Category: Hot air

Counting apples of the Greenhouse Tree – ACT 2

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In Australia, we are idealistic, know how to love, but childish and impossible in dealing with reality – and think reducing emissions is a fairytale notion. The same authors said,  “Over the past four years something remarkable has happened in ACT climate change policy.  Yesterday the ACT Government released its long awaited final action plan outlining how the ACT can reach its 40% emissions reduction for the year 2020. The target, legislated in 2010, leads the country in local jurisdictions aiming to reduce emissions.” This is cccording to Love40percent.org.

CO2Land org takes note that the super fast action needs to be discussed as LOL: Legislated in 2010, action ‘plan’ yesterday September 2012. We agree they now have a policy plan, and it has been researched, undergone economic modeling and considered planning. But is concerned the optimism is utopian as it relies too heavily on the idealistic, and is a good example of the need to give a reality check and not get too carried away with the concept, as ultimately the implementation will come down to the commercial reality. To illustrate, not long a go the ACT Government touted a policy calling for Zero Waste, that is until it was learnt revenues would be affected – the commercial reality was loss of revenue when success lead to loss of weighbridge fees at tip sites became the ‘tipping point’ in the decision to backtrack.

So is the reason such well meaning concepts fail simply because idealistic concepts are too closely aligned with vision statements, initial outreach attempts and childish opportunism? What can be done to ensure concrete actions are in place to make a 40% target a reality? For a start we can look at these needs of the vision: It requires continued community support, constant reinforcement that realising a solution requires we alter our way of life.  This means our emissions reduction must affect our lives so we can reduce 90% of our reliance on convention energy sources – move energy sourced from conventional power sources to renewable wind and solar, ensure 30% of work travel is done by other than the single car journey, drastically improved energy efficiency in all of our buildings. etc.

Co2Land org now find another reason of concern, a populist appeal to encourage GreenPower – albeit in time for a electioneering. Recently the ACT Government commented of ‘misleading’ representation of GreenPower. Then in the Love40percent report it said, “The renewable energy that we create is recognized as additional to any national emissions targets.  No offsets to faraway plantations or gas power required.  This plan effectively reduces the impacts of the way we live for the long term, and will wean us off almighty coal”.  It would seem they either do not understand what is legislated or they are attempting to confuse the issue and deflect that they are embarked on actions that are not carbon but generation offsets and displacements? As such there is no opportunity to generate revenue under a carbon trading scheme, nor can any offsets nor Rec’s can be created. However, the project developers (guess who?) can charge a ‘generous’ price for GreenPower which customers are encourage it the right think to do?  See how easy it is to confuse what is real and what is fairyland?

The suggestion is for the ACT Government to stick to the facts: The truth of Climate Change, that ice caps melting faster than expected and global emissions still rising, and encourage the action that will make a difference. But, alas again the ACT Government will set emissions reductions targets and make climate policy that encourages skepticism. After all the ACT Government’s Greens MLA may have encouraged skeptics when said a matter of days ago: ”There are significant issues with GreenPower’s operation and management, which are placing unfair price pressures on GreenPower customers,” Greens MLA Shane Rattenbury said yesterday.

We agree they should be afraid that we’re putting more pressure on local household budgets when life is already too tight managing a Canberra mortgage.

 

 

revenue and costs to the community – reckless with the future

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Playing the tricks on a NSW Electricity bill: Typical increase is $316 for climate change actions [red ink] and $392 [black ink – price revenue change $200 + price service availability change $162 + GST change $36] for other revenues. * These prices assume 7kWh per day consumption as written on the ‘red ink’ part of the bill.

CO2Land org is an advocate of necessary actions for the future of a sustainable world and disagrees strongly with the way politics plays the emotional card. If we strip away the emotion and look at the hard numbers of the viability of state finances we can understand the panic and scramble for revenue raising and shifting the blame and shame wherever for short-term gains – creating a radio shock jocks paradise despite distorting the facts.

The cold hard facts on state finances can be taken from this table:

NSW VIC QLD WA SA TAS
2011/12 -$940 -$811 na -$178 -$120 -$80
2012/13 -$1000 -$635 na -$284 -$400 -$120

Table: Estimated impact of GST reduction on State budgets, 2011/12 and 2012/13 ($m). Source: State budget papers

From what’s on the table, we can see that state budgets are in a mess that seems to be getting worse rather than better.

