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On the Environment

Wednesday, February 22, 2012
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Chasing data in China’s provinces

By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies

The following post is republished from China Dialogue.

China’s environmental data has created many international headlines in recent months, particularly its controversial air-quality measurements. While Deng Xiaoping urged the Chinese citizenry to “seek truth from facts”, China is still a long way from providing the environmental data and information that allows for just that.

My colleagues and I recently released a study that provides a detailed analysis of provincial-level environmental data in China. We introduced a model framework for environmental performance indicators to assist the Chinese government in tracking progress toward policy goals, as well as recommendations for how the Chinese government can apply more aggressive performance metrics to environmental decision-making. 

In total, we looked at 32 indicators in 12 environmental policy categories (among them air pollution, water quality, climate change, biodiversity, agriculture and forestry). The data we reviewed and used to construct these indicators were all derived from official Chinese statistics.

We concluded that the lack of clear policy targets for many environmental metrics in China, as well as concerns over data sources and transparency, hamper the government’s ability to effectively address pressing environmental issues at the provincial level. While the report elaborates these challenges in detail, a few of the main findings are summarised below.

First, the existence of baseline environmental data is highly uneven. To develop performance indicators that evaluate the efficacy of environmental policies, baseline data are necessary to benchmark performance. Less than half the indicators evaluated had this. Baseline data were most prevalent for economic sustainability indicators (68%) and least prevalent for ecosystem vitality indicators (20%), while environmental health indicators were in the middle (42%). This pattern reflects the priorities of Chinese environmental policymaking in the past decade, which has emphasised pollution control and resource efficiency in the industrial sector. 

Second, difficulties in accessing raw data hinder data quality evaluation. Our report provides pilot indicators based on official statistics; however, we did not have the ability to independently evaluate those statistics. We found that official statistics for most indicators lack detailed information on data collection methods and monitoring systems, and in no instance were we able to obtain raw data from monitoring stations. Nor were we able to obtain data from third parties that might have been used to corroborate official statistics.

For all these reasons, it proved difficult to assess the validity and reliability of the official statistics. These difficulties gave us concerns about how much the official statistics reflect the reality of on-the-ground conditions.

Third, ongoing measurement systems are also highly uneven. Consistent measures, produced on a regular basis, following established methodologies, in a transparent and verifiable manner, are critical for environmental performance monitoring. In China, the measurement systems related to industrial efficiency are exemplary models. In this area, the published data meet the foundational requirements and, as a result, permit operational use of performance indicators in the five-year plans.

The other measures generally fall short. For example, methodologies for ecosystem measures tend to change over time, making comparison problematic, and the metrics used to measure air and water quality are transformed in ways that make tracking performance difficult.

And fourth, policy targets for the vast majority of candidate indicators are not easily identified. Overall, we were able to establish a basis for constructing a policy target for 21 of the 33 indicators we included in our framework — eight in the environmental health objective, seven in the ecosystem vitality objective and six in the economic sustainability objective. We considered 50 additional indicators but did not include them because of the lack of clear policy targets by which to gauge performance. However, the lack of properly specified policy targets is not unique to China. Similar challenges around goal-setting exist in many countries, especially in the developing world.

A major theme underpinning all of these conclusions is the need for greater data and information transparency. Even though laws on the disclosure of environmental information came into effect on May 1, 2008, China still has a long way to go in terms of providing environmental data transparently.

Researchers at Chinese NGO the Institute of Public and Environmental Affairs and the US-based Natural Resources Defense Council found that most big cities in China failed to publish adequate pollution information in 2011 in the third edition of the Pollution Information Transparency Index (PITI), released last month. Only 19 out of 113 cities received passing scores for information transparency. The authors concluded that environmental information disclosure is an “innovative system” in China that does not, so far, go beyond the initial stages.

It is our belief that the value of both the PITI and our report, “Towards an Environmental Performance Index in China”, lies in being able to provide transparency to environmental data and results in China. Transparency and access to information are fundamental tenets of sound environmental policymaking. Greater transparency can stimulate research and policy for developing innovations that can only help China navigate the difficult path of sustainable development.

Angel Hsu is a doctoral student at the Yale School of Forestry and Environmental Studies and project director for the 2012 Environmental Performance Index.

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Wednesday, February 01, 2012
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Exploring Canada’s Climate Perspectives: Dr. Shi-Ling Hsu on Canadian Climate Policy

By Guest Author, Erin Burns Gill, Yale School of Forestry & Environmental Studies, MEM '12

In January’s Climate Change Solutions: Frontline Perspectives from Around the Globe webinar, Dr. Shi-Ling Hsu, law professor at the University of British Columbia and author of the new book The Case for a Carbon Tax: Getting Past Our Hang-Ups to Effective Climate Policy, joined the Yale Center for Environmental Law & Policy to discuss climate policy from Canada's perspective. His presentation, “Climate Policy in Canada: (Snow)Boots on the Ground,” explained the nuances of Canadian policy that outsiders may miss by focusing only on the similarities between Canada and the United States. 


On the surface, many of Canada’s climate actions appear to parallel those of the United States: Canada’s recent withdrawal from the Kyoto Protocol or its acceptance of the Copenhagen Accord might be seen as Canada simply following the U.S. lead in international policy, and Canada’s efforts to impose federal command-and-control policies for greenhouse gases might look similar to President Obama’s efforts to regulate carbon under the Clean Air Act. However, there are several subtle but important distinctions between the two neighbors’ attitudes toward climate policy, Hsu said.

He outlined four “puzzles” that, when explained, reveal differences between the United States and Canada:

  1. Why is Canada’s conservative and market-savvy federal government embracing command-and-control climate policy, rather than a market-based approach?
  2. Why is British Columbia—the only province in North America to have accepted a carbon tax—so far ahead of the country and the continent?
  3. Why are four important Canadian provinces still participating in the Western Climate Initiative, when all U.S. states except California have abandoned the program?
  4. What explains Alberta’s voluntary adoption of carbon policy when its economy and policies are so tightly linked with oil & gas extraction?

 

To explain these puzzles Hsu identified four unique Canadian qualities:

  1. Trade Dependence. Canada places a strong emphasis on maintaining healthy trade relationships with the U.S., Europe, and (more and more) China.
  2. Conciliatory Attitudes. Canadian political leaders often value consensus and conciliation over confrontation and conflict.
  3.  Federalism. Canada is a very federalist country—the jurisdiction of Canadian provinces is much broader than that of U.S. States. Provincial responsibility for action on climate change is well recognized, and passing federal climate policies can be very challenging.
  4. Strong Executives. Canada’s executives (the Prime Minister and provincial Premiers) can be very powerful if backed by a legislative majority. Additionally, Canadian courts are highly deferential to executive branch action or inaction. Unlike in the U.S., if an executive agency makes a decision, Canadian courts are unlikely to question or overturn that decision.

