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World’s Forests Going Up in Smoke

A forest of Nothofagus antarctica trees burned in a fire that covered 40,000 acres in Torres del Paine National Park, Chile in 2012. (Photo by Dave McWethy) Posted for media use

A forest of Nothofagus antarctica trees burned in a fire that covered 40,000 acres in Torres del Paine National Park, Chile in 2012. (Photo by Dave McWethy) Posted for media use

By Sunny Lewis

CONCEPCION, Chile, August 23, 2018 (Maximpact.com News) – Chile has replaced many of its native forests with plantation forests to supply pulp and timber mills that produce paper and wood products. As a result, highly flammable non-native pine and eucalypt forests now cover the region.

Eucalypt trees, which are native to Australia, and pine trees native to the United States contain oils and resins in their leaves that, when dry, can easily ignite.

Researchers have discovered some reasons why massive fires continue to burn through south-central Chile. Their results were published August 22, in “PLOS ONE,” an online scientific journal published by the Public Library of Science.

Lead author Dave McWethy, an assistant professor in Montana State University’s Department of Earth Sciences, received a Fulbright grant that sent him to Chile from 2015-2016 to research the wildfires and teach at the University of Concepcion.

“Chile replaced more heterogenous, less flammable native forests with structurally homogenous, flammable exotic forest plantations at a time when the climate is becoming warmer and drier,” said McWethy. “This situation will likely facilitate future fires to spread more easily and promote more large fires into the future.”

Besides low humidity, high winds and extreme temperatures – some of the same factors contributing to fires raging elsewhere in the world – central Chile is experiencing a mega-drought and large portions of its diverse native forests have been converted to more flammable tree plantations, the researchers said.

Co-author Anibal Pauchard, professor at the University of Concepcion and researcher at the Institute of Ecology and Biodiversity in Chile, said wildfires have been a part of the Chilean landscape for centuries, but they have grown larger and more intense in recent decades, despite costly government efforts to control them.

“Unfortunately, fires in central Chile are promoted by increasing human ignitions, drier and hotter climate, and the availability of abundant flammable fuels associated with pine plantations and degraded shrublands dominated by invasive species,” Pauchard said.

In 2016-2017 alone, fires burned nearly 1.5 million acres of Chilean forests, almost twice the area of the U.S. state of Rhode Island. It was the largest area burned during a single fire season since detailed recordkeeping began in the early 1960s.

The devastation prompted the Chilean government to ask what land-use policies and environmental factors were behind these fires, McWethy said. That led to a national debate about preventing and reducing the consequences of future fires.

McWethy said wildfires in south-central Chile and the western U.S. are affected by many of the same conditions, but the main difference is that native forests in the western U.S. are well-adapted to fire. In Chile, most native forests in the central and southern regions are not.

To better understand the Chilean fires, the researchers compared satellite information with records from the Chilean Forest Service for 2001 through 2017. They studied eight types of vegetation, climate conditions, elevation, slope and population density across a wide range of latitudes in Chile.

“Now we have compelling evidence that after climate, landscape composition is crucial in determining fire regimes. In particular, exotic forest plantations need to be managed to purposely reduce fire hazard,” Pauchard said. “Which forestry species we plant and how we manage them matters in terms of fire frequency and intensity.”

The researchers recommend that Chile move away from exotic plantations toward more diverse, less flammable native forests.

“Protecting and restoring native forests would likely buffer the negative impacts of fires that are projected to continue to increase into the future,” McWethy said, but that will be difficult to do. “So much of the landscape has changed in south-central Chile,” he said, “that it’s going to be difficult to restore,”

Firefighter overlooks the Donnell Fire, which started from unknown causes on August 1, 2018 near Donnell Reservoir, burning into the Stanislaus National Forest. August 18, 2018 (Photo by Josiah Dewey) Creative Commons license via Flickr

Firefighter overlooks the Donnell Fire, which started from unknown causes on August 1, 2018 near Donnell Reservoir, burning into the Stanislaus National Forest. August 18, 2018 (Photo by Josiah Dewey) Creative Commons license via Flickr

North American Forests Drying and Frying

Rising average temperatures have led to forests in Western North America drying out, increasing the risk of fires.

There are 129 million dead trees in California alone. Across California, the total number of fires is trending downward, but the size of fires is going up.

The West Coast of the United States is shrouded in smoke. Currently, more than two million acres have burned in 111 large fires in 13 states. Over 1.9 million acres (768,900 hectares) are or have been ablaze.

Six new large fires were reported in Idaho, Nevada and Oregon over the weekend and eight large fires have been contained, including the Ferguson Fire near Yosemite National Park in California.

The weather concerns in the area include warmer than average temperatures that will continue in the west with daily winds and overnight humidity recoveries that are just marginal.

The Province of British Columbia on Canada’s West Coast has declared a state of emergency as thousands of firefighters battle more than 560 wildfires.

Fifty-eight large wildfires are destroying forests across the province, filling the skies with smoke. Overall, 565 fires are threatening more than 20,000 people who are on evacuation alert or under evacuation order.

“We’re going to throw everything we’ve got at these fires, but in a lot of cases, Mother Nature is going to be in the driver’s seat,” Kevin Skrepnek, the province’s chief fire information officer, told reporters.

Prime Minister Justin Trudeau will meet with first responders and British Columbians displaced by the wildfires on Thursday.

Trudeau met with B.C. Premier John Horgan in the British Columbia town of Nanaimo late Tuesday afternoon, ahead of a retreat with his newly-shuffled cabinet.

“Our thoughts are with the first responders, the firefighters and the residents who are struggling through the wildfires that are raging across the province,” Trudeau said.

In eastern Canada, firefighters from across the continent, from Wisconsin and Mexico are assisting Ontario forest firefighters in their battles with one of the worst fire seasons on record.

