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On 11 December 1997, the international community adopted the Kyoto Protocol to the United Nations Framework Convention on Climate Control (UNFCCC). Developed countries collectively agreed to reduce their aggregate emissions of greenhouse gasses by at least 5% from 1990 levels during the period 2008 - 2012. The emission reduction targets are comprehensive in their coverage of greenhouse gasses across all sources and sinks. "Ratification of the Kyoto Protocol on greenhouse gas emission abatement will have significant medium to long term implications for developed and developing economies. The Protocol is one of the most ambitious and far-reaching environmental policy initiatives ever attempted." Source: ABARE Australian Commodities Forecaste and Issues December 1998. The key to carbon credits is the establishment of carbon sinks through having tress planted to soak up the carbon expelled by factories. Tolarno / Peppora has over 40,000 acres of native untouched forests of Australian mallee. We are open to companies interested in taking out 50 year leases on the carbon credits applicable to the mallee forests.
For a further analysis of carbon credits, please read the article below.
Climate change will be a major global environmental issue well into the 21st century and inevitably, responses to the issue will affect the way the mining industry goes about its business. Exactly how the industry is affected will depend in part on the particular initiatives governments put in place to meet their international obligations. In the lead up to the Kyoto meeting of the 168 Parties to the United Nations Framework Convention on Climate Change, there has been a great deal of discussion on whether or not the international community will commit to legally binding greenhouse gas emission targets. Regardless of the outcome, Australian mining companies are global traders and will be affected by any international agreement. One of the few consensus issues that is emerging from the current negotiations is a support from developed nations for an international carbon trading regime. While the Kyoto conference will not agree any details of how such a trading regime should operate, there are mechanisms already in place which illustrate the direction that carbon trading can be expected to take. Potential Mechanisms Governments that are committed to reducing greenhouse gas emissions have a range of regulatory measures and economic instruments available to them. For many emission sources, economic instruments have an advantage over prescriptive regulations as they reflect more accurately the true cost of pollution, can divert funds to enable greater reduction measures and more effectively penalise non-compliance. Potential economic instruments for greenhouse gas reduction include taxes, levies, charges, subsidies and emission quotas, the latter being the basis for carbon trading. What is carbon trading? A carbon trading system allows the development of a market through which carbon (carbon dioxide) or carbon equivalents (other greenhouse gases such as methane expressed in units of carbon relating to an equivalent warming capacity) can be traded between participants, whether countries or companies. The system allows participants to have flexibility in deciding how to invest in carbon emissions mitigation. ____________________________________ In an ‘allowance’ trading system each participant is allocated an emissions limit. The participants can then sell any unused component of the carbon allowance, obtained by reducing emissions below their limit, or they can buy carbon credits from others, allowing them to exceed their original limit. The participants would choose the least cost alternative between reducing emissions or buying additional allowances from the marketplace. In a ‘credit’ trading system, each participant earns credits for reducing emissions by more than is required. Credits can then be stored for future use or sale. Credit or allowance systems could coexist or be introduced independently and one or the other may be better adapted to specific circumstances. Claims for carbon credits are not permitted under the present ‘pilot phase’ criteria for Joint Implementation (a system in which a sponsor country or company invests in emissions reductions in another country as part of a cooperative agreement), nor are they contemplated under Australia’s Greenhouse Challenge program. However, in the USA, Canada and Costa Rica, some traders are already valuing greenhouse gases at between $5 and $35 per ton of carbon and, in the expectation that trading will be permitted, are actively preparing to sell credits gained from mitigation projects to energy utilities wanting to expand production. BP has launched a trial trading program between its facilities, and Canada’s TransAlta runs an internal trading program in its Western Australian cogeneration project. An example of an existing air emissions trading system is the US Sulphur Dioxide Allowance Program under the Clean Air Act. Individual facilities are allocated emission allowances which they cannot exceed. Companies can buy and sell their allowances and allowances can be bought or sold by brokers or participants in the allowances market. There are hundreds of participating companies (each of which has continuous emissions monitoring), several brokers and annual auctions of allowances. The US EPA manages the program and verifies compliance. The program is widely regarded as successful, and the EPA estimates that the cost of compliance is $2 billion per year compared with $4.9 billion in the absence of trading. Another example is in the Czech Republic where the author was recently involved in establishing a pilot sulphur dioxide emissions trading program between a number of participating power, chemical and mining companies. How would carbon trading work? For a carbon trading system to operate effectively there needs to be :
There also needs to be ready access to information about the market (who is buying, who is selling and what projects are available to investors) in order to keep transactions costs to a minimum. It has generally been found that, to be effective, a regulatory system and a number of other economic instruments, such as high penalties for non-compliance, should coexist with trading. Carbon trading programs will initially have to apply to emissions which can be readily measured and controlled: other emissions will have to be managed using less flexible systems. There are many emission sources in the mining and energy industries that would be suitable candidates for carbon trading programs. ____________________________________ For trading within Australia, part of the necessary framework is already in place. For example, there is an environmental protection authority which could, given adequate resources, manage and control the process like the US EPA is managing the sulphur dioxide program. Brokering and verifying bodies could be easily established. Internationally, the process is more complicated and there is not yet a successful system for international emissions trading of any sort (although the Montreal Protocol introduced a related system for chlorinated fluorocarbons, or CFCs). A number of verifying bodies are being established and the World Bank has announced its intention to establish a carbon fund which will provide a portfolio of carbon credit investment opportunities in developing countries for international investors. In the short term, verification and enforcement would generally be more difficult to manage between nations than within a country, although excellent opportunities for effective carbon trading exist for multinational companies meeting the requirements of their various host countries. The advantages to industry A carbon emissions trading system has the direct advantage for industry of giving companies flexibility in how they meet their carbon emission obligations. For example, instead of investing in a costly process modification, a company can make a less costly investment elsewhere and obtain credits towards a net carbon reduction. Similarly, trading would allow a company to increase production while maintaining or decreasing its overall carbon emissions. Trading is win-win for buyers and sellers and is likely to be preferable for private industry than a system of rigid targets, carbon taxes and penalties. Additional benefits from carbon trading include:
Either as a direct result of Kyoto or shortly afterwards, it is likely that industry will be facing stricter emissions limits for greenhouse gases. Even if Australia does not take concrete action, multinational companies will be affected by the changes. Carbon trading will be part of these changes and companies should be actively positioning themselves in the emerging marketplace.
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