Environment 2

Banning the international trade in coal as a measure to reduce global CO2 levels

Moksha Shah

Head Chair

Topic Summary Coal currently provides 40% of the world’s electricity needs It is the second source of primary energy in the world after oil, and

the first source of electricity generation. Since the beginning of the 21st century, it has been the fastest-

growing global energy source.  The increase in coal use is largely due to the fact that developing

countries, especially China, have relied on it, literally and metaphorically, to “fuel” their economic growth.

Coal's share of total world energy consumption has remained relatively flat over the last few years, declining slightly from a peak of 29 percent in 2010 to 27 percent in 2013.

Although governments around the world have been trying to cut down coal consumption due to the high emission rates, its industrial demand has remained at an all-time high.

Regardless of its economic benefits, the environmental impact of coal use, especially that coming from carbon dioxide emissions, must be urgently addressed. Despite positive efforts to build more efficient plants, to retrofit old plants and to decommission the oldest, least efficient ones, the current pace is far from what is needed.

Source: International Energy Agency http://www.iea.org/topics/coal/

Key point:Many nations are pursuing and

implementing climate policies to reduce carbon emissions in their own country

BUT at the same time they are exporting coal to other countries. The

coal trade undermines and overwhelms efforts to reduce global CO2 levels.

Key Terms Emissions: the production or discharge of substances; for this issue it is carbon dioxide

and other pollutants. (Source: US EPA http://www.epa.gov/cleanenergy/energy-and-you/affect/air-emissions.html)

Carbon dioxide (CO2) is the primary greenhouse gas emitted through human activities. The main human activity that emits CO2 is the combustion of fossil fuels (coal, natural gas, and oil) for electricity generation, as well as transportation, and industry. Human activities are altering the carbon cycle—both by adding more CO2 to the atmosphere and by influencing the ability of natural sinks, like forests, to remove CO2 from the atmosphere. While CO2 emissions come from a variety of natural sources, human-related emissions are responsible for the increase that has occurred in the atmosphere since the industrial revolution. This increase in CO2 emissions has led to climate change by adding CO2 and other heat-trapping gases to the atmosphere. (Source: US Environment Protection Agency http://www.epa.gov/climatechange/ghgemissions/gases/co2.html)

Key Terms Climate Change: The increase in heat-trapping gases such as carbon dioxide is warming

the earth and thus changing the climate. Climate change impacts include: higher temperatures, more droughts, wilder weather, melting glaciers, rising sea levels and ocean acidity. These environmental changes will have increasingly negative consequences for humanity through the impact on human health, agriculture, recreation, water supplies, plants/animals/ecosystems, and particularly forests and coastal areas. (Source: US Environment Protection Agency http://www.epa.gov/climatestudents/basics/index.html)

Embargo: an official ban on trade or other commercial activity. (Source: US Foreign Policy http://usforeignpolicy.about.com/od/introtoforeignpolicy/a/what-are-sanctions.htm)

Sustainable Development: human development in which resource use aims to meet human needs while ensuring the sustainability of natural systems and the environment, so that these needs can be met not only in the present, but also for generations to come. (Source: UN Documents http://www.un-documents.net/ocf-02.htm)

Specific Components Transportation and Taxes: This is an important factor in coal

trade as it is very expensive to import coal when it is subject to a “Carbon Tax” or limited by a “Cap-and-Trade” program (see later slides for further explanation). This is one of the reasons China, who was the largest exporter of coal, is a major importer now. The taxes and tariffs have been an important development towards banning international coal trade as it has deterred nations from increasing their coal exports.

Mining Industry: After countries have adopted measures to switch to renewable energies, mining companies seek to address foreign demands for coal because domestic demands have decreased. Even though this decreases one nation’s reliance on coal, it increases international coal trade, as is the case with the United States.

Economic Dependency: States such as Australia, Indonesia and South Africa are major coal exporters and their economies are greatly dependent on their coal exports; therefore, they are very reluctant to promote measures to limit the coal trade, even though their coal exporting policy undermines any benefits from their domestic climate policy efforts. Several economic incentives have been tried, but are mostly ineffective.

Major Parties Major Coal Consumers: China (47 percent), the United

States (14 percent), and India (9 percent), with those three countries accounting for 70 percent of total world coal consumption in 2010. 