The Ministry of Natural Resources and Forestry reports 1,108 fires across Ontario this year, compared to 618 in 2017. The 10-year average is 643 fires in the province.

Fires Sweep Europe

England’s peatland moors, Ireland, Sweden, Scandinavia and even areas north of the Arctic Circle experienced major fires over the past two months.

At least 15 EU countries have experienced more wildfires than usual for this time of year, according to figures from the European Forest Fire Information System.

The number of wildfires ravaging Europe this year is 43 percent higher than the average for the last 10 years.

Several European countries are in the grip of unprecedented wildfires. While the deadly fires in Greece now are under control, dozens of fires are blazing across Turkey, Italy and Cyprus.

With Europe in the grip of a heatwave and with little rain to ease the drought, fires have now broken out as far north as the Arctic Circle, in Sweden.

An estimated 50 fires are now burning in Sweden. Through July there were three times as many fires during this period as last year.

Jonas Olsson from the Swedish Meteorological and Hydrological Institute said, “It’s very, very dry in most of Sweden. The flows in the rivers and lakes are exceptionally low, except in the very northern part of the country. We have water shortages.”

“Rainfall has only been around a seventh of the normal amount, the lowest since record-keeping began in the late 19th century,” Olsson said.

European Commissioner for Humanitarian Aid and Crisis Management Christos Stylianides said, “The devastating forest fires in Sweden have highlighted once again the impact of climate change and that we are facing a new reality.”

The number of forest fires in the European Union more than doubled from 2016 to 2017, figures obtained by Euronews show. Experts blame climate change for the increase, saying it has lengthened the traditional wildfire season and raised the frequency of fires.

There were 1,671 blazes in 2017, a huge increase over the 639 the EU saw annually on average during the previous eight years.

Russian Fires Not Extinguished

This year, fires have already affected an estimated area of more than 90,000 hectares in Siberia and the Russian Far East.

Lakes in Yakutia were still frozen at the end of May, but that ice has been replaced by fire after persistent heat over Siberia.

For example, on July 29, a total of 66 wildfires covering an area of 14,888 hectares were put out over 24 hours across Russia, the press service of the Federal Aerial Forest Fire Service (FAFFS) reported.

The hardest hit by wildfires were the Krasnoyarsk Region and Yakutia, where 39,600 and 21,000 hectares of woodland respectively were engulfed in flames. About 3,200 hectares were hit by wildfires in the Magadan region, and more than 2,300 in the Irkutsk region.

These fires were not put out as the firefighting expenses exceed the forecasted damage, FAFFS stated.

The northern part of the world is warming faster than the planet as a whole, says the World Meteorological Organization. That heat is drying out forests and making them more susceptible to burning. A recent study found Earth’s boreal forests are now burning at a rate unseen in at least 10,000 years.

Featured Image:  Polish firefighters in action combating the wildfires Sweden. July 24, 2018 (Photo by Pavel Koubek / European Union) Creative Commons license via Flickr


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Lively Carbon Markets Promise Cooler Earth

One of the largest coal-fired power plants in Europe is owned by Uniper SE in the Scholven district of the city of Gelsenkirchen, Germany. (Photo by Guy Gorek) Creative Commons license via Flickr

One of the largest coal-fired power plants in Europe is owned by Uniper SE in the Scholven district of the city of Gelsenkirchen, Germany. (Photo by Guy Gorek) Creative Commons license via Flickr

 

 

By Sunny Lewis

BERLIN, Germany, March 1, 2018 (Maximpact.com News) – Carbon emissions trading is gaining popularity in established markets and also in emerging economies; in fact trading now covers 15 percent of all emissions globally, finds a new report from the International Carbon Action Partnership (ICAP)  on activity in 2017.

Just one year since the entry into force of the Paris Agreement on climate, 21 Emissions Trading Systems (ETS) are operating around the world at various levels of government.

The past year has seen major developments, with a new system emerging in China and the linking of Ontario’s system with that of California and Quebec.

“While the challenge of climate change grows with every year, so does the competency and determination of the policy response,” said International Carbon Action Partnership (ICAP) Co-Chair Marc Allessie, director of the Dutch Emissions Authority, while releasing the report on Tuesday.

“We are confident that ETS is bound to its promise of delivering a cost-effective tool for implementing national pledges under the Paris Agreement,” Allessie said.

How Emissions Trading Systems Work

Carbon emissions trading works on a cap-and-trade market-based system. A cap is set on the total amount of carbon dioxide equivalent (CO2e) that can be emitted by facilities covered by the system. The cap is reduced over time so that total emissions drop.

Within the cap, companies receive or buy emission allowances which they can trade with one another as needed. They can buy limited amounts of international credits from emission-saving projects around the world. The limit on the total number of allowances available ensures that they have a value.

Each year a company must surrender enough allowances to cover all its emissions or pay steep fines. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or sell them to another company that is short of allowances.

Trading brings flexibility that ensures emissions are cut where it costs least to do so. A robust carbon price promotes investment in clean, low-carbon technologies.

Since 2005, the share of global carbon emissions capped by an emissions trading system has tripled from five percent to roughly 15 percent, now covering some seven gigatons of carbon dioxide equivalent (CO2e), according to the report.

The Network Expands Its Reach

In November 2017, the EU and Switzerland signed an agreement to link their emissions trading systems, the first agreement of this kind for the EU and the first between two parties to the Paris Agreement.

The world’s largest emitter of greenhouse gases, China now has overtaken the European Union as the world’s largest carbon market, covering more than three gigatons of CO2e.

The initial launch of China’s national emissions trading system for the power sector in December 2017 is what the ICAP report calls “a remarkable and rapid first step for an emerging economy that is powered by the world’s largest coal fleet.”

This development sends a strong signal to the international community as Chinese coal consumption has recently been one of the key drivers of global emissions.

