High carbon stimulus not G20’s way to a sustainable financial future - WWF

Many of the economic stimulus packages up for discussion at the G20 summit starting today risk locking the world into a continuing high carbon economy, a new analysis released by WWF and E3G reveals today (April 2).

“The content of the stimulus packages we’ve analysed runs counter to the G20 aims of facilitating – in its own words - a sustainable financial recovery and making progress on long-term issues such as climate change and international development,” said Kim Carstensen, Director of WWF’s Global Climate Initiative.

The study, conducted by Ecofys and Germanwatch, provides the most detailed and comprehensive analysis to date of the proposed ’stimulus’ packages of five key countries - France, Germany, Italy, the UK and the US - as well as examining the package agreed by the European Union as a whole.

“These packages amounting to billions of dollars provide a clear opportunity to shift to a more environmentally-sustainable economy when planning a recovery from the world’s global recession,” said Carstensen.

“Unfortunately, close examination of the proposed packages reveals inadequate incentives for greener technologies or any pronounced move away from high carbon investment.”

“It is abundantly clear that the world must act now in order to avoid the worst impacts of climate change, and that unless we invest in a sustainable, low-carbon economy now, we will certainly pay the price later – a price far greater than that of the current economic crisis. The packages currently on the table fail to reflect this reality.”

The report examined the environmentally-beneficial elements of each package in the context of the stimulus as a whole, offsetting low-carbon developments against any potentially carbon-intensive investments. It also considered whether the financing proposed is a direct investment – for example low interest loans to improve energy efficiency – or an indirect one such as tax incentives.

When analysed in this way, the data collected revealed that in the worst cases, the amount of carbon-intensive stimulus actually exceeded the amount devoted to climate-friendly measures. Preparatory work for the study also revealed that of all fifteen countries that have announced their plans for economic stimulus, only five (plus the EU as a whole) have the necessary data available to carry out a detailed analysis of their proposed expenditure on climate-friendly measures.

“The fact that we are unable to comprehensively analyse the results of two thirds of the countries which have announced packages is a real concern,” says Nick Mabey, CEO of E3G.

“Even the data for the six packages analysed in the report was relatively limited and it was often difficult to pinpoint which sector the money was actually intended for. This lack of transparency allows far too much scope for greenwashing, and equally, for the good work done by investment in clean technology to be completely undermined by parallel investment in carbon intensive sectors such as fossil fuels and new roads.”

WWF and E3G are calling on all countries putting forward economic recovery packages to provide comprehensive details of the environmental benefits and impacts of the proposed investments and to ensure that these investments help rather than hinder the global transition to a low carbon future.

Key findings:

• Of the $1.1 trillion worth of stimulus packages analysed the effectiveness adjusted climate friendly expenditure amounts to just $73 billion – a tiny share (6.6%) of the total stimulus.


• The cost of reducing global emissions to a level that will limit global temperature rise to 2°C is estimated to be between 1-3% of global GDP. Our analysis shows that Germany and USA have given the highest priority to green measures, at around 0.5% of national GDP. Even these totals are well below the required level of investment to avoid catastrophic climate change..


• Greater clarity and transparency is needed about the extent of climate friendly measures included in the stimulus packages of all countries in order to avoid potential greenwashing and to allow a real understanding of proposals.


• The G8 must shoulder its historic responsibilities and commit far greater amounts of their stimulus packages to climate friendly measures, so as not to burden the developing world with a massive climate debt in addition to a financial one.


• Most countries focus their activity on energy efficiency in buildings and cars, ignoring key opportunities offered by renewables or restructuring of electricity grids.


• In Italy, where climate-friendly stimulus is only relevant for the transport sector, investment for new roads exceeds investment in public transport and subsidies for efficient vehicles by roughly 30%.


• The UK stimulus has entirely neglected the potential for investment in renewables and is given an overall negative score based on a $742 million investment in highways.

