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Carbon tax to meet climate concerns

India can display bold leadership by imposing a carbon tax on all fossil fuels in proportion to carbon dioxide emissions

Oil prices have plummeted since June 2014 by almost 60 per cent. This has obviously proved to be a bonanza for oil-importing countries like India just as it has seriously hurt oil-producing nations like Russia and Iran. The fall has been unexpected and what has added to the mystery is the behaviour of Saudi Arabia, the traditional “swing producer” in OPEC which has chosen not to cut production in order to boost prices.

The main reason now being adduced for the oil price decline is the re-emergence of the U.S. as a major hydrocarbon producer because of exploitation of its substantial shale deposits. Lower than anticipated demand, especially from countries like China, and anaemic economic growth in Europe have added to the pressure. As to the response of Saudi Arabia, the best guess is that it does not want to lose market share like it did the last time when it cut output to keep prices up. There are, of course, the usual conspiracy theories — that the Americans have put pressure on major OPEC oil producers not to cut output so that Russia could get hurt from falling prices. Another Byzantine view is that Saudi Arabia is not too unhappy with these prices since its arch-rival Iran is getting hurt and because over the medium-term it would discourage the development of new sources of supply that would threaten the Saudi position.

Revisiting an old idea

Whatever be its backdrop, the current oil price scenario offers the right moment for the international community as well as for major carbon emitter nations to revisit an old idea that has been around for quite some time as a way of dealing with the challenge of climate change — and this is a carbon tax. Economists mostly agree that such a carbon tax is the way to go, but it has faced tremendous political resistance, especially in the U.S. A couple of days ago, however, the influential economist Larry Summers, who has been a close adviser to both President Barack Obama and former President Bill Clinton, came out publicly in its favour, pointing out that a tax of $25 per tonne of carbon would add just 25 cents to the price of gasoline. There have been other intellectually weighty voices in the past who have advocated a carbon tax, William Nordhaus being perhaps the most prominent amongst them.

It is the political resistance to any form of taxation (what the late Sukhamoy Chakravarty, the distinguished Indian planner, had called the emerging fiscal sociology) that has led to systems of cap-and-trade being adopted to deal with the emissions problem. The EU has such a system, the Chinese have seven pilots and have announced a national initiative beginning next year, and the Americans too are putting it in place for carbon emissions from power plants. A cap-and-trade system puts a cap on the quantity of emissions (which is flexible) and the “rights” to emit are then traded for a price among classes of consumers. It has considerable appeal since it is “market-based” and it has actually been used very effectively to deal with the consequences of sulphur dioxide emissions from power plants in the U.S. (the “acid rain” problem as it is usually called). The cap-and-trade system does provide incentives for emission levels to decline. On the other hand, a carbon tax is much simpler and straightforward to design and administer since it does not involve fixing emission “quotas” for each emitting industry, which is technically very cumbersome.

“A carbon tax is simple to administer since it does not involve fixing emission ‘quotas’ for each emitting industry, which is technically very cumbersome”

William Nordhaus himself in his classic “The Climate Casino,” after an elaborate analysis of the two approaches, writes: “If I were put on the rack and forced to choose, I would admit that the economic arguments for carbon taxation are compelling, particularly those relating to revenues, volatility, transparency and predictability. So if a country is genuinely unsure, I would recommend it use the carbon tax approach.” Dale Jorgenson, one of the pre-eminent economists of our times, has taken the Nordhaus approach and asked the question: how to make it politically acceptable? In “Double Dividend: Environmental Taxes and Fiscal Reforms in the United States,” Mr. Jorgenson and his colleagues make out a persuasive case for a carbon tax in the U.S., but with a twist: that the revenues be used for a capital tax reduction with other countries free to recycle revenues in the matter they deem fit.

Actually, India has a carbon tax of sorts. It is not called as such but the United Progressive Alliance government’s budget of 2010-11 introduced a cess of Rs. 50 per tonne of both domestically produced and imported coal. Last year, this was doubled. However, the idea of this cess, it must be admitted, was less to curb carbon emissions but more to raise revenues for the National Clean Energy Fund. Of course, the Fund itself could well support carbon mitigation initiatives but its take-off has been slow so far since Finance Ministers see it as a source of mitigating not carbon but the fiscal deficit. The Fund has close to Rs. 15,000 crore already accumulated in it and this will grow rapidly as coal consumption increases. But the important point is that India already has an important half-step, even though its version of a carbon tax is not economy-wide and it is far below the levels that are generally accepted as being desirable (around $20-25 per tonne of carbon).

