MUCH NEEDED BANK REGS ON CO2 CREDS IN WORKS

Today Senators Lieberman and Warner announced the undertaking of a cap-and-trade plan, a "Global Warming Bill" in the US Senate. Despite all the talk, it is only remotely likely anything will actually get done in the US before the 2008 presidential election. But getting the specifics of international trading with "credits" and "offsets" locked down is an important step.

Banks move toward carbon credit regulation
Fiona Harvey, June 27, 2007 (Financial Times of London)

WHO
10 banks, including ABN Amro, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley; European Carbon Investor Services, VP Imtiaz Ahmad;
how offsetting works (click to enlarge)

WHAT
Major banks have agreed on a basic standard for carbon offsetting credits.

WHEN
Agreement reached June 27. Effective date unstated.

WHERE
Agreement brokered in London, applicable to international emissions trading/offsetting.

WHY
- Kyoto offset market in 2006: $5 billion.
- EU mandatory market 2006: $25 billion.
- Voluntary market 2006: $1 billion.
- Many offsetting schemes, especially in the voluntary markets, have raised questions, some because they fund projects that would be done anyway, some because they seem to facilitate greater emissions than they alleviate and some because they do not neutralize the emissions they claim to.
- The Kyoto-established UN Clean Development Mechanism (CDM) has done a better but far from perfect job of regulation in mandatory markets.
Kyoto goal: 5% emissions reduction by 2012.
- Bank regulatory system is based on UN CDM 3rd party checks to establish that offsets use one of the pre-designated, clear emissions cutting methods. Nuclear and large hydroelectric projects don’t count. No enforcement. Unauthorized projects are expected to be disdained.
one way to think about offsetting criteria

QUOTES
Ahmad: “This standard establishes a robust benchmark with environmental integrity in the voluntary market.”