Emissions Trading
Officials' comments on preliminary ICAO aircraft emissions agreement
SCMP, AFP (Montreal):
A first-ever global deal on curbing the airline industry's rising carbon emissions was agreed on Friday, the International Civil Aviation Organization said, though hammering out the details could take years.
The full agreement is not scheduled to take effect until 2020 but the most contentious issues have been resolved, officials said, as the ICAO's full assembly met behind closed doors in Montreal.
The deal "is an historic milestone for air transport and for the role of multilateralism in addressing global climate challenges," ICAO Council President Roberto Kobeh Gonzalez said in a statement.
Air transport "now becomes the only major industry sector to have a multilateral global market-based mechanism agreement in place to help govern future greenhouse gas emissions," he added.
Leading up to the vote, China and India had joined the United States and Russia in balking at a European Union push for a carbon levy on flights within three years.
But at midday, after some 1,400 delegates representing 170 member states voted on the executive committee's resolution, officials said the plan had been passed and details of the accord would follow.
"The good news is (in) having concluded a general agreement that includes China and India," said a diplomat involved in the negotiations.
Aviation accounts for around three per cent of global CO2 emissions but the ICAO forecasts that by 2050 emissions will have risen between four and six times the levels they were in 2010.
Last year, the EU suspended its CO2 Emissions Trading Scheme (ETS) for intercontinental flights, after facing a storm of criticism.
Under the EU's ill-fated arrangement, airlines flying in EU airspace were required to buy pollution credits to cover 15 per cent of their CO2 emissions for the entire flight, wherever it originated.
Several nations rejected the scheme that threatened to tip into a trade war.
The ICAO resolution "is a strong message to Europe after it lost three votes on its proposals," a negotiator said.
According to a draft text of the agreement submitted for consideration at the ICAO meeting, countries must agree by 2016 on a global market-based mechanism and reject all regional schemes, according to the negotiator.
The measure is to be accompanied by a series of technical and operational steps to reduce emissions, said a European Commission statement.
Specific proposals under consideration for curbing CO2 emissions include a carbon tax and a carbon trading system.
The European Union would thus have to abandon its more ambitious ETS and adhere to the new global system for curbing greenhouse gases linked to global warming.
Even so, European Commission Vice President Siim Kallas praised Friday's outcome.
"I am very pleased that after long and hard negotiations we finally have a global deal on aviation emissions," Kallas said in a statement.
"This is good news for the traveling public, good news for the aviation industry, but most importantly it is very good news for the planet," he said.
Furthermore, he added, the deal averts a "damaging conflict among trading partners."
European Commissioner for Climate Action Connie Hedegaard meanwhile congratulated the ICAO members.
"After so many years of talks the ICAO has finally agreed to the first-ever global deal to curb aviation emissions," she said.
In addition to the mechanism for curbing emissions, the accord also calls for promoting the use of better alternative aviation fuels and fuel-saving navigation.
There is also an exemption clause that provides a "fair and equitable solution" for a number of countries facing "special circumstances or with limited capabilities," said the EU.
China and India unhappy with EU over Aircraft Emissions Taxes
The European Union has, for the past few years, pushed for capping aircraft carbon emissions and taxation, in an effort to reduce one of the biggest contributors to greenhouse gases. The proposed plan, however, ran into an insurmountable obstacle: taxing aircrafts of foreign airlines flying to and from Europe. Taxation for emissions that take place outside of Europe (for instance, a large part of a journey between Shanghai and London will not be in EU airspace) is considered by non-EU countries to be extraterritorial and sovereignty-violating, and many threatened retaliatory tariffs on European airlines if the EU went ahead with the plan unilaterally. The US even passed a preemptive law banning US airlines from compliance, and China flashed warnings of a trade war with a moratorium on aircraft orders from Airbus that was only partially lifted recently.
The International Civil Aviation Organisation (ICAO) of the UN has stepped in with a plan to hash out a global agreement over aircraft carbon emissions. Brussels then agreed last November to a one-year suspension of emissions taxes for foreign airlines while the agreement is being worked out. As it turns out, the ICAO target for reaching full agreement is 2016, coming into force only in 2020. Non-EU countries, however, continue to voice their displeasure, fearing that the plan would severely impact their fast-growing aviation networks.
Some in the European transport industries do not consider airlines outside the EU and US as big players in global aviation. (Jimmy LWH/flickr)
It remains to be seen if this round of politicking will be resolved at all.
Click here for the most recent coverage by Charlotte So of SCMP:
Europe's cap-and-trade program is in trouble. Can it be fixed?
