Market Mechanisms for Carbon Dioxide Removals: An Overview

ABSTRACTStudies show that the ‘well below 2°C’ target from the Paris Agreement will be hard to meet without large negative emissions from mid-century onwards, which means removing CO2 from the atmosphere and storing the carbon dioxide in biomass, soil, suitable geological formations, deep ocean sediments, or chemically bound to certain minerals. Biomass energy combined with Carbon Capture and Storage (BECCS) is the negative emission technology (NET) given most attention in a number of integrated assessment model studies and in the latest IPCC reports. However, less attention has been given to governance aspects of NETs. This study aims to identify pragmatic ways forward for BECCS, through synthesizing the literature relevant to accounting and rewarding BECCS, and its relation to the Paris Agreement. BECCS is divided into its two elements: biomass and CCS. Calculating net negative emissions requires accounting for sustainability and resource use related to biomass energy production, processing and use, and interactions with the global carbon cycle. Accounting for the CCS element of BECCS foremost relates to the carbon dioxide capture rate and safe underground storage. Rewarding BECCS as a NET depends on the efficiency of biomass production, transport and processing for energy use, global carbon cycle feedbacks, and safe storage of carbon dioxide, which together determine net carbon dioxide removal from the atmosphere. Sustainable biomass production is essential, especially with regard to trade-offs with competing land use. Negative emissions have an added value compared to avoided emissions, which should be reflected in the price of negative emission ‘credits’, but must be discounted due to global carbon cycle feedbacks. BECCS development will depend on linkages to carbon trading mechanisms and biomass trading.Key policy insightsA standardized framework for sustainable biomass should be adopted.Countries should agree on a standardized framework for accounting and rewarding BECCS and other negative emission technologies.Early government support is indispensable to enable BECCS development, scale-up and business engagement.BECCS projects should be designed to maximize learning across various applications and across other NETs.BECCS development should be aligned with modalities of the Paris Agreement and market mechanisms.

In memoriam: On the death of the ‘market mechanism’

An ANP-SWOT approach for ESCOs industry strategies in Chinese building sectors

World economic growth has been made possible by the ability to harness the energy of fossil fuels. From the Industrial Revolution to the present, the atmospheric concentration of carbon dioxide has increased by about 30% (IPCC in Changes in atmospheric carbon dioxide, methane and nitrous oxide. 2016), and these environmental changes have led to significant climate change effects, such as rising temperatures, water shortages, soil loss and the ‘intensification of the process of desertification. Western societies are characterized by high energy consumption and, with the population growth and economic growth in emerging countries, the effects will tend to be increase more and more. Current patterns of production and consumption have proven unsustainable, and we need radical changes to escape this vicious circle affecting humanity. But, it is necessary first of all to realize that constant economic growth and the indiscriminate us of the energy sector are physically impossible on a planet of finite size and limited resources. In the encyclical, Laudato Si’, Pope Francis fully embraced the message of environmental economists defining the environment as a “good that the market mechanisms are not able to defend” (paragraph 190). The Pope appears to be in tune with what has been stated by the scientific literature about the possible roads to take to resolve the problem: “the consumption of fossil fuels must decrease without delay” (165), simultaneously, “the transition from the use thereof to renewable energy sources should not be hindered, but accelerated “(26). It is necessary to adopt a circular pattern of production to ensure resources for everyone by using, in particular, renewable energy progressively, thus reducing dependency on fossil fuels. In this sense, the agricultural world, thanks to renewable resources and the adoption of advanced practices such as anaerobic digestion, could play a role of fundamental importance to an economy based on sustainable use of resources and circularity. The chain of biogas, in fact, is based on a natural biological process which, starting from the residues of agricultural activities, can produce electricity, heat or biomethane, in addition to the digestate, a byproduct of the anaerobic digestion process, which can be used in agriculture to improve soil fertility through the continuous recycling of organic substances. This paper aims to show how the creation of an anaerobic digestion plant on a farm might be the answer for the attainment of an advanced agricultural model, competitive and sustainable, both in environmental and economic-tale: the perfect example of a circular economy.

On the basis of market fundamentalism, new types of social systems with the market mechanism such as electricity trading markets and carbon dioxide (CO2) emission trading markets have been developed. However, there are few textbooks in science and technology which present the explanation that Lagrange multipliers can be interpreted as market prices. This tutorial paper explains that (1) the steepest descent method for dual problems in optimization, and (2) Gauss-Seidel method for solving the stationary conditions of Lagrange problems with market principles, can formulate the mechanism of market pricing, which works even in the information-oriented modern society. The authors expect readers to acquire basic knowledge on optimization theory and algorithms related to economics and to utilize them for designing the mechanism of more complicated markets.

