Western Climate Initiative expands: Ontario to join California-Québec carbon market

Quebec Premier Philippe Couillard, second from left, pictured in 2015 joining the Under2 Coalition, a first-of-its-kind agreement among states and provinces around the world to limit the increase in global average temperature to below 2 degrees Celsius – the warming threshold at which scientists say there will likely be catastrophic climate disruptions. Photo: Jenna Muirhead via Office of Governor Edmund G. Brown Jr.

en español  |  This morning California, Québec, and Ontario signed a linking agreement that officially welcomes Ontario into the Western Climate Initiative (WCI) cap-and-trade market.

The announcement came after an inspiring Climate Week in New York where states, businesses, and individuals showed that despite Washington D.C going backwards, the U.S. will continue to make progress on our commitment to help avert catastrophic climate change. This linkage announcement provides a concrete example of how motivated governments can work together and accomplish more through partnership than they could apart.

Why linkage matters

The agreement will allow participants from all three locations to use carbon “allowances” issued by any of the three governments interchangeably and to hold joint carbon auctions.

This full linkage can have a number of benefits.

  1. The concrete benefits that economists often point to include “liquidity” from a larger market, meaning that if participants need to purchase or want to sell an allowance, it is easier to find a trading partner.
  2. There are also significant administrative benefits to joining an existing market and to working together, including sharing the administration of auctions.
  3. A larger market can also provide access to lower cost reduction opportunities, which lower the overall cost of compliance for the whole market, allowing governments to maintain and strengthen the ambition of their commitments.
  4. The less tangible benefits of having partners that are equally committed to addressing the challenge of climate change can’t be ignored. California may not have a willing climate partner in Washington D.C. but the state is finding the partners it needs in Québec and Ontario and together they can prove that cap and trade provides an effective model for international collaboration and a cost-effective way to keep harmful climate pollution at acceptable levels.

Choosing the right partners

To ensure any carbon market linkage is strong, partners must be carefully selected by evaluating the compatibility of each program. California, Québec, and Ontario started this process early by working together (along with several other states and provinces) in 2009 to develop best practices for establishing cap-and-trade programs.

This carbon club model is one that EDF has identified as a powerful potential driver of climate action

When full linkage is being considered, one of the most important threshold questions is how ambitious each potential partner’s cap is; the cap is the key feature of each program that ensures the environmental goals of each government are met, and a weak cap would impact all participants. Ontario, California and Québec have all cemented into law ambitious and world-leading climate targets for 2020 and 2030. Beyond that, there are some design elements which should be aligned among all programs and others that can differ and outlining these parameters is a negotiation among participants.

Ontario is demonstrating that the WCI carbon market model is an accessible one for ambitious governments to consider joining. This carbon club model is one that EDF has identified as a powerful potential driver of climate action. Hopefully other states and provinces will take Ontario’s lead. Here are some locations to watch:

  • Several Canadian provinces are actively developing cap-and-trade programs that could link with WCI one day.
  • State legislators in Oregon may have a chance to vote during their short session in early 2018 on a “cap and invest” program that is being designed with WCI linkage in mind.
  • Momentum on carbon markets is also growing elsewhere in the Americas. Mexico is in the process of developing its own national emission trading system and has expressed an interest in linking such a system with the California-Québec-Ontario market.
  • And just this past June, in the Cali Declaration, the heads of state of the Pacific Alliance countries of Mexico, Colombia, Chile, and Peru embraced the vision of a voluntary regional carbon market in agreeing to strengthen monitoring, reporting, and verification frameworks for greenhouse gas emissions.

California, Québec and Ontario are creating a model for action that is ripe for others to adopt as is or adapt as needed. This type of bottom-up partnership that matures into real and ambitious collective action is the future of international climate policy.

 

Note: More details on the linkage concepts discussed in this blog can be found in chapter 9 of the EDF co-authored report Emissions Trading in Practice: A Handbook on Design and Implementation.

Posted in California, Canada, Emissions trading & markets, News| Leave a comment

Biogas cookstoves can help nearby forests grow, new study finds

By Meghna Agarwala, Post-doctoral Research Scientist of Columbia University, and Richie Ahuja, EDF Regional Director of Asia

Degraded forest in Karnataka, India

Clean-burning cookstoves powered by biogas help surrounding forests grow and regenerate, according to a new study by Columbia University scientists.

The study in India finds that forest biomass and regeneration increased significantly after 10 years of introducing biogas stoves; because the stoves run off the gas produced by decomposing cow manure, they eliminate the need for cutting down trees and lopping them for firewood.

