COP 15: Gassing 15 years

on Carbon Economy...Climate Change : Positive Solutions Series

CE81 : The Perils of Carbon Trade

It is futile to chase gasses !!

Both Carbon Cap & Carbon Tax are damaging.

They are negative solutions and do little to stop climate change

Negative solutions can never deliver.

Cap & trade or Cap & tax are penal economic solutions that only tells you

What not to do ?

We need Positive solutions today!!

• Needed positive technology solutions to the worlds energy crisis, that tells you

•What to do ?

Carbon Cap or Carbon Tax

It does not address three Key concerns :

• Feasibility • Scalability• Efficiency

Feasibility

•The feasibility of running fossil fuel units with high carbon price or carbon tax has not been correctly investigated.

Scalability

•The overhead costs of running and monitoring a global carbon economy with continuity and scalability has not been properly examined.

Efficiency

•The fact that direct funding of renewable energy will be always cheaper , quicker and more efficient than indirect methods of disputable cap and trade solutions have been clearly ignored.

Feasibility & Scalability

Questions :

What is the prevailing Carbon Price ?

What must it be to reduce emissions ?

Is such pricing feasible & sustainable?

Is the Carbon economy scalable ?

Carbon Price Reality !!!

• Carbon Prices in U.S. during 2008-2009 auctions average only $ 3.3 / Metric Ton

Ref: COP15: Bullshitting 15 yrs on climate change http://tinyurl.com/luzxss

Low Carbon prices in U.S.

RGGI auctions 110 million Carbon Credits in US over one year at a total price of USD 366 million in 4 carbon auctions held for 10 states.

Ref: COP15: Bullshitting 15 yrs on climate change http://tinyurl.com/luzxss

Low volumes in European auctions

• Under the EU – ETS Scheme the first Carbon auction in Europe held in November 2008 yielded only GBP 54 million with a mere 4 million allowances sold at a unit price of 13.6 GBP per unit.

• Ref: Telegraph report http://tinyurl.com/62pyw9

Few carbon buyers in British auctions, Few carbon buyers in British auctions, only 7 % of allowances auctioned only 7 % of allowances auctioned

93% of the allowances were given away free by the British Government , simply because there were no takers for Carbon and critically important units that could not be shut refused to buy CarbonAs a result of this only 4 million credits went under the hammer.

Ref: Telegraph report http://tinyurl.com/62pyw9

Besides Carbon trading is open to frauds

• Since a credit purchased in any country can be sold anywhere, it leaves room for frauds.

• First arrests in Britain of 6 persons in carbon fraud of 38 million British Pounds for evading VAT reported on the 20 th August 2008

Ref: Telegraph http://tinyurl.com/oujh2j

Carbon trading is also susceptible to speculation that may hurt utilities.

• Carbon trading will hurt the liquidity starved energy industry who don’t have deep pockets.

• Most Utilities will not lock funds in auction but will buy small quantities from spot markets, even if it is at higher rates. These market prices will be eventually passed on to consumers as per the agreements of scheduled distribution of Utility companies.

Wall Street will run the Carbon world

•Carbon speculation will only fatten the Wall street big investor who will buy low due to deep pockets at the Carbon auctions and then hoard and sell high to needy utilities.

• The utilities will ultimately have to depend on expensive spot market purchases leaving them with lesser resources to modernize and adopt green practices.

Wall Street will ruin the Carbon world

•It will also enable setting up of the Carbon Casino, like the CDS in housing mortgage derivatives thus bringing huge speculative profits for the Wall Street during boom time but disastrous losses for the Global community at crashes.

Carbon & Energy Derivatives ?

Efficiency & cost control

Capping carbon has its costs.

Trading Carbon has its costs.

Channeling Carbon funds to clean energy has costs.

But users don’t want carbonThey want low cost clean energy

For only low cost clean energy development is user friendly and can stop climate change.

So why not cut the carbon talk & fund clean energy directly, efficiently, at a lower cost.

Carbon trading Governance is expensive and inefficient

• Since it is multi-lateral trading, the U.N. machinery will handle several aspects of the cap and trade regulatory mechanism.