To quote The Conversation, 25 June 2012, on the parlous health of our state finances: “These financial woes are not because of reckless spending. The trouble stems from revenues, which are flat-lining and seem set to stay that way for the foreseeable future…We are only seeing the problem clearly now because the Rudd government’s recession-busting stimulus spending that was channeled through the states is coming to a premature end”.

CO2Land org asks is the problem, and the solution to be, to address excess bureaucracy and regulation that serves as cost drivers on the community. The idea is not new and the Council of Australian Government (COAG) meeting of 12 April 2012 announced it was “meeting the red tape challenge”.

How should we tackle the ‘real’ problem? Paul Keating favoured a reform of the tiers of government and was ahead of his time. Malcolm Turnbull pushed for a republic model and it to be truly representative – and recently concede vested interests would resist vigorously.  These two persons are selected at this point to illustrate that between them [one a former and the other a likely Prime Minister] they hold the answer to our problems.  We need to address the effectiveness of our beliefs and the efficiencies of how we use our energies.

CO2Land org proposes we examine the imposts on the community and review:

  1. Tiers of government – the terms of reference being: the money waste of the structures for producing relatively ineffective practices; the effectiveness and efficiencies of parochial behaviours of state bodies; and the powers of federal government as an executive power.
  2. The rights for every resident of this country to unfettered education and training in the most effective way possible (please note: this is not a guarantee for established practices, it calls for a complete rethink of how we teach and learn).
  3. That the issues of Education, Environment and Immigration be judged by a jurist prudence principle and not in the hands of short term ambitions of any political party. If we consider this idea, we also consider the four primary schools of thought in general jurisprudence:

▪    Natural law is the idea that there are rational objective limits to the power of legislative rulers.

▪    Legal positivism, by contrast to natural law, holds that there is no necessary connection between law and morality and that the force of law comes from some basic social facts although positivists differ on what those facts are.

▪    Legal realism is a third theory of jurisprudence which argues that the real world practice of law is what determines what law is; the law has the force that it does because of what legislators, judges, and executives do with it. Similar approaches have been developed in many different ways in sociology of law.

▪    Critical legal studies is a younger theory of jurisprudence that has developed since the 1970s which is primarily a negative thesis that the law is largely contradictory and can be best analyzed as an expression of the policy goals of the dominant social group.

CO2Land org has in each is its previous postings set the theme of better practice and were it can illustrate how innovation is a trait of our human side. We have the power to control our future and all too often our willingness to get a result we align in an pluralist way to align with people we do not agree with for our own short term ends. If we look at community consultation businesses that influence, they are making their money by setting up community representative groups. These groups give comfort to the Minister of state that all is well on a certain issue. So the question then becomes why does our three tiers of government fail to give the Minister comfort? Answer, the truism is: Those that seek election are opinionated and not necessarily informed!

The matters that arise over education is the levels are tiered and try to be a fit of society as if society has a stable static requirement to conform to an ideal of more of the same. Education as funds become more scarce are tending to be generalised and specialising is seen as an elitist achievement. However, it is increasingly evident that high achievers are bored with convention and ceremony, good narcism could be the term best suited in saying a specialist position for the niches of interest will follow with them a need for a fit into the world rather than teaching to conform with alliances.

Combine all these issues and it becomes obvious that whenever a decision is made at a group level it is a political achievement. However, if the rule of law was to apply the rights of a better education, to protect the environment and law of god, we do remove the one real problem in the  ‘reasonable man’ principle being applied to protect the future from those that peddle misinformation. Our cliché being ‘better to have been educated and lost, than ignorant and foreboding’.

Power of Choice – review by AEMC of DR

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All community is affected by the rising cost of energy. Something can be done, and the “Power of Choice” review being run by the Australian Energy Market Commission (AEMC) and a Senate Select Committee on Electricity Prices Inquiry is underway. Both these essential bodies need to be influenced and informed about how essential the implementation of and effective Demand Response (DR) is in the National Electricity Market (NEM) in saving $billions, and continuous saving thereafter.

