The latest issue of GHGMM can be accessed online here. The journal is available free of charge to GHGMI Premium Members. Access instructions for GHGMI Premium Members are available here. Not a GHGMI Premium Member? Click here to learn more or sign up.

Although I have done my share of dodging the question over the years, it has been the deep dive discussions on offsets (including the work we did as part of the Offset Quality Initiative) that led me to realize, not only did I not fully understand additionality, neither it seems did anyone else. (Or at a minimum any additionality experts out there seem to have serious trouble articulating their full comprehension of the topic.)

There are, of course, lots of opinions about how impossible or complicated additionality is to apply. But it was only when I started looking into the reports and other literature, with the sole purpose of studying how additionality and baselines were addressed, that I realized we had a real problem here. No wonder people are skeptical about offsets. If you look at the climate community’s own words on the subject, we don’t appear to have a handle on a concept we have championed as integral to the policies we have created. Language on additionality and baselines is vague, inconsistent, or both. No two authors seem to define these concepts in the same way without falling back on some platitude like “business as usual.”

Now, it is at this point where I expose a bit of my personality. I have a tendency to be a bit of a gadfly at times (some might go as far to say this time it is more of a Don Quixote complex). Would you spend several years researching and writing a paper on additionality? Well I did. And further, I wrote three papers.

(As an aside, some of the impetus for this research came out of my work comparing Renewable Energy Certificates and carbon offsets and thinking about what really justifies a claim that an activity actually reduces emissions.)

So before I go any further, here are the papers. We released an earlier version of them several months ago. Since then I have received comments from a number of you (thank you!). The versions we are releasing now incorporate the comments as well as some other improvements.

• What Is Additionality? Part 1: A long standing problem
• What Is Additionality? Part 2: A framework for a more precise definitions and standardized approaches
• What Is Additionality? Part 3: Implications for stacking and unbundling

Each of the three papers does something different. Part 1 explores how we got here. Why is additionality important and why is it such a mess. It concludes with a definition for additionality and baseline that addresses some long standing problems.

Part 2 is a beast of a paper. So be prepared. It dives deep into how to be more rigorous in the application of additionality and baselines and do so in a way that enables the development of standardized approaches. Part 2 has an element of guidance to it, but more importantly, it walks you through the theoretical questions we need to answer as a community if we are to defend offsets as a legitimate policy mechanism.

Lastly, Part 3 takes a tangent into the world of credit stacking and ecosystem services. Once you have thought deeply about additionality, then you can reflect on how to deal with cases where you have multiple overlapping offset programs that are crediting multiple environmental benefits. As we know, many project activities produce benefits other than just greenhouse gas emission reductions.

All three papers are written in an academic style. In this blog, I am not going to try and give a complete summary of them in a non-academic style. But I will make a few points.

Defining the definitions

Hopefully, it is already clear to you that proper consideration of additionality and baselines is key to the environmental integrity of offsets. I would go even farther and say that the very concept of an “offset” requires the concept of additionality. You can’t say you have offset some harm unless you can show that you “caused” some equivalent extra good to occur elsewhere. Additionality is about this causal question.

To start, we need to clarify the precise “cause and effect” we are concerned with in the context of project-level accounting for emission offsets? For us, the “effect” is the implementation of the proposed project (the effect is not the reduction of emissions…see Part 2 paper for an explanation why).

Next, we need to specify our “cause”? You can’t try and predict an effect if you never bother to identify the cause with which you are concerned. Ignoring this issue is like saying:

Betsy: “Why should I trust that this offset credit is real?”

Tom: “Because, we caused the project to happen.”

Betsy: “OK, how?”

Tom: “Well we don’t know how, and we avoid thinking about what we did to cause it. But we know we did cause it to be implemented.”

In the offset community this line of thinking is epitomized by the vacuous, and unfortunately widely used, phrase: “the project would not have occurred otherwise.” This type of language is problematic because it is half a thought: Otherwise except for what?

The “cause” is the policy intervention recognized by an offset program. It might be limited to the economic incentive created by the GHG program (i.e., the risk-adjusted offset credit price signal), but it does not necessarily have to be limited as such (for why, see the Part 2 paper). The additionality question then becomes whether this intervention caused the proposed project to happen or whether there was no behavior change resulting from the intervention. How do we answer this question? By assessing whether the proposed project is the same as its baseline, which, if so, indicates that the policy intervention had no effect. Therefore, the definition of additionality is contingent upon the definition of a baseline. And what is a baseline? Well, it is what would occur in the absence of the policy intervention, holding all other factors constant. So, again, we are back to the importance of being precise about what we recognize as the policy intervention.

