Climate change and carbon markets: a handbook of emission reduction mechanisms PDF
Preview Climate change and carbon markets: a handbook of emission reduction mechanisms
9354 Prelims pi-xxviii 1/12/04 3:14 pm Page i Climate change and carbon markets 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page iii Climate change and carbon markets A Handbook of Emission Reduction Mechanisms Edited by F. Yamin London•Sterling, VA 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page iv First published by Earthscan in the UK and USA in 2005 Copyright © Farhana Yamin and foundation for International Environmental Law and Development (FIELD), 2005 All rights reserved ISBN: 1-84407-163-4 hardback Typesetting by Pantek Arts Ltd., Maidstone, Kent Printed and bound in the UK by Cromwell Press Ltd, Trowbridge Cover design by Danny Gillespie For a full list of publications please contact: Earthscan 8–12 Camden High Street London, NW1 0JH, UK Tel: +44 (0)20 7387 8558 Fax: +44 (0)20 7387 8998 Email: [email protected] Web: www.earthscan.co.uk 22883 Quicksilver Drive, Sterling, VA 20166-2012, USA Earthscan is an imprint of James and James (Science Publishers) Ltd and publishes in association with WWF-UK and the International Institute for Environment and Development A catalogue record for this book is available from the British Library Library of Congress Cataloguing-in-Publication Data Library of Congress Cataloging-in-Publication Data Climate change and carbon markets : a handbook of emission reduction mechanisms / edited by Farhana Yamin. p. cm. Includes bibliographical references and index. ISBN 1-84407-163-4 1. Climatic changes–Government policy. 2. Emissions trading–Government policy. 3. Carbon dioxide mitigation–Government Policy. I. Yamin, Farhana. QC981.8.C5C511346 2005 363.738’747–dc22 2004022383 Printed on elemental chlorine free paper 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page v Contents List of abbreviations ix List of figures, tables and boxes xiv Foreword xvii Preface and acknowledgements xxi About the contributors xxv Introduction xxix Farhana Yamin Purpose xxix Structure of book xxxii The nature of the climate change problem xxxvi An overview of the UNFCCC xxxvii An overview of the Kyoto Protocol xxxix An overview of the Kyoto mechanisms xli Part I: The international rules on the Kyoto mechanisms 1 Farhana Yamin I.1 Introduction 1 I.2 Activities implemented jointly 11 I.3 Cross-cutting mechanism issues 15 I.4 Participation/eligibility requirements 19 I.5 Emissions trading 26 I.6 Clean Development Mechanism 29 I.7 Joint Implementation (Article 6) 53 I.8 Compliance procedures and mechanisms under the Protocol 61 Notes 67 References 73 Part II: The EU Greenhouse Gas Emission Allowance Trading Scheme 75 Jürgen Lefevere II.1 Introduction 75 II.2 The EU burden-sharing agreement 77 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page vi vi Contents II.3 EU environmental policy: from command and control towards market-based mechanisms 81 II.4 The concept of emissions trading 86 II.5 The ethical dimension of emissions trading 92 II.6 The development of emissions allowance trading in the EU 95 II.7 Core elements of the ET Directive 101 II.8 The ET Directive and the Kyoto project-based mechanisms 126 II.9 Conclusion 139 Notes 139 References 148 Part III: Development and implementation of the Kyoto mechanisms worldwide 151 Chapter 1 Emissions trading under the Kyoto Protocol: how far from the ideal? 153 Richard Baron and Michel Colombier 1.1 Introduction and scope 153 1.2 Emissions trading: focusing on economic efficiency 154 1.3 Article 17 of the Kyoto Protocol: throwing governments into the cost-minimization game 157 1.4 The EU Emission Allowance Trading Scheme: a step closer to the ideal? 