Climate & Kyoto
At Green Gas we help our partners maximise their green credentials and financial returns by enabling them to cut their greenhouse gas emissions from coal mines and landfills. We create value for our partners through qualifying these projects for carbon credits.
Climate change naturally occurs. However, since the industrial revolution a significant contributor to global warming has been human activity. In the twentieth century, the average surface temperature of our planet increased by about 0.60C. By contrast, the average global surface temperature is projected to increase by between 1.4 and 5.8°C from 1990 to 2100 (Source: Intergovernmental Panel on Climate Change (IPCC).
Fossil fuel consumption, waste in landfills and coal production, to name a few examples, all add to greenhouse gas emissions. Higher concentrations of carbon dioxide, methane, nitrous oxide and other greenhouse gases trap more infrared radiation, leading to global warming.
Scientists have been estimating, with growing certainty, the impacts of greenhouse gas emissions on climate change. Their findings show that without actions to sharply reduce these emissions the risk of escalating future global warming is significant.
Nations around the world have reacted by agreeing to limit greenhouse gas emissions. The Kyoto Protocol (www.unfccc.int) is an international treaty that mandates signatory nations to reduce their emissions of carbon dioxide, methane and four other greenhouse gases. Signatory nations need to take actions in their own country to reduce emissions but they may also engage in emission trading to help meet their targets. Many governments and private organizations have set their own targets to reduce or offset their greenhouse gas emissions.
The Kyoto Protocol went into force in February 2005 and now covers more than 160 signatory nations. National and international programmes have been set up to reach the targets set under Kyoto, and all major countries now recognise the importance of taking action to reduce emissions and are working together to consider future international approaches. A future treaty is now being negotiated which it is thought may further increase obligations to reduce emissions through to 2020 and beyond.
It is the carbon credit market that provides the stimulus and resources to reduce methane emissions. Nations are now turning to market mechanisms as an effective way to cut emissions, through offering businesses choice and economic incentives.
Most industrialised nations have agreed to cap their emissions of greenhouse gases, under the Kyoto Protocol, and other regulatory regimes providing for companies to restrict their own emissions or offset them through carbon credits.
Coal mine and landfill gas projects, in particular, offer significant carbon credit generating opportunities. A typical 6MWel project may produce over 200,000 carbon credits each year. However, realising the credits requires skilful project analysis and the receipt of credit approvals. In addition, it is important to secure the best possible price for the credits. Prices range from less than EUR 5/credit to over EUR 20/credit, depending on the market, the character of the seller and delivery risks. At these prices many otherwise unprofitable methane-to-energy projects become commercially attractive.
Carbon credits are measured in equivalent tons of carbon dioxide. Several different credit types exist depending on the source and regulations under which the emission reduction is achieved.
Under the Kyoto Protocol, there are two mechanisms to help nations comply with their emission reduction commitments by sponsoring projects to reduce emissions. Countries and their companies may use the and to meet their emissions cap targets depending on the location of the projects.
- allows industrialised nations with a commitment to greenhouse gas reduction, such as Germany, the U.K or Japan to invest in emission reducing projects in developing countries, such as China, Ecuador, and India. CDM credits are called certified emission reductions (CERs)
- allows industrialised countries with national emission limits to reduce greenhouse gas emissions by investing in emission reduction projects in other identified industrialised nations. In return, the investor nation receives credits known as Emission Reduction Units (ERUs).
While CDM and JI are the most important credits for Green Gas and its partners, there are also several other types of credits under different regulatory regimes that may stimulate investment in methane energy projects, and there is a thriving market in "voluntary emission reductions" (VERs) through which companies and individuals can voluntarily offset emissions.