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Offsetting Principles and the CDM, JI Basics
Lucas BelenkyACX Executive Climate Change and Carbon Trading Course
November 12th 2012
Gas Factor Example Source
Carbon Dioxide (CO2) 1 Combustion
Methane (CH4) 21-24 Waste
Nitrous Oxide (NO2) 298 Fertilizer
Hydro Fluorocarbons(HFC)
4,000-12,000 Refrigerant Production
Sulfur Hexafluoride (SH6)
16,000 Transmission Lines
What is a Carbon Credit?
• Definition: A carbon credit is a generic term for any tradable certificate or permitrepresenting the right to emit one tonne of carbon dioxide or carbon dioxideequivalent (eCO2).
• Bought, sold, traded, and hedged as other global commodities.
• Currency of the international carbon markets.
• Considered “retired” or “cancelled” if used to cover emissions
$25Billion
Example of an Emission Trading Scheme
800 tonsCapEU-ETS
1,200 tons
400 tons
The Principle of Offsets
800 tonsCapEU-ETS
1,200 tons
400 Credits
Example of an Emission Trading Scheme (Offsets)
• Mechanism under the Kyoto Protocol
• Promotes carbon reduction projects in developed countries
• Project-based Mechanism
• Guidelines for certifying offsets from annex I counties for compliance purposes
The Joint Implementation (JI) Mechanism
• Mechanism under the Kyoto Protocol
• Promotes Low Carbon Development and Technology transfer
• Project-based Mechanism
• Guidelines for certifying offsets from non-annex I counties for compliance purposes in Annex I countries = Certified Emission Reductions (CERs)
The Clean Development Mechanism (CDM)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
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Sh
are
of
pro
jec
ts
All CDM Projects in the Pipeline in Brazil + Mexico + India + China
as a fraction of all projects
Mexico
Brazil
China
India
HFCs, PFCs & N2O reduction
68%
Renewables18%
CH4 reduction & Cement &
Coal mine/bed6%
Supply-side EE4%
Fuel switch3%
Demand-side EE0% Afforestation &
Reforestation0.0%
Transport0%
CERs issued in each sector
Status of CDM projects NumberAt validation 3685Request for registration 74Request for review 27Correction requested
3Under review
Total in the process of registration 104Withdrawn 53Rejected by EB 213Validation negative by DOE 198
Validation terminated by DOE 1049Registered, no issuance of CERs
2389Registered. CER issued 1354Total registered 3743Total number of projects (incl. rejected & withdrawn) 9045
The CDM at a Glance
Financial Crisis
Nuclear Disaster in Japan
Double Dip and Over-supply