 

Hsu then explained how these four Canadian qualities—unique compared to the U.S.—explain the four “puzzles” of Canadian climate policy:

  1. Trade Dependency and Federalism explain Canada’s command-and-control approach to carbon regulation. To avoid trade tariffs and to otherwise remain competitive in a global marketplace, Canadian companies want to show that they operate under similar regulatory conditions as other countries. Additionally, command-and-control regulation is one of the few carbon policies that the federal government is positioned to impose; the federal government does not have constitutional authority to implement a cap-and-trade program. Hsu notes, however, that the proposed means of achieving federal command-and-control may be a tough sell: the government has defined greenhouse gases as toxic substances, and thus plans to regulate emissions under criminal law. 
  2. The Strong Executive role of British Columbia’s Premier Gordon Campbell explains why the province succeeded in passing a carbon tax. Premier Campbell was politically and intellectually interested in a carbon tax policy, and in 2008 he faced ideal political conditions to lead parliament in adopting the legislation. Interestingly, Campbell’s political party was the less liberal of the province’s two parties; by taking leadership on carbon, Premier Campbell won support from environmentalists who were traditionally more supportive of his opponents.  
  3. Federalism explains why the provinces of British Columbia, Manitoba, Quebec, and Ontario remain in the Western Climate Initiative when all U.S. states (except California) have dropped out. Because there is no expectation of leadership from the federal government, Canadian constituencies demand and expect action from their provincial leadership; thus, participation in the Western Climate Initiative is well supported.
  4. Trade Dependence, Conciliatory Attitudes, and Federalism explain why the fossil fuel-dependent province of Alberta has taken voluntary (albeit tepid) action on climate. Oil and gas production accounts for 25 percent of GDP, 75 percent of exports, and 35 percent of government revenue in Alberta. This dependence on fossil fuel trading motivates Alberta to remain an attractive trade partner to countries that more and more prefer climate-friendly suppliers; Alberta’s climate policy is a sign to trading partners that the province is doing something to address climate change. Additionally, a general inclination to remain conciliatory with neighboring Canadian provinces likely motivated Alberta to pursue some degree of voluntary action. Finally, Canadian federalism means that Alberta’s voluntary action may also prove strategic: by having a climate policy in place, Alberta makes it more difficult for the federal government to impose top-down (and potentially more impactful) legislation.

 

To conclude, Hsu predicted climate action will continue to come from Canadian provinces, rather than from Canada’s federal government. He recognized that, despite the unique qualities of Canadian politics, action from the United States would likely motivate action from Canada. In the perhaps more likely case that the U.S. fails to pass significant climate legislation in the short term, there is still potential that Canada might show leadership by adopting a carbon tax.

Such a tax, Hsu said, could be significant even if it’s not very steep. Even a slight price on carbon could guide upcoming capital decisions (regarding the construction of new power plants, for example) toward less carbon-intensive paths.

A full recording of Dr. Hsu’s presentation, along with recordings of all the other webinars in the Climate Change Solutions series, is available at http://yaleenvirocenter.webex.com.

Posted in: Energy & Climate
Monday, January 30, 2012
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Seeking the Signal in the Noise of Environmental Performance Metrics

By Guest Author, Marc A. Levy, Deputy Director of the Center for International Earth Science Information Network (CIESIN)

This week CIESIN released, with its colleagues at Yale University, the 2012 Environmental Performance Index (EPI).  Wherever possible we collected and processed data in time series, to permit not merely comparisons across countries but also consistent comparisons over time. This has made the EPI a much more powerful diagnostic tool because trends are often much more revealing than static patterns.

To take one illustration, consider overfishing. Globally, the picture is not pretty. On our 0-100 scale, the world average went from 34 in 2000 to 29 in 2010—twice as many countries got worse than got better.

One of the real pleasures of producing the EPI is the chance to work with fellow data geeks who help guide us to the most suitable information and help us structure it into meaningful indicators. For overfishing we turn to the Sea Around Us group at the University of British Columbia, led by Daniel Pauly and backed by a talented, hard-working team. They have done incredible work collecting all the available fishery statistics, uncovering and correcting major errors, making the numbers as comparable as possible, and putting together compelling, informative time series that reveal where overfishing is running rampant and where it is under control.

Map of waters of Namibia. The top two panels show landings by species; the bottom two panels show stock status (click to enlarge). Source: Sea Around Us Project

I asked the people at Sea Around Us where these numbers show meaningful success brought about by deliberate policy efforts. They pointed to Namibia as a clear example. In our 2000-2010 trend analysis, Namibia’s score rises 34 percent. The policy success is even more dramatic when looking at the full time series assembled by Sea Around Us, which reveals that things were extremely bad in the early 1990s, with about 80 percent of the stocks in a collapsed state. By 2000 they had already improved considerably, and that improvement has continued to the present. A major driver of this change has been the elimination of foreign fishing fleets from the Namibian EEZ. Until Namibia established its EEZ in 1990, South African, Russian, Spanish, and Ukrainian vessels took the bulk of the catch (see figure, top). After 1990, Namibia restricted the access to its EEZ (NMFS, 2009), and was able to enforce restrictions.  Consequently the catches of horse mackerel, chub mackerel, hake, anchovy, and monkfish declined briefly and can be attributed to the dramatic decrease in fishing effort expended in the Namibian EEZ by foreign fleets, rather than an actual decrease in the biomass of these species (see figure, second from top).

Being able to see such trends and link them to policy efforts makes possible the identification of leaders and laggards and holds open the promise of accountability and progress.

Marc A. Levy is deputy director of the Center for International Earth Science Information Network (CIESIN), a research and data center of the Earth Institute of Columbia University. He is one of the authors of the 2012 Environmental Performance Index. This post originally appeared on State of the Planet, the Earth Institute's blogspot.

Posted in: Environmental Performance Measurement
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Fourni fishermen hope FPA will safeguard stocks, livelihoods

By Guest Author, Sandy Aylesworth, Yale School of Forestry & Environmental Studies, MEM '13

It is late November and I am bombing across the Mediterranean in a 15-foot Zodiac en route to Fourni, one of Greece’s 1,400 islands, for meetings with the mayor and local fishermen. I share the Zodiac with Anthony Moffa and Adele Faure, two students from Yale Law School, Thodoris Tsimpidis, a retired Naval captain and founder of Archipelagos—Institute of Marine Conservation, and Anastasia Miliou, head scientist and director of Archipelagos. The other students and I are enrolled in the Law School’s Environmental Protection Clinic, and Archipelagos is our client.

We turn sharply into a cove and stop abruptly. “And this,” says Anastasia, “is Anthropofagos Island.” Anastasia is gesturing toward a tall, shrubby island that will serve as an enforcement and research base for Greece’s second no-take marine zone, where fishing is completely forbidden.

Ideally, Anthropofagos Island and the no-take zone that borders it will also be an integral piece of the first Fisheries Protected Area (FPA) in Greece. A FPA is a management scheme wherein different stakeholders of a fishery partner to manage their resource sustainably. FPAs are gaining worldwide recognition as a viable fisheries management tool because of their success in achieving sustainable, locally managed fisheries—a triumph given the depressing reality of the world’s dangerously overfished stocks and failed fisheries management.

In response to declining catches over the last two decades, Fourni’s fishermen, Archipelagos, and Fourni’s mayor, Ioannis Maroussis,are forming a FPA. All three parties are confident that the management structure they envision will enable them to halt illegal fishing, enforce existing regulations, and implement the Anthropofagos no-take zone. The Clinic’s Archipelagos team will abet this effort by drafting a memorandum of understanding (MOU) and policy paper in support of the Fourni FPA. Ideally these documents will enable the FPA to secure European Union funding and official recognition.

In contrast to the stark white of the denuded island, the water beneath the Zodiac is a rich periwinkle. The clarity of the water is shocking and allows a clear view of fish, seagrass beds, and a smattering of invertebrates. Nearby an elderly woman, her son, and husband fish from an intricately painted wooden boat. The boat’s toy-like size and primary colors belie the gravity of these fishermen’s problems: Despite practicing the same artisanal fishing methods their family used for hundreds of years, their resource is in danger of becoming commercially extinct—only 10 percent of Fourni’s fishermen are able to fish fulltime and elders bemoan the exodus of the island’s youth, who are leaving in pursuit of profitable marine jobs elsewhere.

The necessity of improving the existing fisheries management in Fourni was particularly glaring last year when Archipelagos scientists found a 50-percent to 80-percent decline in total fish landings. The fishermen, mayor, and Archipelagos attribute paltry fish landings to rampant illegal trawling in the Fourni archipelago.

