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The rise in global temperatures is a concern that many are taking seriously. Governments, big companies, small businesses, and everyday people are looking for ways to reduce greenhouse gas emissions to lessen climate change risks. One method that’s gaining a lot of attention is using carbon credits. This idea helps provide financial rewards for those who cut down on emissions and support the growth of clean energy sources. This article is the 5th part of our new series based on our 2023 Climate Change and Carbon Markets Annual Report. The series so far includes:

In this post, we’re going to explore the journey of carbon credits from the start with the Kyoto Protocol to now with the Paris Agreement. We’ll look at how global agreements on climate have evolved and how carbon credits play a crucial part in these. Through this discussion, we hope to give a clear picture of how the world is working together to create a sustainable environment for the future.

The Kyoto Protocol: Setting the Stage for Carbon Credits

The Kyoto Protocol, established under the United Nations Framework Convention on Climate Change (UNFCCC) in 1997, marked the inception of formalized global efforts to curb greenhouse gas (GHG) emissions. This landmark treaty set forth binding emissions reduction targets for 37 industrialized nations and the European Union, aiming to reduce emissions to 5% below 1990 levels between 2008 and 2012. A subsequent amendment in 2012 extended these targets to 2013-2020. Central to the Kyoto Protocol was the innovative concept of carbon credits, designed to provide economic incentives for emissions reductions. The Protocol introduced Emissions Trading, the Clean Development Mechanism (CDM), and Joint Implementation (JI), laying the foundation for the global carbon credit framework (see: https://unfccc.int/news/kyoto-protocol-paves-the-way-for-greater-ambition-under-paris-agreement#:~:text=,like%20Germany%20by%2030%20percent).

Key facts:

  • The Kyoto Protocol committed developed countries to emissions reduction targets of 5% below 1990 levels between 2008-2012. This was later extended to 2013-2020 with an amended treaty.
  • The innovative mechanisms introduced included Emissions Trading, CDM, and JI which provided the blueprint for carbon credits trading.

Paris Agreement: A New Dawn in Global Climate Cooperation

The Paris Agreement, adopted in 2015, emerged as a robust successor to the Kyoto Protocol, reflecting a global shift towards more inclusive and ambitious climate action. Unlike the Kyoto Protocol, which placed binding targets on developed countries alone, the Paris Agreement encourages all nations to contribute towards global emissions reduction. This inclusive framework aims to limit global temperature rise to well below 2°C, with an ambition of 1.5°C above pre-industrial levels. The Paris Agreement introduced the Sustainable Development Mechanism (SDM), poised to replace the Kyoto Protocol’s Clean Development Mechanism (CDM), signifying a transformation in the realm of carbon credits and setting a new trajectory for global environmental strategies (see: https://greencoast.org/kyoto-protocol-vs-paris-agreement).

Key facts:

  • The Paris Agreement set a more ambitious goal of limiting global warming to 1.5°C compared to the Kyoto Protocol’s 2°C target.
  • It has a universal framework encouraging all countries to contribute, unlike the Kyoto Protocol’s binding targets just for developed nations.
  • Introduced the SDM to replace the CDM, reflecting an evolution in carbon credits post-Kyoto.

Why Some Countries Opted Out: Economic and Strategic Considerations

The Kyoto Protocol faced resistance from some major emitting countries due to concerns surrounding economic competitiveness and equity. The U.S., citing potential economic drawbacks and the lack of binding commitments on developing countries, chose not to ratify the Protocol. Canada withdrew in 2011, expressing concerns over the Protocol’s ability to effectively address global emissions without the participation of major emitters like the U.S. and China. These decisions underscored the complex interplay of economic, strategic, and environmental considerations that influence international climate agreements and the operationalization of carbon credits (see: https://kleinmanenergy.upenn.edu/news-insights/lessons-learned-from-kyoto-to-paris).

Key facts:

  • The U.S. and Canada opted out due to concerns over economic impacts and equity without developing nations’ commitments.
  • Highlights the strategic considerations alongside environmental ones in climate agreements.

Carbon Credits – A Mechanism to Meet Targets

The Kyoto Protocol introduced pioneering mechanisms like Emissions Trading, the Clean Development Mechanism (CDM), and Joint Implementation (JI) to help nations meet their emissions reduction targets. These mechanisms provided the blueprint for the evolution of the carbon credit system, allowing for the trading of emission allowances and fostering international collaboration on carbon sequestration projects. The Paris Agreement further refined these mechanisms, introducing the Sustainable Development Mechanism (SDM) to build upon the successes and lessons learned from the Kyoto-era mechanisms, thereby enhancing the global carbon credit framework.