Major Coal Exporters: Australia, Indonesia, United States, South Africa, Russia, Colombia

Major Coal Importers: China, India, Japan, South Korea, Taiwan, Europe

Organization for Economic Co-operation and Development (OECD): is an economic organization founded in 1961 to stimulate economic progress and world trade. It has published a very in depth review of the evolution of coal trade.

International Energy Association (IEA): is an organization which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. The IEA's four main areas of focus are: energy security, economic development, environmental awareness, and engagement worldwide.

The United Nations continually advocates for the adoption of renewable energy sources and environmentally sustainable methods of attaining energy.

While the United Nations does not directly advocate to ban the coal trade, it strongly encourages a reduction of carbon emissions. The organization pushes for emissions trading, through the Kyoto Protocol (initially in 1997) and the United Nations Framework Convention on Climate Change.

Furthermore at the United Nations Conference on Environment and Development (UNCED), also known as the Rio Summit, the organization and member nations sought to attain measures to replace the use of fossil fuels and coal.

The Intergovernmental Panel on Climate Change (IPCC) is the leading international body for the scientific assessment of climate change. It was established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988.

UN negotiations are taking place to develop a new international climate change agreement to cover all countries – a protocol that will be legally binding. It will be adopted in 2015 at the Paris climate conference, and implemented from 2020.

UN Involvement

1885:Coal replaces wood as the dominant fuel.

1952: “killer smog” hits London and kills 4,000 and it remains the deadliest smog till now.

1988: The Intergovernmental Panel in Climate Change established by the United Nations Environmental Programme was created to assess information regarding energy consumption and climate change.

1992: The First Rio Summit was held to address environmental concerns most notable alternatives to the usage of fossil fuels.

1992: Creation of the UN Framework Convention on Climate Change (UNFCCC) at the summit which called for voluntary cuts in greenhouse gas emissions and laid the groundwork for future protocols that would be legally binding.

1997: UNFCCC countries adopt the Kyoto Protocol which establishes legally binding obligations for developed countries to reduce greenhouse gas emissions.

Timeline

2009: The UN Climate Change Conference, commonly known as the Copenhagen Summit, was held with the aim of building on the work of the UNFCCC and the Kyoto Protocol.

2011: UN Durban Climate Change Conference

2012: UN Rio+20 Conference was held on the topic of Sustainable Development

2013: UN Warsaw Climate Change Conference

Timeline (Cont.)

The UN Framework Convention on Climate Change requires nations to take responsibility for emissions produced within their own borders. It does not, however, address the responsibility of nations, companies, and consumers who are involved in exporting fossil fuels, such as coal, or importing manufactured goods which relied on coal for their production and transport. Delegates should consider ways to increase accountability for the “co-production” of emissions, i.e. CO2 released at a distance (outside of a nation’s borders).

While the ultimate goal of this issue is a ban on coal trade, delegates must recognize that countries will take a different stance depending on their economic situation and political ability to implement the measures discussed. Countries will also need to consider the positions of their trading partners and political allies. In order to build consensus and achieve maximum engagement by UN member states in solving this issue, delegates should therefore also consider what steps can be taken towards this ultimate goal.

Possible Solutions

In order for states to ultimately ban coal trade, especially coal-reliant countries, delegates need to take into account a variety of factors. Firstly, delegates must decide whether an action is economically feasible –

can the nation still achieve sustained economic growth? What level of economic growth is reasonable for a particular country’s situation?

Delegates also need to consider alternative energy sources and their environmental and economic impact.

The time-frame for implementing actions will also be a point of debate. Countries that depend on the coal export economy will not want an abrupt reduction that results in trauma for the rest of the national economy.

Another key question is: who should take responsibility for solving this issue? How much of a burden should low-carbon emissions countries bear? How much should developing countries contribute to the solution when they have contributed very little to the problem of climate change? How can fairness be achieved? How can delegates “level the playing field”?

Consideration should also be given to a country’s capacity to actually implement a policy – agreement on action is the first goal but only by turning agreement into action will this issue actually be solved.

Another discussion point is how much governments should drive direct action vs. how much governments should allow the global market economy to drive action on this issue.