Mr. Summers’ plea comes with a catch: he wants the U.S. to impose a carbon tax on its own as well as a tax on the carbon tax on its imports, in order to goad other countries to adopt the carbon tax route. Perhaps he has China in mind since it has been estimated that at least a fifth of China’s emissions are because of its export sector. He seems to think that this will be World Trade Organization-compatible. But it will pose a huge threat to the world trading system which has produced tangible benefits for those who have harnessed its potential — like China and India — if it were to be used to meet climate policy objectives.

Requiring a different response

Some years ago, drawing inspiration from no less a person than Lord Keynes himself, the Nobel Laureate James Tobin proposed a tax on short-term currency transactions. This was later expanded to cover all short-term financial transactions and is widely known as the Tobin Tax. But it remains on paper as to which periodic obeisance is paid. The carbon tax is a similar development deity but it is an idea whose time has undoubtedly come given the current and expected oil price situation. In the past, oil prices have declined as they have in recent months; the commitment of countries to make the transition away from fossil fuels has perceptibly wavered. This time around, however, given the climate change imperative, our response has to be dramatically different. A carbon tax imposed on all fossil fuels in proportion to carbon dioxide emissions would signal that transformed thinking. It would generate the needed resources for low-carbon investments in a manner that does not add to the fiscal deficit and provide the impetus to a meaningful global agreement in Paris later this year in December. This could well be India’s moment of bold leadership.

(Jairam Ramesh was Union Minister of State (Independent Charge) Environment and Forests, 2009-2011).

Source: The Hindu

Germany’s $132 Billion Green Energy Lead Is Fortified by EON’s Split With Fossil Fuels

Photographer: Hannelore Foerster/Bloomberg

A crane operates inside the coal storage hall at the EON AG Staudinger coal-powered power plant in Grosskrotzenburg, Germany.

EON SE (EOAN)’s plan to spin off its fossil-fuel plants marks a watershed moment in Germany’s renewables effort that will likely bolster the country’s already leading position in clean energy.

EON’s announcement is the culmination of a push to wind, solar and other alternative energy forms that the German government began 14 years ago with subsidies to reduce the country’s reliance on fossil fuels for power production. That plan gained added momentum in 2011 with a decision to close the country’s nuclear reactors following the Fukushima accident.

Chancellor Angela Merkel’s bold move is already beginning to pay off, with Europe’s largest economy for the first time getting more electricity from renewables this year than any other source. About a quarter of Germany’s power now comes from green energy, compared with 6.2 percent in the U.S. and 4.8 percent in France.

“We are in the midst of a giant transformation process of our energy system,” Deputy Environment Minister Jochen Flasbarth told reporters yesterday in Berlin. “Renewables are the increasingly dominant factor in the German energy mix. EON’s decision is a piece of the puzzle.”

The government intends to go further, setting goals to increase the use of alternative energy sources to as much as 45 percent of all power generated by 2035 and boost that figure to 80 percent by 2050. Germany, where the eastern countryside is already dotted with thousands ofwind turbines, plans to do that in part by expanding large-scale offshore wind plants that can produce more reliably because the breeze is steadier at sea.

Photographer: Krisztian Bocsi/Bloomberg

Germany this year for the first time got more electricity from renewables than any… Read More

Closing Reactors

Merkel decided after the Fukushima accident in Japan to close the country’s eight oldest nuclear reactors and shutter the remainder by 2022. To reach stricter climate protection targets, Germany tomorrow will unveil details of a plan demanding additional emissions cuts from electricity produced using fossil fuel.

“Germany has some of the most ambitious climate protection targets and is radically rebuilding its energy system,” said Sven Diermeier, an analyst at Independent Research GmbH inFrankfurt who follows EON and rival RWE AG. “And now EON is attempting the most radical rebuilding so far of any large European utility.”

