Posted by Stuart D. Brewer January 3, 2012

Success in Durban cannot disguise need for climate adaptation

DNV’s Bjørn Kj. Haugland argues the case for a risk-based framework for tackling unavoidable climate risks

Last month, the world’s heads of state, government, industry and NGOs met in Durban, South Africa, to discuss our common future. These climate negotiations were more successful than many people had feared. A new international climate agreement will enter into force in 2020. This agreement makes life more predictable for industry and supports a future based on low-carbon technology. But we cannot rest on our laurels because– irrespective of political processes –  climate forces are wreaking havoc everywhere, both in Norway and worldwide. The authorities are drowning in information but lack knowledge about how to adapt to the climate changes we are already facing.

A number of Native Americans in the town of Kivalina in the wilds of Alaska are currently suing oil and energy companies, accusing them of destroying the basis of Kivalina’s life. The town depends on ice formations which protect it against the massive forces of nature which ravage Alaska’s coast. The problem is that the ice has melted dangerously fast over the past few years.  Even in 2006, the US authorities’ research results showed that the little society had to be relocated as a result of global warming. The so-called “climigration” lawsuit that is currently taking place in the USA may be the first of many actions for damages in which companies are made responsible for the negative effect that their operations have on the climate of local communities.

Bjørn Kj. Haugland, Chief Technology and Sustainability Officer

A new UN report shows that man-made climate change has already led to extreme weather in the form of heat waves and flooding. Thailand is a country that has over the past few weeks become painfully aware of how catastrophic amounts of rain can destroy the basis of existence for millions of people.  Here in Norway, we were reminded of nature’s inexorable forces when Hurricane Berit struck local communities along the Norwegian coast, leading to major destruction. Norwegian municipalities are now being urged to implement measures to adapt to the extreme weather resulting from climate change.

There is widespread anger, frustration and disappointment about politicians and other decision-makers. The authorities, on the other hand, are drowning in information on climate change but lack knowledge about how to deal with the risks they are facing.

Enormous losses
Optimists state that the financial crisis prevented some of the negative developments in CO2 emissions over the past few years. But to be hard and brutal – although the financial crisis may have led to lower emissions of climate gases in industrialised countries, the opposite has been true in a number of developing countries. The world’s total accounts – and they are what count – are negative. And there is little to indicate that the emissions will not rise sharply again as soon as the wheels are in motion – as they did in 2010.

Our changing climate is threatening infrastructure, health and agriculture and leading to enormous losses for society. This is without doubt the greatest challenge the world is facing today.

We must act
The climate negotiations in Durban – which were saved at the last minute – were a partial victory for our common climate. A new international climate agreement is to be negotiated by 2015 and enter into force in 2020. At the same time, a new climate fund is to be established, there is to be a further commitment to the carbon markets and it is to be profitable to implement ways to prevent deforestation. These are important measures, not least because they make life predictable for industry and pave the way for a future based on low-carbon technology.

The time has come for action. Authorities, industry and NGOs must now do their best to follow up the obligations imposed in Durban a few weeks ago.  And they must follow up previously agreed national and international obligations. Examples of these are the green development mechanisms and initiatives such as REDD+.

But this is not enough.

The Executive Secretary of the UNFCC is one of many who have stated that adaptation to climate change is an important part of the solution to the climate crisis.

A risk-based framework
The authorities have more than enough information about extreme weather and destruction. The problem is not access to information – it is confidence. How are we to relate to all the information we are constantly being bombarded with? How are we to make good, strategic decisions based on the prevailing information at our disposal?

The answer is to adopt a risk-based approach in decision-making processes and when implementing decisions. With the correct use of a risk-based framework, an important step is taken towards safeguarding assets and resources for this and future generations. Adapting to climate change is about seeing the overall picture – about building on experience and utilising expertise in different areas, such as climate research, economics, politics and engineering. We have repeatedly seen that those who succeed are those who handle their risks using an integrated, risk-based framework.

Important prerequisites for the success of such projects are that they must be based on climate models that are suitable for the geographical area where the project is to be carried out and that public authorities, economists and engineers cooperate in the planning and implementation work.