In November, at the UN climate conference (COP23) in Bonn, the EU and China decided to step up their joint cooperation on carbon markets, ahead of the launch of China’s nationwide emissions trading system.

Hosted by China’s Special Representative on Climate Change Affairs Xie Zhenhua, the high-level event took place at the China Pavilion at COP23.

Speaking after the meeting, European Climate and Energy Commissioner Arias Cañete said, “China is ready to launch its nationwide emissions trading system, which is set to cover more than twice as much CO2 as the EU ETS, once it reaches its full scope. This will undoubtedly send a strong signal to the rest of the world in support of carbon markets. The EU is therefore pleased to engage in even closer bilateral cooperation with our Chinese counterparts.”

In September, the European Parliament and Council reached an agreement to revise the EU Emissions Trading System for the period after 2020. This revision is expected to help put the EU on track to achieve a significant part of its commitment under the Paris Agreement to reduce greenhouse gas emissions by at least 40 percent by 2030.

To achieve the 40 percent EU target, the sectors covered by the ETS have to reduce their emissions by 43 percent compared to 2005.

The changes to the EU system will speed up emissions reductions and strengthen the Market Stability Reserve to reduce the current oversupply of allowances on the carbon market.

To this end, the overall number of emission allowances will decline at an annual rate of 2.2 percent from 2021 onwards, compared to the current rate of 1.74 percent.

New Zealand Needs to Plant More Trees

New Zealand is the first, and still the only, country to fully include forest landowners in a greenhouse gas emissions trading scheme, according to a report released in 2017 by Motu Economic and Public Policy Research, New Zealand’s leading non-profit economic and public policy research institute.

The NZ ETS is a partial-coverage all-free allocation, uncapped, internationally linked emissions trading scheme first legislated in 2008 and amended twice, in 2009 and 2012.

Has it been effective?

On February 28, New Zealand’s first environmental accounts show greenhouse gas emissions rose more slowly than economic growth in the last 25 years, but the planting of forests to absorb carbon dioxide has slowed since 2013.

Latin America Prepares for Carbon Markets

Efforts to price carbon are also progressing in Latin America and in subnational governments in North America.

Mexico, Latin America’s second largest economy, will start piloting a mandatory emissions trading system later this year.

In addition, Chile, Colombia and Mexico are jointly exploring regionally consistent carbon market design elements such as monitoring, reporting and verification.

In North America, Subnational Governments Lead the Way

The largest Canadian province, Ontario, linked its system to the joint carbon market of California and Quebec  beginning this year.

As part of the Pan-Canadian Framework on Clean Growth and Climate Change, all Canadian provinces and territories will have a price on carbon by the end of 2018.

“A wide range of actions are taking shape across all levels of government, from the municipal level all the way up to the international level. Sub-national governments in particular have played and will continue to play a vital role,” said Jean-Yves Benoit, ICAP Co-Chair, and Director of the Carbon Market, Ministry of Sustainable Development, Environment and Fight Against Climate Change of Quebec.

Established in 2009, the Regional Greenhouse Gas Initiative (RGGI) is the first mandatory market-based program in the United States to reduce greenhouse gas emissions.

RGGI is a cooperative effort among the nine states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector.

States sell nearly all emission allowances through auctions and invest proceeds in energy efficiency, renewable energy, and other consumer benefit programs. These programs are spurring innovation in the clean energy economy and creating green jobs in the RGGI states.

Interest in several U.S. States, like Virginia and New Jersey, could see an expansion of cap-and-trade despite inaction on the federal level under the Trump administration.

In New Jersey, Governor Chris Christie, a Republican, withdrew from the RGGI in 2012. On January 29, New Jersey Governor Phil Murphy, a Democrat, signed an executive order directing New Jersey to re-enter the regional compact.

Governor Murphy said. “Pulling out of RGGI slowed down progress on lowering emissions and has cost New Jerseyans millions of dollars that could have been used to increase energy efficiency and improve air quality in our communities.”

By withdrawing from RGGI, New Jersey lost an estimated $279 million in revenue that could have been realized by the state’s participation in RGGI’s carbon emission trading program.

As part of the public comment period on Virginia’s proposed carbon trading rule, the Department of Environmental Quality is holding public hearings throughout the state during the month of March.

After a tough political battle in the California legislature, the state extended its cap-and-trade program until 2030. This will build confidence in an increasingly stringent long-term carbon price signal in the linked Western Climate Initiative carbon market, which includes the provinces of Quebec, British Columbia and Ontario, and the state of California.

The recent legislative changes and regulatory reforms in California have set the cap to decline by about four percent annually from 2021-2030, yielding a 40 percent reduction by 2030 compared to 1990 levels.

These renewed commitments to emissions trading give low carbon investors certainty and have resulted in rising carbon prices, with the EU allowance price passing €10 for the first time since 2011.

The reforms have some common elements: steeper cap trajectories aligning with 2030 climate targets; market stability measures becoming standard practice with continuing design innovation; offset policies with focus on domestic abatement with direct local environmental benefits.

The ICAP report concludes that, “Together, these two trends – the continual spread of ETSs and reforms of major systems – will continue to change the landscape of emissions trading – widening and deepening its role in the low-carbon transformation process worldwide.”

The ICAP Status Report is published annually and features in-depth articles from policymakers and carbon market experts with insights into the latest ideas across the globe. To download the full report, executive summaries in Chinese, English, and Spanish, infographics, and a short video, please visit ICAP Status Report.