• This will cause operational delays and a high cost governance with U.N.’s legendary overhead costs.

Users want to know….

•Will the carbon economy ever break even ?

Carbon trading solutions are both formative and expensive

Being a grassroots concept it will also have huge infrastructure cost with the NYMEX, Chicago Exchange or London Climate Exchange plc and the software vendors building the carbon trading solutions from zero.

The formative years will need multiple solutions for testing the workability as its scope is very wide ranging from industrial to forest Carbon valuations

Carbon economy is still in experimental stage and may undergo costly changes.

Besides the effect of carbon cap on emissions is still hypothetical and the trading mechanism is still based on elementary understanding of the subject . Forest carbon cap is still disputable and under scrutiny.

Each nation must have compatible infrastructure which is expensive

• Each of the nations in the cap & trade ambit will also have to invest millions of dollars for system & infrastructure integration without commensurate returns.

• To integrate with the carbon economy your investment will be high regardless of volumes, to ensure compatibility with global system.

So why is Carbon Cap the talk of town?

• But if capping or taxing carbon is so very problematic, why is everybody trying it

• How did the Carbon Cap theory come about and how did it become everybody’s darling.

A novice economist proposed cap & trade

•The Cap & Trade theory was first proposed by a student of economics Mr. Thomas Crocker in1966 who had no industrial experience & had not even finished his thesis at Wisconsin.

•Proposed at a Washington Conference in absence of pollution data of Fertiliser plants of Florida that was to be produced by him, Crocker suggested this unique theory of penalising polluters that heralded an unprecedented controversy amongst nations over the next 40 years.

Protectionist groups made it “The Green Bible.”

• Protectionist groups used it and quickly leveraged it reduce imminent penalties to violators, and also to stall direct U.S budgetary investment in clean energy, proposing a dicey Cap & Trade funding. These theories were pumped up during the early Bush era of 60s

The lobbies were now killing 2 birds with 1 stone

Cap & Trade Creators now debunk own theory

• 40 years after they proposed the Cap & Trade Theory the creators admitted their mistakes

• In 2001 Mr. Dales the author of ‘pollution property and prices’ admitted flaws in Cap & trade theory .

• Last month Mr. Crocker the creator of cap & trade admitted to WSJ that it was a mistake

• Ref: WSJ: http://tinyurl.com/qq2nqm

Why Asia is hesitant…

•Chasing gas will be always expensive

•Western nations have surplus to experiment

•They do not have billions to feed & clothe

•They have already built their infrastructure and enjoy funding experimentation, research& development that increases profitability & value addition and not efficiency or low cost development.

What Asia doesn’t trust

Politics in Western nations are influenced by their lobbies be it the oil or the investment community & devise expensive solutions to protect those interests.

They have adequate energy availability and have little stake in developing clean energy cheaply,& will keep trying indirect solutions that bring profits for its lobbies

Why Asia is scared• China , India and other Asian nations are

savings based economies, while the American economy is today debt oriented & based on financial trading & speculative investment.

• Why should Asia pump carbon savings into Wall Street, NYMEX or Carbon Exchange plc where poor regulatory mechanism is a order of the day and there is no respect for a transparent world economic order.

Macro level Objectives

• No provision in Carbon auctions or Kyoto pact stipulates that Carbon funds shall be essentially used for funding clean energy.

• Clean development is not mandatory.

• Kyoto’s main international offsets scheme, the Clean Development Mechanism http://tinyurl.com/59at69

Objectives & Reality• UNFCC Claims that 2.9 billions of tones of

Co2 could be reduced from 2006 -2012 by implementing Kyoto accord & Carbon economy could yield trillions of Dollars.

• CAN IT REALLY DELIVER ?