(E3G is an independent, non-profit European organisation operating in the public interest to accelerate the global transition to sustainable development. A new E3G report, “Delivering a Sustainable Low Carbon Economy”, is available at www.e3g.org)

Amazon Could Prosper Thanks To Emission Payments, Be Lost Without: WWF

Global payments for ecological services rendered by the Amazon such as the carbon retaining in its forests could go a long way to preserving them, a new study has found.

Keeping the Amazon forests standing: a matter of values, a study carried by the Copernicus Institute of the University of Utrecht on behalf of WWF, valued the avoided emissions from deforestation or degradation over large areas of the Amazon at between 55 and 78 Euro per hectare per year.

These include erosion protection (up to 185 Euro per hectare per year), pollination services by rainforest insects (38 Euro per hectare per year in Ecuadorian coffee plantations), forest products such as honey, fruits and mushrooms (40-80 Euro) and ecotourism (2.5 -5.5 Euro).

This compares to the returns from the production of commodities as beef and soya, the main Amazonian products imported by Europe. Soya generates 230 to 470 Euro per hectare annually and cattle breeding adds up 40 to 115 Euro per hectare per year.

While the major areas of Brazilian soya production are outside the Amazon, the economic interest for this commodity is adding to pressure in the region.

The WWF report shows that the revenue currently received from economic activities in which the natural environment remains intact is not high enough to offset the non-sustainable activities, but finding mechanisms to secure global payments for the forest's ecological services would be a major impetus to both preserving the forest and paying for and providing for proper management.

The key emerging likely mechanism as the world tackles climate change is the s so-called REDD mechanism (Reduced Emissions from Deforestation and forest Degradation) where industrialised countries would pay for forest preservation and the combating of CO2 emissions in tropical countries.

The plans for this mechanism allow for large money flows to become available for sustainable forest management, which will also benefit local communities such as the native population of the Amazon region.

Johan van de Gronden, General Manager of WWF-Netherlands, comments: “REDD is not the only mechanism for the realisation of sustainable forest management, but certainly the one that is the most promising.’’

WWF Brazil emphasised the importance of tackling issues at the receiving end of any REDD mechanism, such as the lack of clarity concerning land ownership, the illegal occupation of land and the illegal land market.

“National and international companies should also play a role of leadership, selecting their suppliers and cleaning and decarbonising their productive chains thus participating actively of the sustainable development of the Amazon”, said Denise Hamú, CEO of WWF-Brazil.

As the fourth-largest trade partner of Brazil, the Netherlands is a major contributor to the destruction of the rainforests. For example, the country is the largest importer of soya in the world after China.

“Humans are very dependent on the services provided by the Amazon region that are disappearing rapidly but for which we are not paying as yet: rain for agriculture, clean drinking water, pure air and the combating of global warming,” said Van de Gronden.

“Especially because of its large contribution to the Brazilian economy, the Netherlands can play a leading role in stimulating a sustainable economic development of the Amazon region by choosing to import sustainable produced goods such as FSC-certified timber only.’’

European Commission Pursues Action Against Member States Over Industrial Permits

The European Commission had to take infringement action against 10 Member States for failing to issue new or updated permits for over 4,000 industrial installations already in operation across Europe. Denmark and Ireland have been sent first warning letters while eight others warned last May will now receive final written warnings. The permits should have been issued by 30 October 2007.

European Environment Commissioner Stavros Dimas said: "It is unacceptable that industrial installations are operating without legal permits that ensure they minimise polluting emissions. These permitting procedures have been agreed by all Member States. To protect the health of our citizens and the environment they must be respected."

The infringements concern the EU directive on Integrated Pollution Prevention and Control (IPPC), whose aim is to prevent and control industrial emissions to air, water, and soil.

The directive required Member States by 30 October 2007 to issue new permits or review and where necessary update existing permits for all industrial installations that were in operation before 30 October 1999. For Bulgaria and Slovenia, new or updated permits had to be issued for industrial installations in operation by the date of their accession to the EU.

Data provided by Member States themselves show that 10 still have a high number of installations for which new or updated permits have not been issued. These total over 4,000 out of about 52,000 targeted industrial installations throughout the EU.