Over the last 11 years there have been a number of Reviews that have made clear recommendations[1] that Demand Response (DR) should be implemented in our electricity markets.  Unfortunately, all these recommendations for implementation of DR have been ignored, with the exception of DR for Reserve Capacity in Western Australia’s Wholesale Electricity Market (WEM) which works very well.  In hindsight, the lack of an effective DR mechanism in the NEM in particular has cost electricity users an estimated Present Value (PV) of $15.8 Billion[2] (this is in the order of a 9% impost on their annual electricity bills).  Worse still this loss to the community is continuing to grow.

The “Power of Choice” Review is an unfinished work, and CO2Land org has experience in the material of Demand Response (DR). DR is most effective as a formal aggregation of small amounts of demand reduction from a larger electricity users who are contracted to reduce this pre-agreed amount of their demand at times when their are extreme wholesale prices, extreme peaks in demand or in emergencies.  It is much cheaper way to address these short term events than our current outdated approach of spending billions of dollars on more generators and networks which are only needed for a total of about 40 hours per year.

In the push for acceptance of DR becoming a part of the National Electricity Market (NEM) an article was written in the Daily Telegraph, 5 Sept 2012,  (link: http://www.dailytelegraph.com.au/news/power-shift-to-cut-household-bills/story-e6freuy9-1226465075377) after it was relayed some of the source contributions were gleaned from an EnerNOC sponsored report recently completed by CME.

CO2Land org and those mentioned in this post accept we look forward and hope the AEMC is now convinced that DR is essential to minimize further price rises.

If you are confused with the terminology, hopefully the following will help you better understand: The energy market has three components that affect the price we pay: Price response (PR), Demand Response (DR) and the Emergency response (ER).  Price is largely inelastic, and as we are experiencing alternative energy sources we notice the costs have similar or more Price effects to introduce them. Demand Response (DR) is the most volatile price driver in the market where smaller splices of time require a greater build and increase capital required for infrastructure projects (pole and wires builds and maintenance needs to cater for the demand growth). Emergency Response (ER) is an energy security problem and is reactionary to large events with little warning.

References to support this view are:

[1]

  • Alan Fels, Chair of ACCC, speaking at the Inaugural EUAA Conference on 19 November 2001
  • The Parer Review 2002 “Towards A Truly National And Efficient Energy Market”
  • The EUAA April 2004 “Trial of a Demand Side Response Facility for the National Electricity Market”
  • The ERIG Review November 2006 “Review of Energy Related Financial Markets”
  • Stages 1 & 2 of the Demand Side Participation Review (Stage 3 still in progress)

[2]

Pitfalls – (Carbon) and (CO2)

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Thinking about 12.5% Carbon Credits currently possible under the EU – ETS, and the Government’s need to negotiate a better deal for it to work for Australia’s Carbon Offsets market and the component CFI programs. Remembering that that program has bi-partisan political support we might think it will be plain sailing.

CO2Land org on 2 Aug 2012 published for educational purposes “Carbon the word most confused” and that story is “the problem is the word ‘carbon’ and carbon is directly linked to abatement and an offsets market.  Whereas the focus issue for farmers is methane production and it is part of the production cycle and it does seem contradictory to imply the backside of a cow can be abated as a constant!”  Then again on other dates 9th, 14th, 17th and 30th Aug each story was directly related to programs that impact on markets and ‘carbon’.

If we feature the UK and how it is handling carbon and we are not alone – In June 2012, 1370 companies listed on the London Stock Exchange had mandatory carbon reporting requirements announced. From 6 April 2013, carbon footprint reports and information will be included in the Director’s Report and financial statements. Thank you ManageCO2 for the heads up. Go to http://www.manageco2.com for their summary.

Notwithstanding, it is the UK Department of Environment Food and Rural Affairs (DEFRA) that established the core requirements under the ISO standards and what is missing in those standards Co2Land org previously explained this was so not to offend world trade bodies. In that context we were talking of Real, Additionality and REC’s and primarily referenced to ISO 14064-2.  DEFRA use similar language to our Government and have started to finalise the exact details of there respective programs and legislation, and use words like ‘the core requirements have been made very clear and are largely consistent with other reporting standards such as the Greenhouse Gas Protocol and ISO 14064-1.” Other similarities are in the reporting of total operations, but it stops at CO2 and that is different to carbon in our context.

