Académie des technologies

Advice note on carbon credits

Academic Advice Note on Carbon Credits issued by the NATF Standing Committee on Energy and Climate Change, NATF, November 10, 2009

The so-called carbon market has demonstrated its capacity to change the behavioural pattern of certain economic actors in terms of their emission of GHGs. The so-called carbon market, measure decided at Kyoto, is a first step in this direction: the aim is to stop accumulation a “carbon debt” in terms of future generations. It primarily concerns major industry that burn fossil fuels.

The test period, 2005-2007, was followed by a period for applications, viz., the period 2008-2012. This gradual implementation of the measure allows us to vary the ceiling values of the quotas that would be assigned to European industrialists, in such a way as to attain a rather yet relatively stable low operational price (15 € per tonne CO2). It is not surprising, in the context of the recent financial crisis, that there has been an impact on carbon credit markets.

An analysis conducted by the Fellows of NATF led to drafting 3 recommendations, viz.:

1) 80 % of the carbon credit exchanges take place on the European markets and 20% on the Kyoto market-place, using the so-called MDP mechanisms.

The clean development mechanism (CDM) used the price of carbon to encourage developing countries to accept within their frontiers those projects that offer lowered carbon emissions. The countries in question are those situated particularly in the poorest parts of the world where the attribution of carbon credits should help participate in the fight against poverty and the pursuit of the objectives set out at the Johannesburg Summit in 2002. CDM must not only prove that intergenerational solidarity exists, but that today there is a degree of solidarity among members of our present generation. NATF is in favour of seeing the CDM generalised.

2) The sheer complexity and bureaucratic strings attached to the assignment processes of carbon credits favours those industrialist who are capable of preparing huge files (calling on assistance where needed from consultants and lobbyists (in chemistry, petroleum, gas, steel, cement … ). In particular, the so-called “additionality” factor of a given project, i.e., the fact that the carbon credit is used to set an emission savings policy in motion, call for a real degree of experience of the assessment criteria used and applied to the case. This tends to create a gift horse effect that naturally should not become a permanent source of gain. The majority of the “carbon income” therefore accrues to these major industrialists.

In contradistinction, so-called diffuse projects, whether in the energy sector or agricultural (methane) find it excessively difficult (and at too high a cost) to have access to carbon credits.

Certain excellent example do exist, in, for example fermentation biomass processes or combustion of residues of cotton or rice harvesting that allows you to provide energy to rural homes in South India, the purpose being to avoid local, excessive burning of wood: the reasons for this lack of profitability obviously lie in the too low price that the carbon credit market shows.

It is necessary to encourage integrator bodies (generally speaking the NGOs) that enable the actors to group smaller projects together and to provide admin. and legal support to help access the markets. It is also and especially important to decide on a credit quota from the CDM and allocate the credits to the component small-sized projects. In this way, there would, in essence, be a carbon market set aside for small-scale diffuse projects. A quota of say 1% for the poor countries concerned would prove significant, but the low price tag on CO2 will nonetheless remain a handicap.

The CDM can and should encourage diffuse solutions that, in the long term, will prove to be more efficient when it comes to limiting carbon emissions. Such diffuse solutions would often be applied to rural areas, whatever the country. They can also be applied in urban areas.

The Copenhagen Summit will decide whether or not to extend the system as it stands. Whatever the format of this extension, it is primordial that the procedures be coherent, that the assessment agencies have the means necessary to act rapidly and efficiently and that they themselves be subject to critical inspection.

3) The equivalent “weighting” of methane with respect to CO2 (1 CH4 for 25 CO2) is a decision made by the Intergovernmental Panel on Climate Change, IPCC, that places a priority on diminishing methane emissions. The fact is, however, that methane does not accumulate in the atmosphere, given than it degrades fairly quickly. The efforts that we are deploying today will not have any direct impact on the earth’s atmosphere in yr. 2040. We could give thought to a lighter weighting of methane, that can indeed be justified scientifically, but with the advantage the priority would then be more to decreasing CO2 emissions.