Tag Archives: climate change

Better than Nothing: the Forests Bond

Kasigau Rangers. Image from http://www.coderedd.org/redd-project/wildlife-works-carbon-kasigau-corridor/#.WBoE4vkrLIU

Launched on November 1, 2016, the Forests Bond will provide investors the opportunity to invest in a traditional financial product that offers the unique option of receiving interest payments in the form of environmental impact — in this case, verified carbon credits generated through REDD, an initiative that rewards landholders for protecting forests, thereby reducing carbon emissions that worsen climate change. The development of the bond is a collaboration of the International Finance Corporation (IFC), a member of the World Bank Group, and BHP Billiton with technical support from Baker & McKenzie and Conservation International (CI).

REDD (short for Reducing Emissions from Deforestation and forest Degradation), which offers financial incentives to landholders in tropical countries to keep their forests standing, has met with mixed success since its launch in 2005, in part because the lack of a carbon market left it dependent on voluntary action and bereft of the certainty needed to attract private funding.

“If you look at the scale of the problem, roughly US$ 100 billion to 300 billion needed to cut deforestation by half over the next decade, it’s clear that we need to mobilize private institutional investors, who control vastly greater amounts than public or philanthropic aid can deliver,” said Agustin Silvani, Conservation International’s vice president of conservation finance. “The REDD mechanism has mostly excluded them because it required specific carbon expertise or a specific interest in forests to engage with it.”

The Forests Bond supports a REDD project in Kenya, and investors can choose between a cash or carbon credit coupon (the interest received from the bond), or a combination of both. This unique element of the bond is made possible by the price support that BHP Billiton**is providing, which means that investors can either 1) elect to take the carbon credits to offset corporate greenhouse gas emissions or 2) sell them on the carbon market, or 3) take a traditional financial return instead. This provides the certainty needed to attract institutional investors while still generating verified reductions in deforestation, in the form of REDD credits…

The REDD project that the Forests Bond will support takes place in the Kasigau Corridor in eastern Kenya….Forest protection activities include forest and biodiversity monitoring, funding for community wildlife scouts, forest patrols, social monitoring and carbon inventory monitoring. Community development activities include reforestation of Mount Kasigau; establishment of an eco-charcoal production facility; support to community-based organizations; and expanding an organic clothing facility.

The bond is listed on the London Stock Exchange and has raised US$152 million from institutional investors.

**BHP Billiton is providing a price support mechanism of US$12 million that ensures that the project can sell a pre-defined minimum quantity of carbon credits every year until the Bond matures, whether or not investors in the Bond elect to receive carbon credit coupons.

Excerpt from Bruno Vander Velde  New bond aims to unlock private investment to protect forest, Reuters, Nov. 1, 2016 and BHP Billiton and IFC collaborate on new Forests Bond, Press Release of BHP Billiton, Nov. 1, 2016

Cooling Down: The Montreal Protocol at 2016

In 1974 scientists discovered that chlorofluorocarbons (CFCs), chemicals used in refrigeration and as propellants in products such as hairsprays, release chlorine into the stratosphere as they decompose. This depletes the ozone that protects Earth from ultraviolet radiation. CFCs are also powerful greenhouse gases, which absorb solar radiation reflected back from the planet’s surface and so trap heat in the atmosphere.

Initially, the consequences for the ozone layer caused most concern. In 1985 a gaping hole in it was found above Antarctica. Two years later, leaders from around the world acted decisively. They signed a deal, the Montreal protocol, to phase out CFCs. Now ratified by 197 countries, it has prevented the equivalent of more than 135 billion tonnes of carbon-dioxide emissions, and averted complete collapse of the ozone layer by the middle of the century. Instead, by that point the ozone hole may even have closed up….