This new finding suggests that biogas stoves, in addition to their role in improving indoor air quality, impacting household nutrition, and reducing carbon emissions, may help India reach its climate goals around improving forest cover and increasing carbon sequestration.

Cookstoves in India

About 41% households in India are dependent on fuelwood as their source of cooking, according to the 2011 Census of India survey. However, burning fuelwood for cooking increases indoor air pollution, exacerbates health issues, contributes to climate change, and destroys wildlife habitat.

Since the 1980s, aid organizations and governments have been installing biogas stoves in some regions in India to reduce the impacts from indoor air pollution and reduce carbon emissions, but these have largely failed due to poor post-installation support.

Results from study

Published in Global Ecology and Conservation, the new study compared forest biomass and regeneration in the areas around villages using biogas or wood for fuel in the Indian state of Karnataka.

The study shows that people dependent on fuelwood for cooking reduce their fuelwood use when provided with a viable alternative, the biogas stove. Switching to biogas allowed the surrounding forests to recover.

The findings have great significance for India, which committed in its national climate commitments under the Paris Agreement to increasing its forest cover to enhance carbon sequestration. India is also working on delivering clean cooking systems for people through the Pradhan Mantri Ujjwala Yojana (PMUY) and biogas programs around the country.

Forest regrowth is, of course, contingent on many other factors besides how much fuelwood is taken from forests. For example, in some locations, forest may not regrow despite biogas stove use, as the ecosystem may have already been damaged so much that it needs active restoration. Also, since biogas technology is dependent on ownership of cattle, this scheme does not work for people who are too poor to own cattle, or in areas where there isn’t enough rainfall for people to own cattle.

This study can help policymakers understand how clean cooking programs can support India’s – and other governments’ – targets of improving forest cover and carbon sequestration.

If conditions are right, and if done at scale and implemented in a way that promotes long-term change, shifting households from burning fuelwood to cleaner technologies can help forests grow and can help countries such as India achieve their climate goals.

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California-Quebec August auction results reflect a secure cap-and-trade future

Photo credit: Flickr – johrling

Strong results from the California-Quebec August auction released today reflect that the future of cap and trade is secure in California.

The August 15 auction saw increased demand and prices for carbon allowances, which will now be usable at least through 2030. These strong results are particularly significant because the auction is the first since a California appellate court cemented the legality of the program, and since the California Legislature extended the state’s cap-and-trade program with the two-thirds vote. This vote protects the program from the type of legal challenges that artificially depressed demand for allowances in 2016.

August auction by the numbers

  • Over $640,000,000: Approximate amount raised for California’s Greenhouse Gas Reduction Fund in this auction.  This is an all-time high for California.
  • $14.75: Price at which current vintage allowances sold. This is $1.18 above the minimum price of $13.57 at which participants were allowed to bid.  This is the largest premium above the minimum price that the auctions have seen since California and Quebec started holding joint auctions. (However, one California auction in 2013 did sell allowances for $14.00 which was more than $3.00 above the minimum price at the time.)
  • 63,887,833: Number of “current vintage” allowances offered and sold at this auction by California, Quebec, and California utilities, and which are available for immediate use.
  • 9,723,500: Number of “future vintage” allowances offered and sold at this auction, which will not be available for use until 2020. These allowances sold for $14.55 a record premium above the “floor price” also $13.57.  The last auction to sell all offered future vintage allowances was in November of 2015.

This is what certainty looks like

Until recently, two big question marks were hanging over California’s cap-and-trade program. These were encouraging auction participants to buy only the allowances that they absolutely needed at the four previous auctions – and led to only modest auction results.

The certainty provided by the resolution of these concerns contributed a great deal to the strong August auction results. Here’s how:

  1. California court upholds cap-and-trade program: A California appellate court first held in May that the cap-and-trade program is not a tax, overturning a lengthy legal battle spearheaded by the California Chamber of Commerce. After this news the May auction saw a significant rebound. This confidence was supported in June when the California Supreme Court declined to review the appellate court’s decision, cementing a win for the state of California (and EDF and NRDC as intervenors) after four and a half years of litigation.
  2. California legislature extends cap-and-trade program to 2030: California’s ambitious 2030 climate target was cemented into law in 2016 but the current cap-and-trade regulation only ran through 2020. ARB was set to extend the program, but legal questions meant that without legislative action the post-2020 program could have been plagued by the same type of challenges that had affected prices in 2016. A change to the definition of a tax in 2010 meant that the California Chamber of Commerce and others might have had gotten a second bite at the litigation apple. But on July 17, 55 Assembly members and 28 Senators came together across party lines to pass legislation extending California’s cap-and-trade program to 2030, ensuring the program could move forward unimpeded.

