EDF Talks Global Climate

New study shows “double counting” of emissions reductions outside NDCs a bigger risk than previously thought

Air pollution in Toronto. Photo credit: Flickr/ United Nations Photo.

Delegates and advisors meeting in Bonn, Germany are hard at work hammering out the fine print for the Paris Agreement Rulebook, and a particular focus has been placed on deciding how Articles 4 and 6 will play out as the agreement comes into force.

These two articles are important because they outline rules to ensure environmental integrity in emissions reductions, particularly when nations are cooperating with others to cut emissions together, likely through international trading. Trading is an important tool in the effort to limit temperature rise, as it can lower the overall cost of reducing emissions, potentially increasing the ambition of the world’s greenhouse gas targets.

Nonetheless, having a strong standard in place to ensure that all trades of emissions reductions are high-quality and transparent is important to prevent “double counting” or “double claiming.”  This refers to a situation where emissions are reduced in one nation, traded to another to offset emissions increases, but are still claimed by the issuing nation when reporting on their own emissions cuts.  If the Article 6 rulebook were to allow such double claiming, it would make it seem like we are getting twice as many emissions reductions as actually happen – and that would be bad news for the climate.

While Articles 4 and 6 have text to help prevent that, their focus on sectors that are covered within each nation’s “Nationally Determined Contribution” (NDC) has led some to suggest that double claiming need not be a concern if it occurs for reductions outside NDCs. Nonetheless, other provisions of the Paris Agreement, like Article 13, require Parties to develop a transparent accounting framework to track how their efforts are contributing to the goal of limiting warming to well below 2 degrees Celsius—which could very well apply to reductions in non-NDC sectors too.

In that context, it is important to consider the question: What share of the world’s emissions occurs outside of NDC coverage?  Even if emissions are covered under NDCs, are there certain types of NDC targets that still leave covered emissions vulnerable to double counting? How should the rulebook best account for this risk, given the Paris Agreement’s pre-existing integrity requirements?

EDF set out to answer these questions with a preliminary analysis to assess the overall share of the world’s emissions that are at risk of double counting—and we found it could be over a third of the world’s total emissions. That’s about as many emissions as from China and the US put together.

The study is a two-part process. First, we interpreted NDCs using a standardized classification system that determined what share of each nation’s emissions could reasonably be considered “covered” under their NDC.

Second, we crafted four different scenarios that assessed the risk profile of different shares of the world’s emissions, based on a set of assumptions that ranged from optimistic to conservative. In our scenarios, we vary the types of NDC targets that can be considered stringent enough to ensure that emissions covered under their scope will not be double counted.  In our category 1 scenarios, all target types are eligible; in the category 2 scenarios, only mitigation targets with a quantifiable cap on emissions are considered.

China and India also have assumptions that differ across scenarios. They are treated separately from other large emitters due to the fact that their mitigation targets are intensity-based (measured relative to units of GDP), rather than compared to a base year or baseline scenario level of emissions.

In all scenarios, the share of the world’s emissions at high risk of double counting was substantial. Even in the most generous scenario where all types of NDC mitigation targets were considered to entail low risks of double counting, we found that 6.5% of the world’s yearly emissions were at high risk of double counting—more than all of India’s emissions put together.  Our most conservative scenario painted a much starker picture, with about a third of the world’s emissions considered at high risk of double counting.

The estimated share of world emissions that could be at high risk of double counting rises even higher if only parties to the Paris agreement are taken into account.  According to our estimates, nations who are not Parties account for about 5 gigatons of greenhouse gas emissions (that’s about 10% of world totals).  If we assume these emissions are also at high risk of double counting, given the fact that they don’t benefit from the same standards placed upon emissions exchanges as those that are governed by the Paris Agreement, the total volume of high risk emissions could range as high as 39.5% of world emissions.

In reality, emissions reductions are only at risk of being double counted if there is demand for them, and international emissions markets are still at a nascent stage. Still, coming years could bring a spike in demand for carbon credits—nearly half of the world’s nations have expressed interest in using either domestic or international market mechanisms to meet their NDC goals, and the scope of carbon markets is rising worldwide.

With more opportunities to benefit from carbon trading comes a greater incentive to double count—but only in the absence of high quality standards on such exchanges. These results indicate that the stakes are high, and parties should take every effort to ensure that double counting risk is proactively taken into account, both within and outside of NDCs, when designing the rules that nations will abide by for years to come.

This post was updated on May 16 to add a reference in the second paragraph to an analysis about the potential for emissions trading to reduce emissions and increase ambition, as well as an updated headline.