In order to manage without CFCs, firms replaced them in applications such as refrigeration, air-conditioning and insulation with man-made hydrofluorocarbons (HFCs). These substances do not deplete ozone and last in the atmosphere for just a short time. However, they still contribute hugely to global warming.  The average atmospheric lifetime for most commercially used HFCs is 15 years or less; carbon dioxide can stay in the atmosphere for more than 500 years. But, like CFCs, HFCs cause a greenhouse effect between hundreds and thousands of times as powerful as carbon dioxide while they linger. Total emissions are still relatively low, but are rising by 7-15% a year. Controlling HFC emissions has been under discussion for the past decade; America and China, the world’s two biggest polluters, made a deal on the issue in 2013, which paved the way for co-operation on limiting carbon emissions ahead of UN-sponsored climate talks in Paris last year. There leaders agreed to keep warming “well below” levels expected to be catastrophic.

Average global temperatures are already 1°C higher than in pre-industrial times….America wants action on HFCs speedy enough that emissions will peak in 2021 and then start to fall; after recent talks in Hangzhou between Mr Obama and Mr Xi China may be ready to commit to reaching that point by 2023. Brazil, Indonesia and Malaysia lean towards 2025, and India has lobbied for a later date, closer to 2030.

Some sectors firms are already preparing to move away from HFCs: in 2015 the Consumer Goods Forum, an international industry group whose members include Walmart and Tesco, began enacting a plan to phase out the substances.

A big question is what to use instead….Some HFCs commonly used in refrigeration could be replaced by others that would have an impact more than 1,000 times smaller. Honeywell, an electronics giant, already makes these less-damaging alternatives. But patents covering such substances have been a sticking point in past discussions, says Achim Steiner, until recently the head of the UN Environment Programme….Other possible replacements include isobutane, propane and propylene, all of which occur naturally. These hydrocarbons are cheap and non-toxic, and can be used as coolants without the same harm to the ozone layer….

Excerpts from The Montreal protocol: To coldly go, Economist, Sept. 24, 2016,at 58

Water and Money: the case of Tasmania

knyvet_falls_tasmania

Australia is the world’s driest continent. Climate change is expected to make its droughts even more frequent. The country is still paying for years of overexploitation of its biggest river system, the Murray-Darling basin. The federal government in Canberra is spending A$3.2 billion ($2.2 billion) buying up and cancelling farmers’ water entitlements in a bid to reduce salinity and repair other environmental damage stretching back a century.

While mainland farmers are being paid to give up water, those in wetter Tasmania are being enticed to buy more. The island state accounts for just 1% of Australia’s land mass and 2% of its population. Yet it receives 13% of the country’s rainfall. Tasmania may be blessed with water, but most of it falls in the mountains of the west, making it useless to farmers elsewhere.

So the island has embarked on a project to capture more water for its drier east and north, shifting it through pipes to these regions’ farms. Almost 800 farmers have already bought into ten irrigation schemes that are up and running. They will allow farmers to do more than graze sheep and cattle; they will be able to grow fruit and vegetables, including more of Tasmania’s exotic stuff: cherries, grapes for the island’s increasingly fashionable wines and even poppies (the island is a big opium supplier for legitimate pharmaceuticals).

If another five planned schemes involving 200 farmers go ahead, Tasmania’s investment in shifting its water around the island will be almost A$1 billion. The federal and Tasmanian governments are putting up some of the money. But that comes with conditions. Farmers and other investors must first agree to meet at least two-thirds of the costs of each irrigation project before governments commit the rest….

Tasmania’s new water market has already been kind to one of its biggest investors. David Williams, a Melbourne banker, owns no Tasmanian farms. But he put A$10m into two central Tasmania irrigation schemes after local farmers had bought in. Mr Williams likens the arrival of reliable water in such regions to technological change: “I punted that it would change the way land is used.” He calculates that trading his water entitlement with farmers in both schemes could turn his investment into A$16m….

Among the foreign tourists coming to sample Tasmanian Riesling, oysters and marbled beef are plenty of Chinese. When China’s president, Xi Jinping, visited Hobart in late 2014, he sent signals that China wanted more seafood, beef and other costlier food exports from Tasmania.