The problem here is that few GHG programs explicitly specify what they recognize as their policy intervention. Therefore, they leave it to validators, project developers, and media reporters to guess and play games with what is additional. Further, and probably more importantly, their lack of specificity makes it impossible to falsify a determination of additionality. We especially need to be precise about the recognized policy intervention before we can develop standardized approaches (i.e., we have to know what we are setting a standard for).

Avoiding linguistic traps

But my biggest annoyance when discussing additionality —and a very common trap that’s snared no shortage of climate policy wonks— is the circular definitions error. How many times have you read or heard someone say that additionality is about what “would occur without the project” (e.g., the Kyoto Protocol itself includes this type of language). The problem with this way of thinking is that we are trying to understand a cause and effect relationship, as discussed above. We are trying to decide if behavior is being changed. The project cannot cause itself to happen. That makes no sense. It is not the absence of the project that is the defining characteristic of a baseline. It is the absence of our recognized policy intervention. This is what is meant by circular definitions. Saying something causes itself puts you in a meaningless logical loop.

Critics will say that we can’t go trying to get inside the heads of every project developer and investor and predict why they are doing what they are doing. I agree. But it would be good enough to predict what a typically project developer would do. What would a reasonable project developer do under typical conditions in this industry or country under conditions where the recognized policy intervention is absent? This is our baseline.

If we are very precise about our recognized policy intervention we can then call on critics to use more rigorous testing and analysis in their arguments rather than vague challenges. Likewise, we can provide validators and methodology developers clear guidance on what their standardized approaches are to approximate.

Another reason there is so much confusion and frustration on the topic of additionality is that most GHG protocols and standards have provided little help. Both the ISO standard and the GHG Protocol for projects basically punted on the topic. We have gotten so used to sloppy and vague language on additionality and baselines that these non-definitions have started to sound like they actually mean something. Since no one seems to say anything that sounds carefully crafted, we assume it must be OK for us to do the same. It is a classic case of groupthink.

I know this is a challenging topic (and one that most really do not want to discuss), but it is not going away. Either, as a community, we deal head on with the conceptual challenges of additionality and baselines, or we should just walk away from offsets as a policy mechanism. I’m convinced that for us to make progress on offset policy, we first have to be far more precise in our thinking about additionality and baselines.

I look forward to hearing your thoughts and comments on my attempt to do just that.

Epilogue

Why is the GHG Management Institute publishing these discussion papers? To be clear we are not a traditional research institute or think tank. There are plenty of those already. And while we are highly cognizant of the value of research and academic inquiry (we even sponsor a peer-reviewed journal), it is not part of our mission to add to the ongoing 20+ year avalanche of policy white papers and reports. Indeed, we long ago determined that our greatest contribution comes in changing the way GHG management is taught, technical skills are developed, and the resulting practitioner class professionalizes. As we work to achieve that mission our research program selectively identifies neglected research questions we believe are key for the GHG community to grapple with for the benefit of all and to further develop ourselves professionally.

As an organization that makes a concerted effort to avoid wading into political debates, this is a season when we have historically parried “how was the COP?” questions to others’ analyses. This year, however, it’s been difficult to ignore that most questions about the COP have come wrapped around off-hand observations on the meeting’s outcomes; casual analysis that, intriguingly, seems evenly split in calling out Durban’s success or failure.

What do I mean exactly? Let’s look at the example of a holiday party I attended last week. As the event was hosted by a climate NGO (not GHGMI), it was inevitable that the fact that I had just the day before stumbled off a plane from South Africa after two weeks in Durban would work its way into cocktail fodder (though I should mention that the canapés garnered impressive conversation attention as well). Puff pastries aside, when the conversation did finally turn to the COP, a great climate see-saw began:

“How was the COP? It must have been so inspirational — they finally broke through the Berlin Mandate!”

“It sounds like not very much was accomplished in Durban. Did you at least have a good time in South Africa? Are they going to keep having these annual climate meetings?”

“What do you think of the Durban Platform? They really saved the process by the skin of their teeth, eh? Glad we’re finally going to see binding action for all major emitters. Did you get out of the conference center at all?”

“Another roadmap — sounds like Bali redux. Those diplomats have gotten really good at kicking the can down the road. What is Durban like? Did you have good curry?”

And back and forth we went.

Two images of Durban

Images courtesy of IISD

Considering my own post-COP reflections, with these contrasting cocktail party voices dancing in my head, two competing narratives take form. Just as the above images convey two perceptions of the COP, the eyes and ears behind those perspectives are more than ever writing to different audiences.

