDTBYBIRDSOTQSDP7UH6KWLI/">50% on 2005 levels by 2030</a>. </p>
<p>Prime Minister Jacinda Ardern described this as “our fair share” and it is indeed a significant step up on New Zealand’s previous pledge to cut emissions by 30%. It leaves the country with 571 Megatons of CO₂-equivalent emissions to “spend” between 2022 and 2030.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cop26-new-zealands-new-climate-pledge-is-a-step-up-but-not-a-fair-share-170932">COP26: New Zealand's new climate pledge is a step up, but not a 'fair share'</a>
</strong>
</em>
</p>
<hr>
<h2>New rules for global carbon trading</h2>
<p>The New Zealand government stated its “<a href="https://www.nzherald.co.nz/nz/politics/climate-change-conference-emissions-to-be-cut-by-50-per-cent-below-2005-levels-by-2030/WRDDTBYBIRDSOTQSDP7UH6KWLI/">first priority</a>” was to reduce domestic emissions, but it acknowledged that alone could not meet the country’s new pledge. In fact, two thirds of the promised emissions reductions will have to come through overseas arrangements, especially with nations in the Asia-Pacific region.</p>
<p>The <a href="https://www.climatecommission.govt.nz/our-work/advice-to-government-topic/inaia-tonu-nei-a-low-emissions-future-for-aotearoa/test-summary/">Climate Change Commission</a> has been critical of this approach, describing it as “purchasing offshore mitigation, rather than [doing] what was necessary to achieve actual emissions reductions at source”. </p>
<p>But the approach is allowed under the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a>, which all states at COP26 have signed up to. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1458083472464023572"}"></div></p>
<p>This would allow one country to buy credits from another country that has exceeded its NDC, or to carry out activities that reduce emissions in another (host) country and count those towards its own NDC. It also supports non-market approaches to climate cooperation between countries around technology transfer, finance and capacity building. </p>
<p>But these provisions have proved contentious, not least because they could result in double counting of emissions reductions, unless clear and robust operational rules are agreed. The COP26 summit has made some progress on this, but many finer details are yet to be resolved.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/big-business-greenwash-or-a-climate-saviour-carbon-offsets-raise-tricky-moral-questions-171295">Big-business greenwash or a climate saviour? Carbon offsets raise tricky moral questions</a>
</strong>
</em>
</p>
<hr>
<h2>Cutting emissions at home versus elsewhere</h2>
<p>Uncertainty about carbon market rules will be particularly problematic for New Zealand, given its reliance on overseas activities to meet its new NDC. There are also practical questions around how much of these activities will count towards New Zealand’s NDC, and how ready potential partners in the Pacific are for such carbon market trading mechanisms. </p>
<p>Pacific Island nations are not currently trading or part of established carbon markets. They may not be able to develop the necessary technical expertise to ensure fairness, compliance and transparency well in advance of 2030.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cop26-time-for-new-zealand-to-show-regional-leadership-on-climate-change-170785">COP26: time for New Zealand to show regional leadership on climate change</a>
</strong>
</em>
</p>
<hr>
<p>While there is scope to pursue opportunities to reduce emissions beyond our shores, we should be looking harder at what can be done domestically to help fulfil our NDC in the short time available.</p>
<p>Public <a href="https://consult.environment.govt.nz/climate/emissions-reduction-plan/">consultation</a> on the government’s first <a href="https://environment.govt.nz/publications/emissions-reduction-plan-discussion-document/">emissions reduction plan</a> is currently underway until November 24. A final version is due in May 2022 and is expected to set out strategies for specific sectors (transport, energy and industry, agriculture, waste and forestry) to meet emissions budgets. </p>
<p>It will also include a multi-sector plan to adapt to climate change, and to mitigate the impacts emissions cuts may have on people.</p>
<p>It’s not ideal that a concrete plan for domestic emissions reductions is still six months away. But this does provide opportunity for people and interest groups to help shape priorities and pathways, and to encourage the government to set bolder domestic targets than would otherwise have been likely. </p>
<p>The Climate Change Commission has already produced <a href="https://www.climatecommission.govt.nz/our-work/reducing-emissions/">recommendations for a low-emissions Aotearoa</a>, including the rapid adoption of electric vehicles, reduction in animal stocking rates and changing land use towards forestry and horticulture. </p>
<p>Now is also the time to start building capacity to support Pacific Island nations in designing their carbon market policies. New Zealand has already <a href="https://www.beehive.govt.nz/release/new-zealand-increases-climate-aid-contribution">pledged NZ$1.3 billion</a> in funding for climate change aid, about half of which will go to Pacific Island countries. </p>
<p>Allocating some of this to enhancing technical know-how will help create a level playing field in carbon trading. It would ensure that whichever overseas arrangements materialise, these will be fair and deliver an “<a href="https://unfccc.int/sites/default/files/english_paris_agreement.pdf">overall mitigation in global emissions</a>”, as the Paris Agreement requires.</p>
<hr>
<figure class="align-right ">
<img alt="COP26: the world's biggest climate talks" src="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><strong>This story is part of The Conversation’s coverage on COP26, the Glasgow climate conference, by experts from around the world.</strong>
<br><em>Amid a rising tide of climate news and stories, The Conversation is here to clear the air and make sure you get information you can trust. <a href="https://page.theconversation.com/cop26-glasgow-2021-climate-change-summit/"><strong>More.</strong></a></em> </p>
<hr><img src="https://counter.theconversation.com/content/171194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Uncertainty about carbon market rules will be problematic for New Zealand, given its reliance on overseas carbon trading to meet its new climate pledge.Nathan Cooper, Associate Professor of Law, University of WaikatoKemi Hughes, Doctoral Researcher in Climate Change Governance, University of WaikatoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1716022021-11-11T19:00:40Z2021-11-11T19:00:40ZVital Signs: Marketing is getting in the way of markets that could get us to net-zero<p>This week the prime minister entered full marketing mode.</p>
<p>Scott Morrison’s topic was climate change and his plans to get to net-zero.</p>
<p>At the Victorian Chamber of Commerce and Industry on Wednesday, he tried out a few <a href="https://www.pm.gov.au/media/address-victorian-chamber-commerce-and-industry">slogans</a>.</p>
<p>Among those he test marketed:</p>
<ul>
<li><p><em>can do capitalism, not ‘don’t do governments’</em></p></li>
<li><p><em>no one passed a law or introduced a tax or passed a resolution at the UN that led to the world developing a COVID vaccine, no one passed a law for the world to move digital, Google and Cochlear were not invented at a UN workshop or summit</em></p></li>
<li><p><em>Australia has already reduced our emissions by more than 20%, now, our emissions are going down, not up, they’re down by more than 20%</em> </p></li>
</ul>
<p>He said a bunch of other stuff, but those are my top three.</p>
<p>He wants to contrast his approach with certain United Kingdom and US environmentalists, who do indeed want to restrict what people can buy or do. Ideas like mandatory “<a href="https://www.mondaycampaigns.org/meatless-monday/news/nyc-expands-meatless-monday-schools">meatless Mondays</a>” and <a href="https://www.theguardian.com/environment/2020/aug/03/ban-suv-adverts-to-meet-uk-climate-goals-report-urges">banning advertising for SUVs</a> do indeed have no place in Australia, or even in the UK for that matter.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/economists-back-carbon-price-say-benefits-of-net-zero-outweigh-costs-169939">Economists back carbon price, say benefits of net-zero outweigh costs</a>
</strong>
</em>
</p>
<hr>
<p>And nor does telling people where to drive, although the prime minister assured us he was not going to tell people “<a href="https://www.minister.industry.gov.au/ministers/wilson/transcripts/press-conference-prime-minister-hon-scott-morrison-mp-and-minister-industry-energy-and-emissions-reduction-angus-taylor-toyota-hydrogen-centre-altona-north-victoria">where to drive or where they can’t drive</a>”. </p>
<p>Economists don’t like such ideas either. The whole idea behind a price on carbon (whether through a carbon tax or a system of tradable permits) is to respect people’s preferences, while making sure their decisions take account of the costs they impose on others.</p>
<h2>Innovations often come from government</h2>
<p>His second claim was that innovation (things like the COVID vaccine, Google search and digitisation) isn’t sparked by governments.</p>
<p>While it’s true that “Google and Cochlear were not invented at a UN workshop or summit”, to suggest that governments played no role is to wilfully ignore history.</p>
<p>The miraculous Moderna mRNA vaccine was developed… checks notes… in partnership with the US National Institutes of Health. <a href="https://www.nytimes.com/2021/11/09/us/moderna-vaccine-patent.html">Moderna received</a> nearly US$10 billion in taxpayer funding.</p>
<p>Much of the work on the Cochlear ear implant was done at the largely government-funded <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4921065/">University of Melbourne</a>; the internet revolution grew from the US Department of Defense’s <a href="https://historycooperative.org/who-invented-the-internet/">Advanced Research Projects Agency</a>; and Google’s search algorithm was developed by fully-funded graduate students at <a href="http://infolab.stanford.edu/pub/voy/museum/pictures/display/0-4-Google.htm">Stanford University</a>, whose endowment is tax exempt.</p>
<h2>Very often, cuts in emissions come from government</h2>
<p>Morrison emphasised on Wednesday that Australia has reduced emissions by 20%. </p>
<p>It’s natural to ask what brought it about. Much of it was a cutback in land clearing, which is counted as emissions reduction under the rules. Land clearing is <a href="https://theconversation.com/land-clearing-laws-bring-out-worrying-libertarian-streak-29978">regulated by government</a>.</p>
<p>Much of the rest happened during the two years Australia had a carbon price in place, as this chart shows. </p>
<hr>
<p><strong>Australian emissions excluding land use, land-use change and forestry</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=285&fit=crop&dpr=1 600w, https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=285&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=285&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=358&fit=crop&dpr=1 754w, https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=358&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/431464/original/file-20211111-27-mha6a7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=358&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Million tonnes of carbon dioxide equivalent per annum, updated quarterly.</span>
<span class="attribution"><a class="source" href="https://www.climatecouncil.org.au/wp-content/uploads/2019/04/Climate-Cuts-Cover-Ups-and-Censorship.pdf">Climate Council, Department of Industry</a></span>
</figcaption>
</figure>
<hr>
<p>The claimed 20% reduction owes much to the laws and summits the prime minister derides.</p>
<p>All prime ministers are politicians, so isn’t surprising they spin narratives. But to spin one so sharply at odds with reality is surprising.</p>
<p>When it comes to “<a href="https://www.pm.gov.au/media/press-conference-berkeley-vale-nsw">technology not taxes</a>”, the truth is it is often taxes that drive the development and uptake of technologies.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/top-economists-call-for-measures-to-speed-the-switch-to-electric-cars-162883">Top economists call for measures to speed the switch to electric cars</a>
</strong>
</em>
</p>
<hr>
<p>Importantly, taxes don’t specify the particular technologies that will emerge. </p>
<p>Perhaps that’s why the nation’s peak body for can-do-capitalitsts – the Business Council of Australia – has asked the government to subject more businesses to Australia’s existing little-known (weak) <a href="https://d3n8a8pro7vhmx.cloudfront.net/bca/pages/6612/attachments/original/1633693581/BCA_Achieving_a_net_zero_economy_-_9_October_2021.pdf?1633693581">price on carbon</a>.</p>
<p>If we are going to get to net-zero, we’ll need less marketing and more markets. Now there’s a slogan.</p>
<p><iframe id="bKoWR" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/bKoWR/35/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/171602/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is President-elect of the Academy of the Social Sciences in Australia.</span></em></p>The prime minister road-tested an avalanche of slogans on Wednesday, some of them clearly false.Richard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1511722021-10-31T11:56:30Z2021-10-31T11:56:30ZCOP26: Strong carbon-trading rules could help the world avoid dangerous levels of global warming<figure><img src="https://images.theconversation.com/files/428611/original/file-20211026-19-u7y8pw.jpg?ixlib=rb-1.1.0&rect=115%2C96%2C6307%2C4304&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Coal accounted for 10 billion tonnes of carbon dioxide emissions globally in 2018. Germany plans to close its coal-fired power stations, like this one in Luetzerath, by 2038.</span> <span class="attribution"><span class="source">(AP Photo/Michael Probst) </span></span></figcaption></figure><p>Despite recent reports of government decisions to shutter coal-fired power plants in Canada, the United States and the European Union, coal remains the source of almost 40 per cent of the world’s electricity. In the past two decades, the capacity for coal-powered electricity has doubled to about 2,050 gigawatts, with another <a href="https://globalenergymonitor.org/wp-content/uploads/2021/02/China-Dominates-2020-Coal-Development.pdf">247 gigawatts in planning or under development in China alone</a>. </p>
<p>President Xi Jinping said in late September that China would stop building coal-burning power plants overseas, but China, India, South Africa and Turkey remain large consumers of thermal coal, the largest source of carbon dioxide emissions. To meet the 1.5 C limit on global warming, <a href="https://www.carbonbrief.org/mapped-worlds-coal-power-plants">thermal coal use would need to drop by about 80 per cent by 2030</a>. </p>
<p>With the <a href="https://unfccc.int/process-and-meetings/conferences/glasgow-climate-change-conference">United Nations-led climate talks in Glasgow (COP26)</a> here, there’s a way for governments to work with industry. One paragraph in the <a href="https://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf">Paris Agreement</a> lays the groundwork for an international emissions-trading system that could bring an end to the production of coal-fired electricity.</p>
<h2>How would it work?</h2>
<p>Emissions-trading mechanisms have gained popularity since they were established in 1997 in the <a href="https://unfccc.int/kyoto_protocol">Kyoto Protocol</a>. They give incentives to participants to find innovative ways reduce their carbon dioxide emissions and offer the option to trade excess carbon with other countries. </p>
<p>The success of international carbon trading has been mixed due to issues such as oversupply and a lack of accounting rules. The Paris Agreement seems to have a solution for this problem, as countries agreed to reduce their national emissions by setting climate targets, known as Nationally Determined Contribution (NDC). </p>
<p>Article 6.2 of the Paris Agreement says that countries can use “internationally transferred mitigation outcomes” (ITMOs) — traded emission reductions generated by one party — towards the nationally determined contributions of the acquiring party. This means two countries could collaborate to reduce global carbon emissions and meet their NDCs. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-is-cop26-heres-how-global-climate-negotiations-work-and-whats-expected-from-the-glasgow-summit-169434">What is COP26? Here's how global climate negotiations work and what's expected from the Glasgow summit</a>
</strong>
</em>
</p>
<hr>
<p>For example, countries A and B could create an agreement that makes it easier for country A to switch from coal-powered electricity to the cleaner sources that are produced by country B. Not only does country A reduce its emissions, allowing it to meet its NDCs, but the agreement also leaves country A with ITMOs to sell, which country B could then purchase.</p>
<h2>Could Canada benefit?</h2>
<p>Canada aims to reduce its emissions to <a href="https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Canada%20First/Canada%20First%20NDC-Revised%20submission%202017-05-11.pdf">40 per cent, relative to 2005 levels, by 2030</a>. Based on the <a href="https://unfccc.int/documents/224829">2020 National Inventory Report</a>, however, Canada will miss its mark. </p>
<p>Canada’s oil and gas sectors <a href="https://www.policyalternatives.ca/publications/reports/can-canada-expand-oil-and-gas-production-build-pipelines-and-keep-its-climate">would have to drastically reduce their emissions</a> for the country to have any chance of meeting its NDC targets. Given Canada’s ambitious commitments, the use of ITMOs gives Canada a viable opportunity to achieve its targets through international co-operation.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canada-is-aiming-for-carbon-neutrality-and-that-will-mean-big-changes-to-how-we-produce-and-consume-energy-169511">Canada is aiming for carbon neutrality and that will mean big changes to how we produce and consume energy</a>