Excerpts from Tasmania charts a new course: Water into wine, Economist, Feb. 11, 2016

Burning Up

bottled water. image from wikipedia

Considered as the “white gold” –as opposed to the “black gold”—oil, water scarcity has become one of the major concerns of Bahrain in spite of the fact that it has a high Human Development Index and was recognized by the World Bank as a high-income economy.  It’s Gross Domestic Product (GDP) per capita amounts to 29,140 US Dollars. And it is home to the headquarters for the United States Naval Forces Central Command/United States Fifth Fleet.

All the above does not suffice to make Bahrainis happy. In fact, their country leads the list of 14 out of the 33 countries most likely to be water-stressed in 2040 –all of them situated in the Middle East– including nine considered extremely highly stressed according to the World Resources Institute (WRI).  After Bahrain comes Kuwait, Lebanon, Palestine, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.  Other Middle East Arab countries more or less share with Bahrain this front line position of water-stressed states. These are Algeria, Iraq, Jordan, Libya, Morocco, Syria, Tunisia and Yemen. All of them hold a very close second position in the region’ s water-stress ranking. The total represents two thirds of the 22 Arab countries. Not that the remaining Arab states are water-safe. Not at all: Mauritania, in the far Maghreb West, and Egypt, at the opposite end, are already under heavy threat as well.

The whole region, already arguably the least water-secure in the world, draws heavily on groundwater and desalinated sea water, and faces exceptional water-related challenges for the foreseeable future, says the WRI’s report: Ranking the World’s Most Water-Stressed Countries in 2040. The report’s authors Andrew Maddocks, Robert Samuel Young and Paul Reig foresee that world’s demand for water, including of course the Middle East, is likely to surge in the next few decades…This comes at a time when the Arab region has not taken advantage of its water resources of about 340 billion cubic meters, using only 50 per cent. The rest is lost and wasted.

Regarding the North of Africa, the Egyptian Ministry for Environment has recently admitted that large extensions of the country’s Northern area of the Nile Delta, which represents the most important and extensive agricultural region in Egypt, is already heavily exposed to two dangerous effects: salinasation and flooding. This is due to the rise of the Mediterranean Sea water levels and the land depression.

The impact of global warming and growing heat waves is particularly worrying the Egyptian authorities as it might reduce the flow of the Nile water in up to 80 per cent according to latest estimates

Excerpts from Baher Kamal, Climate Change and the Middle East (II), No Water in the Kingdom of the Two Seas—Nor Elsewhere, IPS, Apr. 18, 2016

Climate Change–procrastinators and their victims

KIRIBATI. image from http://climatechange.dreamhosters.com/_old/CAUSES-EFFECTS/KIRIBATI.jpg

Global carbon emissions were 58% higher in 2012 than they were in 1990. The atmospheric concentration of carbon dioxide has risen from just under 340 parts per million in 1980 to 400 in 2015.  To stand a fair chance of keeping warming to just 2°C by the end of the century—the goal of global climate policy—cumulative carbon emissions caused by humans must be kept under 1 trillion tonnes. Estimates vary but, according to the Intergovernmental Panel on Climate Change, the total had hit 515 billion tonnes by 2011. Climate Interactive, a research outfit, reckons that if emissions continue on their present course around 140 billion tonnes of greenhouse gases will be released each year and temperatures could rise by 4.5°C by 2100. And even if countries fully honour their recent pledges, temperatures may still increase by 3.5°C by then.

The world is already 0.75°C warmer than before the Industrial Revolution….

Melting glacier ice, and the fact that warmer water has a larger volume, mean higher sea levels: they have already risen by roughly 20cm since 1880 and could rise another metre by 2100. That is perilous for low-lying islands and flat countries: the government of Kiribati, a cluster of tropical islands, has bought land in Fiji to move residents to in case of flooding. Giza Gaspar Martins, a diplomat from Angola who leads the world’s poorest countries in the climate talks, points out that they are particularly vulnerable to the effects of a warming planet. Money alone, he argues, will not fix their problems. Without steps to reduce emissions, he predicts, “there will be nothing left to adapt for.”…

For every 0.6°C rise in temperature, the atmosphere’s capacity to hold water grows by 4%, meaning storms will pour forth with greater abandon. The rains of the Indian monsoon could therefore intensify, cutting yields of cereals and pulses.