Key facts:

  • Emissions Trading, CDM, and JI were introduced under Kyoto as innovative ways to meet reduction targets.
  • Paris Agreement’s SDM builds on these mechanisms to further improve the carbon credits system.

The Decline of the CDM: Transitioning to a New Era

With the advent of the Paris Agreement, the Clean Development Mechanism (CDM) saw a decline in prominence as the Sustainable Development Mechanism (SDM) emerged. This transition reflects the global community’s adaptive approach to evolving environmental challenges. The SDM, with its broader scope and enhanced flexibility, aims to address the shortcomings of the CDM, offering a more robust framework for carbon credit initiatives. The shift from CDM to SDM signifies a continued evolution in the mechanisms governing carbon credits, aligning with the ambitious global climate goals set forth by the Paris Agreement.

Key facts:

  • The CDM is being replaced by the more robust SDM under Paris reflecting an adaptive approach.
  • SDM has a wider scope and flexibility compared to CDM.

Challenges in Participation: Navigating Global Climate Dynamics

The participation challenges faced by the Kyoto Protocol highlight the complexities inherent in global climate agreements. Major emitters like the U.S. and China’s reluctance to commit to binding emissions reduction targets under the Kyoto Protocol underscored the need for a more inclusive approach. The Paris Agreement, with its universal framework for climate action, addresses some of these challenges by encouraging all nations, regardless of their economic status, to contribute towards global emissions reduction. However, the nuances of national and global priorities continue to influence the level of participation and commitment to carbon credit initiatives.

Key facts:

  • Universal participation under Paris was designed to address the lack of major emitters’ commitment under Kyoto.
  • National interests still impact countries’ levels of commitment to climate agreements.

The Role of the International Transaction Log (ITL): Ensuring Transparency and Accountability

The International Transaction Log (ITL) plays a crucial role in the operationalization of carbon credits by ensuring transparency, accountability, and efficiency in carbon credit transactions. Established by the Secretariat of the Conference of Parties, the ITL meticulously records carbon credit transactions, preventing potential issues like double-counting of reductions or the sale of identical credits multiple times. The ITL, by bridging national emissions trading registries and the UNFCCC, exemplifies the global commitment to a transparent and accountable carbon credit system, underpinning the credibility of international emissions trading initiatives.

Key facts:

  • The ITL prevents double-counting and ensures transparency in carbon credits trading.
  • It bridges national registries and UNFCCC to enable international cooperation.

Risks and Mitigation in Carbon Credit Projects: Ensuring Viability and Sustainability

Carbon credit projects, inherent with regulatory and market risks, necessitate robust mitigation strategies to ensure their viability and sustainability. The complexities of regulatory approvals, monitoring actual emissions, and navigating volatile market dynamics pose challenges to carbon credit projects. Leveraging approved CDM technologies and entering into long-term fixed-price contracts can significantly reduce these risks. The evolving carbon credit framework, transitioning from CDM to SDM under the Paris Agreement, reflects a continued effort to address these risks and enhance the sustainability of carbon credit projects.

Key facts:

  • Regulatory and market risks pose viability challenges for carbon credit projects.
  • CDM methodologies and long-term contracts help mitigate risks.

Controversies in Land Use Projects: Navigating Carbon Sequestration Challenges

Land use projects under the Kyoto Protocol aimed at GHG removals and emissions reductions through activities like afforestation and reforestation. However, they faced resistance due to challenges in estimating and tracking GHG removals over extended periods. The complexities of measuring carbon sequestration, particularly in vast forested areas, underscore the controversies and challenges inherent in the carbon credits domain. The Paris Agreement, with its enhanced framework for carbon credit initiatives, offers avenues to address some of these challenges, promoting a more robust and transparent approach to land use projects within the carbon credits framework.

Key facts:

  • Estimating and monitoring carbon sequestration from land use projects is complex.
  • Caused controversies under Kyoto but Paris Agreement provides scope to improve.

Conclusion – Carbon Credits and the Evolution of Global Climate Strategy

The journey of carbon credits, from the early days of the Kyoto Protocol to the transformative era of the Paris Agreement, offers a window into the world’s evolving approach to climate change mitigation. The innovative mechanisms introduced under these agreements have played a pivotal role in shaping the global carbon credit framework. As nations continue to navigate the complex landscape of global climate cooperation, understanding the intricacies of carbon credits remains pivotal in the collective quest for a sustainable future. Through the lens of carbon credits, we witness the global community’s adaptive strategies in the face of evolving environmental challenges, charting a course towards a more sustainable and resilient global climate framework.