One need look no further than the Earth Negotiations Bulletin summary for one perspective. The ENB, famous for covering the minutiae of the negotiations, is the first stop for those tracking the pitch and roll of the UNFCCC’s awkwardly-acronymed negotiating tracks. At the end of each UNFCCC session the ENB publishes both a long form technical wrap-up and a shorter high-level summary. Perhaps still high on the adrenaline of the COP’s overtime feats of diplomacy, ENB’s Durban summary reads like a victorious warring country’s account of the technical details of a major peace accord. You can almost read the grins of elation on the authors’ faces.

In contrast, a quick survey of commentators leveling their punditry at audiences less steeped in close to two decades of UNFCCC talks reveals post-COP analyses served up with everything from a dose to an extra generous dollop of cynicism. Writing to populations eager to see targets and policy mechanisms that correspond with the scientific imperative, these analysts translate the UNFCCC process in highlights, noting that Durban may have secured, from the brink of collapse, a roadmap to targets and corresponding reductions that notably transcend long-standing negotiating impasses. Yet, the same voices are quick to qualify this progress with the observation that the Durban Platform will not for years translate into the type of ambitious action needed to manage climate change.

Indeed both voices make the same high-level points, it is in the balance of their weighting that they diverge. Whereas one lauds the success in process and relegates external measures of success to footnotes, the other underscores the need for action and decries the slow progress of the UNFCCC process for its insufficiency in meeting the challenge.

Measured progress

So which is it? Was Durban the disruptive breakthrough that the ENB insiders would have us believe? Or just another year and another set of questions to be answered another day? Good COP, bad COP? Success or failure?

Amidst this debate, I reckon the most appropriate question is a clarifying one: by what measure success? Some observers may balk at the very thought of having to carefully qualify success metrics, lashing out against assiduously calibrated assessments as an exercise in rebranding failure or justifying incrementalism in the face of challenges requiring sea change. Such assertions are not without merit and indeed are emblematic of a flavor of activist pressure that plays a valuable role in the political discourse on climate action. But for those seriously looking to assess the progress of the negotiations, both context and metrics matter.

And here’s exactly where our two dialogues diverge. Whereas the ENB junkies may become so fully ensconced in the UNFCCC context, they celebrate procedural success in the face of what may seem to more casual observers as glaring omissions (i.e., no near term ambition; and many open questions for the medium to long term). (As one European headline rather pointedly put it: “Durban saves climate talks rather than climate.”) Conversely, much analysis proffering this breath of fresh air, weighing negotiating progress against measures from science and economics, does not fully account for the complex political economy of climate change and systematically undervalues the vast distance climate negotiations have come in addressing an unparalleled collection action challenge.

So what does this all mean? Aside from success being in the eye of the pundit, it seems like these two groups could use to listen to each other. Climate negotiations are complicated; yet complex or no, the timeframe for action is narrowing.

As for the holiday revelers, I punted, concluding that interpretation of the outcomes from Durban depended on one’s expectations and measures of success. And for the rest of the night I reverted to raving about the nibbles, sticking carefully to COP17 topics more befitting holiday cocktail conversation… “Did you know there was no side event catering in Durban?”

What was GHGMI up to in Durban?

In addition to a number of workshops, meetings, and exhibiting, we managed a frenetic slate of events at the COP. We are grateful to our partners, fellow panelists, organizers, and most importantly the engaged attendees that made these events a success. Below is a short list of some of the Durban events to which we contributed:

UNFCCC media training workshop for developing country journalists: The CDM and carbon market actors

GHGMI participated in a UNFCCC-hosted panel of carbon market participants examining the Clean Development Mechanism. An on-demand video webcast of this event is available on the UNFCCC website here.

Professionalization: A pathway to a mature, resilient, capitalized carbon market

GHGMI co-hosted —with the University of Michigan and the International Forest Carbon Association— a panel discussion on the GHG measurement, reporting, and verification and financial system investments needed to scale the carbon market participation. A short write-up of the event is available on the University of Michigan website here.

The 2nd International Compliance and Voluntary Carbon Market Assembly

GHGMI offered an update on the U.S. voluntary market as part of a panel of experts speaking on national carbon market innovations. A short summary of the event, coordinated by Climate Markets & Investment Association, Ecosystem Marketplace, and IETA/ICROA, is available on The CarbonNeutral Company’s website here.

Alternative markets for CERs in the absence of a global deal

In an event co-hosted by EcoMetrix Africa, Evolution Markets, and legal specialists IMBEWU, GHGMI provided perspective on the possibility of future U.S. federal, regional, and state (California) participation in the market for international offsets. The panel was organized around an article published in the Dec 2011/Jan 2012 issue of Trading Carbon magazine. The article “South Africa’s Carbon Crossroads” is can be found on p16-18 of the magazine and is accessible free-of-charge online here.

