Avoiding Extinction: Negative Carbon and the Green Power Fund

10.17.2011

Presented at UNFCCC COP 16 Cancun Mexico

November 29 to December 10 2010

Graciela Chichilnisky

Columbia University

New York USA

New York, October 11 2011

1.     The Kyoto Challenge

Most people know that carbon emissions can precipitate climate change. We know that the science is uncertain, but the consequences are potentially catastrophic. As we act to protect against an uncertain risk of fire to our homes - equally we must take action to prevent the worst outcomes from climate change. We must insure against a future where humans may not survive. It is becoming increasingly clear that the focus is to avoid potential extinction.

The international community has worked hard to reach a solution for a number of years. Most people know that the United Nations Kyoto Protocol limits global carbon emissions, which is the source of a potential catastrophe. This ground breaking agreement was voted by 165 nations in Kyoto 1997, at the Convention of the Parties of the United Nations Framework Convention on Climate Change. The Kyoto Protocol became international law in 2005, when it was ratified by nations representing over 55% of the world emissions of carbon. The Protocol is unique. It is the only international agreement we have for resolving potentially catastrophic climate change. But few people know how it works. Few people are aware that the Kyoto Protocol created the first global environmental market– the global carbon market that I designed and wrote into the protocol in 1997. And even fewer people know that the Kyoto Protocol has already funded US$50 Billion in clean technology projects in developing nations through its Clean Development Mechanism (CDM). The Protocol became international law in 2005 – so this funding took place in a short period of six years, and continues growing. During this six year period, the carbon market of the Kyoto Protocol grew from zero to US$200 billion in annual trades. The projects funded by the CDM and paid from the carbon market’s funds achieved a real impact: these projects have decreased carbon emissions by the equivalent of 40% of EU emissions.[1] This is a very substantive success in an area - the global climate negotiations -- where progress has otherwise been slow and scanty. It is a strong endorsement for the Kyoto Protocol carbon market, which trades at the EU Emission Trading System. How does the carbon market work? And how does its CDM work in practice?

The carbon market allows nations to pay if they exceed their emissions limits, with the payments going directly to those nations that are under their emissions limits – so at the end of the day the world remains within a total reduced level of emissions that is acceptable to the international community. The rights to emit that are bought and sold are called “carbon credits” and are traded in the European Union ETS carbon market. The CDM provides carbon credits to private projects in developing nations that can be demonstrated to reduce carbon emissions in the right amounts. These credits can then be converted into cash by the industrial nations’ investors in those projects -- who therefore receive extra cash from investing in clean projects. The circle closes to everybody’s advantage. Investors are more profitable and carbon emissions are reduced.

The Kyoto Protocol has the unique distinction of being is the first market-based international agreement in history. It is also the first international agreement ever to generate cash, and this cash has made significant monetary transfers to developing nations in a short period of time making green projects possible. Created in 1997, the Protocol has been by now ratified by 195 nations. The CDM transfers are not given to governments but to the private sector, and may thus be less subject to political corruption. CDM transfers go to private and profitable projects that implement new and clean technologies. These technologies can transform the development patterns of poor nations, who can develop in a new way without exhausting the world’s environmental resources. Developing nations are offered funding to develop, without having a negative impact on the planet’s atmosphere nor on the stability of its climate.

As impressive as the numbers are, however, the carbon market and its CDM need serious improvements. The data is clear. Up to now the large majority of all CDM projects are in China and in India, the largest developing nations emitters, and very few projects have been funded in Latin America, in Africa or in the Small Island States[2] where the funding could have most effect in development and in future emissions. Why this bias?

The reason is simple. As currently designed, the Kyoto CDM supports projects that reduce emissions. China and India have very substantive emissions to reduce – the two of them together exceed 20% of the global human emissions of carbon. By contrast, Africa, LA and SIS emits too little and have little to reduce: Africa emits 3% of the global emissions, Latin America 5.5%, and all the 43 small island states emit a mere 0.3% of global emissions. The arithmetic is clear: since they emit so little Africa, Latin America and the SIS attract little CDM project support.

The question is how to use the CDM of the Kyoto Protocol to support clean projects in LA, Africa and SIS?