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China’s Multi-Trillion Dollar ‘Belt and Road’

Silk Road

Chinese President Xi Jinping, and his wife Peng Liyuan, accompany their guests, including Russian President Vladimir Putin, left, to a welcome banquet at the Belt and Road Forum for International Cooperation, Beijing, China, May 14, 2017. (Photo by Liu Weibing courtesy Xinhua) State media

By Sunny Lewis

BEIJING, China, May 16, 2017 (Maximpact.com News) – China’s ambitious new trade and infrastructure initiative One Belt, One Road follows the spirit of the ancient Silk Road that connected Asia and Europe, Chinese President Xi Jinping told world leaders Sunday in Beijing.

Xi was speaking at a high-level forum to gather cooperation for China’s Silk Road Economic Belt and the 21st Century Maritime Silk Road trade plan.

“About 2,000 years ago, our ancestors cherished the hope of friendly communications. They built the ancient Silk Road and started a period of grand exchanges in the history of mankind,” Xi said, toasting the Belt and Road Forum for International Cooperation.

Linking China with 64 countries that collectively account for 62 percent of the world’s population and 30 percent of global GDP, the One Belt, One Road project is long on ambition, and on funding.

Chinese state media calculate that roughly US$1 trillion has already been invested in the initiative, with another several trillion due to be invested over the next decade.

During his keynote speech, Xi pledged at least $113 billion in further funding for the initiative he first announced in 2013. The Chinese leader urged countries across the globe to join hands with him in pursuit of globalization.

“We have no intention to form a small group detrimental to stability,” Xi said. “What we hope to create is a big family of harmonious co-existence.”

Nearly 70 countries and international organizations have signed up to participate, said Xi at the close of the two-day summit on Monday.

Addressing the delegates, UN Secretary-General António Guterres of Portugal drew comparisons between China’s One Belt, One Road initiative and the UN’s Sustainable Development Goals, saying both are rooted in a shared vision for global development.

“Both strive to create opportunities, global public goods and win-win cooperation. And both aim to deepen ‘connectivity’ across countries and regions: connectivity in infrastructure, trade, finance, policies and, perhaps most important of all, among peoples,” said the secretary-general.

The One Belt, One Road initiative includes nearly $1 trillion worth of infrastructure investments in Africa, Asia and Europe, including bridges, nuclear plants and railways.

Guterres stressed the need to work together to uphold international environmental and social standards, ensuring that rural areas, not just cities, benefit.

“With the initiative expected to generate vast investments in infrastructure, let us seize the moment to help countries make the transition to clean-energy, low-carbon pathways – instead of locking in unsustainable practices for decades to come,” Guterres said, praising Chinese leadership on climate change.

The Joint Communiqué issued by world leaders at the conclusion of the forum Monday supports environmental values.

It states, “We are determined to prevent the degradation of the planet, including immediate action on climate change issues, to encourage the full implementation of agreements by all the parties to the Paris Agreement; to manage natural resources in an equitable and sustainable manner, to protect and sustainably use the oceans, freshwater, forests, mountains and drylands; the conservation of biodiversity, ecosystems and wildlife, combating desertification and land degradation, and achieving economic, social and environmental integration, balanced and sustainable development.”

Opposing all forms of protectionism, the Communiqué also underlines its green intentions, “Emphasizing the economic, social, financial, financial and environmental sustainability of the project, promoting high environmental standards, and coordinating the relationship between economic growth, social progress and environmental protection.”

But there are worries that the Belt and Road is really a vehicle for China’s view of itself as the central hub of the Eurasian continent.

This concern kept India from sending an official representative to the forum. The United States announced at the last minute that it would send a government delegation.

In his keynote speech Xi tried to calm these fears, saying, “We are ready to share practices of development with other countries, but we have no intention to interfere in other countries’ internal affairs, export our own social system and model of development, or impose our own will on others. In pursuing the Belt and Road Initiative, we will not resort to outdated geopolitical maneuvering. What we hope to achieve is a new model of win-win cooperation.”

The forum was attended by 29 government leaders, from: Argentina, Belarus, Cambodia, Chile, the Czech Republic, Ethiopia, Fiji, Greece, Hungary, Indonesia, Italy, Kazakhstan, Kyrgyzstan, Kenya, Laos, Malaysia, Mongolia, Myanmar, Pakistan, Philippines, Poland, Russia, Serbia, Spain, Sri Lanka, Switzerland, Turkey, Uzbekistan and Vietnam.

To a volley of international criticism, China included North Korea in the forum, just as Pyongyang fired off its latest missile test.

UN Secretary-General Guterres called on governments to settle peacefully any tensions related to the One Belt, One Road initiative, saying, “Just as the initiative opens new corridors for goods, let us also keep open the channels for dialogue.”

He praised the initiative for its “immense potential” to promote access to markets, and as “far-reaching in geography and ambition.”

Chile’s President Michelle Bachelet was supportive of the One Belt, One Road concept, telling the forum, “Chile welcomes the great effort made by China in the search for new mechanisms for rapprochement, connectivity, innovation and sustainable development.”

“Our presence here today signals our support for this initiative, reaffirming our ties of friendship and cooperation,” said Bachelet. “We are betting on the future, joining in an effort that will lead in the medium and long term to new options for joint work that favors development for all. Chile is a strong promoter of integration. We have defended the idea of convergence in diversity, seeking common interests rather than differences, particularly in the economic arena for mutual benefits.”

World Bank Group President Jim Yong Kim, a Korea-born American citizen, told the forum he was “inspired” by One Belt, One Road.

“The World Bank Group very proudly supports the Government of China’s ambitious, unprecedented effort to light up that night sky. The Belt and Road will improve trade, infrastructure, investment, and people-to-people connectivity – not just across borders, but on a trans-continental scale,” said Kim.

The Belt and Road Initiative has potential to lower trade costs, increase competitiveness, improve infrastructure, and provide greater connectivity for Asia and its neighboring regions,” Kim said.

He explained that projects would require innovative financing mechanisms, “a mix of public and concessional finance and commercial capital.”