Germany’s push has come at a cost for the country’s utilities, energy-intensive industries and consumers. The influx of renewable power on the grid has undermined wholesale prices and decimated the profitability of coal and gas plants. At the same time, the taxes on electricity that subsidize renewable energy production has led to Germany having the second-highest household power prices in the European Union, according to Eurostat.

Subsidies

German consumers have paid a total of 106 billion euros ($132 billion) through the surcharge on their power bills to finance the clean-energy expansion. The annual cost may peak this year and drop slightly to 22 billion euros in 2015 as the government begins reducing subsidies for the industry.

Despite the expense, the shift has broad public support. A poll earlier this year showed 71 percent of Germans back the decision to close the nuclear reactors and 67 percent think the country isn’t doing enough to move to renewables, according to the Allensbach polling company.

Against this general backdrop, power companies in Germany are increasingly staking their future on green energy. EON after the split in 2016 will concentrate on renewables, distribution and marketing to households and consumers. The spun-off entity will include conventional power generation, global energy trading, exploration and production.

Renewables Focus

“There’s a new world becoming reality that’s driven by customers,” EON Chief Executive Officer Johannes Teyssen said today in Berlin of the plan to split the utility.

Vattenfall AB, owned by the Swedish state, wants to get rid of its German coal operations to focus on renewables, while ENBW Energie Baden-Wuerttemberg AG (EBK) last year doubled its asset sales goal to 3 billion euros to free up cash to invest in clean energy. RWE, Europe’s biggest corporate emitter of greenhouse gases, said yesterday it didn’t plan to follow EON’s lead. RWE last year generated more than half of its power in Germany with lignite, the dirtiest fossil fuel.

“Spinning off coal, gas and oil from the core business is a smart strategy for a future-oriented company,” said Patrick Graichen, head of Agora Energiewende. “I’m sure additional utilities will follow suit — not just in Germany, but worldwide.”

Electric Cars

Merkel is also trying to reduce the country’s emissions by pushing Germany’s auto industry to build more electric cars after French, Japanese and American carmakers got off to an early lead. Including vehicles like Bayerische Motoren Werke AG’s i3 city car and an electric version of Daimler AG’s Smart two-seater, German auto manufacturers will offer 17 electric-powered models by the end of 2014, and another 12 will be going on sale next year, according to the country’s VDA automotive industry group.

The chancellor today threw her support behind incentives to reach her goal of having 1 million electric cars on German roads by 2020. The country is behind on the effort in part because the government has previously balked at subsidies like those offered in France, where consumers receive as much as 6,300 euros to help cover the higher cost of low-emission vehicles. Electric car sales in Germany last year amounted to about 7,600 vehicles, while in France demand was almost double that at 14,400.

“There’s a lot to do,” Merkel said during a press conference in Berlin. “We see that further subsidies are necessary. We must speak with the German states about that.”

 

Source: Bloomberg

Adaptation, mitigation activities can control climate change – I.P.C.C. report

Climate change irreversible impacts to increase, however, there are options to adapt to climate change and stringent mitigation activities to manage it, finds new Intergovernmental Panel on Climate Change report.

The Synthesis Report, which sums and integrates the findings of the I.P.C.C. Fifth Assessment Report produced by 800 scientists (see related story), is the most comprehensive assessment of climate change.

“Our assessment finds that the atmosphere and oceans have warmed, the amount of snow and ice has diminished, sea level has risen and the concentration of carbon dioxide has increased to a level unprecedented in at least the last 800,000 years,” said Thomas Stocker, co-chair of I.P.C.C. Working Group I.

The document reports with great certainty than in previous assessment the fact that emissions of greenhouse gases and other man-made drivers have been the dominant cause of observed warming since the mid-20th century.

According to the report, the more human activity disrupts the climate, the greater the risks. Continued GHG emissions will further warm and create long-lasting changes in all components of the climate system, increasing the likelihood of widespread and profound impacts affecting all levels of society.

“Adaptation can play a key role in decreasing these risks. Adaptation is so important because it can be integrated with the pursuit of development, and can help prepare for the risks to which we are already committed by past emissions and existing infrastructure,” said Vicente Barros, co-chair of I.P.C.C. Working Group II.

But adaptation alone is not enough. Substantial and sustained reductions of GHG emissions are at the core of limiting the risks of climate change, as it will not only reduce the rate and magnitude of warming, but also increase the time available for adaptation.

