U.S. patent application number 11/840482 was filed with the patent office on 2008-01-17 for systems and methods for trading emission reductions.
This patent application is currently assigned to Chicago Climate Exchange, Inc.. Invention is credited to Murali Kanakasabai, Richard Sandor, Michael Walsh.
Application Number | 20080015976 11/840482 |
Document ID | / |
Family ID | 35188215 |
Filed Date | 2008-01-17 |
United States Patent
Application |
20080015976 |
Kind Code |
A1 |
Sandor; Richard ; et
al. |
January 17, 2008 |
SYSTEMS AND METHODS FOR TRADING EMISSION REDUCTIONS
Abstract
Systems and methods for facilitating trading of emission
allowances and offsets among participants are described. In some
embodiments, methods of facilitating such trading include
establishing an emissions reduction schedule for certain
participants based on emissions information provided by those
participants and determining debits or credits for each participant
in order to achieve the reduction schedule.
Inventors: |
Sandor; Richard; (Chicago,
IL) ; Walsh; Michael; (Downers Grove, IL) ;
Kanakasabai; Murali; (Chicago, IL) |
Correspondence
Address: |
WINSTON & STRAWN LLP;PATENT DEPARTMENT
1700 K STREET, N.W.
WASHINGTON
DC
20006
US
|
Assignee: |
Chicago Climate Exchange,
Inc.
Chicago
IL
|
Family ID: |
35188215 |
Appl. No.: |
11/840482 |
Filed: |
August 17, 2007 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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11034752 |
Jan 14, 2005 |
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11840482 |
Aug 17, 2007 |
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10623134 |
Jul 18, 2003 |
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11034752 |
Jan 14, 2005 |
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60397401 |
Jul 20, 2002 |
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60537344 |
Jan 15, 2004 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
Y02P 90/845 20151101;
Y02P 90/90 20151101; G06Q 40/04 20130101; G06Q 30/08 20130101 |
Class at
Publication: |
705/037 ;
705/001 |
International
Class: |
G06Q 10/00 20060101
G06Q010/00; G06Q 40/00 20060101 G06Q040/00; G06Q 99/00 20060101
G06Q099/00 |
Claims
1. A computer-implemented method of promoting the reduction of
emissions comprising: registering participants voluntarily with an
established entity; establishing an emission reduction schedule for
a set future period of time, including several years, for each
registered participant that produces emissions based on emissions
information over previous years provided by each registered
participant; establishing tradable financial instruments, including
emission allowances, emission offsets, and credits; issuing
tradable emission allowances to each registered participant based
on the established reduction schedule; collecting emissions data
for each registered participant; comparing the collected emissions
data with the corresponding data in the established reduction
schedule for each registered participant; based on the comparing
step, determining debits or credits for each registered
participant; and based on the determining step, if the registered
participant's emissions exceed the corresponding data in the
established reduction schedule, debiting each registered
participant a quantity of tradable financial instruments, thereby
penalizing the registered participant, wherein the registered
participant is required to purchase tradable financial instruments
to achieve compliance with the reduction schedule; and based on the
determining step, if the registered participant's emissions are
below the corresponding data in the established reduction schedule,
crediting each registered participant a quantity of tradable
financial instruments, thereby rewarding the registered
participant, wherein the registered participant can trade or bank
those tradable financial instruments.
2. The method of claim 1, wherein the registered participants
further comprise environmental benefactors, the registered
participants that produce emissions comprise voluntary greenhouse
(GHG) emission reducers and the method further comprises conducting
trades over the internet between the environmental benefactors and
voluntary GHG emission reducers.
3. The method of claim 2, wherein the voluntary GHG emission
reducers comprise industrial entities, the environmental
benefactors comprise non-industrial entities, and the voluntary GHG
emission reducers obtain at least some of their tradable financial
instruments from the environmental benefactors.
4. The method of claim 3, wherein the non-industrial entities
comprise (a) foresters, farmers, or others who prepare land for
facilitating prevention of GHG emissions or for capturing and
storing carbon or carbon dioxide, or (b) businesses including law
firms, advertising agencies, banks, shopping centers or other
businesses that are capable of exerting control over utility or
transportation uses in order to reduce or conserve such uses to
reduce GHG emissions caused by generation of power or electricity
for providing such uses.
5. The method of claim 3, further comprising providing credits to
environmental benefactors who conduct activities that include
planting trees; keeping carbon released by plants in the soil;
reducing electricity consumption; reducing business travel;
removing pollutants from streams, lakes, landfills, or other
environmentally unfriendly areas; purchasing environmentally
friendly products; or recycling, thus facilitating trading of
tradeable financial instruments by the environmental benefactors
with the voluntary GHG emission reducers.
6. The method of claim 1, wherein the establishment of the emission
reduction schedule comprises creating an emission reduction
baseline based on actual emissions and obtaining the registered
participants' agreement to meet the reduction schedule by obtaining
tradable financial instruments.
7. The method of claim 6, further comprising adjusting the baseline
due to changing emission factors.
8. The method of claim 1, wherein the determination of debits or
credits comprises consideration of the registered participant's use
of alternative energy sources.
9. The method of claim 1, wherein the determination of debits or
credits comprises consideration of the registered participant's
activities prior to its registration with the established
entity.
10. The method of claim 9, wherein the activities comprise one or
more of reforestation, assisted forest regeneration, avoided
deforestation, fuel switching, landfill methane destruction, and
renewable energy generation from solar, wind, small hydroelectric
and biomass systems.
11. The method of claim 1, further comprising establishing emission
monitoring rules that designate which activities count toward
emissions.
12. The method of claim 1, further comprising independently
verifying that the registered participants are properly providing
the emissions data to achieve emission reductions according to the
established reduction schedule.
13. The method of claim 1, wherein participation by the registered
participants is across multiple countries and trading is conducted
over the internet.
14. The method of claim 1, further comprising computing tradable
carbon financial instruments for the registered participants based
on an energy consumption or conservation activity.
15. The method of claim 14, wherein the energy consumption or
conservation source activities include at least one of: power
generation activities, transportation activities, and
non-transportation activities, in which each transportation
activity is related to an energy source consumed during
transportation and is associated with selectable activity units
that include one or more of: units of transportation fuel consumed
during transportation and units of distance traveled during
transportation, optionally modified by fuel efficiency values, and
in which each non-transportation energy activity is related to an
energy source consumed independent of transportation and is
associated with selectable activity units that include one or more
of: units of energy consumed during production of a product, units
of a feedstock consumed during production of a product, units of a
product produced, units of a product consumed, units of energy
consumed during operation of an office facility, and units of
office space occupied by an office facility.
16. A computer-implemented system for promoting the reduction of
emissions comprising a processor, wherein the processor is
configured to: register participants voluntarily with an
established entity; establish an emission reduction schedule for a
set future period of time, including several years, for each
registered participant that produces emissions based on emissions
information over previous years provided by each registered
participant; establish tradable financial instruments, including
emission allowances, emission offsets, and credits; issue tradable
emission allowances to each registered participant based on the
established reduction schedule; collect emissions data for each
registered participant; compare the collected emissions data with
the corresponding data in the established reduction schedule; based
on the comparison, determine debits or credits for each registered
participant for each year of that period of time; and based on the
determination, if the registered participant's emissions exceed the
corresponding data in the established reduction schedule, debit
each registered participant a quantity of tradable financial
instruments, thereby penalizing the registered participant, wherein
the registered participant is required to purchase tradable
financial instruments to achieve compliance with the established
reduction schedule; or based on the determination, if the
registered participant's emissions are below the corresponding data
in the established reduction schedule, credit each registered
participant a quantity of tradable financial instruments, thereby
rewarding the registered participant, wherein the registered
participant can trade or bank those tradable financial
instruments.
17. The system of claim 16, wherein the registered participants
comprise environmental benefactors, the registered participants
that produce emissions comprise voluntary GHG emission reducers,
the tradable financial instruments represent emission reduction
amounts based on the emissions information or activities of the
environmental benefactors, and the processor is further configured
to conduct trades of the tradable financial instruments between the
environmental benefactors and the voluntary GHG reducers to enable
each registered participant that produces emissions to achieve its
reduction schedule.
18. The system of claim 16, wherein the processor is further
configured to provide registered participants with tradable early
action credits or renewable energy certificates to provide for long
term planning to achieve emission reductions according to the
established reduction schedule, and is configured to conduct trades
of such credits or certificates over the internet
Description
REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of U.S. application Ser.
No. 11/034,752 filed Jan. 14, 2005, which is a continuation-in-part
of U.S. application Ser. No. 10/623,134, filed Jul. 18, 2003, which
claims the benefit of U.S. application No. 60/397,401 filed Jul.
20, 2002. Application Ser. No. 11/034,752 claims the benefit of
U.S. application No. 60/537,344 filed Jan. 15, 2004. The contents
of all these applications are expressly incorporated by reference
herein in their entireties.
COPYRIGHT NOTICE
[0002] This application includes material that is subject to
copyright protection. The copyright owner does not object to the
facsimile reproduction of the application by any person as the
application appears in the records of the U.S. Patent and Trademark
Office, but otherwise reserves all rights in the copyright.
BACKGROUND
[0003] The world's environment faces significant threats from
anthropogenic or "human-caused" releases of greenhouse gases to the
atmosphere. Greenhouse gases, such as water vapor, carbon dioxide,
tropospheric ozone, nitrous oxide, and methane, are generally
transparent to solar radiation but opaque to longwave radiation,
thus preventing longwave radiation energy from leaving the
atmosphere. The net effect of greenhouse gases in the atmosphere is
a trapping of absorbed radiation and a tendency to warm the
planet's surface.
[0004] Greenhouse gases can be released, for example, by the
release of carbon dioxide during fossil fuel combustion. Thus,
automobiles, factories, and other devices that combust fuel release
carbon dioxide gases into the atmosphere. However, greenhouse gases
can also be released by more natural means. For example, farmers
may till farmland such that carbon dioxide from the tilled ground
is released into the air. The removal of forest stands, or
deforestation, can also result in the release of greenhouse
gases.
[0005] In general, the rapid increases in the concentration of
greenhouse gases in the earth's atmosphere caused by human activity
increases the risk of fundamental and costly changes in the earth's
climate system. Such risks can include more severe
drought/precipitation cycles; longer and more extreme heat waves;
spread of tropical diseases; damage to vegetation and agricultural
systems; and threats to coastlines and property due to higher sea
levels and storm surges.
[0006] In the 1980's, the United States implemented an emissions
trading system to phase out lead from motor fuel. This effort was
followed by a highly successful U.S. Environmental Protection
Agency (EPA) sulfur dioxide (SO.sub.2) emissions trading program.
To reduce acid rain, an overall cap on SO.sub.2 emissions was
imposed on electric power plants. Utilities that found it expensive
to cut sulfur emissions could buy allowances from utilities that
make extraordinary cuts at low cost.
[0007] The SO.sub.2 program has been successful. Emissions were
reduced faster than required and costs were far below most
forecasts. There has also been steady growth in the trading of
allowances, from 700,000 tons in 1995 to approximately 12 million
tons in 2001. The SO.sub.2 emissions market has now reached a value
of approximately $2 billion each year for registered trades.
[0008] The environmental and economic success of the U.S. sulfur
dioxide allowance trading program to reduce acid rain, as well as
other similar markets, provides evidence of the benefits of
emissions trading on a large-scale. Emissions trading introduces
scarcity by establishing limits on overall emissions, specifying
firm-level limits, and allowing those who can cut emissions at low
cost to make extra cuts. Companies facing high costs to cut
emissions can comply by purchasing tradable emission rights from
those who make extra cuts. The market in a property-like
instrument--emission allowances--helps assure efficient use of the
limited resource (the environment) and yields a price that signals
the value society places on use of the environment. That price
represents the financial reward paid to those who reduce emissions,
and also indicates the value of creating innovative pollution
reduction techniques.
[0009] Emission allowance trading systems, sometimes referred to as
"cap and trade" systems, can be supplemented by project-based
"offsets" that reflect reduction of greenhouse gases and/or capture
and storage of carbon dioxide. Offsets can be generated by
individual initiatives undertaken by entities that are either not
significant emission sources, or have emission profiles that are
naturally incorporated into the market as offsets. For example,
individual farmers can absorb and store carbon dioxide in soils by
maintaining cropping practices that use conservation tillage.