The UK requires organisations that operate outside that country have to report emissions for each facility outside the UK.  They also expect that each operational area outside UK will report according to that region. The European Union Emissions Trading Scheme is included – The London Stock Exchange companies listed to report will be required to report emissions that we will recognise as scope 1 – combustion of fossil fuels. However, we (Australians’) have a problem  – the UK is focused on energy related emissions – not all 6 Kyoto gases are covered – only CO2 is covered! They cover off other requirements in other programs and many of them support innovation!

So lets go over the reporting requirements of EU-ETS as it stands today:

Scope 1 – yes

Scope 2 – no

Scope 3 – no

All 6 Kyoto gasses reported – no CO2 only

Each country/region Specific Emissions Factors required in the report – yes

Enforced – yes.

Source: http://www.defra.gov.uk

The challenge for Australian farmers is the to be able to sell credits in Europe with some certainty as their land practice changes most probably and in full likelihood relate to methane production, and that issue is well posted and might help understand what the government meant by 12.5% could be currently generated as credits to meet the domestic demand through the EU ETS and we have a 50% limit on overseas credits. Exploring that 12.5% if you takes our 6 gases and the harm effects of each (CO2-e calculation) across industry you come up with a number very similar where 50% offshore credits are whittled to become 12.5% when only CO2 can be counted! Are you now confused about ‘Carbon’ Farming?

So can we expect the transition from carbon price to Au ETS to EU ETS to see more ‘policy adjustments’ between now and 2015? It could be worth a wager and it will not matter what political persuasion you are either. It will be a global trade adjustment that will bring that about, and if history prevails political decision based on intervention strategies will dictate price not the market forces.

Why not checkout http://www.CO2Ti.com and the Carbon Offset Masterclass – could be a good move.

 

 

ever heard of Climate Change Authority, Clean Energy Finance Corporation.

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What? You never heard of Climate Change Authority, what about Clean Energy Finance Corporation.

The Energy Users Association of Australia (EUAA) would like to make sure you are up to speed, and encourage you to consider attending their important briefing in Sydney this Thursday, 30 August 2012.

Why would you know more for attending? Because Roman Domanski (Executive Director, EUAA) has engaged the CEO of the new Climate Change Authority, and the Chair of the new Clean Energy Finance Corporation to present the outline and effects of their charge. These two are responsible for advising the Government on the carbon price and the renewable energy target, amongst other things, and responsible for providing funding for clean energy, low carbon and energy efficiency projects.  Of course there is more to the program but you should check that out for yourself.

Because CO2Land org likes to know a little more, a short research brings up:

1. The Climate Change Authority was created as an independent body to provide advice on the Australian Government’s policies for reducing carbon pollution (reviewing the Renewable Energy Target, Pollution caps, carbon pricing and Carbon Farming Initiative):

  • Has a Board of nine members with skills in science, economics, climate change mitigation, emissions trading, investment and business.
  • The Board is supported by a CEO and support staff.
  • Importance is to make recommendations on the steps Australia should take towards the 2020 target and on the longer-term path towards the 2050 target.
  • The Authority will conduct regular, public reviews and its reports will be made public.

2. Clean Energy Finance Corporation (CEFC) is made up of a panel of experts appointed by the Government to advise on the design of the $10billion Clean energy package. The package is announced to:

  • encourage private investment and help overcome capital market barriers to commercialising clean energy technologies.
  • The expert review panel consults with key stakeholders and report with recommendations to assist with the drafting of legislation, allowing the CEFC to start operating from 2013-14.

CO2Land org notes that the EUAA and the agencies recognize that it is an act of being together that will be a success factor with putting a price on carbon pollution, and the establishment of responsible bodies that will help Australia meet the environmental and economic challenges of competing in a low-pollution world.

If you have any interest direct your queries direct to:

 

Energy Users Association of Australia

Suite 1, Level 2, 19-23 Prospect St

Box Hill  Vic  3218 Australia

T +61 3 9898 3900

F +61 3 9898 7499

W www.euaa.com.au

 

Did not use your networks – why your bid failed!

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One of the biggest letdowns is putting in a bid where you know you have a special rapport with the group calling the tender, a very competitive product and good reason to believe your price is well structured – then along comes the news – you are not successful.  What went wrong – you are told, nothing went wrong you did not meet the criteria!

