Carbon Trading Law and Practice

Cover......Page 1
Contents......Page 8
Acknowledgments......Page 24
Preface......Page 26
Introduction......Page 30
PART ONE: The Emergence of Carbon Markets......Page 36
1 Prelude to Regulation—The Development of Climate Change Science......Page 38
A. Typical Process of Regulation Following Science......Page 39
C. The Science of Climate Change......Page 40
E. Controversy over Climate Science......Page 47
F. Future Policy Development Based on Climate Science......Page 50
A. Economics vs. the Environment......Page 51
C. Emissions Trading as a Means of Bridging the Divide between the Economy and Environment......Page 52
D. Basic Concepts of Emissions Trading......Page 53
E. Cap and Trade “Made in America”—The Advent of U.S. Emissions Markets with Sulfur Dioxide and Other Emissions......Page 55
F. Examples of Working Carbon Markets......Page 56
G. Environmental Markets Are Alive and Well......Page 59
A. Defining the Regulated Gases......Page 60
C. Determining the Regulated Sources......Page 63
E. Permitting Emissions of Greenhouse Gases......Page 65
G. Allocation of Emission Allowances......Page 66
J. Borrowing Allowances......Page 68
L. Offsets......Page 69
N. Supplementarity and Linkage to Other National and International Trading Systems......Page 70
P. New or Expanded Facilities......Page 71
Q. Regulatory Agency or Agencies......Page 72
R. Enforcement......Page 73
PART TWO: Regulatory Structures......Page 74
A. The UN Framework Convention on Climate Change......Page 76
B. The Kyoto Protocol......Page 77
C. The Marrakesh Accords......Page 81
D. Bali, Copenhagen, and Cancun: Negotiations for a Post-Kyoto Treaty......Page 82
E. Alternatives to the UNFCCC......Page 84
A. The EU Policy on Climate Change......Page 87
C. Phase II—2008 to 2012......Page 88
E. Fundamentals of the EU ETS......Page 89
A. New Zealand......Page 94
B. Canada......Page 95
D. Japan......Page 96
E. China......Page 98
B. Voluntary Markets......Page 99
C. Pre-Compliance Markets and the Transition from Voluntary to Compliance Markets......Page 104
E. The Current State of the Voluntary Market......Page 105
F. The European Market......Page 106
G. The Kyoto Protocol and the Clean Development Mechanism Market......Page 107
B. Individual State Programs......Page 109
C. Multi-State Programs......Page 120
D. Midwestern Greenhouse Gas Reduction Accord......Page 130
E. Cooperation and Potential Linkage among the Multi-State Programs......Page 131
9 Developing United States Law—The Courts......Page 134
A. Federal Statutory Litigation......Page 135
C. Federal Common Law Litigation to Impose Emission Reductions on Greenhouse Gas Emitters......Page 144
D. State and Federal Common Law Litigation to Obtain Damages from Greenhouse Gas Emitters......Page 146
10 Developing United States Law—The Environmental Protection Agency......Page 149
A. Federal Greenhouse Gas Reporting Program......Page 150
B. EPA Regulation of Greenhouse Gas Emissions under the Clean Air Act......Page 159
A. Defining the Regulated Gases......Page 168
B. Emission Thresholds for Facilities That Emit Greenhouse Gases......Page 170
C. “Covered Facilities”: Determining What Emission Sources Would Be Regulated......Page 171
D. Setting the Cap......Page 173
F. Emission Allowances......Page 174
G. Allocation of Emission Allowances......Page 175
H. Auctions......Page 176
J. Carbon Registry......Page 179
K. Offsets......Page 180
L. Compliance with Greenhouse Gas Emission Requirements......Page 198
N. Banking Allowances......Page 201
P. Safety Valve International Competitiveness......Page 202
Q. Supplementarity and Linkage to Other National and International Trading Systems......Page 204
R. Early Action......Page 205
T. Regulatory Agency or Agencies......Page 206
U. Enforcement......Page 207
PART THREE: Carbon Project Development and Carbon Finance......Page 208
A. Introduction to Carbon Credit Project Types and Methodologies......Page 210
B. Methodologies for Developing Carbon Credit Project Types......Page 211
C. Carbon Credit Project Types......Page 212
A. Project Development Generally......Page 228
C. Feasibility Study......Page 229
D. The Carbon Credit Approval Process......Page 231
E. Carbon Credit Project Risks......Page 234
F. Examples of Projects......Page 235
B. Project Finance......Page 242
C. Carbon Finance......Page 246
D. Carbon Credit Project Lenders and Investors......Page 249
PART FOUR: Other Credits That May be Generated From Carbon Credit Projects......Page 254
A. Environmental Attributes and Other Credits That May Enhance Carbon Credit Projects......Page 256
B. Renewable Portfolio Standards......Page 257
C. Renewable Energy Credits......Page 259
F. Forward Capacity Markets......Page 260
G. Contractual Issues in Selling RECs Outside California......Page 261
H. Contractual Issues in Selling RECs Inside California......Page 264
16 Ecosystem Services: Wetlands and Biodiversity Credits......Page 265
A. Wetlands Credits and Banking......Page 266
B. Biodiversity Credits......Page 267
C. Credit Stacking......Page 269
B. Why Water Is Becoming a Potential Tradable Commodity......Page 271
C. Water Credits and Markets as a Means of Conserving a Scarce Resource......Page 272
D. Carbon Credit Projects and Water Credits......Page 273
PART FIVE: Government Incentives—Stimulating Carbon Projects......Page 276
A. The Use of Government Incentives to Enhance Carbon Credit Projects......Page 278
B. Government Incentives......Page 280
C. Utility Incentives......Page 286
PART SIX: Carbon Trading—Selling Credits and the Carbon Markets......Page 288
B. The Various Types of Carbon Credits......Page 290
D. Secondary Markets and Exchanges......Page 291
G. Carbon Indexes......Page 292
J. Investors and Speculators......Page 293
M. State of the Global Carbon Markets......Page 294
B. Conditions Precedent......Page 296
E. Payment......Page 297
G. Obligations of Buyer......Page 298
H. Representations and Warranties......Page 299
J. Default......Page 300
M. Choice of Law and Venue......Page 301
Q. Miscellaneous Issues......Page 302
PART SEVEN: Carbon Accounting—Carbon Assets and Liabilities......Page 304
A. Carbon Accounting......Page 306
B. Defining Carbon Assets and Liabilities......Page 307
C. Forming a Carbon Ledger as Part of a Carbon Strategy......Page 308
D. Financial Accounting Treatment of Carbon Assets and Liabilities......Page 310
A. Corporate Climate Change Liabilities......Page 314
B. Securities and Exchange Commission Regulations Governing Environmental Financial Disclosure......Page 316
C. Accounting Rules......Page 318
E. SEC Enforcement......Page 319
F. SEC Guidance Regarding Disclosure Related to Climate Change......Page 320
G. Voluntary Climate Change Disclosure Protocols......Page 326
H. Voluntary Standards Evolving into Legal Requirements......Page 327
I. Officer and Director Liability Environmental and Climate Risk Management......Page 328
J. Conclusion......Page 330
Acronyms and Abbreviations......Page 332
A......Page 334
C......Page 335
E......Page 338
F......Page 339
I......Page 340
L......Page 341
N......Page 342
P......Page 343
R......Page 344
T......Page 345
W......Page 346