Near-shore trawling decimates seagrass beds, which provide the nursery for the vast majority of the island’s juvenile fish. The seagrass is also a crucial food source for mature fish. Although Greece forbids trawling on the beds, and they are protected habitat under an EU directive, trawling regulations are not enforced.

Fourni’s coastline and tall mountains protect trawlers from detection. Even if the trawlers were visible, the local coastguard would have a difficult time apprehending illegal fishermen: it does not own a boat. The fishermen say that illegal trawling occurs daily, yet only one fine for illegal trawling was administered in Fourni last year. The pervasiveness of this problem was wholly evident when we observed several illegal trawlers fishing after spending just two nights on Fourni.

Another obstacle to implementing existing regulations is the politically and financially potent trawlers’ union that lobbies aggressively in Athens. Even if approval for an FPA overcame political obstacles, Greece’s financial crisis likely will preclude national funding for an FPA.

But there is cause for optimism: the EU has dedicated funding for sustainable fisheries projects and the proposed Fourni FPA will be a strong candidate.

In Fourni our extensive meetings made clear that the fishermen are ardently protective of their resource and truly dependent on the sea for their livelihood and way of life. Though feta, calamari, and souvlaki enlivened our meetings, the fishermen became somber when they talked about the lack of control they feel over the resource that has sustained the island for thousands of years. They firmly believe that the FPA is their only means of restoring their marine ecosystem to health.

Yale’s Environmental Protection Clinic continues to work closely with Archipelagos. For more information on Archipelagos and the Institute’s research and projects  visit http://www.archipelago.gr/.

Posted in: Environmental Law & Governance
Tuesday, January 24, 2012
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2012: The International Year of Sustainable Energy for All

By Guest Author, Ainsley Lloyd, MEM '12, Yale School of Forestry & Environmental Studies

The United Nations has named 2012 the “International Year of Sustainable Energy for All,” setting three goals: ensuring universal access to modern energy services, doubling the rate of improvement in energy efficiency, and doubling the share of renewable energy in the global energy mix.

Possibly the greatest area of opportunity for achieving these goals is the developing world, where low electrification rates mean great potential for improving access, efficiency gains from switching to modern energy from traditional fuels can be significant, and expanding populations and standards of living drive demand for new generation facilities, which can take advantage of recent advances in renewable energy technology.

The aforementioned goals are driven not just by environmental sustainability targets, but also by recognition of the significant negative impact that energy poverty has on billions of lives. While a majority of earth’s population lives with critical goods just out of reach—poverty that frequently takes the form of a lack of food, clothing or shelter—a lack of these goods insufficiently describes the full spectrum of poverty that these individuals endure. Many throughout the developing world also experience energy poverty, lacking access to electricity and the light it provides.

According to the IEA, 1.3 billion people lack access to electricity, and 2.7 billion to clean cooking facilities, mostly in rural areas in sub-Saharan Africa and developing Asia. For these populations, productive activity is limited by available energy sources: many clinics close at sundown, vaccinations cannot be refrigerated, and children study by the light of kerosene lanterns. Electrification can improve lives and promote environmental sustainability here not just by providing light and power for a greater range of activities, but also by encouraging a shift away from the traditional energy sources thatcontribute to millions of deaths annually via indoor air pollution.

To provide modern energy, many countries have invested in large-scale primary generation facilities—hydroelectric dams, for example. But the infrastructure necessary to deliver electricity to the entire population is frequently lacking. It’s too expensive to build when the customer base is diffuse and much of the population served cannot afford to pay unsubsidized prices for electricity.

In the coming years, forward-thinking countries will explore strategies to increase renewable primary energy generation in order to provide modern energy access while protecting the shared environment for increasing populations with climbing standards of living. In addition, decentralized electricity generation and transmission—in the form of community mini-grids, for example—can help overcome cost issues in traditional grid expansion and provide modern energy access to alleviate energy poverty. By developing strategies to increase electrification rates efficiently and expandingrenewable energy, countries can both pursue reductions in energy poverty and work toward environmental performance goals.

Posted in: Environmental Performance Measurement
Monday, January 09, 2012
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China’s Long March Towards Better Environmental Conditions

By Guest Author, Alex de Sherbinin, Senior Research Associate at the Center for International Earth Science Information Network

This post originally appeared on Columbia University's Earth Institute blog, State of the Planet.

Given its burgeoning economic growth, its rapidly expanding industries, large population, and growing consumer class, many in the environmental field have an intense interest in how China will address its environmental problems.  The country has made some impressive energy and resource efficiency gains, and environmental issues are an important part of the government’s efforts to build a “harmonious society.”  Yet, as evidenced by the recent air pollution events in Beijing, there is a lot of progress to be made, and the government has yet to fulfill its commitment to data transparency.  China’s Regulation on Environmental Information Disclosure, which took effect in May 2008, represents a major step forward, but implementation is still at early stages and much remains to be accomplished to tap the full power of public participation in environmental protection as embodied in the Aarhus Convention, the US government’s Right to Know provisions, and the recently developed Access for All initiative.

It is in this context that a team of researchers (myself among them), jointly led by CIESIN at Columbia University and Yale University, have released the report, Towards a China Environmental Performance Index, that takes a first cut at assessing China’s environmental management and performance at the provincial level. Working closely with colleagues at the Chinese Academy for Environmental Planning (an arm of the Ministry of Environmental Protection) and City University of Hong Kong, we held three expert workshops over the course of two years, analyzed China’s environmental laws, and compiled the best available data. In the end, we determined that it was not possible to produce an aggregate index by province – but the process revealed the steps that would be necessary to fulfill that vision.  The bulk of the report provides a component-by-component analysis of China’s policies and measurement practices. Charts and maps illustrate the issues for 33 indicators, relying entirely on official provincial statistics.

Our decision to stop short of producing an aggregate index was based on concerns over data quality (to use statistical parlance – we had concerns over validity and reliability) and a lack of official policy targets for a number of the indicators we developed. Although we could have proposed interim targets, the crux of the matter was that we could not access raw monitoring station data that would have helped to assess data quality.  This led us to have concerns about how much the official statistics reflected on the ground realities. For our global work (see the 2010 Environmental Performance Index (EPI) and the forthcoming 2012 EPI) it is true that we were unable to validate all data sources (especially those derived from official UN publications – which are becoming fewer in number); but in our recent work with countries we have sought to achieve a higher standard.

What we did produce is a model framework for environmental performance indicators to assist the Chinese government in tracking progress toward policy goals, as well as recommendations for how the Chinese government can apply more aggressive performance metrics to environmental decision-making. China is making good faith efforts to raise environmental standards, partly due to the outcry of its increasingly affluent citizens for better air quality.  Yet the government is also seeking to lift millions more out of poverty, and to do so at a pace that has rarely been witnessed. It seems clear, however, that China’s quest for economic development at all costs will create a legacy of environmental damage that will be costly to repair – unless action is taken now. To avoid the worst impacts, the government needs to have policy tools that are adequate for guiding and prioritizing action, and that is what an EPI would provide.

The report is available in English here; a Chinese version will be available shortly. For more information, visit the Yale Center for Environmental Law & Policy website.

Posted in: Environmental Performance Measurement
Thursday, December 22, 2011
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Will China’s Panda Market be a Bear or a Bull for International Carbon Linking?

By Guest Author, Jasmine Hyman, PhD candidate, Yale School of Forestry & Environmental Studies, and Jonathan Smith, JD/MEM candidate, Yale Law School and the Yale School of Forestry & Environmental Studies

This post originally appeared on the Yale School of Forestry & Environmental Studies UNFCCC blog on 9 December 2011.

