Carbon Pricing Data
A Global Carbon Credits Market can provide a standard carbon pricing mechanism. This would enable the corporate sector to develop a low carbon economy, independent of domestic and regional carbon market bias. The market can be developed on distributed cloud technology using a common information model. The objective is to increase the accuracy of carbon metrics, and provide an international standard for monitoring emissions reduction.
Initially, data about power transmission by generator type can be collected from Transmission Network Operators, both in real-time, and from forecast demand schedules. Data can be collected from scheduled transmissions, as well as from smart grid network devices to supply near real-time metrics of supply of renewable energy generation replacing what was formerly supplied by fossil fuel energy generation.
The metric tons of CO2e reduction can be calculated using standard IPCC algorithms, and the emissions reduction translated into carbon credits can be offered to buyers on the open market.
A pilot for the carbon credits market can be set up in parallel with a replacement renewable energy generation capability engaging a regional Transmission Network Service Provider to replace fossil fuel electricity generation supply with a local renewable energy plant.
Liaison with the IPCC can provide the basic algorithms to apply to the data gathered from the TNSP. Based on the energy metrics, business rules can be applied to automate the emissions calculation algorithms.
A national electricity regulator can be engaged to monitor and manage the regulation of the electricity metrics from the electricity grid.
Specialists with knowledge of IPCC algorithms and emissions factors can be engaged to determine the rules for carbon pricing for the Carbon Credits Market. Automated computing systems can be established to apply the business rules for carbon credits prior to offering them online to buyers.
As well as earning carbon credits for replacing fossil fuels with renewable energy, carbon credits can be bought by companies obliged to demonstrate emissions reduction at the going carbon price. This approach would attract customers with all types of emissions regulations, both taxes and emissions trading.
Data gathering mechanisms can provide a sufficient level of accuracy for market spot pricing, and the accuracy can only increase as electricity monitoring and demand forecasts improve.
This provides an enormous downstream opportunity to apply carbon emissions monitoring algorithms to demand and consumption data, providing carbon pricing discounts on the spot to wholesale and retail buyers of electricity. This approach is an organic way to encourage companies with an innovative approach to carbon emissions reduction.
In parallel, there is a market incentive to develop accurate monitoring mechanisms for other carbon emissions reducing activities that would be fostered by the presence of a Carbon Credits Market.
The establishment of a pilot program to set up the market mechanisms, and engage in a proof-of-concept with the electricity industry and the UNFCCC can be conducted over a year, including evaluation of the outcomes and promotion to investors, and market participants.
Market operations can then be fully deployed, with appropriate improvements based on the experiences of set up and deployment of the technology, and engaging with stakeholders.
The initial carbon trading stakeholders are the current electricity generators and transmission authorities. (They already have real-time metrics in place for demand management. The electricity market is a zero sum game, supply has to meet demand, and algorithms can be applied to these metrics).
Investment is required to to start the ball rolling, and private and institutional investors are to be approached to provide the initial finance.
The policy mechanism has to be determined, and policy specialists engaged to form the policy and lobby for support and adoption through the channels for public policy legislation.
In parallel, market expertise has to be engaged to establish a clearing mechanism for trades in carbon credits. The processes themselves can be set up from scratch using specialist knowledge of market operations and information technology.
Cloud based Information and Communications Technology (ICT) can supply a visual interface on a public website monitoring the replacement of fossil fuel electricity, and automatically calculating and displaying carbon credits from replacing fossil fuel energy with renewable energy. This provides some interesting opportunities for engagement with new parties interested in reducing emissions, as well as providing public interest information.
At the outset, electricity market regulatory bodies can be engaged to promote the market to the electricity industry, and this, allied with a reasonable initial price, can ensure the ongoing stability of the market.
Electricity authorities can accurately provide provable metrics of electricity generated from renewables to replace electricity generated from fossil fuels. This certainty and the accuracy of the data is the fillip required to stimulate investor interest.
The UNFCCC and the IPCC have already developed algorithms for calculation of CO2 emissions reduction per tonne, other verified emissions reduction activities can be registered for carbon credits, monitoring mechanisms developed so that all major sources of carbon credits can eventually be traded in a global carbon marketplace.
The challenge is to replace fossil fuel electricity with renewable energy. Political and economic barriers can be overcome by legislation. Electricity networks can roadmap decommissioning of fossil fuel generators. It simply requires political will.
