A Framework for Various Approaches under the UNFCCC: Necessity or luxury? CEPS Special Report No. 70, 20 November 2012

In recognition that the world is moving towards a new climate change regime that in many ways will be very different from the world in which the Kyoto Protocol has been operating, climate negotiators and other specialists have begun to focus their attention on developing a “framework for variable approaches” (FVA). It is hoped that this new framework will prove more adaptable to national circumstances and more capable of catalysing new ideas, at the regional, national or sub-national level. This paper examines the assumptions, objectives, scope, components and functions of an FVA, with a view to creating the right conditions in which a well-functioning global carbon market can emerge.

The Future of the Clean Development Mechanism. Note on the report “A Call to Action” of the High-Level Panel on CDM Policy Dialogue. CEPS Special Report No. 71, 20 November 2012

The clean development mechanism (CDM) has been through a long and complex growing process since it was approved as part of the Kyoto Protocol. It was designed within the framework of the UNFCCC and the Kyoto Protocol, and reflected the political and economic realities of that time. To ensure its continued effectiveness in contributing to future global climate action and to reflect on how best to position the CDM to respond to future challenges, a high-level panel (HLP) was formed at the Durban climate change conference in 2011. Following extensive consultations, the panel published its report in September 2012. Through this Special Report, the CEPS Carbon Market Forum offers its reflections on findings and recommendations of the HLP, as well as, by extension, its own views on the future of the CDM. In the context of the latter, it explores the following questions: Is there a need for an instrument such as the CDM in the future? What ‘demand’ can it fill? In the roles identified under the first question, what can be done to adapt it and also continue to increase its efficacy?

Backloading: A necessary, but not sufficient first step. CEPS Special Report No. 72, 20 November 2012

In July 2012, the European Commission issued an invitation for public consultation to review the ‘auctioning time profile’ for the EU Emissions Trading Scheme” in order to collect views from stakeholders and experts in the field of the EU carbon market on a draft for a future amendment of the Commission Regulation on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances. In this submission, the CEPS Carbon Market Forum addresses the following questions and offers its views on the Commission’s proposed amendments: Is back loading a good idea? Is there a need for following up the back loading with structural measures? What should the number be? If this cannot be addressed, what are the considerations for deciding upon that number? What price expectations are linked to the number? On what basis are they construed?

Mercado de carbono: um estudo comparado entre Brasil, China e Índia

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES)

O potencial da agroenergia no Brasil na mitigação do clima: histórico jurídico

Pós-graduação em Agronomia (Energia na Agricultura) - FCA

The human side of social technology for climate change mitigation and human development: the case of "efficient stoves" in Brazil

Carbon management has gradually gained attention within the overall environmental management and corporate social responsibility agendas. The clean development mechanism, from Kyoto Protocol, was envisioned as connecting carbon market and sustainable development objectives in developing countries. Previous research has shown that this potential is rarely being achieved. The paper explores how the incorporation of the human side into carbon management reinforces its contribution to generate human development in local communities and to improve the company's image. A case study of a Brazilian company is presented, with the results of the application of an analytical model that incorporates the human side and human development. The selected project is an "efficient stoves" programme. "Efficient stoves" are recognised in Brazil as social technologies. Results suggest that the fact that social technologies value the human side of the technology plays a key role when it comes to analysing the co-benefits of the project implementation.

EU Policy on Climate Change Mitigation since Copenhagen and the Economic Crisis. CEPS Working Document No. 380, 5 March 2013

The EU has long assumed leadership in advancing domestic and international climate change policy. While pushing its partners in international negotiations, it has led the way in implementing a host of domestic measures, including a unilateral and legally binding target, an ambitious policy on renewable energy and a strategy for low-carbon technology deployment. The centrepiece of EU policy, however, has been the EU Emissions Trading System (ETS), a cap-and-trade programme launched in 2005. The ETS has been seen as a tool to ensure least-cost abatement, drive EU decarbonisation and develop a global carbon market. After an initial review and revision of the ETS, to come into force in 2013, there was a belief that the new ETS was ‘future-proof’, meaning able to cope with the temporary lack of a global agreement on climate change and individual countries’ emission ceilings. This confidence has been shattered by the simultaneous ‘failure’ of Copenhagen to deliver a clear prospect of a global (top-down) agreement and the economic crisis. The lack of prospects for national caps at the international level has led to a situation whereby many member states hesitate to pursue ambitious climate change policies. In the midst of this, the EU is assessing its options anew. A number of promising areas for international cooperation exist, all centred on the need to ‘raise the ambition level’ of GHG emission reductions, notably in aviation and maritime, short-lived climate pollutions, deforestation, industrial competitiveness and green growth. Public policy issues in the field of technology and its transfer will require more work to identify real areas for cooperation.

