For Chichilnisky, director of Columbia University’s Consortium for Risk Management, a deal at Copenhagen is needed to further the carbon markets borne of Kyoto by providing carbon-reduction goals out to 2020. However, Chichilnisky has proposed rules changes for the markets to be considered at Copenhagen that could, if adopted, greatly expand the reach of carbon markets to the benefit of technology developers.
One such market extension is a system of “interlocking” options on the carbon markets. Under this system, the U.S. would buy options on carbon-emissions credits, giving it the right to reduce Chinese emissions, and the Chinese would buy options conveying the right to sell emissions credits to the U.S. for a minimum price. “The U.S. can force China to reduce its emissions, and the Chinese can say truthfully that it will be compensated if that happens,” says Chichilnisky. Technology developers in both countries benefit by providing the equipment that delivers the real reductions behind the credits.
Chichilnisky says Copenhagen could also broaden the mechanism by which developing countries sell verified carbon reductions from energy or forestry projects to developed countries, which use such “offsets” to meet their greenhouse-gas-reduction obligations. European companies buying these offsets to meet their obligations under the EU’s Emissions Trading Scheme helped finance the recent explosive growth of wind farms in China and India.
Her proposal would extend such financing to projects that capture more carbon dioxide than they produce, such as biomass-fired power plants that capture and sequester their emissions and air-capture devices that pull carbon dioxide out of ambient air. Chichilnisky is investing in the latter through New York-based air-capture startup Global Thermostat, which aims to use waste heat from coal-fired power plants to capture twice as much carbon dioxide as the plants emit.
A deal at Copenhagen and domestic legislation to implement it will, says Chichilnisky, provide “plenty of money and profits from building clean power plants and scrubbing the CO2 they emit.”