Eight of these Member States had already been sent a first warning. They will now receive a final written warning, the last step before being taken to the European Court of Justice. The Member States concerned are Belgium, Bulgaria, Greece, Italy, the Netherlands, Portugal, Slovenia, and Spain.

Denmark and Ireland will receive first written warnings for the same reason.

Deutsche Bank’s Call for a Global Price for Carbon

Kevin Parker, Global Head of Deutsche Bank’s Asset Management division (DeAM) and a member of the Bank’s Group Executive Committee, is speaking in a plenary session at the World Future Energy Summit in Abu Dhabi. He will speak about the need for comprehensive global government regulations needed in order to attract the massive amount of capital investment required to switch from a carbon-based economy to a more sustainable model based on renewable energy.

Parker will argue that the science of climate change is irrefutable. “Evidence from Antarctic ice-cores has clearly shown that the concentration of carbon in the Earth’s atmosphere has reached an 800,000 year high, with most of that increase having taken place in the last two or three hundred years.”

“We are close to a tipping point where average global temperatures will rise more than 2 degrees Celsius, potentially leading to catastrophic, and certainly very expensive, macro-climatic shifts. The global community must take swift action.”

Comprehensive and global government regulations are the only way to create the investment conditions needed for the transition to a more sustainable energy model over the next few decades.

“A decade and a half after the Kyoto Agreement, regulation to encourage private investment in climate change industries is fragmented and inadequate. There is little international cooperation, the largest carbon-emitting countries such as the US, China, Russia and India, have done little to introduce regulation, and the US has not even signed up to the Kyoto protocol. This chaos must not happen again with the new international agreement being negotiated in Copenhagen in December 2009.”

The Montreal Protocol limiting ozone depleting gasses has proved that international agreements on regulations are possible. A growing hole in the ozone layer, identified as dangerous in the mid-1980s, led to an international treaty in 1987 limiting CFC emission. There is a considerable decrease in the concentration of CFCs in the atmosphere since then.

“Regulation limiting carbon must not only happen fast; it must also be comprehensive and global. Above all, it is critical to establish a global price for carbon, to enable the cost of pollution to be priced into the burning of fossil fuels. Only by pricing in those externalities can we establish a realistic price comparison between fossil fuels and renewable energy. Whether the carbon price is created by a cap-and-trade system or a tax system, the important thing is that the carbon price becomes as well understood and closely watched by people as, say, the oil price,” adds Parker.

Power Emissions Limits to Save Most Carbon at Least Cost

The least cost way to reduce power related carbon emissions in Europe would be to supplement the EU’s Emissions Trading System (ETS) with the introduction of Emissions Performance Standards for energy, according to a new study.

Such a system, successfully used in some US States where it has helped put renewable energy on a more equal footing with traditional energy sources, could cut the EU power sector’s greenhouse gas emissions in 2020 by more than two thirds – more than 800 million tonnes per year.

'Scenarios on the Introduction of CO2 Emission Performance Standards for the EU Power Sector', carried out by the consultancy Ecofys for environmental groups WWF, Bellona Europa, ClientEarth, E3G and Green Alliance, says such an outcome could be achieved if binding emissions limits are introduced for all large power stations in the EU on a staged basis between 2010 to 2020.

The study also shows that an early phase-in of Emissions Performance Standards (EPS) would be more cost-effective and have greater impacts than a delayed introduction. It would overcome some weaknesses of the ETS, which has been criticised for providing some of Europe’s heaviest polluters with windfall profits as a result of governments giving away rather than auctioning carbon emission permits.

“The current EU Emissions Trading Scheme unfortunately does not prevent high polluting coal-fired power stations from being built,” said Stephan Singer, Director of WWF’s Global Energy Programme.

“We need new emissions limits to ensure Europe invests only in renewable energy, energy efficiency, and CO2 capture and storage facilities for coal-fired power stations. Otherwise, Europe will fail to deliver its contribution to keeping global warming below two degrees Celsius.”