The World Bank Group has ongoing commitments of US$86.8 billion in numerous infrastructure, trade, power, and connectivity projects in countries along the Belt and Road route, Kim said.

In transportation alone, the Bank has commitments of US$24 billion, Kim said. “We’re financing projects like Afghanistan’s Trans-Hindukush Road Connectivity, Kazakhstan’s East-West Roads, Pakistan’s Karachi Ports, and Uzbekistan’s Pap-Angren Railway that are already reinforcing connections along the Belt and Road.”

The International Finance Corporation, the World Bank’s private sector arm, is partnering with the Silk Road Fund and China’s Three Gorges Company to develop hydropower in Pakistan.

Kim said that at the invitation of China’s Ministry of Finance, the World Bank and other multilateral banks have signed an agreement to support the Belt and Road, declaring, “We’re ready to help make the promise of the Belt and Road Initiative a reality.”

China plans the next One Belt, One Road summit in 2019.


Featured Images: Chinese President Xi Jinping and his wife Peng Liyuan welcome UN Secretary-General Antonio Guterres before a banquet for the Belt and Road Forum for International Cooperation in Beijing, capital of China, May 14, 2017. (Photo by Yao Dawei courtesy Xinhua) State media

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Carbon Pricing Gathers Momentum

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By Sunny Lewis

WASHINGTON, DC, April 26, 2016 (Maximpact.com News) – “There is a growing sense of inevitability about putting a price on carbon pollution,” said World Bank Group President Jim Yong Kim on the eve of the April 22 signing ceremony at UN Headquarters of the Paris Climate Agreement.

Kim joined government and corporate leaders in issuing a set of fast-moving goals – to expand carbon pricing to cover 25 percent of global emissions by 2020, and achieve 50 percent coverage within the next decade.

“In order to deliver on the promises of the historic Paris Climate Agreement, a price on carbon pollution will be essential to help cut emissions and drive investments into innovation and cleaner technologies,” said Kim.

“Prices for producing renewable energy are falling fast, and putting a price on carbon has the potential to make them even cheaper than fuels that pollute our planet,” he said.

Currently, some 40 governments and 23 cities, states and regions put a price on carbon emissions, accounting for 12 percent of annual global greenhouse gas emissions. This is a three-fold increase over the past decade.

The latest call for action comes from members of the Carbon Pricing Panel, including: Canada’s Prime Minister Justin Trudeau, Chile’s President Michelle Bachelet, Ethiopian Prime Minister Hailemariam Dessalegn, French President François Hollande, German Chancellor Angela Merkel, and Mexican President Enrique Peña Nieto, together with World Bank Group President Kim, International Monetary Fund Managing Director Christine Lagarde, California Governor Jerry Brown, Rio de Janeiro Mayor Eduardo Paes and OECD Secretary-General Angel Gurría.

Kim_Legarde

World Bank Group President Jim Yong Kim, left, and International Monetary Fund Managing Director Christine Lagarde at the Spring Meeting, Washington, DC, April 16, 2016. (Photo courtesy World Bank Group) Creative Commons via Flickr

The Vision Statement accompanying their announcement defines three steps to widen, deepen and promote global cooperation on carbon pricing.

First, the number of countries and businesses that participate in a carbon pricing system needs to increase.

Second, prices need to be significant enough to account for pollution as an operating cost, and incentives for investments in low carbon solutions need to be established.

And third, better links between the various regional and national pricing systems already in place need to be set up.

There are two main types of carbon pricing – emissions trading systems and carbon taxes.

An emissions trading system, such as the EU’s pioneering system established in 2005, is sometimes called a cap-and-trade system. It caps the total level of greenhouse gas emissions and allows those industries with low emissions to sell their extra allowances to larger emitters, establishing a market price for greenhouse gas emissions.

The cap helps ensure that the required emission reductions will take place to keep all emitters within their pre-allocated carbon budget.

A carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or on the carbon content of fossil fuels. It is different from an ETS – the emission reduction outcome of a carbon tax is not pre-defined but the carbon price is.

Other forms of pricing carbon emissions can occur through fuel taxes, the removal of fossil fuel subsidies and regulations that incorporate a “social cost of carbon.”

Greenhouse gas emissions also can be priced through payments for emission reductions. Private entities or sovereigns can purchase emission reductions to compensate for their own emissions (so-called offsets) or to support mitigation activities through results-based finance.

In any case, say the carbon pricing leaders, carbon emissions must be priced so that pollution becomes an operating cost.

Speaking at this month’s high level meeting of the Carbon Pricing Leadership Coalition, the IMF’s Lagarde emphasized the value of cutting emissions.

“If the top 20 emitters in the world were to impose carbon charges that reflect only their domestic and environmental benefits, this would already reduce global emissions by over 10 percent,” she explained.

The Carbon Pricing Leadership Coalition is a global initiative that includes more than 20 national and state governments, more than 90 businesses, and civil society organizations and international agencies, aims at garnering public-private support for carbon pricing around the world.

As 175 world leaders signed the Paris Agreement at United Nations Headquarters on April 22, Earth Day, UN Secretary-General Ban Ki-moon said the next critical step is to ensure that the landmark accord for global action on climate change enters into force as soon as possible.

“Today is an historic day,” Ban told reporters after the signing event. “This is by far the largest number of countries ever to sign an international agreement on a single day.”

Ban said the participation by so many countries and the attendance by so many world leaders leaves “no doubt” that the international community is determined to take climate action. He also welcomed the strong presence of the private sector and civil society, saying they are “crucial to realizing the great promise of the Paris Agreement.”

Adopted in Paris by the 196 Parties to the UN Framework Convention on Climate Change at a conference known as COP21 last December, the Agreement’s objective is to limit global temperature rise to well below 2 degrees Celsius, and to strive for 1.5 degrees Celsius.

