introduction to carbon market yves tuyishime rema
TRANSCRIPT
Introduction to Carbon Market
Yves TUYISHIME
REMA
1. Carbon Market
2. The Clean Development Mechanism (CDM)
3. Kyoto Protocol
4. Carbon Market: Is it happening in Rwanda?
Outline
CARBON MARKET
What is the carbon market?• The carbon market is like any other market, but in this particular
market “people” are shopping for “carbon credits” measured in tCO2e.
Source: Freefoto.com
What is carbon credit?
1 Carbon credit = 1 ton of CO2
• CERs• Emission Reductions Units• Verified Emission Reductions
1 Carbon credit = 1 ton of CO2
Currently the price of one carbon credit varies between 6$ and 8 $
Who are the Buyers & Sellers? Buyers• Compliance buyers, i.e. (big) carbon emitters from developed countries
which have commitment to kyoto protocol.• Voluntary buyers, e.g. corporations , e.g. as part of Corporate Social
Responsibility initiatives (being “green”), attract potential clients, satisfy eco-conscious shareholders, new investment opportunities, risk management or part of their philosophy individuals, e.g. offset your holiday flight, (NGOs) etc….
Sellers• Developing countries, i.e. Lower emission countries or with large
tracks of forests• Developed countries, i.e. countries trading off their surplus in carbon
credits
Types of Carbon Markets Regulatory Markets
- Clean Development Mechanisms
-Joint implementation
Voluntary Carbon Market
Voluntary Market• The voluntary market represents those who wish to compensate
voluntarily for emissions associated with their operations–either as part of a commitment to corporate responsibility or to attract green consumers. They have no legal requirement to participate.
-Voluntary carbon standard VCS
-Plan Vivo
-Gold standard, etc….
Regulatory Market - Clean Development Mechanisms - Joint implementation
CLEAN DEVELOPMENT MECHANISM (CDM)
The Clean Development Mechanism
• Flexible mechanism under the Kyoto Protocol• Two goals:
• Reduce greenhouse gas emissions• Assist sustainable development in developing countries
• Cooperation between Annex-1 countries and non-Annex 1 countries
Kyoto Protocol Establishes legally binding commitments for the reduction of GHGs Adopted in 1997, Ratified in July 2004, entered into force in
February 2005,and had to expire in 2012 (As of august 2011,191 Countries are parties to KP)
Protocol to the 1992 UN Framework Convention on Climate Change (UNFCCC)
Requires Annex 1 countries (West and Eastern Europe, North America, Japan, New Zealand, Australia – industrialised countries) to reduce overall emissions of greenhouse gases by at least 5.2% during 2008 – 2012
Voluntary participation of Non-Annex 1 countries (China, India, etc. – “developing countries”)
Clean Development Mechanism (CDM) involves Annex 1 and non-Annex 1 countries
GHGs covered by KP cont…
GHG Description
Carbon Dioxide(CO2) The most Important GHGGenerated from fossil fuel burning and deforestation
Methane(CH4) Comes from landfills, coal mines, oil and natural gas operations and agriculture
Nitrous Oxide(NH20) Emitted from the use of nitrogen fertilizers, from burning fossil fuels and some industrial and waste management processes
Sulfur-hexafluoride (SF6) Used in electrical insulator, freezing agent and heat conductor
Hydro-fluorocarbons(HFCs) and
These are groups of gazes used as alternative to ozone-depleting in refrigeration systems
Per fluorocarbons (PFCs)
INTRODUCTION TO
CDM
Each GHG has a different Global Warming Potential
Carbon dioxide (CO2)GWP: 1
Carbon dioxide (CO2)GWP: 1
Hydrofluorocarbons (HFCs)
Hydrofluorocarbons (HFCs)
Methane (CH4)Methane (CH4)
Sulphur hexafluoride (SF6)
Sulphur hexafluoride (SF6)
Nitrous oxide (N2O)
Nitrous oxide (N2O)
Perfluorocarbons (PFCs)
Perfluorocarbons (PFCs)
GHGs covered by the KP
GWP: 21
GWP: 310
GWP: 9,200
GWP:11,700
GWP: 23,900
Eligibility criteria
1. Reduction in GHG Emissions covered by the KP
2. Host country (Rwanda) must be a Party to the Kyoto Protocol
3. Contribution to Sustainable Development of Rwanda
4. Additionality
5. Emission reduction must be real, measurable and long term
6. Sector must be eligible
Eligible sectors• Energy industries (Production &Distribution)• Manufacturing industries • Construction • Transport• Mining/mineral production • Metal production• Fugitive emissions from fuels (solid, oil and gas)• Fugitive emissions from production and consumption of halocarbons and sulphur
hexafluoride • Solvent use • Waste handling and disposal • Afforestation and reforestation• Agriculture
How does it work?
Emissions reductions
targetEmissions reductions achieved
Buyer
Certified Emissions Reductions (CERs)
Carbon value (€)
Emissions reductions
needed
Seller
Non-Annex IAnnex I
How to develop a CDM project and create carbon credits?
Project Idea Note (PP)
Validation(DOE)
Project Design
Document (PP)
Registration(EB)
Implementation & Monitoring
(PP)
CERS
Verification(DOE)
Host Country Approval
(DNA)
Legend
DNA Designated National Authority
DOE Designated Operational Entity (Validator / Verifier)
PP Project Participants
EB CDM Executive Board
CERs Certified Emission Reductions
Issuance (EB)
Is it happening in Rwanda?
23 CDM projects in pipeline• improved cookstove projects• water purification• hydropower• efficient lighting projects: Solar lighting
Rechargeable light by pedal machine
CFL project
