difc week - carbon markets and trading
DESCRIPTION
Presentation given by Rod Beckstrom at DIFC Week event in Dubai on November 19, 2007. Beckstrom is also the co-author of "The Starfish and The Spider: The Unstoppable Power of Leaderless Organizations"TRANSCRIPT
Carbon Markets & TradingRod BeckstromChairman, TWIKI.NET
Goals of Session
Science Dimensions Policies & Markets How to Create Carbon Credits How to Trade Carbon Credits How to Create a GCC Market
Science
Question
What planet taught us about
global warming?
1) Ceres
2) Mercury
3) Mars
4) Venus
96.5% CO2
0.038% CO20.0005 % ^
CO2 Rising
CO2 levels
1830 0.028 %2007 0.038%
0.0005 % ^ annual
2100 0.085%
CO2 Cycle
Scientific Bodies Concerned
NASA IPCC NOAH Royal Society Academie de Science Science Council of Japan EPA
Greenhouse Gases
CH4
CO2
PFCs HFCs
SF6
310x
11,000 x 12,000 x
19 x
CO2 Equivalents is Gold Standard
22,000 x
N20
Long Term Trend
Temperatures Rising
?
Other Global Problems
Ozone hole Acid Rain
Ozone Hole
Ozone HoleMontreal Protocol
Acid Rain
Acid Rain
Acid Rain - Cap and Trade
FurtherReductions
Cap
SO2 Emissions in Europe
Acid Rain - SO2 Market
Acid Rain Acid Rain Declines Because of Successful SO2 Reductions Market
MissionPo$$ible !
Dimensions
Size of Global Footprint
What is a carbon footprint?
36+ BN tons of CO2 equivalents emitted Earth can only absorb ˜8 BN tons 6 BN people 5 - 6 tons per person, on average
Per Capital Footprints
Where is it Coming From?
Prepared by Robert A Rohde Data source: Carbon Dioxide Information Analysis Center
Cumulative Footprints
Question
Do you think the USA should take responsibility and accept a binding carbon cap?
1) yes2) no3) maybe
Let’s Get Personal
Size Your Carbon Footprint
calculate your personal carbon footprint
Home sq. meter (00) ____ x 6 = _______
You drive km (000) ____ 0.25 = _______
You fly km (000) ____ x .2 = _______
Your Total Tons ________
Question
How large is your personal carbon footprint?
1) 152) 253) 504) 100+ tons
GCC CO2 Footprints
Country Tons Per Capita
UAE 150M 38
Qatar 53M 69
Kuwait 100M 38
KSA 300 M 13
USA 6,600 M 20
India 1,400 M 1
Question
Should GCC states consider having a carbon cap?
1) yes2) no3) maybe
How Much CO2 in a Gallon?
Pounds weight of a gallon 6.3
% carbon molecules 87%
Pounds of carbon ________
Multiply by CO2 weight 44/12 3.7
Pounds per gallon ________
Some Basic Measures
One gallon generates 20 lbs If car gets 20 mpg- 1 lb. of CO2 per mile 110 gallons = 1 metric ton of CO2
500 tons per $1M production is global average 890 bls of CO2 per barrel of oil 1.7 lbs of CO2 from Kwh electricity
Policies & Markets
Kyoto Market
Kyoto Market - Capped Buyers
Kyoto Market - Capped Buyers
Centralized Policy Creates Market Incentives for
Decentralized Solutions
Economic Cost
In 50 years… Inaction could cost 20% of GDP 50% chance of 5 degree Celsius rise Cost of balancing would cost only 1%
Sir Nicholas Stern UK Economist October 2006, Stern Report
Kyoto Post 2012?
How to Create Carbon Credits
Creating Offsets
Govs allocate allowances (NAP) Co A reduces below it’s target Sells extra offsets to Co. B
How to Create Offsets
JI
CDM
Allowances
from
Profiting from Credits
Trading Investing Creating Offsets (Certificates)
How to Trade Carbon Credits
Two Types of Trading
Exchange traded (allowances)
ExchangeBuyer Seller
$ $
Allowance Allowance
Buyer Seller
$
Carbon Offset
Over the Counter (OTC)
Carbon Market
CDMCERsVERs
EUAs
CA
CCX
RGGI
.14 BN
Clean Development MechanismGCC, etc.
