Navigating the Carbon Offset Markets The North American Ecotourism Conference: 2007 Katherine Hamilton Ecosystem Marketplace September 27, 2007
1
About the Ecosystem Marketplace “Bloomberg� for Emerging Markets f or Ecosystem Services: Carbon Markets , Water markets, Biodiversity Markets, Easements and Other Conservation Transactions Consistent, accurate information is critical for building these ecosystem service markets Daily news updates, feature articles, regular e-mail newsletters, and market watch 2
Carbon Markets: Tool for reducing greenhouse emissions by providing economic incentives for reductions Project based credits: emissions credits are the result of a specific carbon offset project.
Allowance based credits: are created and allocated under a capand- trade regime.
Ex. Kyoto’s CDM & JI, Voluntary Offset Markets
Ex. EU- ETS Trading Scheme; Chicago Climate Exchange 3
A greenhouse gas offset (or carbon credit) is:
•
generated by the reduction, avoidance, or sequestration of GHG emissions from a specific project
•
financed by an organization paying to compensate for their own emissions by enabling equivalent GHG emissions elsewhere
•
effective because greenhouse gases circulate evenly around the earth
4
Source: Climate Trust
NSW GGAS 20MT $225 M
EU ETS Vol: 1,101 Mt (CO2e) Value: $24,357 M CCX Vol: 10 MT Value: $38 M
Voluntary Offset 13.4- 30 MT $54.8- 100 M
CDM/JI Vol: 450 MtCO2e Value: $ 4,813 M
Source: New Forests/Ecosystem Marketplace, World Bank
5
6
How Can Carbon Offsets be Utilized?
•
REALIZE: Calculate personal or corporate wide emissions
•
REDUCE: Reduce greenhouse gas emissions directly
•
RETIRE: To reach more aggressive targets purchase offset credits (contribute to “lower hanging fruit” emission reduction projects elsewhere)
REALIZE
REDUCE
RETIRE
7
What are the benefits of using offsets? •
Finance more efficient global emissions reductions– often with other co-benefits & create incentives for emissions reductions
•
Enable institutions to reach more aggressive mitigation targets
• • •
Puts a price on greenhouse gas emissions A tool for education Can drive institutions to measure their greenhouse gas emissions
8
What are the Risks of entering the voluntary carbon markets? •
Lots of “junk” offsets available to purchase
• • •
Market maturing
•
Considerable misinformation & misunderstanding
•
Open to criticism about direct emissions reductions
Prices vary hugely Market in early stages of utilizing standards
9
How Can Ecotourism Providers Navigate this “Buyer Beware” marketplace?
• •
Do your homework to understand the basics
•
Repeatedly review if the money spent on offsets can finance equal or greater internal emissions reductions
•
Consider purchasing offset credits certified to a specific standard (Gold Standard, Climate Community & Biodiversity Standards, Voluntary Carbon Standard, Clean Development Mechanism etc.)
“What Gets Measured Gets Managed”: Calculate emissions
10
Resources: •
Offsetting Emissions: A Business Brief on the Voluntary Carbon Markets by Ecosystem Marketplace and Business for Social Responsibility
•
The Carbon Trust Three Stage Approach to Developing a Robust Offset Policy By Carbon Trust
•
Voluntary Carbon Markets: An Guide to What They Are and How They Work by Ecosystem Marketplace
•
State of the Voluntary Carbon Markets:2007 by Ecosystem Marketplace and New Carbon Finance 11
Carbon Market Terms •
Mitigation: attempt to prevent hazards from developing into disasters altogether, or to reduce the effects of disasters when they occur
•
Sequestration: The absorption and storage of carbon by “sinks” such as trees or soil
• •
GHG Abatement: Reducing emissions
•
Clean Development Mechanism: allows industrialized countries with a GHG reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.
Kytoto Protocol: An international agreement assigning mandatory emission limitations for the reduction of greenhouse gas emissions to the signatory nations.
12
Questions?: Katherine Hamilton Email: khamilton@ecosystemmarketplace.com Tel: 1 (202) 298- 3007
13