Climate change seems also to be making dry places drier, killing crops and turning forests into kindling. Forest fires in Indonesia, more likely thanks to the current El Niño weather phenomenon, could release 2 billion tonnes of carbon dioxide, about 5% of annual emissions due to human activity, says Simon Lewis of University College London. In recent months fires have swallowed more than 2.4m hectares of American forests. Alaska suffered 80% of the damage—a particular problem because the soot released in these blazes darkens the ice, making it less able to reflect solar radiation away from the Earth.

Developments in the Arctic are worrying for other reasons, too. The region is warming twice as fast as the rest of the world, a trend that could start a vicious cycle. Around 1,700 gigatonnes of carbon are held in permafrost soils as frozen organic matter. If they thaw, vast amounts of methane, which is 25 times more powerful as a global-warming gas than carbon dioxide when measured over a century, will be released. One hypothesis suggests that self-reinforcing feedback between permafrost emissions and Arctic warming caused disaster before: 55m years ago temperatures jumped by 5°C in a few thousand years…

And on September 29th Mark Carney, the governor of the Bank of England, warned that though measures to avoid catastrophic climate change are essential, not least for long-term financial stability, in the shorter term they could cause investors huge losses by making reserves of oil, coal and gas “literally unburnable”.

Excerpts from Climate Change: It’s Getting Hotter, Economst, Oct. 3, 2015, at 63

 

Weather Modification in China

A Dry River in China, Image from wikipedia

China aims to induce more than 60 billion cubic metres of additional rain each year by 2020, using an “artificial weather” programme to fight chronic water shortages…China’s water resources are among the world’s lowest, standing at 2,100 cubic metres per person, or just 28 per cent of the world average. Shortages are particularly severe in the country’s northeast and northwest.

China has already allocated funds of 6.51 billion yuan (S$1.45 billion) for artificial weather creation since 2008, the State Council, or cabinet, said in a document setting out the programme from 2014 to 2020. “Weather modification has an important role to play in easing water shortages, reducing natural disasters, protecting ecology and even safeguarding important events,” it added.  The figure of 60 billion cu.m is equivalent to more than one-and-a-half times the volume of the Three Gorges reservoir, part of the world’s largest hydropower plant.

China sets 2020 “artificial weather” target to combat water shortages, Reuters, Jan. 13, 2015

Weather Modification in India

weather

State governments, tea estate owners, politicians and even some insurance companies are exploring cloud-seeding options. The process involves seeding clouds with chemicals that will lead them to promote precipitation or rain. (The process is also used to boost snowfall and curb hailstones and fog.)  [Indian] companies involved in cloud seeding such as Myavani, Kyathi Climate Modification Consultants [affiliated  with US based Weather Modification Inc.]and Agni Aero Sports expect business to grow as much as a fourth this year over 2012, when the country last saw weak rains.

Bangalore-based Agni Aero Academy, which has been involved in cloud seeding in India since 2003 and undertook cloud-seeding projects for MCGM [Municipal Corporation of Greater Mumbai]  in 2009 and the Karnataka government in 2012, expects a pickup in business.

Girish Odugoudar, 33, of Myavani, which has jointly bid for the Mumbai project along with US National Centre for Atmospheric Research, is aiming to establish his business. “We have the infrastructure and capability and success in one project should open many doors,” he said.

Excerpts, Madhvi Sally, Artificial rainfall: Cloud seeding companies may play rainmakers
Madhvi Sally, the Economic Times of India, July 23, 2014,

Tar Sands from Canada to Europe

dirty deals

Canada and the US have threatened to pull out of TTIP [Transatlantic Trade and Investment Partnership] trade talks unless the EU ignores the massive emissions of oil from tar sands – and the EU is collapsing under the pressure…For five long years the federal government and the oil industry have lobbied against the European Union labeling oilsands (also called tar sands) bitumen as ‘dirty oil’ in its Fuel Quality Directive (FQD).  A new report [authored by environmental groups] reveals the how recent involvement of the US in the lobby offensive to keep the EU market open for bitumen exports has tipped the scales in favour of oilsands proponents….