</strong>
</em>
</p>
<hr>
<p>For instance, natural gas consumption continues to grow in emerging economies. China, for example, has committed to increasing its natural gas consumption by 15 per cent in 2030 and switching to gas <a href="https://energypolicy.columbia.edu/sites/default/files/file-uploads/China%20Nat%20Gas%20Commentary_CGEP_June%202018_FINAL.pdf">in industry and buildings</a>. China currently relies on imports to cover about <a href="https://doi.org/10.1016/j.ngib.2020.04.003">half of its domestic consumption</a>. Given its <a href="https://www.forbes.com/sites/arielcohen/2021/10/19/chinas-energy-crisis-deepens-with-potentially-fatal-consequences/?sh=3c87fe371163">recent energy crisis</a>, China is set to become even more reliant on external sources of energy including natural gas to meet its basic energy needs.</p>
<p>Natural gas production in Canada will <a href="https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2020/results/index.html">increase around 20 per cent over the next 20 years, while domestic consumption is predicted to decline</a>. This leaves opportunity for considerable growth in liquefied natural gas (LNG) exports.</p>
<p>A bilateral agreement between China and Canada, for example, could allow Canada to export LNG to China to displace coal use. This would allow China to achieve its NDC targets. </p>
<h2>Writing the rule book</h2>
<p>The rules are still a work in progress. The rule book for emission reductions is expected to be completed at the UN-led climate talks in Glasgow in November. </p>
<p>In the meantime, pilot projects and other initiatives — in a variety of industries, from <a href="https://www.climatefinanceinnovators.com/wp-content/uploads/2020/12/Climate-Finance-Innovators_Article-6-piloting_State-of-play-and-stakeholder-experiences_December-2020.pdf">waste management to transportation</a> — have emerged worldwide to show how an ITMO transfer would function in practice. For example, the <a href="https://www.ccacoalition.org/en/news/chile-and-canada-partner-reduce-emissions-waste-management-sector">Canada-Chile Program</a> provides technical innovation to reduce emissions in the waste management sector and a system for tracking, monitoring and reporting emission reductions.</p>
<p>Many questions regarding the benefits of the transfer of carbon reductions remain, including whether governments should support transfers between companies. </p>
<figure class="align-center ">
<img alt="An area destroyed by fire smoulders." src="https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/428620/original/file-20211026-17-uu9606.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Bootleg Fire in July, near Paisley, Ore., destroyed more than 61,000 hectares of trees that had been designated for carbon offsets.</span>
<span class="attribution"><span class="source">(AP Photo/Nathan Howard)</span></span>
</figcaption>
</figure>
<p>The rules should guarantee “environmental integrity.” This means that any ITMO exchange should make sure there have been environmental gains — that the reduction in greenhouse gases would not have occurred without the transaction — and that it does not lead to <a href="https://doi.org/10.1080/14693062.2018.1521332">more greenhouse gas emissions</a>. </p>
<p>The accounting and quality of emissions, how they are transferred and the lasting mitigation effects may help address environmental integrity. The rule book writers must also define how emissions are reported and create transparent registries to make sure emissions reductions are not counted twice.</p>
<p>Some see Article 6.2 as a <a href="https://theconversation.com/how-emissions-trading-at-paris-climate-talks-has-set-us-up-for-failure-52319">way to fail</a>, as it has good ideas but unclear rules. There should be clear incentives for countries to set ambitious targets <a href="https://theconversation.com/the-paris-climate-agreement-needs-coordinated-carbon-prices-to-be-successful-60781">without compromising competitiveness</a>.</p>
<h2>What are the next steps?</h2>
<p>The negotiations at COP26 will be critical for governments to revise and co-operate to work towards their targets. The <a href="https://www.ipcc.ch/report/ar6/wg1/">latest Intergovernmental Panel on Climate Change (IPCC) report</a> calls for urgent global climate action, and ITMOs provide a promising opportunity that allows countries to collaborate to achieve their climate targets. </p>
<p>Industry and government must partner to create models that incentivize the creation of carbon trading mechanisms to transfer ITMOs, while also creating economic and environmental benefits. <a href="https://www.icao.int/environmental-protection/CORSIA/Pages/default.aspx">Corsia, a market mechanism developed by the UN International Civil Aviation Organization</a>, is leading the way. It seeks to make all growth in international flights after 2020 carbon neutral. Up to today, Corsia has 81 participant countries that account for 75 per cent of emissions in the international aviation industry. </p>
<p>For Canada, where 2030 climate targets are rapidly approaching, it is essential for the government to leverage ITMOs to work together with industries and collaborate on solutions that support a future transition with cleaner energies. Setting short-term and long-term goals that include the transfer of ITMOs particularly in the oil and gas industry and to collaborate on solutions that support a future transition with cleaner energies will be vital for Canada to achieve its climate goals.</p>
<p><em>Yukinori Kinoshita, an undergraduate student in international economics at the University of British Columbia, co-authored this article.</em></p>
<hr>
<figure class="align-right ">
<img alt="COP26: the world's biggest climate talks" src="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><strong>This story is part of The Conversation’s coverage on COP26, the Glasgow climate conference, by experts from around the world.</strong>
<br><em>Amid a rising tide of climate news and stories, The Conversation is here to clear the air and make sure you get information you can trust. <a href="https://page.theconversation.com/cop26-glasgow-2021-climate-change-summit/"><strong>More.</strong></a></em> </p>
<hr><img src="https://counter.theconversation.com/content/151172/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Citlali Cruz Cruz received funding from MITACS. </span></em></p><p class="fine-print"><em><span>John Steen receives funding from the Project Management Institute, MITACS, NSERC and EY (Ernst and Young).</span></em></p>A global emissions-credit trading system could bring an end to the production of coal-fired electricity, spur innovation and help countries meet their greenhouse gas emissions goals.Citlali Cruz Cruz, Graduate Research Assistant, Public Policy and Global Affairs School, University of British ColumbiaJohn Steen, EY Distinguished Scholar in Global Mining Futures, University of British ColumbiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1699392021-10-17T03:21:12Z2021-10-17T03:21:12ZEconomists back carbon price, say benefits of net-zero outweigh costs<figure><img src="https://images.theconversation.com/files/426607/original/file-20211015-20-55nadk.png?ixlib=rb-1.1.0&rect=538%2C0%2C3155%2C1994&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Wes Mountain/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>Eight in ten of Australia’s leading economists back action to cut Australia’s carbon emissions to net-zero. </p>
<p>Almost nine in ten want it done by a carbon tax or a carbon price – mechanisms that were explicitly rejected at the 2013 election.</p>
<p>The panel of 58 top Australian economists selected by the Economic Society of Australia wants the carbon price restored to the public agenda even though it was rejected seven years ago, some saying Australia’s goods and services tax was rebuffed in 1993 and then restored to the public agenda seven years later.</p>
<p>Among those surveyed are former heads of government departments and agencies, former International Monetary Fund and OECD officials and a former and current member of the Reserve Bank board.</p>
<p>Asked ahead of November’s Glasgow climate talks whether Australia would likely benefit overall from the national economy transitioning to net-zero emissions by 2050, 46 of the 58 said yes.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=509&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=509&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=509&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=639&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=639&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426363/original/file-20211014-23-1tc85lk.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=639&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>The response is at odds with the previous positions of groups such as the Business Council of Australia which in the leadup to the 2019 election labelled Labor’s proposed steps towards net-zero “<a href="https://twitter.com/BCAcomau/status/1011414577702031361">economy wrecking</a>”. </p>
<p>This month the Business Council <a href="https://www.bca.com.au/achieving_net_zero_with_more_jobs_and_stronger_regions">backed</a> net-zero by 2050, and produced modelling suggesting it would make Australians A$5,000 better off per year.</p>
<h2>Only one net-zero doubter</h2>
<p>Only five of the 58 economists surveyed disagreed with the proposition that cutting Australia’s emissions to net-zero would leave Australians better off. </p>
<p>Of those five, only one doubted that cutting global move emissions to net-zero would leave Australia better off. The others believed that even if a global move to net-zero did leave Australians better off, it was likely to happen anyway, meaning Australia wouldn’t need to act, a stance derided by others as “free-riding”.</p>
<p>“The argument that we are only a small percentage of global emissions holds no water either ethically or in terms of establishing and implementing a global agreement,” said Grattan Institute’s Danielle Wood. “If rich countries like Australia won’t do their fair share, this undermines the likelihood that others will.”</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/barnaby-joyce-has-refused-to-support-doubling-australias-2030-emissions-reduction-targets-but-we-could-get-there-so-cheaply-and-easily-169932">Barnaby Joyce has refused to support doubling Australia's 2030 emissions reduction targets – but we could get there so cheaply and easily</a>
</strong>
</em>
</p>
<hr>
<p>Others including Reserve Bank board member Ian Harper pointed out that Australian exporters faced punitive tariffs and lending and insurance embargoes unless Australia pulled its weight in reducing emissions.</p>
<p>His comments echo those of Reserve Bank Deputy Governor <a href="https://www.rba.gov.au/speeches/2021/sp-dg-2021-10-14.html">Guy Debelle</a> and Treasurer <a href="https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/address-australian-industry-group-melbourne">Josh Frydenberg</a> who have said that unless Australia takes action it will face reduced access to capital markets “impacting everything from interest rates on home loans and small business loans to the financial viability of large‑scale infrastructure projects”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/frydenberg-prepares-ground-for-morrison-to-commit-to-2050-target-168610">Frydenberg prepares ground for Morrison to commit to 2050 target</a>
</strong>
</em>
</p>
<hr>
<p>University of Melbourne economist Leslie Martin made the broader point that Australia had a lot to lose from rising temperatures if free-riding didn’t pay off.</p>
<p>“Although Australia could possibly free-ride on the efforts of other larger economies, it would suffer disproportionately if other countries chose to do the same” he said.</p>
<h2>Only one overwhelmingly preferred option</h2>
<p>Offered a choice of four options for rapidly reducing emissions, and asked to endorse only one, the economists surveyed overwhelmingly backed an economy-wide carbon price in the form of a carbon tax or market for emissions permits. </p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/7524430/embed" title="Interactive or visual content" class="flourish-embed-iframe" frameborder="0" scrolling="no" style="width:100%;height:400px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/7524430/?utm_source=embed&utm_campaign=visualisation/7524430" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"> </a></div>
<hr>
<p>Of the 58 surveyed, 49 backed a carbon price, seven backed government support to develop and roll out emissions-reducing technologies, and one backed support for technologies that drew down carbon from the atmosphere. </p>
<p>None backed so-called “<a href="https://www.abc.net.au/news/2013-12-20/coalition-climate-change-direct-action-policy-explained/5067188">direct action</a>” – the program of competitive grants for firms that cut emissions the government took to the last two elections.</p>
<p>“The less federal governments choose to involve themselves with the technical aspects of the alternatives at a micro scale the better,” said Lin Crase, a specialist in environmental management at the University of South Australia.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/climate-wars-carbon-taxes-and-toppled-leaders-the-30-year-history-of-australias-climate-response-in-brief-169545">Climate wars, carbon taxes and toppled leaders: the 30-year history of Australia’s climate response, in brief</a>
</strong>
</em>
</p>
<hr>
<p>Crase said governments had shown themselves to be very bad at picking winners, but very good at putting in place broad settings that allowed the people and businesses closest to the action to pick winners.</p>
<p>Several of the economists surveyed said the government’s slogan of “technology, not taxes” set up a <a href="https://www.pm.gov.au/media/press-conference-berkeley-vale-nsw">false distinction</a>. Taxes could drive the switch to better technologies – ones chosen by the market rather than by government edict.</p>
<p>Australia’s carbon price was introduced in 2012 and abolished in 2014. Had it still been in place Australia would have at hand the tools it needed to get to net-zero.</p>
<p>Some of those surveyed said it was “too late” for a carbon price, partly because of politics and partly because of lost time.</p>
<h2>Time for everything plus the kitchen sink?</h2>
<p>Saul Eslake said Australia was no more likely to adopt an economy-wide carbon price than he was “to step in thylacine droppings on my front lawn of a morning”, the views of the <a href="https://www.oecd.org/environment/climate-carbon.htm">OECD</a> and the <a href="https://www.imf.org/en/Publications/staff-climate-notes/Issues/2021/06/15/Proposal-for-an-International-Carbon-Price-Floor-Among-Large-Emitters-460468">International Monetary Fund</a> notwithstanding.</p>
<p>What was needed was everything possible, including the second-best option of direct action. John Quiggin said Australia needed direct action in the literal sense of government investment in renewable electricity and infrastructure.</p>
<p>Rana Roy said nothing should be ruled out, including the resurrection of a carbon tax or a carbon price, perhaps by a different name. An option rejected once was not rejected “for the rest of time”. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-cant-stabilise-the-climate-without-carbon-offsets-so-how-do-we-make-them-work-169355">We can't stabilise the climate without carbon offsets – so how do we make them work?</a>
</strong>
</em>
</p>
<hr>
<p>Others pointed to Australia’s natural advantages in solar, wind, geothermal energy and carbon removal via means such as reforestation and storing carbon in soil.</p>
<p>With the right settings in place, Australia could become a major producer of zero-emissions hydrogen, and an industrial powerhouse that used its own iron ore and green energy to export green steel to the world.</p>
<p>With one of the most important settings missing, Australia would find it harder.</p>
<hr>
<p><em>Detailed responses:</em></p>
<p><iframe id="tc-infographic-614" class="tc-infographic" height="400px" src="https://cdn.theconversation.com/infographics/614/cc8f46b3140f1282dc21ed862ff375393571693e/site/index.html" width="100%" style="border: none" frameborder="0"></iframe></p><img src="https://counter.theconversation.com/content/169939/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s top economists say Australia can’t “free-ride”, allowing others to cut emissions while it gets the benefits.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1613582021-06-24T20:12:17Z2021-06-24T20:12:17ZUS scheme used by Australian farmers reveals the dangers of trading soil carbon to tackle climate change<figure><img src="https://images.theconversation.com/files/407840/original/file-20210623-27-13co042.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5607%2C3732&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Soil carbon is in the spotlight in Australia. A key plank in the Morrison government’s <a href="https://www.industry.gov.au/sites/default/files/September%202020/document/first-low-emissions-technology-statement-2020.pdf">technology-led</a> emissions reduction policy, it involves changing farming techniques so soils store more carbon from the atmosphere.</p>
<p>Farmers can encourage and accelerate this process through methods that increase plant production, such as improving nutrient management or sowing permanent pastures. For each unit of atmospheric carbon they remove in this way, farmers can earn “carbon credits” to be sold in emissions trading markets.</p>
<p>But not all carbon credits are created equal. In one high-profile <a href="https://www.beefcentral.com/news/aus-cattle-company-makes-global-carbon-credit-sale-to-microsoft/">deal</a> in January, an Australian farm sold soil carbon credits to Microsoft under a scheme based in the United States. We analysed the methodology behind the trade, and found some increases in soil carbon claimed under the scheme were far too optimistic. </p>
<p>It’s just one of several problems raised by the sale of carbon credits offshore. If not addressed, the credibility of carbon trading will be undermined. Ultimately the climate - and the planet - will be the loser.</p>
