Showing posts with label CDM. Show all posts
Showing posts with label CDM. Show all posts
Tuesday, 21 July 2009
The End of Charity part 2
Nic Frances did what he said he would do: become an actor. He is now an actor that can have lots of rests in between jobs as his company Cool NRG has succeeded in gaining approval from the UN for its programmatic CDM project that starts in Mexico. You read can more about it here and here.
Friday, 3 July 2009
The End of Charity
Every now and then someone comes along and inspires you. On the Carbon MBA course, we're lucky to have master classes from people of all walks of life. We've had Carbon specialists talking about Kyoto to finance directors discussing their company. All have been excellent, but none as inspirational as Nic Frances. Frances is one of those people who have the ability to inspire all sorts of people in different ways. He has been a priest and then became a charity worker before losing faith in "doing good". He now calls himself a social entrepreneur, but has decided to sell his businesses and become an actor. Hardly bog-standard MBA stuff.
His book The End of Charity highlights his journey from Jesus to selling to carbon credits in Mexico. It's well worth a read and I would jettison any MBA text book that has the word(s)excellence or value-added or blue skies or whatever the latest business jargon is in fashion.
He had a failing business that he turned around by getting to grips with the Carbon market, and, indeed, made a very good carbon margin. In Victoria in Australia, he realised that he could gain carbon credits by giving away low energy light bulbs. The price of carbon was A$10 a tonne, each pack of four light bulbs saved one tonne of carbon per annum and cost A$5 to distribute. The carbon margin being A$5/tonne. His failing business was saved. He did the same in the UK. In September last year he distributed over 4 million light bulbs via the Sun newspaper. They gained carbon credits for the energy companies and he took a cut. According to external audits 85% of the bulbs are used. This means a huge reduction in emissions.
So what? Well, no charity could match that nor could any government; in fact no organisation of any kind has matched what he has done to reduce emissions. And, it gets better:
Frances hopes in the next few weeks to have approval from the UN for his Clean Development Mechanism (CDM) project in Mexico.
CDM projects, put simply, are carbon offsets. An energy company in the UK may miss its EU-ETS targets and can buy emissions reductions elsewhere - in this case Mexico. There are skeptics about offsets, but they are highly regulated and will reduce global emissions AND reduce poverty. Frances' company - Cool NRG -is giving away 30 million low energy light bulbs to low and middle income households across Mexico starting in the city of Puebla. It is estimated it will cut 8.1 million tonnes of CO2 over ten years. It will also save US$165 million in lower energy bills AND save the Mexican government US $585 million in electricity generation infrastructure costs and US $200 million in reduced household electricity subsidy payments each year. Cool NRG make an IRR of 15% if the price of carbon is around €15/tonne. A lot more money is made if projections of the price of carbon rising to €30-€50/tonne in the next 5-10 years are correct.
Some interesting facts emerge from this: the saving to the Mexican people is the equivalent of one weeks income and the money saved is five times the annual US aid budget to Mexico. This is money direct to the people without NGOs or governments saying what it can be spent on.
It's a work of genius from an entrepreneur who wants to make money. Can Oxfam do this - yes they can, but they don't. Can any NGO do this - yes they can, but they don't. What some people don't like is that it makes a carbon margin; what they fail to understand is that "doing good" doesn't work. It needs to be both.
His book The End of Charity highlights his journey from Jesus to selling to carbon credits in Mexico. It's well worth a read and I would jettison any MBA text book that has the word(s)excellence or value-added or blue skies or whatever the latest business jargon is in fashion.
He had a failing business that he turned around by getting to grips with the Carbon market, and, indeed, made a very good carbon margin. In Victoria in Australia, he realised that he could gain carbon credits by giving away low energy light bulbs. The price of carbon was A$10 a tonne, each pack of four light bulbs saved one tonne of carbon per annum and cost A$5 to distribute. The carbon margin being A$5/tonne. His failing business was saved. He did the same in the UK. In September last year he distributed over 4 million light bulbs via the Sun newspaper. They gained carbon credits for the energy companies and he took a cut. According to external audits 85% of the bulbs are used. This means a huge reduction in emissions.
So what? Well, no charity could match that nor could any government; in fact no organisation of any kind has matched what he has done to reduce emissions. And, it gets better:
Frances hopes in the next few weeks to have approval from the UN for his Clean Development Mechanism (CDM) project in Mexico.
CDM projects, put simply, are carbon offsets. An energy company in the UK may miss its EU-ETS targets and can buy emissions reductions elsewhere - in this case Mexico. There are skeptics about offsets, but they are highly regulated and will reduce global emissions AND reduce poverty. Frances' company - Cool NRG -is giving away 30 million low energy light bulbs to low and middle income households across Mexico starting in the city of Puebla. It is estimated it will cut 8.1 million tonnes of CO2 over ten years. It will also save US$165 million in lower energy bills AND save the Mexican government US $585 million in electricity generation infrastructure costs and US $200 million in reduced household electricity subsidy payments each year. Cool NRG make an IRR of 15% if the price of carbon is around €15/tonne. A lot more money is made if projections of the price of carbon rising to €30-€50/tonne in the next 5-10 years are correct.
Some interesting facts emerge from this: the saving to the Mexican people is the equivalent of one weeks income and the money saved is five times the annual US aid budget to Mexico. This is money direct to the people without NGOs or governments saying what it can be spent on.
It's a work of genius from an entrepreneur who wants to make money. Can Oxfam do this - yes they can, but they don't. Can any NGO do this - yes they can, but they don't. What some people don't like is that it makes a carbon margin; what they fail to understand is that "doing good" doesn't work. It needs to be both.
Friday, 26 June 2009
Waxman-Markey Bill
US law makers always have great sounding names for their bills and acts as they are normally named after the legislators themselves rather than some drab sounding government diktat.
One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.
So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.
Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.
One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.
So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.
Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies
Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.
Offsets will be allowed but capped and 50% must be in the US with farming and forestry to play a large part. The EU has the CDM and JI Kyoto Protocol initiatives which may change after Copenhagen in December.
The bill is a radical departure from the Bush years and is receiving fierce criticism from everyone: farmers, the oil business, greens and the coal lobby. It won't please everyone, but if it gets passed we have a real chance to make progress on climate change. Americans, the world needs you to make the right choice!
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