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On carbon markets: ‘the valley of creation’

Ari Huhtala's picture

The climate conference in Durban in December 2011 agreed to start a process for a post-Kyoto agreement on emissions reductions. The negotiations in Bonn in the last two weeks did make some progress on the issue, at a snail’s pace, but strong signals for a solid, future carbon market are not in the air.

Carbon prices are at an all-time low and do not currently stimulate trade that would make a difference. Hundreds of carbon traders are flocking to look for new employment opportunities, hopefully not for good if the business picks up again in the coming years.

In spite all of this uncertainty, almost 2,000 people from over 100 countries, have gathered in Cologne this year for the 9th Carbon Expo. This is my second visit to this event and I was surprised to find the booths busy and plenaries full. Admittedly there are clear messages of supply surpassing the demand and the long awaited price signal still missing, but there were also some signs of relative optimism.

The annual World Bank report on the State and Trends of the Carbon Market 2012 was launched with a message that the volume of US$ 176 billion in 2011 was the highest ever (an 11% increase over 2010), but that this market is increasingly dominated by Europe. Pre-2013 credits from the Clean Development Mechanism (CDM), known as ‘Certified Emissions Reductions’ (CERs) went down by 32%, Joint Implementation activity was down by 36%. Post-2012 CERs grew by 63% resulting in a total volume of US$2 billion. Africa is emerging as a seller of post-2012 CERs, which is a welcome diversification from the earlier trade dominated by a few emerging economies.

Travelling by bus, car, boat and elephant in Indonesia

Robin Mearns's picture

Last week, a group of around 30 made a transect from West to East across Sumatra, Indonesia, to learn about forests, trees, landscapes, and the people whose livelihoods depend on them. We were often shocked by what we saw. After camping overnight in Tesso Nilo National Park, Riau province, we lumbered slowly on the backs of elephants through tracts of newly logged and burned forest land, some planted with rubber, and learned that over half the park area of 83,000 hectares was encroached and deforested. Tesso Nilo has the highest biodiversity index for vascular plants in the world, and is the last remaining habitat in Riau for elephants and the Sumatran tiger. With their habitat shrinking, elephants often stray into surrounding villages, causing significant economic damage. Villagers retaliate by poisoning the elephants. With support from the Worldwide Fund for Nature (WWF)-Indonesia, an elephant ‘flying patrol’ has been established within the park, staffed by skilled mahouts who have trained six elephants to help chase wild elephants away from villages and back to the park, thereby reducing conflict with the local population.

LED bulbs, potted plants and electric cars - the story of climate innovation in Vietnam

Anthony Lambkin's picture

We raised glasses and cheered to the future success of Mr. Minh’s company. I had just visited his manufacturing facility where his company ASAMLED produces light-emitting diode (LED) lights for a variety of applications. A 40 person start-up and the only LED lighting company to manufacture over 90% of the final product locally, ASAMLED had the makings of Vietnamese clean tech success story. But as the day rolled on, we began discussing the real challenges the company and industry face. Starting an energy efficiency business in a country where energy is cheap and Chinese importers (who he called ‘screw-driver innovators’) are plenty, is not easy.

He told me how ASAMLED was conducting market tests with dragonfruit farmers. Using LEDs at night, dragonfruit production could jump from four harvests a year to nine – good news for the Vietnamese farmers who supply 40% of the fruit’s market in Europe. But he explained research like this was expensive and difficult to do with limited resources. According to him, the World Bank-run Climate Innovation Center could help him advocate his technology, inform consumers and access funding to market test a host of new LED applications.

A new `Climate Normal' needed

Alan Miller's picture

The impact of climate change on investment and development is fundamental but is yet to be appreciated, or some in cases even understood. One related issue is a seemingly obscure technical calculation, the use of “Climate Normals” – a standard way of estimating the weather expected in a particular location for any given day. Such estimates have enormous significance for planning power plants, ports, water systems, roads, and long-lived infrastructure.

The difference between temperatures in the ‘70s (a cool period) and the ‘00s (the warmest decade on record) can mean large increases in summer peak demand. The planning of water supply and demand will similarly be dramatically affected with change in temperature and precipitation. Getting it wrong can mean serious under or over investment, with social as well as economic disruption.

The concept of Climate Normals was originally mandated by the WMO and IMO in the 1930s, initially calculated and updated every 30 years. In 1956, the same organizations recommended updates more frequently, every decade. In 2011, the leading US center for archiving and summarizing climate data, National Climate Data Center (NCDC), released the new Climate Normals that cover the period between 1981 and 2010, replacing the previous 1971-2000 installment. 

