Carbon Trading
Emissions Trading
Rosehill Group specializes in providing carbon market development services, leveraging its expertise and experience to help clients navigate the complexities of these dynamic markets. Our commitment to excellence, innovation, and sustainability ensures that our clients receive the highest level of service and results.
CARBON MARKET DEVELOPMENT
- Advisory
- Market infrastructure and software
- Carbon project development and trading
The Federal Government of Nigeria has mandated Rosehill Group to provide carbon trading advisory, energy transition economics, and green infrastructure development consulting services to the National Council on Climate Change (NCCC).
Greenhouse gas emissions are a new commodity
Parties with commitments under the Kyoto Protocol (Annex B Parties) have accepted targets for limiting or reducing emissions. These targets are expressed as levels of allowed emissions, or assigned amounts,at over the 2008-2012 commitment period. The allowed emissions are divided into assigned amount units (AAUs).
Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare – emissions permitted them but not “used” – to sell this excess capacity to countries that are over their targets.
Thus, a new commodity was created in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the “carbon market.”
Other trading units in the carbon market
More than actual emissions units can be traded and sold under the Kyoto Protocols emissions trading scheme.
The other units which may be transferred under the scheme, each equal to one tonne of CO2, may be in the form of:
- A removal unit (RMU) on the basis of land use, land-use change and forestry (LULUCF) activities such as reforestation
- An emission reduction unit (ERU) generated by a joint implementation project
- A certified emission reduction (CER) generated from a clean development mechanismproject activity
Transfers and acquisitions of these units are tracked and recorded through the registry systems under the Kyoto Protocol.
An international transaction log ensures secure transfer of emission reduction units between countries.
The commitment period reserve
In order to address the concern that Parties could “oversell” units, and subsequently be unable to meet their own emissions targets, each Party is required to maintain a reserve of ERUs, CERs, AAUs and/or RMUs in its national registry. This reserve, known as the “commitment period reserve”, should not drop below 90 per cent of the Party’s assigned amount or 100 per cent of five times its most recently reviewed inventory, whichever is lowest
Relationship to domestic and regional emissions trading schemes
Emissions trading schemes may be established as climate policy instruments at the national level and the regional level. Under such schemes, governments set emissions obligations to be reached by the participating entities. The European Union emissions trading scheme is the largest in operation.
Source: UNFCCC
Net-zero
Net-zero commitments must be backed by credible action
What is net zero?
Put simply, net zero means cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed from the atmosphere, by oceans and forests for instance.
Why is net zero important?
The science shows clearly that in order to avert the worst impacts of climate change and preserve a livable planet, global temperature increase needs to be limited to 1.5°C above pre-industrial levels. Currently, the Earth is already about 1.1°C warmer than it was in the late 1800s, and emissions continue to rise. To keep global warming to no more than 1.5°C – as called for in the Paris Agreement – emissions need to be reduced by 45% by 2030 and reach net zero by 2050.
How can net zero be achieved?
Transitioning to a net-zero world is one of the greatest challenges humankind has faced. It calls for nothing less than a complete transformation of how we produce, consume, and move about. The energy sector is the source of around three-quarters of greenhouse gas emissions today and holds the key to averting the worst effects of climate change. Replacing polluting coal, gas and oil-fired power with energy from renewable sources, such as wind or solar, would dramatically reduce carbon emissions.
Is there a global effort to reach net zero?
Yes, a growing coalition of countries, cities, businesses and other institutions are pledging to get to net-zero emissions. More than 70 countries, including the biggest polluters – China, the United States, and the European Union – have set a net-zero target, covering about 76% of global emissions. More than 3,000 businesses and financial institutions are working with the Science-Based Targets Initiative to reduce their emissions in line with climate science. And more than 1000 cities, over 1000 educational institutions, and over 400 financial institutions have joined the Race to Zero, pledging to take rigorous, immediate action to halve global emissions by 2030.
How do we ensure commitments are turned into action?
The growth in net-zero pledges has been accompanied by a proliferation of criteria with varying levels of robustness. To develop stronger and clearer standards for net-zero emissions pledges by non-State entities such as businesses, investors, cities and regions, and speed up their implementation, UN Secretary-General António Guterres in March 2022 established a High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities. The Expert Group presented its recommendations at COP27 on 8 November 2022.
Are we on track to reach net zero by 2050?
No, commitments made by governments to date fall far short of what is required. Current national climate plans – for 193 Parties to the Paris Agreement taken together – would lead to a sizable increase of almost 11% in global greenhouse gas emissions by 2030, compared to 2010 levels. Getting to net zero requires all governments – first and foremost the biggest emitters – to significantly strengthen their Nationally Determined Contributions (NDCs) and take bold, immediate steps towards reducing emissions now. The Glasgow Climate Pact called on all countries to revisit and strengthen the 2030 targets in their NDCs by the end of 2022, but only 24 new or updated climate plans were submitted by September 2022.
Source: United Nations
Credit: CNA
Credit: Southpole
