Principio de no Regresividad o Irreversibilidad

4.1.1 Introduction

Chapter 3 generated costs for twenty emission reduction projects in eleven countries. These costs were higher than many studies have predicted and they, at least initially, suggest a different ranking or cost 'hierarchy' o f emission reduction methods than is commonly held to exist. Many studies argue that emission reduction by demand side energy efficiency and fuel switching is inexpensive, that carbon sequestration is e}q>ensive and that there are many negative cost emission reduction opportunities (see section 4.3). Chapter 3 suggested a carbon hierarchy in which supply side energy efficiency projects are inexpensive, carbon sequestration is o f moderate ejqjense and emission reduction by fuel switching is expensive.

Two questions need to be posed, however, before we draw inferences fi*om chapter 3’s results about real costs. Firstly, how representative is chapter 3’s sanq)le o f the larger population o f emission reduction projects? If the sample is unrepresentative, we can say little about prevailing emission reduction costs. Secondly, if chapter 3 is a representative sample, are chapter 3’s results really at odds with those in other studies; do chapter 3 and these other studies cost similar phenomena?

Having provided caveats to the evidence presented in chapter 3, this chapter then addresses the carbon hierarchy question. Section 4.2 presents evidence to support the carbon hierarchy advanced in chapter 3. Some o f this evidence involves emission reduction costs from five projects in Venezuela, gathered \^Mst the author undertook a field trip there. Supporting evidence is also found among the few other studies examining ‘real’ carbon emission reduction project costs. Section 4.3 by contrast presents some o f the evidence for the traditional view o f carbon emission reduction costs. Many o f these studies’ results are criticised.

Having scrutinised cost by location and by emission reduction method, we argue that cost alone does not determine where joint implementation projects will take place. Energy efficiency and carbon sequestration projects will fere badly against the criteria o f ‘provability’ because they suffer from higher monitoring and accrediting costs (section 4.5). Foreign policy will also shape what type o f projects are undertaken where (section 4.6).

The primary methods for reducing carbon dioxide emissions discussed here are carbon sequestration, fuel switching and energy efficiency. The former two methods reduce emissions by reducing an economy’s carbon intensity, the latter by reducing a country’s energy intensity. Before discussing chapter 3’s results, we take a brief detour to outline the ways to reduce carbon dioxide emissions.

The following identity reveals fectors behind any country’s level o f carbon emissions (known as the Kaya identity from Kaya 1989; see also Proops et al 1993, pp. 48-50 and Jepma et al 1996 p. 236):

i

C C /E. E/GNP . GNP/P . P (1)

where C is carbon emitted, E is energy consumed, GNP is gross national product and P is population. C/E is the amount o f carbon emitted per unit o f energy consumed, or carbon intensity. E/GNP is the amount o f primary energy used per unit o f GNP produced, or energy intensity. C/E.E/GNP gives the amount o f carbon emitted per unit o f GNP produced. GNP/P is GNP per capita.

By taking time derivatives o f the above identity, the rate o f growth o f gross emissions at time t, gt can be written as:

where Ct is the percentage change in carbon intensity, ^ the increase in energy efiBciency, y* the change in per capita income and pt the rate o f population growth (Fankhauser, 1993, p.l20).

Our real interest is net CO2 emissions. Net emissions equal gross emissions minus

carbon reabsorbed by carbon sequestration. The rate o f growth o f net emissions at time t, nt can thus be written

nt = Ct + ^ + yt + p t - S t (3)

where St is the increase in net sequestered carbon.