Essays on emissions trading markets

This dissertation is a collection of three economics essays on different aspects of carbon emission trading markets. The first essay analyzes the dynamic optimal emission control strategies of two nations. With a potential to become the largest buyer under the Kyoto Protocol, the US is assumed to be a monopsony, whereas with a large number of tradable permits on hand Russia is assumed to be a monopoly. Optimal costs of emission control programs are estimated for both the countries under four different market scenarios: non-cooperative no trade, US monopsony, Russia monopoly, and cooperative trading. The US monopsony scenario is found to be the most Pareto cost efficient. The Pareto efficient outcome, however, would require the US to make side payments to Russia, which will even out the differences in the cost savings from cooperative behavior. The second essay analyzes the price dynamics of the Chicago Climate Exchange (CCX), a voluntary emissions trading market. By examining the volatility in market returns using AR-GARCH and Markov switching models, the study associates the market price fluctuations with two different political regimes of the US government. Further, the study also identifies a high volatility in the returns few months before the market collapse. Three possible regulatory and market-based forces are identified as probable causes of market volatility and its ultimate collapse. Organizers of other voluntary markets in the US and worldwide may closely watch for these regime switching forces in order to overcome emission market crashes. The third essay compares excess skewness and kurtosis in carbon prices between CCX and EU ETS (European Union Emission Trading Scheme) Phase I and II markets, by examining the tail behavior when market expectations exceed the threshold level. Dynamic extreme value theory is used to find out the mean price exceedence of the threshold levels and estimate the risk loss. The calculated risk measures suggest that CCX and EU ETS Phase I are extremely immature markets for a risk investor, whereas EU ETS Phase II is a more stable market that could develop as a mature carbon market in future years.

Séquestration géologique du CO2 par carbonatation minérale dans les résidus miniers

La carbonatation minérale dans les résidus miniers est un moyen sûr et permanent de séquestrer le CO2 atmosphérique. C’est un processus naturel et passif qui ne nécessite aucun traitement particulier et donc avantageux d’un point de vue économique. Bien que la quantité de CO2 qu’il soit possible de séquestrer selon ce processus est faible à l’échelle globale, dans le cadre d’un marché du carbone, les entreprises minières pourraient obtenir des crédits et ainsi revaloriser leurs résidus. À l’heure actuelle, il y a peu d’informations pour quantifier le potentiel de séquestration du CO2 de façon naturelle et passive dans les piles de résidus miniers. Il est donc nécessaire d’étudier le phénomène pour comprendre comment évolue la réaction à travers le temps et estimer la quantité de CO2 qui peut être séquestrée naturellement dans les piles de résidus. Plusieurs travaux de recherche se sont intéressés aux résidus miniers de Thetford Mines (Québec, Canada), avec une approche principalement expérimentale en laboratoire. Ces travaux ont permis d’améliorer la compréhension du processus de carbonatation, mais ils nécessitent une validation à plus grande échelle sous des conditions atmosphériques réelles. L’objectif général de cette étude est de quantifier le processus de carbonatation minérale des résidus miniers sous des conditions naturelles, afin d’estimer la quantité de CO2 pouvant être piégée par ce processus. La méthodologie utilisée repose sur la construction de deux parcelles expérimentales de résidus miniers situées dans l’enceinte de la mine Black Lake (Thetford Mines). Les résidus miniers sont principalement constitués de grains et de fibres de chrysotile et lizardite mal triés, avec de petites quantités d’antigorite, de brucite et de magnétite. Des observations spatiales et temporelles ont été effectuées dans les parcelles concernant la composition et la pression des gaz, la température des résidus, la teneur en eau volumique, la composition minérale des résidus ainsi que la chimie de l’eau des précipitations et des lixiviats provenant des parcelles. Ces travaux ont permis d’observer un appauvrissement notable du CO2 dans les gaz des parcelles (< 50 ppm) ainsi que la précipitation d’hydromagnésite dans les résidus, ce qui suggère que la carbonatation minérale naturelle et passive est un processus potentiellement important dans les résidus miniers. Après 4 ans d’observations, le taux de séquestration du CO2 dans les parcelles expérimentales a été estimé entre 3,5 et 4 kg/m3/an. Ces observations ont permis de développer un modèle conceptuel de la carbonatation minérale naturelle et passive dans les parcelles expérimentales. Dans ce modèle conceptuel, le CO2 atmosphérique (~ 400 ppm) se dissout dans l’eau hygroscopique contenue dans les parcelles, où l’altération des silicates de magnésium forme des carbonates de magnésium. La saturation en eau dans les cellules est relativement stable dans le temps et varie entre 0,4 et 0,65, ce qui est plus élevé que les valeurs de saturation optimales proposées dans la littérature, réduisant ainsi le transport de CO2 dans la zone non saturée. Les concentrations de CO2 en phase gazeuse, ainsi que des mesures de la vitesse d’écoulement du gaz dans les cellules suggèrent que la réaction est plus active près de la surface et que la diffusion du CO2 est le mécanisme de transport dominant dans les résidus. Un modèle numérique a été utilisé pour simuler ces processus couplés et valider le modèle conceptuel avec les observations de terrain. Le modèle de transport réactif multiphase et multicomposant MIN3P a été utilisé pour réaliser des simulations en 1D qui comprennent l’infiltration d’eau à travers le milieu partiellement saturé, la diffusion du gaz, et le transport de masse réactif par advection et dispersion. Même si les écoulements et le contenu du lixivat simulés sont assez proches des observations de terrain, le taux de séquestration simulé est 22 fois plus faible que celui mesuré. Dans les simulations, les carbonates précipitent principalement dans la partie supérieure de la parcelle, près de la surface, alors qu’ils ont été observés dans toute la parcelle. Cette différence importante pourrait être expliquée par un apport insuffisant de CO2 dans la parcelle, qui serait le facteur limitant la carbonatation. En effet, l’advection des gaz n’a pas été considérée dans les simulations et seule la diffusion moléculaire a été simulée. En effet, la mobilité des gaz engendrée par les fluctuations de pression barométrique et l’infiltration de l’eau, ainsi que l’effet du vent doivent jouer un rôle conséquent pour alimenter les parcelles en CO2.