The solution to this problem is simple and radically new: it is Negative Carbon.

2.     Negative Carbon Technologies

Negative Carbon technologies are processes that capture more carbon than they emit. Trees do that – and they are important also for biodiversity conservation that is located in forests. Biochar is also a negative carbon process, by which carbon is buried and reduces the atmospheric concentration as the carbon fertilizes the ground. Trees and biochar are negative carbon processes, and they must be encouraged for many reasons. Forests are crucially important for housing the world’s biodiversity and its water sources, and offer shelter, food and livelihood to billions of people around the world. But trees and biochar they are too slow for what we need in terms of climate change. A recent Canadian report documents that if trees were planted in every square foot of available arable land in the planet, they would at most absorb 10% of the CO2 that humans are expected to emit by the end of this century. We have procrastinated too long and the world cannot be reforested on time to make a difference. There are, however, other technologies that are carbon negative and can make a difference in 10 or 20 years from now. One example is provided by Global Thermostat (GT), a new company – which the author has co-founded in 2006 – that has created a Carbon Negative technology to capture carbon from air.  GT technology transform a fossil power plant into a net carbon sink: for example, a plant that emits 1 million tons of CO2 annually becomes a 1 million tons sink using GT carbon capture technology. The GT process uses the residual heat in a power plant– called ‘process heat’ – to cogenerate CO2 capture with electricity. In this way, the more electricity one produces, the more carbon one reduces. GT is not just for fossil fuel plants – it works with any source of heat to capture carbon from air.  GT can accelerate the transition to renewable power plants. With GT cogeneration, renewable power plants such as concentrated solar plants (CSP) become more profitable, and larger carbon sinks. In this way the technology accelerates the transition to renewable power. The captured CO2 need not be buried. It is fed to algae to produce gasoline and clean water. Global Thermostat technology is live and capturing CO2 from air at the Stanford Research Institute (SRI) in the heart of Silicon Valley California – and has important commercial partners in BASF, the largest chemical company is the world, and Corning, the largest producer of monolithic convertors. Its SRI Pilot Plant is capturing CO2 from air today, the company is planning its commercial operations, and  has become a finalist of the Virgin Earth Challenge Prize.

This type of carbon negative technology – there are several available today - changes the equation. Carbon Negative Power plants can produce energy that cleans the atmosphere instead of injecting carbon that can damage the stability of the earth’s climate. Such technologies can make the CDM offer funding to low emitting poor nations. How? With Negative Carbon technologies regions in Africa, LA and SIS could reduce 30% of global emissions even though they emit only 8% in total. This is what carbon negative technologies mean – more carbon is absorbed than what is emitted. This can attract significant CDM resources for carbon negative projects that ahs not been available until now because these regions emit little carbon.

Why do we need Negative Carbon?

- To contain rising levels of atmospheric carbon because we procrastinated too long and carbon emissions reductions do not suffice[3]

- To provide clean energy in poor regions by using the carbon  market of Kyoto Protocol and the funding provided by its CDM to build negative carbon power plants in Africa, Latin America and the Small Island States. At present it is not possible to use the CDM in these nations without negative carbon technologies, since they emit too little to attract CDM project funding.

- To power development in the poorest regions in the world and thus help resolve the global divide which is the cause of environmental havoc

- To enhance the probability of survival, the future of our Species – our common future

All this seems reasonable but the time dimension is pressing and needs to be faced. We have a short time fuse and there is no time to waste. Solutions to the climate change issue are needed right now because they must be implemented in the next 10 and 20 years. Negative Carbon is needed now. This takes us to the real topic of this article - Green Capitalism. How to use profit motives in tandem with the carbon market to fund a Negative Carbon Solution. How to meet global energy needs and at the same time contain carbon in the atmosphere?

The transition from our fossil fuel economy to a renewable power economy can neither be easy or fast. Indeed 87% of the US$ 55 trillion power plant infrastructure[4] is based on fossil energy, and we need to turn this global infrastructure into renewable energy sources in rich and poor nations now.  This infrastructure is worth US$55 trillion, according to the International Energy Industry, and therefore unlikely to change very fast. This is a challenge of enormous magnitude.