It will enter into force 30 days after at least 55 countries, accounting for 55 per cent of global greenhouse gas emissions, deposit their instruments of ratification.

“If all the countries that have signed today take the next step at the national level and join the Agreement, the world will have met the requirement needed for the Paris Agreement to enter into force,” Ban said, congratulating the 15 governments that have already deposited their instruments for ratification.

Ban has said, “We must put a price on pollution and provide incentives to accelerate low carbon pathways. Market prices, market indices, and investment portfolios can no longer continue to ignore the growing cost of unsustainable production and consumption behaviors on the health of our planet.”

At the Spring Meetings of the World Bank Group earlier this month in Washington, DC, Kim said more action is needed on carbon pricing to help halt global warming and spur more investments into clean technologies.

“The current situation won’t put us on a pathway to limiting global warning. We need greater ambition, and greater leadership,” he said.

Globally, momentum for putting a price on carbon emissions is growing. At least 90 countries included mention of carbon pricing in their national plans, called the Nationally Determined Contributions (NDCs), prepared for the Paris climate conference.

In addition, more than 450 companies around the world report using a voluntary, internal price on carbon in their business plans and more plan to follow suit in the next two years.

The number of implemented or scheduled carbon pricing plans has nearly doubled since 2012, amounting to a total value of US$50 billion.


 

Main image:  A steel works emits carbon dioxide at Teesside, England. (Photo by Ian Britton) Creative Commons license at Freefoto.com

 

Takeaways from the 2016 Latin American Impact Investing Forum

logo_FLII_completo1-1024x340By John Kohler

The most recent Latin American Impact Investing Forum (Foro Latinoamericano de Inversión de Impacto , or FLII) gathering, held in Mérida, Mexico, highlighted both the promise and remaining challenges of impact investment and social entrepreneurship in Latin America. Here are the top three things I took away from the 2016 FLII event:

  1. Latin American impact investing is gaining traction and evolving its own identity. The FLII attendees are very professional in how they’re forming, supporting, and investing in social enterprise in Latin America. They are also taking ownership of the FLII event and creating a vibrant, solutions-oriented conference. A precursor to FLII, Sustainatopia, was held in Miami with sessions primarily in English. With its move to Mérida, Mexico, FLII now presents a majority of sessions in Spanish. This is important, because impact investing needs to be locally driven. Some in our sector like to say, hemispherically, that we want to encourage a South-to-South conversation around solutions, rather than holding the North-to-South dialog that has been the norm until recently.

It was also obvious at FLII that the idea of impact investing is gaining momentum throughout the region: About half of those attending in 2016 were new to FLII, which bodes well for the continued growth of impact investing in the region.

  1. Although the infrastructure is growing and progress is happening, FLII felt very Mexico-centric. Yes, there were people there from Guatemala, Chile, Argentina, Bolivia, Peru, and Colombia, but most of the action is from Mexico. Perhaps part of that imbalance was because the gathering was held in Mérida and because it was organized by New Ventures Mexico. But for the entire Latin American region to flourish and to benefit from social investing, the FLII message needs to have a more regional reach.

The conference organizers tried to hold a FLII event in Columbia last year, and they also tried to do one in Guatemala. Unfortunately, both were too small, and one-time events lack staying power and continuity. It’s good news that the premier Latin conference has moved from the United States (Miami) to someplace that’s more accessible to Latin Americans. But I would love to see FLII extend even further.

  1. At this year’s FLII, there were more people from countries that have been largely isolated in the past, specifically Chile and Argentina. Until now, the efforts of those countries have not melded with the rest of Latin America. The South American countries showed some nascent activity in the past, but I see bigger sparks being generated. I’m hopeful that with greater South American participation, FLII becomes truly a southern hemisphere effort for all of Latin America.

Beyond those three takeaways, I had one other observation of note, which is the flowering of new financing programs that leapfrog the whole idea of banks. One issue faced by many social enterprises in Latin America, especially agricultural or other seasonally based businesses, is that their income isn’t consistent throughout the year. As a result, it’s difficult for these enterprises to adhere to traditionally structured, monthly loan payments. The need for flexibility with repayment amounts and timing is a consistent theme across several Latin countries.

In addition, traditional bank loans are based on collateral, and many Latin American social entrepreneurs are women or farmers or others that have not had the ability to hold anything of sufficient value in their own names.

An example of an alternative approach is Variable Payment Obligation (VPO) financing, which I pioneered at Santa Clara University’s Miller Center for Entrepreneurship. Taking a page from venture debt mechanisms, and another page from microfinance aimed at very small-scale livelihood loans, the combination became VPO financing for social enterprises, in which payments are based on cash flow instead of collateral and fixed monthly payments.

At this year’s FLII, not only did a number of VPO financings take place, but there was a session where an investor and an entrepreneur talked together about their considerations as they went through the VPO financing process, as a way of teaching the rest of the investors and entrepreneurs in attendance how they might do it, too.

It’s clear that Latin Americans have quickly grasped both the opportunity and the depth of change that’s possible by embracing impact investing and by supporting social enterprises and entrepreneurship in their communities and countries. In the end, I came away from FLII feeling optimistic about the direction of impact investing and social entrepreneurship in Latin America.


John Kohler

John Kohler is executive fellow and director of impact capital, Miller Center for Social Entrepreneurship, Santa Clara University. He is the pioneer of a new impact investment vehicle – the Demand Dividend – that presents investors with a structured exit alternative to equity. Kohler will speak on a panel at the Second Vatican Conference on Impact Investing June 28 in Rome.

Happy Employees Attract SRI Fund Investments

WomanWorkerAssemblyLine

By Sunny Lewis

WARWICK, UK, February 11, 2016 (Maximpact.com News) – Google employees enjoy free rides to work at the California company’s headquarters campus, plus breakfast, lunch, and even dinner if they stay late – for free. New dads receive six weeks of paid leave, and moms can take 18 weeks. And Googlers can even bring their pets to work.