Conservation tillage involves minimal disturbance of the soil, thus
trapping carbon that was transmitted to the soil by growth of
plants.
[0010] Incorporation of offsets provides industrial emission
sources with an additional source of greenhouse gas mitigation,
while also providing a funding source for activities, such as
conservation tillage, which produce local environmental benefits
such as improved water quality.
[0011] Many major industrial nations have sought the design of a
greenhouse gas emissions trading program that can provide
corporations and others an organized, market-based mechanism for
cost-effectively reducing global warming gases. This endeavor
presents a means for effectively addressing climate change while
offering its owners and members a significant commercial
opportunity.
[0012] While national and sub-national governments have been
studying greenhouse gas emissions trading programs, for several
years private sector leaders in many countries have financed
mitigation projects and conducted trading with informal "carbon
credits." A World Bank study reports that this nascent
over-the-counter market has included several dozen significant
trades. The study found that, in the absence of any regulatory
framework, the dollar volume of over-the-counter transactions has
already surpassed $200 million. Furthermore, The Economist magazine
projects an annual volume of trading ranging from $60 billion to $1
trillion.
[0013] Numerous governments have moved beyond planning and are
implementing formal greenhouse gas markets, including the U.K.,
Denmark, and the Netherlands, as well as Massachusetts and New
Hampshire. The European Union has established the framework for a
carbon dioxide emissions trading system to be employed starting
2005. The European Union Directive establishes an initial phase
market in advance of a broader and more comprehensive greenhouse
gas emissions trading system among energy and industrial facilities
in its member states starting in 2008.
[0014] A number of states, provinces, exchanges and multilateral
institutions have made detailed preparations for trading. It is in
this context, recognition of a serious environmental risk, desire
for least-cost responses, increasing regulation worldwide, and
demands from stakeholders that the present invention offers
solutions to challenges in establishing and operating a greenhouse
gas trading exchange.
[0015] Examples of barriers to greenhouse gas trading include
regulatory uncertainty; lack of a clear, widely-accepted definition
of the commodity; lack of standards for monitoring, verification,
and trade documentation; lack of standards for eligibility of
project-based emission offsets; and lack of organized markets and
clear market prices. Other barriers and challenges also exist.
These barriers constitute significant transaction costs that impede
progress in adoption of greenhouse gas reduction commitments by
raising the costs of achieving such commitments.
[0016] Thus, there is a need for an improved emissions reduction
trading system that allows realization of greenhouse gas reduction
objectives at lower transaction costs. Further, there is a need for
an organized trading system to promote the reduction of greenhouse
gas emissions. Even further, there is a need for a standards-based,
organized trading market for greenhouse gases.
SUMMARY
[0017] The present invention relates to a method of facilitating
trade of emission allowances and offsets among participants, which
includes establishing an emission reduction schedule for certain
participants based on emissions information provided by those
participants and determining debits or credits for each certain
participant in order to achieve the reduction schedule. In an
exemplary embodiment, the participants include both voluntary
greenhouse gas (GHG) emission reducers and environmental
benefactors, the certain participants include the voluntary GHG
emission reducers and the method further includes conducting trades
between the participants. Typically, the voluntary GHG emission
reducers include industrial entities, while the environmental
benefactors include non-industrial entities, and the voluntary GHG
emission reducers obtain at least some of their debits from the
environmental benefactors.
[0018] The non-industrial entities may include (a) foresters,
farmers, or others who prepare land for facilitating prevention of
greenhouse gas emissions or for capturing and storing carbon or
carbon dioxide, or (b) businesses including law firms, advertising
agencies, banks, shopping centers or other businesses that are
capable of exerting control over utility or transportation uses in
order to reduce or conserve such uses to reduce GHG emissions
caused by generation of power or electricity for providing such
uses. The environmental benefactors are provided credits for
conducting activities that include planting trees; keeping carbon
released by plants in the soil; reducing electricity consumption;
reducing business travel; removing pollutants from streams, lakes,
landfills, or other environmentally unfriendly areas; purchasing
environmentally friendly products; or recycling, thus facilitating
trading of such credits or allowances by the environmental
benefactors with the voluntary GHG emission reducers.
[0019] The present invention further relates to a computer-based
system for facilitating the trade of emission allowances and
offsets among participants, which includes means for establishing
an emission reduction schedule for certain participants based on
emissions information provided by those participants and means for
determining debits or credits for each certain participant in order
to achieve the reduction schedule. Preferably, the participants
include voluntary GHG emission reducers and environmental
benefactors, and the certain participants include the voluntary GHG
emission reducers. The system also preferably further includes (a)
debits or credits representing emission reduction amounts based on
the emissions information or activities of environmental
benefactors, and (b) means for conducting trades of the debits or
credits between the participants to enable each certain participant
to achieve its reduction schedule.
[0020] Systems and methods for computing greenhouse gas (GHG)
emission or emission reduction equivalents based on energy
consumption or conservation activities are also disclosed.
[0021] In some embodiments, methods for computing GHG emission or
emission reduction equivalents include providing activity data
based on an energy consumption or conservation activity and
associated with selectable activity units. A factor for converting
the activity data to one of GHG emission or GHG emission reduction
equivalents is applied to compute the GHG emissions or emission
reduction equivalents. The factor is based on the type of energy
activity and the selected activity unit. The equivalents conform to
standard values that facilitate trading between participants. The
factor can be based at least in part upon a location feature that
is related to the geographic location of the energy activities and
that is associated with selectable geographic locations.
[0022] In some embodiments, the participants include voluntary
emission reducers and environmental benefactors, and the methods
further include trading GHG emission or emission reduction
equivalents between the participants so that the voluntary emission
reducers can reduce GHG emissions.
[0023] The energy consumption or conservation activities typically
include one or more of power generation activities, transportation
activities, and non-transportation activities. Each transportation
activity is related to an energy source consumed during
transportation and is associated with selectable activity units
that include one or more of: units of transportation fuel consumed
during transportation and units of distance traveled during
transportation, optionally modified by fuel efficiency values. Each
non-transportation energy activity is related to an energy source
consumed independent of transportation and is associated with
selectable activity units that include one or more of: units of
energy consumed during production of a product, units of a
feedstock consumed during production of a product, units of a
product produced, units of a product consumed, units of energy
consumed during operation of an office facility, and units of
office space occupied by an office facility.
[0024] In some embodiments, a database of factors is provided, in
which each factor is associated with a type of energy activity, a
geographic location, and an activity unit. The factor is determined
by querying the database to determine whether it includes a factor
that is associated with the type of energy activity and the
selected activity unit.
[0025] The factors generally include emissions factors and
conservation factors. Each emission factor is usually associated
with a type of energy source consumed and an activity unit, while
each conservation factor is usually associated with an energy
conservation activity, a geographic location, and an activity
unit.
[0026] Systems and methods for reducing pollution by creating a
demand for a tradable GHG emission or emission reduction
equivalents are also disclosed.
[0027] In some embodiments, methods for reducing pollution include
computing GHG emission equivalents for a first participant based on
the previously described methods, and enabling the first
participant to acquire GHG emission reduction equivalents in an
amount that is at least equivalent to the computed GHG emission
equivalents so as to reduce pollution.
[0028] The methods further include computing GHG emission reduction
equivalents for a second participant by providing activity data
based on an energy conservation activity of the second participant
and associated with selectable activity units. A factor for
converting the activity data to GHG emission reduction equivalents
is applied to compute the GHG emission reduction equivalents of the
second participant. The factor is typically based on the type of
energy activity and the selected activity unit. When the first
participant is a voluntary emission reducer and the second
participant is an environmental benefactor, the methods can further
include trading GHG emission or emission reduction equivalents
between the participants so that the voluntary emission reducers
can reduce GHG emissions.
[0029] Systems and methods for administering a market for trading
GHG emission or emission reduction equivalents are also
disclosed.
[0030] In some embodiments, computer-implemented methods for
administering such a market include receiving a request from a
participant to trade on the market. In reply, the participant is
requested to provide information on amounts of GHG emission or
emission reduction equivalents to be traded, and the participant is
registered to trade the GHG emission or emission reduction
equivalents on the market.
[0031] Activity data can be received from the participant, in which
the activity data is based on an energy consumption or conservation
activity and associated with selectable activity units. A factor
for converting the activity data to one of GHG emission or GHG
emission reduction equivalents can be applied, in which the factor
is based on the type of energy activity and the selected activity
unit to compute the GHG emissions or emission reduction equivalents
to confirm whether the participant's information on amounts of GHG
emission or emission reduction equivalents to be traded is
accurate.
BRIEF DESCRIPTION OF THE DRAWINGS
[0032] FIG. 1 is a block diagram of an emissions reduction trading
system in accordance with an exemplary embodiment of the present
invention.
[0033] FIG. 2 is a diagrammatic representation of auction
functionality within the system of FIG. 1 in accordance with an
exemplary embodiment.
[0034] FIG. 3 is a block diagram of an emissions reduction and
trading system in accordance with another exemplary embodiment.
[0035] FIG. 4 is a flow diagram depicting exemplary operations
performed in the creation of baselines and allowance
allocations.
[0036] FIG. 5 is a graph of an exemplary emissions baseline,
reduction schedule, economic growth provision, and maximum
mitigation quantities.
[0037] FIG. 6 is a graph of an exemplary growth provision, maximum
required purchases, and allowed sales quantities.
[0038] FIG. 7 is a diagrammatic representation of multi-sector
emissions monitoring, reporting, and auditing for emissions
baselines and periodic emissions reports.
[0039] FIG. 8 is a diagrammatic representation of an exemplary
true-up process.
[0040] FIG. 9 is a diagrammatic representation of exemplary offset
project registration and reporting.
[0041] FIG. 10 is a diagrammatic representation of an exemplary
crediting mechanism for methane combustion.
[0042] FIG. 11 is a graph of exemplary forestry offsets based on
carbon storage.
[0043] FIG. 12 is an exemplary map of agricultural soil offsets
based on geographic region.
[0044] FIG. 13 is a diagrammatic representation of an exemplary
issuance of greenhouse gas emission allowances upon increases in
qualifying carbon stocks.
[0045] FIG. 14 is a diagrammatic representation of an exemplary
offset verification process.
[0046] FIG. 15 schematically illustrates another exemplary
embodiment of an emissions reduction trading system.
[0047] FIG. 16 schematically illustrates an exemplary display of a
graphical user interface that facilitates computations of GHG
emissions and compliance CFIs.
[0048] FIG. 17 schematically illustrates an embodiment of a method
for computing GHG emissions in the exemplary system of FIG. 15.
[0049] FIG. 18 schematically illustrates an embodiment of a method
for computing compliance CFIs in the exemplary system of FIG.
15.
[0050] FIG. 19 schematically illustrates an embodiment of a method
for registering CFIs for trading on a market supported by the
exemplary system of FIG. 15.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
[0051] Illustrative embodiments will now be described to provide an
overall understanding of the disclosed systems and methods. One or
more examples of the illustrative embodiments are shown in the
drawings. Those of ordinary skill in the art will understand that
the disclosed systems and methods can be adapted and modified to
provide systems and methods for other applications, and that other
additions and modifications can be made to the disclosed systems
and methods without departing from the scope of the present
disclosure. For example, features of the illustrative embodiments
can be combined, separated, interchanged, and/or rearranged to
generate other embodiments. Such modifications and variations are
intended to be included within the scope of the present
disclosure.
[0052] Turning now to the figures that illustrate exemplary
embodiments of the invention, FIG. 1 illustrates a diagrammatic
representation of an emissions reduction and trading system 10. The
system 10 can include a registry 12, a guarantee mechanism 16, and
a trading host or platform 18. The system 10 can be coupled to a
network 20, such as the Internet or any other public or private
connections of computing devices. The system 10 can be
communicatively coupled to an emissions database 22 either directly
or via the network 20.
[0053] The registry 12 serves as the official record of emission
allowance and offset holdings of each participant in the commodity
market managed by the system 10. Trades become officially
acknowledged for compliance purposes only when they are transferred
across accounts in the registry 12. The holdings of the registry 12
can be Carbon Financial Instruments (CFIs), such as, exchange
allowances (XAs), exchange emission offsets (XOs) generated by
mitigation projects, and exchange early action credits (XEs). Each
instrument represents one hundred metric tons of CO.sub.2 and is
preferably designated with a specific annual vintage. Each
instrument is recognized as equivalent when surrendered for
compliance (subject to certain constraints described below). CFIs
may be used in compliance in their designated vintage year or in
later years. These equivalents facilitate standardized trades.