The Ring of Fire is ablaze with the new carbon trading schemes sweeping around the Pacific Rim. New Zealand is home to the first mandatory trading scheme outside of the EU, and the governments of both California and Australia recently approved trading programs. Japan, which is pulling out of the Kyoto agreements in 2012, has been proposing the widespread adoption of bilateral carbon offset mechanisms for countries no longer part of those agreements, and at the municipal level, both Tokyo and Saitama are experimenting with urban carbon markets. Meanwhile, China and South Korea have plans to scale out national emissions trading schemes by 2015 as well.

Investors worldwide are taking note of these developments in Asia. At a China-sponsored side event at the climate negotiations in Durban, Henry Derwent, CEO of the carbon market’s International Emissions Trading Association, praised Asia as being the epicenter of the fastest growth in the carbon market, and noted that surveys indicate that of all the new trading programs developing around the world, participants in trading schemes have the most confidence in those that are being created in Asia.

China in particular has been the focus of attention ever since the controversial launch in 2009 of its “Panda Standard” with BlueNext, one of the leading environmental exchanges originating from the EU. This past year, the Chinese government announced that as part of the carbon intensity and energy intensity targets of its 12th Five Year Plan (2011-2015), seven pilot carbon trading schemes will be launched in provinces and cities: Beijing, Chongqing, Guangdong, Hunan, Shanghai, Shenzhen and Tianjin. Officials hope that these market-based programs will assist China in meeting its pledge to reduce nationwide carbon intensity (emissions per unit GDP) 40-45 percent below 2005 levels by 2020.

China’s domestic carbon trading scheme elicits equal parts confusion and optimism. The exact structure of the pilot carbon markets has yet to be worked out, as Tsinghua University’s Teng Fei noted in a Durban side event. One major point to work out is whether these pilot programs will cap emissions on an absolute basis, or per-unit of GDP basis. China is also looking at the Tokyo program, which bills itself as the “World’s First Urban Cap-and-Trade,” to see whether it should copy Tokyo’s end-user cap on building and facility owners, or follow the more traditional, EU-style cap on producers such as factories and power plants. And it is still unclear whether the pilot programs will be uniform in structure, or tailored to the specific circumstances of each province and city.

While Mr. Derwent maintains that it is “far too early to think of Chinese markets demanding international credits,” Li Junfeng of the Energy Research Institute of China’s National Development and Reform Commission did indeed indicate that the ultimate trajectory of China’s carbon markets are to eventually join a global market.

But stitching together the current patchwork of trading schemes will be challenging. On the international level, linking China’s trading schemes to its neighbors will be difficult, if not impossible, especially if the Chinese programs quantify emissions reductions in terms of GHG intensity, rather than the international norm of issuing carbon credits for reductions in absolute GHG emissions. Linking to the Australian scheme, which will likely be one of the largest sources of credit demand in the region, will also be complicated by the Australian system’s use of a floor price. It remains to be seen how carbon credits from other schemes will meet the floor price in order to circulate within the Australian market — will there be a top-up fee to the trader? A subsidy from the Aussies? Or no linking at all?

Leon Wang Liangling, Regional Manager for China and East Asia at The Gold Standard Foundation, a certification scheme for voluntary and CDM offsets, also points to internal tensions in bringing a market mechanism for pollution control to China. “Building a working, effective and efficient domestic scheme is highly challenging given the massive scale and high complexity of China’s economy. The truth is that those challenges that confront the trading scheme didn’t pop up only when the international climate talk heated up — they have been among the difficulties that China has to deal with in its market reform in recent decades.”

Worldwide interest in linking up the many regional carbon trading programs remains high. EU Climate Commissioner Connie Hedegaard confirmed plans to link the EU system with the what will soon be the second biggest emission trading scheme in the world: California’s. The EU has informed California that they hope to collaborate to ensure that their two programs are linkable. “It doesn’t have to be identical, just compatible,” Hedegaard notes.

With the potential of China’s scheme to be the largest in the world, pressure to make the Chinese system compatible will likely be high as well. It is up to China whether its carbon market will be a conservative bear that protects national interests, or an energetic bull pushing for global carbon market linkages.

Jasmine Hyman, is completing a doctorate at the Yale School of Forestry & Environmental Studies, where she holds a doctoral fellowship from the National Science Foundation. Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They attended COP-17 in Durban.

Posted in:
Friday, December 09, 2011
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Bridging Gaps in Durban: What Can China do?

By Guest Author, Angel Hsu, Max Song, and Jonathan Smith

The following post is republished from China FAQs: The Network for Climate and Energy Information.

One of the most persistent themes so far at Durban has been how to bridge gaps - the divide between the developed and developing countries, many of whom disagree about whether the Kyoto Protocol should be extended into a second commitment period; the hole in climate finance pledges from developed countries; and the ambition or emissions gap between the Copenhagen pledges and the stabilization of global temperatures below a 2 degrees Celsius increase from pre-industrial levels.

These three major gaps must be addressed in Durban. One major question will be whether developing and some developed countries, Europe in particular, can work together to find a solution that enables the Kyoto Protocol to be extended. When it comes to money, there are questions about where some $2 billion USD out of the $30 billion promised to developing countries at Copenhagen and Cancun to assist them in mitigation and adaptation efforts will come from.

Perhaps the most prominent issue being discussed in Durban is the emissions or ambition gap between Copenhagen emission reduction pledges and the goal to limit global temperature rise to 2 degrees Celsius. To help facilitate the negotiations, the United Nations Environment Programme (UNEP) released a report Bridging the Emissions Gap which concludes that even if countries fully implement their Copenhagen commitments, the world would only be about halfway towards the emission reductions necessary to ensure global temperatures do not warm more than 2 degrees Celsius. However, the good news is that we have the technological and financial capacity now to achieve the emissions reductions necessary to avoid such an increase. Focusing on projections of global greenhouse gas emissions in the year 2020, the report looks at the “emissions gap” between:

  1. the level of emissions needed to ensure an average global temperature increase below 2 degrees C; and
  2. the level of global emissions in 2020 we’re likely to see given the voluntary emission reduction pledges in the Copenhagen Accord.

The report finds that even if all Copenhagen reduction pledges are met, total emissions would still exceed the level necessary to prevent a 2-degree increase by 6 to 11 gigatonnes. This is about 1 gigatonne greater than last year’s gap, an increase brought about by some countries such as Australia and Brazil having clarified how they calculate the baseline emissions from which their reductions would be made - effectively weakening their Copenhagen pledges.

But on the bright side, the full implementation of current technologies could more than make up for the gap, and at an economically feasible price. Existing energy efficiency technologies, renewable energy sources, and agricultural practices will be enough to put us back on the right track. In other words, we no longer need to wait for the next great technological breakthrough, just the next great policies to deploy the technology we have now. The report also emphasizes the need to improve measurement and accounting for market-based incentives such as the carbon reduction projects through the Clean Development Mechanism and from land-use, land-use change and forestry (LULUCF).

Negotiators here in Durban have been actively discussing the report and referencing the emissions scenarios that show global emissions must peak sometime before 2020 if temperature rise is to be contained below 2 degrees C. Delegates have been referring to the 6-11 gigatonne gap on the plenary floors and in the working groups over the last week.

We had the opportunity to speak with Dr. Kejun Jiang of China’s Energy Research Institute and a lead author of the UNEP report, about their analysis and what China can do here in Durban to help bridge the gap.

The Gap

Q: The UNEP report concludes that global emissions will need to peak before 2020 if the “emissions gap” is to be closed. How likely do you think it will be for countries to agree on this here in Durban and what about the time frame for when China’s emissions will peak?

A: It’s necessary for the world to see emissions peak by 2020. We can get there supposing China’s emissions peak in 2025, and developed countries will have significantly reduced emissions by 2025. This way, it’s still possible to control global average temperature rise below 2 degrees Celsius. It’s not quite possible to observe the global peak before 2015. For China, emissions are expected to peak around 2030. However, if we look at clean tech development in China now, the speed is very fast and it’s still possible to see major changes coming from China in 3 to 4 years to help close the gap.

