Carbon emission reductions: trading system or carbon tax?

COP 19 climate change conference, Warsaw, Poland, 2013, theguardian.co.uk

A climate change convention is currently taking place in Warsaw, Poland and although the public talks began on the 11^th of November, the political commitments were adopted when the government ministers joined the negotiating table on the 27^th of November for few days. This convention is the latest summit of the United Nations Framework Convention on Climate Change (UNFCC). The UN talks have been held since 1992, through annual conventions giving, despite high expectancies on the international stage, no legally binding regulation on the carbon emissions yet. The international summits on climate change are often negatively seen by the public due to the fact they are pointing out the major difficulties encountered by the various actors of the international stage to take any global initiative to tackle the issues raised by the carbon emissions from the rich countries. If we need any reminder of that, we only need to put forward the examples of the Kyoto protocol in 1997, which the US never ratified or the Copenhagen summit in 2009, which ended in scenes of chaos despite the ratification of several commitment measures from most of the industrialised countries. So far, these commitments are only running to 2020 and represent far less than the levels that need to be reached according to several key experts such as the intergovernmental panel on climate change. The main goal of the current talks consists in forging an agreement that would come into application by 2020 and that would include significant cuts of greenhouse gas emissions from major economies as well as from emerging countries.

Mapping of the carbon emissions, IEA

This blog initially aims at giving a clear overview of the main ins and outs of environmental topics and despite the important political dimension that these talks present, it is not in our mission to assess and criticize the international agreements taken from a political perspective. This article will focus on the current tools available to the governments, which aim at reducing their carbon emissions. The question of cutting global carbon emissions is to be paired with the question of the carbon emissions trading that was implemented shortly after the Kyoto protocol in 1997. Emissions trading relies on a restriction of the total amount of carbon that can be released into the atmosphere. The core of this system consists in the ability of a national government to issue shares of its agreed emissions limits in the form of tradable certificates. The companies, which have to comply with the carbon abatement scheme, can then decide for themselves whether to reduce their carbon emissions or to buy these certificates from other company that have exceeded their targets of carbon reductions.

The introduction of a trading framework has the benefit of reaching the cheapest abatement scenario. Without implementing a trading system, the total cost of abatement would be higher and the companies that have the most expensive abatement capacity would be forced to reduce their own carbon emissions at a higher cost. As the trading system currently presents the least cost solution to global emissions reduction, industries and businesses are firmly in favour of such system rather than a carbon tax. One of the advantages of the trading system is its capacity to generate incentives for innovating in abatement technology as long as the market price of carbon rises. In comparison with the trading system, a carbon tax would set a price per ton of carbon and only lead to the incentive of adjusting the production levels, which are not profitable for either the society or the businesses.

One of the other consequences of a trading system is the entry of new suppliers of abatement technology, which enhance the reactivity of companies to adopt a strategy for their abatement targets. Thus, the performances of any company in emissions monitoring and trading will be part of its environmental performance, which is assessed by an increasing number of suppliers and customers. Carbon emissions are about to become a way for companies to gain competitive advantage over each other and as a consequence in the long term, being successful in the abatement strategy will play a key role in the competiveness of companies.

The main example that is put forward for promoting the trading system over the carbon tax comes from a past experience of the introduction of an emissions trading system for sulphur and nitrous oxides (SOx and NOx), which are the main pollutants involved in the precipitation of acid rains. In 1990, the US clean air act required electric plants to lower their emissions of NOx and SOx by 8 millions tons compared with the 1980 levels. The cost of this abatement program was estimated by various experts and eventually happened to be far less than anticipated. The reason for these economic savings comes from the introduction of such decentralized and market-driven approach of the acid rain program. Despite the promising success of such innovative solution to the emissions problem, the Bush administration has refused taking part to the Kyoto protocol and the current US legislation is made of a mix of laws across the states. This regulation system is largely criticized on the international and national stage, which call for a more consistent program based on a trading system for US businesses.

The number of schemes being implemented across the world reveals a clear shift in national strategies of carbon abatement. Nevertheless, the main reason that explains such discrepancies comes from the differences within the industries of the countries, which choose their own strategy for the abatement of their carbon emissions and create a heterogeneous carbon reduction schemes.

Diversity of the carbon reduction programs across the world, IPCC

To put it in a nutshell, a trading system is often compared with a carbon tax system and based on past experiences with other pollutants; it appears that a trading system offers more advantages for the businesses to comply with the carbon abatement targets to be set on a governmental scale. For a better synergy between the countries, those national targets should be set on a global scale during the climate change conferences, which explains the crucial importance of the success of such international events. However, the main decisions that the international stage agreed on at the 2013 Warsaw climate change conference consisted in the countries responsibility to come forward with their “contributions” to global reductions of greenhouse gas emissions. These contributions will be set at a national level and although such actions will be assessed by other countries, the exact form of assessment is not established yet. The next climate change conference will be held in Lima, Peru in 2014 but most of the global agreements will be eventually ratified at the 2015 climate change conference that will take place in Paris.

