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Green Financing: Carbon Markets 2011 US-China Green Development Symposium

Green Financing: Carbon Markets 2011 US-China Green Development Symposium. Bruce Usher Executive-in-Residence Co-Director, Social Enterprise Program Columbia Business School, New York City June 10, 2011. Climate Change: Defining the Problem.

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Green Financing: Carbon Markets 2011 US-China Green Development Symposium

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  1. Green Financing: Carbon Markets2011 US-China Green Development Symposium Bruce Usher Executive-in-Residence Co-Director, Social Enterprise Program Columbia Business School, New York City June 10, 2011

  2. Climate Change: Defining the Problem A negative externality occurs when a decision has costs to individuals or groups other than those making the decision. In other words, the decision-maker does not bear all of the costs from his or her own action. This will result in an outcome that is not socially optimal.

  3. Carbon Markets: The Kyoto Protocol (2001)

  4. Carbon Markets: The EU Emissions Trading System (2005) EU (-8%) EU ETS UK (EUAs) Germanyh France Spain … … Utility A Utility B Utility C Utility D

  5. Carbon Markets: Linking the EU Emissions Trading System and the Kyoto Protocol (2005) EU (-8%) EU ETS UK (EUAs) Linking Directive Germanyh France Spain … … Utility A Utility B Utility C Utility D

  6. Carbon Markets: Success of the CDM Yes!

  7. Carbon Markets: Success of the EU ETS Growth in trading Volumes EU ETS emission permits–Jan 2005 to Oct 2007 Source: Point Carbon

  8. Lessons Learned from the CDM and EU ETS Carbon Markets?

  9. CDM Lesson #1: Markets change behavior

  10. CDM Lesson #2: Contract integrity is critical Credit Buyer eg European Utility “Focal Point” $ Renewable Energy Project eg Chinese Wind Developer Credits Project audit System Administrator eg CDM Executive Board Verification Report Verifier eg Swiss auditor

  11. CDM Lesson #3: Markets require stable, long-term policies Oh no… Yes!

  12. CDM Lesson #4: Markets need to be efficient

  13. EU ETS Lesson #1: Long-term policies change investment patterns

  14. EU ETS Lesson #2: Linking markets increases liquidity

  15. What is the Future of Carbon Markets?

  16. Future of Carbon Markets: EU ETS has long-term support

  17. Future of Carbon Markets: CDM has the Linking Directive

  18. Future of Carbon Markets: US has no support

  19. Future of Carbon Markets: Predictions • EU ETS will remain stable through 2020, with modestly increasing trading volume • Kyoto Protocol will not be extended past 2012, but • CDM market will remain in place past 2012, with stable to lower trading volumes • US carbon market will not develop until after 2014 at the earliest

  20. Green Financing: Carbon Markets2011 US-China Green Development Symposium Bruce Usher Executive-in-Residence Co-Director, Social Enterprise Program Columbia Business School, New York City June 10, 2011

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