The GHG Management Institute is the host of the United Nations Framework Convention on Climate Change (UNFCCC) training programme for greenhouse gas inventory review experts for the technical review of greenhouse gas inventories of Parties included in Annex I to the Convention. This programme is being organized by the UNFCCC secretariat in response to decision 10/CP.15 of the Conference of the Parties at its fifteenth session (COP15).

This training course provides instruction related to the review of Annex I Parties’ greenhouse gas inventories.  The curriculum consists of online (e-learning) modules, followed by a training seminar and examination, taking place in Bonn, Germany, from 12 to 14 April 2010.

The following lessons are now offered as a part of this programme:

  1. Improving Communications and Facilitating Consensus in Expert Review Teams
  2. Overview of UNFCCC Review Process and General IPCC Inventory Guidance
  3. Agriculture
  4. Industrial Processes
  5. Waste
  6. Energy – Fugitive Emissions
  7. Energy- Fuel Combustion
  8. Land Use, Land-Use Change and Forestry
  9. Application of Adjustments
  10. Modalities for the Accounting of Assigned Amounts under Article 7.4
  11. National Systems
  12. Review of National Registries and Information on Assigned Amounts
  13. Review of Activities under Article 3, paragraphs 3 and 4 of the Kyoto Protocol

These lessons are delivered online and involve over 100 people participants from around the world. For more information on this programme click here or contact the UNFCCC Secretariat at GHGTraining@unfccc.int.

From Environmental Finance

The recent suspension of a leading CDM verification company has highlighted the need to ‘professionalise’ the auditors of greenhouse gas emissions, say Tim Stumhofer and Michael Gillenwater.

For the full story, please see the December 2009/January 2010 print edition of Environmental Finance:

http://www.environmental-finance.com/2009/0912dec/features.htm#nf3

Will carbon trading work?

December 14, 2009 11:41 p.m. EST – From CNN.com

(CNN) — Carbon trading — with its mix of free-market principles and government regulation — holds global appeal as a way for businesses to reduce emissions. But lack of a global market for carbon trade and questions over surveillance and accounting for pollution offsets raises questions about its viability.

The factors complicating accurate carbon-trading reportage begins with the “product” — in this case the absence of an invisible gas. Adding to the intangibility is the crediting of businesses for projected reductions in greenhouse gas emissions.

Read the article in its entirety - http://www.cnn.com/2009/BUSINESS/12/14/carbon.trading.explainer/

From Reuters News on 19 November 2009, 16:19 PM 
By Michael Szabo

LONDON, Nov 19 (Reuters) – An injection of U.S. talent into the $6.5 billion market in carbon offsets would help clear bureaucratic bottlenecks, making way for increased investment in clean energy, the CEO of a $310 million environmental fund said.Under the Clean Development Mechanism (CDM), an emissions trading scheme governed by the Kyoto Protocol climate change pact, companies can invest in low-carbon projects in emerging countries. In return they receive offsets that can be used towards greenhouse gas targets or sold for profit.

But long delays in approving projects and issuing offsets have forced many investors to the sidelines in the past year.

The U.S. decided not to ratify Kyoto in 2001 so its participation in the CDM has been minimal, even though the first emissions trading schemes were engineered by Americans.

“You basically have a global regulatory system staffed without the world’s most talented human resource pool, and it’s a big problem,” Assaad Razzouk, head of Sindicatum Carbon Capital, said this week.

“What the CDM needs is 20,000 products of the U.S. education system … You’ve got Europeans regulating a cap-and-trade system which was essentially invented by Americans.”

Razzouk said the United States, the largest emitter of greenhouse gases behind China, is not represented according to its size as an emitter and as a global economic and regulatory force.

“The transfer of knowledge capital did not occur, and as a result the U.S. is not represented in this market according to their weight,” Razzouk added. “We will have a system that works much better when they are involved.”

Through a fund of $310 million, London-based Sindicatum has developed an investment portfolio of 20 projects, 80 percent of which are in Asia and the remainder in the United States.

The projects, some of which are CDM registered, capture greenhouse gases emitted by coal mines, landfills and livestock.

The fund profits both through offset sales as well as by selling power generated by the projects. It is now 85-90 percent committed, prompting Razzouk to consider Sindicatum’s next step.

He told Reuters it is considering four options: start a second fund, raise private equity capital, publicly list in the U.S. and/or Singapore, or simply continue reinvesting revenues.

Razzouk said a decision will be made in the new year, at which point the company will relocate its headquarters to Singapore and move its European office to Cyprus.

“We’ve got to take a long-term view. We have no footprint in Europe, most of our projects are in Asia and more than 80 percent of our investors are U.S. institutions,” he added.

COPENHAGEN

A U.N.-sponsored climate summit in Copenhagen next month is expected to address CDM reform by attempting to streamline processes, which could result in shorter delays.

It was hoped that the talks would agree a successor to Kyoto, which expires in 2012, but there is a growing consensus that only a political agreement will be reached in the Danish capital, postponing a full treaty until 2010 at the earliest.