According to experts, there are multiple mitigation pathways to achieve the substantial emissions reductions over the next few decades that will limit the warming to 2 degrees Celsius. But delaying mitigation to 2030 will severely increase the challenges associated with limiting the warming.

“It is technically feasible to transition to a low-carbon economy. But what is lacking are appropriate policies and institutions. The longer we wait to take action, the more it will cost to adapt and mitigate climate change,” said Youba Sokona, co-chair of I.P.C.C. Working Group III. – EcoSeed Staff

Source: Ecoseed

Now, sell solar power to discoms to reduce electricity bill

NEW DELHI: Delhi took a huge leap in renewable energy generation on Tuesday. Power watchdog Delhi Electricity Regulatory Commission (DERC) announced regulations for net metering of renewable energy, giving Delhiites a chance to become renewable energy suppliers. The regulations outline how people can generate renewable energy in their premises, and then reduce their electricity bills by the amount of power they supply to the grid. The regulations are expected to be enforced within a week.

While the net metering regulations apply to all forms of renewable energy like solar, hydro and wind, in Delhi only solar generation is feasible. Many households and organizations already generate solar power for their own consumption, but the new regulations will allow them to supply to the grid and receive energy credits or adjust the units supplied against their electricity bills.

DERC chairperson P D Sudhakar said, “With this, consumers can set up their own solar panels and either supply directly to the grid or use it partially. Whatever you supply to the grid, you can draw back whenever you need it”. How much power a person supplies and draws back from the grid will be metered. If they draw more than they supply, the difference will be billed to them. If they draw less, they will be given energy credits in the next billing cycle.

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To become a renewable energy generator, a person will have to apply to their area’s discom for a connection to the renewable energy system. The discom will then allow the connection after analyzing transformer-level capacity. “The capacity of renewable energy system to be installed at any premises shall be subject to the feasibility of interconnection with the grid, the available capacity of the service line connection of the consumers of the premises, and the sanctioned load of the consumer. Minimum capacity for the renewable energy system should not be less than 1kW peak,” said an official on Tuesday.

Two meters will be installed in the consumer’s premises — a renewable energy meter to measure total renewable energy generated, and a net meter to measure the difference between the power drawn and contributed to the grid. Check meters can be installed by either party at their own cost. “Charges for the testing and installation of net meters will be borne by the consumer, and those for the renewable energy meter by the distribution licensee,” the regulations state.

Many large-scale power consumers like malls, hospitals, schools and government buildings already generate solar power. “The MoEF building in Jor Bagh generates up to 1MW power which it is unable to use. Now it can supply its excess power to the grid and get adjustments in its power bills. We also hope households will opt for renewable energy generation,” said a DERC official. For discoms, the advantage is that any renewable energy they source in this way will count towards their renewable power obligations that they have not been able to meet.

 

Source: TOI, New Delhi

Forests for the future: Kenya’s carbon credit scheme

When 61-year old Mercy Joshua was young, the vast forests of southeastern Kenya teemed with wildlife, but decades of unchecked deforestation by locals have devastated the land.

She watched forests dwindle and rivers dry up across her homeland of Kasigau — a semi-arid savanna grassland dotted with shrubs, woodland and small rugged hills — as people cut down the trees to scratch a living by selling them for firewood.

But now, after decades of degradation, a local project has found a way to preserve the forests and support the community by getting international companies to pay to plant trees.

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“We were losing everything, but thanks to the project we have learnt even how to live with the wild animals,” Joshua, a mother of four, told AFP.

“These days, we don’t cut down trees… they are our friends,” she added.

The project has breathed new life into Kasigau, a 500,000 acre (200,000 hectare) dryland forest 330 kilometres (205 miles) southeast of the capital Nairobi that connects the two halves of Kenya’s renowned Tsavo national park.

Founded in 2009, it is part of a UN-backed carbon credit scheme aimed at stopping 54 million tonnes of carbon dioxide being released into the atmosphere over the next 30 years, equivalent to 1.2 million tonnes a year.

Leading buyers of the credits include Microsoft, Barclays Bank and Kenya Airways, which have invested $3.5 million (2.5 million euros) each since the project started.