<figure class="align-center ">
<img alt="sunset on farm with cattle and trees" src="https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407842/original/file-20210623-21-k64xg8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The integrity of soil carbon trading must be assured.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>What is soil carbon trading?</h2>
<p>Plants naturally remove carbon dioxide (CO₂) from the air through photosynthesis. As plants decompose, carbon-laden organic matter is added to the soil. If more organic matter is added than is lost, soil carbon levels increase. </p>
<p>Carbon trading schemes require the increase in soil carbon levels to be measured. The measurement methods are well-established, but can be costly and complex because they involve collecting and analysing large numbers of soil samples. And different carbon credit schemes measure the change in different ways - some more robust than others.</p>
<p>The Australian government’s Emissions Reduction Fund has a rigorous approach to soil sampling, laboratory analysis and calculation of credits. This ensures only genuine removals of atmospheric carbon are rewarded, in the <a href="http://www.cleanenergyregulator.gov.au/OSR/ANREU/types-of-emissions-units/australian-carbon-credit-units">form of</a> “Australian Carbon Credit Units”.</p>
<p>Farmers can choose other schemes under which to earn carbon credits, such as the US-based carbon offset <a href="https://www.regen.network/">platform</a> Regen Network.</p>
<p>Regen Network’s method for estimating soil carbon largely involves collecting data via satellite imagery. The extent of physical on-the-ground soil sampling is limited. </p>
<p>Regen Network issues “CarbonPlus credits” to farmers deemed to have increased soil carbon stores. Farmers then sell these credits on the Regen Network trading platform.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/nJ3IFYuYlcY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Regen Network video explaining its remote sensing methods.</span></figcaption>
</figure>
<h2>‘A number of concerns’</h2>
<p>It was Regen Network which sold Microsoft the soil carbon credits generated by an Australian farm, Wilmot Station. Wilmot is owned by the Macdoch Group, and other Macdoch properties have also claimed carbon credits under the Regen Scheme. </p>
<p>Regen Network should be applauded for making its methods and calculations available online. And we appreciate Regen’s open, collaborative approach to developing its methods. </p>
<p>However, we have reviewed their documents and have a number of concerns:</p>
<ul>
<li><p>the dry weight of soil in a known volume, also known as “bulk density”, is a key factor in calculating soil carbon stocks. Rather than bulk density being measured from field samples, it was calculated using an equation. We examined this method and determined it was far less reliable than field sampling</p></li>
<li><p>Estimates of soil carbon were not adjusted for gravel content. Because gravel contains no carbon, carbon stock may have been overestimated</p></li>
<li><p>The remote sensing used by Regen Network involved assessment of vegetation cover via satellite imagery, from which soil carbon levels were estimated. However, vegetation cover obscures soil, and research has found predictions of soil carbon using this method are highly <a href="https://www.mdpi.com/2072-4292/11/14/1683/htm">uncertain</a>.</p></li>
</ul>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-morrison-government-wants-to-suck-co-out-of-the-atmosphere-here-are-7-ways-to-do-it-144941">The Morrison government wants to suck CO₂ out of the atmosphere. Here are 7 ways to do it</a>
</strong>
</em>
</p>
<hr>
<p>Wilmot increased soil carbon, or “sequestration”, through changes to grazing and pasture management. The resulting rates of carbon storage calculated by Regen Network were extremely high – 7,660 tonnes of carbon over 1,094 hectares. This amounts to 7 tonnes of carbon per hectare from <a href="https://regen-registry.s3.amazonaws.com/projects/wilmot/Wilmot+Monitoring+Report+2019.pdf">2018 to 2019</a>. </p>
<p>These results are not consistent with our experience of what is possible through pasture management. For example, the CSIRO has <a href="https://publications.csiro.au/publications/publication/PIcsiro:EP10121">documented</a> soil carbon increases of 0.1 to 0.3 tonnes of carbon per hectare per year in Australia from a range of methods to increase pasture production.</p>
<p>We believe inaccurate methods have led to the carbon increase being overestimated. Thus, it appears excess carbon credits may have been awarded. </p>
<p>Many carbon trading schemes apply <a href="https://www.offsetguide.org/high-quality-offsets/">rules</a> to ensure integrity is maintained. These include:</p>
<ul>
<li><p>an “additionality test” to ensure the extra carbon storage in the soil would not have happened anyway. It would prevent, for example, farmers claiming credits for practices they adopted in the past</p></li>
<li><p>ensuring sequestered carbon is maintained over time</p></li>
<li><p>disallowing double-counting of credits – for example, by preventing a country claiming credits that have been sold offshore.</p></li>
</ul>
<p>The Emissions Reduction Fund and other well-recognised international schemes, such as <a href="https://verra.org/project/vcs-program/">Verra</a> and <a href="https://www.goldstandard.org/">Gold Standard</a>, apply these rules stringently. Regen Network’s safeguards are less rigorous.</p>
<p>Responses to these claims from Regen Network and Macdoch Group can be found at the end of this article. A full response from Regen can also be found <a href="https://docs.google.com/document/d/1neVVUoyoUsyD_UQM-xBzQ-cAvf3DxqNmHhrZxMmWzSg/edit">here</a>.</p>
<figure class="align-center ">
<img alt="diagram. showing arms, money, laptop and leaves over world map" src="https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=257&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=257&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=257&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=323&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=323&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407841/original/file-20210623-13-97dzfp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=323&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Carbon trading is a way for farmers to make money by changing their land management practices.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Not in the national interest?</h2>
<p>Putting aside the problems noted above, the offshore sale of soil carbon credits generated by Australian farmers raises other concerns.</p>
<p>First, selling credits offshore means Australia loses out, by not being able to claim the abatement towards our own <a href="https://www.environment.nsw.gov.au/topics/climate-change/net-zero-plan">government</a> and <a href="https://www.mla.com.au/research-and-development/Environment-sustainability/carbon-neutral-2030-rd/cn30/">industry</a> targets.</p>
<p>Second, soil carbon does not have unlimited emissions reduction potential. The quantum of carbon that can be stored in each hectare of soil is <a href="https://onlinelibrary.wiley.com/doi/10.1111/ejss.12194">constrained</a>, and limited by factors such as land availability and <a href="https://www.sciencedirect.com/science/article/abs/pii/S0016706118301216">climate change</a>. So measures to increase soil carbon should not detract from society’s efforts to reduce emissions from fossil fuel use.</p>
<p>And third, ensuring carbon remains in soil long after it’s deposited is a <a href="https://pubmed.ncbi.nlm.nih.gov/32148267/">challenge</a> because soil microbes break down organic matter. Carbon credit schemes commonly manage this by requiring a “buffer” of unsold credits. If stored carbon is lost, farmers must relinquish credits from the buffer. </p>
<p>If the loss is greater than the buffer, credits must be purchased to make up the difference. This exposes farmers to financial risk, especially if <a href="https://www.greenbiz.com/article/carbon-offset-prices-set-increase-tenfold-2030">carbon prices rise</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-need-more-carbon-in-our-soil-to-help-australian-farmers-through-the-drought-102991">We need more carbon in our soil to help Australian farmers through the drought</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="farmer sits on rock" src="https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/407843/original/file-20210623-13-jvp69u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Poorly managed carbon trading schemes can put farmers at financial risk.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Getting it right</h2>
<p>Soil carbon is a promising way for Australia to substantially reduce its emissions. But methods used to measure gains in soil carbon must be accurate. </p>
<p>Carbon markets must be regulated to ensure credit is awarded for genuine abatement, and risks to farmers are limited. And the extent to which offshore carbon markets prevent Australia from meeting its own obligations to reduce emissions should be clarified and managed.</p>
<p>Improving the integrity of soil carbon trading will have benefits beyond emissions reduction. It will also improve soil health and farm productivity, helping agriculture become more resilient under climate change.</p>
<hr>
<h2>Regen Network response</h2>
<p>Regen Network provided The Conversation with a response to concerns raised in this article. The full nine-page statement provided by Regen Network is available <a href="https://docs.google.com/document/d/1neVVUoyoUsyD_UQM-xBzQ-cAvf3DxqNmHhrZxMmWzSg/edit">here</a>.</p>
<p>The following is a brief summary of Regen Network’s statement:</p>
<p><strong>- Limited on-ground soil sampling</strong>: Regen Network said its usual minimum number of soil samples was not reached in the case of Wilmot Station, because historical soil samples - taken before the project began - were used. To compensate for this, relevant sample data from a different farm was combined with data from Wilmot.</p>
<p>“We understand the use of ancillary data does not follow best practice and our team is working hard to ensure future projects are run using a sufficient number of samples,” Regen Network said.</p>
<p><strong>- Bulk density:</strong> Regen Network said the historical sample data from Wilmot did not include “bulk density” measurements needed to estimate carbon stocks, which required “deviations” from its usual methodology. However the company was taking steps to ensure such estimates in future projects “can be provided with higher degrees of accuracy”.</p>
<p><strong>- Gravel content:</strong> Regen Network said lab reports for soil samples included only the weight, not volume, of gravel present. “Best sampling practice should include the gravel volume as an essential parameter for accurate bulk density measurements. We will make sure to address this in our next round of upgrades and appreciate the observation!” the statement said.</p>
<p><strong>- Remote sensing of vegetation:</strong> Regen Network said it did not use vegetation assessment at Wilmot station. It tested a vegetation assessment index at another property and found it ineffective at estimating soil carbon. At Wilmot station Regen used so-called individual “spectral bands” to estimate soil carbon at locations where on-ground sampling was not undertaken.</p>
<p><strong>- Sequestration rates at Wilmot:</strong> Regen Network said while it was difficult to directly compare local sequestration rates across climatic and geologic zones, the sequestration rates for the projects in question “fall within the relatively wide range of sequestration rates” reported in key scientific studies.</p>
<p>Regen Network said its methodology “provides a conservative estimate on the final number of credits issued”. Its statement outlines the steps taken to ensure soil carbon levels are not overestimated.</p>
<p><strong>- Integrity safeguards:</strong> Regen Network said it employs standards “based both on existing standards of reputable programs […] and inputs from project developers, in order to come up with a standard that not only is rigorous but also practical”. Regen Network takes steps to ensure additionality and permanence of carbon stores, as well as avoid double counting of carbon credits generated through their platform.</p>
<p>A more detailed response from Regen Network can be found <a href="https://docs.google.com/document/d/1neVVUoyoUsyD_UQM-xBzQ-cAvf3DxqNmHhrZxMmWzSg/edit">here</a>.</p>
<hr>
<h2>Wilmot Station response</h2>
<p>Wilmot Station provided the following response from Alasdair Macleod, chairman of Macdoch Group. It has been edited for brevity:</p>
<p><em>We entered into the deals with Regen Network/Microsoft because we wanted to give a hint of the huge potential that we believe exists for farmers in Australia and globally to sequester soil carbon which can be sold through offset markets or via other methods of value creation.</em></p>
<p><em>Whilst we recognise that the soil carbon credits generated on the Macdoch Group properties in the Regen Network/Microsoft deal will not be included in Australia’s national carbon accounts, it is our hope that over time the regulated market will move towards including appropriately rigorous transactions such as these in some form.</em></p>
<p><em>At the same time we have also been working closely with the Australian government, industry organisations, academia and other interested parties on Macdoch Group properties to develop appropriate soil carbon methodologies under the government’s Climate Solutions Fund.</em></p>
<p><em>This is because carbon measurement methodologies are an evolving science. We have always acknowledged and will welcome improvements that will be made over the coming years to the methodologies utilised by both the voluntary and regulated markets.</em></p>
<p><em>In any event it has become clear that there is huge demand from the private sector for offset deals of this nature and we will continue to work towards ensuring that other farmers can take advantage of the opportunities that will become available to those that are farming in a carbon-friendly fashion.</em></p><img src="https://counter.theconversation.com/content/161358/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Aaron Simmons is a Technical Specialist in Climate Change Mitigation with the NSW Department of Primary Industries and an Adjunct Senior Research Fellow with The University of New England. Aaron has received funding from Australian Wool Innovation, Grains Research and Development Corporation, Cotton Research and Development Corporation, Dairy Australia and the Commonwealth government. </span></em></p><p class="fine-print"><em><span>Annette Cowie is a Senior Principal Research Scientist in the Climate Branch at the NSW Department of Primary Industries, and Adjunct Professor in the School of Environmental and Rural Science at the University of New England. She has received funding for soil carbon research from NSW and Commonwealth government programs. Annette is a member of Soil Science Australia, a not-for-profit, professional association for soil scientists and people interested in the responsible management of Australia’s soil resources.</span></em></p><p class="fine-print"><em><span>Brian Wilson is a member of academic staff and researcher at the University of New England and a Principal Research Scientist with NSW State Government. He has received research income from a range of State and Commonwealth organisations to engage in research relating to soil carbon.</span></em></p><p class="fine-print"><em><span>Mark Farrell has received funding for soil carbon research from Commonwealth, State and industry programmes. He is a member of Soil Science Australia, a not-for-profit, professional association for soil scientists and people interested in the responsible management of Australia's soil resources.</span></em></p><p class="fine-print"><em><span>Matthew Tom Harrison is an Associate Professor and Systems Modelling Team Leader at the University of Tasmania. He receives funding from the Commonwealth and Tasmanian Government, as well as Meat & Livestock Australia. His research examines pathways for improving the sustainability of agricultural systems, including avenues for greenhouse gas emissions mitigation through soil carbon sequestration.</span></em></p><p class="fine-print"><em><span>Peter Grace has received funding from federal government sources and Rural Development Corporations with respect to sustainable agricultural systems and reducing greenhouse gas emissions. </span></em></p><p class="fine-print"><em><span>Richard Eckard receives funding from Commonwealth Government, as well as Meat & Livestock Australia and Dairy Australia. </span></em></p><p class="fine-print"><em><span>Vanessa Wong receives funding from the Victorian State Government and the Australian Research Council. She is currently the President of Soil Science Australia, a not-for-profit, professional association for soil scientists and people interested in the responsible management of Australia’s soil resources </span></em></p><p class="fine-print"><em><span>Warwick Badgery is a Research Leader in Rangelands and Pasture with the NSW Department of Primary Industries and has honorary positions with Melbourne University and China Agricultural University. He receives funding from the Federal Government, Meat and Livestock Australia and the food Agility CRC for agricultural systems and soil carbon research. </span></em></p>If problems in such schemes are not addressed, the credibility of soil carbon trading will be undermined. Ultimately the climate - and the planet - will be the loser.Aaron Simmons, Adjunct Senior Research Fellow, University of New EnglandAnnette Cowie, Adjunct Professor, University of New EnglandBrian Wilson, Associate Professor, University of New EnglandMark Farrell, Principal Research Scientist, CSIROMatthew Tom Harrison, Associate Professor of Sustainable Agriculture, University of TasmaniaPeter Grace, Professor of Global Change, Queensland University of TechnologyRichard Eckard, Professor & Director, Primary Industries Climate Challenges Centre, The University of MelbourneVanessa Wong, Associate Professor, Monash UniversityWarwick Badgery, Research Leader Pastures an Rangelands, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1614632021-05-25T13:37:38Z2021-05-25T13:37:38ZNew EU carbon tax: wrong rate could wreck net-zero goals – but right rate can help world’s poor<figure><img src="https://images.theconversation.com/files/402581/original/file-20210525-21-1cvu5ka.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Factories like this one in Serbia will have to pay carbon duties to export to EU in future. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/DqF_3g6lZak">Árpád Kiss</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The European Commission is holding <a href="https://www.ft.com/content/17e157b2-21ea-4e22-9278-35f157046e85">a meeting</a> in June that is, on the face of it, very boring. The EU’s senior bureaucrats will be considering at what level to set a tax on carbon emissions for goods imported into the bloc. </p>