Sources and References:

Image credit:

Kelly Sikkema on Unsplash

Carbon Footprint

McKibben opts for a small-tent climate movement

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A few months ago I went to a climate change forum at the Center for Brooklyn History. The panel I attended, “Confronting Climate Change: Understanding Deniers,” featured the prominent climate activist, Bill McKibben.

Bill McKibben. Courtesy https://billmckibben.com/.

I was curious to hear McKibben’s take on climate change deniers. I don’t regard the true deniers as a big problem – they’re only 11-15% of our country, according to most polls. Rather, I wondered if McKibben would label as “climate deniers” people who agree that climate change is a significant problem but disagree with his framing and his proposed solutions. I have worked for decades on energy and climate matters as an energy lawyer. Now, more than ever, I believe that to address climate change we need to build a big tent.

In the Q&A I tested where McKibben is on this by asking if he would label as a climate denier someone who subscribes to the main tenets of climate change science yet holds that natural gas has a role to play as a bridge fuel. (Our exchange starts at 1:12:45 of the video.)

This could have been a chance for McKibben to make clear that such a view isn’t climate denialism, even if he feels it’s misguided. But he punted, saying “I don’t care whether they’re deniers or not.” For good measure, he threw in his long-standing refrain that swapping coal for natural gas makes climate change worse, despite coal’s far higher carbon content per unit of energy.

674-MW methane-powered generating station, Salem, MA.

As you can hear in the recording, McKibben’s claim that gas is worse than coal draws on the work of Cornell scientist Robert Howarth. Yet McKibben didn’t mention that Howarth’s work is controversial and disputed by many scientists. The crux of the dispute is whether methane’s impact on warming should be measured with a 20-year or 100-year time frame.

Methane is a relatively short-lived greenhouse gas, with a lifetime of around 10 years, versus the 100-year life applicable to carbon dioxide. But each ton of methane is far more potent while in the atmosphere, trapping roughly 100 times as much heat as a ton of CO2. These cross-cutting facts about atmospheric methane — shorter life but greater potency than CO2 — have resulted in two opposing camps: one insisting on a 20-year timeframe for greenhouse gas accounting, the other adhering to the established 100-year frame. This matters because with a 20-year timeframe, generating electricity with natural gas (which, chemically speaking, is essentially all methane) is more damaging to climate than coal-fired electricity.

McKibben blew past this dispute. To hear him at the Center for Brooklyn History, one would have no inkling that there’s an active disagreement over which timeframe to use, that there are staunch climate activists who favor the 100-year time frame, and that the Intergovernmental Panel on Climate Change  (IPCC) generally uses the 100-year timeframe.

McKibben’s latest (2025) book. Published by W.W. Norton & Company.

McKibben also insisted that a discussion about natural gas’s potential role in mitigating climate change as a replacement for coal is irrelevant because solar “is now our cheapest resource.” McKibben’s claim, of course, suffuses “Here Comes the Sun,” his 2025 book that extols solar power as the cheapest solution for all of our energy needs. But this too is questionable, because it’s based on cost comparisons between solar farms and natural gas power plants (or nuclear power plants) that fail to consider that electricity supply and delivery is a complex system of wires and plants rather than individual power plants. Based on his remarks, McKibben is choosing to ignore studies such as the comprehensive 2025 report from the Clean Air Task Force that concluded that plant-level cost comparison “is a good metric to track historical technology cost evolution [but] is not an appropriate tool to use in the context of long-term planning and policymaking for deep decarbonization.” And the task force is not alone in finding that when electricity is treated as a system, solar loses its place as the cheapest low-carbon resource.

The dogmatism McKibben displayed at the Brooklyn meeting was unfortunate. We’re in a time when efforts to combat climate change are in retreat. A unified front is required to turn the tide. Instead of doubling down on absolutist positions, activists like McKibben who seem convinced that the solution to climate change is all-renewables, end of discussion, should be seeking common ground with others who want climate action but believe that nuclear power and natural gas must also play a role.

NYC Climate March, Sept 17, 2023. Photo: C. Komanoff.

Climate change activists need to build a bigger tent, rather than call anyone who disagrees with their positions a climate change denier. It is striking that McKibben stuck to his guns after saying in the same talk that the most important goal for everyone right now is to help climate change realists win more House and Senate seats in this year’s midterms. As some have noted, an absolutist position on natural gas appears less likely to achieve that win and politicians are following that advice.