Q: So is China’s Copenhagen pledge to reduce carbon intensity 40-45 percent enough to help bridge the emissions gap?

A: Actually, the 12th-Five Year Plan was made according to a target of 45 percent carbon intensity reduction. There are a lot of policies and actions in the plan on energy efficiency and non-fossil fuel energy. If all this work could be done well, it is possible for China to do better than the target.

Clean Tech

Q: Technology transfer continues to be a very hot-button issue in the UN climate negotiations. Will China be pushing for technology transfer to contribute to their ability to help close the emissions gap?

A: There is much capital from China looking for investment opportunities, however domestic investment has been pretty much saturated, and they are now looking at overseas investments. Clean tech investment is a good choice because China has the most competitive technologies that can bring down the cost of wind and solar power. So this is what we want to convey here in Durban: it’s not just emission reductions, it’s also about the country’s future competitiveness in the clean tech sector.

China will have a lot of capital in the future, like I just said, and China is not really in need of CDM money, which is only a tiny little part of GDP. What China needs is high-end technology.

The Durban Agenda

Q: What do you think can be accomplished here in Durban?

A: So here are my suggestions for us observers this time in COP-17. First, we want to leave some more room for the negotiators. Copenhagen was about debating; Cancun was about moving forward, and Durban is a working conference where countries don’t really want to fight each other but to finish the “homework” left from Copenhagen and Cancun. Also, countries in Durban want to nail down some technical details. For example, the EU wants to promote a “road-map” this time, and countries like China are waiting for that proposal to see how much it can be promoted. If Durban fails again, then countries will start to doubt UN’s capability.

Also China is changing very fast, and the negotiators need time to follow up. For example, China expected financial support in Copenhagen, but this time, this is not a major issue for China.

Q: If Parties fail to decide on a second commitment period before the Kyoto Protocol expires next year, what do you think China’s response will be?

A: I think this [failure to agree on the Kyoto Protocol] would be unimaginable. Without the KP - the minimum-level of agreement - it would be a mess. Ideally, we should have an improved KP, both considering the needs from G77+China and developed countries. China can also compromise on some issues here in Durban.

Q: If a new agreement can only be made for 2020, do you think that would be too late?

A: Certainly too late. There is possibility for some countries to make new adjustments to their 2020 emission goals. So I think countries should start to make targets for 2025 and 2030. If those targets are made very clear, then we can start to place less emphasis on emission targets for 2020.


Angel Hsu is a PhD candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Posted in: Environmental Performance MeasurementEnvironmental Law & GovernanceEnergy & Climate
Thursday, December 08, 2011
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Propelling the Durban climate talks - China announces willingness to consider legally binding commit

By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies

The following post is republished from China FAQs: The Network for Climate and Energy Information.

When China launched its first official pavilion at a UN climate conference last week, UN Framework Convention on Climate Change (UNFCCC) Secretariat Cristiana Figueres was there alongside China’s NDRC Vice Minister Xie Zhenhua to cut the ribbon. Swarmed by journalists in the standing-room only conference center of the China pavilion in Durban, Figueres applauded China for being a “trend-setter” in global renewable energy, resonating around the world and during the first week of climate negotiations in Durban.

“As I look at what has happened here at Durban in the negotiations this past week, what I see is a sailboat that has been sailing over very difficult waters, but with the wind blowing the right direction. And now that you have arrived, that boat now has a powerful motor behind it,” she said. The motor propelling talks forward into the second and final week of negotiations here in Durban may be developments in China’s negotiation position that emerged last week. An announcement that made waves was with regards to China’s willingness to consider signing on to a legally-binding agreement with binding climate targets after 2020 for the country.

Lead Chinese negotiator Su Wei told media last Friday that, “We do not rule out the possibility of legally binding. It is possible for us, but it depends on the negotiations,” Su is quoted as speaking in English rather than Chinese, presumably to make his point clear.

Although China made similar noises in Cancun, Su’s statement is the first time in the international climate negotiations that China has made this type of overture so clear with regards to a willingness to consider placing its post-2020 action into a legally binding instrument. This willingness to discuss the legal nature of post-2020 targets comes directly counter to the United States’ position put forth in Durban last week in which Jonathan Pershing, Deputy Envoy for Climate Change, said that a legally binding post-2020 agreement would be unacceptable unless other major economies also agree to be legally bound. Indeed it would seem to fulfill one of the US’ main conditions for moving forward.

If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, it has just opened a pathway forward to both securing the Kyoto Protocol for the post-2012 period and building a bridge, with all Parties, to a legally binding regime in the near future. The impact of this is not to be underestimated.

Vice Minister Xie Zhenhua confirmed China’s stance when he spoke at a briefing for international NGOs immediately following the China Pavilion’s launch. “We can start the process for a legally-binding framework for issues after 2020,” Xie said, clarifying five conditions that must be met before China can make its commitments legally binding in an international agreement. These conditions are:

  1. Parties must continue the Kyoto Protocol through a second commitment period;
  2. Developed countries must meet financial commitments to provide developing countries $30 billion in fast-start financing and $100 billion per year by 2020 through the Green Climate Fund;
  3. Institutionalization of consensus on finance, technology transfer, REDD+, adaptation, and transparency measures;
  4. Commitment to completion of the review of adequacy of long-term goals scheduled to take place between 2013 and 2015.
  5. Define a framework for a post-2020 agreement that upholds common but differentiated responsibilities, equity, respective capacities, and environmental integrity.

If all conditions are met, Xie says, “We are open to the process.”

Implications – Will China’s move bolster the EU mandate?

The question remains as to whether these major developments in China’s position here in Durban will have a significant impact on the negotiations in Durban. The European Union has stated its openness to placing its 2020 targets into the legally binding Kyoto Protocol if it is part of a package. The package includes a roadmap that would clearly show the way forward for all major economies to be in a binding regime in the post-2020 time period, the negotiations for which would end in 2015. China’s statements agreeing to internationally-binding emissions limits in a post-2020 framework might galvanize other major emerging economies such as India and Brazil to do the same.

Jennifer Morgan, the Climate and Energy Program Director at the World Resources Institute, explained the significance of China’s new posture:

“If China is indeed open to placing its post-2020 commitment into an internationally legally binding instrument, Europe and the most vulnerable countries are now its key allies. If these Parties can work together this week, Durban has a good chance of success,” Morgan added.

It is not yet clear what kind of commitment China would be willing to bind, and that level of specificity does not appear to be part of the current discussion.

Jonathan Smith (JD‘12/MEM’12) and Max Song (MEM’12) contributed to this piece.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Posted in: Environmental Performance MeasurementEnvironmental Law & GovernanceEnergy & Climate
Tuesday, December 06, 2011
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Chinese experts discuss absolute emissions limits in Durban

By Guest Author, Angel Hsu, Max Song, and Jonathan Smith

The following post is republished from China FAQs: The Network for Climate and Energy Information.

The idea of a total cap on energy consumption in China, first suggested last March before the National People’s Congress, has reemerged in Durban -- and surprisingly there are now suggestions that China might consider some kind of a cap on carbon emissions. This has been suggested apparently as part of domestic policy rather than as a negotiating position, but details are very sketchy.

Over the last week, we have been witnessing an active debate amongst Chinese academics and researchers on energy and carbon caps, although these discussions have taken place separately, from outside the plenary floor and in the multitude of side events the Chinese delegation has been hosting. Chinese negotiators have been careful to not muddy the waters in Durban, especially after making such a loud splash late the first week of negotiations by supporting a legally-binding treaty after 2020. Read more.

What senior government researchers have been suggesting, however, is that China is considering an absolute rather than an intensity-based emissions target that is more restrictive after 2020. Statements by senior researchers from the Energy Research Institute - a high-level government think tank associated with the National Development and Reform Commission (NDRC) - are the first time that China has suggested they might soon be ready to set a timetable and limit for its emissions, at least in the context of domestic policy.