So what is meeting the criteria? Short answer – depends on what drives the business activity being called for in the tender. So is a sound understanding of the required activity enough? Short answer – it depends on whether the activity is public or private. So is it the money? – Well it depends – so lets look at projects of government (Federal and or State) and about 30% found price the reason, 37% possibly, 33% not very likely. So is it the economic conditions? About 58% say yes, 37% very possible, 5% No reason to think this is the reason.

Compare this to carbon intervention programs: Initiatives based on economic drivers (47%), based on accounting functions (53%). It is therefore very possible when putting in a bid you could underestimate the impact of factors other than price (in other words external factors) by 11% (58% – 47%).

How can you factor in an 11% margin for the effect of external matters? Co2Land org is not going to try to answer that question. However, polling your networks might be very useful to narrow this margin. If you research through professional and social media you can quickly profile and assign a probability of the likelihood it will impact on your bid assessment. Think about it – how often do you find yourself thinking something should be done about that and next day it is news?   This is even more important when the assessment is weighted score (This is when each criteria is not equal in the marking).

 

Time for a real review

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Smart forms of research has found that customer service and sales skills are considered the least important when building a brand, and it would seem big brand and government know this very well. This might explain why any meaningful programs are explained in a way of the language of spin. For what is done would we not prefer to hear or feel that our policy makers value some measure of the actions and actively seek feedback from those that influence our lives at least every 6 to 12 months from a startup campaign. This view suggests government is a business – a business that must please its total stakeholder basis.

Why should this happen? Take a look at quotes taken from the writings of Laurissa Smith and Anna Vidot (www.abc.net.au ), on Monday, 20/08/2012, the story ‘Carbon farmers challenged by rigorous process’: “The guidelines which set out how they can make money from schemes like the Federal Government’s Carbon Farming Initiative are still being developed…It’s still sitting under consideration with the Domestic Offset Integrity Committee which is the committee tasked under the clean energy regulator to review the methodologies…So we hope that it’s going to become available for public interest by early 2013.” This is extremely frustrating when you consider the Department responsible made announcements of a body as set up for Carbon Offsets in June 2010.

In fairness some methodologies are already approved – 3 with the possible 4th soon, and the promise is new methodologies on the way would allow farmers to earn credits not yet seen for not yet approved promotions on their properties.

Following on with the need for measures and feedback, consider another story featuring Anna Vidot, it too is clearly linked to our food security, the National Retailers Association says the sector is suffering from “review fatigue” and is an easy target for people concerned about the viability of Australian food processing. The story is leveraged on how the industry is responding to recommendations made by a Senate committee which has just concluded a year-long investigation into food processing in Australia. Rather than call it a broad based affair, the report is labeled ‘wide-ranging’ across areas of diverse ranges. The report makes more than 30 recommendations from industrial relations to food labeling.

If we refrain from discussing the market dominance of Coles and Woolworth, views of a political advantage etc, and concentrate on finding evidence of how customers and suppliers are satisfied with their treatment by the big two, you can narrow down to the need for a survey of supermarket activities. That survey concept could also be used to find evidence of government performance, and that survey could, ideally, be reviewable on a half yearly or yearly basis. Correctly structured we could be well assured ‘all funny business’ would be stamped out of politics, and we would remove the election cycle porkbarreling we are so used to in new policy announcements.

If we explore this a little further, from the retailers: “We’ve had a number of reviews in this space, and the last Australian Competition and Consumer Commission review found that there was workable competition in this country… The supermarkets already do an enormous amount of research and collection of data… Many of the suppliers you’re talking about are big multinationals in their own right…From the perspective of farm-gate suppliers, in the case of Coles and Woolworths, the majority of their suppliers have been with them for 20 or 30 years.”

Then from a peak body for the manufacturers, the Australian Food and Grocery Council sums it all up very well: “If you’re looking at how we become more competitive, to improve productivity and compete effectively against imports and secure export markets, innovation is absolutely fundamental to that…,[It’s about] giving that a commercial focus and providing some leadership, or a catalyst if you like, for some of the innovative effort that assists in improving productivity and identifying and securing export markets…But it’s not easy and we welcome the fact that this report has identified this as an area for future action.”