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“Fiji-on-the-Rhine”: Four things to expect from the COP 23 UN climate talks

By Alex Hanafi, Senior Manager, Multilateral Climate Strategy and Senior Attorney, and Soren Dudley, Program Assistant, Global Climate

A confluence of factors sets the stage for what to expect from this year's climate meetings, the first since the U.S. announced its plans to withdraw from the Paris Agreement. Above: The Bula Zone at the UNFCCC headquarters in Bonn. Photo: UNFCCC/ Flickr.

The first UN climate talks since the United States announced its plans to withdraw from the Paris Agreement start this week in Bonn, Germany. Chaired by the island nation of Fiji, the meetings are the second-to-last Conference of the Parties (COP) before the Paris Agreement’s implementation “rulebook” is scheduled to be finalized in Poland next year.

This confluence of factors – Fiji’s presidency of the COP, President Trump’s announcement (and the ensuing groundswell of domestic and global support for the Paris Agreement), and the need to advance progress on the technical details of the Paris Agreement’s infrastructure – sets the stage for what to expect from this year’s climate meetings.

1. Islands’ COP, islands’ issues

As the President of the 23rd meeting of the COP, Fiji will aim to highlight both the needs of vulnerable parties as well as island nations’ climate action leadership. This year’s COP presents an opportunity to spotlight necessary adaptation to a changing climate, as well as the loss and damage experienced by islands due to the impacts of climate change. These concerns are especially important to low-lying island nations because their very existence is threatened by the rising sea levels triggered by climate change.

Many island nations, Fiji among them, have made ambitious renewable energy pledges central to their participation in the Paris Agreement. Leadership by small island developing states will shine an even brighter spotlight on the Trump Administration’s retreat from climate action.

2. Trump’s intention to withdraw the U.S. from the Paris Agreement isolates the U.S…. and triggers a groundswell of support for the Paris Agreement

President Trump’s June 1 announcement that the US intends to pull out of the Paris Agreement left the U.S. isolated. This isolation became even starker with the recent news that Nicaragua will join the Paris Agreement, leaving the U.S. and Syria the only two nations in the world refusing to join.

Although the Trump Administration has been working to roll back existing federal climate policies and will continue to do so, its initial efforts have encountered delays and legal setbacks.  The Administration has yet to successfully suspend, weaken, or repeal a major climate protection

While the U.S. government attempts to backtrack on common-sense efforts to reduce U.S. climate pollution, nations around the world are already taking concrete steps to meet their Paris pledges. Perhaps most notably, China plans to roll out a national carbon market in the coming weeks, demonstrating China’s continuing commitment to climate action. China is now increasingly seen as filling the leadership void left by the U.S. With news of recent trilateral climate meetings between China, the EU, and Canada, COP 23 offers the first chance for a this potentially powerful alliance to prove itself as a force for accelerating the transition to the clean-energy, low-carbon economies of the future.

3. U.S. subnational actors show commitment on the global stage

In direct contrast to Trump’s announced pull-out, U.S. subnational actors are eager to communicate to the global community that they are still committed to moving ahead despite federal backsliding. American businesses and state-level officials plan to use COP 23 to showcase concrete examples of their continued climate leadership. Notably, several U.S. governors, including those from California, Virginia, Washington, and New York, will attend to demonstrate the depth and breadth of U.S. state-level action.

4. Negotiations and progress on the Paris Agreement Rulebook

This COP will be important for keeping the ship sailing in the right direction on implementing the Paris Agreement. Countries decided last year that they will finalize the nuts and bolts of the Paris Agreement’s implementing infrastructure (its “rulebook”) by COP 24 in Poland in December 2018. Parties have a long list of tasks to complete, and negotiations on key tools Parties can use to cooperate in driving down climate pollution, like carbon markets, are moving slowly.

While agreement among all Parties on these carbon market standards is not necessary before “bottom up” cooperation on carbon markets may begin, up-front clarity on key issues (like how Parties can avoid “double counting” of emissions reductions) can reduce uncertainty and help catalyze additional investment in high-integrity emissions reductions around the globe.

This will be an important COP to watch for signs of how much work will remain for next year, and how likely it is that countries will stick to their tight timeline for delivering an effective roadmap to guide Parties in achieving the goals of the Paris Agreement.

This post was updated Nov. 5 with more detail in #2.