Verifying in a world of disparate accreditation models

GHGMI participated on a diverse panel representing offset project developers, verifiers, buyers, and GHG program administrators in an International Emissions Trading Association hosted panel examining the confusing and often “behind the scenes” world of verifier accreditation.

Press briefing announcing GHGMI and iCET Chinese training partnership

GHGMI held a press conference with a number of partners to announce the new Chinese training partnership. Click here for more information on this initiative.

Vancouver – West Coast Environmental Law, a non-profit environmental law organization, today released a report – Professionals and Climate Change: How professional associations can get serious about global warming. This report is perhaps the first in the world to examine the implications of climate change for professional associations regulating the qualifications and activities of resource and planning professionals, such as engineers, biologists, lawyers, architects and others.

West Coast Environmental Law has sent Professionals and Climate Change to over 70 professional associations across Canada inviting them to become climate leaders by specifically recognizing the professional obligations of their members in relation to climate change.

“Biologists, city planners, foresters, and other professionals are already dealing with the reality of climate change on the ground,” said Andrew Gage, the report’s lead author. “Our report highlights how professional associations can play, and in some cases are playing, a leadership role – giving their members guidance how to address climate-related issues competently and in a way that protects the public.”

“Climate change is an issue that affects all of us, and managing our activities should be a responsibility for all of us – including professionals in all sectors,” agreed Tom Baumann, P.Eng., co-founder of the Greenhouse Gas Management Institute. “There is a growing need for expertise in greenhouse gas management and this report provides important recommendations to engage professionals and their associations in ways that can achieve more progress towards managing and limiting the impacts of climate change.”

The Report identifies some examples of climate leadership already taken by Canadian and international professional associations, but invites professional associations to go further. Professionals and Climate Change challenges professional associations to (among other things):

• Recognize the urgency of climate change and call for governments to act;
• Require members to receive education and training on the implications of climate change for their professional work;
• Give direction to their members on best practices related to climate change; and
• Recognize their members’ professional obligations in relation to climate change.

For more information contact:

Andrew Gage, Staff Lawyer and Acting Executive Director, West Coast Environmental Law – 604-601-2506 or 250-412-9784

Tom Baumann, PEng, Co-founder, Greenhouse Gas Management Institute – 613-795-1158

###

Beijing and Washington, DC – The Innovation Center for Energy and Transportation (iCET), a leading think tank on climate change and sustainable development in China, and the Greenhouse Gas Management Institute (GHGMI), an international non-profit organization founded to build professional capacity in measuring, reporting, verifying, and managing GHG emissions, have partnered to bring an international training curriculum on GHG accounting and verification to climate change practitioners throughout China.

The world is facing the expiration of the Kyoto Protocol’s first commitment period, yet on the eve of the latest round of climate talks in Durban, South Africa, international climate negotiations are at a political stalemate. Moreover, while climate programs are emerging and expanding in some regions, financial turmoil and political gridlock have stymied efforts in key major emitting countries to comprehensively mitigate greenhouse gas (GHG) emissions.

Against these political headwinds China is charting an ambitious path, committing to carbon reduction targets in its 12th five-year plan and recently announcing an “exploratory phase” of a nationwide carbon trading program. Chief among the investments necessary to move down this path is the development of a competent emission monitoring and carbon management workforce. From developing the metrics upon which climate policies are implemented to assuring the accuracy of the data underpinning carbon markets, iCET and GHGMI’s joint initiative is fundamental to addressing the challenge of climate change.

This initiative will build on iCET’s Energy and Climate Registry (ECR) – the first voluntary and comprehensive online carbon reporting platform in China – and GHGMI’s carbon management education program –the world’s largest and most comprehensive GHG measurement, reporting, and verification course curriculum. The initiative aims to equip businesses, government agencies, nonprofit organizations, and communities throughout China with the capacity to manage GHG emissions. The partners will develop the workforce necessary for China to pursue a low carbon development pathway by working to improve the quality of Chinese greenhouse gas emissions data.

The GHGMI-iCET initiative will deliver a professional development curriculum in both Chinese and English complemented by comprehensive examinations assessing competency in GHG quantification and verification in line with international standards and best practices. The partnership’s first course on Organizational GHG Accounting will commence 8 February 2012 in Beijing, China. Other courses on Project-level GHG Accounting, GHG Verification for Inventories and Projects, and GHG Information Management Systems will follow.

