Introduction to Bank of Ireland

1
The Carbon Markets The Story So Far
8th September 2006 Paul J. Harris Head of Energy
Emissions Bank of Ireland Global Markets
Classification , Amber
2
Overview

• The Kyoto Protocol
• EUETS
• Carbon Market
• Emissions in the Irish context
• Carbon agriculture

3
Global Warming

• Average sea levels rose by up to 0.2m in the last
  century
• 1998 was the hottest year globally since records
  began
• Snow cover in the Northern Hemisphere has
  decreased by 10 since 1968

4
Global Response

• 1992 Rio Earth Summit
• UN Framework Convention for Climate Change
• Kyoto Protocol 1997
• Collective reduction in CO2 by an average of 5.2
  below 1990 levels between 2008-12
• Ratified in 2004 except Australia, USA

5
Kyoto Flexible Mechanisms
Emissions Trading
Clean Development Mechanism
Joint Implementation

CER
AAU
ERU
6
EUETS

• Commitment to reduce emissions by 8 below 1990
  levels.
• Cap and trade system. Two Phases 2005-7 2008-12
• Four categories of impacted industries Energy
  Minerals Metals installations with rated
  thermal input over 20MW
• Each Member State responsible for allocation
• 6.5bn allowances allocated in Phase 1 to around
  13,000 installations

7
EUETS mechanics

• Annual allocation
• Independent verification by following March
• Account balance by end April
• Fine of 40/tCO2e mandatory delivery of the
  shortfall

8
EUETS in an Irish context

• Managed by the Environmental Protection Agency
  (EPA)
• 65mio t/CO2e for Phase 1 (21mio t/CO2e per annum)
  issued free to participants
• 105 installations (circa. 65 companies)

9
Price Action

10
Abatement options

• Energy efficiency
• Switching fuels
• Fossil fuels gt biomass
• Wind power
• Diesel gt bio-fuels tallow

11
Ireland Pathway to Kyoto compliance


Agriculture

Transport
Residential

Waste
Energy Industry EUETS

12
Emissions by sector 2004 2012

13
National Climate Change strategy

• Based on policies and measures already
  implemented or expected to be implemented up to
  2012, projections show Ireland will face an
  average annual shortfall in its Kyoto target of
  some 7.174Mt of CO2e.
• Current price of 16/tCO2e 114.87mio

14
Agriculture the key to Kyoto compliance

Carbon savings
How can agriculture convert the carbon saving
capacity to cash?
15
Unlocking value in carbon

• Domestic JI (Carbon offset programme)
• VERs

16
Wrap-up

• Why carbon is globally important
• Current structure
• How the carbon market works
• Examination of Carbon in the Irish context
• Prospects for Carbon in agriculture