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Western Climate Initiative expands: Ontario to join California-Québec carbon market

Quebec Premier Philippe Couillard, second from left, pictured in 2015 joining the Under2 Coalition, a first-of-its-kind agreement among states and provinces around the world to limit the increase in global average temperature to below 2 degrees Celsius – the warming threshold at which scientists say there will likely be catastrophic climate disruptions. Photo: Jenna Muirhead via Office of Governor Edmund G. Brown Jr.

en español  |  This morning California, Québec, and Ontario signed a linking agreement that officially welcomes Ontario into the Western Climate Initiative (WCI) cap-and-trade market.

The announcement came after an inspiring Climate Week in New York where states, businesses, and individuals showed that despite Washington D.C going backwards, the U.S. will continue to make progress on our commitment to help avert catastrophic climate change. This linkage announcement provides a concrete example of how motivated governments can work together and accomplish more through partnership than they could apart.

Why linkage matters

The agreement will allow participants from all three locations to use carbon “allowances” issued by any of the three governments interchangeably and to hold joint carbon auctions.

This full linkage can have a number of benefits.

  1. The concrete benefits that economists often point to include “liquidity” from a larger market, meaning that if participants need to purchase or want to sell an allowance, it is easier to find a trading partner.
  2. There are also significant administrative benefits to joining an existing market and to working together, including sharing the administration of auctions.
  3. A larger market can also provide access to lower cost reduction opportunities, which lower the overall cost of compliance for the whole market, allowing governments to maintain and strengthen the ambition of their commitments.
  4. The less tangible benefits of having partners that are equally committed to addressing the challenge of climate change can’t be ignored. California may not have a willing climate partner in Washington D.C. but the state is finding the partners it needs in Québec and Ontario and together they can prove that cap and trade provides an effective model for international collaboration and a cost-effective way to keep harmful climate pollution at acceptable levels.

Choosing the right partners

To ensure any carbon market linkage is strong, partners must be carefully selected by evaluating the compatibility of each program. California, Québec, and Ontario started this process early by working together (along with several other states and provinces) in 2009 to develop best practices for establishing cap-and-trade programs.

This carbon club model is one that EDF has identified as a powerful potential driver of climate action

When full linkage is being considered, one of the most important threshold questions is how ambitious each potential partner’s cap is; the cap is the key feature of each program that ensures the environmental goals of each government are met, and a weak cap would impact all participants. Ontario, California and Québec have all cemented into law ambitious and world-leading climate targets for 2020 and 2030. Beyond that, there are some design elements which should be aligned among all programs and others that can differ and outlining these parameters is a negotiation among participants.

Ontario is demonstrating that the WCI carbon market model is an accessible one for ambitious governments to consider joining. This carbon club model is one that EDF has identified as a powerful potential driver of climate action. Hopefully other states and provinces will take Ontario’s lead. Here are some locations to watch:

  • Several Canadian provinces are actively developing cap-and-trade programs that could link with WCI one day.
  • State legislators in Oregon may have a chance to vote during their short session in early 2018 on a “cap and invest” program that is being designed with WCI linkage in mind.
  • Momentum on carbon markets is also growing elsewhere in the Americas. Mexico is in the process of developing its own national emission trading system and has expressed an interest in linking such a system with the California-Québec-Ontario market.
  • And just this past June, in the Cali Declaration, the heads of state of the Pacific Alliance countries of Mexico, Colombia, Chile, and Peru embraced the vision of a voluntary regional carbon market in agreeing to strengthen monitoring, reporting, and verification frameworks for greenhouse gas emissions.

California, Québec and Ontario are creating a model for action that is ripe for others to adopt as is or adapt as needed. This type of bottom-up partnership that matures into real and ambitious collective action is the future of international climate policy.

 

Note: More details on the linkage concepts discussed in this blog can be found in chapter 9 of the EDF co-authored report Emissions Trading in Practice: A Handbook on Design and Implementation.

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Is Brazil stepping back from environmental leadership, just when it’s needed the most?

Michel Temer in April 2016. Credit: Fabio Rodrigues-Pozzebom/ Agencia Brasil via Wikimedia Commons.

Every conversation I have with my Brazilian friends and colleagues these days starts off with a discussion of whose political crisis is worse. It’s a hard question. But Brazil’s President Temer has the chance to show a little real leadership June 19th if he decides to veto a blatant giveaway of a large swath of protected Amazon forest to land grabbers and environmental lawbreakers.