[0054] In an exemplary embodiment, the registry 12 is designed to
have secure Internet access by participants to their own accounts.
The registry 12 may be configured to provide access of accounts by
the public, but this access would be on a view-only basis.
Preferably, the registry 12 is configured with the ability to
interface with registries in other greenhouse gas markets. The
registry 12 is linked to the trading platform 18 and financial
guarantee mechanism 16. The combination of these three components
provides a clearinghouse system.
[0055] The guarantee mechanism 16 enhances market performance in
several ways. The guarantee mechanism 16 ensures that those who
conduct sales of CFIs on the trading platform 18 receive next-day
payment even if the buyer fails to execute the payment process.
This mechanism allows for anonymous trading by eliminating the need
to address the credit worthiness of buyers. Non-payment risk is
eliminated, thus removing a transaction cost. This feature allows
the participation in trading by liquidity providers (including
"market makers"), who can stand ready to promptly buy and sell. The
presence of standing buyers and sellers increases trading activity,
which improves the economic efficiency of the price discovery
process. In addition, the ability to trade anonymously allows
members to post bids and offers and execute trades without
revealing their trading strategies. The guarantee mechanism 16,
eliminates the risk that a buyer may fail to make payment.
[0056] Upon enrollment as an exchange member, the member is
allocated a time stream of original issue allowances that are
designated with yearly vintages. Regardless of the method of
trading employed, all deliveries of exchange allowances (XAs) and
exchange offsets (XOs) occur by having the transferor instruct the
registry 12 to move allowances of offsets from its account to the
account of the transferee. Subsequent to year-end, the emission
source must transfer a quantity of appropriate vintage allowances
or offsets equal to its total emissions during the prior year to
the retirement account. Subsequent to the end of a compliance year,
each exchange member must designate for retirement a quantity of
tradable exchange CFIs equal to total emissions of that participant
during the compliance year.
[0057] The trading platform 18 is an electronic mechanism for
hosting market trading. The trading platform 18 provides
participants with a central location that facilitates trading, and
publicly reveals price information. The trading platform 18 reduces
the cost of locating trading counter parties and finalizing trades,
an important benefit in a new market. The trading platform 18 may
also be used as the platform for conducting the periodic
auctions.
[0058] FIG. 2 illustrates an exemplary annual auction performed
using system 10 described with reference to FIG. 1. Alternatively,
the auction can be held intermittently throughout a year. In an
exemplary embodiment, the auction operates by providing bids 30 and
offers for allowances to an auction pool 32. The auction pool 32
can receive allowances from an auction reserve 34 and other offers
36. The auction reserve 34 includes exchange allowances (e.g., the
XAs). Auction results include public price information 38, winning
bids 40, and proceeds returned pro rata to participants 42. Winning
bids 40 result in allowance transfers 44 between accounts in the
registry 12 described with reference to FIG. 1.
[0059] Advantageously, auctions of greenhouse gas emission
allowances provide an orderly mechanism for assisting the market.
By publicly revealing prices, the auctions provide critical
information to participants. Prices help participants formulate
reasonable private trading terms and, importantly, provide signals
indicating which internal greenhouse gas mitigation actions are
economically logical and which actions are best performed by other
participants who face lower mitigation costs.
[0060] The system 10 preferably conducts periodic auctions of
exchange allowances (XAs) (possibly including exchange emission
offsets (XOs) for the purpose of revealing market prices,
encouraging trade, and expanding market participation. In an
exemplary embodiment, a single-clearing price auction is performed.
Alternatively, a discriminating price auction is used. A
discriminating price method is used in the Chicago Board of Trade
auctions for sulfur dioxide emission allowances. By way of example,
a single clearing price auction is understood to be an auction
where all buyers pay the lowest price of all accepted bids. In
contrast, a discriminating price auction is understood to be an
auction where the successful buyers pay the price they bid
regardless of what other accepted bid prices are. As such, it is
possible to have different accepted prices in the same auction.
[0061] FIG. 3 illustrates an emissions reduction and trading system
100. The system 100 can include a registry 102, a trading platform
104, a clearing component 106, a financial institution 108, a help
desk 110, and a help desk support component 112. In general,
members 114 and/or participants 116 interact with the trading
platform 104 to engage in buying and selling allowances and
offsets. For registration/maintenance 118 and general inquiries
120, the members 114 and/or participants 116 interact directly with
the registry 102. In either case, communication is done by way of
technology standards 122. The technology standards 122 can include
internet protocol standards and other technology-specific standards
that facilitate communication by members 114 and/or participants
116.
[0062] The registry 102 can include information regarding system
products, such as, XAs, XOs, and XEs, as well as information
regarding baseline and emission reduction commitments. The registry
102 can be implemented using a database and computer software. The
registry 102 can also include information on retirement accounts
for allowances and offsets and early action credits based on
activities prior to establishment of the system.
[0063] The trading platform 104 provides members 114 and
participants 116 with a structure that enables the trading of
emission allowances and offsets. The trading platform 104 can be
implemented as a software program providing a user interface that
enables the execution of various functions. The trading platform
104 can include a market supervision monitor 130, a market
administration console 132, and equipment 134. The equipment 134
can include hardware and/or software, such as, routers, servers,
phone lines, and the like. The market administration console 132
allows the exchange to manage, intervene, and control accounts and
make adjustments to accounts (e.g., where member sells an emission
source). The market supervision monitor 130 facilitates the
oversight of trading done using the trading platform 104 for
adherence to system rules.
[0064] The trading platform 104 is coupled to the registry 102 to
obtain and communicate information, such as, account information
and trading records. The trading platform 104 also interacts with
the clearing component 106 in the carrying out of trades performed
by members 114 and participants 116 on the trading platform 104.
The clearing component 106 can include a book entry transfer 138
that constitutes the official mechanism by which delivery of
tradable CFIs occurs, a repository 140, a registry interface 142,
and a collection component 144. The financial institution 108
provide for settlement of trades and may provide a mechanism by
which financial performance is guaranteed.
[0065] The help desk 110 provides trading support for members 114
and participants 116 for trades using the trading platform 104. The
help desk support component 112 assists in customer inquiries that
are made directly to the system without going through the trading
platform 104, which may be provided and maintained by a third
party.
[0066] The market (as embodied in system 10 or system 100) has been
designed with a view to commoditizing CFIs used in the trading of
CFIs. Uniform and fully fungible CFIs (e.g., exchange allowances,
exchange offsets, and exchange early action credits) allow for easy
transfer and flexibility among participants. Uniformity reduces
transaction costs, increases predictability and enhances market
liquidity. Such features are a few of the improvements relative to
the heterogeneous and high transaction costs associated with
practices currently used in the informal market for greenhouse gas
emission reductions.
[0067] Each member of the market managed by the system 10
(described with reference to FIG. 1) or the system 100 (described
with reference to FIG. 3) (hereinafter collectively referred to as
the "market") has an emission baseline, which can be the average of
its emissions during certain previous years such as 1998 through
2001.
[0068] An emissions baseline preferably reflects a detailed
assessment of patterns of industrial activity and practical
considerations, such as data availability. Emissions baselines can
be adjusted to reflect acquisition or disposition of facilities. A
reference emission level is preferably established to be able to
obtain emissions data, reflect variations in economic cycles, and
perform operations. An emission reduction schedule can be defined
from the reference emission level.
[0069] FIG. 4 illustrates operations performed in the creation of
baselines and allowance allocations in the market. Additional,
fewer, or different operations may be performed, depending on the
embodiment. In an exemplary embodiment, an operation 410 is
performed in which emission monitoring rules are established.
Emission monitoring rules can relate to included facilities,
included gases, and/or excluded gases. These rules designate what
activities count toward emissions.
[0070] In an operation 420, member emission numbers are determined
using the emission monitoring rules. In some embodiments, the
member emission numbers are computed based on the schemes described
with respect to FIGS. 15-17. Emission numbers can be submitted to
the market by members or obtained electronically over a network
from a database. Emission monitoring rules are applied such that
the member emission numbers are accurate for the creation of a
baseline. Preferably, the definition of the baseline includes rules
governing inclusion of facilities and specifications for defining
emissions "ownership" at jointly-owned facilities, and rules for
addressing gaps in the baseline period emissions data. Once the
emission numbers are obtained, member baselines are established in
an operation 430. The baseline can be an average of emission
numbers over a certain time period, such as four years.
[0071] Adjustments can be made to the baseline in an operation 440.
Baseline adjustments can be upward, for example, when emitting
facilities are acquired by the member. Similarly, baseline
adjustments can be downward, for example, when a member disposes of
an emitting facility.
[0072] Having established a baseline, an operation 450 can be
performed to create allowance allocations and contributions to the
auction. An emission reduction schedule created by the market is
applied to create an emission schedule for each member. Preferably,
the emission reduction schedule utilizes a known rule that is
common among all participants. By way of example, the schedule can
call for reductions of 1%, 2%, 3% and 4% below baseline emission
levels during, e.g., years 2003, 2004, 2005 and 2006 respectively.
Members annually surrender a quantity of CFIs (e.g., exchange
allowances, exchange emission offsets, when applicable, exchange
early action credits) equal to their yearly emissions. After their
yearly emissions have been compared with the numbers in the
schedule, those members that reduce emissions below these levels
are rewarded and can sell or bank their excess CFIs or credits,
while those with emissions above the reduction schedule are
penalized, run up a debit and must purchase CFIs in order to
achieve compliance. Debits include required purchases of CFIs to
meet the reduction schedule.
[0073] Advantageously, the emission reduction schedule is uniform
and easily understood. Its simplicity facilitates participation by
a diverse range of businesses and other entities, thus increasing
both the environmental effectiveness of the program and the
potential for enrollment of entities that are able to reduce
emissions at low-cost. As shown in Table 1 below, the emission
reduction objective declines 1% per year, and the cumulative
four-year emission reduction relative baseline emission levels is
10% (1%+2%+3%+4%). This simple value facilitates easy analysis of
potential implications of participation as well as planning
efforts. TABLE-US-00001 TABLE 1 Market Emission Reduction Schedule,
Year Exchange Allowance Allocations 2003 1% below participant's
baseline 2004 2% below participant's baseline 2005 3% below
participant's baseline 2006 4% below participant's baseline
[0074] Each member is preferably allocated a four-year stream of
emission allowances. The registry 12 (or the registry 102 in the
case of the system 100 of FIG. 3) employs a system that identifies
the vintage of each instrument. The market monitors instrument
transfers and holdings and facilitates the oversight needed to
enforce rules, such as the restrictions on banking and the
single-firm sales limit.
[0075] FIG. 5 illustrates a graph of an exemplary emission
baseline, reduction schedule, economic growth provision, and
maximum mitigation quantities. The graph includes a dotted line
horizontally across from 100% to designate an emission baseline for
a particular member. Each year going forward, emission targets are
reduced by a reduction schedule. The graph depicts a yearly
reduction schedule of 1% per year.
[0076] The graph of FIG. 5 also indicates that the maximum quantity
of emission mitigation required rises at a fixed rate over time. In
an exemplary embodiment, the market is configured such that the
maximum amount of CO.sub.2 equivalent emissions recognized in
determining the annual true-up for each member is 2% above that
participant's baseline emission level during year 1 and year 2, and
3% above baseline during year 3 and year 4. As such, there is an
established limitation on the risk exposure faced by pilot market
participants. Without such a provision, the maximum potential
quantity of purchases of CFIs that each member may face would be
unknown. This mechanism allows potential participants to know, in
advance with certainty, the maximum quantity of purchases they may
have to undertake to achieve compliance with the annual emission
reduction commitments. This provision is referred to as the
economic growth provision.
[0077] FIG. 6 illustrates a graph of an exemplary economic growth
provision, maximum required purchases, and allowed sales quantities
described with respect to FIG. 5. For each instrument vintage,
there is a maximum number of emission allowances that can be sold
as well as a maximum number of emission allowances that must be
bought. These restrictions reflect the symmetric application of the
economic growth provision.