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/20/europes-cap-and-trade-program-is-in-trouble-can-it-be-fixed/
By Brad Plumer
The European Union has long prided itself on taking the lead in tackling climate change. But, this week, the continent's flagship program — a cap-and-trade program for carbon-dioxide emissions — ran into serious trouble. So can it be fixed, or is the situation hopeless?
Not sure what's going on here, but it's a dramatic Europe-related image. (Michael Probst/AP)
Let's start with some background. The E.U.'s Emissions Trading Scheme works by setting an overall cap on carbon emissions for about half of Europe's industries. Companies get a certain number of pollution permits that they can trade among themselves. As the cap ratchets down each year, the number of permits is supposed to dwindle and the "price" on pollution keeps rising.
Over the last few years in Europe, however, there has been a glut of permits. Policymakers initially gave too many away, and then there was a huge recession. So Europe's emissions are well under the cap and permit prices had been hovering below $9 per ton since 2011. Companies have little incentive to make any drastic changes. Polluting is cheap:
The European Parliament wanted to change this by delaying a scheduled release of new permits. This policy, known as "backloading," would have been the first of several possible reforms to the ETS. But backloading failed by a vote of 334 to 315 this week. Immediately after, the price of carbon plunged to around $3.40 per ton and analysts were calling the trading scheme "completely toothless." The prospect for further reforms is uncertain.
So what can we learn from all this? Basically, the E.U.'s climate policy seems to be somewhat confused. There are a couple big things going on here:
1) From one angle, the cap-and-trade program is working — emissions are down. Since the ETS came into existence, Europe has been meeting its emissions goals. Yes, that's partly because the continent has been grinding along in an economic depression, but emissions are still far lower than one would otherwise expect:
This is, essentially, how cap-and-trade is supposed to work. When meeting the targets is easy (and it's much easier when the economy is in the toilet), then the price of carbon goes down. If the euro zone ever recovered from its pit of endless despair, then the price of polluting would presumably rise again.
Poland has made this point often, as FT Alphaville's Kate Mackenzie points out — and this was the Polish delegation's reason for voting against the backloading proposal: "Growth will return and the price will find its equilibrium again. No administrative meddling is needed or else we might create the impression that such measures are standard practice."
Now, Poland's position is arguably too sanguine. Europe's cap-and-trade program has a number of other flaws that may need fixing — such as the fact that policymakers gave away too many permits initially. Still, there's an argument that low prices aren't inherently a problem.
2) Yet many people in Europe want a high price on carbon. Many politicians and analysts weren't satisfied with simply staying under the cap. They wanted a high price on carbon that would drive big changes to the continent's energy supply. And, it's true, the ETS wasn't providing that. As a recent report (PDF) from the International Energy Agency points out, Europe would need prices to rise to $65 per ton before power plants would switch from coal to natural gas. Instead, prices have been at $7 per ton.
David Hone of Shell had been making a similar argument. In his view, carbon capture and sequestration (CCS) for coal plants is an essential technology for tackling climate change. And since CCS is a difficult technology to develop, utilities need to start working on it now, or they'll never be able to deploy it in time to cut emissions sharply by 2050. Yet the price on carbon isn't nearly high enough to spur CCS development.
Even for people who aren't fans of natural gas or CCS, the same argument holds. Companies aren't going to develop complicated clean-energy technologies of the future without a much higher price on carbon.
3) What's more, Europe is undermining its cap-and-trade system with "complementary" policies. German economist Hans-Werner Sinn has made this point often. In addition to cap-and-trade, Europe also has a renewable energy mandate and an energy-efficiency mandate. Since utilities and companies already are already required to meet those, they have a much easier time meeting their pollution targets. So, naturally, that puts downward pressure on carbon prices in the trading scheme.
4) So it's worth asking, should Europe just get a carbon tax instead? When you add these all up, it's hard to escape the idea that many people in Europe seem to want a carbon tax. A carbon tax that rises slowly over time would keep the price of emitting greenhouse-gases stable — and the price would remain high even if European policymakers wanted to tack on renewable mandates and other policies.
Oxford's Hans Dieter has used this graph to make the point:
Yes, a carbon tax is less flexible to changes in circumstance — it would keep energy prices high even during a recession. But many policymakers seem to find that flexibility in cap-and-trade a problem.
Trouble is, there's no reason whatsoever to think a carbon tax would be politically easy. For one, any major change to the E.U.'s climate policy would take many years to negotiate and approve. All 27 countries would need to take a vote. And countries like Poland, for one, seem quite happy with the current low pollution prices.
That means Europe is likely stuck with trying to reform its cap-and-trade program. According to Point Carbon, further big changes aren't likely to happen until 2016 at the earliest.