About the Innovation Center for Energy and Transportation

The Innovation Center for Energy and Transportation (iCET), a leading policy think-tank in the area of low-carbon development and climate change, is an independent non-profit organization registered in Beijing, China and California, USA. iCET’s mission is to mitigate climate change through the promotion of low-carbon transportation, clean energy, energy efficiency and carbon management best practices in China. iCET pursues its goals by actively developing programs with wide range of stakeholders, including Rockefeller Brothers Fund, the Hewlett Foundation, and the Energy Foundation. For more information, please visit www.chinaclimateregistry.org or email luciagw@icet.org.cn.

About the Greenhouse Gas Management Institute

The Greenhouse Gas Management Institute (GHGMI), an international nonprofit organization, trains, certifies, and networks the global community of experts that account for, audit, and manage greenhouse gas emissions. The Institute’s membership includes individuals and organizations, from those new to the field to certified professionals, working on all aspects of climate change. GHGMI works with a number of leading climate change institutions and a globally distinguished faculty to develop and deliver training and professional development programs designed to build a robust workforce to support market mechanisms and other policy responses to climate change. For more information, please visit ghginstitute.org or email media@ghginstitute.org.

###

With the latest big annual United Nations climate conference just a month away in Durban, South Africa, this question is seeing attention from the press the world around. The question seems innocuous enough, but as with so much in climate policy —and particularly the UN process— answers come in pieces, with caveats, and almost exclusively in acronym-thick jargon difficult for anyone who doesn’t happen to be a full-time climate policy wonk to penetrate.

We are doubtless guilty of falling into the climate domain language trap ourselves in this blog, dissecting the often inaccessible nuance of carbon accounting program design. Complexity in past posts notwithstanding, we thought it might be timely and instructive to break down the post-Kyoto question for a broader audience.

Defining our terms: “The Carbon Market”

First, let’s talk definitions. If we’re to consider the impact on “the carbon market” what all exactly is wrapped up in the carbon market?

This is exactly where the challenge of addressing this question starts: whether written in the singular “carbon market,” plural “carbon markets,” or any of its synonymous forms (e.g., emissions trading, cap-and-trade, etc.) popular reference is almost always some form of catch-all term. What’s implied for inclusion under “the carbon market” (the form I’ll stick to in this post for continuity’s sake) may be everything from one discrete scheme to a few specific programs or an even wider net employing more generous interpretations of what should be considered.

The reality here isn’t necessarily as wide ranging as I may suggest, but the language is nevertheless imprecise, and it stands to reason that any question of analysis need at a bare minimum define its scope of coverage.

In the interest of not getting too bogged down with the details of different programs or going to the trouble of developing a taxonomy to academically address this definition, let’s consider at a high level a few different types of carbon market programs that are generally discussed. To keep things simple we’ll keep it to three labels: compliance, pre-compliance, and voluntary.

The compliance programs are perhaps the most obvious. These are programs structured around legal obligation. Compliance schemes may hinge on obligations at various levels, from international treaties, to national regulations, down to municipal ordinances. The key point is that meeting these commitments is compelled by law.

Examples include international (country to country) emissions trading under the Kyoto Protocol, national and supernational (firm to firm) emissions trading programs like the European Union Emission Trading Scheme (EU ETS) or New Zealand’s ETS, as well as other market-based national climate policies like Britain’s Carbon Reduction Commitment and subnational programs like the Regional Greenhouse Gas Initiative in the United States or the New South Wales abatement program in Australia. Programs that are in the design phase, but when operational will be obligatory, such as Australia’s freshly approved program or California’s cap-and-trade scheme, would also make this list when they formally start up. The compliance net should include both the programs themselves and also related offset programs that mint instruments accepted for program compliance.

Pre-compliance programs are slightly less cut and dry. Pre-compliance may mean different things to different people. For the sake of creating a definition so we have something to work with let’s consider the programs developed with the intent to support regulatory objectives. As any lawyer will tell you, intent can be quite difficult to prove, but we’re painting with broad brushstrokes for the sake of illustration. These programs might include initiatives established to eventually integrate with regulatory programs, or programs that might become compliance regimes themselves. Such programs may even have elements of law and regulation in them, but they don’t completely fit the bill of a compliance scheme.

In the context of the carbon market, “pre-compliance” is often used to describe offset project development that braves the regulatory uncertainty of early day program design (see Ecosystem Marketplace’s annual state of the voluntary carbon market report for one definition of pre-compliance). Indeed projects developed for use in future compliance programs, such as has been seen across the United States —most recently for California’s program— would seem to suit the pre-compliance label.