Gestão florestal e propriedade: A floresta, a (sua) propriedade e o alcance das políticas públicas

O trabalho pretende questionar se as necessidades da gestão da floresta e as interacções com o ambiente, justificam o repensar do conceito de propriedade privada, na definição de políticas florestais concretizadoras duma «mundividência ambiental». Estrutura-se em quatro partes: primeiro, procura-se dar uma perspectiva do direito de propriedade privada, a sua perenidade na nossa cultura, sobretudo na cultura jurídica; segundo, analisa-se a dinâmica da propriedade privada da floresta nos últimos séculos, e as soluções de políticas florestais- destacando-se a criação das zonas de intervenção florestal (ZIF); terceiro, estuda-se em concreto o regime de certificação florestal, como forma específica de gestão florestal; quarto, sublinham-se novos desafios ambientais à gestão das florestas, designadamente a identificação dos problemas que emergem em resultado das alterações climáticas, destacando-se o sequestro de carbono e a criação do mercado de carbono. Este estudo não é estanque, faz parte de um mesmo questionamento: é o ambiente um valor para a humanidade ou é um valor em si mesmo? ABSTRACT: The work intends to question if the private property of the forest, toward the necessities of management and interactions with the environment, justifies the rethink of the concept, in forest politics definition, producer of an interactive view of the environment. lt is structured in four parts: first, it intends to give a perspective of the right of private property, its longevity in our culture, the importance of legal quarrel; second, the dynamics of the private property of the forest, in the latest centuries, and the solutions of the implemented forest politics - being distinguished the creation of zones of forest intervention, the ZIF; third, the forest management ­ forest certification; fourth, the environmental source, the identification of problems that emerge in result of climatic alterations, being distinguished the kidnap of carbon and the creation of the carbon market. This study is not tight; it is part of the same reflection: of being the environment a value for the humanity or a value in itself exactly.

