Chapter 4 Flashcards
International Climate Policy
Binding and nonbinding multinational agreements that primarily focus on reducing greenhouse gas emissions.
UNFCC & what is it
United Nations Framework Convention on Climate Change - 1st global agreement on Climate established
Kyoto protocol + when was established
1997, legally binding treaty, where high-income countries agreed to reduce emissions by 5% from 1990 by 2008 - 2012
Paris Agreement, when was it taken, what are the target temperatures
Taken in 2015, agree on 1.5-2 С reduction, relies on peer pressure
2 types of carbon pricing policies
Carbon tax & emissions-trading schemes (cap and trade schemes)
DICE model what it means
Dynamic Integragted Climate-Economy model by Nordhaus
What is the international consensus # of degrees С of warming?
2 degrees С
Tragedy of commons in the Climate Change problem
Good climate is a common good. If a country cuts down its emissions now - it suffers full economic losses short term, but only gets a fraction of the benefit of a good climate, and in the long term -> discouragement to do it, rather want to be a free rider
What affects CC more - total stock of CO2, or the annual flow?
Total stock
WMO
World Meteorological Organization
What is Kyoto protocol about?
The Kyoto Protocol, which took the form of a legally binding treaty, required high-income “Annex 1” countries to attain 5% emissions reductions compared to 1990 levels by 2008–2012, with several mechanisms built in that attempted to promote flexibility and technology transfer between countries.
3 mechanisms of Kyoto protocol
- Emission trading between Annex 1 countries
- Technology transfer between the Annex 1 countries
- Clean development mechanism - e.g. if Annex 1 country conducts an emission reduction project in a non-annex 1 country -> it gets credit
Goal of Paris agreement
Keep global temperature rise “well below 2C above preiundustrial levels”, “pursue efforts to limit rise to 1.5 С”
NDC
Nationally Determined Contribution - national plans to reduce GHG emissions
Global Stocktake
Institution by Paris agreement - periodic assessments of collective progress towards agreed climate goals
Difference btw Kyoto and Paris Agreement, that made Paris more successful
- Paris relies on inclusion and peer pressure, Kyoto - on legal binding, but it’s hard to bind the whole country.
- Paris recognized that many stakeholders can help to contribute to С goals (cities, regions, businesses, financial institutions, etc.)
2 types of carbon pricing policies
- Carbon tax (price per ton of CO2 emitted)
- Emission trading (cap-and-trade)
- Limits on industries / sectors
3 types of carbon tax
- Upstream (production and import of fossils)
- Midstream (applied at processing / distribution stage)
- Downstream (applied to consumers)
Carbon leakage
When carbon intense companies relocate to place with weaker carbon policies
RPS (Renewable Portfolio Standards)
Policy for commercial power producers - certain proportion of supply must come from renewable energy sources, wind, solar
def subnational climate policies
implemented in states, regions, cities
WRI
World Resource Institute
WBCSD
World Business Council for Sustainable Development
GHG protocol
Most widely used GHG emissions accounting standard
Direct emissions
Indirect emissions
Emissions from sources controlled by the reporting company
Indirect - emissions that are result of activities of reporting company, but are not controlled by it
3 emission scopes
Scope 1 emissions are direct emissions from owned or controlled sources.
Scope 2 emissions are indirect emissions from the generation of purchased energy.
Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
Project finance
Loans used to build infrastructure (e.g. financing highways, airports, gold mines, etc.)
International Financial Institutions
Banks that are established and managed by two or more countries
Multilateral Development Banks
Multinational institutions that support financial growth in developing countries.
DFI (Development Financial Institutions)
Institutions that finance projects in developing countries
Double bottom line mission
Institution with this mission is designed to be self-sufficient, but with a mandate to support socioeconomic development, NOT to maximize profits
SLB (Sovereign sustainability-Linked Bond)
Bond, linked to sus. targets of the issuing government. Interest rate depends on whether gov-t makes progress to these goals. Failure -> higher IR
Green taxonomy def
Lists made by policymakers and regulators of economic activities considered “green”
3 conditions for the economic activity to be considered sustainable + 6 types
(a) make a substantive contribution to one of six environmental objectives,
(b) do no significant harm to the other five
(c) meet minimum safeguards (e.g., the OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights).
Climate change mitigation
Climate change adaptation
Sustainable use and protection of water and marine resources
Transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and ecosystems
brown, transition, and green activities
brown - contributes to CC
green - facilitate transition to a low-carbon economy
transition activity - has potential to become greener by embracing low-carbon technologies / practices
diff btw green and transition taxonomy
green - focuses only on green activities
transition taxonomy - focus on all activities, based on their contrib to transition to sust economy
NGFS (Network for Greening the Financial System)
Initiative joining central banks and regulators to work on climate integration & spread best practices
micro- and macroprudential supervision
micro - examine specific fin institution
macro - examine stability of the broader financial system
Stress test
Test modelling the reaction of a fin inst or the whole fin sys to a hypothetical shock
FCA
Financial Conduct Authority - UK financial regulator for conduct & fin consumer protection
Greenwashing
Marketing portraying products as producing positive env outcome, while it’s not the case
TCFD
Task Force on Climate related Financial Disclosures
CDP
Carbon disclosure project - global environmental disclosure platform
Diff btw climate R and environmental R
Climate R is a subset of env Risk. Climate R - physical risk, transition risk. Environmental risk - climate R + risk from pollution, waste, biodiversity loss, resource depletion, habitat destruction
TNFD
Task force on nature-related fin disclosures (June 2021)
Climate action 100+
Private sector, investor-led initiative to pressure the world’s most polluting firms to do more on CC
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