But looking more broadly, a strong case could also be made that larger-scale international initiatives like national and subnational (“nested”) avoided deforestation schemes (referred to in UN acronyese as “REDD” or Reducing Emissions from Deforestation and forest Degradation in developing countries) and “nationally appropriate mitigation actions” (NAMAs) —think: very large activities often on a municipal, sector, or even economy-wide scale— are also a part of the pre-compliance carbon market. These initiatives and programs look to tightly dovetail with future international agreements and associated markets, but are undertaken without a proper market to speak of today. Part and parcel to these larger scale programs is the development of emissions measurement, reporting, and verification (MRV) infrastructure at all scales. Finally, pre-compliance also includes a whole class of “voluntary” programs founded with an explicit or implied intent to transition to a compliance program. Examples include Japan’s voluntary “JVETS” program, the ever-growing number of voluntary schemes emerging in China, and even the now defunct US-based Chicago Climate Exchange.

Rounding out our categorization of the carbon market, voluntary programs would be those that don’t meet the “intent” requirement of pre-compliance programs. In other words, programs that are truly optional and don’t have serious designs on becoming part of the climate regulation edifice. Maybe they were designed to stave off regulation, give organizations an opportunity to prove their climate bona fides to stakeholders, or provide a mechanism for climate-concerned citizens to take some action on their own part. Whatever the reason, for this classification we’re talking about programs that are not going to tie into compliance programs anytime soon.

As with pre-compliance offsets, voluntary or “true voluntary” (to lean on another Ecosystem Marketplace definition) offsets —that is, those used for “carbon offsetting”— provide a good starting point for breaking out the voluntary carbon market. In reality these distinctions are quite porous, meaning what is pre-compliance one day may be compliance the next or even voluntary the next. (The Voluntary Carbon Standard’s recent name change to the “Verified Carbon Standard” concisely illustrates the fluidity of these classifications.) Without devoting too much energy to trying to create a perfect definition of “voluntary” here I think this and the other rough working classifications provide sufficient latitude to broadly break up “the carbon market.”

Now that we’ve gone through the trouble of breaking out the carbon market into its component flavors, let’s revisit that scenario we started with: There is no “successor to Kyoto,” — no second Kyoto commitment period or other binding collective target-based treaty agreement. Where does that leave the carbon market?

Compliance markets

First, let’s take a look at what happens without that Kyoto successor? For one, Kyoto’s first (and only) commitment period expires. And, with that expiration, out the window go international treaty commitments for Australia, Canada, Europe, Japan, New Zealand, Russia, and a few other former Soviet countries like Ukraine. Legally, that’s about it.

The expiry of Kyoto will close the door on one part of today’s compliance market, international emission trading between Kyoto countries (versus firms). But the Kyoto national allowance trading market, while large in scope, was just one compliance mechanism, and not a particularly active one. Other compliance schemes governed by national and subnational legislation have been clear in communicating that the conclusion of Kyoto commitments will not slow their programs. Indeed, the European Union Emission Trading Scheme, the world’s largest trading program by transaction volume, is actively continuing to expand its scope at the very time the region’s Kyoto commitments wrap up. In a similar vein, in Australia a slated carbon tax program is pegged to start up just as Kyoto winds down. (The Australian program ramps up ambition in later years, converting to a trading scheme in 2015.) Likewise, compliance programs have been ushered forward in countries without Kyoto targets in spite of the looming end of the Kyoto era and what many market participants would characterize as serious pessimism about the renewal of international commitments. (How much more aggressive the growth of today’s compliance market would have been with a global climate deal in reach we’ll never know.)

However, the Kyoto Protocol as a legal instrument survives and continues to be legally binding, as it does not terminate with the end of any given compliance period. The most notable surviving element of the Protocol in the absence of a second commitment period is the Clean Development Mechanism (CDM)¹ —an “offset” scheme that credits emission reductions financed in developing countries. The CDM plays maybe the most confused role in the post-Kyoto scenario. The offset program, designed as a “flexibility” mechanism for Kyoto compliance, was linked to other compliance programs, namely the EU ETS and the much smaller New Zealand Emission Trading Scheme. There is nothing to legally or administratively prevent the CDM from continuing to operate under the UNFCCC. The CDM is self-funding, and as long as the Parties to the UNFCCC agree not to shut it down and there remains demand for the offset credits it issues, it can continue. Notably, without international emissions trading, the CDM is left to serve as one of the few obvious options for linking various national and subnational programs.