Razzouk said expectations of a deal at the Copenhagen meeting had always been unrealistic.

“I don’t know what people were smoking. I think expectations were wrongly raised for politicians to save us, and I think people should know better,” Razzouk said.

“There are 190 governments trying to negotiate a single treaty. My bet is they’ll agree at midnight on Dec. 31, 2012.”

Razzouk said Copenhagen was irrelevant to his company, and that it would benefit from a number of possible outcomes.

“Unlike many other companies, we’re not sitting being anxious about what happens in Copenhagen. I don’t care what happens and we can’t afford to build a business that cares.”

CLICK HERE FOR THE FULL INTERVIEW TRANSCRIPT

From Nathanial Gronewold, E&E reporter

UNITED NATIONS — As some 15,000 people gather in Copenhagen for a high-profile effort to create a follow-up treaty to the Kyoto Protocol agreement, some of the delegates will be absorbed in a more mundane, but important task. They must figure out how to reform of the Clean Development Mechanism, one of the protocol’s most visible and controversial parts.

But with so much emphasis placed on merely getting a new agreement, and with time carved out for high-level events, CDM watchers expect little in the way of progress to come out of the discussions.

“In terms of CDM reform, it’s mostly going to be on process side and Executive Board side,” said John Romankiewicz, an analyst at New Energy Finance. “We’re really not expecting major changes yet in the way CDM works.”

The managers of the Clean Development Mechanism, a group called the Executive Board, have been taking steps to improve and speed up the process, following requests issued from earlier meetings. But nations are now discussing the option to radically alter the very structure of the CDM after the Kyoto Protocol’s first compliance period ends in December 2012.

The biggest proposal on the table so far is to move away from the current project-by-project-based system to a more “sectoral” approach as touted by the European Union, setting up a system whereby emission offsetting is targeted at entire industrial sectors. Observers say E.U. officials are strongly pushing the idea on China, India, Brazil and other large developing nations — the hosts of the majority of CDM projects that industrial nations pay for as a cheaper way to achieve their emissions reductions.

The plan would give more substance to recent promises by India and China to reduce the “carbon intensity” of their economies as they become more energy efficient. Under the European Union’s proposal, nations would calculate what emissions from a certain industry would be under a business-as-usual scenario. The large developing states would be committed to keeping emissions under a certain level as their economies grow, but could earn CERs or other types of credits if industries perform even better than expected.

‘A radical rethinking’ under way

It’s a radical rethinking of the CDM that “would basically put all the weight on the host government,” Romankiewicz said. It would also take years to work out the details and would almost surely meet with resistance from those who are already critical of carbon offsetting.

If any reforms come out at all from this latest round of negotiations, they will likely be much more incremental than the creation of a sectoral CDM, experts say.

CDM reform efforts, now dragging on for years, are becoming increasingly bitter as the Executive Board gets more stringent in doling out millions of dollars’ worth of Certified Emission Reductions (CERs), the United Nations’ official carbon offset credit. As investor frustration builds and developing nations grow fearful of the possible end of the CDM, what was once a quiet discussion on the sides of climate change talks is now turning into a virtual shouting match.

The issue of CDM reform was brought to the fore last week after it was announced that the Executive Board is rejecting 10 wind-power projects in China on the grounds that they violate the CDM’s “additionality” requirement, the controversial rule that offset projects must prove they wouldn’t have happened without the opportunity to earn CERs. It’s a decision that’s groundless, emissions trading experts say.

“I honestly do not understand it,” said Kim Carnahan, an official with the International Emissions Trading Association (IETA) who is in Copenhagen this week to press for CDM reform. “I do not understand why you would disincentivize something that is obviously beneficial as wind power.”

Carnahan says that the rejection of the wind projects brings to light just how arbitrary and unpredictable Executive Board decisions are. Her criticism echoes numerous other complaints by CDM critics that the Executive Board seems to keep changing the rules as it goes. Project developers, this argument goes, have no recourse and can’t appeal rejections; meanwhile, the process is bogged down with applications easily taking a year or more to get through the system.

A Chinese puzzle

“As the Executive Board undertakes reforms to incorporate more objective, standardized criteria into additionality determinations, it will be possible to create a program that both ensures offset quality and is not overly burdensome or administratively complex,” conclude researchers with the Offset Quality Initiative (OQI), a coalition of six climate change organizations.

The China wind dispute is only the latest in a series of Executive Board decisions that have riled project developers and carbon traders. Observers note that in the past two years, the board has greatly increased the number of projects it pulls aside for review. The rate of rejections is also increasing as board members work to dispel concerns that illegitimate projects are being awarded lucrative carbon credits.

Last Friday, IETA issued a report heavily critical of the CDM as it is now run, detailing its concerns and recommendations on how to improve them. Citing an “enduring lack of predictability and consistency,” the trade group warned that would-be offset project investors are now pulling back in droves. The decision on Chinese wind will only fuel this trend unless reforms are immediately carried out, it said.