Can you see the similarities that each industry faces, it follows: Call for interest, formulate, approve, review, report, review the review, determine if real, and review if the review equals very little intervention other than a market correction and then all care and no responsibility taken.  And, what if each industry could review the performance of the politician and review that appointment?

 

Lift the veil of corporate secrecy on public projects and save the taxpayer

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Reference:”http://theconversation.edu.au/profiles/vivek-chaudhri-164″

The $1.4 billion cost blowout reported by the NBN Co last week has focused attention once again on the seemingly regular occurrence of large government infrastructure projects being delivered late and over budget.

Whether we look at the much touted Public Private Partnerships (PPP) frameworks championed by state and federal governments of all persuasions, or in the NBN Co. case, a government monopoly engaging with the private sector, the cost to the taxpayer invariably appears to be greater than first estimated.

Why might that be? Is it that we are systematically poor (in one direction) at estimating future costs? Or do political realities and parameters change? That there is a lot of risk and uncertainty in the world around us is certainly true, but why must it always be the case that the taxpayer is left with the “bill”?

Surely there must be something wrong with our government’s existing tendering and contracting processes that leads to this repeated occurrence. And there is. An alarmingly lack of both good governance and contract design, principles that we expect of the corporate sector, are only cursorily considered in the public sector.

Let’s deconstruct the problem a bit further. The most efficacious delivery of large infrastructure (and other government projects) will almost always involve some private sector engagement. The challenge is to garner that engagement on terms that create societal value.

The tendering guidelines that most public sector entities adopt recognise the value in harnessing competition. Recourse to elementary microeconomics suggests that competition amongst potential bidders “for the market” (that is, to win the right to have some monopoly power) will result in the same efficiency outcomes as competition “in the market”. The problem, in almost all real world contexts however, is what economists refer to as an “asymmetry of information”.  If one side of the market – in this case the bidders (or worse yet, only some bidders, so we don’t even get the real positive effects of competition) – have information about the likely outcomes (costs/benefits etc) and the other side (the government) doesn’t, then we would expect the informed party to appropriate more of the rents.

Which is exactly what we observe when cost blowouts occur.

So, how can we resolve this inherent and systemic problem? Firstly, competition for the market (that is the terms on which government tenders are constructed) needs to be much more transparent.

Potential bidders need to be able to have equal access to information and the “commercial in confidence” veil needs to be tempered for the public good. Simply having many bidders involved in a tender, if they are not privy to the requisite commercial information, will not yield competitive outcomes.

Too often, government tenders satisfy a very rudimentary definition of competition, without significant thought in the design of the tender to ensure real competition takes place. Efficient, well designed government tenders are about good governance.

Secondly, and more importantly, we need to be much better at contract design where there is a large deal of uncertainty about future outcomes. The way much of the government contracting currently takes place, despite the political rhetoric to the contrary, is that the residual or contingent risk always sits with the state.

This need not necessarily be the case. Getting the right balance of incentives that mitigate any cost over-runs, and ensure a viable commercial return to the private sector requires much more detailed tender and contract design than currently takes place. Payments for outcomes that capture risk and uncertainty are a staple of financial markets and business to business interactions.

Yet, government to business interactions seem to be devoid of the same detailed considerations. Not surprising, then, that time and time again, our political masters tell us that they have negotiated a great deal with the private sector, only to find that the realised costs are often way more!

The risky uncertain world in which governments attempt to deliver infrastructure and other social projects with private sector involvement necessitates a complete revamp of our tendering and contracting methods.

We need to design systems that harness competition by mitigating the risks of asymmetries of information, and contracts that allow for risk and uncertainty to be shared.

Unfortunately, to date, political expediency has trumped sound economic analysis and design. There is unlikely to be too much consternation from the private sector as a result of the latest cost blowout in a government tendering process, but an informed citizenry ought to be demanding much better from its political masters.

Because if we don’t we will continue to be left with the bill. And it will always be more than we were initially told it would be.

Now it is Co2Land org to have its say, if we look overseas we see that government (say UK) encourages business development and innovation is rewarded. So is the problem a fetish over branding?

Real, Additionality, RECs

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Observing CTi’s Carbon Offsets 2 day Masterclass offering, it occurred that a US based mob was on about getting real about ‘real’ carbon offsets. Curiosity lead to checking out the reporting standard AS/NZS ISO 14064, finding it is silent on the word or term ‘real’ and completely avoids the topic of additionality, was fascinating given that you can’t even conceive of an offset without the concept of additionality!