<p>Yet the consequences will be pivotal – both to the future of the EU’s world-leading system for managing corporate carbon emissions, and for how this market develops around the world. It’s therefore an absolutely vital part of the battle for net zero global emissions. </p>
<p>Let’s first understand what has prompted the tax. Within the EU, carbon emissions are governed by a cap-and-trade system: a cap is set on the total amount of carbon emissions that can be emitted, and power providers and other firms each get an allowance for how much they can emit themselves. </p>
<p>If their pollution exceeds their permit allowance, they must buy more permits on an open market. Crucially, if they pollute less than their permit allowance, they can sell their unused permits to other firms. The upshot is that firms earn more if they pollute less – a win-win. </p>
<p>Economists love the <a href="https://ec.europa.eu/clima/policies/ets_en">European Trading System (ETS)</a> for this reason. Increasingly the market does too. <a href="https://www.ft.com/content/2b965427-4fbc-4f2a-a14f-3be6019f0a7c">With speculators betting</a> that the days of unrestricted carbon emissions are coming to end, ETS permit prices have doubled since the start of the pandemic. </p>
<p><strong>ETS carbon price</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="EU carbon price chart" src="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=346&fit=crop&dpr=1 600w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=346&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=346&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=434&fit=crop&dpr=1 754w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=434&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/402363/original/file-20210524-19-lh3she.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=434&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://uk.tradingview.com/chart/UajHAaVc/">Trading View</a></span>
</figcaption>
</figure>
<p>To a large extent, this price hike has been a good thing. It makes it more costly for firms to pollute and so ramps up their incentive to green their production processes. The only problem is that producers outside the EU are not required to pay for their pollution with permits. As permit prices rise, these competitors are becoming relatively less expensive and taking market share from their EU rivals. </p>
<p>To level the playing field, EU industries are in the <a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.ft.com%2Fcontent%2F17e157b2-21ea-4e22-9278-35f157046e85&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343987939%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=Jeonuem6swuGlLc2N3tU8A6sy1S8PhIFV%2F7L8F7FjEk%3D&reserved=0">unusual position</a> of lobbying Brussels to impose a new tax – in this case on the carbon emissions of goods being imported into the bloc. Yet in the teeth of this high-stakes negotiation, several possible outcomes could actually make the situation with carbon emissions much worse than it is already. </p>
<h2>Scenario #1: ETS implosion</h2>
<p>The worst-case scenario is that the EU sets the tax too low. This could happen because the best outcome for any given EU country is to protect its own industry while not damaging its preferred trading partners outside of the EU. Because each EU member state has different industries and different preferred trading partners, horse-trading is likely to bid the border tax lower. In this case, pollution-intensive industries within the EU would continue to face higher costs relative to their overseas competitors.</p>
<p>This could lead to the ETS being undermined in one of several ways. EU industries might use their political clout to lobby for the ETS rules to be relaxed, for example by creating exemptions. Or firms might simply breach their emissions allowances. The European Commission has a <a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Flink.springer.com%2Farticle%2F10.1057%2Fcep.2015.8&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343997957%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=d%2BE90Fex4XNjQM91IKKAUeDpNlf2gWyPzlSFqbzFSNs%3D&reserved=0">patchy track record</a> for collecting on fines and, again for reasons of political clout, national governments might side with industry against the EU (<a href="https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.independent.co.uk%2Fnews%2Fbusiness%2Fnews%2Feu-takes-ireland-court-15-billion-dollars-fine-apple-back-taxes-latest-european-court-justice-a7982211.html&data=04%7C01%7Cdavid.comerford%40stir.ac.uk%7C244449b343694067fc9608d911655ad3%7C4e8d09f7cc794ccb9149a4238dd17422%7C0%7C0%7C637559950343997957%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=PnDWMJTjZi%2BtEJbqDefbXoksCPSFMXs6DmFgGUO%2BVXM%3D&reserved=0">which happens</a> from <a href="https://curia.europa.eu/jcms/upload/docs/application/pdf/2020-03/cp200029en.pdf">time to time</a>). If both these things happen, it could effectively dismantle the ETS, returning us to a world of rising carbon emissions and global climate disaster. </p>
<p>Thankfully, a couple of factors make these outcomes unlikely. One is that Europe’s biggest trading partners are sympathetic to the cause. China already has its own <a href="https://www.forbes.com/sites/scottcarpenter/2021/03/02/toothless-at-first-chinas-carbon-market-could-be-fearsome/#:%7E:text=China%20has%20no%20carbon%20tax,buildout%20of%20renewable%20energy%20infrastructure.&text=Under%20the%20scheme's%20initial%20rollout,period%20from%202019%20to%202020.">carbon emissions scheme</a> and the Biden administration has signalled a commitment to <a href="https://www.politico.com/news/2021/04/22/biden-climate-goal-congress-484141">making deep cuts</a> to US carbon emissions. </p>
<p>But more importantly, the ETS has an in-built release valve. If the scheme makes it too expensive for a firm to produce within the EU, it can shift production overseas. It then ceases to need ETS permits and releases it stock of permits on to the market. Demand reduces, supply increases and the price of permits falls. This might help keep the system intact, but emissions would rise in the meantime. </p>
<h2>Scenario #2: widening global inequality</h2>
<p>A way to get around the horse-trading is for the EU to pre-commit that no external country will get special treatment. That entails a higher tax rate that reduces the risk of the ETS imploding, but there is a cost that would reveal itself over decades: the tax would disproportionately hit economies that rely on heavy industry. </p>
<p>Countries like Canada that have plenty of (clean) white-collar jobs would be hit less hard than middle-income countries like India, for instance. And more worrisome than the initial hit would be the consequences for business opportunities: a high tax would create opportunities for innovators in green energy. </p>
<p>This might sound like a great thing, but these people – and the tools they require to do their research – are disproportionately located in the developed world. This points to a dystopian future of increasing north/south and white collar/blue collar divergence.</p>
<h2>Scenario #3: a better world for all</h2>
<p>The European Commission therefore faces two risks here: climate disaster from setting the tax too low, and greater global inequality if the rate is too high. The sweet spot is to set a border tax rate such that the worst-off countries get a break and the best-off countries fully pay their dues. So what would that look like?</p>
<p>One opportunity open to the European Commission is to tax imports in proportion to some reliable metric of development. So imports from countries like New Zealand would be taxed as though they were produced in the EU whereas concessions would be made for those coming from countries with, say, low life expectancy or high levels of poverty. That outcome would build on the promise of the ETS as a means to reduce global carbon emissions and would also rebalance global development.</p><img src="https://counter.theconversation.com/content/161463/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Comerford receives funding from UKRI for survey research in relation to the Covid-19 pandemic. </span></em></p>In setting new tax on the carbon emissions of goods being imported into the bloc, there are two potential disasters for EU to avoid.David Comerford, Senior Lecturer of Economics and Behavioural Science, University of StirlingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1563862021-03-25T12:33:58Z2021-03-25T12:33:58ZWhy corporate climate pledges of ‘net-zero’ emissions should trigger a healthy dose of skepticism<figure><img src="https://images.theconversation.com/files/391560/original/file-20210324-23-ef4x1c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some companies' net-zero plans include continuing to emit climate-warming greenhouse gases for decades.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/s-huge-oil-refinery-complex-continues-its-24-hour-news-photo/72319755">Christopher Furlong/Getty Images</a></span></figcaption></figure><p><a href="https://sciencebasedtargets.org/companies-taking-action">Hundreds of companies</a>, including major emitters like <a href="https://www.united.com/ual/en/us/fly/company/global-citizenship/environment/100-percent-green.html">United Airlines</a>, <a href="https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bernard-looney-announces-new-ambition-for-bp.html">BP</a> and <a href="https://www.shell.com/media/news-and-media-releases/2021/shell-accelerates-drive-for-net-zero-emissions-with-customer-first-strategy.html">Shell</a>, have pledged to reduce their impact on climate change and reach net-zero carbon emissions by 2050. These plans sound ambitious, but what does it actually take to reach net-zero and, more importantly, will it be enough to slow climate change?</p>
<p>As <a href="https://vcresearch.berkeley.edu/faculty/matthew-potts">environmental policy</a> and <a href="https://www.climatecollege.unimelb.edu.au/profiles/oliver-miltenberger">economics researchers</a>, we study how companies make these net-zero pledges. Though the pledges make great press releases, net-zero is more complicated and potentially problematic than it may seem.</p>
<h2>What is ‘net-zero’ emissions?</h2>
<p>The gold standard for reaching net-zero emissions <a href="https://ghgprotocol.org/corporate-standard">looks like this</a>: A company identifies and reports all emissions it is responsible for creating, it reduces them as much as possible, and then – if it still has emissions it cannot reduce – it invests in projects that either prevent emissions elsewhere or pull carbon out of the air to reach a “net-zero” balance on paper.</p>
<p>The process <a href="https://www.carbontrust.com/news-and-events/insights/net-zero-an-ambition-in-need-of-a-definition">is complex and still largely unregulated and ill-defined</a>. As a result, companies have a lot of discretion over how they report their emissions. For example, <a href="https://www.riotinto.com/en/sustainability/climate-change">a multinational mining company</a> might count emissions from extracting and processing ore but not the emissions produced by transporting it.</p>
<p>Companies also have discretion over how much they rely on what are known as offsets – the projects they can fund to reduce emissions. The <a href="https://www.shell.com/promos/business-customers-promos/download-latest-scenario-sky/_jcr_content.stream/1530643931055/eca19f7fc0d20adbe830d3b0b27bcc9ef72198f5/shell-scenario-sky.pdf">oil giant Shell</a>, for example, projects that it will both achieve net-zero emissions by 2050 and continue to produce high levels of fossil fuel through that year and beyond. How? It proposes to offset the bulk of its fossil-fuel-related emissions through massive nature-based projects that capture and store carbon, such as forest and ocean restoration. In fact, Shell alone plans to <a href="https://www.reuters.com/article/us-shell-carbon-offsets-graphic-idUSKBN2AC1CR">deploy more of these offsets by 2030</a> than were available globally in 2019. </p>
<p>Environmentalists may welcome Shell’s newfound conservationist agenda, but what if other oil companies, the airline industries, the shipping sectors and the U.S. government all propose a similar solution? Is there enough land and ocean realistically available for offsets, and is simply restoring environments without fundamentally changing the business-as-usual paradigm really a solution to climate change?</p>
<p><iframe id="nG2Y7" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/nG2Y7/10/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Concerns about voluntary carbon markets</h2>
<p>Outside of <a href="https://www.epa.gov/emissions-trading-resources/what-emissions-trading">compliance emissions markets</a>, which primarily focus on government regulation in the <a href="https://ec.europa.eu/clima/policies/ets_en">energy sector</a>, voluntary markets create most of the offsets that are used to reach net-zero. </p>
<p>Voluntary markets are organized and operated by a diverse range of groups where anyone can participate. Have you ever seen the option to offset your flight? That offset probably happens through a voluntary carbon market. The activities that produce the offsets include projects like <a href="https://climatetrust.org/forest-carbon-projects-faq/">forestry</a> and <a href="https://www.thebluecarboninitiative.org/">ocean management</a>, waste management, agricultural practices, fuel switching and renewable energy. As the name implies, they are voluntary and therefore largely unregulated. </p>
<p>Because of the wave of net-zero pledges and subsequent demand for offsets, voluntary carbon markets are under pressure to expand quickly. <a href="https://www.iif.com/tsvcm">A task force</a> launched by United Nations Special Envoy on Climate Action Mark Carney and involving several major companies released a <a href="https://www.iif.com/tsvcm/Main-Page/Publications/ID/4254/Taskforce-Establishes-Core-Carbon-Principles-Publishes-Roadmap-for-Scaling-Voluntary-Carbon-Markets">sweeping blueprint</a> at Davos 2021 that predicts voluntary carbon markets need to grow fifteenfold over the next decade. It suggests that the net-zero surge represents one of the largest commercial opportunities of our time – prompting keen interest from <a href="https://www.blackrock.com/corporate/investor-relations/blackrock-client-letter">investors</a> and <a href="https://www.uschamber.com/series/above-the-fold/update-the-chambers-approach-climate">big business</a>. It also identifies and proposes solutions to some persistent challenges and critiques of voluntary carbon offset markets.</p>
<p><iframe id="WuLZd" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/WuLZd/8/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Some critics of the blueprint argue that it <a href="https://carbonplan-assets.s3.amazonaws.com/docs/Offset-Task-Force-Comment-Letter-01-05-2021.pdf">overlooks deeper problems</a> rooted in the overall reliance on and effectiveness of voluntary carbon markets as a solution.</p>
<p>Though there is historical <a href="https://features.propublica.org/brazil-carbon-offsets/inconvenient-truth-carbon-credits-dont-work-deforestation-redd-acre-cambodia/">evidence of misuse</a> and <a href="https://greenfinanceobservatory.org/wp-content/uploads/2021/01/Scaling-up-GFO-analysis-final4.pdf">plenty of criticism</a>, voluntary carbon markets are not inherently bad or useless in the pursuit of climate targets. In fact, quite the opposite. Some voluntary carbon market projects, in addition to <a href="https://www.edf.org/media/carbon-offsets-when-done-right-can-reduce-emissions-and-support-paris-agreement-edf-and-engie">mitigating climate change</a>, provide <a href="https://doi.org/10.1080/14693062.2020.1724070">other benefits</a>, such as improvements to biodiversity habitats, water quality, soil health and socioeconomic opportunities. </p>
<p>However, there are real concerns about the ability of voluntary markets to legitimately deliver what they promise. Common concerns include <a href="https://news.berkeley.edu/2019/05/07/new-paper-states-cap-and-trade-program-is-falling-short-of-goals/">questions about the permanence of the projects</a> for storing carbon long term, verifying that offsets actually reduce emissions beyond a business-as-usual scenario and confirming that credits are not being used more than once. These and other challenges expose voluntary carbon markets to potential manipulation, greenwashing, unintended consequences and, regrettably, failure to achieve their purpose. </p>
<p><a href="http://voluntarycarbonmarket.org/">It’s getting better</a>, but over-reliance on this method for counterbalancing emissions does risk some entities’ using offsets as a <a href="https://www.nrdc.org/stories/should-you-buy-carbon-offsets">right to pollute</a>. </p>
<p><iframe id="XhU9n" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/XhU9n/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Can global ecology meet the demand?</h2>
<p>Voluntary carbon markets can improve landscapes and help make up for unavoidable emissions. However, they cannot accommodate all of the developed world’s net-zero targets. </p>