Will McKibben evolve? He has demonstrated that he knows how to build a national climate movement centered around issues like divestment. Given the current political situation, he should focus on building an even bigger tent by welcoming all of the 85% who believe that we need to address climate change but do not agree with his ideological positions.

Rich Miller is an energy lawyer who has worked for a variety of stakeholders and now gives walking tours in lower Manhattan on the history of electricity. 

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Carbon Footprint

Rebranding ‘Balcony Solar’ as ‘Guerrilla Solar’ won’t lift its climate value.

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Image generated with Claude. Why have we juxtaposed a bicycle with balcony solar? Read on.

First it was Plug-In Solar. Then it was Balcony Solar. Now it’s Guerrilla Solar, at least according to Inside Climate News, which yesterday proclaimed that The ‘Guerrilla Solar’ Era Has Arrived.

“It,” of course, is Modular solar panels. They’re the hot new photovoltaic solution: cheap enough to buy at Home Depot, easy to hang or prop to catch maximum rays, and small enough to fit on a balcony (if you’ve got one) and plug into your “home grid.” But, alas, too meager a generator of electricity to be more than a bit player in decarbonizing most U.S. homes.

How do I know? I’ve done the math.

A standard, lower-end 220-watt balcony solar array will produce 337 kilowatt-hours a year, or 28 kWh a month averaged over the course of a year. That’s for a 220W unit measuring 3.5 feet by 3.5 feet. (220W x 1/1000 x 17.5% x 8760 hours per year = 337 kWh. Calculation assumes a 17.5% full-year capacity factor, which is arguably generous for New York, where I live. )

Our balcony solar mashup. Top: an install in Germany. Bottom: Home Depot advert.

A typical U.S. home consumes 10,500 kWh a year, or 28 to 29 kWh per day, says Solartech, drawing on U.S. Energy Information Administration data. That puts a home’s daily power needs on par with a balcony solar unit’s monthly output. In effect, once each month the balcony array gifts a homeowner or renter a bit more than day’s full complement of electricity. And earth’s atmosphere gets the same respite: a 3 percent reduction in carbon emissions caused by the home’s electricity usage.

(The 3 percent figure could also be calculated directly by dividing 337 kWh per year of solar production by 10,500 kWh per year to run the home. For bigger or smaller arrays, just prorate your assumed wattage by my 220W; for 440W, say, double my figures.)

Balcony Solar metrics

Why write about balcony solar if it’s so inconsequential? CTC’s mission includes puncturing would-be climate balloons before they ascend too far. In the same vein, we practice quantification to make clear what does and doesn’t move the climate needle. (More on that further below.)

The best way to depict balcony solar’s climate value is to express it in terms of tangible metrics. We’ve selected two. Both assume the basic, lower-end PV array I assumed at the top: a 3.5 foot-square array whose peak output is 220 watts.

1. It would take 50 million 220W balcony solar units (bsu’s) to restore the climate benefit we destroyed in 2020-2021 when we shut the high-performing Indian Point nuclear power plant 32 miles from Midtown Manhattan.

2. A single person cutting back their driving by a mile a day would provide the same climate benefit over the course of a year as a single 220W bsu.

(Calculations in sidebar. Now you know why we led with images of an urban dweller as cyclist and balcony solar user.)

Yes, it’s dense — as befits a sidebar. The numbers tell a story. Follow the color co-ordination.

Ponder that: It would take fifty million smallish bsu’s to level up to the fossil fuel carbon emissions that Indian Point was keeping at bay by supplying the New York City area year in and year out with abundant carbon-free power. Deploying that many balcony solar units would entail 10 bsu’s for each of the 5 million households in the MTA’s service territory. (The Metropolitan Transportation Authority provides subway, bus and commuter rail transit in the five boroughs and seven suburban counties.) Or, if those same households upgraded to 1100-watt bsu’s, collectively they would still make up only half of the lost Indian Point power.

The second comparison, involving driving, is perhaps trickier to grasp but more interesting, since it relates to people’s behavior. Living differently isn’t part of public discourse, at least not in the USA, and especially when what’s being served up is using less. But “reducing,” as we might call it (remember “Reduce, Reuse, Recycle”? or, “Insulate, then Insolate”?) is just as potent for cutting emissions as switching to renewables — even more so when the reducing means driving less, considering the multitude of benefits that accrue from diminishing cars’ imprints on our communities. Still, staying on topic: driving just one fewer mile per day brings about the same shrinkage in carbon emissions as deploying one 220W solar array.