The increasing trend of energy generation and management systems towards decentralized structures such as using renewable energy resources makes it necessary to use digital and smart platforms for exchanging information and even conducting financial transactions in a decentralized manner, known as the peer‐to‐peer model. The decentralized transaction verification of cryptocurrencies makes it possible to use these encrypted currencies and decentralized blockchain networks in energy management systems and carry out financial transactions related to carbon trading. Carbon and other greenhouse gas (GHG) emission trading systems reduce the competitiveness of fossil fuel projects in the market and accelerate investment in low‐carbon energy sources such as wind and photovoltaic power generation units. This market mechanism allows large entities such as countries and companies that emit GHGs into the atmosphere to buy and sell these gases. This paper reviews the blockchain solutions developed for carbon markets. Studies related to the design of smart contracts in the platform of blockchain are investigated. Special cryptocurrencies that are used in the field of green energy transactions and carbon trading are introduced. In addition, the application of artificial intelligence and game theory in energy trading is stated. The study of different blockchain frameworks for carbon trading shows that the use of decentralized platforms in carbon trading can have a significant impact on the trend towards low‐carbon measures and achieving the goals of the Kyoto Treaty, increasing the value of green cryptocurrencies and the volume of transactions. These technologies offer a promising avenue for creating a more decentralized, efficient, and environmentally conscious energy ecosystem.

When it comes to ecological diversity, California has it all: snow-capped mountains, wide deserts, scenic beaches, and some of the worst environmental problems in the country. Six of the country’s ten most polluted cities—Los Angeles, Bakersfield, Fresno–Madera, Visalia–Porterville, Merced, and Sacramento—are found in California, where children face fivefold greater risks of reduced lung function compared with children who live in less-polluted areas. Beyond its air pollution problems, California could also face catastrophic consequences from climate change. Assuming warming trends continue at their present rates, experts generally agree that the Sierra snowpack—which is crucial to the state’s drinking water supply—could decline by 50–90% by the century’s end. With statistics like that, environmentalism has become a powerful force in California. According to a 2006 survey conducted by the Public Policy Institute of California (PPIC), a San Francisco–based research organization, 65% of Californians don’t think the federal government is doing enough to combat global warming. Two-thirds of the population support state efforts to address climate change, while an equal number support tougher air pollution standards on new vehicles, even if it makes vehicles more expensive. California legislators have responded with some of the strongest environmental laws ever passed. Whereas the U.S. government has yet to regulate carbon dioxide, California recently passed AB 32, a groundbreaking law signed by governor Arnold Schwarzenegger in September 2006 that directs industries to reduce all greenhouse gas emissions by 25% over the next 13 years. Another law—AB 1493, which was enacted in 2002—directs automakers to reduce greenhouse gases emitted by passenger vehicles sold in California after 2009, with a 30% reduction in statewide vehicular emissions by 2016. (That law is currently being challenged by a lawsuit from the automotive industry.) This year, California will consider a statewide green chemistry policy that could exceed the scope of the federal Toxic Substances Control Act (TSCA), which sets national policy on chemicals used in products and industrial processes. Local governments have also tightened environmental controls. San Francisco, for instance, recently passed the country’s first ban on baby products containing bisphenol A and has also regulated levels of phthalates in these products. Bisphenol A and phthalates are both suspected endocrine disruptors. Coming from one of the world’s largest economies, these preemptive legislative efforts have impressive clout. “California provides an example [for other states],” says Cympie Payne, associate director of the California Center for Law and Policy at the University of California (UC), Berkeley. “Other states find it easier to model their own laws on those that another state has already put into effect.”

China's adaptation to climate & urban climatic changes: A critical review

Market Harms and Market Benefits

One of the key challenges of the current century is the growth in green-house gases emissions to the atmosphere. The concentration of carbonic acid gas in the Earth atmosphere keeps rising, which results in climate change. Climate change in Russia can be characterized as continuous warming and its speed is in 2.5 times higher than the speed of global warming. It can prove the volume of our country contribution to the total green-house gas emissions, which shall be taken into account for developing steps aimed at resolving national climatic problems. Ecology in current circumstances and in long-term perspective means practical and scientific and technical foundation for the beginning of man’ rational life on the Earth, when negative impact on the environment is reduced and at the same time accumulated damage is eliminated. Disregard for climatic agenda can create risks for sustainable development of national economy. This principle was introduced in the concept of sustainable development, which is based on balance between human activity and laws of nature by replacing consumers’ attitude towards nature. The article studies the widely-spread economic (market) mechanisms of carbon regulation. General and specific measures of motivating low-carbon development were discussed aiming at higher responsibility and involvement of enterprises in work on cutting green-house gas emissions. The authors show that the key economically effective tools for cutting the carbon footprint are the system of trading quotas on green-house gas emissions, the development of the national system of stock-taking, accounting and emission monitoring. It can be realized as a result of substantiating national emission factors, logical and normative approaches and tested methods for estimation of green-house gas emissions, improvement of the quality of data being analyzed and scenario modeling.