CO2Land org now ponders: If ‘real’ cannot be a guarantee of a good project outcome. It follows that the use of the word or term ‘real’ can be seen as a initial or promised activity increase and not be seen as a guarantee of an increase in the carbon offset (it could be real activity and still lead to a decrease of carbon offsets). So if I say it was real at the time I acted; it was an act in good faith only. The issue with the word ‘real’ is it literally means the activity is a cause of change.

This lead to thinking of the impact this has on the Carbon Farming Initiative as legislated when the Gold Standard and Carbon Fix require that projects be “real”, but no international standard could explain what they mean by using the terms.

Now lets talk of the other mob: In their story –

Getting real about “real” carbon offsets,  by Michael Gillenwater –it was said:

“The qualities of a good emission offset project are one of the most common refrains you hear in the carbon offsets community. You can probably repeat most of them by memory: real, additional, permanent, verifiable, etc. Different programs or protocols might add other points about leakage or accuracy, or conservativeness or some other offset quality principle. But common to almost all programs and standards and protocols is the criterion that offset projects or credits must be ‘real’. Here is a question for you: What does it mean for an offset project to be real? What would an unreal offset project be? How could we tell if it was unreal, and is this something we should be concerned about?”

They go on to look even closer at the word or term ‘real’:

If you check out the Offset Quality Initiative and how they express the term ‘real’ and explain it the word should be done away with entirely as it is not meaningful, or at least ambiguous, and those that use the term are employing vacuous language. They claim the problem for ‘real’ is it most likely used to describe itself is real, and used this way one cannot ban imaginary projects, and one may ‘forward credit’. That is you can issue a credit before emissions have been achieved.

They continue that where ‘real’ is covered with a contrived definition and includes the concepts of completeness and accuracy in accounting, and leakage. It does so as no more than use ‘real’ as a synonym!

Now how do the markets act responsibly on handling this issue:

  • The Clean Development Mechanism (CDM) rules states that offset projects must be “real” in various places, but the definition is absent.
  • The Verified Carbon Standard (VCS) does attempt to handle this and goes with the imaginary friend test: All the GHG emission reductions and removals and the projects that generate them must be proven to have genuinely taken place. Much better description than using ‘real’ – no room for weasels in this one.

CO2Land org looked a little harder (we don’t want this post to be no more than ‘hot air’) and found:

  • Specifically ISO 14064-2 (project accounting) does not include ‘Real’ because during development of ISO 14064-2 ‘Real’ was regarded as a programmatic rule/criteria, which is outside the scope of ISO 14064-2.
  • ISO 14064-2 is a standard rather than a program
  • ISO 14064-2 (Clause 5.4) specifies the following requirement in regards to additionality: “The project proponent shall select or establish, justify and apply criteria and procedures for demonstrating that the project results in GHG emissions reductions or removal enhancements that are additional to what would occur in the baseline scenario.”
  • Additionality is incorporated into ISO 14064-2 is based on the core principles of ISO standards in general, i.e. that ISO standards not be a barrier to trade (WTO-TBT – anyone following development of ISO 14067 (product) will know this is a major issue). As such, ISO standards must be policy-neutral (extended to include program-neutrality). This is of course very important for market confidence.
  • ISO 14064 deals with the concept of additionality by requiring that the GHG project has resulted in GHG emission reductions or removal enhancements in addition to what would have happened in the absence of that project. It does not use the term “additionality”…Thus the project proponent may apply additionality criteria and procedures, or define and use boundaries consistent with relevant legislation, policy, GHG programmes and good practice.”
  • Although the concept/requirement of additionality is within the requirements of ISO 14064-2, the simple reason why the ‘term’ additionality is not present within the requirements of ISO 14064-2 is because of certain sensitivities/perceptions/politics of certain parties involved in the development of the standard –

And, the following references helpful in gaining a more complete understanding:

CO2LAND armed with this information focused more on Australia, and with raised eyebrows takes note ‘real’ is long-overdue for a critique of the ‘real world’ of concepts and terminology defining emissions offsetting and accounting policy and practice. In fairness what becomes obvious is domestically and internationally in Australia have had to deal with the vagaries of the debates and arguments over the development of both an international REDD mechanism and revision of accounting rules for land use, land use change and forestry (LULUCF) by Annex 1 countries.