[0078] Emissions levels can be unpredictable and are often
influenced by factors external to a business (e.g., weather,
economic conditions, plant outages). The economic growth provision
provides a measure of insulation against such uncertainties. This
risk-reducing feature allows potential members to establish
better-informed estimates of the highest possible financial
exposure associated with participation. This increased
predictability is expected to result in greater participation in
the voluntary market, thus yielding more environmental progress and
helping to advance market infrastructure while developing human
capital in greenhouse gas (GHG) emissions trading. The benefits of
this provision are particularly important for entities facing rapid
emissions growth (e.g., due to population growth in their customer
base). Development of tools for initiating GHG mitigation efforts
in countries with rapid emissions growth, such as China and India,
is recognized as one of the world's significant challenges in the
long-term global effort to effectively counter the threats of
global climate change.
[0079] At the same time, there is a limit applied to participants
in the market to allowed sales. In an exemplary embodiment, maximum
recognized emission reductions mirror the maximum required
purchases. For example, sales are limited to 6% of baseline where
required purchases are limited to 6%.
[0080] Certain individual members may be in a position to sell
large quantities of exchange allowances. Should any single member
or small group of members be allowed to sell without limit, the
market could become imbalanced and subject to price congestion.
Similarly, unrestrained ability to sell could cause a single-firm
to achieve a dominant status of the sell-side of the market, which
would be damaging to market competition. Thus, the quantity of
sales any single firm can make is constrained to avoid market
imbalance, price congestion and potential for market dominance by a
single seller or a small group of sellers of exchange allowances.
This provision is applied to all members that have baseline
emissions in excess of 100,000 metric tons CO.sub.2 equivalent.
This exception reflects the fact that unrestricted sales by small
members would not cause undesirable market impacts, and that
removal of such constraint increases the likelihood that the fixed
costs of market membership can be more than offset from proceeds
from sales of CFIs.
[0081] Net allowed sales by a single firm are preferably escalated
if program-wide emissions rise above baseline levels. The
escalation mechanism reflects the extent to which program-wide
emissions rise above program-wide baseline emission levels. For a
particular vintage, each member is allowed to sell and/or bank the
quantity of allowances that is the lesser of the quantities
determined by the symmetric economic growth provision and the
single firm sales limit. (In this context, allowed sales means the
net sales by the member.) If for the first vintage year, the single
firm sales limit is less than the quantity determined by the
symmetric economic growth provision, then the difference between
those two quantities is placed in a special reserve for possible
future release.
[0082] For subsequent vintages, each member is allowed to sell
and/or bank the quantity that is the lesser of the quantities
determined by the economic growth provision and the single firm
sales limit. For these vintages, members may also bank the amount
by which the quantity determined by the economic growth provision
exceeds the single firm sales limit.
[0083] As such, market imbalance and price congestion that might
arise if members are allowed to carry forward large amounts of
surplus exchange allowances that may arise due to economic
recession or other factors are avoided.
[0084] FIG. 7 illustrates the market as applied to multi-sector
emissions monitoring, reporting, and auditing for emissions
baselines and periodic emissions reports. Any of a number of market
sectors, such as an electric power sector 710, a manufacturing
sector 720, an electric power consumption sector 730, and an oil
and gas sector 740, can report information to an emissions database
750 in the system 10 or the system 100. For example, the electric
power sector 710 can use a quantification method of continuous
emission monitors and/or fuel specific emission coefficients. The
electric power sector 710 can also perform coal testing for carbon
content. Emissions information obtained using these types of
quantification methods is communicated to the emissions database
750.
[0085] The information received from sectors 710-740 by emissions
database 750 can be used by the market to make confirmations and
adjustments to CFIs in an operation 760. NASD emissions audits 770
can be used in the operation 760 to make these confirmations and
adjustments. Final audited emissions 780 can be used in a true up
process described below with reference to FIG. 8.
[0086] Additional, fewer, or different sectors may be included in
the market besides or in place of sectors 710-740. In an exemplary
embodiment, members primarily engaged in electric power production
include in their baseline and quarterly emission reports CO.sub.2
emissions from all power generation facilities having a rated
capacity of 25 megawatts or larger. These members may opt-in
emissions from facilities having rated capacity less than 25
megawatts, but must include all such facilities if this option is
chosen. Electric power generating units use CO.sub.2 emissions data
from continuous emission monitors (CEMs) as reported to the U.S.
Environmental Protection Agency. In other cases where CEM data is
not available, such members quantify CO.sub.2 emissions by using
the fuel consumption methods contained in government
regulations.
[0087] These provisions represent adoption of specified rules for
CO.sub.2 emissions monitoring and facilities inclusion for
participation by entities primarily engaged in electric power
generation in an organized GHG reduction and trading program.
Advantageously, this provides a multi-sector GHG trading program
for electric power generating plants.
[0088] Market electric power sector members may also opt-in
SF.sub.6 emissions from electric power transmission equipment.
Emissions from such systems can be quantified using protocols
provided by the U.S. Environmental Protection Agency. These members
may also opt-in emissions from vehicles they own and operate or
lease by using the protocols developed by the World Resources
Institute/World Business Council for Sustainable Development
(WRI/WBCSD) initiative. These provisions represent adoption of
specified rules for SF.sub.6 emissions monitoring and facilities
inclusion for participation by entities primarily engaged in
electric power generation in an organized GHG reduction and trading
program.
[0089] Other members, including members in the forest products,
chemicals, cement, manufacturing, and municipal sectors can report
greenhouse gas emissions as follows. CO.sub.2 emissions from
stationary source fossil fuel combustion can be quantified using
the protocols developed by the WRI/WBCSD. Process emissions (e.g.,
N.sub.2O, PFCs and CO.sub.2) can be quantified using applicable
WRI/WBCSD protocols. CO.sub.2 emissions from vehicles can be
included in the member's baseline and quarterly emission reports if
these emissions are greater than 5% of total entity-wide emissions
and represent an integral part of the member's operations.
Otherwise, members have the option to include emissions from
vehicles in their baseline emissions and quarterly emission
reports. Vehicle emissions can be quantified using the WRI/WBCSD
protocols.
[0090] Member sources not primarily engaged in the production of
electricity may opt-in purchased electricity (sector 730 in FIG. 7)
as a supplemental reduction objective. When this option is elected,
reduction commitments for purchased electricity are identical to
the market emission reduction schedule (e.g., 1% below baseline in
2003, 2% below baseline in 2004, 3% below baseline in 2005, 4%
below baseline in 2006). Members that elect this option receive
greenhouse gas emission allowances when the reduction objective is
exceeded. When members opt-in their electricity purchases and their
electricity purchase reduction objective is not achieved, the
member must surrender greenhouse gas emission allowances and/or
XOs.
[0091] The market can specify methods for monitoring emissions and
credit allowance activities for a variety of sectors and
activities. Members in the forest products sector that have wood
harvesting operations can quantify and report net changes in carbon
stocks (expressed in metric tons of CO.sub.2 equivalent) held in
above-ground biomass on land owned by the member or on land for
which the member owns carbon sequestration rights. Exchange
allowances (XAs) can be issued on an annual basis to these members
in an amount reflecting net increases in stored carbon from the
previous year. These allowances have the vintage of the year in
which the increase in carbon storage occurred. These members
surrender XAs, XOs or XEs on an annual basis in an amount
reflecting net decreases in carbon stored in above-ground
biomass.
[0092] Advantageously, the market participant base can be enlarged
as additional entities seek to enroll. Typically, members will
include corporations, industrial companies. municipalities, and
other entities that generate emissions of CO.sub.2, SO.sub.2 or
other gases from facilities in various neighboring countries, e.g.,
the United States, Canada, and Mexico, and commit to an emission
reduction schedule. Expansion, however, can be managed with a view
to furthering the goals of the exchange and avoiding price
congestion. New members can be bound to the same terms and
obligations as original members. Use of a standardized,
proportional emissions reduction schedule simplifies the addition
of new members as the emission reduction objective of each existing
members is not altered when new participants join the exchange. The
capability of potential participants to join the exchange is
continually changing as the strategic benefits of joining are
better appreciated, and as the required skills base is expanded.
Expansion of membership automatically causes an expansion of the
trading opportunities for members and offset providers based on
pre-set formulae.
[0093] In an exemplary embodiment, entities meeting the following
conditions may become associate members: the entity does not have
direct emissions; and the entity commits to the mitigation schedule
or a mitigation objective that goes beyond the schedule. Examples
of associate members include businesses, individuals, families, or
other groups. Associate members can be subject to the same external
audit of true-up that is conducted for members. Members and
associate members can be grouped together as "voluntary greenhouse
gas emission reducers" or participants that commit to an emission
reduction schedule in an effort to reduce pollution such as
greenhouse gas emissions.
[0094] In certain embodiments, emissions numbers for associate
members are computed based on the schemes described herein with
respect to FIGS. 15-17. Thus, the invention provides a simple yet
effective method and system for calculating the emission
numbers.
[0095] Additional entities that may participate in the system
include environmental benefactors and exchange participants.
Environmental benefactors are participants that have not
necessarily committed to an emission reduction schedule, but that
act to prevent or remove pollution. Environmental benefactors can
be, for example, offset providers, liquidity providers and
intermediaries that trade on the system but do not have an emission
reduction schedule. Offset providers are entities such as project
owners, project implementers, registered aggregators, market makers
and entities selling exchange offsets produced by qualifying
registered offset projects. Liquidity providers are entities or
individuals who trade on the exchange for reasons other than
compliance with the emission reduction schedule. These include
entities such as market makers and proprietary trading groups.
Exchange participants are entities or natural persons that
establish a registry account for the purpose of acquiring CFIs.
[0096] By allowing a broad range of entities to participate in the
market, including entities that are not large industrial or energy
concerns, the market encourages broader adoption of greenhouse gas
reduction objectives, as well as the adoption of new and creative
mitigation objectives (e.g. entities may wish to become carbon
neutral for "indirect" emissions associated with company travel on
commercial airlines). Thus, a member that fails to achieve its
reduction schedule is not limited to purchasing its debits from
just other members. Environmental benefactors may also provide the
CFIs needed to remove such debits from member accounts. For
example, a forester or farmer is issued credits for participating
in environmentally friendly activities, such as planting trees or
removing pollutants from a stream. A member who exceeds its
emissions level can purchase these credits from the forester or
farmer to make up for its own emissions allowance shortfall.
[0097] An annual report of emission reductions may optionally, but
preferably, be generated by the system. This aids in facilitating
emissions reduction and describes member performance, i.e., if the
member has met its emission reduction schedule. The report may be
published in, for example, a member's report to its shareholders
and distributed during stockholder meetings, and used as a public
relations tool in touting the member's environmentally conscious
practices.
[0098] The system described herein provides a platform for members,
associate members, and other participants to trade in CFIs and
facilitates their trading. Participation in the present system is
completely voluntary and provides numerous incentives for market
players to participate. The system creates a market where secondary
players can trade in and provide valuable commodities to other
industry players in need.
[0099] Entities can contribute to mitigation of greenhouse gases by
reducing electricity purchases (e.g., through improved "end use"
efficiency), reducing travel, or reducing CO.sub.2 generating
activities such as burning trash or building campfires. Such
entities are credited when the reduction objectives are exceeded,
or are held responsible to purchase CFIs reflecting mitigation
elsewhere in the market if such standardized reduction objectives
are not achieved. The opt-in electricity purchase provision is
described further below with respect to FIG. 10.
[0100] FIG. 8 illustrates a flow diagram of an exemplary true-up
process utilized in the system 10 described with reference to FIG.
1 and/or the system 100 described with reference to FIG. 3. The
true-up process can involve the following operations, additional
operations, or fewer operations depending on the embodiment.
Members of the market apply facility and emissions monitoring rules
to generate emissions data in an operation 810. The emissions data
is communicated to the market and stored in an emissions database
in an operation 820.
[0101] In accordance with true-up procedures, members are provided
with annual notice of required instrument surrender quantities.
Subsequent to each compliance year, each member must surrender any
combination of exchange allowances, exchange offsets and exchange
early action credits in an amount equal to CO.sub.2 equivalent
emissions released from that member's included facilities during
the compliance year (subject to the economic growth provision
described with respect to FIGS. 5 and 6 and constraints on the use
of XOs and XEs). Compliance through the surrender of three
different forms of CFIs allows mitigation resources to flow to
their highest-impact-per-dollar activity (e.g., emissions
mitigation by members or by offset projects). It also makes
operational the recognition and crediting of certain mitigation
projects undertaken in advance of program launch.