<p>Most of these initiatives have not yet started, yet emitters from developed countries are already seeking offsets outside their borders. This is raising concerns that wealthier companies may be placing the burden of their emissions onto poorer countries that can produce offsets cheaply, begging the notion of a newfound climate colonialism. Local communities may benefit from some environmental improvements or socioeconomic opportunities, but should economically developed polluters be forcing that decision? </p>
<p>Beyond ethics, in statistical terms, there is simply not enough ecological capacity to offset the world’s emissions.</p>
<p>Take the interest in using forests as offset solutions. There are around <a href="http://dx.doi.org/10.1038/nature14967">3 trillion trees</a> on Earth today with room for about <a href="http://doi.org/10.1126/science.aax0848">1 to 2.5 trillion more</a>. The <a href="https://trilliontreesinitiative.com/">Trillion Tree Initiative</a>, <a href="https://www.1t.org/">1T program</a>, <a href="https://trilliontrees.org/">Trillion Trees</a>, and the CEO of <a href="https://www.independent.co.uk/climate-change/news/reddit-yishan-wong-trees-b1803102.html">Reddit</a>, among others, aim to plant a trillion trees each. From just a few examples, there is already a paradoxical impasse. </p>
<p>Offsets can realistically do only so much for reaching climate targets. That is why the focus must turn toward reducing rather than offsetting global emissions. Voluntary carbon markets serve a critical role as innovation sandboxes for creative offset solutions, and they are mobilizing the private sector to act; however, they must be limited. </p>
<p>While some prominent organizations are pursuing net-zero, most <a href="https://climateactiontracker.org/">businesses and governments</a> have not yet pledged, let alone developed, clear and plausible road maps to meet targets in line with a 2050 net-zero global economy. </p>
<h2>The needed goal: A negative net</h2>
<p><a href="https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_Low_Res.pdf">The Intergovernmental Panel on Climate Change suggests</a> that the world can keep global warming in check if emissions are cut in half by 2030, compared to 2010 levels, and reach net-zero by midcentury. However, it also states a need for greenhouse gas removal beyond net-zero emissions targets. </p>
<p>The real act of climate cleanup begins at net-negative emissions for all greenhouse gases. Only then will their atmospheric concentrations finally begin shrinking. That feat will require more renewable energy, widespread infrastructure and transportation developments, improved land management and investments in carbon capturing activities and technologies.</p>
<p>While net-zero is a critical step toward addressing climate change, it must be achieved smartly. And, importantly, it can’t be the end goal.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p><img src="https://counter.theconversation.com/content/156386/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Potts is also a scientific advisor for Carbon Direct. </span></em></p><p class="fine-print"><em><span>Oliver Miltenberger does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>CEOs, including at oil companies and airlines, are relying on trees and oceans to capture and store carbon for them, but the numbers don’t add up.Oliver Miltenberger, Ph.D. Candidate in Environmental Economics, The University of MelbourneMatthew D. Potts, Professor, S.J. Hall Chair in Forest Economics, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1281202019-12-02T18:13:45Z2019-12-02T18:13:45ZEarth has a couple more chances to avoid catastrophic climate change. This week is one of them<figure><img src="https://images.theconversation.com/files/304634/original/file-20191202-67023-emmwbr.jpg?ixlib=rb-1.1.0&rect=29%2C14%2C4861%2C3240&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">This week's climate conference in Madrid is key to getting global cooperation on climate change, the impacts of which are already being felt.</span> <span class="attribution"><span class="source">Dean Lewins/AAP</span></span></figcaption></figure><p>Almost 200 world leaders gather in Madrid this week for climate talks which will largely determine the success of the Paris agreement, and by extension, the extent to which the planet will suffer under climate change.</p>
<p>Negotiations at the so-called <a href="https://unfccc.int/news/cop25-will-take-place-in-madrid-from-2-to-13-december-2019">COP25</a> will focus on finalising details of the <a href="https://theconversation.com/we-finally-have-the-rulebook-for-the-paris-agreement-but-global-climate-action-is-still-inadequate-108918">Paris Agreement</a>. Nations will haggle over how bold emissions reductions will be, and how to measure and achieve them.</p>
<p>Much is riding on a successful outcome in Madrid. The challenge is to get nations further along the road to the strong climate goals, without any major diplomatic rifts or a collapse in talks.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/rivf479bW8Q?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<h2>What COP25 is about</h2>
<p>COP25 is a shorthand name for the 25th meeting of the Conference of Parties to the UN Framework Convention on Climate Change (or the nations signed up to the Paris agreement).</p>
<p>After Paris was signed in 2015, nations were given five years in which to set out bolder climate action. Current targets expire in 2020. At next year’s November COP in Glasgow, nations will be asked to formally commit to higher targets. If Madrid does not successfully lay the groundwork for this, the Glasgow talks are likely to fail.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-most-important-issue-facing-australia-new-survey-sees-huge-spike-in-concern-over-climate-change-127688">The most important issue facing Australia? New survey sees huge spike in concern over climate change</a>
</strong>
</em>
</p>
<hr>
<p>The United Nations says the world <a href="https://unfccc.int/news/cut-global-emissions-by-76-percent-every-year-for-next-decade-to-meet-15degc-paris-target-un-report">must reduce overall emissions by 7.6%</a> every year over the next decade to have a high chance of staying under 1.5°C warming this century. </p>
<p>The 1.5°C limit is at the upper end of the Paris goal; warming beyond this is likely to lead to catastrophic impacts, including <a href="https://www.smh.com.au/federal-election-2019/radical-climate-action-critical-to-great-barrier-reef-s-survival-government-body-says-20190413-p51dul.html">near-total destruction of the Great Barrier Reef</a>.</p>
<p>Presently, emissions reduction targets of nations signed up to Paris put Earth <a href="https://climateactiontracker.org/global/temperatures/">on track for a 3.2°C</a> increase.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/304635/original/file-20191202-67011-p4ln2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Coral bleaching will devastate the Great Barrier Reef if climate change is not curbed.</span>
<span class="attribution"><span class="source">KERRYN BELL</span></span>
</figcaption>
</figure>
<h2>A global carbon market</h2>
<p>Parties will debate the mechanism in the Paris agreement allowing emissions trading between nations, and via the private sector.</p>
<p>Such mechanisms could lower the global cost of climate mitigation, because emissions reduction in some nations is cheaper than in others. But there are concerns the trading regime may <a href="https://www.beaumontenterprise.com/business/energy/article/U-S-to-Negotiate-Carbon-Trades-Under-Climate-14870329.php">lack transparency and accountability</a> and <a href="https://www.berghahnjournals.com/view/journals/ijsq/8/2/ijsq080203.xml">ignore human rights</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/double-counting-of-emissions-cuts-may-undermine-paris-climate-deal-125019">Double counting of emissions cuts may undermine Paris climate deal</a>
</strong>
</em>
</p>
<hr>
<p>Among the additional risks are that <a href="https://theconversation.com/double-counting-of-emissions-cuts-may-undermine-paris-climate-deal-125019">emissions cuts are “double counted”</a> - meaning both the buying and selling nation count the cuts towards their targets, undermining the aims of the agreement.</p>
<h2>Help for vulnerable nations</h2>
<p>Small island states say COP25 is the <a href="https://www.theguardian.com/science/2019/dec/01/island-states-want-decisive-action-to-prevent-inundation">last chance to take decisive action</a> on global emissions reduction.</p>
<p>Fossil fuel burning in the developing world is largely responsible for the carbon dioxide that drives global warming. Developing nations are particularly vulnerable to the loss and damage caused by climate change.</p>
<p>Parties will discuss whether <a href="https://unfccc.int/topics/adaptation-and-resilience/workstreams/loss-and-damage-ld/warsaw-international-mechanism-for-loss-and-damage-associated-with-climate-change-impacts-wim">an international mechanism</a> designed to assess and compensate for such damage is effective.</p>
<p>Developing nations are expected to contribute to <a href="https://www.greenclimate.fund/cop">the Green Climate Fund</a> to help poorer nations to adapt to and mitigate climate change. Some 27 nations <a href="https://www.greenclimate.fund/news/countries-step-up-ambition-landmark-boost-to-coffers-of-the-world-s-largest-climate-fund">contributed US$9.78 billion</a> in the last funding round.</p>
<p>Some nations have indicated they will not contribute further, <a href="https://www.climatechangenews.com/2019/04/02/australia-stops-payments-green-climate-fund/">including Australia</a>, which says it already helps Pacific nations through its overseas aid program.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/304636/original/file-20191202-67017-lrhq1k.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Low-lying islands such as Tuvalu are particularly vulnerable to sea level rise caused by climate change.</span>
<span class="attribution"><span class="source">MICK TSIKAS/AAP</span></span>
</figcaption>
</figure>
<h2>Arguments about cost</h2>
<p>Nations opposed to adopting stronger emissions reduction targets often argue the costs of decarbonising energy sectors, and economies as a whole, are too high.</p>
<p>However, recent <a href="https://academic.oup.com/reep/article/12/1/4/4804315">cost benefit analysis</a> has found not taking action on climate change will be expensive in the long run.</p>
<p>Realisation is also growing that the cost of emissions reduction activities has been overestimated in the past. In Australia, <a href="https://theconversation.com/australia-could-fall-apart-under-climate-change-but-theres-a-way-to-avoid-it-126341">prominent economist Ross Garnaut </a> recently said huge falls in the cost of equipment for solar and wind energy has created massive economic opportunity, such as future manufacturing of zero-emission iron and aluminium.</p>
<p>The shift in the cost-balance means nations with low ambition will find it difficult to argue against climate mitigation on cost grounds.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/304637/original/file-20191202-66994-52v7lw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A coal-fired power plant in Germany. Developing nations emit most CO2 in the atmosphere.</span>
<span class="attribution"><span class="source">SASCHA STEINBACH/EPA</span></span>
</figcaption>
</figure>
<h2>Australia’s position at Madrid</h2>
<p>At the Paris talks, Australia pledged emissions reduction of 26-28% by 2030, based on 2005 levels. The Morrison government has indicated it will <a href="https://www.theguardian.com/australia-news/2019/sep/26/scott-morrison-says-australias-record-on-climate-change-misrepresented-by-media">not ramp up the goal</a>.</p>
<p>About 68 nations said before COP25 they will set bolder emissions reduction targets, including Fiji, South Africa and New Zealand. This group is expected to exert pressure on laggard nations.</p>
<p>This pressure has already begun: France has <a href="https://www.afr.com/politics/federal/france-puts-climate-at-heart-of-any-fta-with-europe-20191107-p5386n">reportedly insisted</a> that a planned free trade deal between Australia and the European Union must include “highly ambitious” action on climate change.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-hot-and-dry-australian-summer-means-heatwaves-and-fire-risk-ahead-127990">A hot and dry Australian summer means heatwaves and fire risk ahead</a>
</strong>
</em>
</p>
<hr>
<p>The Climate Action Tracker says Australia is <a href="https://climateactiontracker.org/countries/australia/current-policy-projections/">not contributing its fair share</a> towards the global 1.5°C commitment. Australia is also ranked among the <a href="https://www.climate-transparency.org/g20-climate-performance/g20report2019">worst performing G20 nations</a> on climate action. </p>
<p>The Madrid conference takes place amid high public concern over climate change. Thousands of Australians <a href="https://www.abc.net.au/news/2019-09-20/school-strike-for-climate-draws-thousands-to-australian-rallies/11531612">took part in September’s climate strikes</a> and <a href="https://www.smh.com.au/national/environment-is-prime-worry-for-the-first-time-poll-20191201-p53fu5.html">the environment has reportedly </a>surpassed healthcare, cost of living and the economy as the top public concern.</p>
<p>Climate change has already arrived in the form of more extreme weather and bushfires, water stress, sea level rise and more. These effects are a small taste of what is to come if negotiations in Madrid fail to deliver.</p>
<p><em>Johanna Nalau, Samid Suliman and Tim Cadman contributed to this article.</em></p><img src="https://counter.theconversation.com/content/128120/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Recent bushfires and extreme weather are just a small taste of what is to come if this week’s climate negotiations in Madrid fail to deliver.Robert Hales, Director Centre for Sustainable Enterprise, Griffith UniversityJohanna Nalau, Research Fellow, Climate Adaptation, Griffith UniversitySamid Suliman, Lecturer in Migration and Security, Griffith UniversityTim Cadman, Postdoctoral Research/Teaching Fellow, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1250192019-10-15T01:21:45Z2019-10-15T01:21:45ZDouble counting of emissions cuts may undermine Paris climate deal<figure><img src="https://images.theconversation.com/files/296760/original/file-20191013-96221-13lk53i.jpg?ixlib=rb-1.1.0&rect=24%2C0%2C3260%2C2094&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ice floe adrift in Vincennes Bay in the Australian Antarctic Territory. There are fears efforts to combat global warming will be undermined by double counting of carbon credits.</span> <span class="attribution"><span class="source">AAP/Torsten Blackwood</span></span></figcaption></figure><p>In the four years since the Paris climate agreement was adopted, countries have debated the fine print of how emissions reduction should be tracked and reported. One critical detail is proving particularly hard to work out – and a weak result would threaten the environmental integrity of the entire deal.</p>
<p>The sticking point is rules for carbon markets: specifically, how to prevent double counting of emissions reductions by both the country selling and buying carbon credits.</p>
<p>These rules are proving a major barrier to reaching consensus. In December, the negotiations move to Chile for this year’s major climate talks, <a href="https://www.cop25.cl/en/">known as COP25</a>. The double counting issue needs to be resolved. It will not be an easy job, and the outcome matters to many countries, including Australia.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-good-the-bad-and-the-ugly-the-nations-leading-and-failing-on-climate-action-123581">The good, the bad and the ugly: the nations leading and failing on climate action</a>
</strong>
</em>
</p>
<hr>
<p>The Morrison government says <a href="https://www.theguardian.com/environment/2019/sep/26/how-does-scott-morrisons-climate-declaration-at-the-united-nations-stack-up">Australia will meet the Paris emissions targets</a> by 2030 without international trading – partly by counting old carbon credits towards its Paris efforts. But in future Australia may adopt a stronger target in line with global climate goals. This may entail government and businesses buying carbon credits from overseas. </p>
<p>In an article just published in the journal <a href="https://science.sciencemag.org/content/366/6462/180">Science</a>, we and our co-authors* explain why double counting could undermine the Paris goals, and how a robust outcome could be achieved.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/296761/original/file-20191013-96252-1cevm29.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Port Kembla industrial works in Wollongong. Industrial activity is a major contributor to overall global emissions.</span>
<span class="attribution"><span class="source">AAP/Deal Lewins</span></span>
</figcaption>
</figure>
<h2>What’s the problem here?</h2>
<p>International carbon trading allows two or more countries to achieve their emissions targets more cheaply than if going it alone. Countries where cutting emissions is relatively cheap do more than is required by their targets. They then sell the additional emissions reductions, in the form of credits, to countries that find it harder to achieve their targets.</p>
<p>Carbon credits could be produced through activity such as replacing fossil fuels with zero-emissions energy, greater energy efficiency and electrification in transport and buildings, new technologies in industry and better practices in agriculture and forestry.</p>
<p>Rules for carbon trading are defined under <a href="https://unfccc.int/files/meetings/paris_nov_2015/application/pdf/paris_agreement_english_.pdf">Article 6 of the Paris agreement</a>. Trading under the deal could be big: almost half the parties to the agreement have signalled they want to use carbon markets. Airlines might also become major buyers of emissions credits, under rules requiring them to <a href="https://theconversation.com/feeling-flight-shame-try-quitting-air-travel-and-catch-a-sail-boat-123349">offset increases in carbon emissions </a>from international flights above 2020 levels.</p>