• Total global carbon revenue since the year 2006 is less than $ 1 billion • GHG & Emissions show marginal increase since start

of the Kyoto implementation period 2006

Wishful thinking

• The average price of Carbon auctioned last year in Europe & U.S. was less than $5/Mt

• As per CERA Estimates if Carbon prices increase to $ 60/Mt emissions will drop 22% by 2030

• As per CERA Estimates if Carbon prices increase to $ 100/Mt emissions will drop by 60 % by 2030

Carbon Prices to Emission(objective & reality graph)

0

5

10

15

20

25

30

35

40

45

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

bill

ion

met

ric

ton

s

CO2 emissionsat US$100/Mt

CO2 emissionsat US$60/Mt

CO2 emissionsat US$5/Mt

Can energy producers bear high Carbon cost

Let us say the Kyoto & CERA’s pipe dream comes true !!

Carbon prices rise to $60/MT or $ 100/MT

What then will be the cost of energy ?

Can consumers pay the cost

Can you pay for it ?

Will you ever allow it to happen?

Is wishful thinking enough to stop climate change?

See what You will pay

To understand how it will pinch your pocket see this Case Study of Allegheny Energy of Pittsburg, Pennsylvania, U.S. a 10,000 MW a large Coal fired utility, that isInvolved in emission cases in 3 states.

Allegheny Energy of Pennsylvania

• Producing 9730 MW ,• Coal consumed 19 million tonnes per annum• 4000 employees, major job provider in 3 states• Lowest generation cost. Sells both regulated &

unregulated power. • Co2 emissions 44,000,000 tonnes per annum

Allegheny Energy of Pennsylvania•Total Revenues $ 3Bn /year

•Co2 emissions 44,000,000 tons per annum

So Allegheny will pay and pass you the Bill for

•Carbon Price @5/Mt = $ 220 million/p.a

•Carbon Price @60/Mt = $ 2.64 Billion/p.a

•Carbon Price @100/Mt = 4.40 Billion/p.a.

Will you pay billions for cap ?

Even if you pay for it !!

• People have paid happily for TARP & Bailouts

• Let us assume they also pay for Carbon Cap.

• Does it solve the climate change problem ?

• No !

The emission story is never ending

Because after Carbon there is GHG.

After GHG there is mercury

After mercury there are toxic releases

And the emission list goes on happily ever after!!!

Let us see the Allegheny figures to find some more gasses to chase ?

• Nitrogen Di-oxide & Sulphur Di-oxide produced at Allegheny Energy increased by 8% during 2005-2007

• Co2 generation rose by 3 % from 2005 to 2007

• Mercury produced went up by 15% in 2005-07

• Toxic release inventory went down by 10%

But are these the only gasses that affect climate change ?

Well not really if you understand the core basics of industrial development worldwide.There are over 600,000 pollutants that cause widespread damage with a few million also ran’s.

We look next at CFC the refrigerant, that wasthe popular gas chase of the seventies, as it harmed the ozone layers. See list of the alternatives to CFC (not all ratified) by a single Chinese producer. Needless to say that COP 15 or the IPCC or any cap & trade scheme cannot chase all.

Few Refrigerant substitutes ( some untested) to CFC once considered harmful to Ozone layer in the 70s

Name Formula B.P(°C)vapor pressure

(25°C)barSubstituted

ProductsPacking(kg) ODP

HFC-134a CF3CH2F -26.1 6.65 R12 420\30b\50b 0

R407C R32/125/134a -43.9 11.74 R22 420\800\25b 0

R410A R32/125 -52.7 16.64 R22 420\800\25b 0

R404AR125/143a/

134a-46.1 12.6 R22 420\800\24b 0

R406A R22/600a/142b -32.4 6.8 R12 420\800\24b 0.05

R125 CHF2CF3 -48.45 13.71 R22/502 30b\50b 0

R124 CHClFCF3 -10.95 3.86 R22/502 30b\50b 0.02

R123 CHCl2CF3 27.85 0.96 R11/R113 30b\50b 0.02

R32 CH2F2 -53.15 17.02 R22 30b\50b 0

R152a CH3CHF2 -24.7 5.99 R12 30b\50b 0

R142b CH3CClF2 -9.2 3.15Refrigeration

at hi-temp

420\30b50b 0.06

What to monitor, whom to catch?

The biggest problem with emissions is that it has hundreds of forms, changing by the day, with new technological advances and adaptations

One of the largest sources of emission is from the unregulated rural Areas of Asia and Africathat is till date considered uncap able and un-taxable and even difficult to classify or quantify..