[0102] Members provide notification of the instrument types and
vintages to be retired in fulfillment of compliance commitment to
the registry in the system in an operation 830. Data contained in
the registry can be communicated to a retired CFIs archive in an
operation 840. As such, members "true-up" or account for
allowances, offsets, and other emissions data. The market can also
make adjustments in the allowed usage of offsets and early action
credits based on the reported emissions data for all of the
members.
[0103] FIG. 9 illustrates offset project registration and reporting
operations in the system 10 (FIG. 1) and/or the system 100 (FIG.
3). Additional, fewer, or different operations can be performed
depending on the particular embodiment. In an exemplary embodiment,
small projects 910, 920, and 930 have less than 10,000 metric tons
of CO.sub.2 per year. Small projects 910, 920, and 930 are combined
in an aggregator operation 940.
[0104] Eligible projects can be recorded in the registry and are
issued exchange offsets (XOs) on the basis of mitigation tonnage
realized during a four year period. XOs can be issued after
mitigation occurs and required documentation is presented to the
market, or can be issued concurrently in anticipation of receipt of
such documentation.
[0105] Offsets or credits are generated according to a
predetermined schedule of environmental friendly activities, such
as by planting trees that absorb CO.sub.2, by keeping carbon
released by plants in the soil, or by removing pollutants, such as
CO, lead, NO.sub.2, or ozone, from streams, lakes, landfills or
other environmentally unfriendly areas. Indirect reductions of
greenhouse gas emissions can be obtained by reducing reliance on
the use of fossil fuels, such as by reducing business travel or by
purchasing environmentally friendly products such as those made by
processes that do not adversely affect the environment. A first
category of participants who are eligible to be offset providers
therefore includes foresters, farmers and others who prepare the
land for facilitating a reduction in CO.sub.2 emissions. Types of
entities that would likely fall within a second category are law
firms, advertising agencies, banks, shopping centers, supermarkets,
or other entities or locations that include a large number of
individuals.
[0106] A system for independent verification of qualifying offset
projects is preferably included. Independent verification provides
a basis for the grant of credits and allowances, and ensures that
carbon sequestration activities are accounted for accurately.
Independent verification may be performed, for example, by an
independently contracted party, or any party qualified to make such
an assessment. Ideally, independent verification would occur at
least every year before the true-up process.
[0107] Other eligible offset project categories include landfill
methane destruction in North America; agricultural methane
destruction in North America; carbon sequestration in North America
reforestation projects; carbon sequestration in U.S. agricultural
soils; and fuel switching, landfill methane destruction, renewable
energy and forestry projects in Brazil, recycling, alternative
travel, and other environmentally harmonious activities. For offset
project types that have uncertain mitigation effectiveness,
standardization of tradable offset quantities is achieved by
applying discount factors so that members can have high confidence
that a particular activity is defined so that each metric ton of
CO.sub.2 mitigated by each project is equivalent.
[0108] As shown in FIG. 9, a minimum amount of exchange offsets
(XO) issuance to any project or group of projects in any single
category can be set at 10,000 tons CO.sub.2 equivalent per year (as
an example). Individual projects that achieve mitigation quantities
of less that 10,000 tons CO.sub.2 equivalent per year are combined
with other projects within the same project category by a market
registered project aggregator. As such, trading can occur in
quantities less than 10,000 tons.
[0109] The market can use the 10,000-ton threshold rule as a
standard that establishes an offset pool scale allowing for
economically efficient administration of the project enrollment,
verification and offset issuance process. This provision allows
low-cost mitigation actions to supply the market with reductions
while also providing a source of funding for the implementation of
such projects.
[0110] In the aggregator operation 940, the projects 910, 920, and
930 are examined to determine various features, such as, project
eligibility based on type, location, and timing; whether contracts
and/or attestations are properly executed; and estimated annual
tonnage of offsets produced. Other examined features can include
time commitments and property descriptions of sequestration
projects, annual report acknowledgment, verifier access
acknowledgment, entity name and facility, and management issues.
The project-aggregation process of operation 940 allows multiple
small projects to participate in the market without forcing the
exchange or market participants to incur high administrative
costs.
[0111] In an operation 950, the aggregation of small projects 910,
920, and 930 or a large project 970 are subject to a registration
and reporting process. An exemplary registration and reporting
process includes establishing an account file, establishing a
registry account, receiving project reports, defining eligible
project verifiers, receiving project verification reports from
verifiers, receiving NASD reports on verifiers, and issuing offsets
to accounts.
[0112] In another embodiment, carbon sequestration reserve pools
are established to hold back a portion of earned offsets from
project aggregators. These reserve pools provide a readily
accessible pool of offsets that can be immediately cancelled if
carbon stored in a credited sequestration project is later released
to the atmosphere.
[0113] FIG. 10 illustrates a crediting mechanism for methane
combustion. A methane (CH.sub.4) source 1010 can be a landfill or
agricultural waste, for example. Methane can have twenty-one times
more environmental impact than CO.sub.2. It is possible, however,
to burn the methane using a combustion device 1015. The burning
converts the methane to CO.sub.2 while creating electric power from
an electric power generator 1020. The burning of methane releases
2.75 tons of CO.sub.2 for every one ton of methane. As such, the
net equivalent emission reduction from burning methane is 18.25
metric tons of CO.sub.2. Thus, an exchange landfill offset (XLO)
can be issued in the market.
[0114] To account for offset projects efficiently and accurately,
two types of accounting procedures may be used. The carbon-stable
accounting approach may be used by members or participants who, for
example, practice conservation soil tillage or are in commercial
forestry sector, to quantify changes in carbon stocks on its
commercial land. A member or participant electing to use this
approach must obtain reputable third-party verification that its
commercial land is managed in a sustainable fashion and provide a
warranty that there will be no net decrease in overall carbon
stocks on that land. In the commercial forestry sector, a member or
participant in the United States may quantify and report changes in
carbon stocks associated with individually registered exchange
forestry offset projects on the condition that that there is no net
decrease in overall carbon stocks in the member or participant's
commercial forest inventory.
[0115] Each member or participant in the commercial forestry sector
electing to use the carbon-stable accounting approach will
additionally be required to annually submit evidence that it has
maintained certification of sustainable forest management and shall
provide annual certification, signed by a corporate officer, that
there will be no net decrease in overall carbon stocks held in the
member or participant's commercial forestry inventory. The
statement that there is no decrease in overall carbon stocks held
in a member or participant's commercial forestry inventory is
subject to independent verification and audit.
[0116] The model-based accounting approach can be used by a member
or participant from, for example, the commercial forestry sector,
to quantify changes in carbon stocks on its commercial forestry
land on the basis of projections made by growth and yield models,
which estimate the volume of above-ground biomass of different
species of trees as the trees grow. Each member or participant that
elects to use the model-based accounting approach will be issued
exchange allowances or debited CFIs on the basis of annual
increases or decreases respectively in carbon stocks in its
commercial inventory.
[0117] Net changes in carbon stocks will be quantified only on the
basis of the wood in the main stem of the tree up to the terminal
bud, excluding carbon sequestered in root systems and the branches.
Quantifications of carbon stocks reduced through harvest will also
include only the main stem of the tree.
[0118] In cases of adverse weather events or outbreaks of fire and
pest damage that do not reduce the quantity of carbon stocks on a
parcel of forested land, the member or participant is required to
document the quantity of timber destroyed by the fire, pest or
adverse weather and surrender an equivalent amount of CFIs. The
member or participant is required to continue to quantify and
report subsequent increases and decreases in carbon stocks on that
land and shall be issued and must surrender CFIs accordingly.
[0119] A market member 1030 can purchase electric power from the
electric power generator 1020 as an emission reduction objective.
The market member 1030 is selecting power in a way that returns
"green power crediting" with the market. In an exemplary
embodiment, landfill methane collection and combustion systems
placed into operation can be issued exchange landfill offsets on
the basis of tons of methane destroyed, net of CO.sub.2 released
upon combustion, during the years 2003 through 2006, for example.
Benchmarks for methane reduction help remove uncertainty over which
landfill gas projects can receive offsets, and at what rate and
help ensure there is proper accounting so that electricity produced
by combustion of landfill gas can be properly treated as CO.sub.2
"neutral" (i.e., having no net GHG emissions associated with its
production). As such, the benchmarks provide predictability and
clarity in relation to determining if a landfill gas collection
system qualifies to earn GHG offsets.
[0120] The use of the 18.25 metric ton net offset issuance rule
(for each ton of methane combusted) accounts for the
net-of-CO.sub.2 GHG benefit from combusting landfill methane. This
rule concomitantly establishes that electric power produced by
combustion of landfill gas is CO.sub.2-neutral as the CO.sub.2
released upon combustion is netted-out in the offset issuance
calculation. This characteristic thus establishes a complete and
accurate accounting process that allows such purchased electricity
to be considered "zero emissions."
[0121] The market allows electricity users to elect to include
electricity purchases as a supplemental reduction commitment. If a
market member that elects this option reduces it electricity
purchases to a level that is below its targeted reduction, the
member is issued 0.61 tradable emission allowances for each
megawatt-hour by which the member's actual electricity purchases
fall below the reduction target. This is a simple conversion that
does not require complex calculations to determine the allowance or
credit. Simultaneously, the generator of such electricity also
realizes an emission reduction (all else constant) as a result of
reduced electricity demand on the part of the member. This
reduction in emissions at the electric power plant can have the
effect of freeing-up an emission allowances for sale. As such, this
feature introduces the possibility that a single ton of actual
emission reductions may result in the release into the market
system of two tons worth of rights to emit CO.sub.2, and the
ownership of such rights is equally shared between the electricity
user and the electricity generator. This pre-established equal
sharing provides a standard formula that eliminates the need to
negotiate the sharing of emission reduction rights associated with
reduced electricity consumption.
[0122] The opt-in electricity purchase provision establishes a
mechanism that employs standardized reduction schedule for end-use
of electricity as a supplemental mitigation objective that can be
elected by members. This provision also establishes a known,
predictable quantity by which excess (or insufficient) electric
power reductions are issued (or must surrender) greenhouse gas
emission allowances. This predictability facilitates participation
in this mitigation option and may stimulate adoption of electricity
reduction technologies as the financial returns to such
technologies are enhanced by the ability to earn marketable
greenhouse gas emission allowances in the market.
[0123] The baseline electricity purchase quantity can be defined as
the average of electricity purchases during previous years, such as
1998 through 2001. The baseline can be adjusted to reflect
acquisition or disposition of facilities that consumed power
purchased by the member. The definition of the electricity purchase
baseline also contains rules governing inclusion of facilities;
specifications for defining emissions "ownership" at jointly-owned
facilities; and rules for addressing gaps in the baseline period
electricity purchase data.
[0124] In an exemplary embodiment, members that opt-in U.S.
electricity purchases and reduce their electricity purchases to
levels below the quantity corresponding to the market reduction
schedule are issued greenhouse gas emission allowances at a rate of
0.61 metric tons CO.sub.2 for each megawatt-hour by which actual
power purchased is below the reduction schedule. The 0.61 metric
ton rate is applied only to electricity purchased by U.S.
facilities as it reflects the U.S. average emission rate for
electricity production during 1998-2001. Preferably, that opt-in
electricity purchases and realize electricity purchases in an
amount that is above the quantity corresponding to the market
reduction schedule surrender greenhouse gas emission allowances
and/or exchange offsets at a rate of 0.61 metric tons CO.sub.2 for
each megawatt-hour by which actual power purchased is above the
reduction schedule. The corresponding standard values for
electricity purchases in Canada and Mexico are 0.20 and 0.59 metric
tons per megawatt-hour, respectively.
[0125] By setting a single, stable value of the crediting
reductions in GHG emissions associated with each megawatt-hour of
purchased electricity, the market provides a standardized reference
value that makes it comparatively simple for large numbers of
electricity users to participate in GHG mitigation and be rewarded
at a known, predictable rate. The members who elect this option
know in advance precisely how many tons of CO.sub.2 emission
allowances they receive (or must surrender) if they can surpass (or
fail to achieve) the standardized reduction schedule.