In any case, Europe's experience will certainly provide a lesson to other countries. Australia is currently preparing its own cap-and-trade system (assuming that the Liberals don't come to power and scrap it), and a cap in California just went into effect. So there are a lot of lessons here in how to design — or how not to design — a climate policy.
© The Washington Post Company
Time running out for carbon tax deal
South China Morning Post – 10 Nov. 2011
Aircraft cause 2 to 3 per cent of the world's air pollution, but airliners and passengers have had an easy ride when it comes to emissions. While industries such as power generation and steelmaking have been forced by governments to clean up their acts, firms involved in air travel and cargo have got off scot-free. The European Union's plan to make aviation pay by forcing operators of flights to, from and within its borders buy tradeable permits to emit carbon dioxide has caused a stir, with sanctions threatened. Tit-for-tat measures are in no one's interests. Common sense has to prevail so that a reasonable international emissions scheme can be put in place.
There is nothing wrong in European minds with what amounts to a tax of around HK$400 per passenger for each flight – it merely adds airlines to the EU's existing Emissions Trading Scheme. Under it, the requirement to buy permits will apply to the entire length of a flight, not just the part within European airspace. Airlines and governments outside the EU perceive it as unfair, contending it imposes taxes beyond the EU's territorial limits and discriminates against nations farthest from Europe. It is by no means perfect, but it satisfies EU environmental legislation which, in the absence of an international pact on emissions, is the standard to which many other nations aspire.
With the January 1 implementation date looming, the rhetoric has become increasingly heated. Last week, the UN's International Civil Aviation Organisation, which sets the rules on air travel, adopted a working paper from China, the US and 24 other countries urging the EU to exclude non-European carriers from the scheme. Beijing in June blocked Hong Kong Airlines from buying 10 European-made Airbuses, reportedly in protest. A proposed law to ban American airlines from complying has cleared its first major hurdle by gaining the US House of Representatives' approval, raising the unlikely, but not impossible, scenario of flights being suspended.
High oil prices have forced many airlines to look for alternatives to the kerosene that powers their planes. Hong Kong's Cathay Pacific (SEHK: 0293) is investigating mainland-produced biofuels, while Virgin Atlantic Airways is studying waste gas from steel mills. They are welcome and voluntary moves, although years could pass before they are viable, if at all. The EU's plan imposes a deadline.
Airlines claim that they could lose €1.2 billion (HK$12.8 billion) in 2012 – a quarter of estimated profits for this year – as a result of the scheme. They say they are worried about the pollution caused by emissions, but more than a decade of discussion has still not led to the best solution, a global carbon market. This is why the EU has decided on its own course. But avoiding the damage of trade disputes and instead pushing for a global trading deal makes the most sense.
Cathay pins hopes on biofuels
South China Morning Post – 24 Oct. 2011
Airline could save billions of dollars a year while also satisfying requirements to reduce its emissions and offset costs of EU's carbon tax scheme
As airlines mull their options after a European Court upheld the European Union's carbon tax scheme, Cathay Pacific Airways (SEHK: 0293) says it is pinning its hopes on biofuels. It says biofuels could be the answer not just to tighter emission requirements but, eventually, as a fuel much cheaper than kerosene, when production is scaled up significantly.
While it could take two decades before biofuels trade at half the price of kerosene, Cathay said both fuels should trade at the same price by the end of this decade, given the rapid development of alternative energy sources in the past few years.
The airline is considering developing a biofuels supply chain in Asia for itself and its subsidiary Dragonair.
"If you look at the real cost of growing the [biofuels] feedstock, refining it and transporting it, there is a real good possibility that it could cost 30 to 50 per cent less than today's jet fuel," Cathay fuel purchasing head Gavin Fernandez said. "If we are involved in production, and we reach a good scale, I don't see why the savings cannot go over 50 per cent or even more."
Fuel accounts for more than 35 per cent of Cathay's operating expenses. Cutting that cost in half means the airline could save more than HK$14 billion a year, based on the airline's figures for last year.
Fernandez (pictured) said that although most of the savings were likely to be offset by the cost of carbon credits under the EU's new emission scheme, as well as investments in biofuels facilities, passengers would also benefit.
"The airline business is one of the most competitive businesses," he said. "The margins are so small, and others will undercut you as soon as they can with cheaper fuels, cheaper tickets. The travelling public will be one of the first consumer groups to get a price advantage."
Last Thursday, three US airlines lost a lawsuit against a new EU regulation, which requires all airlines entering European airspace to buy carbon credits if they fail to meet a new emission cap that takes effect in January. The cap will be tightened annually.
Cathay – with almost 20 per cent of its flights in Europe last year – stands to lose the most among Hong Kong's airlines. Apart from volatile oil prices, the new emission scheme gives airlines another reason to accelerate the commercialisation of cleaner fuels.