These companies buy carbon credits by paying to conserve existing trees and plant new ones. The forests soak in carbon from the atmosphere, helping to reduce carbon dioxide levels in the air and so offset what the companies release themselves.

– ‘No jobs, no water’ –

The Kasigau scheme has also created a new source of income for impoverished local communities where most people scrape a living by hunting animals for meat or illegal charcoal production.

“There are no jobs here, no water, and I have a family to feed,” said Matthew Mutie, a 40-year-old father of three who supports his family by making charcoal for around $3 a sack.

“Most of the people in this area are subsistence farmers and in most cases their crops fail due to poor rainfall,” added Rob Dodson from Wildlife Works, which oversees the Kasigau project.

The scheme directly employs 400 people but also supports nearly 100,000 rural Kenyans in other projects, including sustainable charcoal production, tree nurseries, and eco-friendly craft products.

In a deeply poor region where many people live on $1 per day, the project has made a major impact, bringing in an average of $270 per person a year — about a quarter of Kenya’s GDP per capita.

“The project is a perfect example of how African countries can help in the fight against climate change, while at the same time benefitting the local communities,” said Josep Gari, from the United Nations Development Programme.

Kenyan officials said the Kasigau project was helping to transform people’s lives.

“Once an area is under a carbon credit scheme, the area becomes protected,” said Elijah Mwandoe, a senior local government environment official.

“We tell communities if you have a tree standing, it is making our air clean, and if we have clean air then we will all benefit and we will get rainfall.”

– ‘Help society adapt’ –

Deforestation accounts for roughly 15 percent of global greenhouse gas emissions every year, pumping more carbon dioxide into the atmosphere than the global transportation sector, according to Wildlife Works.

Global warming is already hitting southern Kenya. Tim Christophersen, from the UN Environment Programme (UNEP) said that climate change is “having an effect here on the local community… droughts are more frequent”.

In response, UNEP is “also looking at large-scale restoration of forest in Kenya to help society here adapt,” he said.

However, carbon credit schemes are not a panacea for global warming.

Some have been criticised for achieving little and being poorly policed, while a slowdown in global industrial production during the financial crisis has seen prices plummet.

But Gari insists that this project is generating wealth for the community, and so provides a more long-term bulwark against climate change.

The Kasigau team have succeeded in “accessing carbon markets in times of uncertainty and deflation for climate finance,” he said.

It has also helped to improve the local forest habitat, which is home to some 500 elephants, as well as lions, cheetahs, zebras and more than 300 species of birds.

“The greatest success is that generally people now see the value to the environment,” said Dodson of Wildlife Works.

“When we first came here we were shocked to see how rich the biodiversity of this area was and how poor the people were.”

Source: By Reuben Kyama | AFP – Sunday, Aug 10, 2014

Better Beleaf it! Man made leaf

The Royal College of Art graduate, Julian Melchiorri says the synthetic biological leaf he created, absorbs water and carbon dioxide to produce oxygen exactly like a plant.  His project entitled “Silk Leaf” had been exhibited as a final year project at his university and was featured in Dezeen and Mini Frontiers. The applications of this Julian believes could include be used as a medium in interior designing and architecture to it’s use in space. Check the video out for more information.

 

 

Minimum CO2 price of $32 needed to curb warming, study shows

Paris (AFP) – A global carbon price of at least $32 (24 euros) per tonne is needed by 2015 to apply an effective brake on global warming — almost five times today’s European market rate, a study said Monday.

Co-authored by British economist Nicholas Stern, an authority on the costs of climate change, the report reviewed a widely-used model for assessing risk and found it led to a “gross underassessment” of danger.

Emissions spew out of a large stack at the coal fired Morgantown Generating Station, on May 29, 2014 in Newburg, Maryland © Getty/AFP Mark Wilson

Emissions spew out of a large stack at the coal fired Morgantown Generating Station, on May 29, 2014 in Newburg, Maryland
© Getty/AFP Mark Wilson

This beefs up the case for strong cuts in greenhouse gas emissions, helped by a carbon price “in the range of $32-103 per tonne of CO2 (tCO2) in 2015″, said the study carried by The Economic Journal.

“Within two decades, the carbon price should rise in real terms to $82-260/tCO2,” it added.