Today’s results affirm the courage of the votes taken to secure the future of cap and trade in California. Carbon prices now more directly align with expectations about the true cost of reducing carbon pollution through 2030. That clearer and more accurate price will send a signal throughout California that will drive the action needed to meet the state’s climate targets and show others around the world what is possible.

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Temer’s rollback of Brazil’s environmental and indigenous protections threatens livelihoods and world’s climate goals

Guest authors: Juliana Splendore, EDF climate change and indigenous issues consultant in Brazil, and Joelson Felix, Communications Officer of COIAB – a Brazilian indigenous organization representing indigenous peoples in the Brazilian Amazon

An aerial view of the Brazilian Amazon under a pouring rain | Photo by Juliana Splendore

One year into his presidency, Brazilian President Temer is leading a dismantling of crucial protections for Brazil’s indigenous territories and the environment.

New policies the president recently approved put at risk indigenous peoples’ rights to their lands, and could open the flood gates for Amazon deforestation, which has been rising dramatically in the past few years.

The president’s actions, aimed at winning the favor of the powerful agriculture lobby in Congress, threaten the livelihoods of the indigenous peoples who live in the forests, as well as Brazil’s international climate leadership and the world’s ability to meet the greenhouse gas emissions targets agreed to in the Paris Agreement.

One of the world’s largest tropical forest areas, the Brazilian Amazon is home to more than 200 groups of indigenous peoples. Nearly half of the Brazilian Amazon, an area about five times the size of California, is designated as indigenous lands or protected natural areas, and as such is protected from development. These indigenous and protected areas and their indigenous populations were key to Brazil’s decreasing its deforestation by 70% from 2005 to 2014, which has made it the world leader in reducing greenhouse gas emissions.

However, these gains are now at risk. Over the last two years, deforestation in the Brazilian Amazon nearly doubled from 4,500 km2 in the period of 2011-2012 to 8,000 km2 in the period of 2015-2016, according to the National Institute of Space Research (INPE).

The significant rise in deforestation caused the Norwegian government this year to cut its forest protection payments to the Amazon Fund to about $35 million, $65 million less than in 2016. This cut directly affects the indigenous populations in the Amazon, who are among the main beneficiaries of the Fund.

Rollbacks in indigenous lands and environmental protections

Since he took office August 31, 2016, scandal-plagued Brazilian President Temer approved new measures and federal rules aimed at helping him gain critical support from the advocates of agribusiness and large rural landowners, known as the ruralistas, who make up one of the most powerful caucuses in the National Congress with over 200 seats.

Temer has created a new federal rule to be implemented by Brazilian Administration that can be used to deny many indigenous peoples the right to their lands. It stipulates that indigenous peoples do not have the right to their lands if they were not occupying them in October 1988, when the current constitution came into effect. Essentially, it denies the right of the indigenous peoples who lack sufficient documentation to prove that they were expelled from their lands during that time. As a result, many pending requests by indigenous groups for titles to their traditional territories could be denied because of their earlier expulsions. Another part of the new rule also prohibits the expansion of existing indigenous territories. Finally, the new rule also allows certain types of infrastructure projects to be permitted on their titled territories without any consultation.

A new short-term measure signed by President Temer (MP759) – which can be easily turned into a law – is expected to substantially intensify deforestation in the Amazon region. The new measure facilitates the legalization of public lands that were illegally occupied in the period of 2004 – 2011 and increases the size of land parcels that can be claimed. This measure could result in the loss of millions of hectares in the Amazon to land speculators.

Indigenous peoples in a training organized by ISA (Instituto Socioambiental) | Photo by Juliana Splendore

Need for more international attention and support

Taken together, these developments in Brazil endanger not only the livelihoods of indigenous populations, but also the significant amount of forest carbon stored in indigenous territories in the Brazilian Amazon, threatening the world’s ability to stabilize global climate.

The silver lining here is that the advocacy efforts led by the indigenous movement, environmentalists, Norway, and some international organizations are playing a key role in  mitigating the effects of the policies and guidance approved by Temer.

Now, indigenous peoples need even more support from international actors, in particular from EU governments and international companies committed to reduce deforestation in their supply chains. The governments and business leaders need to tell President Temer to roll back the new rules and measures.

Posted in Brazil, Deforestation, Indigenous peoples| Leave a comment

Deepening collaboration: Aligning private sector and government commitments to tackle deforestation

By Breanna Lujan, EDF Policy Analyst, and Brian Schaap, Forest Trends Senior Associate

Aerial view of the Amazon rainforest, photo by Neil Palmer (Flickr: CIAT)

When it comes to reducing deforestation, companies and national governments tend to operate in their respective silos. Effectively reducing forest loss, however, will require collaboration between both corporations and governments. According to a report published today, Collaboration Toward Zero Deforestation: Aligning Corporate and National Commitments in Brazil and Indonesia, companies and governments are beginning to work together toward their shared goals of reducing deforestation.