$24 BN
$5.2 BN
Trading Volumes from World Bank 2007 April report.
JIERUs
.03 BN
California
For KyotoCappedCountriesOnly
Voluntary
EEXEUAsFutures
Carbon Credits Value?
EUA CO2 price Nov 19, 2007 = 22.5 Euro or $33
How to Create Carbon Credits
OTC Project Development
Buyer Seller
$
Carbon Offset
Over the Counter (OTC) Example
Developer
$ and Offsets
UNFCCProject
Approvals
Advisor
CDM Project Approval Flow
unfccc.int
Approved UNFCC Methods Windfarms Landfill Methane Farm methane Sewage plants Cogeneration Solar Fertilizer plants - N2O For a full list see unfccc.int
Leading CDM Projects
CDM by Countries
CDM Market Participants
Regional Kyoto - DNA’s UAE - Mr. Majid Ali Al Mansouri, Env. Agency Qatar - Mr. Khalid Ghanim Al-Ali, Env. & Nat. Res. Bahrain - Prof. Dr. Ismail Mohammed Al Madani,
Env. and Wildlife Protection Kuwait - Dr. Jasem M. Al-Besharah, EPA Egypt - Dr. El-Sayed Sabry Mansour, EEAA Pakistan - Mr. Kiyaz Hayat, Ministry of Env.
Kingdom of Saudi Arabia- not appointed
Full DNA list: http://cdm.unfccc.int/DNA/index.html
Sample Projects
Landfill waste Agricultural methane caputre Sewage plants Energy Efficiency Solar electric Solar thermal
Pak Arab Fertilizer Analysis Ammonium Fertilizer Plan Also make nitric acid Privatized 2005
Methodology AM0028 ver. 1 - Catalytic N2O destruction in the tail gas of Nitric Acid Plants
1.0 M tons of CO2 equivalent Phase I live April 2007 400K Tons per annum Upfront Cost $10M, $1M per annum energy Value?
Could be valid for 21 years
Sequestration Project Analysis Gas sequestration
Petronas Bintulu, Malaysia White Tiger Oil field, Vietnam BP, Statoil, Sonatrach, Salah, Algeria Qatar Gas
Wind Farm Analysis
Wind Farm Analysis
Gas Recovery Al Shaheen -Oil Field
Qatar Gas from oil field was flared Now used for power 2.5 M tons annual CERs
Contra Case Abu Dhabi methane flaring No registration- no credits
Other Ways to Make Money
Green products Zero Carbon Projects Green Cities Green Buildings Conservation Green Portfolios Consulting businesses Add green services
Green Products
IT Energy Savings
Computer monitor shut offs Consider energy usage at purchase time Power management for all systems Virtualization software reduces servers New power supplies More videoconferencing, less travel More in each specific industry Calculate CO2 from Kwh bills
STARFISH?
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
How to Create a GCC Market
Can the DIFC
Create a Carbon Exchange?
Ingredients for Exchange Binding Cap Local allowances Could be unique or linked market Could also be a Kyoto cap Thereby develop local intellectual capita Dubai, UAE or another state could become
regional leader
Cap Locally for Exchange
Kyoto or regional binding cap Tradable allowances in region Active NGO’s Active carbon market participants
Developers Consultants Brokers/bankers
Need Caps Globally by 2013
Kyoto or regional binding cap Tradable allowances in region Active NGO’s Active carbon market participants
Developers Consultants Brokers/bankers
To Solve Our Global Problem
Dubai and DIFC Can Help Lead the Way…
…in carbon projects, capping and trading.
Question
Do you think Dubai and DIFC should help lead the way?
1) yes2) no3) maybe
Goals of Session
Science Dimensions Policies & Markets How to Create Carbon Credits How Carbon Trading Works How to Create a GCC Market
Rod BeckstromMore info
www.beckstrom.com globalwarming.twiki.net