Climate negotiations
The Executive Secretary of the UNFCC Christina Figueres made the following statement during the negotiations in Durban: “The concentration of greenhouse gases in the atmosphere has never been higher, the number of people who have lost their livelihood as a result of climate change has never been greater and the need for action has never been more essential or achievable”.

The Native Americans in Kivalina live closer to nature than most of us. When they shout a warning, the world should listen. Not least the decision-makers and politicians that have just returned home from Durban. The wisdom preached by the Native Americans in Kivalina is simple but strong: “We did not inherit the Earth from our forefathers, we are borrowing it from our children.”

Bjørn Kj. Haugland, Chief Technology and Sustainability Officer DNV

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Posted by Stein Bjørnar Jensen September 16, 2011

Climate changes require new planning routines

A changed climate represents a changed risk picture for society and industry. We have the tools for planning for the future – a future that is uncertain – we must simply start to use them…

This summer has given us a taste of the expected effects of future climate changes -  flooding, landslides and closed roads and railway lines due to the infrastructure not being able to cope with the new environmental conditions.

We need to improve the way in which we plan – especially when we are going to invest in infrastructure that is to last for several decades. However, the future is uncertain and what we have to plan for is far from clear. In such a setting, risk-based adaptation to climate changes will be an important tool.

In the current debate, it seems as if the interest in climate challenges has diminished and is being  overshadowed by more urgent problems, such as the financial crisis and unemployment. In the USA, climate change has become more or less a term of abuse and we see tendencies towards climate sceptics gaining ground in Europe too. However, it is quite certain that the climate is changing and it is overwhelmingly probable that the changes are caused by human activity. Unfortunately, the climate processes have probably come so far that we can hardly avoid a change in the global average temperature and thus subsequent changes in weather patterns. We must thus be prepared for new, changed environmental strains on infrastructure in the decades to come.

When planning for several decades into the future, we must admit there is a great deal of uncertainty about what the future will hold – both globally and locally. We are actually facing several layers of uncertainty:

  • Climate-related uncertainties: what will the future greenhouse-gas concentrations be in the atmosphere – and will other climate drivers change? At a local level, it is uncertain how local variations and physical factors will affect future weather patterns. The global climate models are not sufficiently advanced that they can predict what will happen in a little coastal town or local valley.
  • Uncertainty regarding the effect on existing and planned infrastructure. Might we experience new damage mechanisms, how will older facilities be able to cope with changed strains and how can different types of infrastructure influence the course of events in extreme weather situations?
  • Uncertainty linked to how we can develop and implement measures to adapt society to the expected effects of the future climate. This is not least dependent on economic growth, financial strength, budgets, population growth, new technology, etc.

Based on the uncertain picture that has been outlined, the most efficient way of adapting to climate is to adopt a risk-based approach to the problem. We are facing a decision-making problem which requires us to deal systematically with the uncertainties ahead of us and requires the various scenarios to be weighed up against each other. Such an approach to decision-making problems has been developed over the past 40 years and has become completely normal in sectors where the consequences of making the wrong decision can be disastrous.

However, there is one challenge which we must take into account. In normal risk-based approaches, the risk analyst will want to base his or her assessments on historical experience, and the more information there is from stable systems, the more accurate the predictions about the future. This is a challenge when planning for a climate that is changing. Weather forecasts are becoming more and more outdated as the climate changes, and may lead to us underestimating the future risks facing vulnerable infrastructure which we want to function for several decades to come.  Studies of, for instance, the expected frequency of storms in New York have shown that the official statistics, which on the whole are not adjusted to take account of climate changes, very probably underestimate the number of future storms over the city.

If there are so many uncertainties about the future, many people may ask whether it is possible to plan for anything with any degree of certainty. In my opinion, we can do so by using a planning strategy based on risk assessments of various scenarios and introducing a higher level of flexibility when executing and following up the plans. We need to add a monitoring element to the risk analysis and plans so that we can identify how the climate effects change in local areas. The information we obtain from this monitoring work must be used to adjust the plans when we see that the climate changes’ effect on the weather deviates from our original assumptions.