Essays on Emissions Trading Markets

This dissertation is a collection of three economics essays on different aspects of carbon emission trading markets. The first essay analyzes the dynamic optimal emission control strategies of two nations. With a potential to become the largest buyer under the Kyoto Protocol, the US is assumed to be a monopsony, whereas with a large number of tradable permits on hand Russia is assumed to be a monopoly. Optimal costs of emission control programs are estimated for both the countries under four different market scenarios: non-cooperative no trade, US monopsony, Russia monopoly, and cooperative trading. The US monopsony scenario is found to be the most Pareto cost efficient. The Pareto efficient outcome, however, would require the US to make side payments to Russia, which will even out the differences in the cost savings from cooperative behavior. The second essay analyzes the price dynamics of the Chicago Climate Exchange (CCX), a voluntary emissions trading market. By examining the volatility in market returns using AR-GARCH and Markov switching models, the study associates the market price fluctuations with two different political regimes of the US government. Further, the study also identifies a high volatility in the returns few months before the market collapse. Three possible regulatory and market-based forces are identified as probable causes of market volatility and its ultimate collapse. Organizers of other voluntary markets in the US and worldwide may closely watch for these regime switching forces in order to overcome emission market crashes. The third essay compares excess skewness and kurtosis in carbon prices between CCX and EU ETS (European Union Emission Trading Scheme) Phase I and II markets, by examining the tail behavior when market expectations exceed the threshold level. Dynamic extreme value theory is used to find out the mean price exceedence of the threshold levels and estimate the risk loss. The calculated risk measures suggest that CCX and EU ETS Phase I are extremely immature markets for a risk investor, whereas EU ETS Phase II is a more stable market that could develop as a mature carbon market in future years.

The carbon disclosure project, an evolution in international environmental corporate governance : motivations and determinants of market response to voluntary disclosures

This paper examines the factors associated with Canadian firms voluntarily disclosing climate change information through the Carbon Disclosure Project. Five hypotheses are presented to explain the factors influencing management's decision to disclose this information. These hypotheses include a response to shareholder activism, domestic institutional investor shareholder activism, signalling, litigation risk, and low cost publicity. Both binary logistic regressions as well as a cross-sectional analysis of the equity market's response to the environmental disclosures being made were used to test these hypotheses. Support was found for shareholder activism, low cost publicity, and litigation risk. However, the equity market's response was not found to be statistically significant.

Reforming the Market Design of EU Electricity Markets: Addressing the Challenges of a Low-Carbon Power Sector. CEPS Task Force Report, 27 July 2015

This CEPS Task Force Report focuses on whether there is a need to adapt the EU’s electricity market design and if so, the options for doing so. In a first step, it analyses the current market trends by distinguishing between their causes and their consequences. Then, the current blueprint of EU power market design – the target model – is briefly introduced, followed by a discussion of the shortcomings of the current approach and the challenges in finding suitable solutions. The final chapter offers an inventory of solutions differentiating between recommendations shared among Task Force members and non-consensual options.

Evaluation of dynamic pass-through of carbon prices into electricity prices – a cointegrated VECM analysis

This paper addresses the impact of the CO2 opportunity cost on the wholesale electricity price in the context of the Iberian electricity market (MIBEL), namely on the Portuguese system, for the period corresponding to the Phase II of the European Union Emission Trading Scheme (EU ETS). In the econometric analysis a vector error correction model (VECM) is specified to estimate both long–run equilibrium relations and short–run interactions between the electricity price and the fuel (natural gas and coal) and carbon prices. The model is estimated using daily spot market prices and the four commodities prices are jointly modelled as endogenous variables. Moreover, a set of exogenous variables is incorporated in order to account for the electricity demand conditions (temperature) and the electricity generation mix (quantity of electricity traded according the technology used). The outcomes for the Portuguese electricity system suggest that the dynamic pass–through of carbon prices into electricity prices is strongly significant and a long–run elasticity was estimated (equilibrium relation) that is aligned with studies that have been conducted for other markets.

Micro-generation Evaluation of the Zero Emissions Technologies in the Portuguese Market

Micro-generation is the small scale production of heat and/or electricity from a low carbon source and can be a powerful driver for carbon reduction, behavior change, security of supply and economic value. The energy conversion technologies can include photovoltaic panels, micro combined heat and power, micro wind, heat pumps, solar thermal systems, fuel cells and micro hydro schemes. In this paper, a small research of the availability of the conversion apparatus and the prices for the micro wind turbines and photovoltaic systems is made and a comparison between these two technologies is performed in terms of the availability of the resource and costs. An analysis of the new legal framework published in Portugal is done to realize if the incentives to individualspsila investment in sustainable and local energy production is worth for their point of view. An economic evaluation for these alternatives, accounting with the governmentpsilas incentives should lead, in most cases, into attractive return rates for the investment. Apart from the attractiveness of the investment there are though other aspects that should be taken into account and those are the benefits that these choices have to us all. The idea is that micro-generation will not only make a significant direct contribution to carbon reduction targets, it will also trigger a multiplier effect in behavior change by engaging hearts and minds, and providing more efficient use of energy by householders. The diversified profile of power generation by micro-generators, both in terms of location and timing, should reduce the impact of intermittency or plant failures with significant gains for security of supply.