difc week - carbon markets and trading

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