<p>The cost savings from using carbon markets could make it easier for countries to adopt more ambitious targets – ultimately resulting in greater emissions reductions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/there-are-three-types-of-climate-change-denier-and-most-of-us-are-at-least-one-124574">There are three types of climate change denier, and most of us are at least one</a>
</strong>
</em>
</p>
<hr>
<p>But if trading rules are not watertight then the use of carbon markets could lead to greater emissions, undermining the agreement.</p>
<p>One fundamental risk is double counting: a country selling a carbon credit might claim the underlying emissions reduction for itself, while at the same time the country buying the credit also claims the same emissions reduction.</p>
<p>Obviously any international transfer of emission reductions should not lead to higher total emissions than if participating countries had met their targets individually. This could be ensured through a form of double-entry bookkeeping, wherein the country selling carbon credits adjusts its emissions upwards, and the country acquiring the carbon credits adjusts, by the same amount, downwards.</p>
<p>But the devil lies in the detail – and in the self interest of the parties involved. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/296803/original/file-20191014-135501-5dfgzh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Planes lined up at Sydney Airport. The aviation industry will likely buy carbon credits to offset its emissions growth from 2020.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<h2>The bones of contention</h2>
<p>Countries are wrangling over what double counting is, how it should be avoided and whether it should sometimes be allowed.</p>
<p>Some countries hoping to sell emissions credits, notably Brazil, propose rules under which emissions reductions sold to another country could effectively also be claimed by the selling country. Such rules existed under the <a href="https://unfccc.int/kyoto_protocol">Kyoto Protocol</a>, which came before the Paris agreement. However under Kyoto developing countries did not have emission targets. All major countries have emissions targets under Paris, making the method unsuitable now.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/feeling-flight-shame-try-quitting-air-travel-and-catch-a-sail-boat-123349">Feeling flight shame? Try quitting air travel and catch a sail boat</a>
</strong>
</em>
</p>
<hr>
<p>Another potential pitfall lies in the potential purchase by international airlines of large amounts of credits to offset increases in their emissions. Aviation emissions are not counted in national emissions inventories. So it would be logical to adjust the selling country’s inventory for any emissions reduction sold to airlines. </p>
<p>But some countries, notably Saudi Arabia, argue that this should not be done because the airline industry is governed by a separate international treaty. This approach would allow emissions reductions to be included in both agreements and counted twice.</p>
<p>In a separate point of debate some countries – including Australia, Canada, Japan, and the United States – oppose the idea of a single international body overseeing carbon trading under the Paris agreement, arguing for more national sovereignty and flexibility between nations buying and selling.</p>
<p>Making things even more complex, the Paris agreement allows each country to determine how to frame their emissions target. Some countries frame them as absolute emissions, others as a reduction relative to business-as-usual, or as a ratio of emissions to gross domestic product. Some countries’ targets are simply unclear. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=486&fit=crop&dpr=1 600w, https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=486&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=486&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=611&fit=crop&dpr=1 754w, https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=611&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/296805/original/file-20191014-135521-1wtkm8p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=611&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A deforested area in the Amazon forest in Brazil. Carbon credits can be earned by nations that retain forest rather than cutting it down.</span>
<span class="attribution"><span class="source">Marcelo Sayao/EPA</span></span>
</figcaption>
</figure>
<p>Letting each country determine its own ambitions and approach was key in making the Paris agreement a reality. But it makes accounting for carbon markets more complex.</p>
<p>There are also questions over whether a portion of carbon trading revenue should be allocated to help pay for climate change resilience in developing countries, and whether old credits from a trading scheme under the Kyoto Protocol, the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BN/0809/KyotoProtocolCDM">Clean Development Mechanism</a>, should be tradable in the new scheme. </p>
<h2>The way forward in Chile</h2>
<p>The solutions to all these issues will be nuanced, but will require that governments agree on some fundamentals.</p>
<p>The first is that a single set of common international accounting rules should apply, irrespective of which carbon market mechanism is used by countries or groups of countries.</p>
<p>The second is to ensure robust emissions accounting, regardless of how mitigation targets are expressed. </p>
<p>The third is that over time, all countries should move toward economy-wide emissions targets, as the Paris Agreement foresees.</p>
<p>The need to reach a political deal in Chile must not result in loopholes for international carbon markets. The rules must ensure environmental integrity and avoid double counting. If this is achieved, emissions reductions can be made more cheaply and global ambition can be more readily raised. If not, then the accord could be seriously undermined.</p>
<p><em>The article in the journal Science “Double counting and the Paris Agreement rulebook” is authored by Lambert Schneider, Maosheng Duan, Robert Stavins, Kelley Kizzier, Derik Broekhoff, Frank Jotzo, Harald Winkler, Michael Lazarus, Andrew Howard, Christina Hood.</em> <a href="https://ccep.crawford.anu.edu.au/sites/default/files/uploads/ccep_crawford_anu_edu_au/2019-10/accepted_manuscript_1011_policy_forum.pdf">See here for the full manuscript</a>.</p><img src="https://counter.theconversation.com/content/125019/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo leads research projects funded by various organisations and governments and occasionally consults. No conflicts of interest with regard to the substance of this article arise from any of these activities. </span></em></p><p class="fine-print"><em><span>Lambert Schneider is Research Coordinator for International Climate Policy at Oeko-Institut. He conducts research projects for several governments, including Germany and the European Commission. He is also a member of the Excecutive Board of the Clean Development Mechanism and supports the European Union in international climate negotiations.</span></em></p><p class="fine-print"><em><span>Maosheng DUAN receives funding from National Natural Science Foundation of China (project 71690243) and Ministry of Science and Technology of China (project 2017YFA0605304) which is relevant to this article. He is a member of the Executive Board of the Clean Development Mechanism and a member of the Chinese delegation for United Nations climate negotiations.</span></em></p>Nations are struggling to agree on how international carbon trading should work under the Paris accord. A weak result would undermine global efforts to fight climate change.Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National UniversityLambert Schneider, Research coordinator for international climate policy, Oeko-InstitutMaosheng DUAN, professor, Tsinghua UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1239912019-09-25T20:41:42Z2019-09-25T20:41:42ZAustralia’s carbon market needs to be faster and smarter. Blockchain can help<figure><img src="https://images.theconversation.com/files/293725/original/file-20190924-54793-1c1s2x.jpg?ixlib=rb-1.1.0&rect=8%2C1%2C900%2C471&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Using blockchain to power Australia's carbon market could deliver tangible results.</span> <span class="attribution"><a class="source" href="https://www.piqsels.com/sv/public-domain-photo-zbaaq">Piqsels.com</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p><em>This article and the research it describes were co-authored by <a href="https://uk.linkedin.com/in/sam-hartmann-b7933267">Sam Hartmann</a>, who led the work as a graduate researcher at the University of Melbourne.</em></p>
<hr>
<p>Since 2013, Australia’s policy response to climate change has been the <a href="http://www.environment.gov.au/climate-change/government/emissions-reduction-fund">Emissions Reduction Fund</a>, which awards government contracts to projects that reduce carbon emissions by planting trees, flaring landfill gas, improving energy efficiency, and other methods. It is supported by a “<a href="https://www.environment.gov.au/climate-change/government/emissions-reduction-fund/publications/factsheet-erf-safeguard-mechanism">safeguard mechanism</a>” that imposes a cap on the largest emitters. </p>
<p>Under the Emissions Reduction Fund, the government has <a href="http://www.cleanenergyregulator.gov.au/ERF/Auctions-results/july-2019">contracted</a> 192 million tonnes of emissions reductions from 433 projects, at an average price of about A$12. There are <a href="https://www.abc.net.au/news/2019-08-02/emissions-reduction-fund-carbon-abatement-federal-government/11379424">mixed views</a> about whether these projects will be delivered and if they will effectively reduce emissions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-emissions-reduction-fund-is-almost-empty-it-shouldnt-be-refilled-92283">Australia's Emissions Reduction Fund is almost empty. It shouldn't be refilled</a>
</strong>
</em>
</p>
<hr>
<p>The Emissions Reduction Fund has been <a href="http://climatechangeauthority.gov.au/review-emissions-reduction-fund">criticised</a> for its high transaction costs and administrative complexity. It also limits the development of a secondary market, whereby people would be able to trade carbon credits among themselves rather than directly under contract to the government. </p>
<p>Despite these criticisms, earlier this year the fund was extended and rebranded as the <a href="https://www.environment.gov.au/climate-change/government/emissions-reduction-fund">Climate Solutions Fund</a>.</p>
<p>This policy is set for the foreseeable future, but may eventually be replaced with a more open market mechanism. It is important to consider how to improve the current system and lay foundations for future developments. </p>
<p><a href="https://theconversation.com/au/topics/blockchain-11427">Blockchain</a> is an emerging technology that promises to transform how individuals, industry, and government operate. The current Australian carbon market is ripe for such a technical transformation. </p>
<h2>How does blockchain work?</h2>
<p>Blockchain is a record of transactions, also known as a ledger. It is the <a href="https://theconversation.com/demystifying-the-blockchain-a-basic-user-guide-60226">design and process</a> of blockchain that distinguishes it from other established ledgers. </p>
<p>Blockchain uses online networks to conduct, validate, and record transactions. These can range from simple transactions to more complex <a href="https://theconversation.com/blockchain-is-useful-for-a-lot-more-than-just-bitcoin-58921">smart contracts</a> that only execute when defined conditions are met. </p>
<p>Network members can access the distributed ledger and independently verify transactions. Once the network is satisfied that a collection of transactions (known as a “block”) is legitimate, they are added (or “chained”) to the ledger, creating a permanent record. </p>
<p>Our <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/1759-3441.12266">research</a> explored how blockchain could be applied to the Australian carbon market. We used a structured <a href="https://ieeexplore.ieee.org/document/7930224">design process</a> to consider each technical component of a carbon market blockchain. </p>
<p>The key element of our design was a partially decentralised blockchain, featuring smart contracts of the type described above. A regulator would have particular powers to issue and verify carbon credits, and administer decentralised transactions. This decentralisation would be backed by smart contracts that would automate transactions if certain conditions were met.</p>
<p>Suppose a company has a government contract to provide a certain amount of emissions reductions by planting trees. Once these reductions were achieved, the blockchain would verify that the activity was complete. The company might then be able to plant more trees, and potentially sell further carbon credits to a non-government client. This could be a company that needed to offset its own emissions that had gone above the levels set in the safeguard mechanism, for example.</p>
<p>In this case, the blockchain would allow all parties to transparently see the verified reductions and ensure that no credits were double-counted.</p>
<h2>How can this help the Australian carbon market?</h2>
<p>Currently the <a href="http://www.cleanenergyregulator.gov.au/">Clean Energy Regulator</a> is intimately involved in every aspect of project monitoring, reporting, and verification. But there is a smarter way.</p>
<p>Smart contracts could be programmed according to a project’s particular emissions reduction method (tree planting, improving energy effiency, and so on). Market rules could then be designed to automate the regulator’s functions. </p>
<p>As a project met conditions specified in its smart contract - meeting a certain amount of emissions reductions, for instance - it would be verified and issued with the carbon credits it has earned. For projects currently contracted to the Emissions Reduction Fund, an extension could be added to automatically award the credits. </p>
<p>Using smart contracts could create a more independent regulator. The regulator would be able to demonstrate transparency and consistency in credit issuing and purchasing. This would remove the uncomfortable conflict of interest that currently exists, whereby the regulator is currently in charge of both issuing and buying the credits.</p>
<p>Smart contracts would also create a more effective regulator, with access to real-time information about the performance of projects, rather than having to wait months or years for reporting. This would enable the regulator to more quickly identify non-compliance or suspicious activity in projects. </p>
<p>Smart contracts would also speed up processing times for project reporting and encourage more frequent reporting. This would benefit projects by cutting transaction costs and allowing credits to be issued more quickly, thereby improving cash flow. </p>
<p>At the scheme level, lower administrative burdens and improved project cash flow would reduce overall project costs. This would in turn lead to more projects, promote more competition in Emissions Reduction Fund auctions, and thus allow the government to save money when buying emissions reductions. </p>
<p>Smart contracts would let the government monitor its portfolio of contract projects more closely. This would allow faster reallocation of funds from poorly performing projects.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-future-of-blockchain-according-to-experts-in-the-energy-sector-111780">The future of blockchain according to experts in the energy sector</a>
</strong>
</em>
</p>
<hr>
<p>The Australian government often declares its commitment to free markets. But the current system puts all the responsibility for the carbon market squarely on the government’s shoulders. This must be uncomfortable, and an alternative approach would surely be attractive.</p>
<p>Introducing a blockchain technology to the market’s processes would boost transparency, security, efficiency, and integrity. It would also reduce costs, increase competitiveness, and improve equity for participants in the market.</p>
<p>An Australian carbon market blockchain is an attractive potential solution to some of the problems with the current approach to emissions reductions, and a promising foundation for a more open Australian carbon market in the future.</p><img src="https://counter.theconversation.com/content/123991/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sebastian Thomas is part of the Carbon Market Institute's Professional Member Network. </span></em></p>Under the current rules, the federal government takes the most responsibility for buying carbon credits. A blockchain-driven market would be faster, smarter, and much more open.Sebastian Thomas, Lecturer in Sustainability Governance and Leadership, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1089182018-12-18T00:32:14Z2018-12-18T00:32:14ZWe finally have the rulebook for the Paris Agreement, but global climate action is still inadequate<p>Three years after the <a href="https://theconversation.com/the-paris-climate-agreement-at-a-glance-50465">Paris Agreement</a> was struck, we now finally know the rules – or most of them, at least – for its implementation.</p>
<p>The <a href="https://unfccc.int/documents/187593">Paris Rulebook</a>, agreed at the UN climate summit in Katowice, Poland, gives countries a common framework for reporting and reviewing progress towards their climate targets.</p>
<p>Yet the new rules fall short in one crucial area. While the world will now be able to see how much we are lagging behind on the necessary climate action, the rulebook offers little to compel countries to up their game to the level required.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cop24-shows-global-warming-treaties-can-survive-the-era-of-the-anti-climate-strongman-107786">COP24 shows global warming treaties can survive the era of the anti-climate ‘strongman’</a>
</strong>
</em>
</p>
<hr>