U.S. and Brazilian presidents: The 19th-century take on development and the environment

Wildly unpopular U.S. President Trump was elected by maybe a third of eligible voters, with a substantial minority of votes cast. He is doing everything he and his staff can think of to roll back environmental protections in the United States and stymie progress on climate change globally. His ill-conceived scheme to pull the United States out the Paris Agreement would have us abdicate international leadership and surrender the enormous economic opportunity of the new, renewable, energy economy to China and other competitors.

Wildly unpopular Brazilian President Temer was put in power by an even more wildly unpopular Congress in an ultimately failed bid to shut down judicial investigations that are sending herds of them, and their business associates, to jail for massive graft and corruption. He (and his predecessor, who mismanaged the economy into the worst recession in Brazil’s modern history) has totally dropped the ball on controlling Amazon deforestation, which, in the absence of budget for enforcement has increased for two years running for the first time since 2004.

Brazil’s Amazon at risk

Since the weight of corruption scandals Temer is personally implicated in has him clinging to power by his fingernails, the yahoos in the “rural caucus” of the Congress (the voting bloc of big ranchers’ and agribusiness’ representatives) are taking the opportunity to run hog-wild with proposals to gut forest protections and roll back indigenous territories – two of the major reasons why Brazil became the world leader in reducing greenhouse gas emissions by decreasing deforestation by about 80% from 2004–2014.

By June 19th, Temer has to decide whether to veto measures that would deliver 600,000 hectares in an Amazon protected area to land-grabbers – and rampant deforestation. It's not just 600,000 hectares of forest at stake – caving to a flagrant play to carve up a federal conservation area to benefit slash-and-burn land grabbers is a terrible precedent for all of the Amazon protected areas.

All of this is rapidly eroding Brazil’s international climate leadership, and is bad news for the Paris Agreement. Brazil’s demonstration that a major emerging economy could reduce large-scale emissions while growing its economy and bringing millions out of poverty was a beacon of light in the climate negotiations that is dimming by the moment.

Brazil’s President Temer can show a little real leadership if he vetos a blatant giveaway of a large swath of protected Amazon forest to land grabbers and environmental lawbreakers

The abandonment of Brazil’s successful deforestation control program by President Temer and former President Dilma, if continued, will only hinder Brazil’s economic prospects in the 21st century global economy – like President Trump’s radical misreading (or ignorance) of the economic implications of the Paris Agreement for the United States. Increased deforestation will likely cause Brazil to lose market share as major commodity traders and consumer goods companies that have committed to zero-deforestation beef and soy supply chains curtail market access. Rampant violence and human rights abuses against indigenous peoples and grassroots environmental activists will expose public-facing companies to increasing reputational risk – and send them looking for lower-risk places to source.

On the other hand, support for sustainable development first movers such as Acre state and agriculture powerhouse Mato Grosso could make Brazil the go-to supplier for zero-deforestation commodities worldwide. And, as Amazon states, civil society and green business leaders have consistently advocated, if Brazil opened up to carbon market crediting for reduced deforestation in emerging international markets, it could unlock the finance needed to end deforestation in the Amazon and Brazil’s other mega-diverse biomes; make family and industrial agriculture 100% sustainable; and create sustainable prosperity in the 200 million hectares of indigenous territories and protected areas of the Amazon.

It’s hard to say whose loss is worse under U.S. and Brazil’s lamentable current policies, but maybe even harder to say whose gain would be greater if Trump and Temer would wake up and recognize the real opportunities in the 21st century economy.

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ICAO’s market-based measure could cover 80% of aviation emissions growth in mandatory phase

icao-logo The International Civil Aviation Organization (ICAO), the UN agency charged with setting standards for international flights, has set a goal of “carbon neutral growth from 2020” – i.e. capping net emissions at year-2020 levels. The ICAO Assembly today adopted a global market-based measure that lets airlines purchase high-quality emission reductions to offset the carbon growth above the cap.

Analysis of high-quality data on aviation emissions projections demonstrates the ICAO market-based measure is a critical step forward for climate action, and could prevent nearly 2.5 billion tonnes of CO2 emissions into the atmosphere over the first 15 years of the program. Here’s how.

The market-based measure provides that:

  • from 2021-2023, nations would opt in to a voluntary pilot phase;
  • from 2024-2026, nations would opt in voluntarily to another phase;
  • from 2027-2035, all nations would be required to participate, with some exceptions;
  • least developed countries, land-locked developing countries, and small island developing countries would all be exempt throughout (although these states could opt in at any time if they so choose).

What this means for ICAO’s commitment to “carbon neutral growth from 2020” depends on how many more countries decide voluntarily to opt in.

