The past month was full of climate-related stories in the media, including speeches by the Pope in Washington DC and New York, the joint China-US statement, and the announcement of China’s cap-and-trade scheme starting 2017.
We may still hear about differences of opinion on what is causing climate change and what needs to be done and by whom, but it is happening, and that efforts to resolve these differences are made in conventions and meetings, in houses of Congress, in media or public debate.
It has been a fascinating time to be in the United States and watch as the media and American public were transfixed by Catholic Pope Francis’ whirlwind three city sojourn to Washington DC, New York City and finally Philadelphia.
It was a trip of firsts. Pope Francis became the first Pope to address a joint session of the US Congress and then a day later marking another first in addressing the UN General Assembly just before member states unanimously adopted Agenda 2030 and the Sustainable Development Goals (SDGs).
It was fitting and profound to have the Pope frame the global goals’ agenda with his remarks, since in many ways his recently released encyclical, Laudato Si, embodies the integrated and indivisible nature of the sustainable development agenda.
It puts both environmental protection and social inclusion as part and parcel to ending poverty and extending dignity instead of being an add-on or at worst an afterthought.
During his visit to Washington last week, China’s President Xi Jinping confirmed that the world’s largest greenhouse gas emitter, which has pledged to reduce its carbon intensity and reach a peak of overall emissions by 2030, will use a cap-and-trade market approach to help realize this.
China already has 7 pilot markets in cities and provinces in place that cover 1 billion tons of greenhouse gas emissions annually. Under the national scheme, now to go live in 2017, this could increase to 4 billion tons according to Chinese researchers - making it the world’s largest national emissions trading system.
It’s an exciting step and demonstration of China’s commitment to achieve its low carbon goals.
Many of my compatriots in Poland, where over 90 percent of power generation comes from burning coal, are concerned that the EU climate policy is a risky outlier.
They worry that the EU Emissions Trading System may expose domestic industry to unfair competitition and cause companies to move production to countries where emission costs are lower, something called “leakage”.
The two reports recently released by the World Bank may change this perception.
New York this week plays host to Climate Week 2015, where business and government leaders are convening to make pledges and commit to actions to demonstrate that development does not have to come at the expense of the environment.
One year ago this event was a forum for the New York Declaration on Forests, a public-private compact to end natural forest loss by 2030.
Now one year on, the World Bank Group remains an active partner working with countries and companies to help turn forestry commitments into actions on the ground.
This week, the World Bank Group released the latest version of our annual State and Trends of Carbon Pricing report. It reports that today,
This represents the equivalent of about 7 billion tons of carbon dioxide, or 12 percent of annual global greenhouse gas emissions.
As world leaders come together at the UN General Assembly to adopt new sustainable development goals, climate change activists gear up for Climate Week in New York City and the Pope brings his message to the United Nations, a shared vision of our future is coming into clear focus.
If we are to eradicate poverty, we need to tackle climate change. And since 2008, the $8.1 billion Climate Investment Funds (CIF) has been showing it is possible for countries to pursue sustainable development in a way that does just that.
More than two decades ago, the world agreed on the need to confront climate change.
The U.N. Framework Convention on Climate Change (UNFCCC) emerged in 1992, spawning a variety of negotiating forums with the goal of preventing catastrophic impacts from planetary warming caused mostly by polluting societies.
It's easy to overlook the progress that has occurred since, because we still have so far to go. Droughts, flooding and cyclones that already seem to be the norm are just the latest warnings of what is coming, and preventing much worse requires immediate and aggressive action to drastically reduce greenhouse-gas emissions.
China, the biggest source of CO2 emissions globally, accounts for more than 27 percent of the world's emissions. China is the first developing country to control CO2 emissions through a cap-and-trade system. Once a national carbon market is established, which could be as early as 2017, China will overtake the European Union (EU) to become the biggest carbon market in the world. The Chinese market will significantly alter the balance of power in global carbon markets in the mid-term. Significant challenges remain, and the IFC, a member of the World Bank Group, is helping China to overcome them with a project in Shenzhen that addresses key barriers to carbon trading.
Fundamentals of Emissions Markets
Once a liquid carbon market has been created, trading will mostly happen via forward and futures contracts. These instruments help companies to protect themselves against volatile prices and to hedge their carbon position. In the EU, exchange platforms emerged as one of the main mechanisms aimed at simplifying transactions, reducing risk and facilitating transparent pricing. As trading platforms, exchanges can facilitate price discovery and offer hedging products.
The financial sector and financial institutions (FI) play a fundamentally important role in an emissions trading system. It is to be expected that most companies in China will trade with the help of intermediaries; only large emitters will trade directly at an exchange. Thus, FIs will be in a position to offer trading-related services, as well as advisory products, to clients subject to mandatory CO2 regulation.
Private investors bought price guarantees for 8.7 million tons of methane emission reduction in an innovative auction, attracting bidders from across the globe.
The Pilot Auction Facility for Methane and Climate Change Mitigation (PAF) provides support to businesses that invest in climate friendly projects. The first pilot auction was held online on July 15, 2015, auctioning off price guarantees, or put options, targeting methane reducing projects.
By providing a floor price for captured methane, the PAF offers private investors a financial incentive to fund carbon capture. Using an auction maximizes the impact of public funds dedicated to slowing climate change.
Here’s my journal entry from the day – July 15 – auction day (at last!)