Possible Solutions

Measures to reduce and ultimately ban the coal trade can occur as part of broader action to reduce carbon emissions, such as these: National carbon footprints: Government can take steps to more accurately measure

their country’s carbon footprint, to freeze its expansion, and then continue to monitor it. Carbon Funds: Establishing national and/or international carbon funds will help to

provide for longer term structural adjustments (to help all sectors of the economy through the period of adjustment to a more environmentally-friendly economy) and to raise funds for investing in energy alternatives, especially for developing nations currently importing fossil fuels.

Carbon Capture and Storage (CCS): is the process of capturing waste carbon dioxide and depositing it underground, where it will not enter the atmosphere or the ocean. However, the main issue with carbon capture and storage is the risk of leakage, therefore the technology requires further research and investment before it can be adequately implemented on a large scale. For now though, this is the most promising solution.

Fuel-switching: Policies and regulations to encourage the use of cleaner energy sources will reduce carbon emissions and global coal consumption.

Energy Efficiency and Energy Conservation: Through measures to implement these strategies, carbon emissions can be directly reduced plus the demand for coal can also be reduced.

Possible Solutions (cont.)

Carbon Emissions Trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare - emissions permitted them but not “used” - to sell this excess capacity to countries that are over their targets. Thus, a new commodity was created in the form of emission reductions or removals. Since carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked and traded like any other commodity. This is known as the “carbon market” and it has grown steadily over the last decade. It is worth tens of billions of dollars.

Possible Solutions (cont.)

Cap-and-Trade program: In a cap-and-trade program the government puts a limit on the overall level of carbon

pollution from a given industry and lowers the level every year to reach an established limit. If companies exceed this limit they’re forced to buy a quota from another company therefore making it wiser to not to use cheaper polluting technology.

Pros: Cap-and-trade programs are favored by those who prefer it instead of taxation (adding

a carbon tax). It allows financial market forces to drive change (as opposed to government-forced

change). It is flexible, so companies can determine how much they adjust by reducing their

carbon emissions vs. buying credits from other companies. Cons:

Many cap-and-trade programs have been established but they vary nationally and internationally. The International Carbon Action Partnership (ICAP) was established in 2007 to help coordinate the global market.

Possible Solutions (cont.)

Carbon Tax: A carbon tax is a fee on greenhouse gas emissions; this is applied mainly to industrial

processes. Pros:

Carbon taxing is a disincentive for companies to use non-renewable energy sources like coal, and eventually the price on the emissions will incentivize companies to invest in renewable energy resources instead. The high tax will encourage them to give up their reliance on coal.

Carbon taxes are also very easy for governments to implement. Cons:

It is unfair for competing companies all over the world since different countries have different environmental regulations, which results in vastly different expenses and profits.

Possible Solutions (cont.)

Focus on coal exporters: Coal exporting countries and companies have not been required to take much responsibility for their actions which ultimately result in more carbon emissions. Instead, the focus has been on the countries and companies that actually produce the emissions using the imported coal (i.e. burning coal for their power or industry).

Solutions could focus on the coal producers and exporters, instead of only the importers/coal burners.

(Countries such as Canada, Australia, the Russian Federation, and Saudi Arabia, will be particularly affected by this approach.)

Possible Solutions (cont.)

Solutions that focus on coal exporters may include, for example: Tax on trade in unprocessed (or unburned) fossil fuels; caps on exports. Shift in how the world measures responsibility for carbon emissions – add emissions

from exported coal to emissions produced within a nation’s own borders. Then apply actions such as taxation and cap-and-trade programs. This approach will provide a more accurate summary of a nation’s responsibilities to mitigating

climate change (especially since some of these major coal exporters currently claim that their contribution to the problem of climate change is only very minimal!)

It also aligns with the principle of “doing no harm” which is recognized under international law and which many countries have agreed to in signing declarations such as the Rio Declaration of 1992, which states that parties “have the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States.” The coal trade clearly flouts the harm avoidance principle.

Actions to limit coal mining in the first place, so as to reduce coal exports. Actions to minimize the impact on the national economy while the coal export

economy is scaled down (especially if slowing the coal export economy occurs at the same time as increasing costs from climate adaptation and disaster relief funding). 

International cooperation and coordination to achieve these goals and hold countries and companies accountable.

Possible Solutions (cont.)

Bibliography "Blow for Clean Coal as UN Shuts It out of Emissions Trading." The Telegraph 

     [England] 16 Dec. 2009: The Telegraph. Web. 25 Dec. 2013.      <http://www.telegraph.co.uk/earth/copenhagen-climate-change-confe/6827802/      Blow-for-clean-coal-as-UN-shuts-it-out-of-emissions-trading.html>. 