<p>The <a href="https://cdn.theconversation.com/infographics/190/8c77ad2c631b947ec1188bf545bc5376f6623e31/site/index.html?&lat=-25&lng=-25&zoom=3">national pledges</a> adopted in Paris are still <a href="https://theconversation.com/paris-climate-targets-arent-enough-but-we-can-close-the-gap-61798">woefully inadequate</a> to meet the 1.5°C or 2°C global warming goals of the Paris Agreement. In the run-up to the Katowice talks, the Intergovernmental Panel on Climate Change released a <a href="https://theconversation.com/new-un-report-outlines-urgent-transformational-change-needed-to-hold-global-warming-to-1-5-c-103237">special report</a> detailing the urgent need to accelerate climate policy. Yet the summit ran into trouble in its efforts to formally welcome the report, with delegates eventually agreeing to welcome its “timely completion”. </p>
<p>Rather than directly asking for national climate targets to be increased, the Katowice text simply reiterates the existing request in the Paris Agreement for countries to communicate and update their contributions by 2020. </p>
<p>Much now hinges on the UN General Assembly summit in September 2019, to bring the much-needed political momentum towards a new raft of pledges in 2020 that are actually in line with the scientific reality. </p>
<h2>Ratcheting up ambition</h2>
<p>A key element of the Paris Agreement is the <a href="https://unfccc.int/topics/science/workstreams/global-stocktake-referred-to-in-article-14-of-the-paris-agreement">Global Stocktake</a> - a five-yearly assessment of whether countries are collectively on track to meet the Paris Agreement’s goals to limit global warming. </p>
<p>The new rulebook affirms that this process will consider “equity and best available science”. But it does not elaborate specifically on how these inputs will be used, and how the outcomes of the stocktake will increase ambition. </p>
<p>This raises concerns that the rulebook will ensure we know if we are falling behind on climate action, but will offer no prescription for fixing things. This risks failing to address one of the biggest issues with the Paris Agreement so far: that countries are under no obligation to ensure their climate pledges are in line with the overall goals. A successful, ambitious and prescriptive five-yearly review process will be essential to get the world on track.</p>
<h2>Transparency and accounting</h2>
<p>One of the aims of the Katowice talks was to develop a common set of formats and schedules for countries to report their climate policy progress.</p>
<p>The new rules allow a degree of flexibility for the most vulnerable countries, who are not compelled to submit quantified climate pledges or regular transparency reports. All other countries will be bound to report on their climate action every two years, starting in 2024.</p>
<p>However, given the “bottom-up” nature of the Paris Agreement, countries are largely able to determine their own accounting rules, with guidelines agreed on what information they should provide. But a future international carbon trading market will obviously require a standardised set of rules. The newly agreed rulebook carries a substantial risk of double-counting where countries could potentially count overseas emissions reductions towards their own target, even if another country has also claimed this reduction for itself. </p>
<p>This issue became a major stumbling block in the negotiations, with Brazil and others refusing to agree to rules that would close this loophole, and so discussions will continue next year. In the meantime, the UN has no official agreement on how to implement international carbon trading.</p>
<p>Accounting rules for action in the land sector have also been difficult to agree. Countries such as Brazil and some African nations sought to avoid an agreement on this issue, while others, such as Australia, New Zealand and the European Union, prefer to continue existing rules that have delivered windfall credits to these countries. </p>
<h2>Finance</h2>
<p>The new rulebook defines what will constitute “climate finance”, and how it will be reported and reviewed. </p>
<p>Developed countries are now obliged to report every two years on what climate finance they plan to provide, while other countries in a position to provide climate finance are encouraged to follow the same schedule. </p>
<p>But with a plethora of eligible financial instruments – concessional and non-concessional loans, guarantees, equity, and investments from public and private sources – the situation is very complex. In some cases, vulnerable countries could be left worse off, such as if loans have to be repaid with interest, or if financial risk instruments fail. </p>
<p>Countries can voluntarily choose to report the grant equivalent value of these financial instruments. Such reporting will be crucial for understanding the scale of climate finance mobilised. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-cant-know-the-future-cost-of-climate-change-lets-focus-on-the-cost-of-avoiding-it-instead-108051">We can't know the future cost of climate change. Let's focus on the cost of avoiding it instead</a>
</strong>
</em>
</p>
<hr>
<p>The Paris Agreement delivered the blueprint for a global response to climate change. Now, the Paris Rulebook lays out a structure for reporting and understanding the climate action of all countries. </p>
<p>But the world is far from on track to achieving the goals of the Paris Agreement. The latest report from the <a href="https://www.unenvironment.org/resources/emissions-gap-report-2018">UN Environment Programme</a> suggests existing climate targets would need to be increased “around fivefold” for a chance of limiting warming to 1.5°C. The newly agreed rules don’t offer a way to put us on this trajectory. </p>
<p>Multilateral climate policy has perhaps taken us as far as it can – it is now time for action at the national level. Australia, as a country with very high per-capita emissions, needs to step up to a leadership position and take on our fair share of the global response. This means making a 60% emissions cut by 2030, as <a href="https://theconversation.com/climate-change-authority-calls-for-30-emissions-cut-by-2025-40554">outlined</a> by the Climate Change Authority in 2015. </p>
<p>Such an ambitious pledge from Australia and other leading nations would galvanise the international climate talks in 2020. What the world urgently needs is a race to the top, rather than the current jockeying for position.</p><img src="https://counter.theconversation.com/content/108918/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Dooley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Three years after the Paris Agreement, negotiators have finally agreed (most of) the rules for its implementation. But there is still no way to compel countries to deepen their climate ambitions.Kate Dooley, Researcher, Australian German Climate and Energy College, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1076592018-12-07T12:56:11Z2018-12-07T12:56:11ZHow Brexit could benefit the UK’s climate change policies<figure><img src="https://images.theconversation.com/files/249320/original/file-20181206-128205-1hihdfv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A better tomorrow?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sunset-conisholme-wind-farm-lincolnshire-692882863?src=xzWnaEcEPDc8cWli97Bdrg-1-3">John-Kelly/Shutterstock</a></span></figcaption></figure><p>With the UK leaving the European Union and eyeing new trade opportunities beyond the EU, it should also be looking for ways to take forward its <a href="https://www.reuters.com/article/uk-britain-carbontrading/britain-looking-at-four-options-for-carbon-pricing-after-brexit-govt-official-idUSKCN1MR1FA">policies for reducing greenhouse gas emissions</a>. One of the few advantages of Brexit might lie in being able to design policies that haven’t gone down the long and winding road of Brussels’ consensus building.</p>
<p>Since the beginning of industrialisation, humanity has released <a href="http://cdiac.ess-dive.lbl.gov/ftp/ndp030/global.1751_2014.ems">1.5 trillion tonnes of carbon dioxide</a> into the atmosphere and, as a consequence, <a href="https://data.giss.nasa.gov/gistemp/tabledata_v3/GLB.Ts+dSST.txt">global temperatures have risen by 1°C</a>. As the recent <a href="http://www.ipcc.ch/report/sr15/">IPCC special report</a> reminds us, we must pump out less than another 770 Gigatons to keep the total rise below 1.5°C. </p>
<p>This is not going to be easy. The <a href="https://unfccc.int/process/the-paris-agreement/nationally-determined-contributions/ndc-registry#eq-1">currently stated ambitions</a> of the world’s nations would actually increase outputs from their current total of just over 40 Gigaton a year to around <a href="http://www.ipcc.ch/report/sr15/">55 Gigaton by 2030</a>. At 50 Gigaton a year we blow the 770 Gt budget in just 15 years. So, more must be done, and it must be done immediately.</p>
<h2>To tax or trade?</h2>
<p>A carbon tax is arguably the most effective way of addressing the emissions problem as it provide a simple framework that everyone understands as well as the regulatory stability that allows businesses to plan ahead. Carbon taxes send a clear price signal and incentivise households and industry to change their behaviour. </p>
<p>Taxes are also superior to top-down regulation such as sector-specific reduction targets or even <a href="https://link.springer.com/article/10.1186/2193-2697-2-8">emissions trading</a>. A carbon tax factors in the cost of CO₂ emissions to production, thereby forcing industry to account for it and reduce emissions. It is “technology-blind”, meaning a carbon tax does not pick a winner in the market and instead leaves it to industry to develop more sustainable production. </p>
<p>In practice, however, carbon taxes haven’t been very popular. Political leaders worry about support for anything called a tax and shy away from it. The recent <a href="https://www.bbc.co.uk/news/world-europe-46437904">fuel protests in France</a> are a testimony to that fear. By increasing the cost of energy, taxes also risk increasing fuel poverty. In short, squaring the circle between climate goals and distributional equity is a matter of <a href="https://www.nature.com/articles/nenergy201624">energy justice</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/249327/original/file-20181206-128220-19ox35q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A carbon tax would put a price on the carbon businesses emit, forcing them to take action.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/coal-fired-power-station-cooling-towers-392008096?src=rQBUJf_HU08ya2WzSqll_Q-1-0">ditttmer/Shutterstock</a></span>
</figcaption>
</figure>
<p>The EU instead opted for an emissions trading system, the <a href="https://www.gov.uk/guidance/participating-in-the-eu-ets">ETS</a>, and other countries, including China, have adopted <a href="https://unfccc.int/news/china-to-launch-world-s-largest-emissions-trading-system">similar schemes</a>. The ETS puts a cap on emissions, forcing polluters to buy carbon permits if they emit more than they can under their allocated quota.</p>
<p>Permits are tradeable, thus creating a price signal for carbon. The problem with the EU’s ETS is that, until very recently, it has delivered prices around €5 per ton or less – a far cry from the €45 or more that would be needed for it to be compliant with targets set in the <a href="https://sandbag.org.uk/carbon-price-viewer/">2015 Paris agreement</a>. The ETS also only covers a few industries, such as electricity generation, that, together, produce <a href="https://ec.europa.eu/clima/policies/ets_en">only 45% of the EU’s total emissions</a>.</p>
<h2>Power to the people</h2>
<p>So how can the UK enhance its climate leadership and keep citizens and businesses on board? A place for inspiration is Canada, the first nation to implement a <a href="https://citizensclimatelobby.uk/carbon-fee-dividend/fee-dividend-in-the-uk/">carbon-fee and dividend scheme</a>. </p>
<p>Their main idea was to tax carbon emissions and ensure money taken in taxes is given to the public in the form of a dividend paid to households. There is much to celebrate in such a scheme. The initial tax level might be something like £25 per tonne of carbon dioxide and, in the UK, we each produce about <a href="https://data.worldbank.org/indicator/EN.ATM.CO2E.PC">six tonnes per year</a>. A rough back-of-the-envelope calculation suggests the tax could generate £150 per person per year. </p>
<p>A recent study estimates that the majority of households will come out rather well on a net basis, <a href="https://www.carbon-dividends.ca/">getting more back in carbon dividends</a> than they would pay in carbon taxes, should the government roll out the scheme nationwide as planned.</p>
<p>As <a href="http://www.lse.ac.uk/GranthamInstitute/publication/make-carbon-taxes-acceptable/">research</a> has shown, redistributing carbon revenues not only helps social equality, it also improves the acceptance of such taxes among taxpayers. It therefore makes it very hard for a future government to reverse the policy if people become attached to payments from the state. Just think how hard it would be for any government to repeal the UK’s <a href="https://www.gov.uk/winter-fuel-payment">winter fuel allowance</a> for over 65s.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/electricity-bills-could-rise-if-brexit-threatens-northern-irelands-unique-energy-agreement-with-ireland-106269">Electricity bills could rise if Brexit threatens Northern Ireland's unique energy agreement with Ireland</a>
</strong>
</em>
</p>
<hr>
<p>An effective and socially acceptable carbon fee, in turn, fosters economic competitiveness. The Nordic countries, which pioneered carbon taxes, have become <a href="https://nordic.businessinsider.com/denmark-finland-and-sweden-are-the-worlds-best-at-clean-technology-innovation-2017-6/">leaders in clean technology</a>. Denmark has some of the world’s <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%253A52015SC0221">lowest unit energy costs</a> thanks to drastically reduced energy use in their economic output. This, among other reasons, effectively shields the country’s industry from energy price shocks.</p>
<p>The UK, in many respects already a climate frontrunner thanks to its <a href="https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN05927">carbon floor price</a>, stands to learn from the Canadian experience as its post-Brexit low carbon policies take shape. In Europe, the UK is the second-largest polluter, behind only Germany in <a href="http://www.globalcarbonatlas.org/en/CO2-emissions">overall greenhouse gas emissions</a>. </p>
<p>The UK can exert true leadership by designing progressive policies that benefit both people and the climate. If they work, this might set a model across the continent – whether from within or outside the EU.</p><img src="https://counter.theconversation.com/content/107659/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Waltham is affiliated with the Citizen's Climate Lobby</span></em></p><p class="fine-print"><em><span>Andreas Goldthau does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Brexit may be an unexpected boon for the UK’s climate leadership. Here’s how the UK can seize the initiative.Andreas Goldthau, Professor in International Relations, Royal Holloway University of LondonDavid Waltham, Professor of Geophysics, Royal Holloway University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/884602017-12-05T23:47:38Z2017-12-05T23:47:38ZHow American cities & states are fighting climate change globally<figure><img src="https://images.theconversation.com/files/197444/original/file-20171203-5420-1ew3ysa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A severe summer drought in Thailand in 2016 caused many of the country's reservoirs to dry up, including this one near Lampang.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Since the Trump administration announced last June its intended withdrawal from the Paris Climate Agreement, attention — and hope — has turned to America’s cities and states. </p>
<p>Many local and regional governments actively <a href="https://www.vox.com/energy-and-environment/2017/6/30/15892040/blue-america-trump">voiced support</a> for upholding the United States’ pledges under the Paris Agreement. Initiatives that represented those commitments, including the <a href="https://www.usclimatealliance.org/">U.S. Climate Alliance</a>, the <a href="https://www.wearestillin.com/">We Are Still In</a> declaration and <a href="https://www.americaspledgeonclimate.com/">America’s Pledge</a> were all active participants at November’s UN climate conference (COP23) in Bonn, Germany. </p>
<p>Given these pledges, UN Secretary-General Antonio Guterres <a href="http://www.independent.co.uk/news/world-0/us-politics/paris-agreement-climate-change-deal-us-may-still-meet-says-un-chief-trump-a7821916.html">suggested</a> these organizations could, in the end, honour the previous U.S. commitment to the Paris Agreement. </p>
<p>However, optimism aside, the sense remains that American cities and states are no substitute for U.S. national action on climate change. This is especially the case when it comes to the country’s global financial commitments under the Paris Agreement. </p>
<h2>Trump pullout affects climate fund</h2>
<p>Even if the U.S. meets its domestic goals, the administration’s policy shift leaves a gaping hole in the <a href="https://www.nytimes.com/interactive/2017/06/02/climate/trump-paris-green-climate-fund.html">Green Climate Fund (GCF)</a>. The fund provides grants, loans and equity financing for adaptation and mitigation efforts in developing countries. </p>
<p>The Obama administration pledged $3 billion to the fund from the U.S., making it the single largest contributor. However, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3053218">only a billion dollars</a> was delivered by the time the Trump administration announced the pullout. </p>
<p>It’s not likely that California or New York City will pay into the GCF on the White House’s behalf. However, that doesn’t mean local action in the U.S. is irrelevant for global climate finance more broadly. In fact, climate policy in American cities and states can have global impacts in two key ways. </p>
<h2>Poorer regions can replicate policy</h2>
<p>First, it lowers the costs of climate action through so-called policy learning.</p>
<p>Designing, developing and piloting new policies takes time and money.
