Transcript 2 0 C – At what cost - World Conference on Climate Change

Pricing of Carbon and Funding of Low
Carbon Transition Under a 20C Regime
Bose Varghese
24-Oct-2016
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Infosys Limited
• A $9.5 billion company headquartered in Bengaluru, India
• A global leader in technology services and consulting
• Over 190,000 employees
• Clients in over 50 countries
• Committed to becoming carbon neutral by 2018
• Committed to becoming RE100 by 2018
• Member of the Carbon Pricing Leadership Coalition (CPLC)
• Internal carbon pricing has been done with the support of WRI
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Internal carbon pricing – Infosys approach
Emission Category
FY 2016
(tCO2e)
FY 2018
Projection
(tCO2e)
Scope 1
17950
13500
Scope 2
153300
236000
Strategy to
become
neutral
Offset
%
100%
100%
4720
EE
2%
33040
Captive RE
14%
132160
Wheeled RE
56%
66080
REC/Offset
28%
Scope 3
177505
221000
Total emissions
348755
470500
Offset
100%
Our pricing of carbon was related to our carbon neutral commitment.
The price should generate the funds required to become carbon neutral.
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20C - What it takes
• Peaking of emissions by 2020
• Total emissions should drop to about 40 GtCO2e by 2030 (Estimated emissions
in 2030 based on current INDCs: 55 GtCO2e)
• Business as usual scenario: 16% increase in energy-related emissions by 2040
(20C regime demands 41% reduction energy-related emissions by 2040)
• Move toward carbon neutral by the end of the century
• At current emission levels, the remaining carbon budget of about 900 GtCO2e will
be consumed by 2040
• PwC’s Low Carbon Economy Index estimates that 2-3% annual global emissions
reduction is required under a 20C regime
• 60% cut in emissions from China alone by 2040 from current levels
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20C – At what cost
• Projected annual investment from 2015-2030: over 1100 billion (700 on EE and
400 on RE)
• In 2015, 330 billion was invested in RE alone
• India’s INDC commitment of 33-35% reduction in emission intensity of GDP by
2030 below 2005 levels is estimated to cost 2.5 trillion dollars
• Where will this money come from? Put a price on carbon?
• Need mechanisms to turn carbon price into low carbon transition fund
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Cap-and-trade
• Market-based
• Policy tool that puts a cap on emissions over a period; emission reduction is
guaranteed
• Allowances are allocated to participating parties or auctioned
• Market determines the optimal price of allowances
• Allowances can be traded among participating parties
• Theoretically, cap-and-trade finds the least cost option to achieve the emissions
cap
• Offers flexibility to parties – doesn’t mandate any particular approach or
intervention
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Why cap-and-trade may not fit under a 20C regime
• Faced with a massive emission reduction target, what will be the right cap?
• Sort term caps that get revised downwards in the long term
- likely to miss opportunities for transformational change
- likely to delay attainment of long term goals
• Long terms caps with short term check-points
Emissions
• Under a 20C regime, who can get away with having surplus allowances to sell?
Time
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Emissions tax
• Puts a price on emissions
• Emission reduction is not guaranteed
• Market determines the optimal emission reduction
Emissions
• Therefore the tax revenue must be invested in promoting low carbon technologies
so that emission reduction targets can be achieved
Time
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International offsets
• Buying emission reduction achieved in another country to offset own emissions
• Emission reduction is more certain
• Demand-supply within the market will determine carbon price
• Under a 20C regime, who should be allowed to sell emission reduction? If a
country is able to reduce emissions, shouldn’t it get a share of the global target?
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20C – At what cost
State and Trends of Carbon pricing, The WB Group, 2015
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Emissions
SI.
No.
1
2
3
4
5
6
7
8
9
10
11
12
80% Emissions
Saudi Arabia
Brazil
Canada
South Korea
Iran
Germany
Japan
Russia
India
European Union
United States
China
0
2,000
4,000
6,000
8,000
2014 EMISSIONS (TCO2E)
10,000
Trends in Global CO2 Emissions, 2015 Report, PBL Netherlands Environment Agency
12,000
Million
%
tCO2e
China
10,640 31.0%
United States
5,335 15.0%
European Union
3,415 9.6%
India
2,342 6.6%
Russia
1,766 5.0%
Japan
1,279 3.6%
Germany
767 2.2%
Iran
618 1.7%
South Korea
610 1.7%
Canada
566 1.6%
Brazil
501 1.4%
Saudi Arabia
495 1.4%
80.6%
Countries
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References
• Climate Change 2014, Synthesis Report, IPCC
• IPCC
• CO2 Emissions from Fuel Combustions highlights, IEA, 2015
• Climate Change 2014, Mitigation of Climate Change, Working Group III Contribution
to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change
• Climate Change and Nuclear Power, IEA, 2016
• Climate Change and Nuclear Power, IEA, 2015
• Benjamin M. Sanderson, Brian C. O'Neill, and Claudia Tebaldi, What would it take to
achieve the Paris temperature targets? Geophysical Research Letters, July 2016
• Trends in Global CO2 Emissions, 2015 Report, Background Studies, PBL Netherlands
Environment Agency
• State and Trends of Carbon pricing, The WB Group, 2015
Thank you
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