Moral of the story

• Don’t chase clouds• Don’t chase gasses• Don’t chase carbon• You can never cap carbon by penalizing• You can never tax carbon and reduce emission• And if you want to do it, prepare for

candlelight dinners……..

•What then do we do ?

Stop talking Carbon Rubbish !

Fund Clean Energy Direct

Find a positive solution !

.Will emissions ever drop if clean energy investments are not made today?

No !

You have to first invest in clean energy and then expect emissions to fall.

Let’s see what the experts say

•Global consultant Accenture in its climate change report 2009 says the onus is on U.S. and other developed nations to cut emissions by 90% plus to reach per capita stabilization levels.

• Norwegian Institute Of Science & Technology research indicates that there is a strong dependence of CO2 emissions on wealth. With a doubling of per-capita expenditure, the CO2 emissions from fossil fuel burning and industrial processes increase by 81% . Biggest offenders are

•Individuals who are big spenders.

Excerpts of data & analysis as in Accenture Report “The stabilisation challenge is massive and is not well articulated

by policy makers, nor well understood by business”

The USA would have to reduce current emissions by 95% and the UK by 90% to reach per capita stabilisation volumes Drive a compact car for 5,000km (2700

miles) orStay at home and run four 100 watt light bulbs for 8 hours a day for a yearorSit in the dark and watch your digital television for eight hours a dayorDrink two cups of tea a day and eat 0.5kg of fruit imported by plane a weekorReturn flight from New York to London (5560 km/3455 miles apart)

What can you currently get for your 1 tonne of CO2 per year?

Source: Accenture analysisData Sources and assumptions• Compact car emissions of 0.2 kg CO2 per km• Coal station emissions of 900kg CO2 per MWh• 40 inch plasma television power rating of 400watts, not left on standby• Typical time to boil 3kw kettle = 3 minutes• CO2 output from fruit inter-continental importation – UK Dept for Transport• Return flight based on 11,000km per tonne CO2

Per capita energy related CO2 emissions for selected countries and regions - 2004

0

5

10

15

20

25

US

A

No

rth

Am

eric

a

Ge

rma

ny

UK

Eu

rasi

a

Eu

rop

e

Glo

ba

l ave

rag

e

Ch

ina

Ce

ntr

al &

So

uth

Am

eric

a

Bra

zil

Sta

bili

satio

n le

vel

Afr

ica

Ind

ia

To

nn

es

CO

2 p

er

ca

pit

a p

er

an

nu

m

You can’t expect miracles to happen.

• Is it possible for U.S. and U.K. to reduce emissions by over 90 % as Accenture suggests

• Improbable• Is it fair to ask them to do so?• No….Not unless they are shown how to do it

through a positive profit plan • That is cost effective, global & has mass appeal.

• That is feasible, scalable and efficient.

NTNU says big spenders have largest footprint

Wealth and Responsibility •“The emissions of other greenhouse gases, primarily methane and nitrous oxides, increases less strongly with wealth, because they are mostly associated with food production. We see that for poor countries, food is the most important consumption category, while for rich countries, mobility, shelter, and the consumption of manufactured goods become more important “ says the Norwegian research.

•The NTNU graph shows exponential rise in carbon footprint as personal expenses rise from $10,000 p.a to $ 100,000 p.a plus

So can we tax the Rich ? … Improbable.

Emissions from Coal accounts for half of C02 but provides critical sustenance

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.020

00

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

bill

ion

met

ric

ton

s

CO2 emissions from Total Energy Consumption CO2 emissions from Coal Consumption

Micro level happenings for coal

• No significant reductions observed in major coal fired power, steel and cement plants.

• Increase of GHG observed at plant levels

• Increase of land and water based toxicity like effluents containing mercury, arsenic and other toxic chemical substances.

The dilemma !!!

Coal Power muzzles its way through in absenceclean energy of alternatives !!! Emissions peak.

You can’t stop coal…you can’t cap carbon…

You can’t pay a kings ransom for energy

You must not touch clean coal CCS as it is rubbish. Can you simply switch off.?

Improbable.

