green financing: carbon markets 2011 us-china green development symposium
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Green Financing: Carbon Markets 2011 US-China Green Development Symposium. Bruce Usher Executive-in-Residence Co-Director, Social Enterprise Program Columbia Business School, New York City June 10, 2011. Climate Change: Defining the Problem. - PowerPoint PPT PresentationTRANSCRIPT
Green Financing: Carbon Markets2011 US-China Green Development Symposium
Bruce Usher
Executive-in-Residence
Co-Director, Social Enterprise Program
Columbia Business School, New York City
June 10, 2011
Columbia Business School
A negative externality occurs when a decision has costs to individuals or groups other than those making the decision. In other words, the decision-maker does not bear all of the costs from his or her own action. This will result in an outcome that is not socially optimal.
Climate Change: Defining the Problem
2
Columbia Business School
Carbon Markets: The Kyoto Protocol (2001)
3
Columbia Business School 4
Carbon Markets: The EU Emissions Trading System (2005)
(EUAs)
EU (-8%)
EU ETS
UK
Germanyh France Spain …
Utility A Utility B Utility C Utility D …
Columbia Business School 5
Carbon Markets: Linking the EU Emissions Trading System and the Kyoto Protocol (2005)
(EUAs)
EU (-8%)
EU ETS
UK
Germanyh France Spain …
Utility A Utility B Utility C Utility D …
Linking Directive
Columbia Business School
Yes!
6
Carbon Markets: Success of the CDM
Columbia Business School 7
Carbon Markets: Success of the EU ETS
Growth in trading Volumes EU ETS emission permits–Jan 2005 to Oct 2007
Source: Point Carbon
Columbia Business School
Lessons Learned
from the CDM and EU ETS Carbon Markets?
8
Columbia Business School
CDM Lesson #1: Markets change behavior
9
Columbia Business School
CDM Lesson #2: Contract integrity is critical
Credit Buyer eg European Utility“Focal Point”
Renewable Energy Projecteg Chinese Wind Developer
System Administratoreg CDM Executive Board
Verifiereg Swiss auditor
$
Credits Project audit
Verification Report
10
Columbia Business School
Yes!
Oh no…
11
CDM Lesson #3: Markets require stable, long-term policies
Columbia Business School 12
CDM Lesson #4: Markets need to be efficient
Columbia Business School
EU ETS Lesson #1: Long-term policies change investment patterns
13
Columbia Business School 14
EU ETS Lesson #2: Linking markets increases liquidity
Columbia Business School
What is the Future
of Carbon Markets?
15
Columbia Business School
Future of Carbon Markets: EU ETS has long-term support
16
Columbia Business School
Future of Carbon Markets: CDM has the Linking Directive
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Columbia Business School
Future of Carbon Markets: US has no support
18
Columbia Business School
Future of Carbon Markets: Predictions
EU ETS will remain stable through 2020, with modestly increasing trading volume
Kyoto Protocol will not be extended past 2012, but CDM market will remain in place past 2012, with stable
to lower trading volumes US carbon market will not develop until after 2014 at
the earliest
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Green Financing: Carbon Markets2011 US-China Green Development Symposium
Bruce Usher
Executive-in-Residence
Co-Director, Social Enterprise Program
Columbia Business School, New York City
June 10, 2011