This paper was prepared for the National Petroleum Council's Study on Natural Gas GHG Emissions. Natural gas is the largest primary energy produced in the United States and its use is growing. Yet getting this gas to homes and businesses creates greenhouse gas emissions. That’s why reducing emissions from America’s natural gas is an urgent priority that requires collaborative solutions. The National Petroleum Council brought together a diverse group of stakeholders with the expertise to analyze this complex issue and identify ways to reduce natural gas GHG emissions for all future supply and demand scenarios. The result: actionable consensus on ensuring a lower-emission natural gas system. The study’s research charts a course forward to meaningfully reduce emissions from the natural gas system, contributing significantly to the United States’ ability to achieve its climate goals. The report concludes that through the implementation of existing policies, voluntary commitments, technologies, and market mechanisms, a 63% reduction in methane emissions can be achieved by 2030. The report went further to identify an additional pathway that methane emissions decrease by 70% and carbon dioxide emissions reduce by 33% through 2050.

İnsanlık, özellikle sanayi devrimi ile birlikte son derece hızlı bir üretim ve tüketim çarkının içine hapsolmuştur. Thomas R. Malthus’u muhtemel kıyametin en azından tarihi konusunda haksız çıkaran teknolojik gelişme ve üretim artışları, artmakta olan dünya nüfusunu besleme kapasitesine sahipse de bugün talebe ilişkin artışlar ile insanlık fazladan bir gezegene daha ihtiyaç duymaktadır. Tabiidir ki böyle bir istek en azından şimdilik gerçekleşmiş durumda değildir. Arz ile talep arasındaki açık giderek büyümekte, kaynak erişimi problemlerini derinleştirmektedir. Sürdürülebilir kalkınma hedefi ile sürdürülebilirlik vurgusunu kalkınmaya/büyümeye yapan insanlık, bugün gezegenin doğal kaynakları üzerinde her çağdan daha fazla baskı oluşturmaktadır. İnsanlık tarafından oluşturulan doğal kaynak talebi; gıda ihtiyacı, hammadde temini ve karbondioksit gazının özümsenmesi gibi başlıklar çerçevesinde hesaplanmaktadır. Bu hesaplama ile Ekolojik Ayak İzi kavramına ulaşılmaktadır. Ekolojik Ayak İzi kavramı insanlığın gezegen üzerindeki baskısını ölçülebilir, sayısal bir değer olarak sunmakta ve tanımlamaktadır. Ekolojik bir ekonomi tanımlaması geliştirmek amacına hizmet etmektedir. Bu çalışma, tarihsel bir dönüm noktasında bulunan insanlık için Ekolojik Ayak İzi ve Dünya Limit Aşım Günü kavramlarına odaklanmaktadır. Güncel ve önemli kavramlar olarak Ekolojik Ayak İzi ve Dünya Limit Aşım Günü kavramlarının genel bir değerlendirmesini yapmaktadır. Sorunun ölçülebilir, sayısal değerlerle ifade edilmesinin küresel tehdidin anlaşılırlığını güçlendirdiği fikrinin altını çizerken gelecekte piyasa mekanizmasının üstleneceği role dikkat çekmektedir.

The AIM/end-use model and its application to forecast Japanese carbon dioxide emissions

Building on a review of experience in the United States and the European Union, this article advances four main propositions concerning policies aimed at increasing electricity generation from renewable energy. First, who bears the short-run costs of programs to subsidize the generation of electricity from renewable sources varies with the organization of the electric power industry, and this variation may be a significant contributor to such programs’ political attractiveness in U.S. states. Second, despite the greater popularity of feed-in tariff schemes worldwide, renewable portfolio standard (RPS) programs may involve less long-run social risk. Third, in contrast to the European Union’s approach to reducing carbon dioxide emissions, its renewables program is almost certain not to minimize the cost of achieving its goals. Fourth, state RPS programs in the United States are also almost certain to cost more than necessary, even though most use market mechanisms. To support this last proposition I provide a fairly detailed description of actual markets for renewable energy credits and their shortcomings.

The carbon emission trading policy attributes carbon dioxide emission rights to commodities, representing an important exploration to reduce carbon emissions by the market mechanism. Since 2013, China has implemented the carbon emission trading policy. In order to study whether the carbon emission reduction effect of emission trading policy in pilot areas and what is the pathway, this paper uses multi-period difference-in-differences method and the medintion effect method. An empirical analysis of panel data from 283 prefecture-level cities in China between 2006 and 2019.The research findings demonstrate that: (1) The policy about carbon emission trading significantly reduced carbon emissions,which is still valid after a series of robustness tests, and had a synergistic effect. (2) The policy primarily promotes carbon dioxide emission reduction through innovation in green technology and adjustments in industrial structure. (3) In comparison to the eastern and western regions, the policy performs better in central regions. Furthermore, the effectiveness of emission reduction depends on the intensity of environmental regulations, thus, stricter regulations are more conducive to carbon reduction. This paper provides strong evidence to the expansion of carbon emission trading pilots, and guides the operation of carbon emission trading market in China.