A changed climate represents a changed risk picture for society and industry. We have the tools for planning for the future – a future that is uncertain – we must simply start to use them. Risk-based climate adaptation and flexible plans which allow an opportunity for revision as we gain experience about how the climate affects the local weather in various regions should be a natural element of future investment projects, whether owned by the authorities or industry.

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Posted by Lai Chee Keong August 24, 2011

Mixed Reactions from the Carbon Market to Chinese CDM regulations

The Chinese “Measures for the Operation and Management of Clean Development Mechanism Projects” has gone through two revisions since its birth. The latest revision came into effect on 3rd August 2011 superseding the previous version dated 12 October 2005.

Major changes

a.      Involvement of local/provincial DRC
The main inclusion in the latest version is clause 18, where the Project Proponent will now have to submit its application to local/provincial Development Reform Commission (DRC) where the project (or proposed project) is located for review. The local/provincial DRC will then forward all the documents supplied by the Project Proponent (PP) and its preliminary review opinion to the National Development Reform Commission (NDRC) within 20 working days from the date of submission made by the PP. Clause 18 also states that the local/provincial DRCs are not granted the authority to approve or reject a project proposal.

Should there be any non-compliance with rules and regulations or shortage of documents, the local/provincial DRC shall request the PP to supplement immediately or within 5 working days in one request.

Appendix 1 of the ruling lists 41 SOEs (State Owned Enterprises) which are exempted from this new ruling. Projects from these 41 SOEs could be submitted directly to the NDRC.

b.      Changes to tax levied on the CER income
Clause 36: Tax levied on projects reducing nitrous oxide (N2O) emissions from nitric acid production has been reduced from the previous 30% to 10% of the transacted value of CERs sales. Tax on CER revenue from projects reducing emission of perfluorocarbons (PFC) is now 5%. Tax percentages for any other type of projects remain unchanged.

c.       Credit materialized post 2012
Clause 37: Carbon credit generated post 2012 from currently approved projects shall not be traded unless otherwise approved by the NDRC.

Reactions from the market
With the release of the latest version of the “Measures for the Operation and Management of Clean Development Mechanism Projects”, there are various reactions from the market.  One of the foremost reactions is that the new ruling will likely extend the application process by 20 working days. 

If we take a closer look at the bigger picture, the revision setting out an additional step to submit the application to the local/provincial DRC (except for projects from the 41 SOEs listed in Appendix 1 of the ruling) may result in a positive outcome:

 a) the introduction of the local/provincial DRCs’ involvement could be seen as an extra pair of eyes to check on the documents including various local authorities’ approvals which could potentially speed up the document review process as well as verifying the authenticity of documents; and

b) through the process of review, CDM competency level at local/provincial level could be enhanced.

Revision to regulations is deemed necessary as market conditions change.  As a DOE actively involved in the carbon market, DNV shall ensure compliance with the new ruling.

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Posted by Noel Peters July 20, 2011

Why aren’t you listening?

Mark Trexler’s excellent blog piece “What’s Missing When It Comes to Managing Climate Risk” dated April 6 is certainly food for thought. It got me thinking anyway…

In his blog post <http://blogs.dnv.com/climate_risk/2011/04/what%e2%80%99s-missing-when-it-comes-to-managing-climate-risk/> Mark rightly observes that the global community is not doing enough to “avoid dangerous anthropogenic interference with the climate system”, and suggests that better characterising and communicating risk will help address this situation. While I have to agree with this, I think we will always have a problem communicating risk if the people we communicate to are not listening.

Are you listening?

I suggest the problem goes much deeper than improving the scientific and risk management communities’ technical approaches for communicating climate risk. There are, broadly, two much deeper societal and humanistic aspects at play here. The first aspect is that we humans don’t really want to hear dire messages about existential risk and even if we do, the risk is conveniently distant enough for many of us to put it to one side. The second is that it seems, as Ulrich Beck theorises, our contemporary risk society1 has lost its unquestioning trust in scientism. We now live in a world driven by the need to manage technological risk. Scientism got us into this situation; can it be trusted to get us out of it? The technologists among us are sure they can, but the lay public is less sure. What happens when someone you don’t trust tells you something you don’t want to hear?