[0126] This standardized, predictable system enhances the ability
to test the electricity reduction commitment mechanism. By doing
this, the provision allows a much broader range of entities to
participate in GHG mitigation, even if they do not directly release
significant amounts of GHGs through their own combustion of fuels
or industrial processes. This mechanism provides a standard system
whereby large commercial buildings (e.g., office buildings,
shopping malls, government buildings, electricity-intensive
manufacturing operations, and, conceivably, groups of small
commercial utilities and households), can participate in a GHG
reduction and trading program.
[0127] Another exemplary embodiment includes a method for
integrating renewable energy certificates (RECs) markets into a
greenhouse gas emissions trading market. The RECs markets are
emerging in various states, provinces and countries as a means for
cost-effectively increasing the quantity of electric power produced
through environmentally preferable methods. Laws in multiple states
(e.g., Texas and Nevada) require increasing amounts of electricity
to be generated using low or zero-emission systems, such as wind
energy. The RECs laws typically set a quantified overall objective
(e.g. 5% of all electricity production for the year 2003) for
renewable energy production and allows those who produce
electricity from renewable energy systems in an amount above the
mandated level to earn tradable certificates indicating they have
exceeded the regulatory goal. If another electricity producer
cannot achieve the legislated objective it can remain in compliance
with the legislated mandate by acquiring RECs from the electricity
producer that exceeded the legislated mandate. For example, the
legislative mandate could require Company A and Company B to each
to produce 1,000 megawatt-hours of electricity using specified
renewable energy systems. If Company A in fact produces 1,200
megawatt-hours of electricity using renewable systems, it would
earn 200 megawatt-hours worth of RECs. If Company B produces 800
megawatt-hours of electricity using renewable systems, it must
acquire 200 megawatt-hours worth of RECs to achieve compliance with
the legislative mandate (by producing 800 mw of renewable energy on
its own and by acquiring 200 mw worth of RECs to demonstrate
ownership of the other 200 mw of renewable energy production).
[0128] The market can allow its members to include electricity
purchases as a supplemental reduction objective. For example, the
market rules can provide the following: "Electricity produced using
specified renewable energy sources can be treated as zero emission
electricity by a Member that elects to opt-in electricity
purchases. Each Member that elects to opt-in electricity purchases
may exclude from its Electricity Purchases Baseline and Periodic
Electricity Purchase Reports electricity acquired from
market-specified Renewable Electricity Production Systems, provided
the Member provides documentary evidence that the electricity is
produced solely for the Member or is otherwise dedicated to the
Member. Electricity produced by the following Renewable Electricity
Production Systems shall qualify under this provision: solar;
hydropower; wind; renewable fuels, which, for purposes of market
are: wood, wood wastes and wood-derived fuels; agricultural
residues and grasses; landfill and agricultural methane; and
ethanol (bioalcohol). Documentary evidence that electricity is
produced solely for the Member or is otherwise dedicated to the
Member can consist of copies of power plant ownership documents,
power purchase contracts, and, as specified by the Market Executive
Committee, certain renewable energy certificates."
[0129] By allowing members to use renewable energy certificates as
a means of documenting that a portion of their electricity
purchases are acquired from renewable energy systems, the market
explicitly introduces a linkage between the greenhouse gas and RECs
markets. This introduces an additional source of flexibility to
members to achieve the electricity purchase reduction commitments
via a systemic increase in production of electricity by renewable
energy systems as evidenced by the Member's acquisition and
presentation to the market of RECs. Incorporating this mechanism
into the market architecture also provides another potential source
of financing for new electricity production systems based on
renewable energy sources.
[0130] Consistent with the economic growth provision described with
reference to FIGS. 5 and 6, the maximum recognized increase in
purchased power is, for example, 2% above baseline in 2003 and
2004, and 3% above baseline in 2005 and 2006. Without the economic
growth provision limiting maximum required purchases, the maximum
liability associated with participation in the market would be
unknown. This mechanism allows potential participants to know, in
advance with certainty, the maximum quantity of allowances they may
have to purchase to achieve compliance with the annual electricity
purchase reduction commitments, as well as the maximum quantity of
sales of emission allowances they may be able to undertake.
[0131] Uncertainty as to how and how much to credit reduction in
electric power purchases impedes adoption of reduction objectives
and the end-use efficiency technologies and management methods that
can contribute to mitigation of GHG emissions. By adopting standard
greenhouse gas emission allowance quantities for reductions in
electricity purchases in the U.S., Canada and Mexico, the market
encourages participation in this mechanism and broadens the base of
entities that can contribute to GHG mitigation via reductions in
electricity purchases.
[0132] Members are responsible for emissions from jointly owned
facilities in proportion to the member's ownership equity share,
subject to the following exceptions. Members not primarily engaged
in electric power production have the option to exclude from their
emissions baseline and emission reports emissions from facilities
in which the member's equity ownership share is less than 20%.
Exceptions can be made on a case-by-case basis if a member's
ownership share is less than 50% and emissions data from the
jointly owned facility is not accessible to the member.
[0133] Entities primarily engaged in electric power production have
the option to exclude from their emissions baseline and emission
reports emissions from facilities in which the member's equity
ownership share is both less than 20% and represents less than 25
megawatts of generating capacity.
[0134] Many large industrial and energy facilities are owned by
multiple entities. These multiple owners often jointly invest in a
facility as a means of spreading financial risk or exploiting the
special business capabilities or locational advantage provided by
one of the joint owners. The specific provisions for apportioning
GHG emissions in the market for jointly owned facilities takes into
consideration: the logic of employing a pro rata ownership
approach; the desire to include a large proportion of each firms
emissions, the importance of including major emission sources as a
primary objective; the reality that minority owners of a facility
may not have ready access to operational data needed to calculate
emissions of a facility.
[0135] At the same time, by implicitly allowing a member to opt-in
emissions from facilities in which it owns a relatively small
equity share, these provisions encourage members to examine the
possibility that such facilities may offer low-cost emission
reductions. This flexibility encourages members to identify such
low cost GHG reduction options, realize them and bring them into
the market, which would enhance the overall cost effectiveness of
the GHG emission reductions achieved through the market.
[0136] Each exchange member can be allowed annually to exempt a
quantity of emissions that is equivalent to the emissions of a 500
megawatt capacity natural gas combined cycle electricity generating
plant operated at 55% of capacity and having a heat rate of 7,000
btu/mwh. The exempt emissions cannot exceed emissions from the new
facility or facilities. All new unit emissions above this level are
included as part of the member's annual emissions. As such, members
who build new facilities are not penalized in light of the fact
that new facilities are typically more efficient (i.e. emit less
GHG per unit of electricity produced) than existing facilities.
[0137] This provision reflects both an environmental rationale and
a practical equity consideration. Development of new,
higher-efficiency production facilities offers a means of
fulfilling demand for products while producing less GHG emissions
per unit of production. In addition, members may have been
constructing such plants prior to the initiation of the market
design phase. This provision establishes a limited exemption for
emissions from new facilities, thereby removing or reducing the
penalty that might have been in place if emissions from such
facilities were required to be mitigated under the market
rules.
[0138] FIG. 11 illustrates a graph depicting exchange forestry
offsets (XFOs) based on carbon storage. Similar to methane
combustion projects, qualifying reforestation and afforestation
projects can be issued Exchange Forestry Offsets on the basis of
increases in tons of CO.sub.2 equivalent of carbon storage
realized. Project eligibility, project baselines, quantification,
monitoring and verification protocols can be specified using the
market. In the graph, XFOs of +1 are earned each year as end of
year carbon stocks increase.
[0139] FIG. 12 illustrates a map of agricultural soil offsets based
on geographic region. Offset issuance quantities for agricultural
soil can standardize participation of GHG emissions mitigation via
soil carbon sequestration. Soil carbon sequestration is realized
when farmers or other individuals do not significantly disturb the
soil surface through tillage and release carbon accumulated
therein. In an exemplary embodiment, certified soil offsets can be
issued annually for agricultural soil carbon sequestration
activities in designated states, counties and parishes in the U.S.
Midwest and Mississippi Delta regions. As an example, Exchange Soil
Offsets can be issued at a rate of 0.5 metric tons CO.sub.2 per
acre per year in cases where farmers commit to qualifying
continuous no-till or low-till in the designated locations.
Exchange Soil Offsets can be issued at a rate of 0.75 metric tons
CO.sub.2 per acre per year in cases where farmers commit to
maintain sequestration associated with grass plantings in the
designated locations.
[0140] The market allows for the cost-effective incorporation of
carbon sequestration by a large number of agricultural producers
despite uncertain site-specific sequestration rates and high costs
of measuring soil carbon changes.
[0141] FIG. 13 illustrates the issuance of greenhouse gas emission
allowances upon increases in qualifying carbon stocks by members of
the market in the forest products sector. A graph 1310 depicts
yearly carbon stock changes. The graph 1310 shows growth of carbon
stock in 2003 as 10 metric tons CO.sub.2 and harvest and other
losses as 8 metric tons CO.sub.2. As such, there is a +2 ton net
change and XAs are issued to the member.
[0142] A graph 1320 shows growth of carbon stock in a particular
year to be 8 metric tons CO.sub.2 and harvest and other losses as
11 metric tons CO.sub.2. In this case, the member is liable for a
-3 net change and must surrender 3 tons of CFIs.
[0143] Quantification of changes in carbon stocks held in
above-ground biomass are based on standardized models and sampling
procedures to be used by all members in the forest products sector.
The calculation of changes in carbon stocks can be adjusted to
reflect acquisition or disposition of forest land.
[0144] In an exemplary embodiment, the maximum amount of net
reductions in carbon stored in above-ground biomass on company land
recognized is limited to 3% of each member's emission baseline
during a first year, such as 2003, 4% of its baseline during 2004,
6% of its baseline during 2005 and 7% of its baseline during 2006.
The maximum recognized quantity of net increases in carbon stored
in above-ground biomass is limited to 3% of the member's emission
baseline during a first year, such as 2003, 4% of its baseline
during 2004, 6% of its baseline during 2005 and 7% of its baseline
during 2006. Net sales and banking of Exchange Allowances by
members are also subject to limits described below.
[0145] Increased carbon sequestration associated with changes in
carbon stocks due to forest management activities offer an
important GHG mitigation option and should be recognized and
credited (or debited if such changes cause a reduction in stored
carbon). Preferably, greenhouse gas emission allowances are issued
in an amount reflecting net increases in stored carbon during the
1-4 years time period. These members must surrender XAs, XOs or XEs
on an annual basis in an amount reflecting net decreases in stored
carbon during the four year time period. The calculation of changes
in carbon stocks can be adjusted to reflect acquisition or
disposition of forest land.
[0146] FIG. 14 illustrates an offset project verification process.
Additional, fewer, or different operations can be performed in the
process, depending on the particular embodiment. In an operation
1410, NASD audits can be performed using protocols. Independent
measurement and verification can be performed in an operation 1415
on reforestration and methane combustion projects 1420.
[0147] In an operation 1425, independent verification is performed
on soil carbon projects 1430 that contracted practices are
undertaken. A reference value can be assigned in operation 1435.
The offset project tonnage can be confirmed and deficiencies
reported in an operation 1440. Confirmed offsets are communicated
to registry accounts of individual projects and aggregators in an
operation 1445.
[0148] The market can specify project eligibility, project
baselines, quantification, monitoring and verification protocols.
This feature helps to satisfy the need for a predictable, low
transaction cost protocol that provides to farmers, in advance of
their decision to commit to a contract to provide carbon
sequestration services, precise information on the quantity of
offsets they earn per acre per year for eligible soil carbon
sequestration practices.
[0149] By way of another example, Exchange Emission Reductions can
be issued to qualifying projects undertaken in Brazil or other
countries. Qualifying projects include: reforestation and/or
assisted forest regeneration; avoided deforestation together with
reforestation and/or assisted forest regeneration; fuel switching;
landfill methane destruction; and renewable energy generation from
solar, wind, small hydroelectric and biomass systems.
[0150] Exchange Early Action Credits (XEs) can be issued to certain
projects previously undertaken. To qualify, projects must be:
off-system; originally undertaken or financed by members; direct
emissions reductions or involve sequestration; clearly owned by the
members; measured; and verifiable. By establishing specifications
for this provision, it is possible to define which actions
undertaken before activation of its GHG market are eligible to earn
early action credits. This standard is of particular value as many
legislative proposals worldwide that propose GHG limits have
recognized the importance (in terms of equity and provision of
incentives to act early) of including an early-action crediting
provision.