Instead of simply launching a research and development joint-venture project on biofuels, Fernandez said Cathay was looking at a larger commitment. That would include the production of feedstock, refining, oil storage and fuel transport to its base in the city for blending with kerosene.
Currently, airlines can only use a 50-50 blend of biofuels and kerosene on commercial and military aircraft.
"To get involved in growing [fuel crops] would cut the middleman out," Fernandez said.
Apart from jatropha, camelina and algae – plants commonly considered as sources of aviation biofuels – Cathay is looking at a fourth option – a jungle plant that does not compete with any food crop.
If Cathay gets involved in upstream production, it could be a multibillion-dollar investment because a single refinery plant costs between US$300 million and US$500 million. The carrier will spend the next six months finalising its strategies and investment plans.
It is considering whether to invest only when the most promising feedstock emerges, or invest in less efficient feedstock along the way.
Meanwhile, Hong Kong Airlines – in the midst of expansion – is taking a wait-and-see attitude towards biofuels. "We don't have the means and resources of Cathay to develop our own supply chain, but of course when the technology is mature, we would love to use it on our planes," said Eva Chan Yuen-kwan, the carrier's spokeswoman.
Last month, KLM Royal Dutch Airlines began to apply used oil- derived biofuels on some 200 flights between Amsterdam and Paris.
anita.lam@scmp.com
Carbon tax on airlines upheld
South China Morning Post – Oct. 7, 2011
World airlines vow to continue their fight against emissions charge plan after court adviser finds in favour of European Union's cap-and-trade system
The world's aviation industry yesterday suffered a setback in its fight against a European Union plan to make foreign airlines pay hundreds of millions of dollars in carbon tax for flights to and from the EU.
The blow came when an adviser to the European Union Court of Justice told judges that the decision to impose the EU's carbon cap-and-trade system on airlines beyond the region's borders would be lawful, advice the court is likely to follow.
"The inclusion of international aviation in the EU emissions trading scheme is compatible with the provisions and principles of international law invoked," advocate general Juliane Kokott wrote in a legal opinion for the Luxembourg-based court, rejecting arguments filed by the international aviation industry.
Several carriers and airline associations have challenged the 2008 decision by the 27 EU states to force airlines flying in and out of Europe to buy the permits under the bloc's Emissions Trading System (ETS), fearing that it will cost their industry US$1.2 billion a year.
"Foreign governments are unlikely to accept this interpretation of the validity of the ETS being imposed unilaterally on foreign airlines," said Andrew Herdman, director general of the Kuala Lumpur-based Association of Asia-Pacific Airlines. "This is certainly not the end of the matter."
Tony Tyler, the head of the International Air Transport Association, said: "We are disappointed with the opinion but it is only part of a complex set of developments concerning" the carbon-trading system.
Tyler said that "many governments were rightly concerned about the infringements on sovereignty" and warned that 20 states had signed a declaration "vowing to challenge the plan's extra-territoriality" at the International Civil Aviation Organisation, a United Nations agency.
Last month, the China Air Transport Association warned that dozens of airlines would be involved in another lawsuit it aimed to lodge by the end of the year.
China has said it fears its aviation sector will have to pay an additional 800 million yuan (HK$974.6 million) a year on flights originating or landing in Europe, and that the cost could be almost four times higher by 2020.
"If they charge us, we will charge back," Wei Zhenzhong, the secretary general of the China Air Transport Association, told an industry conference in Hong Kong last week.
Cathay Pacific (SEHK: 0293) said: "This decision represents a green light towards an emerging patchwork of complex, bureaucratic and punitive regional schemes which will ultimately have no impact on improving the environment and will hit passengers."
The ETS, started in 2005, is the cornerstone of the EU's plan to fight global warming and cut carbon dioxide emissions by 20 per cent from 1990 levels by 2020.
EU Climate Commissioner Connie Hedegaard said that while the EU doesn't want to "dictate the world", aviation could not be excluded from such measures forever.
"I am glad to see that the advocate general's opinion concludes that the EU directive is fully compatible with international law," she said. "The EU reaffirms its wish to engage constructively with third countries during the implementation of this legislation."
Bloomberg, Agence France-Presse
Green tax to hit air passengers
South China Morning Post – 6 Sept. 2011
Carriers face a US$400m bill on flights to Europe next year due to levy on carbon emissions – and cost will 'inevitably' be passed on to customers
Asian airlines including Cathay Pacific (SEHK: 0293) are likely to have to pay up to US$400 million a year for their carbon emissions on European routes from January – a cost likely to be passed on to passengers.