The Australian Government’s independent Climate Commission recently released a report, The Critical Decade  reaffirming the risks from anthropogenic climate change and stressing that we must act now. Nonetheless, certain political and industrial interests opposing Australian action on climate change still gain traction with the community. A recent online survey <http://www.csiro.au/resources/Climate-change-attitudes-online-survey.html>  of 5,000 Australians indicates that while a majority of those surveyed think climate change is happening, only about half think humans are largely causing it.

There are multiple discourses at play here and we need to cross the boundaries of those discourses before we can effectively manage the risks of climate change. It doesn’t matter if the scientific community believes climate change risk is becoming self evident if other citizens perceive things differently. Until we give proper regard to the different worldviews of scientists and the wider public, including those who set policy, until we accept the legitimacy of other worldviews, we will continue to experience risk communication challenges, and progress will be slow.

“The single biggest problem in communication is the illusion that it has taken place.” - George Bernard Shaw

 

1See Ulrich Beck’s Risk Society: Towards a New Modernity.

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Posted by Lai Chee Keong July 1, 2011

Musical chairs

It has been a cold and dry winter in Beijing. A grey layer of dust has cast a gloomy shadow over the city – perhaps helping to obscure a worrying development in human capital in the carbon market.

Beijing city

Beijing city

Yet as spring arrives, so does an expected buzz of human resource activities. In this part of the world, it is normal for salary earners to eagerly anticipate the year-end increments and bonuses, followed by the big Spring Festival celebration.  After the bonus payments, it is also common for salary earners in various professions to start looking for other opportunities; in hope of better remuneration packages, less stressful work environments, and brighter career prospects. Whatever the motivation, it is a season of hopping – shifting gear into the fast lane or moving to a slower lane to take a breather from stressful workloads – particularly in the carbon market.

Industry-leavers
In the carbon market, fund management companies and consultancy firms, bankers and major oil companies tend to opt for mergers and acquisitions. Coupled with an unpredictable post-2012 carbon market, this has led some to leave the industry, while others have been made redundant. Many of these industry-leavers are early entrepreneurs in the carbon market who have been successful enough to retire or venture into other businesses.

Ostensibly, there should be a sufficient number of working-class consultants in the market to take up vacancies in a Designated Operating Entity (DOE) and assume a third party role. In reality, however, the outlook is rather different. 

Credit chase
The credit chase of pre-2012 has created substantial demand for trained validators and verifiers, especially those from reputable DOEs.  Many qualified validators and verifiers have been offered with lucrative income packages, often thanks to the efforts of headhunters.

Yet on a whole, the carbon market remains in deficit of trained third party validators and verifiers.  The third party role has not been a sought-after position in the market, mainly due to heavy workloads, but also because income opportunities cannot compete with those in origination and consultancy roles. 

Shortage of trained validators and verifiers
Due to the shortage of trained validators and verifiers, many DOEs are willing to pay a premium just to recruit trained resources to meet the needs up to 2012. In the quest for trained resources, headcount costs have escalated manyfold. Still, many strive to outdo each other in recruiting, and the race only continues. Will the market be able to sustain both the tangible and intangible costs of such movement of trained resources? 

Many move on as frequently as every 12 to 18 months. Have a closer look at the bigger picture, and it is plain to see that all this movement is happening at the expense of the projects.  Each time a project changes hands from one manager to another, work gets delayed and continuity and progress is interrupted. 

Effectively, the demand for trained resources to fill third party roles far exceeds the supply. Have DOEs lowered their requirements of trained resources? It can seem as if some have resorted to pinching anyone with previous experience from a reputable DOE. How long will this practice continue? Is it really a sustainable strategy for markets to function successfully?

Excessive movement will be disadvantageous to the market as well as individuals.

If this was a game of musical chairs, it would look as if the market has more chairs than qualified takers.