The report presents case studies that explore the ways in which companies and governments are collaborating, and highlights recommendations for how this collaboration could be strengthened—with implications not only for the two focal countries of Brazil and Indonesia, but for tropical forest countries worldwide. Aligning corporate commitments and Nationally Determined Contributions (NDCs) – official climate action plans submitted by parties of the Paris Agreement–is of critical importance to meeting national deforestation reduction and reforestation goals. Collaboration between companies and governments will not only enable each sector to achieve their respective deforestation reduction goals, but will also pave the way for future partnerships and enhanced action.

Need and opportunity for public-private partnerships

Deforestation continues to account for around 15% of global greenhouse gas emissions, while destroying biodiversity and threatening livelihoods. In 2014, Brazil and Indonesia together accounted for 38% of global tropical deforestation—with the majority of deforestation in each country driven by commercial agriculture.

Many companies and governments have committed to reduce deforestation. As of early 2017, 447 companies have made commitments to reduce deforestation in their supply chains, according to research by Forest Trends’ Supply Change initiative. Concurrently, of the 191 countries that submitted Nationally Determined Contributions (NDCs) to the United Nations Framework Convention on Climate Change (UNFCCC), an estimated 80% included plans to address the land sector in their mitigation targets.

Collaboration between these two sectors is essential: corporations need a regulatory and policy environment conducive to their reduced deforestation commitments—which governments can provide; and governments would benefit tremendously from the participation of key corporate actors in order to achieve the reduced deforestation and forest landscape restoration goals put forth in their NDCs.

Finding Synergies: Lessons from Brazil and Indonesia

Brazil

Brazil’s  NDC aims to reduce emissions 37% below 2005 levels by 2025, and 43% below 2005 levels by 2030—and outlines the role that reducing deforestation and increasing forest landscape restoration could play to achieve these emission reduction targets. Many companies with operations in Brazil developed zero deforestation commitments and are collaborating with the government and NGOs in multi-stakeholder initiatives such as Mato Grosso’s Produce, Conserve, Include (PCI) program. The PCI aims to reduce deforestation, increase reforestation, and increase sustainable agricultural and livestock production—all goals that align with Brazil’s NDC. Companies including Marfrig and Amaggi have signed on to this initiative and are contributing to the design, implementation, and mobilization of finance to support the PCI. Another PCI participant, the Sustainable Trade Initiative (IDH), created a de-risking fund to increase cattle intensification and reforestation. Through interactions via the PCI and other partnerships, the private sector is supporting the government to accelerate the implementation of the country’s NDC goals, and revealing the ways in which these collaborations can be scaled-up and amplified throughout the country.

Indonesia

The government of Indonesia, in addition to enacting several policies focusing on peatland and forest conservation and restoration, has made an unconditional commitment in its NDC to reduce emissions 29% below business-as-usual (BAU) estimated emissions by 2030, and a conditional commitment—contingent upon international support, including finance—to reduce emissions 41% below BAU by 2030. Meanwhile, companies committed to reducing deforestation in their supply chains have made No Deforestation, No Peat, No Exploitation (NDPE) commitments of their own. Many of these companies are collaborating with subnational governments in jurisdictional, multi-stakeholder initiatives aimed at achieving their shared goals of reducing deforestation. The Central Kalimantan Jurisdictional Commitment to Sustainable Palm Oil is one of the most advanced public-private collaborations to address deforestation and emissions in Indonesia, and is bringing together representatives from local governments, NGOs, indigenous peoples, smallholder farmers, and oil palm growers and buyers toward the goal of certifying all palm oil produced in the province by 2019—with Unilever as a particularly active private sector participant.

Recommendations

Lessons from Brazil and Indonesia show that corporate zero deforestation commitments—when buttressed by strong government policies and enhanced by multi-stakeholder partnerships—can help countries reach their goals of reducing deforestation and enhancing forest landscape restoration. This type of collaboration is of increasing importance and has come to the fore in countries such as the United States, where businesses and local and state governments are teaming up to uphold the spirit of the country’s Paris Agreement pledge, despite the US federal government’s announcement to leave the Agreement.