Take the Blue Line to social resilience

Margaret Arnold's picture

Ever wonder what the subway map of Seoul, Korea has to do with social resilience? A group of policy makers, insurance experts and development practitioners wondered the same thing as they mapped risk management strategies and political economy issues onto the subway line maps of different cities. While it seemed absurd, the exercise forced them to think about connections and relationships they may not have considered before.   The exercise was part of a retreat recently held at the Rockefeller Foundation’s Bellagio Center to advance a study led by the Social Resilience Cluster on Financial Innovations for Social and Climate Resilience (FISCR). The FISCR initiative is assessing the impacts of index insurance on the welfare and risk management strategies of poor households (for more details on the study, see here).

The format and structure of the Bellagio retreat and was co-designed by the Bank team and by faculty and a student from the trans-disciplinary design program of Parsons the New School for Design. The study team’s partnership with Parsons is a key innovation that integrates design thinking throughout the study’s design, implementation, and dissemination in order to increase its impact. Index insurance and social resilience are complex topics that are challenging to communicate. Working with designers from the beginning of the study allows us to view the issues in different ways and consider the ways to engage and empower the target audience throughout the entire process of the study. 

The FISCR study is unusual as well in that it examines insurance through a social lens. Index insurance schemes (mainly targeting poor farmers and in a couple of cases herders) have been piloted in a number of countries for more than 10 years now, as a way to help the poor protect their livelihoods.  Its proponents speak of great promise: engaging the private sector in the protecting the assets of the poor from climate shocks; enabling the poor to make more productive investments, and encouraging investments in disaster prevention. With these promises, index insurance and other market-based risk financing mechanisms have received a great deal of attention in the global discussion on adaptation financing, including the possibility of developing a climate risk insurance facility (see related Cancun agreement).

Apps For Climate – time to vote for your favorites!

Tim Herzog's picture

Apps For Climate enters a new phase this week. The World Bank’s innovation competition, which was launched at COP-17 alongside the Open Climate Data Initiative and the Climate Change Knowledge Portal, attracted about 50 qualifying entries. These are now on public display on the Apps For Climate websiteTake a look.

For those who have been watching the competition and wondering what developers might cook up, now comes the fun part: trying out the dozens of interesting apps and voting for your favorites. Voting for the Popular Choice category is now open and runs through April 27, 2012, with the winner receiving US$5,000. The entry pool contains something for everyone, including web apps, mobile apps, visualization programs, and games. Some apps focus on taking actions to reduce greenhouse gas emissions and others on different aspects of development and adaptation.

Formal judging also kicks off this month. The judging panel includes Christiana Figueres, Rachel Kyte, Rajendra Pachauri, Juliana Rotich, Andrew Steer, and Patrick Svenburg. This group will be reviewing the qualifying entries, and making awards based on originality, design, performance, and potential impact. We will announce these awards in June. There are 15 awards in all, with the first place winner receiving US$15,000.

Be afraid. Be very afraid

Dan Hoornweg's picture

Earlier this week, I read an article in Scientific American that had an ominous warning ‘global warming is close to becoming irreversible’. In typical cautionary climate-speak there’s a hope stated that “we can cap temperature rise to two degrees”. This is followed by a more subtle message, “we are on the cusp of some big changes”.

‘On the cusp of changes’ is an understatement. There are a half-dozen possible tipping points, crossing any of which gets us into scary unchartered territory. Ocean acidity and coral die-off; drying the Amazon rainforest; run away growing fossil fuel use; loss of ice sheets; large scale melting of permafrost: and the biggest tipping point of all – our amazing inability to come anywhere near an agreement limiting global GHG emissions and warming.

The article argues that unless we seriously curb the rate of growth of GHG emissions within the next 10 years, we will cross tipping points that lead to significant and irreversible global warming. And yet, all that was agreed at COP17 in Durban last year is for countries to reach an agreement by 2015 for action that will not start until 2020. Too little too late, according to the science.

The world will likely only see 450 ppm CO2 concentrations from our rear-view mirror as we hurtle down the express lane to at least 550 ppm CO2 and a 5 degree warming. What the article doesn’t say is that we will need to figure out how to geo-engineer some sort of amelioration. Good luck with that. We can’t agree on the much easier aspects of limiting GHG emissions; how will we ever agree on something as complicated as managing the planet’s climate?