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Posted by Miguel Alejandro Rescalvo May 20, 2011

Maximizing Opportunities and Minimizing Risks

While the future of the Clean Development Mechanism (CDM) is uncertain, other mechanisms such as, Nationally Appropriate Mitigation Actions (NAMAs) are quickly gaining international attention.

This rapid rise in popularity may be attributed to NAMAs’ comprehensive nature, rather than their simplistic design.

NAMAs are voluntary emission reduction measures undertaken by developing countries that are reported by national governments to the UNFCCC. They are expected to be the main vehicle for mitigation action in developing countries under a future climate agreement, and can be policies, programs or projects implemented at national, regional, or local levels. NAMAs  have the potential to provide developing countries a means of reducing their CO2 emissions in a manner that facilitates mitigation and adaptation strategies as well as sustainable development, while being measurable, reportable and verifiable

Currently, there are 43 NAMA proposals submitted to UNFCCC.  Each of one these are unique and customized to meet the needs of each individual developing country. Some are promoting sustainability development in the country in the areas of energy, transport and agriculture. Some are promising viable investment opportunities for Annex 1 countries in terms of financing, technology development and capacity building. Simply put, NAMA’s are quickly becoming a panacea for climate change mitigation.

Vast potential…and challenges
However, before we all join hands in a victory lap, let’s be sure that we have done our homework.  Yes, NAMAs offer vast potential. But they also create challenges. For starters, how can something so unique and so customized for an individual country still be measurable, reportable and verifiable (MRV)? How can we develop a matrix of protocols to ensure success of these program? Is it possible to ensure uniform quality in capacity building? How can something so unique and individualized be made uniform enough to attract private sector investment?

For organizations working on a  proposed NAMA, whether with international entities such as the World Bank or the Inter-American Development Bank or the individuals in developing countries charged with implementing the NAMA, there will be a vast and potentially confusing array of systems, laws, procedures and processes that must be navigated.

For those of us who has been involved in the evolution of the Kyoto Protocol Mechanisms from their incipient form, we know that it has not been without effort that we have arrived to a system that, with its imperfections, is contributing to climate change mitigation. We now face the risk of dispersing our efforts in the design and implementation of many different parallel systems (bilateral agreements,  sectoral programs) that may dilute the impact of our positive efforts to combat climate change. Coordination, proper attention to program design and capacity building to secure proper implementation are key, as well as agreeing on the management systems that can facilitate third party verification of the implemented actions and their impact on mitigating climate change.

In this context, how do you think all stakeholders can contribute to make  any post 2012 regime a success?

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Posted by Chandrashekara Kumaraswamy May 18, 2011

Transportation – the neglected sector

In these days of ‘green thinking’ striking a balance between infrastructures, controlling pollution and making any new initiative sustainable, is indeed becoming a fine balancing act

Mobility has always been synonymous with city life. With the ever growing urbanization and masses migrating to the larger cities in Asia, administrators and city planners have always been grappling with a host of issues and one among them being, how to make transportation for the masses – easier, faster and affordable. In addition, in these days of ‘green thinking’ striking a balance between infrastructures, controlling pollution and making any new initiative sustainable, is indeed becoming a fine balancing act.

Having been involved in the field of ‘Climate Change’ over the last half a dozen years (albeit as a third party auditor), I have always wondered why the field of transportation has never been in the forefront of ‘encashing’ on the available opportunities such as the Clean Development Mechanism (CDM). Further, when I chanced upon an article recently, that highlighted the fact that the ten year old TransMileno public transit project in Colombia is not only the first public transportation project in the world to be registered under the CDM, but has already prevented more than 2 million tones of CO2 equivalent greenhouse gases from being released into the atmosphere; it set me wondering why many more such projects and other transportation initiatives are not coming forward to look at CDM as a means to make the initiative more attractive and viable? More so, in India and the other Asian countries, where it is said that more that one third of fossil fuel related carbon emissions are a direct result of transportation! 

