By: Tiffany Richmond

This summer has been unforgettable. Some might remember it as hot summer days spent swimming at the cottage or warm dinners with friends on the patio. What I will remember are the events, the earthquake in Ontario, monsoon rains in Pakistan, Moscow’s heat wave, that have reassured me that not only is the world is getting warmer but the way of life for many is changing dramatically.

I remember the classic story my grandparents would tell my brother and I of the hardship of having to walk to school in 10 feet of snow uphill– what’s the chance that by the time I’m a grandparent, some years away, I am reiterating this story to my grandchildren? Chances are slim. Instead my tales are going to consist of walking through puddles and rarely having to shovel snow.

Recently a report from NOAA (the National Oceanic and Atmospheric Administration) reported that 2010 is the warmest year worldwide since 1880, the year weather record keeping began. The report noted that year by year the earth’s temperature has been steadily increasing. The first 10 years in the 2000 are already warmer than the average of the entire 90s. The report also stated that each decade has seen an increase in about a fifth of a degree Fahrenheit , which in the past 50 years has increased the temperature of the earth by 1 degree Fahrenheit. This number seems so little, but 1 degree Fahrenheit increase has already altered the planet’s behaviour with glacier melting, increased heavy rainfalls and intensifying heat waves.

To most, this may mean nothing. People will still go about their day without thinking twice about the temperature of the earth rising. However, daily I am reminded that the earth is changing as frequent natural disasters are occurring around the world.

In case you haven’t been reading the newspaper the Petermann Glacier in Greenland broke off an enormous chuck of ice, approximately 97 square miles. This is the largest chunk of ice shed in Greenland in nearly half a century. If this type of activity continues we are going to experience increasing sea levels. If this occurs low lying areas, such as New Orleans, will see greater flooding.

Moscow Russia has experienced scorching temperatures this summer, hitting an all time high of 100 degrees Fahrenheit. This has sparked hundreds of forest fires and prolonged drought for the country. Other countries have also experienced increased temperatures this summer causing unbearable heat waves.

On top of that Pakistan is experiencing the worst monsoon rains in 80 years. 300 millimeters of rain in one 36-hour period has sent rivers rampaging over huge swaths of countryside, flooding thousands of villages. It has left 14 million Pakistanis homeless or otherwise affected, and killed 1,500. Monson rains occur due to seasonal changes in atmospheric circulation and precipitation associated with zero balance between the temperatures in the ocean and the temperatures in the air. With the air and ocean temperatures being hotter than normal it has produced more humidity. When humidity rises it forms intensive storms, causing natural disasters like in Pakistan.

China is also witnessing its worst floods in decades. Floods and landslides have killed at least 1,100 people and left more than 600 missing. It has buried farmlands and destroyed homes, factories and railways.

I’m not going to say that these disasters are a result of global warming. To me global warming is no more than coined political phase that has been splattered across the media and used out of term far too often. But I am going to say that the earth’s temperatures are increasing. This is evident every day and the above examples only name a few.

The question I ask is – what has to happen to make a change? People can debate back and forth about whether climate change is real but the issue at hand is this – things are changing and if we don’t do anything to help prevent further damages things are going to get worse. Lives are at risk, homes are at risk, basic living essentials, such as water and food are at risk.

This is what people should be thinking about and this is what should motivate people to make a change.

By: Tiffany Richmond

The Western Climate Initiative (WCI) and its partner jurisdictions released a comprehensive strategy on Tuesday, including a robust cap and trade system, to address climate change in North America. The program’s objective, culminated from two years of work, is to reduce greenhouse gas emissions by 15% below 2005 levels by 2020.

The program includes:

• A market-based approach that caps greenhouse gas emissions;
• Encouraging reductions throughout the economy, including offset certificates;
• Expanding energy efficiency programs;
• Encouraging additional renewable energy sources;
• Vehicle emission standards, fuel standards and incentives in the transportation industry;
• Establishing performance benchmarks for high –emitting industries; and
• Identifying best practices programs for new jobs in the clean energy economy.

The WCI’s jurisdiction partners backing the program include Ontario, Quebec and British Columbia in Canada, and California and New Mexico in the United States. The other 6 members have not committed to the program.

How The WCI Cap And Trade Program Will Work

The cap and trade program will be composed of the individual jurisdictions’ cap and trade programs implemented through state and provincial regulations. Each jurisdiction will issue emission allowances to entities to meet the jurisdiction’s specific emissions goal. Emission allowances are the maximum emitted emissions that entities can produce. The total number of available allowances serves as the cap on emissions and can be bought or sold (traded).

The WCI’s cap and trade program includes rigorous emission reporting requirements to support accurate and timely measurement and recording of GHG emissions. The WCI reporting requirements in the United States will be harmonized with the EPA Mandatory Reporting Rules for GHG emissions. In Canada the WCI is currently developing a similar version of this reporting requirement. Under the program emitters will have to report their emissions and submit sufficient emission allowances and offset certificates (achieved when a reduction or removal of GHG emissions is obtained) annually.