160 1.5 Conclusion 163 Notes 164 References 164 2 Trading through the flexibility mechanisms: quantifying the size of the Kyoto markets 166 Odile Blanchard 2.1 Methodology and assumptions 167 2.2 Characteristics of the five cases 169 2.3 Analysis of the market features of the five cases 171 2.4 Conclusion 180 Notes 181 References 182 3 Implementation challenges: insights from the EU Emission Allowance Trading Scheme 183 Fiona Mullins 3.1 Introduction 183 3.2 National Allocation Plans 184 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page vii Contents vii 3.3 Permitting procedures 196 3.4 Monitoring and verification 197 3.5 Registries 197 3.6 Conclusions 198 Notes 199 4 Joint Implementation and emissions trading in Central and Eastern Europe 200 Jason Anderson and Rob Bradley 4.1 Overview 200 4.2 Interest in Joint Implementation and emissions trading in EITs 200 4.3 CEE, international emissions trading and ‘hot air’ 203 4.4 The preference for domestic action 205 4.5 AIJ in CEE: early experience with projects 210 4.6 Mechanism participation requirements and CEEs 213 4.7 Early ‘JI’ experiences 215 4.8 The future potential of JI 218 4.9 European emission trading in Central and Eastern Europe 222 Notes 229 References 229 5 Implementing the Clean Development Mechanism and emissions trading beyond Europe 231 Martijn Wilder 5.1 Introduction 231 5.2 Emissions trading (Article 17) 232 5.3 Joint Implementation (Article 6) 244 5.4 The Clean Development Mechanism (Article 12) 246 5.5 International development agencies 259 5.6 Other emissions trading activities 259 5.7 Conclusion 261 Notes 261 6 The Clean Development Mechanism: a tool for promoting long-term climate protection and sustainable development? 263 Mark Kenber 6.1 Introduction 263 6.2 Assessing the CDM’s contribution to sustainable development 265 6.3 Tools to assess CDM project eligibility and sustainability 269 6.4 Evolution of the CDM market 278 6.5 Future issues and options 284 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page viii viii Contents Notes 287 References 288 7 Determination of baselines and additionality for the CDM: a crucial element of credibility of the climate regime 289 Axel Michaelowa 7.1 Introduction 289 7.2 Baseline determination 290 7.3 Why baseline and additionality determination are not the same 296 7.4 Conclusions 302 Notes 303 References 303 8 Creating the foundations for host country participation in the CDM: experiences and challenges in CDM capacity building 305 Axel Michaelowa 8.1 Introduction 305 8.2 Capacity requirements to successfully implement the CDM 306 8.3 Donor activities 310 8.4 Challenges 317 8.5 Conclusions 319 Notes 320 References 320 Part IV: Conclusion: Mechanisms, linkages and the direction of the future climate regime 321 Erik Haites IV.1 Domestic GHG trading programmes 321 IV.2 Links among domestic GHG emissions trading programmes 328 IV.3 Direction of the future climate change regime 334 Notes 342 References 346 Appendices 1 Documents related to the EU emission allowance trading Scheme 353 2 EU Emission Allowance Trading Scheme Directive 355 3 EU Directive 2004/101/EC 371 4 EU Guidelines on Allocations of Allowances 383 Index 413 9354 Prelims pi-xxviii 1/12/04 3:14 pm Page ix List of abbreviations 4AR Fourth Assessment Report (IPCC – forthcoming 2007) A6SC Article 6 Supervisory Committee (for JI) AAU Assigned Amount Unit (under emissions trading) ACEA European Automobile Manufacturers Association ADB Asia Development Bank AE Applicant Entities AGBM Ad Hoc Group on the Berlin Mandate AIJ Activities Implemented Jointly AIPs Annex I Parties ALGAS Asia Least-Cost Greenhouse Gas Abatement Project (ADB) AOSIS Alliance of Small Island States ASEAN Association of South-East Asian Nations ASPEN Analyse des Systèmes de Permits d’Emissions Négociables BAT ‘best available techniques’ BAU ‘business as usual’ BM Bonn-Marrakesh Accords BREF BAT reference document BTU British thermal unit CACAM Central Asia, Caucasus, Albania and Moldova (negotiating coalition) CAN Climate Action Network CBO Congressional Budget Office (USA) CCA Climate Change Agreement CCX Chicago Climate Exchange CDCF Community Development Carbon Fund CDET Canadian Domestic Emissions Trading CDM Clean Development Mechanism CDM-AP CDM Accreditation Panel CDM-AT CDM Assessment Team CEE Central and Eastern Europe (UN regional group) CEMD Conservation and Environmental Management Division (MOSTE, Malaysia) CER Certified Emission Reduction CERUPT Certified Emission Reduction Unit Procurement Tender (The Netherlands) CFC chlorofluorocarbon (controlled under the Montreal Protocol)
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