Dealing with this is not as making the concept closer to simplicity and ‘naturalness’ in terms used as much of the confusion stems from failure to separate out responsibilities for project managers, national/sub-national regulators and for the international community. In short the levels of responsibility presume everyone else should be responsible for everything. Then everything ‘real’ becomes perverse. Source: Alistair Graham
Tasmania, Australia
7 August 2012

Previously CO2Land org has written of the perils of the REDD issues, and that things are going to avoidably get more complex, and Alistair Graham also believes we best get our house in order for the, relatively easier stuff in the non-LULUCF sectors.

Then rock my socks along comes Judith Hull (talking of work with Environment Canada) and commented, August 13th, 2012:

“Michael – In response to your August 9 note on my short comment, I would emphasize that isolating one criterion is always problematic. Clearly baseline setting with functional equivalence is key. We used the ‘real’ criterion to flag that just a cut in production would not be eligible. A project to make that production more efficient (even if total output were to decrease) may well be eligible. Judith”

Is it ‘real’?

Now look at confusion on RENEWALBLE ENERGY CERTIFICATES (RECs):

There are a few other terms bandied about incorrectly.

1) RECs are not offsets. Yet routinely you hear they “have offset their carbon emissions with RECs.” That is wrong on several levels. Yes, it is inconvenient that the word offset can be a verb or a noun. But get it right. RECs can be said to “compensate for” or perhaps “balance” the GHG emissions from electricity consumption, but leave offsets out of the conversation.

2) While we’re hammering RECs, if a facility/organization is buying RECs they are not “powered by wind.” There is no orange extension cord connected to a wind turbine. RECs connect load to renewable power by a contract, not a wire. To say “powered by wind” creates false images in lay peoples’ minds.

3) If a facility/organization is buying offsets or RECs sufficient to equalize all their GHG emissions, they have not attained “climate neutrality.” They have attained “GHG neutrality.” The definition is “no net GHG emissions.” That definition does not define a state of the climate, it defines a state of emissions.

It is wrong to connect climate with RECs – RECs like green power energy are project outcomes.

 

REC References:

 

 

Vic Coalition at odds with Fed Coalition – CFI Direct Action compromised.

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More barbed wire fences: At odds with the Federal Coalitions Direct Action Policy, the Victorian Coalition has a position that farmers need to be very careful of, it is effective now, and does impose imposts on farmers under Carbon Farming Initiatives. In an exclusive, Kate Dowler ( August 8, 2012 through weeklytimes Now) said Carbon farming could cost farmers, instead of making them money, and is the result of the Victorian Government tripling rate bills. Quoted: “The Victorian Government does not recognise carbon farming as a legitimate farming activity under land tax and valuation acts and has ruled out changing the laws”.

The impacts:

  • Carbon farming, as the main activity on a land title, could attract commercial council rates, instead of lower farming rates.
  • The Victorian Coalition’s move results in the federal Coalition’s Direct Action policy being ineffective in encouraging carbon sinks.
  • Treasury has advised farmers state and local governments did not “recognise carbon farming as a primary production activity for the purposes of land tax or council rates”.

Also quoted is Environmental Farmers Network spokesman and Ararat farmer Peter Forster: ”The news was very concerning…This is outrageous and means farmers trying to do the right thing (enter carbon farming Initiative programs) are going to be disadvantaged… People are already reluctant to go into carbon farming – this will be the nail in the coffin.”

The piece also quoted: Agriculture Minister Peter Walsh “confirmed carbon farming was not classified as a farming activity and flatly ruled out reviewing it…He said recognising it could distort the market and produce ‘a managed investment scheme debate all over again…Prime agriculture land should be used for food and fibre production and people should be “very careful” about entering carbon schemes”.

The Victorian Minister then added when asked what he thought of the federal Coalition’s policies for carbon abatement; Mr Walsh repeated, “People need to be very, very careful about going into carbon farming”.

CO2Land org in a previous story on coalition positions and government outreach said you may be even more confused and equally reluctant to modify land use practices because of the politics – who can blame you – It may be time for the resilient to overcome the Neanderthals.