The green tax, imposed by the European Union in an attempt to lower greenhouse gas emissions, would mean an extra cost of US$8 per passenger on average.
That figure was based on a total of 2.5 billion passengers and the 650 million tonnes of carbon dioxide emitted globally by carriers last year, said Andrew Herdman, general director of the Association of Asia Pacific Airlines.
A Cathay Pacific spokesman said yesterday: "It is inevitable that the increased costs will be passed on to the passengers." Carbon credits, which are used to offset the carbon emissions, traded at an average of €15 (HK$166) to €20 per tonne on the European market last year.
It is estimated that the carbon footprint of one passenger on a round trip from Hong Kong to London – a total of 19,244 kilometres – is about 1.4 tonnes of carbon dioxide.
The extra cost seems affordable, but airlines operate on thin margins.
Global airlines made US$18 billion in net profit last year, their best year since 2000. That translates into a profit of approximately US$7 per passenger, compared with the US$8 in carbon pricing per ticket.
In three out of the past 10 years, when airlines turned a profit, their margins were between 1.1 per cent and 3.2 per cent. "The airlines industry is so competitive that any difference in the margin translates into market share gain and market share loss," said Herdman. "That's why we are demanding fairness in the scheme and are against any kind of distortion in the rules."
Cathay agreed that a price should be put on the carbon footprint, but not through a "territory system", said John Slosar, chief executive of the airline, at a press conference last month.
Airlines, which account for 2 per cent of global carbon emissions, protested against the EU scheme because it charged for the entire flight, even if the flights are over non-EU territories. This scheme penalises carriers operating at hubs far away from Europe, while benefiting those nearer, such as Middle East airlines.
US carriers have sued the EU in the European Court of Justice for including airlines in the emissions trading scheme. A panel of judges will publish an opinion on October 6.
The US case is key because its arguments focus on the legitimacy of the EU applying its emission scheme to all airlines. A ruling in favour of the US carriers would apply to others.
Air China (SEHK: 0753, announcements, news) and other mainland carriers have also threatened to sue.
Herdman predicted the lawsuit would eventually turn into political disputes between governments and would need to go through the International Civil Aviation Organisation, a specialised agency of the United Nations that governs airlines.
These political battles could be solved only by bilateral discussions between governments, he added.
Under the EU scheme, airlines are granted 85 per cent of their carbon emissions for free and need to buy the remaining 15 per cent through auctions, based on their traffic figures for last year. Those that cannot come up with a quota sufficient to cover their emissions will be subject to penalties equivalent to €100 per tonne of emissions.
charlotte.so@scmp.com
A Green Dawn On The Horizon
Michael Perry, SCMP – Jun 18, 2009
Centuries-old practices are going as Australian farmers embrace new ways to save the land
On the rolling hills of Winona, a fine merino sheep stud in New South Wales state, a quiet revolution is taking place that Australian farmers hope will see them selling soil carbon credits in the climate change battle instead of sticking semen up sheeps' rears.
Colin Seis, one of the country's leading "carbon farmers", has for 10 years been encouraging the extraction of greenhouse gas carbon dioxide from the atmosphere and raising the carbon content of his soil to improve pastures.
Mr Seis estimates he has sequestered a total of 73,786 tonnes of carbon dioxide equivalent, or 7,386 tonnes each year. As he only emits 2,200 tonnes farming, he has a credit of 5,186 tonnes of carbon.
Under Australia's planned carbon emissions trading scheme, if Mr Seis continues sequestering carbon and maintains his credit, he could sell 5,186 tonnes for up to A$129,650 (HK$800,000), depending on the price.
Australia wants a formal carbon trading scheme by 2011, with agriculture possibly included in 2015. Australia's planned Emissions Trading Scheme will have a fixed A$10 a tonne price in the first year, followed by an open market with an expected price of A$25 a tonne. But it is unclear what type of credit farmers would be allocated.
"Soil is the largest carbon sink we have control of. It's a major answer [to climate change] yet it's been overlooked," Mr Seis said. "It's so obvious because plants are the only thing taking carbon dioxide out of the atmosphere."
The Chicago Climate Exchange in the US has been trading soil carbon since 2005 but it is not an official offset under the Kyoto Protocol. The UN food and agriculture organisation and conservation farmers are pushing for the rules to be changed at the Copenhagen talks in December.
The Chicago Climate Exchange traded contracts worth 18.1 million tonnes of carbon dioxide equivalent in the year to the end of April, with prices ranging from US$1.55 to US$2.05 per tonne.