[0151] By way of example, Exchange Early Action Credits can be
given to the following project types that meet the eligibility
criteria: reforestation, afforestation and avoided deforestation;
landfill methane destruction in the U.S.; fuel switching and other
energy related U.S.I.J.I. projects. Exchange Early Action Credits
are issued on the basis of mitigation tonnage realized by the
qualifying project.
[0152] Numerous legislative proposals in the U.S. and elsewhere
have proposed the general concept of crediting "early action". The
rationale for this concept is to encourage early action to mitigate
GHGs by removing an incentive to postpone action. It is sometimes
argued that entities that could reduce GHG emissions in the
near-term in fact refrain from doing so because they would lose the
opportunity to be credited for such reductions if they are realized
prior to enactment of legislation or other actions that cause the
emergence of a GHG reduction and trading system. By establishing
precedent that demonstrates that "early" action can be effectively
credited in an organized GHG reduction and trading system, this
provision may stimulate GHG mitigation actions that might otherwise
be postponed or never undertaken.
[0153] A limited number of market constraints are employed in order
to assure that emission mitigation under the market reflects a
balance of emission reductions at member facilities and reductions
from off-system projects, and to prevent market instability and
price congestion. The market does not endorse the imposition of
limits on trading or on the use of offsets in large scale GHG
trading systems that may emerge a market created by government
regulation.
[0154] Net sales of Exchange Allowances by any single member are
limited to 0.5% of the program-wide emissions baseline, apportioned
over 2003-2006 according to the schedule in Table 2 below.
TABLE-US-00002 TABLE 2 Net Exchange Allowance (XA) sales limit:
percent of program-wide baseline emissions that can be sold by a XA
Vintage single firm for each XA vintage 2003 0.05% 2004 0.10% 2005
0.15% 2006 0.20% Total: 0.50% of program-wide baseline
emissions
[0155] In an exemplary embodiment, the market can include "super
reductions" which can be sold to non-members that may seek to
purchase emission reductions that are registered in the context of
a rules-based program. These "super reductions" reflect cases where
members reduce emissions beyond the maximum reductions recognized
as tradable, as per market rules. Additionally, "super reductions"
may be usable in pilot markets that may be established subsequent
to 2006.
[0156] By way of example, during a first year, program-wide use for
compliance of Exchange Emission Offsets is allowed in an amount
equal to 0.5% of the total program-wide baseline emissions.
Exchange Early Action Credits may be used for compliance starting
in a second year. During subsequent years after the first year,
program-wide use of Exchange Emission Offsets plus Exchange Early
Action Credits is allowed in an amount equal to 4.5% of the total
program-wide baseline emissions. As such, limitations on the use of
Exchange Offsets plus Early Action Credits are adjusted in a
predictable manner, and in proportion to expansion of the market
due to new entrants (and contraction due to disposition of emission
sources by members).
[0157] Such a provision assures that the majority of GHG mitigation
in the market occurs at member facilities, maintaining market
balance, diversity and environmental credibility while allowing
development and use of project-based offsets and implementing a
method for crediting early action. By limiting the allowed use of
Exchange Emission Offsets plus Exchange Early Action Credits, this
provision establishes that at least half of the overall GHG
mitigation realized by member must come from reductions in the
emissions released by their own facilities.
[0158] By limiting the proportion of CFIs produced by prior
emission mitigation projects used in compliance in the market to no
more than 25% of the program-wide emission reduction, the market
effectively requires that 75% of the reductions come from
mitigation actions that occur concurrently or in the future, (or
occurred recently e.g. via mitigation projects occurring after a
certain date). This provision also helps to maintain market balance
and diversity of mitigation efforts.
[0159] The total program-wide quantity of Exchange Early Action
Credits used for compliance during years subsequent to the first
year preferably does not exceed 50% of the total quantity of
Exchange Offsets plus Exchange Early Action Credits used for
compliance. Total allowed use for compliance of Exchange Offsets
during the first year, and Exchange Emission Offsets plus Exchange
Early Action Credits during subsequent years are escalated if
program-wide emissions rise above baseline levels. The proportional
escalation mechanism reflects the extent to which program-wide
emissions exceed program-wide baseline emission levels.
Advantageously, this mechanism establishes a formulaic predictable
process that automatically loosens market efficiency provisions as
demand rises.
[0160] For each member, total net sales plus use for compliance of
Exchange Offsets (e.g. Landfill Offsets) produced by facilities
that it owns and/or operates are allowed in an amount equal to no
more than 0.5% of the total program-wide baseline emissions,
apportioned over certain years. By way of example, limits can be as
indicated in Table 3. TABLE-US-00003 TABLE 3 Total net sales plus
use for compliance of XOs generated from member's owned and
operated XO Vintage facilities, by XO vintage 2003 0.05% 2004 0.10%
2005 0.15% 2006 0.20% Total: 0.50% of program-wide baseline
emissions
[0161] Such a feature avoids market imbalance, price congestion and
potential for market dominance by a single seller of Exchange
Offsets or a small group of sellers by constraining the quantity of
sales any single firm can make. Certain individual members may be
in a position to sell large quantities of Exchange Offsets. As is
the case with any limited-scale and limited-coverage market, should
any single member or small group of members be allowed to sell
without limit, the market could become imbalanced and subject to
price congestion. Similarly, unrestrained ability to sell could
cause a single-firm to achieve a dominant status of the sell-side
of the market, which would be damaging to market competition.
[0162] Allowed sales plus use for compliance by a single member
under this provision can be escalated proportionately if
program-wide emissions rise above baseline levels. The escalation
mechanism reflects the extent to which program-wide emissions
exceed program-wide emission baseline levels. Advantageously, this
mechanism establishes a formulaic predictable process that
automatically loosens market efficiency provisions as demand
rises.
[0163] By way of summary, system 10 (FIG. 1) and/or system 100
(FIG. 3) (again, collectively referred to herein as "the market")
provide an electronic mechanism for hosting greenhouse gas
commodity trading. It provides participants with a central location
that facilitates trading, publicly reveals price information, and
contributes to the broad objectives of the emission reduction plan.
The market reduces the cost of locating trading counterparties and
finalizing trades, an important benefit in a new market. The market
may also be used as the platform for conducting the periodic
auctions. The market could host trading in standardized contracts
that, for example, provide a uniform trade size, pricing terms and
payment requirements. The market may have the following core
features: low cost to users; easy-to-use for participants, allow
for real-time trading and price information, and readily interface
with the registry accounts of participants in the commodity
market.
[0164] The market overcomes many of the shortcomings and
disadvantages of conventional emissions trading programs. For
example, the absence of a complete, standardized system for
defining and trading greenhouse gas reductions introduces high
transaction costs and impedes the widespread initiation of action
to reduce greenhouse gas emissions among private, non-profit and
public sector entities. The market provides a method for greenhouse
gas reduction through a commodity based trading program. Unlike ad
hoc or unstandardized emissions trading programs, the market
provides a commodity-based exchange that facilitates capital flows
to environmental protection by employing a central electronic
trading mechanism coupled with a means of guaranteeing receipt of
payment and delivery of traded Carbon Financial Instruments even if
a counter-party fails to perform.
[0165] Another shortcoming of conventional systems is how to
facilitate participation in greenhouse gas reduction efforts by
multiple sectors in multiple countries, thus advancing
environmental progress and enhancing the prospects for cost
effectiveness by allowing reductions to occur in a wide range of
organizations.
[0166] The standardized emission reduction schedule applied in the
capped trading system described herein establishes a common,
proportionate system under which all exchange members know both
their emission reduction objectives and the maximum liability they
may face in meeting such objectives.
[0167] Another shortcoming of conventional systems is the lack of
common rules, standards, protocols and methods which impedes
large-scale participation in GHG mitigation efforts and limits the
ability to realize mitigation at low cost. Preferably, the market
includes a structured market design and standardized environmental
objective that allows numerous participants to mitigate greenhouse
gases on a common schedule. This reduces transaction costs and
facilitates broader action and ease of transacting and introduces a
mechanism for allowing efficient flow of financial resources to the
mitigation of greenhouse gases.
[0168] Use of a standardized, proportional emissions reduction
schedule simplifies addition of new members as the emission
reduction objective of each existing member is not altered when new
participants join the exchange. The capability of potential
participants to join the exchange is continually changing as the
strategic benefits of joining are better appreciated, and as the
required skills base is expanded. Starting with a limited-scale
pilot market allows for near-term demonstration of the exchange. In
addition, the ability to test and refine methods and systems is
enhanced by having limited scale.
[0169] Expansion of membership automatically causes an expansion of
the trading opportunities for members and offset providers based on
pre-set formulae, while also providing the mechanisms to maintain
market balance.
[0170] Unlike any other existing emissions trading program, use of
a "live," electronic trading platform allows members and
participants to continuously view bids, offers and transaction
prices and volumes. Continuous price discovery enhances the ability
of members to identify the least-cost methods for achieving
compliance with the reduction commitments. Advantageously, public
price discovery informs the development of private and legislative
actions to mitigate greenhouse gases. Currently, there is no
systematic method for making public prices from greenhouse gas
emission reduction trades. Thus, the formation of private and
legislative actions suffers from the absence of critical
information needed to establish economically rational actions.
Without price information, the ability to develop GHG reduction
action plans is impeded because cost-benefit analysis is conducted
with severely limited information on mitigation costs.
[0171] Lack of a common, rules based framework in conventional
systems impedes economically efficient use of emission mitigation
resources. The market embodied in the system 10 and/or the system
100 allows flexibility in the methods, location and timing of
emission reductions so that greenhouse gas emissions can be reduced
cost effectively.
[0172] With conventional systems, the action to cut and trade
greenhouse gases is greatly impeded by high transaction costs.
System 10 and/or system 100 facilitates trading with low
transaction costs. A rules-based program, a central trading
platform, delivery and payment guarantees and low transaction costs
implemented in system 10 and/or system 100 greatly reduce the
impediments to trading, thus allowing all market participants to
exploit the opportunity to realize economic gains from trading.
Such features help assure that greenhouse gas emission reductions
are both undertaken more broadly and are realized at the lowest
possible cost.
[0173] This detailed description outlines exemplary embodiments of
an emissions reduction and trading system and method. In the
foregoing description, for purposes of explanation, numerous
specific details are set forth in order to provide a thorough
understanding of the present invention. It is evident, however, to
one skilled in the art that the exemplary embodiments may be
practiced without these specific details. In other instances,
structures and devices are shown in block diagram form in order to
facilitate description of the exemplary embodiments.
[0174] Systems can be included within the market for performing a
variety of functions. For example, a system can be included to
designate individual employees of market members, associate
members, and participant members as authorized traders of such
members. Another system can be included to screen all entities that
desire to become market members, associate members, and participant
members on the basis of financial standing and business stability.
Yet another system allows traders to elect to utilize market
provided trade negotiation and clearing mechanisms or,
alternatively, to negotiate trades in a private, bilateral
fashion.
[0175] Advantageously, the systems and methods described here
enable the creation and operation of a greenhouse gas emissions
market with reduced transaction costs. The minimization of
transactions costs may be a result of one or more of a variety of
different factors. These factors include the standardizing of
definitions of included emissions and opt-in provisions; allocating
ownership of emissions in cases of jointly owned facilities;
defining emission baselines; defining tradable Carbon Financial
Instruments; defining Early Action Credits; emissions monitoring
methods; offset project definitions (including formulae) and sizes
and aggregation; market constraints; the registry; the trading
platform; and the clearing system.
[0176] In some embodiments, a computer system is used for the
implementation of these systems and markets which has a central
processing unit (CPU) that executes sequences of instructions
contained in a memory. More specifically, execution of the
sequences of instructions causes the CPU to perform steps, which
are described below. The instructions may be loaded into a random
access memory (RAM) for execution by the CPU from a read-only
memory (ROM), a mass storage device, or some other persistent
storage. In other embodiments, hardwired circuitry may be used in
place of, or in combination with, software instructions to
implement the functions described. Thus, the embodiments described
herein are not limited to any specific combination of hardware
circuitry and software, nor to any particular source for the
instructions executed by the computer system.