Road to metro-users
In India, there are on-going transportation initiatives such as the Metro and many others on the threshold of being implemented in various cities. The Metro Chief of Delhi Metro says that Metro has brought about a massive conversion of road-users to Metro-users. He says, for 1.5 million passengers that we see on the Metro, 0.15 million vehicles are off the road, thus leading to a huge reduction in emissions.  However, the fact remains that the system is not fully utilized and it is also common knowledge that the breakeven point has not been reached due to the system not being utilized fully. A study of 210 transportation infrastructure projects worldwide has shown that generally costs are significantly underestimated and benefits exaggerated, thus questioning the viability and sustainability of such initiatives in the long run. Given this scenario, why is it that CDM is not seen as a vehicle to realize additional money through the sale of Certified Emission Reductions (CER’s)?

Apathy?
From an Indian context, I would assume (like everybody else) a lack of awareness of CDM and its attendant benefits, to be the key factor for transportation projects not going the CDM way. This might sound strange, given that India is the second largest country in terms of registered CDM projects. But a quick scan of these registered projects from India reveals that Government and public sector initiatives only constitute a miniscule percentage. Transportation projects, be it Metro or BRTS projects are driven by the Governments. Mired in bureaucracy and red tapeism, lack of awareness of CDM guidelines and requirements, CDM always takes a backseat until it is too late to apply.. But do we leave it at that? Why it is that nobody is taking the initiative to address this? What is it that will improve the awareness and inculcate a sense of urgency into considering CDM as a vehicle for sustainable growth? While these are questions that I wish I had an answer, the sooner the bull is taken by its horns, the better it is.

To me, more than awareness (or the lack of it), it is the lack of seriousness, discipline and intent in recognizing climate risk and the will to incorporate and enforce mitigation actions at the early stages (policy stage and planning) that is missing. And unless we have far-sighted, knowledgeable and proactive policy makers, sustainable initiatives will remain a pipedream.

‘No pain, no gain’
I know critics will always say that the tediousness and rigidity of the UNFCCC mechanisms and huge transaction costs are deterrents too. The use of complicated methodologies like AM0031- Baseline Methodology for Bus Rapid Transit Projects and its associated tedious data monitoring also add to the woes. The adage ‘no pain, no gain’.is quite apt. All new initiatives take time to mature as is the case with CDM. The reforms and changes which are underway will definitely make the CDM process more standardized and transparent and will bring in more viable CDM transportation projects   In conclusion, let us aim that the transportation sector integrates more seamlessly with other sectors like energy, urban development, air pollution and traffic to usher in the era of sustainable cities (safer, healthier and climate friendly).

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Posted by Luc Larmuseau May 6, 2011

Coal Fired Power Plants In Focus

Coal Fired Power Plants (CFPPs) will play an important role in reaching the European commitment of 20% reduction in greenhouse gas emissions by 2020.

CFPPs are the largest greenhouse gas emitters (GhG) of the European power sector. In 2010 they accounted for a third of the electricity production and two thirds of the electricity related carbon emissions. This corresponds to 17% of the total European carbon emissions.

Consequently, these CFPPs will play an important role in reaching the European commitment of 20% reduction in GhG emissions by 2020. In our latest position paper titled ‘Pathways to low-carbon coal-fired power generation in Europe’, DNV investigated the potential and cost of different technologies which can reduce these emissions. Currently identified measures include combined heat and power, a shift from subcritical to supercritical units, biomass co-firing and carbon capture and storage. Depending on size and type of the CFPP, each measure has its own abatement potential and cost.

To effectively compare the different abatement options, DNV has analysed the marginal
abatement cost for each measure over the current and expected population of CFPPs in Europe by 2020. The results are presented in marginal abatement cost curves demonstrating the emission reduction that can be achieved and the related cost per ton CO2 reduced.

DNV’s study demonstrates that a 7% reduction in emissions across Europe is possible at
negative cost through combined heat and power and through the switch from subcritical to supercritical units.

Carbon capture and storage also has a large abatement potential but will bear a significant
additional cost.

Please click on this link to read our position paper.
I would be happy to answer have questions on this subject:
http://www.dnv.com/resources/position_papers/low_carbon_coal-fired_power_generation_paper.asp

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Posted by Michael Lehmann April 26, 2011

Post-2012 CDM – Standardization is needed

The Clean Development Mechanism will change its character in the years to come. From being a mechanism which mainly finances the development of renewable energy projects in China, India, Brazil and other countries with advanced economic development, the post-2012 CDM will most likely comprise other types of projects being located in least developed countries, the so called LDCs. In addition we will expect the post 2012 CDM projects to be smaller in terms of emission reductions per project.