Giving oceans a fighting chance

Mary Barton-Dock's picture

Last week I went swimming with manta rays, sharks and dolphins along some of the world’s most spectacular reefs. Well at least, it felt like I was swimming among them. With my special 3D glasses on, it was as if I was flying across coral atolls, plunging through clouds of jellyfish and darting in and out of brightly colored corals alongside hundreds of thousands of tropical fish.

In a new film by Luke Cresswell and Steve McNicholas – The Last Reef 3D: Cities Beneath the Sea – viewers embark on a worldwide journey to explore coral reef habitats from Palau and French Polynesia in the Pacific to the Bahamas in the Caribbean.

As visually stunning as the film is, it carries a very sobering message: human activity is having a significant negative impact on the world’s oceans.

Many of us who work on climate change and oceans have known about the threat from ocean acidification and warming for a long time. Increasing carbon dioxide emissions have resulted in rising surface and air temperatures. Moreover, ocean acidity is rising owing to an increased absorption of carbon dioxide from the atmosphere. Increasing acidity levels in turn make it harder for corals to grow and for shell-forming animals like mussels to build their protective housing, leading to knock-on effects of biodiversity loss in ocean called “dead zones”.

The movie’s message is reinforced by a recent report published in Science Magazine which says the oceans are acidifying at a pace not seen in 300 million years. Historically, ocean acidification has led to mass extinctions. What makes today’s situation particularly alarming is that the rise in CO2 is not due to volcanic eruptions or other natural occurrences but is the direct consequence of human behavior over the course of the last century or so.

Tar sands: The story behind the headlines

Alan Miller's picture

The complexity of climate change issue is a challenge for most mainstream media, which increasingly seek the shortest possible sound bite to interest an audience with a very limited attention span. Yet a recent example illustrates the importance of looking past the headlines to understand the importance and true meaning of scientific announcements.  The article featured the optimistic headline: “New study finds oil sands fuels would cause imperceptible temperature rise.” 

This declaration understandably attracted considerable attention from climate policy-watchers because Canadian oil sands (also commonly referred to as “tar sands” reflecting the heavy, molasses like quality of the substance) are the resource proposed for transmission via the controversial Keystone XL pipeline recently denied a permit by the Obama Administration. (Oil sands deposits have also been found in Russia, Venezuela and Kazakhstan, but a majority of identified reserves and virtually all commercial production are in Canada.)  

Some advocates for developing the oil sands see their use as essentially a national energy security issue, maintaining the pipeline is an important step forward toward fulfilling the long cherished dream of US energy independence, not to mention the potential to reduce or at least stabilize gasoline prices: ``Is US Energy Independence Finally Within Reach”, National Public Radio, March 7, 2012.

To be sure, the promise of lower gasoline prices and energy security are strong considerations. But an ongoing debate continues as to whether or not this economically attractive resource can be extracted, refined, and distributed without unacceptable environmental harm. This is why an otherwise academic analysis by Neil Swart and Andrew Weaver at the University of Victoria in British Columbia proved newsworthy. They calculated the global temperature rise that would result from the carbon dioxide released by burning currently proven reserves of Canadian oil sands: Neil Swart and Andrew Weaver, “The Alberta oil sand and climate,” Nature Climate Change, Feb. 19, 2012.

Disruptive Innovation needed, submit your ideas now

Jean-Louis Racine's picture

Henry Ford once famously said that if he had asked his customers what they wanted they would have asked him for a faster horse. If he had listened to his customers, the Ford Motor Company may never have existed, or would be called the Ford Faster Horse Company. The automobile became what is called a “disruptive innovation” meaning that it radically displaced the incumbent technology (the horse and carriage) by not listening to the demands of mainstream consumers, but trying to uncover their real needs.

This is the approach the World Bank is now prototyping in Indonesia: Trying to uncover the real clean energy needs of rural communities by understanding their underlying energy-related problems rather than simply asking them what technologies they want. The Indonesia Green Innovation Pilot Program is prototyping a new approach to fostering green disruptive innovation. The first stage of the program is being launched this week, and consists of identifying possible challenges – or problems – linked to energy in rural communities. In keeping with the logic of disruptive innovation, the program does not start with a market demand study, or a survey of clean energy solutions in the market, but with uncovering stated and unstated needs that affect the population of a rural community in their everyday lives. This is being done in three ways: One is through field research by a team of designers from Inotek and Catapult Design, a second way is through consultative workshops in Jakarta and in the rural communities,  and a third is through a “call for challenge” where the program is using a crowdsourcing approach to collect problems linked to energy in rural Indonesian communities. If you are in any way familiar with rural Indonesia and its energy challenges, the program invites you to submit a challenge through this website.

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