3.     A Blueprint for Transformation: the Green Power Fund

The world needs energy – and the power plant industry is the key to the problem. Nothing can be made without tackling this problem. This industry is also the key to the solution. The power plant US$55 Trillion Infrastructure represents 41% of global CO2 Emissions. Without transforming this infrastructure into renewable power sources the problem caused by fossil fuels will never go away. How to achieve such an enormous transformation in a timescale that matters?

My proposal is a Green Power Fund.  I proposed this Green Power Fund first in Copenhagen COP 15 and explained this in articles I provided to the US Department of State[5] and the US Department of the Treasury[6], and published the concept in a number of articles that appeared in the Financial Times and Europe’s World.[7] It was supported by Hilary Clinton who announced it publicly at Copenhagen three days after my proposal was made. My proposal is relatively simple although the details are technical and depend on the intricacies of the Kyoto Protocol and its CDM, as well as Article 4 of the UN Framework Convention on Climate Change. It starts with the creation of a $200 Bn/year Private Fund for 15 years, with a measure of  public support.  A period of 15 years with this level of funding is needed to change the global power industry direction and this number was based on the number of GT power plants would be needed to capture all the CO2 emitted by humans today – about 30 gigaton/year. The Green Power Fund will be based on private funding but will have governments’ support. The GPF will invest only on investible grade power plant firms building Negative Carbon power plants and based on Power Purchasing Agreements – PPAs or Off – Take Agreements -- that are paid over time by the Kyoto Protocol CDM in Africa, LA & SIS. In Copenhagen COP15 – and working with Papua New Guinea, I introduced the wording into the CDM that would allow Negative Carbon projects to be funded from the CDM – wording that is still going through the process of becoming international law. The Green Power Fund can use the CDM to resolve the global climate risks of our time. At the same time that it is self funded, it can increase development – through clean power provision – in the poorest regions of the world. By helping resolve the Global Divide it can have an impact on the real source of the global environmental crisis of our times – all of which are connected and based on extreme poverty and human suffering. The Green power Fund is based on the Kyoto Protocol and its unique market that is based on equity and efficiency, a new type of market for a sustainable future.

Our vision of Sustainable Development is to create a Carbon Negative economy.  An economy where the more one drives, produces, creates jobs, uses electricity – the cleaner is the atmosphere.

Green Capitalism can drive the equation:

- Resolving the Global Climate Negotiations – the North - South Divide

- Economic Growth that is Harmonious with the Earth Resources

4.     A Vision of Green Economics: Avoiding Extinction

Green Markets like the carbon markets lead the transformation, the way to Green Capitalism. These are new types of markets. They are efficient and provide funding to the poorest nations to help resolve the Global Divide. The choice is stark. Either we transform capitalism soon – or we may face the extinction of human civilization as we know it.

Green Markets can help the implementation of Carbon Negative solutions are the future of energy. Indeed, the Kyoto Protocol carbon market already trades about US$200 Bn per year, which is precisely the funding that is needed for the Green Power Fund to ignite the transformation of the power plant infrastructure, building Carbon Negative Power Plants in developing nations and particularly in Africa, Latin America and the Small Island States. The Green Power Fund and the Carbon negative Power Plants that it funds can help resolve the North South divide in the Global Climate negotiations, provide clean energy and growth for the North and for the South, and economic development that is harmonious with the Earth’s resources. The green Power Fund can help build our future - our common future.

[1] See The World Bank Annual Report: “Status and Trend of the Carbon Market” 2006- 2011..

[2] The actual statistics are provided in The World Bank Annual Report: “Status and Trend of the Carbon Market” 2009. See the Appendix.

[3]  This is confirmed by IPCC data, see also, Chichilnisky and Eisenberger 2009, and Cohen, Eisenberger and Chichilnisky 2009. See also Chichilnisky and Eisenberger, “Carbon  Negative Power Plants” in CryoGas International, 2011

[4] Data from International Energy Agency (IEA) and from DOE (US Department of Energy).

[5] (first name) Pershing---- (title) US Department of State

[6] William Pizer Assistant Secretary for Energy and the Environment US Department of the Treasury

[7] References

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