Each jurisdiction will have an allowance budget, the total emissions emitted maximum in each jurisdiction, with each year gradually reducing to the 2020 emission target.

At least once each three years, entities are required to turn into the state or provide one emission allowance for each metric ton of carbon dioxide equivalent emissions they emit and report. Entities that reduce their emissions below the number of allowances can hold them for later use or sell their excess. The WCI is reviewing using an auction setting to sell excess emissions. Recommendations for the design of the auction include a sealed bid, single round, uniformed price auction, a reserve price auction, allowances from future compliance periods to be sold concurrently, allowances to be sold in lot size of 1,000, and open auction to anyone who meets pre-qualified financial assurance requirements.

With two years until the planned launch of the program, the WCI recognizes that variations in jurisdictional authority, regulatory procedures, and administrative requirements will result in different approaches for implementation. The program also recognizes that future conditions, such as technology cost increases, weather instability and disruption in electricity supply, could lead to higher than expected program costs.

The WCI announced that it will continue to address program design and take the necessary steps to make regional trading operational.

During a recent conference, Energy Advantage presented on the topic of holistic carbon management and spoke to five steps organizations should take to prepare for carbon regulations. With this recent announcement from the WCI it’s evident that the industry is moving towards a regulated reporting system and it’s imperative to start preparing today.

Click here to read the summary of this presentation on how to prepare for carbon reporting regulations today.

1. “Western Climate Initiative”. WCI Partners Release Their Comprehensive Strategy to Address Climate Change and Spur a Clean-Energy Economy. Western Climate Initiative, 28 July, 2010.
2. “Western Climate Initiative”. Design Summary and Documentation Section of the Design for the WCI Regional Program. Western Climate Initiative, 28 July, 2010.
3. “David Ebner”. Biggest Provinces Push Plan to Cap Emissions. The Global and Mail, 27 July, 2010.

In the past several years the creation of new international, federal, and state regulations clearly indicate that government agencies are addressing concerns regarding the effects of greenhouse gas emissions.

Demonstrated by measures, such as, the European Union Emissions Trading System, the U.S. Environmental Protection Agency’s policy for large emitters to collect and report greenhouse gas emissions, the Waxman-Markey Bill, currently pending in Congress, and international efforts to replace the Kyoto Protocol, exhibited by event such as the United Nations Climate Change Conference.

With myriad regulatory actions in effect or pending, many public companies are facing pressure from shareholders to understand and communicate the impact that climate change is having on their organizations. Several petitions have been submitted to the Securities and Exchange Commission requesting detailed explanations of disclosure requirements relating to climate change. The Commission responded to these petitions on January 27th, 2010, voting to provide public companies with interpretive guidance towards existing disclosure rules that may require organizations to disclose their impact on climate change.

Below highlight some of the ways climate change may trigger disclosure, as discussed in the Securities and Exchange Commissions’ interpretive release.

Impact of Legislation and Regulation
When assessing potential disclosure obligations, a company should consider whether the impact of certain existing laws and regulations regarding climate change is material. In certain circumstances, a company should also evaluate the potential impact of pending legislation and regulation related to this topic.

A company should evaluate whether these regulations will have an impact on capital expenditures related to the discharge of environment materials. For example, a company may need to improve facilities or equipment to comply with regulations.

An organization should evaluate the overall impact of risks factors (financial, physical, reputational, etc.) resulting from climate change and regulatory rules. A company should also evaluate whether any existing or pending regulations will have a material effect on its financial and/or operational conditions. For example, did or might a regulation effect revenue by increasing or decreasing  demand for a product or service?

Impact of International Accords
A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.

Indirect Consequences of Regulation or Business Trends
It’s important for a company to consider the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.

Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For example, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products.

A company should consider how its position on climate change is perceived by the public, and the potential effects on its business operations or financial conditions.

Physical Impacts of Climate Change
Significant physical effects of climate change, such as severe weather (floods, hurricanes), sea levels, and water available and quality, have the potential to affect a company’s operations. Companies should evaluate the actual and potential material risks of environmental factors on their business.

At minimum, this release should bring awareness to existing climate change issues and motion organizations to monitor legislation and regulations changes regularly. I will continue to watch for further guidance ruling regarding climate change from the Securities and Exchange Commission.

*The Commission’s interpretive releases do not create new legal requirements or modify existing ones, but are intended to clarify and ensure consistency for public companies and their investors.

After two weeks of discussions between 192 countries and 110 world leaders, the United Nations Climate Change conference comes to a conclusion, the Copenhagen Accord. Veering close to a farcical collapse, political protests and slower than expected negotiations, Copenhagen was a far cry from participant’s high hopes of concluding the conference with a legally binding agreement.