This idea first emerged prior to the March release of the Five-Year Plan. Senior representatives of the Chinese government suggested that an energy consumption cap of 4.1 billion tons coal equivalent might be included in the Plan. Since then we understand the question of a total energy cap has been hotly debated within the Chinese government. Now its advocates are speaking fairly forcefully in Durban and going beyond the energy cap to suggest a carbon cap as well.

At a side event on local pilot carbon trading schemes on Dec. 1 organized by Tsinghua University and the Institute for Global Environmental Strategies, the debate of absolute versus intensity emissions targets was prominently mentioned. Tsinghua University professor Teng Fei emphasized that whether these preliminary carbon-trading schemes will cap emissions on an absolute or an intensity basis is the biggest issue for government leaders in deciding how to roll out these programs to the four cities and two provinces selected as pilots. Lead Chinese negotiator Su Wei was also present and added, “It’s very clear in China’s Five-Year Plan that it’s our objective to gradually establish a national system on carbon emissions trading. Certainly the pilot system is still in the design stage but we have more or less set the direction of piloting market mechanisms.” It certainly could be the case that experience with regards to the design of caps (i.e. sectoral or provincial basis; baseline calculations, etc.) in these local pilot projects may eventually inform a national level cap on emissions.

One reason for a possible shift to an absolute target is because an emissions cap may spur growth in alternative energy sectors – such as natural gas, renewables and nuclear – according to Yang Fuqiang, Senior Advisor on Energy, Environment, and Climate Change for the Natural Resources Defense Council.

While Chinese experts and delegates have not suggested what kind of carbon number they are considering, Jiang Kejun of NDRC’s Energy Research Institute noted, “If you add up the coal consumption cap, the target for non-fossil energy consumption, and the natural gas target, you can basically calculate what an emissions limit for China might be.”

At this point this discussion mainly concerns domestic policy, but its active airing in Durban suggests the scope for Chinese policy development in the next several years.

Angel Hsu is a Phd candidate at Yale School of Forestry and Environmental Studies and a contributing expert to ChinaFAQs.org; Max Song is a MEM student at the Yale School of Forestry and Environmental Studies; and Jonathan Smith is a JD/MEM candidate at Yale Law School and the Yale School of Forestry and Environmental Studies. They are all attending COP-17 in Durban.

Posted in: Environmental Performance MeasurementEnergy & Climate
Wednesday, November 30, 2011
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Google’s decision to shutdown Renewable Energy Cheaper Than Coal should be a wakeup call

By Guest Author, Noah Walker, MEM ’13 Yale School of Forestry & Environmental Studies

Google announced last week that it has shut down Renewable Energy Cheaper Than Coal (RE<C), the Google initiative aimed at developing technology that would drive down the cost of renewable energy.

Under the new leadership of Chief Executive Larry Page, Google has been scaling back its less successful programs across the board. Google’s explanation that other institutions are better positioned to take its renewable energy efforts "to the next level” is understandable and Google has pledged to continue “its work to generate cleaner, more efficient energy," through procuring renewable energy for its data centers and investing in renewable energy companies.

However, while this may be a sound business decision, there is something troubling about Google’s decision to abandon RE<C, particularly in light of the optimism with which it was created four years ago. In December 2007 Page said Google expected, “to produce one gigawatt of renewable energy capacity that is cheaper than coal. We are optimistic this can be done in years, not decades." Google executives also said they anticipated investing hundreds of millions of dollars in “breakthrough renewable energy projects which generate positive returns.”

Optimistic (and perhaps naive) sentiment like this was par for the course in 2007.  Democratic presidential hopefuls, buoyed by the 2006 midterm elections, promised comprehensive climate change legislation. Picking up on the political headwinds, many businesses began building climate regulation, green products, and green marketing plans into their models.  Money flowed into green tech and clean energy startups as venture capitalists projected increased demand driven by stricter regulation, government incentives, and the belief that a game-changing breakthrough could be right around the corner. By the end of 2008, the “Drill Baby, Drill” chorus was momentarily silenced and hope and change were inspiring bold statements like the one Page made a year earlier.

Undeniably, there have been huge technology advances over the last four years. The International Energy Agency (IEA) released a report this week that identifies renewable energy as the “fastest growing sector in the energy mix.” But the reality is that many of these technology advances have been made as a result of government subsidies that are drying up. Others have been made in anticipation of a market shaped by cap and trade legislation. And even with the progress that has been made, renewable technologies are a long way from being able to replace the convenience and capacity of fossil fuels.

Google’s announcement is a blow to those of us who held out hope that private-sector funded technology would let inactive national and global policy makers off the hook.  If the massively well-funded and exceptionally innovative Google has decided its engineers aren’t the people to find a game-changing technology after just $10 million of their promised hundreds of millions in investments in RE<C, what options do other companies have?

Google’s RE<C decision is one more reason on a long list for diplomats meeting in Durban this week (as well as for national politicians in this country) to move forward with robust policies to reduce greenhouse gas emissions and curtail the effects of climate change.  Environmental sustainability and energy security won’t come with the private sector overcoming this challenge on its own. The public should be a partner and lead the way.

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Wednesday, November 23, 2011
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Demystifying China’s Controversial Air Quality Measurements

By Guest Author, Angel Hsu, PhD candidate, Yale School of Forestry and Environmental Studies

Beijing’s air quality dominated international headlines when discrepancies arose last month between official monitoring data and U.S. Embassy measurements.

Pictures of stifling haze and smog posted and circulated online by netizens depicted extreme pollution. The U.S. Embassy’s monitor indicated that the air quality was “hazardous” and “beyond index, but “the Chinese government’s official Air Pollution Index indicated that the air was only “slightly polluted.[1]

Why the inconsistency? To start, the U.S. Embassy’s monitor, which was originally put in place in 2008 to record air quality during the Olympics, measures finer particulate matter with a diameter of 2.5 micrometers or less (PM 2.5) and ozone. These particulates are more relevant for human health because of their ability to penetrate human lung tissue and lead to asthma, lung cancer, and cardiovascular disease. The Beijing measurements, however, don’t include these pollutants and instead take an average of measurements from monitoring stations from around the city. 

Many people are asking which measure is more accurate. This is a difficult question to answer because it’s almost like comparing apples and oranges. The two systems are measuring different pollutants, and the U.S. monitor is only looking at one point source compared with Beijing’s 27 monitoring stations. The accuracy the U.S. Embassy’s monitor – and how often the instruments are calibrated – is also unclear. Granted, Beijing’s system has its flaws, which the government has acknowledged and is working to improve. As a sign of good faith, the Beijing Environmental Protection Bureau announced that it would allow public tours of its air monitoring facilities to show that they aren’t trying to hide behind the data.

These efforts come in conjunction with several important policy developments regarding air quality in China.  Last month I wrote about new efforts to pilot PM 2.5 measurement in model environmental protection cities in China. Last week, the Chinese government announced new ambient air quality standards for PM 2.5 and ozone levels (link available in Chinese only). While still slightly below WHO recommendations, these new standards are a significant step in the right direction, particularly when diplomatic cables suggested that PM 2.5 data were deemed too politically sensitive to measure and report. These new standards will likely not take effect nationally until 2016; however, major cities like Beijing and Shanghai, which already measure PM 2.5 but do not publicly release the data, likely will roll them out sooner. Officials from the Ministry of Environmental Protection have already noted that there will likely be a binding national target for PM 2.5 in the next Five-Year Plan.

LinkAsia recently asked me to discuss Beijing’s controversial air quality data and some of the measures the government is taking to address citizen concerns over poor air quality. You can view the interview here: http://www.linktv.org/linkasia/linkasia2011111119/understanding-chinas-deadly-air.