Fifth-generation farmer Mr Seis said there were about 2,000 "carbon farmers" in Australia. Farmers are turning their backs on centuries-old practices brought from England, where paddocks were continually cropped and ploughed, and drenched with fertiliser and weed killer, and are adopting eco-friendly farming to repair damaged soil. Carbon farmers are adopting zero or minimum tillage, which does not plough the soil, increasing stock rotation to allow land to rest, sometimes for years, and avoiding bare earth with year-round cover with crops, native grasses and weeds. All these measures increase the biomass in the soil, making it more fertile and, in turn, increase the carbon in the soil.
Mr Seis "pasture crops" his 840-hectare farm near Gulgong in eastern Australia, planting cereals among native grasses to ensure paddocks are covered all year to allow plants to constantly absorb carbon and limit erosion.
"We do not kill the grasslands; we sow the crop when the grass is in its winter dormant phase. When we harvest, the grass comes back," said Mr Seis. "What I have done is encourage nature to function as designed – to work with nature not against it."
Mr Seis has also reduced the size of his paddocks and rotates his 4,000 sheep regularly, what is called high-density short-duration grazing, or pulse grazing, ensuring paddocks are given long periods of rest from grazing to revive.
Despite a long-running drought, Mr Seis has enough ground cover to last the dry winter and no need to buy feed. He can also run two sheep per acre, double his neighbour.
Increasing soil carbon allows paddocks to retain more moisture for crops – a vital advantage for Australian farmers who have been battling decades of drought.
A 1 per cent increase in soil carbon means an extra 144,000 litres per hectare water capacity, says Mr Seis, who has increased his soil carbon from 2.5 per cent to 4 per cent, giving him an average of 300,000 litres extra water per hectare.
"It's like putting your farm under a different rain zone. Carbon farming means your farm comes into drought later and comes out of drought sooner," said Louisa Kiely, a fellow sheep farmer and co-founder of the lobby group Carbon Coalition.
Across the valley from Ms Kiely's homestead stand three tombstones marking the graves of the property's original owners, the Lahys from Tipperary, Ireland. Michael Lahy died in 1859. But those tombstones, surrounded by rotting, dead weeds, are the only remnants of the old farming ways on Uamby in NSW. The Kielys have turned their property into a pure carbon farm. "We have turned the farm over to native vegetation and grazing, and we can get carbon credits for it. There is a whole new economy developing," said Michael Kiely, surveying his farm from the top of a hill.
Mr Seis and other Australian farmers are being hindered from selling carbon credits due to a lack of a formal protocol for measuring the increase in carbon in their soils and a formal market. Australia has only a small voluntary carbon market.
Australia's annual greenhouse emissions total 553 million tonnes of carbon dioxide-equivalent, but would require only a 0.5 per cent rise in soil carbon in 2 per cent of farmland to sequester all the annual carbon dioxide emissions, Christine Jones, founder of Australian Soil Carbon Accreditation Scheme, said.
"Australia's single greatest comparative advantage in the battle to reduce CO2 emissions is our enormous land mass – over 7 million square kilometres," said opposition leader Malcolm Turnbull, whose Liberal Party supports a policy of bio-sequestration. "The opportunities for CO2 abatement here are gigantic."
Australia's carbon farmers argue that the country's depleted soil can be repaired to once again store more carbon. Since white settlement in Australia in 1788, more than 70 per cent of farmland has been seriously degraded, with a loss of 50 to 80 per cent of organic carbon from surface soil, says Ms Jones.
Broker Prime Carbon lists carbon credit units on Australia's National Environment Registry and aims to convert 1 million hectares into sustainable farming by 2013, and provide wholesale carbon credits for national and international markets.
Prime Carbon had registered 200,000 tonnes of carbon dioxide in the past 18 months but sold only 10 per cent, said founder Ken Bellamy.
Measuring soil carbon gains is difficult as carbon levels vary between soils and rainfall areas. Soil carbon can differ from one end of a paddock to the other. "It is dynamic and always cycling and fluxing and cannot be measured like house bricks," Mr Kiely said.
Another sticking point is how to ensure the carbon credit stays in the ground, as farming emits carbon. Agriculture accounts for 16 per cent of Australia's emissions. Farmers argue that, if they remain in credit, then they are storing carbon.
Environmentally friendly 'carbon farming' techniques
By 2030, the UN estimates that 5.5 gigatonnes to 6 gigatonnes of carbon dioxide equivalent a year could be mitigated by agriculture, with about 89 per cent achieved by soil carbon sequestration through cropland and grazing management, and restoration of organic soils.
Soil carbon is created when carbon dioxide is absorbed by vegetation, oxygen is released and carbon is used to make living tissue, such as vegetation. It is also produced by microbes and fungi, stimulated by plant roots as they push down through soil, retreating when the foliage above ground is grazed or harvested, then pushing down through the soil again as the foliage regrows.