Based on the findings of the report, companies and governments from tropical forest countries worldwide should consider the following recommendations to promote more effective public-private partnerships toward reducing deforestation:

Companies

  • Advocate for policies that support corporate deforestation-free goals
  • Participate in existing multi-stakeholder initiatives and help them scale-up and replicate
  • Support efforts to strengthen and enforce regulations that can help to reduce deforestation

Governments

  • Conduct transparent consultations on elaborating and implementing NDCs, and solicit corporate input
  • Identify ways that private sector actors and subnational initiatives can support NDCs
  • Support private sector supply chain sustainability improvements through targeted policies, incentives, and financial mechanisms
  • Remove barriers to more stringent conservation efforts by companies
  • Better align national definitions of ‘forest’ and ‘deforestation’ with private sector zero-deforestation policies

For more details, please view the full report.

Posted in Brazil, Deforestation| Leave a comment

California Models Climate and Air Pollution Action with Balanced Approach

Air pollution visible in downtown Los Angeles | Photo by Diliff, via wikipedia comms

California is once again demonstrating its bold climate leadership. As Washington, D.C. continues to abdicate its role as a climate champion, California is stepping up to extend its landmark cap-and-trade program, address local air pollution, and push California businesses forward toward a cleaner economy.

Environmental Defense Fund strongly supports AB 398 (E. Garcia) and AB 617 (C. Garcia), as well as their authors, Legislative leadership, and the Brown Administration. We commend their vision and initiative on a bill package that addresses the growing threat from climate change and improves public health outcomes by addressing local air pollution in the most impacted neighborhoods.

AB 398: Extending the cap-and-trade program

This bill seeks to extend California’s groundbreaking cap-and-trade program until 2030, with a 2/3 vote. We support this bill for 3 key reasons:

  1. This bill maintains the environmental integrity of California’s cap on emissions. By introducing a price ceiling on allowances, the Air Resources Board with the Legislature’s guidance provides greater certainty on costs. Done poorly, such a ceiling can put environmental outcomes at risk. This proposal addresses that concern by requiring that any excess emissions be made up for by high-integrity emissions reductions outside the cap. This ensures that California does not bust through its emissions cap.
  2. This proposal extends the economic benefits of cap and trade. California has added over a million jobs since cap and trade launched in 2013, and this bill includes important provisions to further develop a green workforce for the 21st century economy. At the same time, cap and trade encourages investments in alternative forms of fuel. This decreases our dependence on fossil fuels, which protects consumers from volatile gas prices.
  3. Extending cap and trade sets a national example for other states to follow. California is on track to meet our 2020 target of reducing emissions to 1990 levels, and the 2030 goal is even more ambitious. We are demonstrating that emissions reduction and a thriving economy can go hand-in-hand. And we will not leave our most vulnerable communities behind.

AB 617: Clean air for California’s most vulnerable communities

The second part of this essential package is an unprecedented air quality bill which seeks to address local air pollution in California’s most impacted neighborhoods. For EDF, these are the 3 main reasons we are committed to supporting this bill:

  1. This measure targets neighborhoods burdened by multiple sources of air pollution. California communities like Richmond, Modesto, or Torrance aren’t polluted by just cars or one refinery – they have many different sources of air pollution. This bill identifies these neighborhoods and focuses monitoring and emissions reduction plans based on burden, rather than source.
  2. Industrial facilities are required to upgrade their technology. There are many facilities that have not been upgraded in decades. This means they emit far more pollution than if current technology were used. This bill requires that industrial sources covered by cap and trade are retrofitted to a standard that reflects technological advances, but are also cost-effective.
  3. This bill increases penalties for big polluters. Many air pollution penalties haven’t been adjusted since the 1970’s. This bill increases these so big polluters no longer have an advantage over facilities that follow the law. This is critically important to hold polluters accountable, especially for the residents who live nearby.

Yes, there is still compromise in politics

California can address climate change without leaving communities behind.

The ability to compromise seems absent from most political arenas these days. The zero-sum strategies of filibusters and government shutdowns are more the norm than a negotiated settlement. However, the California State Senate and Assembly Leadership, along with Governor Brown’s Administration have re-discovered the art of the possible, and isn’t that what politics is all about? They have managed to find the compromise with stakeholders that addresses the twin challenges of climate pollution and air quality.

This package is a path forward that demonstrates to the country and to the world that California can address climate change without leaving communities behind.

There is no silver bullet to accomplish this, despite what we all wish. The environmental community needs businesses to thrive so California’s economy remains strong. Business needs the environmental community to hold them accountable. The Legislature needs all of us to help continue setting the standard on climate policy. We don’t get to take our ball and go home because things aren’t going our way.

As we demonstrate how to address climate change and air pollution, let’s also demonstrate to Washington, D.C. how to compromise. We urge the Legislature to support AB 398 and AB 617.

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