Cornot-Gandolphe, Sylvie. "Global Coal Trade: From Tightness to Oversupply."      2013. PDF.

David Suzuki Foundation. "Carbon Tax and Cap-and-Trade." Carbon Tax or      Cap-and-Trade. David Suzuki Foundation, n.d. Web. 31 Dec. 2013.      <http://www.davidsuzuki.org/issues/climate-change/science/climate-solutions/      carbon-tax-or-cap-and-trade/>. 

EIA. "International Energy Outlook." U.S Energy Information Administration. 2013. Web. 30 Dec. 2013. <http://www.eia.gov/forecasts/ieo/coal.cfm>. 

ICAP. "Cap Setting." International Carbon Action Partnership. ICAP, 2013. Web.      31 Dec. 2013. 

IEA. "Topic: Carbon Capture and Storage." Carbon Capture and Storage. IEA.      Web. 25 Dec. 2013. <http://www.iea.org/topics/ccs/>. 

Bibliography (Cont.)

International Energy Association: Coal. International Energy Association,      Web. 25 Dec. 2013. <http://www.iea.org/topics/coal/>. 

Technology Roadmaps. IEA, Web. 25 Dec. 2013. <http://www.iea.org/      roadmaps/>. 

United Nations. "International Emissions Trading." United Nations Framework      Convention on Climate Change. United Nations. Web. 25 Dec. 2013. <http://unfccc.int/2860.php>

Peter, Christof. "Why Australia Must Stop Exporting Coal." The Conversation. 2 Dec. 2012. Web. 30 Dec. 2013. <http://theconversation.com/why-australia-must-stop-exporting-coal-9698>

Further Reading UNFCC Cancun Agreements: http://unfccc.int/key_steps/cancun_agreements/items/6132.php

UNFCC Warsaw Climate Conference: http://unfccc.int/2860.php

Rio+20 Conference on Sustainable Development: http://www.uncsd2012.org/

United Nations Outlook on a Sustainable Future: http://www.un.org/en/sustainablefuture/

UNFCC Press Headlines: http://unfccc.int/press/news_room/items/2768.php

United Nations Sustainable Development Knowledge Platform: http://sustainabledevelopment.un.org/

Intergovernmental Panel on Climate Change (WHO, UNEP) http://www.ipcc.ch/organization/organization.shtml#.UsINLNIW28A

Image Citations

trade. [Online Image] December 24, 2013. https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcTPyE1HC9o_9BD-VoJ3NOXYKhp0p3vTrIHRAdWFeqGAIEFmsPhWWw

Title Slide Coal [Online Image] December 24, 2013 https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQjASQsgwEjuL5rRe9fOQOR_7mpRkEGlgg8fVnkok34VzlOhw5uQw

Fiery Coal [Online Image] December 24, 2013 https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcQYG1jCyr-pEDZMi92MAjlHLTUpRGyhyVGWY3hWnnTzqZH5E0LR

Black Coal [Online Image] December 24, 2013 https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTZY-ZBZfFOS8aSVXmSrn5-S_lmGh9OY65N500Hlxqck2l6m3Ke

Ship [Online Image] December 24, 2013 https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQrxenQ6V-Ey5epRtuojTsyx6gfLDYlAYQfscSaIVXfVqwD6TGr7Q

Trade Symbol [Online Image] December 24, 2013 https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTsoQLTo8s07ErTlyAYcWuGLE0L6v9ngSeyO-Bakz8edKlHWzkX

Image Citations (cont.)

OECD Logo. [Online Image] December 24, 2013. https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcSvEFDuGVO2p0geao-Lb8y8LcSqvATH_QtbtdvGBPaYOVrLiTnt

Black Coal [Online Image] December 24, 2013 https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTZY-ZBZfFOS8aSVXmSrn5-S_lmGh9OY65N500Hlxqck2l6m3Ke

Ship [Online Image] December 24, 2013 https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQrxenQ6V-Ey5epRtuojTsyx6gfLDYlAYQfscSaIVXfVqwD6TGr7Q

Trade Symbol [Online Image] December 24, 2013 https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTsoQLTo8s07ErTlyAYcWuGLE0L6v9ngSeyO-Bakz8edKlHWzkX