WIND AND SOLAR IN THE CARBON MARKET – CURRENT STATUS AND OUTLOOK
During the first two weeks of December 2008, Poznan, Poland’s fifth largest city, hosted the United Nations Climate Change Conference, the 14th session of the Conference of Parties (COP 14) to the United Nation Framework Convention on Client Change (UNFCCC).
The negotiations that took place were a halfway point between the Bali Roadmap created in Indonesia last year and the Copenhagen talks planned for this year, when negotiators hope to sign a successor to Kyoto. This, alongside commitments made by President Barack Obama on November 18th, indicates that climate change is still a major agenda for countries all over the world. So how does wind and solar energy fit into this, what is the current status of wind and solar in the carbon market and how might this look for the future?
An overview of wind and solar in the carbon market
The carbon market can be divided into two segments, the regulatory or compliance sector and the voluntary sector. The compliance sector falls under the Kyoto Protocol where binding targets have been set for 37 industrialised countries to reduce greenhouse gas (GHG) emissions. The target reduction is an average of five per cent against 1990 levels over a five-year period, 2008-2012. The voluntary segment, on the other hand, allows companies choosing to be carbon neutral to purchase carbon credits, on a voluntary basis, to offset the emissions of their day-to-day operations.
The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and came into full force on the 16 February 2005. At the same time the Protocol established these binding commitments, it also approved the use of three market-based mechanisms to facilitate the achievement of the reduction targets.