Carbon footprint & carbon trading for dummies Jørund Buen, Point Carbon & Johan Pettersen, MiSA
About us Point Carbon Provides trading analytics, research, news, conferences and advisory services to carbon, power and gas markets globally MiSA Develops tools and services for strategic environmental management in private industry, organisations and the public sector
How do carbon markets look today? Kyoto Protocol United States Developing Countries = no targets Industrialized Countries = binding targets Federal C&T? Kerry-Boxer Waxman- Markey Other congressional proposals Regional Programs RGGI WCI MGGA Voluntary Markets Clean Development Mechanism (CDM) Domestic C&T programs EU ETS Canada Australia Japan New Zealand Joint Implementation (JI) C&T = Cap-and-Trade Program CDM = Offset-based program
Carbon allowance trading: The basic principle Company 1 Sector 1 Country 1 Continent 1 Company 2 Sector 2 Country 2 Continent 2 Combined P 1 Reduced cost Increased + = profit P C P 2 Q Q 2Q Source: William Blyth, London School of Economics
Carbon offset credit trading: The basic principle An offset project is additional if GHG emissions are reduced below those that would have occurred in the absence of the project Abatement project BAU baseline emissions Additional emission reductions With project emissions Year
Carbon trading: Volumes and values The global carbon market saw 8.2 billion tonnes of CO2 equivalents change hands in 2009 Up 68 percent on 2008 Value of the transactions estimated at 94bn EU ETS: 5.6 Gt CO2e traded, total value 72bn CDM: 1.6 Gt CO2e traded, total value 17bn Regional Greenhouse Gas Initiative (USA): 765 Mt CO2e traded, total value 1.7bn
Voluntary market 1. Pre-compliance 1. Utilities (US) 2. Aviation (Europe) 2. Offsetting often based on carbon footprint calculations 1. Large corporates (industry, financial, retail) 2. Governments 3. Individuals Most volume sold by developers through bilateral contracts Prices are lower than CER prices ( 2-10) Several VER standards Reputational risk: Environmental integrity of standards vary
Carbon Footprint of Point Carbon Greenhouse gas account for = Own emissions, from energy, vehicles + Emissions in production of products and services used Point Carbon 200 employees 40 M Nok in purchases in 2009 No direct emissions Sells non-physical products
How? Point Carbon accounts system Klimakost, a comprehensive GHG model for the economy (56 sectors) Standardised approach, simple and comprehensive Allows split on CF for departments, office locations, and functions Presents carbon footprint per purchase, and per emission source
Carbon Footprint of recycling sector Split on purchase
Conclusions The Kyoto Protocol has defined a price for carbon emissions The carbon market will be one of the world s largest commodity markets The voluntary segment of this market is also growing, partly based on carbon footprint calculations of products or organisations CF differs from extended producer responsibility in that it goes upstream Responds to increasing need to document carbon neutrality claims Increasing understanding of the importance of value chain (indirect) emissions, and the role of the service sector
Feel free to contact us Jørund: jb@pointcarbon.com Johan: johan@misa.no