A CO2 Emissions Performance Standard is a limit on emissions per unit of energy output. EPS in the power sector has been in place in California, US since 2007 and has subsequently been introduced by Oregon, Washington State and Montana.

All of these states are part of the Western Climate Initiative, formed with the aim of cooperating on the introduction and operation of cap and trade-systems, and the report stated there was a clear indication that the fruitful co-existence of EPS and ETS (Emissions Trading System) schemes was considered feasible.

In general it was found that EPS schemes were implemented successfully, especially if the right framework conditions were created, by helping operators to bear the costs of EPS compliance through incentivising legislation (taxation related). In the EU this could also be supported by a more stringent EU-ETS with higher certificate prices.

With such a limit, new power plants that cannot meet the standard would not be built and existing power plants that do not plan to upgrade pollution controls or implement equivalent measures would close down. Utilities will have clear incentives to invest in energy efficiency measures, equip their new plants or retrofit the existing ones with CO2 capture and storage, or switch to renewable sources of energy.

The study clearly shows that an Emission Performance Standard needs to be phased in through stages for both new and existing plants. Imposing a very demanding limit of 150g CO2 / kWh just on new plants from 2010 would deliver reductions of 10 per cent of power sector greenhouse gas emissions by 2020, while a staged introduction of a less stringent 350g standard for new plants from 2010, extended to existing plants by 2015, could save up to 46 per cent of power sector emissions by 2020.

In contrast to continuing to allow construction of new conventional fossil fuel power stations under the guise of 'capture readiness', an Emissions Performance Standard is an effective means of providing the real regulatory certainty needed to shift investment decisions in the power sector, and avoid dangerous lock-in to high carbon power infrastructure.

It will also be key to move Europe’s commitments to reduce greenhouse gas emissions from 20 per cent to 30 per cent as soon as a new international agreement is in place.

WWF, Bellona Europa, ClientEarth, E3G and Green Alliance say that, despite recent agreement on new climate and energy legislation, more action to limit greenhouse gas emissions is essential in order to re-establish Europe's credibility and build greater international confidence ahead of the crucial Copenhagen climate summit in December.

MASDAR and ADNOC Sign Cooperation Agreement to Reduce Carbon Emission

Abu Dhabi, Jan 18th, 2009

Masdar and the Abu Dhabi National Oil Company (ADNOC) signed today a framework agreement to develop a series of ground-breaking projects to reduce carbon emissions from Abu Dhabi's oil and gas facilities and monetise the emission reduction under the Kyoto Protocol's Clean Development Mechanism (CDM).

Masdar is driven by the Abu Dhabi Future Energy Company (ADFEC), a wholly owned company of the government of Abu Dhabi through the Mubadala Development Company.

The partnership will represent a major carbon reduction and monetisation initiative for the oil and gas industry in the gulf region.

The CDM, a project-based regulatory mechanism led by the United Nations, provides financial incentives to reduce greenhouse gas emissions in countries that do not have binding reduction commitments under the Kyoto Protocol, by turning emission reductions into tradable assets or 'Certified Emission Reductions' (CERs) or carbon credits.

The agreement allows Masdar to identify and develop a portfolio of CDM projects at ADNOC group companies' facilities in Abu Dhabi on an on-going basis. Five CDM projects are currently under development by ADNOC, with the capacity to reduce four million tons of carbon dioxide emissions, are already in the pipeline for registration at the United Nations by Masdar.

"ADNOC's partnership with Masdar raises the bar for oil companies looking to reduce their carbon footprint. We are proud to work with Masdar such that the CDM can be effectively used to support our efforts to reduce environmental impact and ensure a sustainable future for the industry" said Yousef Omair Bin Yousef, ADNOC's Chief Executive Officer.


As part of the agreement, MASDAR will monitor the life cycle of the CDM projects in ADNOC's portfolio and assure their registration at the United Nations, the monitoring of emissions and the delivery of carbon credits.