 


Posted in: Environmental Performance Measurement
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Metrics and Measurement of Sustainability Performance

By Guest Author, Rafael E. Torres, MBA ’13, Yale School of Management, MEM ’13 Yale School of Forestry & Environmental Studies

The selection of sustainability performance metrics in a company’s sustainability or corporate social responsibility (CSR) management system is dependent on the relevant issues facing that specific firm, the issues facing its stakeholders, and the context of the company’s industry. CSR metrics are crafted to report on performance in the environmental, social, and economic contexts. Since the issues underlying CSR are complex, selection of particular sustainability metrics involves value judgments about their importance and the measurement methodology to be used. I offer below some issues to consider in developing sustainability metrics and reporting systems. This is by no means an exhaustive list, but rather a menu of issues to think about that are relevant to CSR measurement systems.

First, one sound business philosophy that I learned a long time ago from a college professor was: “you get what you measure and reward.” This philosophy has rung true over the years and I’ve seen it play out at many different firms. Any metric that the firm sets out to produce and track should somehow be weaved into the performance management and bonus incentive scheme of the company in order for it to have the greatest impact. If employees are not trained to consider CSR metrics as part of the results they manage to, and if they are not somehow directly incentivized based on CSR performance, they will focus and prioritize other areas outside of these metrics. In such a case, improvement to areas tracked by the CSR metrics will likely be incremental or nonexistent altogether.

Second, practically every individual metric has benefits and drawbacks involving tradeoffs of incentives or measurement goals. It is easy to create perverse incentives one way or another with any given individual metric. For instance, using an energy intensity metric (energy usage/output or revenue) has the benefit of factoring in the effect of more production by the firm, but has the drawback that the company’s absolute energy usage—and thus its total impact—can be increasing, while being masked by the intensity metric. Using absolute energy usage has the opposite effect, as it masks improvements in efficiency when the firm’s growth outpaces the related efficiency gains. These optical effects make it difficult for either metric to provide an accurate picture on its own, and it can result in employees managing to one performance indicator at the expense of the other. Often, good metric systems are designed to use sets of counterbalancing metrics whose effects cancel each other out. This helps provide a balanced performance picture and reduces the possibility that employees or managers will have incentive to improve in one area at the expense of another.

Third, when working with any type of metric, it is very important to develop benchmarks against which to compare the results. Such benchmarks need to be relevant to the objectives of the CSR metric system. When the desired objective is improvement over a prior year, then the benchmark is simply the prior year quantity. However, how do we determine benchmarks to achieve sustainability? One vocal sustainability researcher and metrics expert, Mark McElroy, holds that many CSR metrics in use today are lacking because they do not have a benchmark measure to compare against that represents the truly “sustainable” level of use for that resource for that company. In other words, if a firm states that it used 1.0 million (M) gallons of water in the current year as compared to 1.1 M gallons in the previous year, we can only say that this was an improvement over the prior year. However, what does it say about whether the 1.0 M gallon result is “sustainable,” meaning a rate that doesn’t deplete the resource beyond its capacity to regenerate? To know if that firm’s water use is sustainable, a more detailed assessment would need to be made about water availability and use in the firm’s geographic region, and such an analysis would require allocations of the resource base amongst industries and companies. It is, to be sure, a formidable undertaking, but Mr. McElroy’s point is well taken that CSR metrics reported without context stand little chance of achieving their objective of reporting on sustainability, as defined.

Finally, for companies wishing to report sustainability metrics externally, there are additional considerations of how to frame and execute such external reporting. Currently, many companies use annual CSR reports as a primary vehicle to communicate their environmental, social and economic performance. Such CSR reports are often complemented by press releases and other ongoing external communications. Surely there are good reasons to adopt this approach to external reporting, but it is worth considering whether it is a good idea to separate the company’s CSR reporting from its financial reporting. A public company in the U.S. files annual financial reports (Form 10-K) and quarterly financial reports (Form 10-Q) with the Securities Exchange Commission (SEC), and those are very likely the reports that 99 percent of investors pay most attention to. In that context, do companies risk creating the perception that CSR reports are a side dish when they divorce sustainability metrics from financial ones? As companies refine their CSR measurement and reporting systems, they may want to consider ways of unifying communications so that users of reports are not left feeling like there are double standards.

Designing and implementing any form of performance measurement system is indeed a challenging task, and it is no less so for a CSR measurement system. Organizations need to make sure their metric systems are tailored to the challenges of sustainability measurement and are set up to succeed.

Rafael is a 2nd-year MBA/MEM joint degree student focused on energy policy and strategy. Prior to Yale, Rafael worked almost 10 years as an external financial auditor, including as manager at Deloitte & Touche LLP. Rafael is a licensed Certified Public Accountant (CPA), and holds other financial certifications.

Posted in: Environmental Performance Measurement
Tuesday, November 22, 2011
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Q&A with Vera Pardee, Senior Attorney in CBD’s Climate Law Institute

By Susanne Stahl

Vera Pardee, senior attorney in the Center for Biological Diversity’s Climate Law Institute, recently spoke at the Yale School of Forestry & Environmental Studies about the future of climate change regulation on a panel with Dale Bryk, Director of the Energy & Transportation Program and a senior attorney with the Natural Resources Defense Council, and Dan Lashof, Director of NRDC’s Climate Center.

YCELP: What is the future of cap-and-trade as a policy solution in the United States?

VERA PARDEE: We should start with a little bit of background. Cap and trade was an idea intended to integrate market forces into regulations designed to prevent the worst consequences of anthropogenic climate change. Many Republicans had balked at any regulatory scheme for climate change unless market forces were given a primary role through trading schemes. However, when Democrats in the House and Senate introduced cap-and-trade bills in 2010, Republicans quickly changed course and attacked the legislation as overly expensive and supposedly job-killing. So I think it’s interesting to keep that mind. At this point, the unrelenting gridlock in Congress seems to guarantee that not much of anything can be accomplished on the federal level.

Although prognostication is difficult, it is not likely that there will be a federal approach to cap and trade; that does not mean, however, that there won’t be effective regional approaches or state approaches, as NRDC’s Dale Bryk has outlined.

In California, we have AB 32, which is a cap and trade program. California often leads and states often follow where California goes. AB 32 has many smart design elements, but every time legislation includes a trade component rather than just a cap, one introduces the potential for fraud and abuse and, most critically, lack of additionality – that is, are emissions actually reduced somewhere? Although creating a marketplace for emission permits theoretically causes greater efficiency, practically it can create trading bubbles, inequalities, and much lower prices on carbon than should be imposed if the true damages caused by climate changed were taken into account. 

In 2009 and 2010, when cap-and-trade was considered in Congress my organization, the Center for Biological Diversity, did not actively support any of those bills – not only because of fear of abuse – as that’s not necessarily an objection that cannot be overcome – but because all but one of them had as its centerpiece the dismantling of all Clean Air Act provisions to reduce greenhouse gases in exchange for this scheme. We said that’s a very bad idea because the Clean Air Act has been an incredibly successful pollution reduction vehicle for 40 years and it definitely should not be sacrificed. We do not, however, oppose new legislation that builds and expands upon the Clean Air Act in positive ways. As it turns out, cap-and-trade did not pass, and at this point most if not all green organizations are on the same page as we are, which is to say that we have to safeguard and protect the Clean Air Act.

YCELP: What do you see as the policy or regulatory mechanisms most likely to provide the largest greenhouse gas reductions?

VERA PARDEE: For myself, I would say a direct, substantial tax on carbon emissions that continues to rise. Such a tax has many advantages. It would be, first of all, a very direct and transparent mechanism. It would generate funds that could be used for renewable fuel development and assistance, and it would provide an effective incentive to avoid the generation of greenhouse gases. And the tax – as was proposed in the Cantwell Bill that was one of the possibilities in 2010 – could result in rebates to consumers, which would also avoid any possibility of ending up with a regressive tax. So a direct tax would be fast; it could be equitably structured; it would be transparent.