“We’re not kidding. Investors are pulling away, and they’re pulling away fast,” said Carnahan in an interview. “These messages that I’ve already gotten are stop investing in wind projects, and not just in China, either. It sends a negative message to all other countries that might be thinking about putting in a feed-in tariff.”

Shortly after launching its report, IETA issued a statement loudly condemning the Executive Board’s decision on Chinese wind producers. Board members say they have uncovered evidence that authorities in Beijing are deliberately adjusting the subsidies to wind projects to make sure to keep them eligible to receive CERs.

How do you define and enforce ‘additionality’?

The CDM office in Bonn, Germany, defended the board’s decision, insisting that it is limited to this particular case, as the projects owe their existence to Beijing’s feed-in tariffs for wind and not to CER revenue. The decision doesn’t effect other wind projects that may still be eligible, the office said.

“Projects must produce emission reductions that are additional to what would have occurred without the project,” CDM officials said in a note. “These so-called tariffs are revenue for the projects and, as such, factor in the financial viability of the projects, and thus the determination of additionality.”

Still, investors are demanding more transparency and clarity in CDM board decisions. Greater standardization of the process of project approval and rejection is also needed, and proponents of reform want the delegates in Copenhagen to finally allow carbon capture and storage projects. Traders also desperately want nations to set up an appeals process, independent of the Executive Board, and other strict guidelines to correct “a glaring neglect of administrative due process rules to ensure basic procedural fairness” that IETA and others see.

Michael Gillenwater, director of the Greenhouse Gas Management Institute, believes that much of the problems that plague the CDM could be due to a simple lack of expertise. Carbon calculating, offset project decisions and emissions trading are all relatively new fields still being developed. Project design, auditing and approval could be enhanced and streamlined with just better training, he said, pointing to a need for some sort of professional accreditation procedure.

“The analogy would be passing the bar, the medical board, or becoming a CPA [certified public accountant],” said Gillenwater. “Professional certification is a very common format for industries throughout the economy … and as the carbon market grows, part of the problem is that we need a clear pathway for people to get into the field.”

But the way changes are now moving forward — at a snail’s pace — isn’t working for carbon traders. IETA wants delegates at Copenhagen to appoint a separate body that would meet year-round and devote itself exclusively to enhancing the program. Simply forwarding yet another set of recommendations to the Executive Board isn’t sufficient, it says.

“Last year, they had over 40 different things they asked the EB to do, and the EB is so busy doing their daily work that they get around to doing almost none of them,” said Carnahan. “This is the kind of process that’s been going on the past four years.”



25 November, 2009 – Carbon Finance

Six non-profits have concluded that the Clean Development Mechanism (CDM) could provide sufficiently high-quality carbon offsets for a future US cap-and-trade programme, but have called for significant reforms.

The Offset Quality Initiative (OQI) has criticised the CDM’s additionality guidance – designed to ensure that carbon credits are only awarded for reductions that are ‘additional’ to business-as-usual – called for better oversight of project verifiers, and has suggested that the use of temporary credits for forestry projects be phased out, as they discouragement investment.

The OQI “neither endorses nor opposes the CDM”, but aims to objectively analyse it using eight criteria. It concludes by giving the CDM “a passing grade”, but suggested a number of improvements.

“While there have been concerns about the quality of offsets, especially regarding additionality and third party verification, OQI’s analysis shows that the CDM is making improvements to address the concerns of its critics,” said Michael Gillenwater of the Greenhouse Gas Management Institute, one of six OQI member organisations.

The OQI says that “CDM’s processes perform sufficiently against most of our core offset quality criteria” although it identifies “room for improvement”.

Specifically, the report argues that the guidance for assessing additionality is “too subjective and vague [and is] applied inconsistently”. It calls for more guidance to the Designated Operational Entities (DOEs), who are charged with verifying projects, and the use of standardised investment and analysis tools.

The report is also critical about the rigour of the CDM’s verification processes, arguing that DOE staff need better training and guidance, and that the practice of project developers hiring DOEs to verify their projects leads to conflicts of interest.

It applauds the recent suspensions of SGS and DNV, arguing that it shows that oversight is improving, and says that DOEs should be assigned to projects by a neutral party, and paid predetermined fees.

The report also calls for a move away from project-by-project emissions baselines towards more standardised baselines – such as those based on benchmarks. While the former approach “is generally sufficient to ensure offset quality”, benchmarking baselines for some project types “could help increase administrative efficiency”.

Finally, it finds that the use of temporary credits to address permanence risk in forestry projects – the danger that the carbon stored could be released by fire or pests – “may be overly conservative” and has discouraged CDM investment in the sector. Instead, it would like to see the use of buffer pools of excess credits or insurance products “to provide more market certainty”.

The OQI comprises the Climate Trust, the Pew Center on Global Climate Change, Climate Action Reserve, Environmental Resources Trust/Winrock International, the Greenhouse Gas Management Institute and the Climate Group.

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