The Sustainable Development Mechanism AKA The New Carbon Market Mechanism

 

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The Sustainable Development Mechanism is a new mitigation mechanism established in Art. 3 ter of the draft Paris Agreement. The purpose of this mechanism is to “promote the mitigation of greenhouse gas emissions [in developing country Parties] while fostering sustainable development….” In order to achieve its goals, the mechanism provides incentives for successfully mitigating GHG emissions. Under this mechanism, Parties that contribute to the reduction of GHG emissions in a host country Party can benefit from their mitigation activities by using the resulting emission reductions to fulfill their own mitigation ambition requirements.

Overall, the structure of the Sustainable Development Mechanism closely resembles the Clean Development Mechanism, which is the carbon market mechanism in the Kyoto Protocol. Carbon markets and offsets were created under Art. 6 of the Kyoto Protocol, which states that “…any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases in any sector of the economy….” Additionally, the Clean Development Mechanism was established under Art. 12 of the Kyoto Protocol, which provides a process for handling all of the carbon credits created under Art. 6.

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Ultimately, the major difference between the new Sustainable Development Mechanism from the Clean Development Mechanism is that carbon markets will no longer be limited to developed country Parties. Instead, all Parties will be able to participate in this mechanism. Expanding the scope of a carbon market mechanism to allow all types of Parties to participate in transferring mitigation GHG reductions is unprecedented. We don’t know how all Parties will use this mechanism or how successfully it will address sustainable development issues. Therefore, a  s a successful Paris Outcome appears to be on the horizon, this new carbon market mechanism is one more aspect of the Agreement that will be worth watching develop.

 

 


Carbon Capture Use and Storage: Still Deep in Controversy

At the ADP’s Technical Expert Meeting: Carbon Capture, Use and Storage (CCS), a panel of State Party and industry representatives discussed CCS challenges and ccs imageopportunities, focusing on financing and technology. CCS is the process for separating and then capturing CO2 from industrial and energy-related sources, then injecting it deeply into porous rock reservoirs. Though growing, there are currently a limited number of CCS projects worldwide. While addressing some of the some of the barriers to wide implementation, the panel on Tuesday presented an optimistic future for CCS in deceiving climate change mitigation targets.

Industry experts on implementation asserted that CCS is safe and that its main challenges come from lack of stable government regulation and financing, not inadequate technology. To demonstrate CCS technology’s safety, Norwegian Olav Skalmerås said his offshore natural gas processing plant had not seen any “surprises” since the project started in 1996. However, describing a regulatory barrier, Scott McDonalds, a biofuels development director from the US, said a developer must spend $10-15 million–just for permitting. Finances were mentioned in each presentation and the experts explained how current CCS projects depended on public financial incentives (or disincentives). For example, Shell’s David Hone said Canadian projects relied on $865 million in support from the Canadian government. Similarly, the US government has given subsidies for CCS projects. However, in contrast to projects depending on government aid, Norway’s high carbon tax served to precipitate CCS projects there.

Despite these hurdles, the panel envisioned a bright future for CCS. State party representative Matthew Bilson said that CCS is the cheapest way to fight climate change and is an absolute necessity for the UK, since it is a “small island” with little room for nuclear energy options. Though developing CCS infrastructure is currenlty hugely expensive, Bilson hopes that by the mid-to-late 2020’s CCS projects will be fully commercial, receiving “virtually no government support.” To increase implementation of CCS, the panel advocated greater collaboration between nations in transferring technology, regulatory models, and finances.

But, while these panelists painted a positive picture of CCS’s future, others would prefer to see a future with little or no reliance on CCS for climate mitigation. The concerns with CCS are numerous and come from sources as varied as AOSIS, Greenpeace, and Stanford. And even the panelist, when stressed during questions, admitted some other areas of concern, such as leaks or spills during transportation or blowouts in pre-injection processes.

Concerned with the injection itself, a group of Stanford researchers argue CCS, like other forms of geological injections, is likely to cause earthquakes. These researchers state, “Because of the critically stressed nature of the crust, fluid injection in deep wells can trigger earthquakes when the injection increases pore pressure in the vicinity of preexisting potentially active faults.” Brittle crusts, or potentially active faults, exist nearly everywhere on earth. Even if seismic activities are not strong enough to endanger people, they could compromise storage seals, causing leaks of stored CO2. Earthquakes from natural causes in the vicinity could similarly compromise CCS storage. Both resulting in negating the benefits of CCS. These researchers noted that highly porous, permeable, and weakly cemented geological formations may provide the safest storage locations, but limiting CCS to these areas makes it improbable or impossible as a method for significant reductions in greenhouse gas emissions.

Greenpeace attacks CCS on a number of fronts, including those mentioned above, like the high financial costs and potential for leaks. But adds the additional concern that CCS “uses between 10 and 40% of the energy produced by a power station,” so a power station must make more energy just to support its CCS process. Thus plants using CCS must increases their environmental impact. Greenpeace argues adopting CCS on a wide scale would “increase resource consumption by one third.” Accordingly, Greenpeace does not see CCS as a viable climate mitigation strategy.

In 2011 submission, the Aliance of Small Island States (AOSIS) expressed concerns with CCS and part of the Clean Development Mechanism (CDM) of the Kyoto Protocol. Though the Kyoto Protocol and its CDM may not be the vehicle driving future climate mitigation, AOSIS’s concerns are still relevant to future international climate discussions. AOSIS acknowledges the potential problems discussed above, involving leaks, impermanence, and negative environmental impacts, but still recognizes CCS as a valuable technology. AOSIS’s main issue with CCS is not its use generally, but its use as an offset mechanism. “Offset mechanisms do not contribute to global emission reductions,” so nations implementing CCS should not view those projects as a means of shirking emission reduction targets.  ADM-Plant_2

At the heart of the CCS debate is an issue of principles: CCS enables people to continue burning fossil fuels. This has its benefits: it has strong industry support and doesn’t threaten changing day-to-day lifestyles. But it also has its drawbacks. CCS encourages business-as-usual greenhouse gas emissions, but to stay below the IPCC’s target (raise global temps by no more than 2 degrees above pre-industrial levels), we may need a much bigger shift in the way we live and work.

The question is whether CCS should be one part of this shift or if it is antithetical to the goal. CCS requires huge monetary and resource investments that could perhaps be more fruitfully spent in other sectors. However, the industries with the means have the most interest in CCS, so why not let them finance it? (Here we can see the implications from different approaches: Norway’s high carbon tax strategy incentivized CCS without taking public funds away from other investments. The same can not be said where the US and Canada directly funded projects.)

Whether people should invest in CCS, they certainly are. As the first commercial scale CCS facilities are switched on, these benefits or banes will soon manifest. And as technology continues developing new techniques, concern and praise may have to adjust accordingly.  For example, a Texas company recently launched a project that not only captures the CO2 but recycles it by creating sodium bicarbonate and other products for sale. In a few decades, these efforts may surpass current expectations and leave us with a different world of CCS discussion.