CO2e Emissions Reduction
The United States is the second largest emitter on the planet, topped only by China. US statistics are readily available, and they are cited here as an indication of the potential for global emissions reduction:
In 2014 4,093 billion kilowatt hours of electricity was consumed in the United States. About 67% of the electricity generated was from fossil fuels (coal, natural gas, and petroleum).
Savings over 5 years assuming an average attrition rate of fossil fuel generators from electricity grid of 5% per annum would be of the order of 520 M tonnes of CO2e emissions saved. These figures can be extrapolated into a global context.
Of course the basic assumption is that there is a strong initial carbon price set by an international regulator, and that market players do not sabotage a reserve price.
A second factor in assuring emissions reduction is public opinion. Ongoing public campaigns put pressure on global governments to make fossil fuel electricity unpalatable politically.
Assuming participation by electricity stakeholders, an international carbon market is viable. The costs of renewable generators can be defrayed by a stable carbon price attractive to investment by electricity market stakeholders.
Other emissions reduction activities would augment the level of emissions reductions over the same period.
Electricity stakeholder expectations can be met by providing a financial incentive to develop baseload renewable energy, which in turn stimulates the investment in renewable energy and storage technology.
A Carbon Credits Market technology provides for the new carbon pricing regimes being mandated in every part of the globe.
Lower cost of electricity results from increasing demand for renewable energy generators which in turn reduces the costs and stimulates technology improvements.
The market can provide further economic stimulus in all technologies that are deemed to reduce the planet's carbon footprint.
Market redeemable carbon credits can provide competitive pricing regime for energy consumers, as well as a robust market for investors who want to finance low carbon technologies.
Deployment of technology standards and models can facilitate the establishment of a Carbon Credits Market internationally, and once established, CCM information technology can be licensed to global markets.
The cost of technology for delivery of carbon pricing from adoption of renewable energy into a market is estimated here and briefly summarized.
The final costs depend on the implementation detail, however indications that a carbon credits market is a long term growth prospect that countries may find very attractive from both an economic and a political perspective. To finance the initial technology, costs of around $30M are forecast for the five year period 2016 – 2021.
Of course these costs can be offset by income generated from market operations. The rate of return determines the fees and charges to be levied for the running of a Carbon Credits Market.
Costs for development and implementation, including the technology to develop the initial monitoring and reporting information systems, and the processes to establish the standard and the governance mechanism are estimated at around $8M in Year 0.
Ongoing operational annual costs and further development of new carbon emissions reduction standards for other emissions reduction activities are estimated to be around $6M per annum over the five year period.
A proof-of-concept pilot scheme to verify the technology and develop the governance processes can be developed in 2017, at a cost of around $5M. A full operational capability can be established by 2018.
Market operations to carbon credit sellers and buyers can commence at the same time.
Short term, a pilot project can be delivered within one year. By year five, a significant number of regional electricity grids can reasonably be expected to participate in a Carbon Credits Market, given that strong global support for an international carbon pricing regime is expected to emerge from the new UN Kyoto Protocol replacement agreement to be signed in Paris in December 2015.
By year three, the ratification of governance mechanisms to address the other major sources of CO2 emissions, transport and deforestation, can be standardized. Over subsequent years, activities from agriculture, ocean regeneration, and plastic replacement can be included as standard measured ways to reduce emissions.
In 20 years, 100% of energy has to be renewable, and technologies to stabilize the carbon cycle to manageable levels. to have any chance of averting critical loss and damage, large scale disasters and catastrophic climate change putting the world on the footing of survival management. Reduction in energy consumption would otherwise be by attrition as social breakdown of infrastructure is bound to result.
By 2100 we have to have contained temperature rises to around 2 degrees.
IPCC Fifth Assessment Report https://www.ipcc.ch/report/ar5
CO2e emissions sources USA 2013http://www.epa.gov/climatechange/ghgemissions/sources.html
Changes in the pattern on Earth’s temperature rises http://earthobservatory.nasa.gov/Features/GlobalWarming/page3.php
Carbon reservoir http://worldoceanreview.com/en/wor-1/ocean-chemistry/co2-reservoir
Earth’s carbon resources http://hyperphysics.phy-astr.gsu.edu/hbase/organic/carbonres.html
What if we burn all the fossil fuels? http://mahb.stanford.edu/library-item/what-if-we-burn-all-the-fossil-fuels/
Energy Model Exchange Technology for Energy and Carbon Market Efficiency https://www.academia.edu/3245784/Energy_Model_Exchange_Technology_for_Energy_and_Carbon_Market_Efficiency