After a direct tax I think what we have is the Clean Air Act, and with all its mechanisms it at least holds the promise of being very effective.

Beyond that, I think you absolutely cannot discount the many, many local and regional initiatives – sometimes those aren’t given enough credit. Some people think that if you don’t tackle the largest emissions, you may as well stop, and I think that is incorrect.  Stopping greenhouse gases is going to be an effort that requires societal consensus and that will be accomplished by changing people’s minds and then their habits in their daily lives on a local level as well as through nationwide regulation. So I don’t discount those measures at all.

YCELP: Are there other measures or legislation pending that could prove to be a real push forward in reducing greenhouse gas emissions?

VERA PARDEE: Yes, with some qualifications. What has been done with the Clean Air Act is the best thing that has happened so far: the various rulemakings – the endangerment finding, the vehicle rule and then the beginning of greenhouse gas permitting for stationary sources – have been a start. Of course it’s been viciously fought on every level, which is deplorable. My hope, and I think well-founded hope, is that those attacks now being litigated in the federal appellate court in D.C. will fail.

That said, there is so much left to do to enforce the Clean Air Act, and so many steps yet to be taken. I fear the progress that is being made with Clean Air Act regulations may become illusory if the actions that are taken are largely an effort on paper. If you review the permitting that is now going on for stationary sources – the first permits are being issued to try to control greenhouse gases from things like power plants and factories – the permits themselves have been very disappointing because the stepwise analysis of the best-available control technology has been employed to force very few, if any, actions to actually reduce greenhouse gases. Things like switching fuel sources for power plants, which is an obvious, clear remedy to get greenhouse gases reduced, are rejected as a viable option.  So it’s great that we now have required permitting that looks at the problem, but if the regulators don’t require action, we really haven’t advanced anything.

So other than the vehicle rules, I don’t really know of any federal law that has yet to make a difference on these issues. The vehicle rules will make a difference over business as usual beginning with the 2012 models, but unfortunately, those rules are by no means tough enough.  Even with the rules, we will still lag behind the EU and China, and we will still fail to employ technology available today that could improve the mileage and therefore reduce the emissions of our vehicle fleet.

YCELP: The Center for Biological Diversity identified a way for EPA to address climate change based on water quality impacts under the Clean Water Act. Could you say more about that?

VERA PARDEE: The basic premise is that carbon dioxide released into the air is being absorbed by the ocean in enormous amounts and causes the pH level of the ocean and other bodies of water to become much more acidic, which is extremely dangerous to marine life.  The Clean Water Act is mostly known for permitting, but what we have been looking at is the fact that the Clean Water Act requires states to list all bodies of water in their jurisdiction that are impaired. The question, then, is what is impairment? There are laws on the books in many states that define impairment as change in pH level at certain quantifications. If a body of water experiences such a change through human causes, then under these state laws, the waters must be considered impaired. We brought a test case that made the connection between the CWA’s requirement of impairment listings, these state laws, and the demonstrated effect of carbon dioxide on pH levels, and obtained a settlement that raises awareness of this issue and a promise by EPA to begin to look at this relationship.  EPA issued a guidance document saying that for the next year, 2012, states should list all of the bodies of water within their jurisdiction as impaired that have suffered a certain change in pH. And once they are on that list under CWA section 303(d), then it becomes necessary to take action to stop the impairment. The acidification effect is not theoretical. It is real, and it has already happened. And the effects on marine life as well as the industries that live off marine life are drastic.

YCELP: Is there any legislation or measures pending that could be a real setback?

VERA PARDEE: EPA can’t act if it doesn’t have any money so the constant attempts to cut back EPA funding are really frightening. We often criticize EPA for not doing enough or not doing it fast enough, but without EPA the ballgame, at present, is really over. Cutting off the EPA’s funding would probably be the worst thing that I can see.  Beyond that are the innumerable bills that have passed the House that would undo or delay EPA’s greenhouse gas emission reduction efforts.

YCELP: Is there anything else you’d like to add?

VERA PARDEE: This was mentioned during our panel, but I’d like to reiterate that we need to counteract the idea that regulatory initiatives, or even the government as a whole, are evil. The rhetoric has in many ways become religious and fanatical. And rationality must prevail. We need to change the conversation in the country. The connection between environmental regulation – or just regulation – and the loss of jobs is a pernicious and false connection and must be broken.

Posted in:
Monday, November 21, 2011
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Q&A with Dan Lashof, Director of NRDC’s Climate and Clean Air Program

By Susanne Stahl

Dan Lashof, Director of the Natural Resources Defense Council’s Climate and Clean Air Program, recently spoke at the Yale School of Forestry & Environmental Studies about the future of climate change regulation on a panel with Dale Bryk, Director of the Energy & Transportation Program and a senior attorney with NRDC, and Vera Pardee, senior attorney in the Center for Biological Diversity’s Climate Law Institute.

 

YCELP: What is the future of cap-and-trade as a policy solution in the United States?

DAN LASHOF: As my colleague Dale Bryk mentioned, there are a number of states that are moving forward with cap and trade; the European Union has a program that has been up and running for awhile, and they’re making it more robust and effective over time. Australia is in the process of adopting a program.

At a national level, I think the U.S. will eventually come back to it because the substantive and political reasons why it had been a focus of efforts in the past are still valid. And while it’s been politically tainted – and that will last for a while – I think eventually people will see it as a more effective mechanism than the more piecemeal approach, which, by necessity, will be pursued over the next few years.

YCELP: What do you see as the policy or regulatory mechanisms most likely to provide the largest greenhouse gas reductions?

DAN LASHOF: For the foreseeable future, and provided that EPA retains its authority under the Clean Air Act, I think that the biggest opportunities are from regulations EPA will be issuing for power plants and other large industrial sources under Section 111.

There are also significant reductions that are in the pipeline as a result of the vehicle performance standards developed jointly by EPA, the Department of Transportation and the California Air Resources Board, both passenger vehicles and now, for the first time, heavy-duty trucks.

YCELP: What EPA regulation during this current administration has accomplished the most in terms of GHG reductions?

DAN LASHOF: The light-duty vehicle standards that cover model year 2012 to 2016 are definitely the most significant. Those could potentially be surpassed by the regulations that EPA is currently working on that would apply to power plants.

YCELP: Are there other measures or legislation pending that could prove to be a real push forward in reducing greenhouse gas emissions?

DAN LASHOF: There are a couple of others that I would identify: one is the regulation of methane leaks from the oil and gas system, which is really important because methane has a higher global warming impact per ton than carbon dioxide. Getting those regulations in place would clear away one of the concerns that has been raised about potentially switching from very dirty coal plants to natural gas as a cleaner source because there is enough uncertainty now about how much methane is leaking to call into question what the net benefits of doing that are.  If EPA was able to issue strong regulations requiring good housekeeping in oil and gas production, then it would be a much clearer benefit from a climate perspective.

The other area, which people haven’t been paying much attention to, but has significant potential has to do with industrial gases like hydrofluorocarbons where there are significant emissions and very high global warming potential gases so reductions could have a big payoff.

YCELP: Is there any legislation or measures pending that could be a real setback?

DAN LASHOF: The Keystone XL pipeline, which is clearly directly within the jurisdiction of the Obama administration to decide to provide a permit, and the extra emissions associated with shifting to dirtier fossil fuels like tar sands oil could erode some of the benefits associated with the vehicle standards and the power plant standards.

The other threat, which is only partially within the administration’s control, but they do have some leverage over it, is Congressional threats to EPA’s rules – either generically or individually.

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