Employees at the Silicon Valley Internet giant enjoy free oil changes and car washes, massages and yoga, a play room, back-up child care assistance and $12,000 a year in tuition reimbursement.

Other California tech companies, too, top numerous lists of the best places to work. The California-based business software company Intuit offers education support up to $5,000 a year, as long as the employee’s courses are related to financial services. At the office, employees enjoy a state-of-the-art gym, dry cleaning services and on-site therapeutic massages.

Dr. Onur Kemal Tosun of Warwick Business School points to Pride Transport, a Utah-based trucking company. “It uses employee engagement as a competitive advantage to keep good drivers. Not only is their pay competitive, but they find accommodation for them while they are on the road and help their families while the truckers are away,” he says.

Dr. Tosun has just published a study of 1,585 U.S. corporations and 47 socially responsible investment (SRI) funds in which he quantifies how much more investment from socially responsible funds employee satisfaction attracted. He concluded it was 35 percent.

“This increased investment makes sense as firms investing in their employees signal high corporate social responsibility (CSR), which in turn potentially enhances a firm’s reputation and prestige,” said Tosun, an assistant professor of finance in Warwick Business School at University of Warwick.

“Improvements in this area of CSR have been known to boost loyalty, employee contribution, and motivation through which productivity, firm performance and firm value increase. Naturally, this would draw funds’ investment,” he said.

“Increases in society CSR, such as improving housing in a bad neighborhood by a construction company or covering education fees for local children, also sees firms gain a significant growth in investment,” Tosun explained.

“McDonald’s is a good example,” he said, “it has a society focus CSR. Ronald McDonald House Charities provides free ‘home away from home’ accommodation to families while their child is in hospital.”

As it happens, more than 16 percent of the assets under professional management in the United States are in SRI funds. This sector is growing quickly. SRI funds expanded their portfolios about 76 percent over two years – from $3.74 trillion (2012) to $6.57 trillion (2014).

For his study, Tosun created a unique new measure of investment patterns. “I use a comprehensive measure that combines SRI funds’ own CSR perception with corporate CSR scores to explain funds’ investment in these firms,” he explains.

A firm’s CSR score was measured by summing “Strengths” and “Concerns” of each issue area in the “Kinder, Lydenberg, and Domini Index.”

Funds’ CSR sensitivity was evaluated by SRI funds’ investment policy data for positive investment or negative, restricted, investment, available from Bloomberg’s Environmental, Social and Governance Service.

Tosun then combined the CSR score of each company with the CSR sensitivity of each SRI mutual fund investing in that firm.

“My research also shows firms in specific sectors can benefit more from increased CSR efforts, but on the whole CSR investment is a worthwhile endeavor for any firm looking to attract SRI funds,” he says.

But Tosun writes that CSR investments might not improve a fund’s bottom line, although they had higher returns than the market during the crisis period of 2007-2008.

“I show funds having CSR sensitivity underperform the market in general,” he writes, “and fail to improve their portfolio performance after they invest in firms with high CSR.”

The study, “Is Corporate Social Responsibility Sufficient Enough to Explain the Investment by Socially Responsible Funds?” has been submitted for publication to a number of finance journals.

HappyWorkingWomanAward-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.


Main image: Workers on the Scania front axle assembly line (Photo by Scania Group) creative commons license via flickr.
Bottom image: This happy woman works at TimeWarner in the Media Sales division. (Photo by Dylan H.) creative commons license via flickr.

TPP Unites Old Enemies, Makes New Ones

TPPindigenousprotest

Maori (Indigenous New Zealander’s) demonstrate against the Trans-Pacific Partnership in Auckland, February 4, 2016

 

 

 

 

By Sunny Lewis

AUCKLAND, New Zealand, February 9, 2016 (Maximpact.com News) – “We expect this historic agreement to promote economic growth, support higher-paying jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and to promote transparency, good governance, and strong labor and environmental protections,” declared the ministers of the 12 Trans-Pacific Partnership (TPP) countries on February 4 as they signed the document that for the first time opens trade across the region.

The TPP eliminates 98 percent of all tariffs among the 12 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.

The agreement includes former enemies at war as well as overwhelmingly Catholic countries such as Peru and Chile, the Buddhist-Shinto country of Japan, and majority Muslim nations such as Brunei and Malaysia.

But many civil society groups oppose the agreement for a host of reasons. They warn it will undermine environmental protections, human rights, labor rights, indigenous rights and internet freedom, despite official assurances to the contrary.

After more than five years of negotiations, ministers finalized the text at a session in Atlanta, Georgia on October 5, 2015 and agreed to sign it within 90 days. That signing event took place in Auckland on February 4, 2016.

New Zealand Prime Minister John Key said the agreement “will be overwhelmingly positive for New Zealand in supporting more trade and investment, jobs and incomes.”

“TPP will provide much better access for goods and services to more than 800 million people across the TPP countries, which make up 36 percent of global GDP,” said Key. “TPP is our biggest-ever free trade deal and is estimated to boost our economy by at least $2.7 billion a year by 2030.”

“It is New Zealand’s first Free Trade Agreement relationship with five of the TPP countries, including the largest and third-largest economies in the world – the United States and Japan. Successive New Zealand governments have been working to achieve this for 25 years, the prime minister said.

Prime Minister Key views the TPP as not only good for New Zealand, but also for the entire Asia Pacific region.

“Other countries have already signalled an interest in joining TPP and this could lead to even greater regional economic integration. A more prosperous and therefore secure region, is in all of our interests,” Key said.

The next step is for member countries to ratify the TPP so it can take effect.

The agreement can take effect only with the approval of at least six countries, which account for at least 85 percent of the combined gross domestic product of all member nations.