Useful links

1. 2013 Warsaw climate change conference

http://unfccc.int/meetings/warsaw_nov_2013/meeting/7649.php

2. Carbon targets per country (IEA)

http://www.iea.org/policiesandmeasures/climatechange/

3. Establishing and  understanding post-2020  climate change mitigation  commitments (OECD report by G. Briner and A. Pragg)

http://www.oecd.org/env/cc/CCXG%20EstablishingandUnderstanding_%20final%20full%20docOct2013.pdf

Sustainable development in the construction industry

Mike McNally, CEO Skanska USA, taking position for green construction regulations (2013)

In the USA, last week, a heated debate led to the resignation from membership of the US chamber of commerce of a major multinational construction company, Skanska. This company, specialised in green construction, is firmly denouncing the decision of the US chamber of commerce to amend a regulation encompassing several sustainability rating systems for the construction of government buildings (Leadership in Energy and Environmental Design LEED regulation). Recently, the chamber of commerce announced its wish to remove the section encouraging the construction companies to report about the chemical composition of construction materials (Wall street journal, 09^th of July 2013). According to Skanska, this regulation has helped the green construction industry grow to where it currently contributes to the creation of 7.9 million of jobs annually in the US. The debate is still open and Skanska recently made a series of statements to the media inviting the people to join the ongoing debate. This discussion, as passionate as it might get in the short term future, raises several questions. What are green materials? How do we enhance the sustainability of construction materials? Why is the construction industry still not green enough?

Solar cells: a shining technology between politics and science

A solar panel farm in California, 2010

“Read my lips, no new taxes”. This sentence was originally pronounced by George H. Bush during the 1988 US election campaign. It seems like Angela Merkel drew her inspiration from Bush’s famous motto on the 26th of may 2013. On this day, she announced to the European commission that Europe should not apply any permanent taxes against China regarding the Chinese manufactured solar panels (Bloomberg 2013). As a reminder, a dumping investigation was opened in September 2012 about Chinese low-cost solar panels being imported in Europe. China is accused by European solar companies to produce artificially low-cost solar panels in order to win the leadership in this growing niche market and then establish a monopoly. If Merkel’s announcement was followed by the European commission on the vote of the 8th of august 2013, most of the European solar experts such as Frank Asbeck, the CEO of Solarworld (Germany), agree on predicting that European solar industry would, to say the least, experience severe economical damages and eventually collapse. So, what are the ins and outs of solar panels current industry?

Shale gas: the fracture of Europe

Protecting worker at a drilling rig in Groundbirch, Canada (2010)

“No regulation must get in the way” Prime Minister David Cameron said at the last EU summit (22^nd of may 2013 in Brussels) pointing out the need for the EU to shift toward a more diverse energy supply panel, natural shale gas included. It is not the first time that PM David Cameron offers a strong support to European exploitation of shale gas and it is not the first time that shale gas provokes heated debates in Europe. So what’s all the fuss about shale gas? Shale gas is natural gas trapped within deep impermeable shale formations and should be distinguished from conventional gas which can be easily collected from a network of porous rocks. Since large shale gas resources have been found in the EU and especially in France and in Poland, European governments have not found any agreement on the decisions to be taken regarding these resources. As an example of these divergent visions, the UK has moved forward with development of shale gas technology while France has placed permanent moratoria on the hydraulic fracturing process, citing concerns with respect to environmental safety and public health. The debates between pros and cons are warming up due to the latest estimations of the EU commission stressing the fact that EU will soon be the last continent depending on imported energy. The main critics on shale gas focus on the key activities implemented with shale gas exploitation such as water resources (their use and their contamination), the destruction of ecosystems and the need to transport materials through future infrastructure. As an example of the anti-shale gas critics, several NGOs claim that this infrastructure will inevitably disturb the land use patterns. More recently, the human side of these critics was highlighted in the latest Gus Van Sant movie featuring Matt Damon Promised land that helped raising public awareness to the tragic consequences of shale gas exploitation in isolated regions. However, this article will not deal with the consequences that shale gas may have nowadays on society or economy; it will rather focus on the state of the art of technologies enhancing the safety and the performances of shale gas exploitation. These recent technologies are the most important argument being currently used by the anti-shale gas activists and the most challenging field of research on shale gas.

Manifesto

Why bother creating yet another blog with a focus on the environment? Environmental issues have been investigated over and over again all throughout the last decades; arguing over a constellation of topics which green parties and environmental NGOs pioneered a front for fifty years. To these widely covered topics, current environmental research aims at the moment to bring innovative solutions relying on green technologies. Ever-improving access to an expanding amount of data, from the internet to the specialised journals, points to the increasing relevance of green technologies while their impact continues to be experienced. Scientific knowledge is the fruit of our curiosity and willingness to ask questions, yet it sometimes requires a clear analysis if we want to avoid bringing in more confusion to a debate on the cusp of saturation. Can one introduce green technologies to a large audience with a zing while avoiding tediousness or pedantry?

This is what this blog aims to do in presenting promising green technologies arising from the research teams working all over the world on environmental related topics. In fact, a great deal of work has already been done to add fluidity to the interactions between research groups and the corresponding industries eager to fund research expenses. Those connections have a crucial role at the crossroads of the aims of theoretical research and the needs of actual civil society. However, the society itself remains wayside struggling to catch up with the significance of the important discoveries in environmental research. This gap in this chain of transmission of information in part explains the lack of reactivity of the political spheres and the population at large towards pressing environmental concerns. Thus, being currently a PhD student, I created this blog in order to fill this gap through introducing green technologies to the largest audience.

Hence, this blog does not aim to identify the global environmental challenges that we will face in either the short or the long term. The media fulfil this role with great efficacy, prophesising tales of a doomed world and sometimes forgetting to promote the latest technologies arising from the research. The failure of a long list of international summits, the latest incarnation of which is the Copenhagen conference, makes it more obvious that to global dangers, we should find local solutions.  Such local solutions must be easy to implement on a large scale and at every level of society, mobilising individuals, research teams and the political apparatus at the state and interstate level. In keeping with this objective, the recent research in environment on display here hopes to bring a fresh point of view that will be of interest to people wishing to get a taste of the upcoming technologies that will shape the society of tomorrow to our mutual benefit.

To put it in a nutshell, I will adopt a critical but fair approach for assessing recent technologies; and aim at contributing to making denser the network of information between the scientific research community and the rest of the society.