Top 10 Total Emission & Energy Consumption

Sl Nation/Gr Emission Elec. Power Pop Co2 /Capita Mn MT Co2 Kwh. /Capita Million Metric Ton 1 U.S. 7,900 13,700 295 26.80 2 Euro (Rest) 5200 6,900 320 16.25 3 China 3900 1,800 1300 3.00 4 Japan 1800 8,200 128 14.06 5 India 1800 500 1100 1.64 6 Germany 1300 7200 82 15.85 7 U.K. 900 6200 60 15 8 France 800 7900 60 13.3 9 Russia 1500 5800 142 10.56 10 Brazil 700 2000 190 3.68

Total Emission Data has been adopted from Norwegian Institute of Science & Technology Carbon Footprint Data released in 2009 while total population and energy consumption figures are from World Bank data which is updated by them up to year 2005

The haves & the have not syndrome

Three of the 10 nations India, China, Brazil have very moderate per capita emission as well as low per capita energy consumption

U.S. on the other hand is the biggest consumer in both areas with 25 times the energy and the per capita emission levels as India and even twice the levels of U.K. or France.

Developing nations need energy: You can’t stop that happening.

• U.S. wants India, China, Brazil to accept the same standards as its own self, for emissions and carbon cap though it has taken no significant steps in the last 15 years for emission reduction and capping solves no problem.

• Is it possible for developing nations to really implement reduction even if politicians accept the clauses on paper.

Improbable

So what then is Probable ?

Stop chasing carbon !

Develop low cost clean energy by direct financing

How ?

WHAT WILL STOP CLIMATE CHANGE

SHARPEN FOCUS ON ONLY 3 SCALABLE MASS PRODUCED GLOBAL SOLUTIONS :

Solar power,

Wind power,

Rainforest Plantation Projects

Only globalization can mass produce clean energy & stop climate change

• Apply the 4 forces of globalization

• Enterprise• Technology• Capital• Markets

The 4 forces of Globalization

• Combine the 4 forces, the competitive entrepreneurship skills and markets of Asia with the technology and capital of the West to create mass produced

low cost clean energy solutions.

How ?

• Watch for its release in October 2009

• “Cost reductions and positive solutions” for clean energy using the 4 forces of Globalization CE -91….onwards

Others to follow in the climate change positive plan “clean energy” series

CE 21…… onwards “Solutions in solar energy”

CE 41……. onwards “Solutions in rainforest plantation”

CE 61…….onwards “Solutions in wind energy”

CE 81…….onwards “The perils of carbon trade” CE91……. onwards “ Cost reductions and positive solutions for clean energy and climate change initiatives to make it a profit plan.”

Our references & acknowledgements

Economy to EcologyOur goal is to help promote clean, safe and better practices in economy and ecology worldwide. Balanced, efficient and a little more sustainable. Read more in : Amazon Kindle Blog : Ecothrusthttp://tinyurl.com/kpujfx

Accenture Report on Climate ChangeAllegheny Energy Data from Allegheny websiteCERA Reports on Carbon Economy Kyoto agreement & Data / UNFCCC & COP DataNorwegian Institute Of Science ReportOur Previous presentation on CE-01Telegraph U.K. and Wall Street Journal

Other Presentations by User

Business Risk Case Study – Ba 33 http://www.slideshare.net/SandipSen/business-risk-case-study-ba33

Climate Change Positive Solutions Series CE-01

http://www.slideshare.net/SandipSen/cop15bullshitting-15-years-on-climate-change

Other presentations by user

Business Risk management Serieshttp://www.slideshare.net/SandipSen/living-dangerously-managing-risks-in-business-ba01ppt

Business Risk Case Studies Ba31http://www.slideshare.net/SandipSen/business-risk-case-study-ba31

Business Risk Case Studies Ba32

http://www.slideshare.net/SandipSen/business-risk-case-study-ba-32-1751378

Authors Note

• The Clean energy positive plan series is an elaborate in depth study in the feasibility, scalability and efficiency of major solutions

and its user friendly low cost implementation with a total of approx. 30 presentations .

For any queries please e mail to sen.sandip@gmail.com