This means that it must be adopted by the legislatures of the two largest TPP economies, the United States and Japan.

Just 71 years ago, the United States dropped nuclear bombs on Japanese cities, as the two nations were bitter enemies locked in a struggle for control of the Pacific during World War II.

But now Japanese Prime Minister Shinzo Abe says the Trans-Pacific Partnership will allow Japan and the United States together to write the rules for the global economy.

Speaking at an economic forum in Tokyo in October, the day after the long-secret text of the TPP was made public, Abe said, “Rules should not be something that are imposed on you – you make them. The TPP is the structure where Japan and the U.S. can lead in economic rule-making.”

TPPprotestVirginia

The TPP protest movement has been building for years. Here, American workers demonstrate against the Trans-Pacific Partnership in Leesburg, Virginia, September 9, 2012. CWA stands for Communications Workers of America.

 

 

U.S. President Barack Obama said after the document was signed on February 4, “TPP allows America – and not countries like China – to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific.”

“It eliminates more than 18,000 taxes that various countries put on Made in America products,” said Obama. “It promotes a free and open Internet and prevents unfair laws that restrict the free flow of data and information.”

“It includes the strongest labor standards and environmental commitments in history – and, unlike in past agreements, these standards are fully enforceable.”

Fifty years ago, the United States and Vietnam were engaged in a fierce war, and U.S. demonstrations against involvement in the Vietnam war sharply divided the country.

Today, both countries are signatories to the Trans-Pacific Partnership.

Authorized by Prime Minister Nguyen Tan Dung, Minister of Industry and Trade Vu Huy Hoang took part in the signing ceremony in Auckland.

The World Bank’s latest “Taking Stock” report features a special section on the Trans-Pacific Partnership Agreement, in which it projects that the TPP is expected to generate considerable benefits for Vietnam, despite “implementation challenges.”

“The recently concluded TPP will not only improve market access, but will also serve as a critical anchor for the next phase of structural reforms in Vietnam.” says Sandeep Mahajan, lead economist for the World Bank Vietnam.

As the TPP economy with the lowest per capita GDP, Vietnam has unique comparative advantages, particularly in labor-intensive manufacturing. Simulations suggest that the TPP could add as much as eight percent to Vietnam’s GDP, 17 percent to its real exports, and 12 percent to its capital stock over the next 20 years.

An agreement that opens trade, forges bonds between old enemies, and brings together 800 million people of many different faiths and languages – what could go wrong?

Plenty, according to protesters in some of the TPP countries.

Environmentalists object to language such as this. “3. The Parties further recognize that it is inappropriate to establish or use their environmental laws or other measures in a manner which would constitute a disguised restriction on trade or investment between the Parties.”

A movement of labor, environmental, family farm, consumer, faith and other organizations has escalated its campaign to defeat the Trans-Pacific Partnership with a joint 1,525-group letter urging the U.S. Congress to oppose the trade agreement.

“As you would expect from a deal negotiated behind closed doors with hundreds of corporate advisors, while the public and the press were shut out, the TPP would reward a handful of well-connected elites at the expense of our economy, environment and public health,” said Arthur Stamoulis, executive director of Citizens Trade Campaign, which organized the letter.

The TPP would roll back environmental enforcement provisions found in all U.S. trade agreements since the George W. Bush administration, requiring enforcement of only one out of the seven environmental treaties covered by Bush-era trade agreements, Stamoulis charged in a letter to supporters emailed last week.

“Beyond just failing to mention the term “climate change” in its thousands of pages, the TPP would also provide corporations with new tools for attacking environmental and consumer protections, while simultaneously increasing the export of climate-disrupting fossil fuels,” Stamoulis wrote.

The U.S.-based global climate campaign 350.org called the TPP “a toxic deal that would give dangerous new powers to the fossil fuel industry and pose a serious harm to the climate.”

“The TPP is a fossil fuel industry handout,” said Payal Parekh, 350.org Global Managing Director. “This partnership in pollution gives corporations the right to challenge any local government or community that tries to keep fossil fuels in the ground.”

“The deal signed in New Zealand today makes a mockery of the climate agreement decided in Paris last December. If countries are serious about addressing the climate crisis, they need to stand up to coal, oil and gas companies, not reward them with new rights and privileges,” Parekh warned.

350.org is one of many organizations around the world that will be mobilizing members to fight back against the TPP and block its final approval and implementation.

Corporate Accountability International, based in Boston, states, “We oppose the TPP because it prioritizes corporate interests over public health, the environment, human rights, and democracy.”

In Kuala Lumpur in January, some 5,000 Malaysians protested the TPP on Saturday, days before parliament was due to open a debate on the pact.

Many of the demonstrators were from the opposition Parti Islam Se-Malaysia (PAS). They voiced fears that their country could lose control of its economy if it enters the partnership with the United States.

The Canadian nonprofit OpenMedia calls the TPP a “reckless Internet censorship deal.”

“We are planning to grow a global coalition and build an international action platform to turn public opinion against the TPP, country by country. We will jam public consultations, build an international action kit, and support our allies across the globe to kill this agreement once and for all.”

“The TPP won’t come into force until it gets ratified,” says OpenMedia. “That means the final and most crucial phase of the battle begins today.”


 

Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image:  U.S. Trade Representative Michael Froman (right) attend the Trans-Pacific Partnership Ministerial Meeting in Sydney, October 25, 2014. Both men signed the TPP pact February 4, 2016. (Photo by TPP Media Australia) under creative commons license via Flickr
Main image : Maori demonstrators against TPP (Photo by Dominic Hartnett) under creative commons license via Flickr
Image 01: American workers demonstrate against the Trans-Pacific Partnership in Leesburg, Virginia, September 9, 2012. CWA stands for Communications Workers of America. (Photo by GlobalTradeWatch) under creative commons license via Flickr