Pre-compliance markets

Perhaps one of the most important considerations regarding the failure to re-up Kyoto is the degree to which policymakers and market participants have anticipated this outcome. Indeed, large pre-compliance initiatives (e.g., REDD, NAMAs) and supporting program capacity building efforts have emerged in a policy environment that arguably assumes no immediate Kyoto successor (or has at least seriously discounted the possibility). Time will bear out the assumption that these initiatives can survive in a post-Kyoto scenario, but the fact that these investments are being made as Kyoto elapses returns us to attempting to derive meaning for the carbon market.

Employing the strictest definition of what the Kyoto expiration impairs, the commitment period’s conclusion has no immediate bearing on these emerging mechanisms. In other words, they are not legally constrained without Kyoto’s targets. If anything a lapsed Kyoto commitment period, in removing the dominant regulatory structure under the umbrella of an international treaty, may open up more room for pre-compliance markets.

Voluntary markets

Finally, the voluntary market, much heralded as a proving ground for innovation, is not immediately impacted by Kyoto’s expiration. Hinging on corporate and individual sentiment and ambition, rather than government policy like the compliance and pre-compliance markets, the voluntary market is notoriously challenging to predict. Arguments could be made that a post-Kyoto conclusion of international commitments could either depress or invigorate true voluntary market-based efforts.

Checking the pulse

So in the end where does this leave us? I’ve tried to be reasonably even-handed, but, of course, in choosing to confront the supposition that the expiration of the Kyoto Protocol’s commitment period will be an end to all carbon markets I’ve addressed something of a straw man argument. In other words, no one who closely follows climate policy seriously believes that the end of Kyoto will, in one fell swoop, bring down with it the entire universe of market-based approaches designed to mitigate climate changing emissions. In contrast, what I meant to illustrate in this quick stocktaking is that in the absence of a Kyoto successor much survives. Critically, however, the markets do lose some other key institutional pieces, including a centralized structure (as observers and participants have been saying for some time the integration of markets is challenging without the coordination to link them).

Yet taking a step back from this exercise, all the stocktaking and legal analysis in the world still leaves us with a very poor proxy measure of the related looming question: When will the world show the collective ambition to seriously address climate change? …a question to which Durban is liable to provide another ambiguous, caveated, and buzzword-rich response.

What we can say is, from an infrastructure and market readiness perspective, a post-Kyoto world may not be in substantially worse shape to address that challenge.

¹ If anyone reading this can provide a clear explanation of what happens to the Clean Development Mechanism’s much smaller sister Kyoto offset program, Joint Implementation, in the absence of a second Kyoto commitment period please post in the comments.

ECO Canada Event for GHG Professionals: GHG Verification and Emission Calculations Workshop

November 1, 2011 8:30 a.m. to 3:30 p.m. – Toronto, Ontario – Evergreen Brick Works

Event Website: http://www.eco.ca/toronto

Event Registration Page: http://www.eco.ca/epeventregistration

Trainer: EP(GHG) Bill Palmer, a leader in greenhouse gas verification in Canada

Learn ISO 14064-3 verification theory and practical information on GHG emission calculations. Theory will be explored through real-life examples.

• Review of Basic Audit Theory with ISO14064-3
• How to conduct a Stage 1 Desktop Review
• What to look for in a Stage 2 Site Visit
• GHG calculation issues

Registration includes a seat at the ECO Canada Networking Luncheon with special keynote by EP Michael DeWit – ICFI’s EMS and EHS lead expert for NASA, IRS and Department of Homeland Security projects

Cost:

• Certified EP: Workshop & Luncheon $79
• Non-Member: Workshop & Luncheon $129

Note: Prices include applicable taxes

For further information on the event, please visit the event website or contact Megan Foreman at mforeman@eco.ca

In the United States, a near medieval political environment is even halting progress on clean air. And polls show fewer Americans believe anthropogenic climate change is a real and pressing issue than just a few years ago. More recently, the states’ sole up-and-running cap-and-trade program, RGGI, failed to attract bidders for all of its allowances available for auction —a shortfall partly rooted in weak target-setting. And anyone reading this blog is surely familiar with the potential for U.S. federal climate legislation or a major breakthrough at the UNFCCC negotiations in Durban.

If your spirits have not hit bottom yet, how about the recent study that finds our path to a low carbon future may actually be a bridge to nowhere. Tom Wigley at the National Center for Atmospheric Research is reporting that substituting natural gas for coal would likely worsen planetary radiative forcing when other pollutants (e.g., methane, sulfates, etc.) are taken into account. If this is correct, then the only real option is to go straight to eliminating fossil fuels (unless we find a way to deploy geologic carbon sequestration on a massive scale).