The report shows the EU Fuel Quality Directive, a piece of legislation designed to reduce global warming greenhouse gas (GHG) emissions in the EU’s transportation sector, is unlikely to acknowledge fuels from different sources of oil – conventional oil, oilsands, oil shale – have different carbon footprints.  All oil is the same – no matter how great the disparity in emissions  Instead all oils will more than likely be treated as having the same GHG emissions intensity ‘value’ in the Directive. This is exactly what Canada, the oil industry and now the US have been pushing for…

The EU has not fallen for the federal government’s argument that bitumen produces only marginally more GHG emissions than conventional oil in extraction, processing, and use.  A European Commission study found bitumen’s carbon footprint is between 12% – 40% higher than conventional oil as so much of the bitumen produced from the tar sands is burnt to fuel the energy-intensive extraction process.  The report reveals trade, not science, is the cause of the EU backing off from implementing the Fuel Quality Directive as it was originally meant to be implemented.

The US in some ways has been more open [than Canada] about its lobbying against the Fuel Quality Directive.  US Trade Representative Michael Froman confirmed he “raised these issues [of the FQD implementation] with senior Commission officials on several occasions, including in the context of the Transatlantic Trade and Investment Partnerships (TTIP).” The TTIP is the highly controversial trade agreement between the US and the EU currently under negotiation.  European Commission documents obtained by Friends of the Earth Europe reveal the US trade missions has “substantive concerns” with the Fuel Quality Directive singling out fuels produced from bitumen as having a higher carbon footprint than conventional oil.    Like Canada and the oil industry, the US wants all oil – regardless of GHG emissions – to be treated the same as conventional oil in the Directive…Recently eleven members of US Congress sent a letter to the US trade mission expressing their concerns “that official US trade negotiations could undercut the EU’s commendable efforts to reduce carbon pollution.”

Excerpts, Derek LeahyIgnore tar sands emissions! EU buckles under US, Canada pressure in TTIP talks, Ecologist, July 23, 2014

Un-addicted to Coal? United States

U.S._2013_Electricity_Generation_By_Type_crop

The U.S. Environmental Protection Agency [released on June 2, 2014}the Clean Power Plan proposal, which for the first time cuts carbon pollution from existing power plants, the single largest source of carbon pollution in the United States…

Power plants account for roughly one-third of all domestic greenhouse gas emissions in the United States. While there are limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides, and particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels.

[Goals to be achieved by 2030]

· Cut carbon emission from the power sector by 30 percent nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year;

· Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25 percent as a co-benefit;

· Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days—providing up to $93 billion in climate and public health benefits;

and
· Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.

The Clean Power Plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans.

Also included in today’s proposal is a flexible timeline for states to follow for submitting plans to the agency—with plans due in June 2016, with the option to use a two-step process for submitting final plans if more time is needed. States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal.

Excerpt, EPA Proposes First Guidelines to Cut Carbon Pollution from Existing Power Plants/Clean Power Plan is flexible proposal to ensure a healthier environment, spur innovation and strengthen the economy, US EPA Press Release, June 2, 2014

What is the Cost of Carbon? the price of carbon in 2013

carbon social costs

The market price of carbon is €4.90 ($6.70) per tonne of CO2 in the EU, $11.50 in California. Big oil companies charge $34 or more. That is closer to the “social cost of carbon”—the damage from an extra tonne of CO2—than to the market price. America’s administration recently estimated the social cost at $37 a tonne. These prices change behaviour. A huge amount of attention is paid to government action. But the sort of carbon price some companies are using for planning would, if it became a market price, have a much bigger impact than any of the policies that governments are now talking about.

Companies and Emissions: Carbon Copy, Economist, Dec. 14, 2013, at 70