"Our agreement with ADNOC is a step forward towards fulfilling the Abu Dhabi leadership's directives to reduce carbon emissions," said Dr Sultan Al Jaber, Masdar's Chief Executive Officer.


"Introducing the CDM at ADNOC is an important step into building a successful and sustainable low carbon economy in Abu Dhabi and ADNOC facilities present a tremendous opportunity for Masdar to deliver on one of its missions-, to become a carbon emission reduction solution provider at home," added Al Jaber.

There are a number of CDM projects in the pipeline waiting for UN registration.

In Das Island, a natural gas flaring will be reduced by installing a new pipeline to recover the excess fuel and flash gases which will be reused as fuel. The ADGAS project will utilise the flared gas as fuel. Consequently, it will reduce carbon dioxide emission as well as the need for fuel.

The Takreer project will conserve the previously flared gas streams at the Ruwais refinery at Takreer. The collected gases will be compressed and sent to the fuel gas system in order to partially replace the natural gas imported from a nearby gas field.

The FERTIL project, the first of its kind in the Arab world, will recover the carbon dioxide emissions from flue gases generated due to fuel burning, to convert ammonia into urea in FERTIL's Ammonia/Urea plant in Ruwais.

The GASCO project will install energy efficient seals on the ground flare systems of the gas processing complexes at Bab, Buhasa and Asab to reduce fuel gas consumption needed to purge the flare header and avoid air entrance.

The GASCO project will recover the previously flared waste gases generated from the gas processing complex at Habshan. The recovered gases will partially replace the imported fuel gas, thus CO2 emission will decrease and additional fuel will be available to the other consumers.

The Emirates News Agency, WAM

EU Carbon Windfall

Polluting electricity generators in Europe are set to reap another round of extraordinary windfall profits from the carbon trading scheme meant to curb their carbon emissions

A recent study, commissioned by WWF from world-leading carbon market analysts Point Carbon, estimates that the windfall to electricity generators in just the five states of UK, Germany, Spain, Italy and Poland over the current five year phase of the EU Emissions Trading System (ETS) could be between 23 and 71 billion Euros (USD36 -111 billion ).

Windfall profits are generated when generators benefit from electricity prices reflecting the cost of carbon emissions while receiving the bulk of their carbon emission allowances (EU Allowances) for free under National Allocation Plans. “Windfall profits are highest in countries that have a high level of pass-through of CO2 costs into wholesale power prices, countries with emissions intensive (coal) plant setting the price the majority of the time, and countries that allocate the highest percentage of free allowances to the power sector,” Point Carbon said in the report.

Coal fired power stations account for 20 percent of the EU's total carbon dioxide emissions, and its grip on the European power sector looks set to increase with plans to construct 40 major new coal fired power stations in Europe in the next five years. WWF has always supported the EU ETS as a crucial mechanism to tackle emissions within the EU, but notes that careful implementation is required for such schemes to achieve their potential.

“We have long been critical of the ETS design faults that provide cash for coal in the name of emissions reductions”, said Sanjeev Kumar, WWF Emissions Trading Scheme Coordinator at WWF. “But Europe’s experience should be a stark warning to the rest of the world on the danger of free allocations of pollution permits.”

Point Carbon identified the free handouts of EUAs as the central mechanism of the windfall profits, which on various carbon price and cost pass-through estimates are expected to be worth EUR14-34 billion (USD22-53 billion) to Germany’s generators (70 per cent dependant on coal power), and EUR6-15 billion (USD9.5-23.5 billion) to UK generators where coal and gas thermal capacity is more evenly balanced. The findings of the study are highly relevant to nations like the US, Japan and Australia, where the desirability and design of emissions trading schemes are being considered as key elements of national responses to the challenge of climate change.

WWF is concerned that power generators in these areas will lobby for free allocations under “grandfathering” schemes where allowances are provided for free to power stations on the basis of historic or anticipated emissions or “benchmarking” where free allowances are allocated on the basis of industry or emission reduction plans. Point Carbon notes that windfall profits for carbon intensive power generators fall towards zero where all permits are auctioned, the allocation method preferred by economists and environmentalists.