Smaller projects in least developed countries:
Let me first explain what types of projects that I am thinking of. It is waste management projects which reduce methane emissions; it is projects providing poor households with clean energy (solar, biogas, etc) and clean water (water purification instead of having to cook water prior to use). These projects currently face transactions costs which make it difficult for them to compete with other type of CDM projects. The monitoring of a renewable energy project resulting in yearly emission reductions of 100 000 tonnes CO2 is straightforward and requires only monitoring the amount of the electricity generated. This is in contrast to a small waste management project with annual emission reductions of 10-20 000 tonne CO2 equivalents where the operator will have to measure the biogas flows, the methane content in biogas and the efficiency of the flare destroying the methane. As these were not enough obstacles, the project will also have to demonstrate that it can not utilise the biogas to generate electricity which could make the project financially attractive.

The obvious way to reduce the transaction costs for such projects is to simplify the requirements for monitoring and to standardize the approach for determining the projects emission reductions.

The obvious way to reduce the transaction costs for such projects is to simplify the requirements for monitoring and to standardize the approach for determining the projects emission reductions. It should be possible to determine a project’s emission reductions by applying standard default emission factors without having to monitor the project’s emission reductions in the most accurate way. Choosing defaults in a conservative way could compensate for less accuracy and thus compensates for the possibility that reduced accuracy could result in credits being issued for emission reductions which are not real. Moreover, there is a need for positive lists of technologies which are considered additional in specified countries and thus do not require demonstration of additionality for each individual project. For household projects, the concept of suppressed demand needs to be introduced to allow such projects to not only to claim the reduction in historic CO2 emissions, but also the CO2 emissions these households would have in case they would have improved living conditions.

Standardization, positive lists and the introduction of the concept of suppressed demand has obviously also some drawbacks. Standardization and the suppressed demand concept could in some cases result in a project’s emission reductions being overestimated. Positive lists could potentially lead to accepting projects as CDM projects even though these projects would have been implemented anyway and which would have been rejected in case a project specific assessment was carried out.

However, in my opinion, these drawbacks are acceptable for the sake of having created a framework for more effectively introducing low carbon technologies through utilising the CDM projects in least developed countries by reduced transaction costs and thus provides an incentive for many more projects to be implemented than today’s framework.

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Posted by Dr. Mark Trexler April 6, 2011

What’s Missing When It Comes to Managing Climate Risk?

Business leaders have been hearing for years that the science of climate change doesn’t matter any more, because the policy train has “left the station.”  I submit that neither point is true, and that we need to expand our climate risk management toolbox.

The U.N. Framework Convention on Climate Change (UNFCCC) was signed almost 20 years ago by a majority of the world’s countries based on agreement to “avoid dangerous anthropogenic interference with the climate system.”  Today, there are no policies in place or even under serious international discussion that would prevent this unwanted outcome.

While a variety of policy cars are spread around the train yard, it can’t objectively be argued that the policy train to “preventing dangerous interference” has left the station.  The increasing focus on climate change adaptation is a reflection of this reality.  Relying on adaptation as a primary climate change strategy isn’t a rational risk management response; it’s a recognition of policy stalemate.

Is the problem continuing scientific uncertainty when it comes to climate change?  I don’t think so.  The climate change risks posed by the future trajectory of a “business as usual” fossil energy economy have been the subject of scientific consensus for years.  And we routinely develop policy in areas characterized by just as much if not more forecasting uncertainty.

A discipline that we clearly need to focus on more intensively is that of how we perceive and manage risk.  As is effectively argued in the recent “Degrees of Risk-Defining a Risk Management Framework for Climate Security,” we are not treating climate change risk in the same way we treat other risks.  If we better characterized and communicated climate risk, it might prove to be a key locomotive that’s been missing from our climate policy train!

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