EDF has developed an interactive tool to allow users to estimate how many emissions would be covered of the billion-tonne gap between projected emissions and the 2020 cap, if various countries opt in to the MBM.

The tool provides unique calculations of the aviation sector’s emissions growth based on projections from ICAO, industry and analysts. The focus on emissions provides a direct estimate of the aviation sector’s contribution to climate change that complements analyses based on aviation’s traffic growth, measured in revenue tonne kilometers (RTKs).

Here’s the snapshot of the tool as of the adoption of the market-based measure on October 6. With Qatar and Burkina Faso becoming the 64th and 65th countries to signal their intent to participate in the MBM from the start, 65% of emissions growth above 2020 would be covered in Pilot + Phase 1, and nearly 80% (79%) of these emissions would be covered during Phase 2 of the program (2027-2035). Importantly, 77% of anticipated emissions growth above 2020 would be covered over the first fifteen years of the program.

aviation-tool-100516_2

The tool shows the importance of commitments to early participation by the Asia-Pacific aviation powerhouse states of Singapore, Japan, Korea, and Australia; the Middle Eastern aviation dynamos of United Arab Emirates and Qatar; Latin American states like Mexico, Costa Rica, Guatemala; and leading African states such as Kenya.

It also shows that as exempted states increase in their importance as aviation powers, participation by at least some of them will be significant for boosting overall coverage toward the goal of carbon-neutral growth from 2020. Consequently, it will be important for today’s leading aviation countries to help build MBM capacity in the anticipated aviation leaders of tomorrow.

A number of countries that are exempt under the resolution's formulas, including leading voices from the front lines of climate impacts – Burkina Faso, Marshall Islands, Papua New Guinea, Costa Rica, Guatemala, and Kenya – have announced their intent to participate, and more are expected to join.

After nearly two decades of effort, ICAO is providing global leadership, with both developed and developing countries taking the lead. Hand in hand with this week’s announcement about ratification of the Paris Agreement, that’s good news indeed.

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With joint action plan, US and Mexico walk the walk on energy and climate

Lea aqui la version en Español.

When President Obama joined Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto in Ottawa last month at the North American Leaders’ Summit to announce ambitious goals on climate and clean energy, EDF President Fred Krupp said that “implementing them will be the true measure of success.”

Today, the United States and Mexico took important next steps towards successful implementation, announcing new details on how the two countries will work together to:

  • curb emissions of methane, a potent greenhouse gas responsible for a quarter of today’s warming, by reducing emissions from the oil and gas sector by 40-45% by 2025;
  • expand clean energy to meet the goal of 50% electricity generation from zero-carbon sources by 2025;
  • promote residential, commercial, and industrial energy efficiency; and
  • align methodologies for estimating the social cost of carbon, a key input into understanding the benefits of reducing carbon pollution.

If the June announcements were the poetry, today’s announcements were the prose — but they are no less important for it. The work plans, workshops, technical dialogues, and regulatory processes laid out in today’s announcement are the nuts and bolts of effective governing. Just as important, the concreteness and specificity of these plans give a clear signal of the countries’ strong commitment to getting these things done.

The two countries also reaffirmed their commitment to work together in the International Civil Aviation Organization (ICAO) for the adoption of a robust market-based measure to limit emissions from international aviation, and to join the Paris Agreement and support its entry into force this year.

Today’s announcement provides yet another illustration of the growing importance of North American leadership on climate and clean energy — one of many recent bright spots in climate action.

The concreteness and specificity of these plans give a clear signal of the countries’ strong commitment to getting these things done.

And it’s not hard to see why. Canada and Mexico are two of the U.S.’s top three trading partners. By advancing together, the three countries can reap the full economic and environmental benefits of a clean energy economy, creating opportunities for clean energy entrepreneurs, low-carbon investment, and sustainable economic development across the continent.

Today’s announcement is a particularly strong signal from Mexico, which — with a well-earned reputation for climate leadership on the international stage — must still demonstrate how domestic policy will match those ambitious targets. Indeed, Mexico itself has much to gain from following through. With a historically oil-dependent economy, the country is already feeling the fiscal pinch of rock-bottom global oil prices. Combine that with the enormous untapped potential and newly opened market for renewable energy generation, and pathway is clear to major opportunities for economic growth through low carbon energy and efficient production.

The path to shared global prosperity is a low-carbon path. By moving from the bold type of headline announcements to the finer print of detailed workplans, the U.S. and Mexico just took a meaningful step in that direction.

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