For you voluntary carbon offset market fans, we have definitely seen glimmers of progress. The voluntary market continues to innovate and mature, and is starting to prove its mettle as a testing ground for future compliance instruments. But let’s not fool ourselves. The true voluntary market (i.e., excluding some pre-compliance buying) is not booming. A number of large companies have recently backed away from their carbon neutrality pledges. (Note: These moves also have a lot to do with issues I have written on regarding Renewable Energy Certificates. See the links below for references.) As has been said many times, climate change is not a problem that will be solved through voluntary action. Solving it will require deep and broad international collective action through mandated regulation.

At the international level, NAMAs, LEDS, and REDD are the key buzz acronyms of the day. Now, these are worthy (although not necessarily new) concepts and there are many valuable initiatives now focused on fleshing out these concepts. But one observation I have made after working in climate policy for a number of years, is that our community resembles the boss in a Dilbert comic strip. We seem to jump from the latest management buzzword to the next like a teenager switching between clothing fads. This pattern is understandable given the composition of the community and the limited avenues we have to implement policy. For a community dominated by policy wonks and analysts, it is always the new policy idea that is more exciting and that can justify more analysis, more websites, and more reports.

But is a lack of policy proposals or analysis reports really something that is holding us back? There is certainly room for innovation and learning more, but I generally think the best way to learn is experimentation with its associated trial and error. Luckily, Europe continues to lead the way here, but they are still largely alone. And this is a problem that must be addressed collectively and globally. The optimistic look to Australia, California, and a number of other regional efforts as signs of hope. But, it is hard to argue any of these will be game changers.

To summarize the outlook for the short-term: the politics look bleak, the problem is probably even more difficult to solve than we thought, and we are caught in a circle of trying to analyze our way out of it, as if the cumulative mass of policy white papers will somehow move us into a new orbit.

As I have written previously, this has led me to focus on the longer-term. I do not think the problem is going away. I also think it is highly probable that society will at some point be shocked into action. So the question is what can we work on now that is focused on the long-term? A lot of resources are focused on advocating for action in the short-term. Much of which I’m not entirely convinced are a good investment.

I continue to watch the Arctic as a possible wake-up alarm to society. As a signal of the coming change, we are seeing new species migration corridors open up as the ice melts that are allowing Atlantic and Pacific species to begin mixing. And the sea ice extent in the Arctic continues to shrink at what seems like an accelerating rate. I will be curious to hear how news outlets openly skeptical to climate change will explain a North Pole without ice.

Focusing on long-term measures does not mean only putting money into research. There is a lot more that can be done to prepare and build infrastructure than just research. These other investments are what the GHG Management Institute was created for. The Institute is working on rigorous capacity building using time-honored institution of professionalization, which can be both a driver of change as well as a robust approach for preparing for the kind of serious GHG mitigation actions that will eventually be required. We expect the Institute’s work to have its biggest impact a decade from now as we slowly put in place a social infrastructure necessary to enable real action.

To governments, foundations and other funders: If you are interested in investing in this kind of long-term capacity building and change, we would love to hear from you.

Note References:

Gillenwater, Michael, “Redefining RECs (Part 1): Untangling attributes and offsets,” Energy Policy, Volume 36, Issue 6, June 2008, Pages 2109-2119. [Click here for pre-publication discussion paper version]

Gillenwater, Michael, “Redefining RECs (Part 2): Untangling certificates and emission markets,” Energy Policy, Volume 36, Issue 6, June 2008, Pages 2120-2129. [Click here for pre-publication discussion paper version]

Gillenwater, M., “Taking green power into account,” Environmental Finance, October 2008.

Gillenwater, M. and C. Breidenich, “Internalizing carbon costs in electricity markets: Using certificates in a load-based emissions trading scheme,” Energy Policy, Volume 37, Issue 1, January 2009, Pages 290-299. [Click here for pre-publication discussion paper version]

“Maintaining Carbon Market Integrity: Why Renewable Energy Certificates Are Not Offsets” Offset Quality Initiative, June 2009.

Now, more than a year after its initial launch, the Institute has partnered with the SEI to re-launch an updated CORE site to reflect recent program updates. In keeping with GHGMI’s mission to build the social and educational infrastructure necessary to enable climate change programs, the refreshed CORE site offers concise up-to-date programmatic detail across voluntary and compliance offset standards, making it both an excellent stand alone resource and an impeccable complement to GHGMI’s range of offset-related curriculum.

Please watch for these changes to be phased in over time. In the meantime, the current iteration of the CORE site offers a timeless introduction to many of the fundamentals that serve as the basis for specific programmatic rules and approaches.

A version of this blog post appeared as an article in an edition of The American College & University Presidents’ Climate Commitment “Implementer” newsletter.