Much of the carbon taken in by plants enters the top layer of the soil and is held there. Some is carried down to deeper layers of the soil where it can be held for hundreds of years.
Some carbon returns to the atmosphere as carbon dioxide from respiration of plants and some as methane from the rotting of vegetation.
Carbon farming is a new way to describe a collection of eco-friendly farming techniques which increase organic carbon in soil. Practices include:
100 per cent groundcover to prevent soil being blown or washed away: cooler soil is more attractive to microbes.
Grazing management: stock are left in small paddocks for short periods so they graze evenly and also till the soil with their hooves. When plants are lightly grazed, the roots go deeper into the soil helping create more carbon.
No till cropping or conservation tillage: farmers abandon ploughing and plant seeds by dropping them into ruts that barely disturb the soil, which avoids releasing soil carbon.
Pasture cropping: planting and growing crops among native grasses and weeds, taking advantage of their dormant period to grow and harvest crops. This ensures year-round ground cover of soil and more microbes.
Biological farming: zero chemical fertilisers.
"Mulching": covering bare paddocks with hay or dead vegetation. This protects soil from the sun and allows the soil to hold more water and be more attractive to microbes.
Nation's First Emissions Exchange Likely To Start Trading By End Of Year
Reuters in Beijing, Updated on Feb 20, 2009
The nation's first emissions exchange is expected to begin trading by the end of this year as it works out trading procedures and recruits more member firms, a senior exchange executive said yesterday.
The Tianjin Climate Exchange was established in September, but acceptance has been slow among the small mainland companies that the exchange is trying to attract.
"We hope the exchange will start trading sulfur dioxide, COD [chemical oxygen demand] and energy intensity credits by the end of this year," exchange assistant chairman Jeff Huang said.
The exchange was working on operational details with the central government and potential member companies before trading could kick off, Mr Huang added.
Beijing has long vowed to save energy and reduce emissions, setting a goal to reduce all emissions by 10 per cent from 2006 to 2010.
But to initiate active trading on the country's only emissions exchange, Mr Huang said the mainland needed to change the way it allocated emissions credits.
Mr Huang is also vice-president of the Chicago Climate Exchange, which owns 25 per cent of the Tianjin exchange. An asset management unit of China's top oil and gas firm, China National Petroleum, owns more than 50 per cent of the venture and Tianjin Property Rights Exchange owns the rest.
Emissions credits on the mainland are allocated by the central government to the provinces, which often ignore environmental regulations to focus on economic growth, which produces tax revenue.
Mr Huang said Beijing should hand out emissions credits to companies directly, bypassing local officials and, more importantly, giving firms the incentives to bring emission credits to market.
"Polluters can now cash in on their emissions credits at the exchange," he said.
The Chicago exchange, run by Britain's Climate Exchange, is a voluntary market that aims to reduce emissions of gases such as carbon dioxide that scientists blame for global warming.
The Tianjin exchange has about 20 member companies, which include the Industrial and Commercial Bank of China, China Construction Bank and Delong Steel, a unit of Singapore-listed Delong Holdings.
The Chicago exchange had 13 member firms when it began trading in 2003 and now hosts more than 400 members. Mr Huang declined to forecast future trading levels at the new exchange, pointing instead to the Chicago exchange's history, where total trading volume surged to 110 million tonnes last year from only 2.2 million tonnes in 2003, he said.
The Tianjin exchange's success could hinge on Beijing's official support for environmental goals, something the Chicago exchange does not enjoy as the US is still not a party to the Kyoto Protocol.
"The current overall conditions in China for trading emissions are much better than in the United States when the Chicago exchange started up," Mr Huang said.
Vietnam Under Threat As Seas Rise
David Adam, SCMP – Updated on Dec 14, 2008
As Global Warming Raises Ocean Levels, Rich Nations Are Being Urged to Bail out the Vulnerable
Which country will be most affected by the steady rise of the seas?
Which country could see more than a tenth of its population displaced, a tenth of its economic power crippled and a tenth of its towns and cities swamped by the end of this century?
The answer, which may surprise you, is Vietnam, named by the World Bank as the nation with most to lose as global warming forces the oceans to reclaim the land.
Just a 1-metre rise in sea level would flood more than 7 per cent of the country's agricultural land and wreck nearly 30 per cent of its wetlands, the bank says. And the situation could be worse than that: a 1-metre rise in sea level is at the conservative end of the predictions for the year 2100. Some climate experts, including Jim Hansen, director of Nasa's Goddard Institute for Space Studies, argue the likely rise should be measured in several metres.