What Balcony Solar boosters are really saying

To be fair, our friends at Inside Climate News and, yes, The New York Times appear to be trying to modulate their balcony solar enthusiasm.

ICN‘s Dan Gearino, whom we cited up front, said he looked to Germany, the birthplace of balcony solar, to see if the units made sense for U.S. households. His takeaway: “It may make more sense financially to spend the cost of plug-in solar on insulation, air sealing or other basic measures to reduce energy use.” Hooray: insulate before you insolate.

Gearino helpfully interviewed renewables guru (and U.S. emigré) Craig Morris, who currently heads Germany’s plug-in solar trade association, Bundesverband Steckersolar. To Morris, balcony solar’s main advantages are that it provides power without taking up land, and that it affords people a way to “become participants in the transition to clean energy.” Behold, guerrilla solar. That, in turn, bolsters “the political consensus that supports the transition.” But Morris also made clear that widespread adoption of plug-in solar would only meet “about 2 percent of Germany’s electricity demand.”

Morris’s “about 2 percent” feels right for Germany. But not for the U.S., where widespread adoption of virtually any individual carbon alternative seems forever out of reach, and where the energy pie is so much larger — think giant fridges, freezers for beer, steroidal homes bursting with piles of powered toys, not to mention industrial and institutional electricity use that Morris correctly excluded from his figure.

Don’t forget to micro-dose. NYT headline + image for David Wallace-Wells’ guest essay (see text). Image by Rui Pu.

Both Gearino and Morris seem more measured than climate journalist Robinson Meyer, founding editor of Heatmap and frequent contributor to The Times, where he wrote about balcony solar in mid-June.

“New zero-carbon power kits will allow Americans to make their own energy choices,” declares the callout to the print version of Meyer’s NYT guest essay, The Tiny Solar Panel That Could Change America. (The even more expansive print headline invites us to “Forget Roofs. Backyard Solar Is the Next Frontier.”)

Wallace-Wells is of two minds. He calls balcony solar “a small way that apartment- and condo-dwelling Americans can take ownership of their energy choices and cut down their pollution on the margins.” No quarrel there, thanks to his qualifiers “small” and “on the margins.” Earlier, though, he opines that balcony solar units “have the potential to change how Americans understand and consume energy,” But read further and you’ll again see Wallace-Wells cautioning that “Balcony solar will play one small role in [the] drama” of transiting to the new world of clean, abundant energy.

Any such caveats are welcome these days, amid widespread solar hoopla. Still, it doesn’t seem to be in Wallace-Wells’ toolkit — or that of Inside Climate News and other mainstream climate journalists — to tutor their audiences as to the  true limits of balcony solar and other panaceas. Just like it wasn’t in their field of vision a decade ago to lay out the true stakes of shutting Indian Point as Riverkeeper was singing its siren song.

What’s Next for NY Balcony Solar

Meantime, as Canary Media reported recently (and helpfully), New Yorkers concerned with climate and affordability are waiting for NY Gov. Kathy Hochul to sign the recently passed SUNNY (Solar Up Now New York) Act legalizing balcony and other plug-in solar. It would be head-spinning (and politically suicidal) if she didn’t, given near-universal support ranging from Con Edison to DSA Assembly Member Emily Gallagher, who told Canary Media, “This is the most popular bill I’ve [ever] worked on.”

My guess is that Hochul is waiting for the right moment, and perhaps the right “package,” that can advance and not undercut her push to launch five large new nuclear power plants around the state — one to be built by the public New York Power Authority, the others to be constructed and operated privately. A little bit of math, a la what we offered here a la Indian Point, might help her out.

The governor also must manage the veritable hot potato of her deferred implementation of the landmark 2019 Community Leadership and Climate Protection Act. She might do well to consider jettisoning the act’s unwieldy cap-and-invest centerpiece in favor of a straight-up carbon tax (with the revenues distributed pro rata to the state’s households) in its place. That, far more than balcony (or guerrilla) solar, could blow open the door to the “innovations and technologies we cannot yet imagine” that Wallace-Wells fantasized about in his Times essay.

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Carbon Footprint

The new SBTi Corporate Net-Zero Standard: what it means for business

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On 11 June 2026, the Science Based Targets initiative (SBTi) published the most substantial revision of its flagship corporate framework since its introduction. The SBTi Corporate Net-Zero Standard Version 2.0 takes effect on 1 February 2027 and reshapes the way companies approach their net-zero targets.

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