By developing policies to combat climate change, American cities and states can lower the costs of climate action for other sub-national governments.</p>
<p>In other words, when a state like California spearheads an initiative such as its carbon-trading scheme, it generates knowledge and expertise that can lower the barriers to policy implementation for other jurisdictions seeking to do something similar.</p>
<p>These efforts can also inspire policy action elsewhere. It’s fitting that David Vogel <a href="http://peter.beachheadonline.com/blog/files/Vogel%20-%20Trading%20up%20and%20growing%20across%20transnational%20govenrance%20and%20environmental%20protection.pdf">coined the phrase</a> “the California effect” to describe the race-to-the-top that environmental leaders can spark beyond their own borders. </p>
<h2>Cities have growing impact</h2>
<p>Already, we’re seeing the barriers to local policy action being lowered. For example, among member cities of the C40 — a global network of municipalities committed to fighting climate change — the number of climate actions that were citywide <a href="http://www.cam3.c40.org/images/C40ClimateActionInMegacities3.pdf">increased</a> from 15 per cent in 2011 to 51 per cent in 2015. What this highlights is how local climate action is maturing from pilot initiatives to full-fledged policy. </p>
<p>It also highlights how policies are increasingly ready to be replicated elsewhere. At the 2016 UN climate conference in Marrakesh, Morocco, the World Bank launched the Global Platform for Sustainable Cities. The platform will enable Chinese cities to build from California’s experience in order to boost their low-carbon development. Commenting on the launch, the World Bank’s vice-president for sustainable development <a href="http://citiscope.org/habitatIII/news/2016/11/california-help-100-chinese-cities-boost-low-carbon-development">said</a> “We need partnerships like this if we are going to deliver on the ambitions of Paris.”</p>
<p>The reach and influence of city and regional networks can also help spread these policies beyond the industrialized Global North. For <a href="https://link.springer.com/article/10.1007/s11077-012-9159-5">example</a>, the city of Changwon, South Korea developed its bicycle-based public transit system, Nubija, through a collaboration with the C40 and the city of Paris.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/197445/original/file-20171203-5420-j6wq4a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Nubija dock in Changwon, South Korea.</span>
<span class="attribution"><span class="source">Creative Commons</span></span>
</figcaption>
</figure>
<p>This is part of a more general trend across the network. In 2015, C40 member cities <a href="https://c40-production-images.s3.amazonaws.com/fact_sheets/images/12_2016_Global_Initiatives_Factsheet.original.pdf?1464230837">reported</a> 30 per cent of their climate actions were delivered through collaborations with other cities, and two thirds of these collaborative efforts were facilitated by the C40 itself.</p>
<h2>Freeing up funds</h2>
<p>In addition to lowering the costs of action, policies in U.S. states and cities can also spur interest in reforming lending practices to better support sub-national climate action. This broader shift can help make alternative funds available to local governments, and move that could benefit cities and regional governments in developing countries.</p>
<p>In 2014, former UN Secretary General Ban Ki Moon <a href="http://www.citiesclimatefinance.org/about/">launched the Cities Climate Finance Leadership Alliance</a>, a coalition of banks, governments, and governmental organizations (NGOs) tasked with closing the investment gap in cities. </p>
<p>More recently, the European Commission and the European Investment Bank launched <a href="http://europa.eu/rapid/press-release_IP-17-4941_en.htm">Urbis</a>, an advisory service to help cities plan investments and access funding with more ease. </p>
<p>Ensuring the benefits of financial reform reach developing countries may require some creative thinking. One example is through <a href="http://blogs.worldbank.org/psd/beyond-sovereign-guarantees-case-sub-national-finance">non-sovereign guaranteed loans</a>. This type of lending can help localize climate finance in the developing world by allowing sub-national governments to access financing despite low national credit ratings. </p>
<p>These are just some examples of the indirect benefits of local and regional climate action. </p>
<p>Of course, these benefits cannot replace the America’s financial commitments to the GCF. But through the cost savings that come through policy learning and the effects sub-national action can have on global climate finance, climate action among cities and regions can help bolster the fight against climate change.</p>
<p>Solutions should focus on filling the Trump-shaped gap in global climate finance through <a href="https://doi-org.myaccess.library.utoronto.ca/10.1007/s10784-016-9318-9">sharing the benefits</a> of policy learning and financial reform with local governments in the developing world. </p>
<p>By doing so, we can work to avoid <a href="https://www.washingtonpost.com/news/monkey-cage/wp/2017/11/21/trumps-noncooperation-threatens-climate-finance-under-the-paris-agreement/?utm_term=.fb2d6727d7b8">undercutting future climate action</a> in the poorest regions of the world.</p><img src="https://counter.theconversation.com/content/88460/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emma Lecavalier does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Trump administration withdrew from the Paris Agreement. But U.S. cities and states are supporting climate change efforts in the developing world regardless.Emma Lecavalier, Research Assistant Environmental Governance Lab, PhD Student in Political Science, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/789272017-06-08T00:39:46Z2017-06-08T00:39:46ZExplainer: what is a ‘low emissions target’ and how would it work?<p>The main job of the <a href="http://www.environment.gov.au/energy/national-electricity-market-review">Finkel Review</a>, to be released this week, is to set out ways to reform the National Electricity Market (NEM) to ensure it delivers reliable and affordable power in the transition to low-carbon energy. Yet most of the attention has been focused on what type of carbon-reduction scheme Australia’s chief scientist, Alan Finkel, will recommend. </p>
<p>The expectation is that he will advocate a “low emissions target” (LET), and it looks like <a href="http://www.theaustralian.com.au/national-affairs/climate/lets-do-it-say-industry-groups-on-finkel-review-let-plan/news-story/27089bd58160ca85ed92f560e39c9f90">industry is getting behind this</a>. </p>
<p>That would be instead of an emissions intensity scheme (EIS), which had been supported by much of <a href="http://www.afr.com/news/politics/industry-prefers-an-eis-but-swings-behind-let-to-resolve-climate-impasse-20170604-gwk00e">industry</a> as well as <a href="http://www.smh.com.au/federal-politics/political-news/emissions-intensity-scheme-best-and-most-appropriate-policy-new-national-electricity-boss-says-20170526-gwdz9e.html">regulators</a> and <a href="https://theconversation.com/labors-climate-policy-could-remove-the-need-for-renewable-energy-targets-73198">analysts</a>, but <a href="https://theconversation.com/turnbull-government-rules-out-an-emissions-intensity-scheme-70039">the government rejected</a> this. </p>
<p>Both types of scheme are second-best approaches to a carbon price. They can have similar effects depending on their design and implementation, although an EIS would probably be more robust overall. </p>
<h1>How a LET might work</h1>
<p>A LET would give certificates to generators of each unit of electricity below a threshold carbon intensity. Electricity retailers and industry would be obliged to buy the certificates, creating a market price and extra revenue for low-emission power generators. </p>
<p>How many certificates get allocated to what type of power generator is an important design choice. Government would also determine the demand for the certificates, and this defines the overall ambition of the scheme.</p>
<p>At its core, the scheme would work rather like the existing <a href="https://theconversation.com/how-will-the-reduced-renewable-energy-target-affect-investment-41505">Renewable Energy Target</a>, which it would replace. But the new scheme would also include some rewards for gas-fired generators, and perhaps even for coal-fired generators that are not quite as polluting as others. The question is how to do this.</p>
<p>A simple but crude way of implementing a LET would be to give the same number of certificates for every megawatt hour (MWh) of electricity generated using technologies below a benchmark level of emissions intensity. In practice, that would be renewables and gas. In principle, the scheme could include nuclear power as well as coal plants with carbon capture and storage, but neither exists in Australia, nor are they likely to be built.</p>
<p>Such a simple implementation would have two drawbacks. One, it would create a strong threshold effect: if your plant is slightly above the benchmark, you’re out, slightly below and you’re in. Two, it would give the same reward to gas-fired generators as to renewables, which is inefficient from the point of view of emissions reduction. </p>
<p>A better way is to scale the amount of certificates issued to the emissions intensity of each plant. </p>
<p>If the benchmark was 0.7 tonnes of carbon dioxide per MWh of electricity (as some media reports have predicted), then a gas plant producing 0.5 tonnes of CO₂ per MWh would get 0.2 certificates per MWh generated. A wind or solar farm, with zero emissions, would receive 0.7 certificates per MWh generated. </p>
<p>The benchmark could also be set at a higher level, potentially so high that all power stations get certificates in proportion to how far below the benchmark they are. For example, a benchmark of 1.4 tonnes CO₂ per MWh would give 1.4 certificates to renewables, 0.9 certificates to the gas plant, 0.5 certificates to an average black coal plant and 0.2 certificates to a typical brown coal plant. </p>
<p>Including existing coal plants in the LET in this way would create an incentive for the sector to move towards less polluting generators. It would thus help to reduce emissions from the coal fleet, and perhaps pave the way for the most polluting plants to be retired earlier. But the optics would not be good, as the “low emissions” mechanism would be giving credits to coal. </p>
<p>Whichever way certificates are distributed, the government also has to specify how many certificates electricity retailers need to buy. Together with the benchmark and with how electricity demand turns out, this will determine the emissions intensity of overall power supply. The benchmark would need to decline over time; alternatively, the amount of certificates to be bought could be increased. </p>
<p>The price of LET certificates would depend on all of these parameters, together with the cost of energy technologies, and industry expectations about the future levels of all of these variables. As the experience of the RET has shown, these can be difficult to predict.</p>
<h2>Low emissions target vs emissions intensity scheme</h2>
<p>An emissions intensity scheme (EIS) is the proposal that in recent times had the broadest support in the policy debate. Finkel’s <a href="http://www.environment.gov.au/energy/publications/energy-market-preliminary-report">preliminary report</a> referenced it and the <a href="http://climatechangeauthority.gov.au/reviews/special-review/special-review-electricity-research-report">Climate Change Authority</a> earlier put significant emphasis on it. But it got caught in the internal politics of the Liberal-National Coalition and was ruled out.</p>
<p>Under an EIS, the government would set a benchmark emissions intensity, declining over time. Generators below the benchmark would be issued credits, whereas those running above the benchmark would need to buy credits to cover their excess emissions. Supply and demand set the price in this market.</p>
<p>Depending on how the parameters are set, the effects of a LET and an EIS on the power mix and on power prices would differ, but not necessarily in fundamental ways. </p>
<p>There are some key differences though. Under a LET, electricity retailers will need to buy certificates and not all power plants may be covered by a low-carbon incentive. Under an EIS, the higher-polluting plants buy credits from the cleaner ones, and all types of plants are automatically covered. The EIS market would be closely related to the wholesale electricity market, with the same participants, whereas a LET market would be separate and distinct, like the RET market now. </p>
<p>Further, the benchmark in an EIS directly defines the emissions intensity of the grid and its change over time. Not so for the benchmark in a LET. A LET will also require assumptions about future electricity demand in setting the total amount of credits that should be purchased – and bear in mind that the estimates used to calibrate the RET were wildly off the mark. </p>
<p>What’s more, an EIS might present a chance to circumvent the various special rules and exemptions that exist in the RET, and which might be carried over to the LET. </p>
<h1>Politics vs economics</h1>
<p>Neither a LET nor an EIS provides revenue to government. Since the <a href="https://theconversation.com/carbon-tax-axed-how-it-affects-you-australia-and-our-emissions-28895">demise of Australia’s previous carbon price</a> this has often been considered desirable politically, as it avoids the connotations of “carbon tax”. But economically and fiscally it is a missed opportunity. </p>
<p>Globally, most emissions trading schemes generate revenue that can be used to cut other taxes, help low-income households, or pay for clean energy research and infrastructure. </p>
<p>An economically efficient system should make carbon-based electricity more expensive, which encourages energy consumers to invest in energy-saving technology. Both a LET and an EIS purposefully minimise this effect, and thus miss out on a key factor: energy efficiency. </p>
<h2>Ambition and confidence</h2>
<p>More important than the choice of mechanism is the level of ambition and the political durability of the policy. </p>
<p>Bringing emissions into line with the <a href="https://theconversation.com/the-paris-climate-agreement-at-a-glance-50465">Paris climate goals</a> will require fundamental restructuring of Australia’s power supply. Coal would need to be replaced well before the end of the lifetime of the current plants, probably mostly with renewables. </p>
<p>To prompt large-scale investment in low-carbon electricity, we need a reliable policy framework with a genuine and lasting objective to reduce emissions. And investors need confidence that the NEM will be governed by rules that facilitate this transition. </p>
<p>Of any policy mechanism, investors will ask the hard questions: what will be its actual ambition and effects? Would the scheme survive a change in prime minister or government? Would it stand up to industry lobbying? Investor confidence requires a level of predictability of policy. </p>
<p>If a LET were supported by the government and acceptable to the Coalition backbench, and if the Labor opposition could see it as a building block of its climate policy platform, then the LET might be a workable second best, even if there are better options. Over the longer term, it could be rolled into a more comprehensive and efficient climate policy framework.</p><img src="https://counter.theconversation.com/content/78927/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo has received research funding from various organisations including the ARC and Australian government. </span></em></p>The Finkel Review looks likely to recommend a “low emissions target”, which would award credits to cleaner energy sources, much like the current Renewable Energy Target.Frank Jotzo, Director, Centre for Climate Economics and Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.