European nations were entitled to auction up to 10 per cent of allowances in the second phase of the ETS (2008-2012), but in practice Member States overall have opted to auction only four per cent. “The free handouts of pollution permits to the power sector must not be allowed to continue beyond 2012,” said Kumar, noting that WWF commends current EU proposals that the power sector buy all required permits from 2013 on.

However, there are increasing concerns that the requirement will be reversed or weakened during political negotiations on the future design of the scheme. “WWF would like to see revenues from the auctioning of the pollution permits re-invested in climate protection measures in Europe and developing countries, in line with the financial commitments made at the Bali climate change conference at the end of last year” Kumar said.

“We feel sure that European power consumers would prefer this over funding windfall profits for the most polluting of power generators.”

EU Carbon Windfall

Polluting electricity generators in Europe are set to reap another round of extraordinary windfall profits from the carbon trading scheme meant to curb their carbon emissions

A recent study, commissioned by WWF from world-leading carbon market analysts Point Carbon, estimates that the windfall to electricity generators in just the five states of UK, Germany, Spain, Italy and Poland over the current five year phase of the EU Emissions Trading System (ETS) could be between 23 and 71 billion Euros (USD36 -111 billion ).

Windfall profits are generated when generators benefit from electricity prices reflecting the cost of carbon emissions while receiving the bulk of their carbon emission allowances (EU Allowances) for free under National Allocation Plans. “Windfall profits are highest in countries that have a high level of pass-through of CO2 costs into wholesale power prices, countries with emissions intensive (coal) plant setting the price the majority of the time, and countries that allocate the highest percentage of free allowances to the power sector,” Point Carbon said in the report.

Coal fired power stations account for 20 percent of the EU's total carbon dioxide emissions, and its grip on the European power sector looks set to increase with plans to construct 40 major new coal fired power stations in Europe in the next five years. WWF has always supported the EU ETS as a crucial mechanism to tackle emissions within the EU, but notes that careful implementation is required for such schemes to achieve their potential.

“We have long been critical of the ETS design faults that provide cash for coal in the name of emissions reductions”, said Sanjeev Kumar, WWF Emissions Trading Scheme Coordinator at WWF. “But Europe’s experience should be a stark warning to the rest of the world on the danger of free allocations of pollution permits.”

Point Carbon identified the free handouts of EUAs as the central mechanism of the windfall profits, which on various carbon price and cost pass-through estimates are expected to be worth EUR14-34 billion (USD22-53 billion) to Germany’s generators (70 per cent dependant on coal power), and EUR6-15 billion (USD9.5-23.5 billion) to UK generators where coal and gas thermal capacity is more evenly balanced. The findings of the study are highly relevant to nations like the US, Japan and Australia, where the desirability and design of emissions trading schemes are being considered as key elements of national responses to the challenge of climate change.

WWF is concerned that power generators in these areas will lobby for free allocations under “grandfathering” schemes where allowances are provided for free to power stations on the basis of historic or anticipated emissions or “benchmarking” where free allowances are allocated on the basis of industry or emission reduction plans. Point Carbon notes that windfall profits for carbon intensive power generators fall towards zero where all permits are auctioned, the allocation method preferred by economists and environmentalists.

European nations were entitled to auction up to 10 per cent of allowances in the second phase of the ETS (2008-2012), but in practice Member States overall have opted to auction only four per cent. “The free handouts of pollution permits to the power sector must not be allowed to continue beyond 2012,” said Kumar, noting that WWF commends current EU proposals that the power sector buy all required permits from 2013 on.

However, there are increasing concerns that the requirement will be reversed or weakened during political negotiations on the future design of the scheme. “WWF would like to see revenues from the auctioning of the pollution permits re-invested in climate protection measures in Europe and developing countries, in line with the financial commitments made at the Bali climate change conference at the end of last year” Kumar said.

“We feel sure that European power consumers would prefer this over funding windfall profits for the most polluting of power generators.”