Such a price should limit the concentration of greenhouse gases in the atmosphere to 425-500 particles per million, the level required to contain global warming to 1.5-2.0 degrees Celsius (2.7 degrees Fahrenheit), said the report.

The study was co-authored by Stern’s colleague, Simon Dietz, at the Grantham Research Institute on Climate Change and the Environment.

It was released a day after the close of UN talks in Bonn on concluding a deal to curb greenhouse gas emissions. The pact is expected to be signed in Paris in December 2015.

In April, the UN’s expert Intergovernmental Panel on Climate Change (IPCC) said the world can still limit global warming to relatively safe levels, provided annual emissions are cut by 40-70 percent by 2050.

The panel listed a global carbon price as one option for tackling the challenge. It warned temperatures could rise by up to 4.8 Celsius this century and sea levels by 26-82 centimetres (10-32 inches) on present emissions trends.

The International Monetary Fund and World Bank have also this year called for the introduction of a universal price on carbon — the most common greenhouse gas blamed for climate change.

For the moment, carbon prices are determined by national or regional systems — either as a tax on emissions or as a cap-and-trade scheme that allows companies to sell unused allotments.

The European Union Emissions Trading Scheme (ETS), the most ambitious cap-and-trade system in the world, has seen prices drop drastically from a peak of about 30 euros per tonne eight years ago to $7.7 (5.7 euros) today — partly due to countries issuing too many allowances.

The Stern-Dietz report said the standard DICE model used to calculate economic risks from climate change, also by studies included in the IPCC’s latest report, used unrealistic values and underestimated the potential damage.

The updated model, “strengthens the case for strong cuts in emissions of greenhouse gases,” Dietz said in a statement.

© AFP

Source: Magazine GoodPlanet Info

Japan ‘plans carbon offset scheme with India’

Tokyo (AFP) – Japan is set to offer India a carbon offset scheme that would see Tokyo’s environmental technology used by the rising Asian giant to help reduce its emissions, a report said.

The scheme would see Japanese firms earn carbon credits in return for helping developing countries reduce their greenhouse gas emissions, the Nikkei newspaper said in its Monday evening edition, adding India was a likely early partner.

Farmworkers prepare a flooded field for rice-growing as the chimneys of the Kolaghat Thermal Power Plant loom the background in Mecheda, around 85 kms south-west of Kolkata, eastern India on July 26, 2011 © AFP/File Dibyangshu Sarkar

Farmworkers prepare a flooded field for rice-growing as the chimneys of the Kolaghat Thermal Power Plant loom the background in Mecheda, around 85 kms south-west of Kolkata, eastern India on July 26, 2011
© AFP/File Dibyangshu Sarkar

The joint crediting mechanism (JCM) would encourage Japanese firms to participate by allowing them to promote technologies such as energy-efficient furnaces and air-conditioning systems, in developing countries with huge market potential such as India.

The Nikkei report comes as Japan struggles to further cut its greenhouse gas emissions, with businesses claiming many factories, vehicles and household appliances are already fitted with energy-efficient technologies.

It also comes as the latest energy white paper showed Japan is increasingly dependent on imported fossil fuels for power generation, with the public still unwilling to allow nuclear reactors to be switched back after the huge 2011 quake-tsunami disaster that crippled the Fukushima nuclear plant.

Under the mooted joint crediting mechanism (JCM), participating firms would be allowed to count the carbon credits as reductions in their own greenhouse gas emissions or could sell them to the government, the Nikkei said.

Japanese Prime Minister Shinzo Abe and his Indian counterpart Narendra Modi, who will visit Tokyo next month, will agree to speed up talks on the matter, the newspaper reported.

Japan has already signed JCM agreements with 11 developing countries, including Indonesia, Mongolia and Kenya.

Tokyo hopes carbon credits from the scheme could be used to come closer to its target of reducing Japan’s greenhouse gas emissions by 3.8 percent against the 2005 level.

Japan, which had relied on nuclear for over a quarter of its power, jacked up imports of fossil fuels to keep the lights on after the quake-tsunami disaster forced a shutdown of the country’s reactors.

About 88 percent of Japan’s energy came from fossil fuels in the past fiscal year to March, according to the white paper released Tuesday.

© AFP

Source: Magazine Goodplanet Info