A 1-metre rise would still be enough to cause chaos. In a study recently published in the journal Climatic Change, the World Bank says such a rise would have an impact on about 0.3 per cent of the territory – 194,000 sq km – of 84 developing countries. That might not sound much, but it would affect about 56 million people. Coastal populations across poorer countries generally do better economically, so the surge in the seas would affect GDP even more – about 1.3 per cent.
The study, which summarises the findings of a 50-page briefing paper published by the bank last year, comes as campaigners call for rich countries to do more to help the developing world adapt to the inevitable effects of climate change.
Heather Coleman, senior climate change policy adviser with UK-based charity Oxfam, says: "Helping vulnerable people cope with the effects of climate change is desperately needed today because they already face increasingly severe and ever-worsening climate change impacts."
The charity released a report last week that called for at least US$50 billion a year to be channelled from international carbon trading schemes into adaptation efforts.
"With a global financial crisis unfolding, these mechanisms could raise enough money from polluters without governments having to dip into national treasuries," Ms Coleman says. "Many negotiators agree that this is one of the more practical approaches. Billions of dollars can be raised and invested to prevent future climate change and to help poor people adapt to the negative impacts of global warming."
Oxfam says poor countries need help to upgrade national flood early-warning systems, plant mangrove "bio-shields" along coasts to diffuse storm waves, and grow drought-tolerant crops.
The report came out last week as ministers attended UN talks in Poznan, Poland, to continue negotiations on a new global climate treaty to replace the Kyoto protocol.
Ms Coleman said the world's leaders had paid lip service to the issue of adaptation money for too long. "It is a vital part of the overall deal, a litmus test of how serious rich countries are in tackling the problem.
"Poor people around the world bear the brunt of climate change, and yet they are least responsible for global warming. Even during tempestuous financial times, rich countries can and should help poor people to cope. We can't afford to exchange a short-term saving for a long-term disaster."
If countries fail to adapt to the new reality of climate change, Ms Coleman warns, they would suffer far greater damage from floods, droughts and hurricanes.
Of those, the World Bank study, led by Susmita Dasgupta, of its Development Research Group, says some countries will suffer the effects of sea level rise much worse than others. Severe impacts will be limited to a "relatively small number of countries".
As well as Vietnam, the report highlights likely damage to the Bahamas, which could lose more than a tenth of its territory to a 1-metre rise, and Egypt, which faces the flooding of 13 per cent of its agricultural land. Mauritania, Guyana and Jamaica are also among the biggest losers.
In the bank's rankings of the top 10 countries affected by a sea level rise, across six different types of impact, Bangladesh – often associated with rising sea levels – features only once. The country is listed as the tenth most affected by land area, with just over 1 per cent likely to be flooded.
The report says: "The overall magnitudes for the developing world are sobering: within this century, tens of millions of people are likely to be displaced by sea level rise, and the accompanying economic and ecological damage will be severe for many."
It adds: "International resource allocation strategies should recognise the skewed impact distribution we have documented. Some countries will be little affected by sea level rise, while others will be so heavily impacted that their national integrity may be threatened. Given the scarcity of available resources, it would seem sensible to allocate aid according to degree of threat."
The bank says the study is the first of its kind, but admits it is not foolproof. It did not investigate the effects of milder sea level rise, which will be felt in the next few decades. And its methods were too crude to assess the fate of small islands, which are particularly vulnerable. It also fails to take into account adaptation measures put in place over the next century, which would lessen the damages, or storm surges, which would worsen them.
Nevertheless, its central message is clear: "There is little evidence that the international community has seriously considered the implications of sea level rise for population location and infrastructure planning in many developing countries."
A separate Oxfam report last month investigated the situation on the ground in Vietnam, in the provinces of Ben Tre and Quang Tri.
The charity warned that the effects of climate change threatened Vietnam's development achievements. It is one of the few countries on track to meet most of its millennium development goals by 2015, and it managed to reduce its poverty rate from about 58 per cent of the population to 18 per cent in 2006.
"Such impressive achievements are now at risk," Oxfam says. In 2000, Vietnam produced just 0.35 per cent of world greenhouse gas emissions – one of the lowest contributions in the world.
It is not just rising sea levels that pose a threat; higher temperatures, as well as more extremes of weather such as drought and typhoons, will have a "potentially devastating impact on the country's people and economy", the report says.
Some communities are already adapting to changing weather patterns. Rice farmers are harvesting earlier, before the main flooding season, or growing a rice variety with a shorter cycle.
But the report found countless cases of poor people across Ben Tre and Quang Tri who were ill-equipped to cope with the consequences of climate change.
Oxfam says rich countries must step in – and quickly. "The amounts of investment needed are beyond [Vietnam's] budgetary capacity," it says. "International adaptation finance will be needed in the face of unavoidable impacts."