New and Modified Carbon Credit Protocols
May 26, 2011
New methodlogies for things like jet engines and forests have been approved or modified by North America’s offset programs. Here are a couple of note:
Jet Engines
(Not necessarily the jet engine to which this protocol applies)
The Verified Carbon Standard (“VCS”), which long-time market watchers will recognize as the new name for the Voluntary Carbon Standard, has approved a “Methodology to Curb Jet Emissions via Engine Washing.” The protocol was developed by Pratt & Whitney. It’s focus is on the fuel efficiency gained by keeping jet engines clean. Cleanliness really is next to godliness.
Landfills
The Climate Action Reserve (“CAR”) is accepting public comments on its Landfill Project Protocol revision (U.S. Version 4.0). Landfill? Or land thrill?.
Forest Management
Of particular interest to Canadians, the VCS has approved the “Improved Forest Management (IFM) Methodology to Protect Temperate and Boreal Forest Properties” put together by 3GreenTree and Ecosystem Restoration Associates. They see the forest for the trees.
Auditor General: Give Canadians the Real Costs on Climate Adaptation
May 26, 2011
Yesterday, May 25, 2011, retiring Auditor General Sheila Fraser released Serving Parliament through a Decade of Change, a publication outlining the accomplishments of the Office of the Auditor General during her decade-long tenure.
One of Canada’s most respected and well-known civil servants, the Auditor General used her last official speech to highlight important long-term Canadian fiscal pressures, including the costs of adapting to climate change.
Auditor General Sheila Fraser (Photo via Auditor General's Office Website)
In a media release summarizing her speech the Auditor General wrote of climate change and the other long-term fiscal challenges:
I encourage the government to provide Canadians with long-term fiscal projections so they can see the impact of these challenges. I also encourage the government to engage Canadians in a national discussion about how we will meet these challenges.
In her report, the Auditor General made specific mention of the Federal Sustainable Development Act, enacted in 2008, which stipulates the Commissioner’s new responsibility to report on the government’s progress on addressing climate change. The Auditor General noted that “the Commissioner’s work (is) an integral part of our mandate. Our environmental and sustainable development auditing is a crucial aspect of the way we serve Parliament and Canadians.”
The Auditor General will likely address climate change further in her upcoming audit report, set to be tabled on June 7, 2011.
- Post by Ariana Foyle (Intern and guest blogger at Zizzo Allan Climate Law LLP)
S&P to assess climate risk as part of credit score
May 5, 2011
Lenders and rating agencies are recognizing that climate risks may seriously companies’ finances. This means climate exposure could affect the availability and price of credit for companies that do not adequately deal with climate risk.
While North American governments have been slow to provide the comprehensive and predictable regulation and carbon pricing requested by environmentalists and a number of Canadian business leaders (for example Shell Canada President Lorraine Mitchelmoore), sophisticated corporations understand the necessity of dealing with climate risks now and have started taking important steps to prepare themselves for an economy in which carbon emissions are limited.
In a recent profile in Environmental Finance, which is unfortunately only available behind a paywall, Michael Wilkins, London-based Managing Director of Carbon Markets at S&P, reveals that S&P is taking active steps to integrate carbon risk into its risk assessment metrics.
“It’s still heavily debated how big an issue this is,” he notes. “But there’s a growing realisation that will change and … our group is working out how best to analyse that change … and how to incorporate that into the credit rating process”
Wilkins says that the details of the methodology are still being finalised but, by the middle of the year, companies across all industrial sectors will undergo an initial automated screening. If they are deemed to be exposed to climate risk, a more in-depth assessment will be carried out.
This will include not only their emissions profile, but also where those emissions are produced (with European assets facing greater risk of carbon constraints than those in developing counties), the company’s ability to mitigate those emissions — and its ability to pass any carbon costs through to suppliers. The output will be “carbon exposure per euro or dollar of EBITDA [earnings] — a financial metric”, he says.
Environmental Finance March 2011 (p. 32)
This is an interesting development when considered along with recent guidance from securities regulators in Canada that requires companies to improve disclosure of climate risks to investors.
Smart Grid Report (Ontario) Released
May 4, 2011
Smart Meter (from the IESO website)
The Ontario Smart Grid Forum has released its second report Modernizing Ontario’s Electricity System: Next Steps. The report provides recommendations on smart grid development in Ontario and also provides some assessment of how far the Province has come on smart grid development.
What is a smart grid? “…the smart grid, a term used to describe a reliable and fast-adapting electrical grid that combines the use of computing and communications technologies to safely manage the two-way flow of electricity and automate many aspects of operation. The smart grid is ultimately about using megabytes of data to move megawatts of electricity more efficiently and affordably. In the medical world, it would be what Magnetic Resonance Imaging (MRI) is to an X-ray – more advanced, versatile, safe, and beneficial for those who rely on it. (from the report page 4)
One of the most important goals of the smart grid is to get people using electricity more efficiently and to spread demand out over the day. This is important because demand tends to have peaks and valleys (for example when people are home after work cooking and doing laundry) meaning that more capacity is needed at the peaks, while we are not using all the capacity we have at other times of day (and particularly at night). When a lot of your power comes from sources that can’t be quickly shut on and off (like nuclear) or, looking forward, sources that depend on external factors we can’t control (like wind speeds) it is helpful to be able to price in such a way that power users are encouraged to draw energy when supply is plentiful, and conserve when it is not. If you are interested in this subject the Independent Electricity System Operator (IESO, which leads the Ontario Smart Grid Forum) has more info here.
The report indicates that the number of retail customers using time-of-use rates (which attempt to solve this problem) has increased from 4.1% in December 2009 to 34.3% in December 2010. Not bad! We will be very interested to see how this effects demand and power quality, based on some of the other metrics the report recommends using.
The report has a number of important recommendations on privacy and energy storage and talks about the integration of electric vehicles as well. It’s worth a read.