KEY ISSUES

Greenhouse Gas Emissions
It’s been stated before; greenhouse gas emissions are a major cause for global warming. Both developed and developing countries need to reduce their greenhouse gas emissions by 40 percent or more by 2020 to avoid serious climate damage¹.

Climate Aid for Poorer Nations
Developing countries need assistance financially to make a positive impact against global warming. Developed countries have committed to providing some sort of sourcing to developing countries. It’s important to consider that this sourcing be long term and come from stable revenue sources.

Forest Issues
Developing countries are encouraged to preserve forestation by implementing a mechanism called REDD-plus (developing nations are compensated to engage in deforestation). Discussed in negotiations leading to the Kyoto Protocol and again in 2007 during United Nation’s conference in Bali, deforestation remains a controversial subject with many loose ends that must to be defined before any forward progress can be made.

Monitoring of Pledges
Developed countries’ greenhouse gas emission targets will be monitored to ensure actions are taken against their stated commitments. If developed countries do not live up to their committed obligations they could face potential sanctions. Developing countries will not face penalties however; developed countries motion for international verification levels across all nations.

Legal Framework
For tangible changes to exist, developed and developing countries must commit to legal obligations against reducing greenhouse gas emissions. An international treaty is the only hope for such commitment.

CHALLENGES

China vs. United States
High tension between the United States and China rose throughout the 14 day conference. United States and China account for some 40% of global greenhouse gas emissions and have the potential to make the largest impact on global warming; that is only if they can they can get past their disagreements over climate policy.

China expects developed countries, like the United States, to take the lead and offer greenhouse gas emission reductions that would surpass those of industrialized countries, like China. Meanwhile, the United States expects China — now the world’s largest emitter of greenhouse gases — to agree to some limits on its carbon dioxide emissions, which doubled from 1996 to 2006².

Turning into a blaming war, China and the United States pointed fingers at one another and played the he said she said game. Despite differences, China and the United States must come to some sort of agreement between emission targets and transparency. Being the world’s two largest emitters, they will shape the international playing field for fighting climate change.

Rich vs. Poor Countries
A chasm between rich countries and poor counties surrounding financial aid brought negotiations to a halt the second week of the summit. Poor countries feel they are less equipped to manage climate change and demand rich countries to develop more radical greenhouse gas emissions targets. Poor countries insist that rich countries provide greater financial aid then the 10 billion (USD) (for three years) originally discussed and note the need for millions more after that.

Slow Negotiations
Two weeks to summarize years of negotiations is just not enough time. Both world leaders and United Nations organizers recognized the pace of discussions was not fast enough for a successful treaty to be agreed upon. The next 12 months leading up to COP16 in Mexico City will be more important than ever. Countries must attempt to fill in the details of the Copenhagen Accord before December 2010 if there is any hope to replace the Kyoto Protocol with a new treaty in 2012.

OUTCOME

The Copenhagen Accord, a four page declaration laying out the road map for tracking global warming. The Accord was drafted the last day of the conference by China, South Africa, India, Brazil and the United States. The Accord calls for action to hold mean warming of the Earth’s surface at no more than 2 degrees Celsius above pre-industrial levels. This target is 0.5 degree Celsius higher than original documents and does not outline any strategy on how to achieve such a desirable goal.

The Accord outlines financing options for developing countries for climate mitigation and adaption. Financial support includes 30 billion (USD) from 2010 to 2012 and scaling up to 100 billion (USD) by 2020. It states that a significant portion of this funding will flow through a Copenhagen Green Climate Fund.

The agreement also set ups a forestry deal, encouraging mechanisms such as REDD-plus, reduced emissions from deforestation and forest degradation, to reduce deforestation in return for cash funds. However, does not inform where such a cash flow might come from.

The Accord ends with commitment from 31 counties (Annex I Parties) to submit economy-wide emission reduction goals by January 31st, 2010. Developed countries must submit specific targets and dates, while developing countries are only to list targeted actions.

CONCLUSION

COP1, held in Berlin in 1995, was the beginning of climate negotiations between nation leaders. Now, fourteen years later, and the climax of two years of negotiations, COP15 ultimately ends with no legally binding treaty, no set targets and no actionable items.

Evidence shows that 11 of the past 14 years have been the warmest on record, Arctic ice-caps are melting and last year’s inflamed oil and food prices provide a forecast of potential future havoc³.

Climate change affects everyone, and must be solved by everyone.

Overcoming climate change will take a triumph of optimism over pessimism and vision over short-sightedness with hope that world leaders overcome their political combats and commit to an international binding treaty.

¹ “United Nations.” Copenhagen was more than accord. United Nations Climate Change Conference, 13 January 2010.
² “Orville Schell.” The Challenges of Copenhagen: Bridging the US- China Divide. Environment 360, 13 January 2010.
³ “Editorial.” Copenhagen climate change conference: ‘fourteen days to seal history’s judgment of this generation. The Guardian, 14 January 2010.