The identity reveals five ways to reduce CO2 emissions. One could reduce GNP per c ^ ita

or the population. These two methods are not pursued: instead the aim is to reduce CO2

emission without reducing end use services and without altering the projected population size. This leaves three methods: reducing carbon intensity, reducing energy intensity and increasing carbon sequestration

Carbon intensity is reduced by switching fi’om a high carbon fuel to one giving off fewer or no carbon emissions (Le. by fuel switching) or by introducing end o f pipe technology: the aim is to see less carbon released per unit o f energy used. Energy intensity is reduced by producing output with less energy (Le. by increasing energy efficiency). A useful further distinction can be drawn between demand side energy efficiency and supply side energy efficiency. Demand side energy efficiency involves inq)rovmg energy efficiency amongst energy consumers, >^iiether households or industrial power users. Supply side energy efficiency involves improving energy efficiency among a smaller number o f power producers, as well as oil, gas and electricity distributors. O f course to achieve emission reduction via fuel switching, fuel switching must not reduce energy efficiency and visa versa.

Reducing carbon and energy intensity in^rovements may not achieve absolute emission reductions because GNP per capita and population may still rise. However,

carbon and energy intensity in^rovements would still achieve emission reduction against the baseline o f what emissions would be without intervention.

Having disaggregated the 6ctors causing carbon emissions, it is important to recognise interrelationships in an economy that mean one cannot singly act on one 6ctor without that affecting other aspects o f the economy. On an econony wide scale, GNP and population tend to be inversely related, so that a control scenario which restrained per capita income could increase the rate of population growth (Anderson 1994b). Energy efiBciency gains might raise the GNP growth rate, having the perverse effect o f increasing emissions (Saunders, 1992).

4.1.2 How Representative is C hapter 3’s Sample?

The relationshÿ between sanple and population in c h ^ e r 3 is a particularly interesting one because at present there is only a very small population o f projects solely focused on achieving additional emission reductioa There are particularly fow fuel switching projects focused solely on achieving emission reduction; projects do achieve emission reduction but many do this whilst focusing on achieving other goals.

The amount o f money committed to a project and whether or not a project has taken place are two foctors that tell use a good deal about the motivation o f projects. Projects that generate carbon emission reduction permits but no other returns (in sin^listic terms - forestry projects) will currently be having difficulties raising finances because credits cannot even be generated by projects in the AU era. Those projects that are already in operation are focused on making a profit fi*om selling energy. They are not ‘carbon focused’ in that they are not focused on reducing carbon emissions.^ This latter group contains the fuel switching projects.

' The relationship between the additionality and carbm focus of a project is interesting. If a project is not carbon focused, but is focused on making a profit, the project will probably perform well in terms of additionality. If the project is making money by other means, it does not. need to exaggerate the amount of carbm emissim reductim that it achieves. By cmtrast, those projects that really are carbm focused may try to exaggerate the carbm emissim reductim that they achieve, in order to attract funding and in mder to secure as many carbm credits as possible.

We can thus divide the projects analysed in chapter 3 between those that are carbon focused and those that are not. The carbon sequestration and demand side energy efficiency projects in chapter 3 are carbon focused. The fuel switching and rural development projects are not carbon focused; they aim primarily either to make money or to aid rural development.

Related to the question o f how representative our twenty project sançle is o f the larger population o f emission reduction projects, is the question o f how representative our sangle is o f the other sixteen AIJ projects included in table 3.2. The first and second round USIJI projects may have been more strict in only claiming additional emission reduction than the third round projects. If this is the case, then the (unadjusted) cost o f emission reduction in rounds one and two USIJI projects will be higher than for round three projects. Round 3 projects might involve exaggerated emission reduction claims if the USIJI secretariat had had to look through projects previously rejected in order to find suitable round three projects. Working in the other direction with regards quality and cost, however, might be the feet that USIJI staff are now better at weeding out exaggerated emission reduction claims.

Forestry and demand side energy efficiency projects studied in chapter 3 are representative o f projects that exist at present and that would operate in an active carbon market. The fuel switching projects are representative o f the non carbon focused projects that exist now, but less representative o f more carbon focused fuel switching projects that would prevail in an active carbon market. The price o f emission reduction in fiiel switching projects would fell if they focused more on carbon emission reduction in the future. The price o f carbon emission reduction in forestry and demand side energy efficiency projects may not fell in the same way.