A review of an educational session at the MiaGreen Expo & Conference held in Miami FL on February 25-26, 2010.

1. miagreen session 2 1
review: MiaGreen session 2
At 11 a.m., we jumped right into the session tracks. I attended Track 3: Experiences and
Opportunities From Around the World, where the topic was Carbon Monetization and
Worldwide Initiatives. Daniel Smyth, the Director of Carbon Finance at MGM Innova, LLC.,
was the presenter.
A brief overview of the existing global carbon markets showed that there are essentially
three groups: compliance markets; regional; and voluntary. I was astounded by the
plethora of acronyms being thrown about, most of which I had to look up when I got back
to the office. So, before I get into mentioning any of them, here’s a quick guide:
• AAU – Assigned Amount Units
• CAR – Climate Action Reserve
• CDM – Clean Development Mechanism
• CER – Certified Emissions Reductions
• CRT – Climate Reserve Tonnes
• ERU – Emission Reduction Unit
• EUA – European Emission Allowances
• EU ETS – European Union Emission Trading System
• NGAC – NSW Greenhouse Abatement Certificate
• NSW GGAS – New South Wales Greenhouse Gas Abatement Scheme
• RGGI – Regional Greenhouse Gas Initiative
• VCS – Voluntary Carbon Standard
• VCU – Voluntary Carbon Unit
• VER – Voluntary Emissions Reductions
In the compliance market there are basically two sub-groups: the EU ETS, the largest
program in the world, and other non-European programs brought to life by the Kyoto
Protocol. Some examples of regional initiatives are the NSW GGAS in Australia, and the
RGGI in the Northeast and Mid-Atlantic United States. Within the voluntary field, the CAR
and VCS offset certification programs operate in North America and around the world,
respectively.
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Those programs provide emissions allowances or offsets to their participating members.
EU ETS issues EUAs; CAR supplies CRTs; VCS provides VCUs; the United Nations is in
charge of all Kyoto Protocol-based credits, and oversees the distribution of CERs and
ERUs.
While this entire field is generally referred to as the “carbon markets,” they don’t necessarily
focus on only carbon emissions. The EU ETS currently does regulate only CO2 emissions,
but there are proposed changes that seek to include other greenhouse gases. Daniel gave
a brief overview of chemical compounds with significantly greater global warming potential
(GWP) when compared to CO2. They were: methane (CH4), nitrous oxide (N2O),
perfluorocarbons (PFC), hydrofluorocarbons (HFC), and sulfur hexaflouride (SF6).
While the majority of us has probably never heard of most of these other compounds, they
are very common in our industrial complex. For example, HFCs, of which there are well
over twenty that are tracked and measured, are used as refrigerants – they abound in
supermarkets everywhere! (Walmart has calculated that fully 10% of its total corporate
carbon footprint is due solely to refrigerant leaks in their stores.) PFCs are used in the
production of aluminum, and sulfur hexaflouride is a common component of LCD
manufacturing. And while SF6 is not emitted nearly as much as CO2, the release of a single
SF6 molecule is equivalent to the release of 22,800 CO2 molecules in terms of its
contribution to the greenhouse effect.
Emissions reductions are being pursued through various CDMs, with projects related to
industrial gases, renewables, and methane and cement largely dominating the field with a
combined 81% majority. Forestry, transportation, and demand-side energy efficiency
projects are expected to make up a meager 1.7% of the total through the year 2012. Not
surprisingly, the following were identified as potential new sources of emissions reductions
in the context of a cap and trade market:
• avoided deforestation in tropical countries;
• sustainable agriculture;
• sectoral initiatives in large developing countries;
• more emissions reduction programs targeted at households and buildings.
The presenter acknowledged that, as currently structured, the offset market created by the
Kyoto Protocol heavily favors the most industrialized developing nations, and singled out
Brazil, South Korea, India, and China as the countries that have most benefited from that
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3. miagreen session 2 3
set-up. While the future of cap and trade in the United States is still uncertain, he believes
that Congress will have to move on something. It may not be what was originally proposed,
but government officials will have to reach a compromise because the issue is at a point
where it can no longer be put off for future consideration. As the largest emitters, the U.S.
and China do have to be part of the solution if the world as a whole is to make any
progress on the issue.
The overall carbon market is currently valued at $125 billion, and it continues to grow.
Hopefully a general overview of new developments will be scheduled for next year’s
conference as well.
Daniel has been kind enough to share the slideshow of his presentation with us. If you
would like to download it, please click here.
Thank you, Daniel, for this informative session!
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