[0177] FIG. 15 schematically illustrates another exemplary
embodiment of an emissions reduction trading system. As shown in
FIG. 15, the illustrated system 1500 includes one or more client
digital data processing devices 1506 ("client"), one or more server
digital data processing devices 1510 ("server"), and one or more
databases 1534. The client 1506, the server 1510, and the database
1534 communicate using one or more data communications networks
1512 ("networks"). In FIG. 15, the features in a digital data
processing device are shown as residing in the client 1506. Those
of ordinary skill in the art will understand that one or more of
the features of the client 1506 can be present in the server
1510.
[0178] As described further herein, the emissions reduction trading
system 1500 can compute emissions numbers (i.e., amounts of GHG
emissions or emission reduction equivalents), compliance CFIs,
and/or other related parameters for members and associate members
(collectively referred to hereinafter as "members") based on the
members' consumption of energy sources. Additionally, the emissions
reduction system 1500 can administer the guarantee mechanism (e.g.,
16 in FIG. 1), the trading host/platform (e.g., 18 in FIG. 1), the
clearing system (e.g., 106 in FIG. 3), and the other mechanisms and
systems previously described herein with respect to FIGS. 1-14.
[0179] Generally, references herein to a "client" and a "server"
are used to differentiate two communicating devices and/or sets of
processor instructions. References herein to a client and/or a
server can thus be understood to be references to communications
originating from a client and/or a server as these terms are
understood by those of ordinary skill in the art. Such
communications can be based on or otherwise initiated from one or
more input devices (e.g., a keyboard, a stylus, a mouse, etc.)
controlled by a user. Also, references herein to a client and/or a
server can thus be understood to include one or more
processor-controlled devices that act in a client-server (i.e.,
request-response) model, in which the client and the server can
reside on the same processor-controlled device, and in which, based
on perspective, the client can act as a server, and the server can
act as a client.
[0180] As shown in the system 1500 of FIG. 15, a user 1502 (e.g., a
member or environmental benefactor) desiring to compute GHG
emissions or emission reduction equivalents can execute one or more
software application programs 1504 (such as, for example, an
Internet browser and/or another type of application program capable
of providing an interface to a GHG emissions computation program)
residing on the client 1506 to generate data messages that are
routed to, and/or receive data messages generated by, one or more
software application programs 1508 (e.g., a GHG emissions or
emission reduction equivalents computation program) residing on the
server 1510 via the network 1512. A data message includes one or
more data packets, and the data packets can include control
information (e.g., addresses of the clients and the servers 1506,
1510, names/identifiers of the software application programs 1504,
1508, etc.) and payload data (e.g., data relevant to compute GHG
emissions, such as a request 1548 that includes consumption data
and output data 1562 that includes the thusly computed GHG
emissions).
[0181] The software application programs 1504 include one or more
software processes (e.g., a calculation process/engine) executing
within one or more memories 1518 of the client 1506. Similarly, the
software application programs 1508 include one or more software
processes executing within one or more memories of the server 1510.
The software application programs 1508 include one or more sets of
instructions and/or other features that enable the server 1510 to
compute GHG emissions or emission reduction equivalents, compliance
CFIs, and/or other related parameters. For example, as described
herein, the software application program 1508 include instructions
for processing consumption data 1536a to generate GHG emissions
data 1536b and CFI data 1536c. Additionally, in some embodiments,
the software application programs 1508 include one or more sets of
instructions and/or other features that can enable the server 1510
to administer the guarantee mechanism (e.g., 16 in FIG. 1), the
trading host/platform (e.g., 18 in FIG. 1), the clearing system
(e.g., 106 in FIG. 3), and the other mechanisms and systems
previously described herein with respect to FIGS. 1-14. The
software application programs 1504, 1508 can be provided using a
combination of built-in features of one or more commercially
available software application programs and/or in combination with
one or more custom-designed software modules. Although the features
and/or operations of the software application programs 1504, 1508
are described herein as being executed in a distributed fashion
(e.g., operations performed on the networked client and servers
1506, 1510), those of ordinary skill in the art will understand
that at least some of the operations of the software application
programs 1504, 1508 can be executed within one or more digital data
processing devices that can be connected by a desired digital data
path (e.g. point-to-point, networked, data bus, etc.).
[0182] The digital data processing device 1506, 1510 includes a
personal computer, a computer workstation (e.g., Sun,
Hewlett-Packard), a laptop computer, a server computer, a mainframe
computer, a handheld device (e.g., a personal digital assistant, a
Pocket Personal Computer (PC), a cellular telephone, etc.), an
information appliance, and/or another type of generic or
special-purpose, processor-controlled device capable of receiving,
processing, and/or transmitting digital data. A processor 1514
refers to the logic circuitry that responds to and processes
instructions that drive digital data processing devices and
includes, without limitation, a central processing unit, an
arithmetic logic unit, an application specific integrated circuit,
a task engine, and/or combinations, arrangements, or multiples
thereof.
[0183] The instructions executed by a processor 1514 represent, at
a low level, a sequence of "0's" and "1's" that describe one or
more physical operations of a digital data processing device. These
instructions can be pre-loaded into a programmable memory (e.g., an
electrically erasable programmable read-only memory (EEPROM)) that
is accessible to the processor 1514 and/or can be dynamically
loaded into/from one or more volatile (e.g., a random-access memory
(RAM), a cache, etc.) and/or non-volatile (e.g., a hard drive,
etc.) memory elements communicatively coupled to the processor
1514. The instructions can, for example, correspond to the
initialization of hardware within the digital data processing
devices 1506, 1510, an operating system 1516 that enables the
hardware elements to communicate under software control and enables
other computer programs to communicate, and/or software application
programs 1504, 1508 that are designed to perform operations for
other computer programs, such as operations relating to computing
GHG emissions and compliance CFIs. The operating system 1516 can
support single-threading and/or multi-threading, where a thread
refers to an independent stream of execution running in a
multi-tasking environment. A single-threaded system is capable of
executing one thread at a time, while a multi-threaded system is
capable of supporting multiple concurrently executing threads and
can perform multiple tasks simultaneously.
[0184] A local user 1502 can interact with the client 1506 by, for
example, viewing a command line, using a graphical and/or other
user interface, and entering commands via an input device, such as
a mouse, a keyboard, a touch sensitive screen, a track ball, a
keypad, etc. The user interface can be generated by a graphics
subsystem 1522 of the client 1506, which renders the interface into
an on- or off-screen surface (e.g., on a display device 1526 and/or
in a video memory). Inputs from the user 1502 can be received via
an input/output (I/O) subsystem 1524 and routed to a processor 1514
via an internal bus (e.g., system bus) for execution under the
control of the operating system 1516.
[0185] Similarly, a remote user (not shown) can interact with the
digital data processing devices 1506, 1510 over the network 1512.
The inputs from the remote user can be received and processed in
whole or in part by a remote digital data processing device
collocated with the remote user. Alternatively and/or in
combination, the inputs can be transmitted back to and processed by
the local client 1506 or to another digital data processing device
via one or more networks using, for example, thin client
technology. The user interface of the local client 1506 can also be
reproduced, in whole or in part, at the remote digital data
processing device collocated with the remote user by transmitting
graphics information to the remote device and instructing the
graphics subsystem of the remote device to render and display at
least part of the interface to the remote user. Network
communications between two or more digital data processing devices
can include a networking subsystem 1520 (e.g., a network interface
card) to establish the communications link between the devices. The
communications link interconnecting the digital data processing
devices can include elements of a data communications network, a
point to point connection, a bus, and/or another type of digital
data path capable of conveying processor-readable data.
[0186] In one illustrative operation, the processor 1514 of the
client 1506 executes instructions associated with the software
application program 1504 (including, for example, runtime
instructions specified, at least partially, by the local user 1502
and/or by another software application program, such as a
batch-type program) that can instruct the processor 1514 to at
least partially control the operation of the graphics subsystem
1522 in rendering and displaying a graphical user interface
(including, for example, one or more menus, windows, and/or other
visual objects) on the display device 1526.
[0187] The network 1512 can include a series of network nodes
(e.g., the client and the servers 1506, 1510) that can be
interconnected by network devices and wired and/or wireless
communication lines (e.g., public carrier lines, private lines,
satellite lines, etc.) that enable the network nodes to
communicate. The transfer of data (e.g., messages) between network
nodes can be facilitated by network devices, such as routers,
switches, multiplexers, bridges, gateways, etc., that can
manipulate and/or route data from an originating node to a server
node regardless of dissimilarities in the network topology (e.g.,
bus, star, token ring), spatial distance (e.g., local,
metropolitan, wide area network), transmission technology (e.g.,
transfer control protocol/internet protocol (TCP/IP), Systems
Network Architecture), data type (e.g., data, voice, video,
multimedia), nature of connection (e.g., switched, non-switched,
dial-up, dedicated, or virtual), and/or physical link (e.g.,
optical fiber, coaxial cable, twisted pair, wireless, etc.) between
the originating and server network nodes.
[0188] FIG. 15 shows processes 1528, 1530, 1532, and 1550. A
process refers to the execution of instructions that interact with
operating parameters, message data/parameters, network connection
parameters/data, variables, constants, software libraries, and/or
other elements within an execution environment in a memory of a
digital data processing device that causes a processor to control
the operations of the digital data processing device in accordance
with the desired features and/or operations of an operating system,
a software application program, and/or another type of generic or
specific-purpose application program (or subparts thereof). For
example, a network connection process 1528, 1530 refers to a set of
instructions and/or other elements that enable the digital data
processing devices 1506, 1510, respectively, to establish a
communication link and communicate with other digital data
processing devices during one or more sessions. A session refers to
a series of transactions communicated between two network nodes
during the span of a single network connection, where the session
begins when the network connection is established and terminates
when the connection is ended. A database interface process 1532
refers to a set of instructions and other elements that enable the
server 1510 to access the database 1534 and/or other types of data
repositories to obtain access to, for example, user account data
1536, computation rules 1542, and computation parameters 1544. The
accessed information can be provided to the software application
program 1508 for further processing and manipulation. An
administrative process 1550 refers to a set of instructions and
other features that enable the server 1510 to monitor, control,
and/or otherwise administer a cash flow computation. For example,
the administrative process 1550 can a) maintain and update
configuration, runtime, and/or session data for the one or more
digital data processing devices 1506, 1510 and/or the software
application programs 1504, 1508 executing on the devices 1506,
1510, b) provide buffer management, multi-threaded services, and/or
data structure management, c) provide initialization parameters to
the digital data processing devices 1506, 1510 and/or the software
application programs 1504, 1508, d) manage groups of objects (e.g.,
groups of data elements stored on the digital data processing
devices 1506, 1510 and/or stored or otherwise maintained in the
database 1534, groups of software application programs 1504, 1508,
groups of members authorized to access software application
programs 1504, 1508, groups of licenses, etc.), e) manage
relationships between objects in response to messages communicated
between the one or more digital data processing devices 1506, 1510,
f) provide one or more support services (e.g.,
encryption/decryption, compression, path routing, message parsing,
message format manipulation, etc.) to the digital data processing
devices 1506, 1510, and/or g) provide load balancing based on, for
example, processor usage/availability, network usage/availability,
memory usage/availability, software application program
usage/availability, message length, and/or message volume.
[0189] Those of ordinary skill in the art will recognize that,
although the illustrated processes 1528, 1530, 1532, and 1550 and
their features are described as being separate, the illustrated
processes and/or their features can be combined into one or more
processes. One or more of the illustrated processes 1528, 1350,
1532, and 1550 can be provided using a combination of built-in
features of one or more commercially available software application
programs and/or in combination with one or more custom-designed
software modules.
[0190] The databases 1534 can be stored on a non-volatile storage
medium or a device known to those of ordinary skill in the art
(e.g., compact disk (CD), digital video disk (DVD), magnetic disk,
internal hard drive, external hard drive, random access memory
(RAM), redundant array of independent disks (RAID), or removable
memory device). As shown in FIG. 15, the databases 1534 can be
located remotely from the client 1506. In some embodiments, the
databases 1534 can be located locally to the client 1506 and/or can
be integrated into the client 1506. The databases 1534 can include
distributed databases. The databases 1534 can include different
types of data content and/or different formats for stored data
content. For example, the databases 1534 can include tables and
other types of data structures.
[0191] Member account data 1536 includes data that identifies the
members of system 1500, data that relates to the members'
consumption of energy sources, and data that relates to the
members' holdings on the market administered by system 1500. Data
identifying the members can include the members' names, contact
information, login information (e.g., usernames and/or passwords),
and/or other similar types of information known to those of
ordinary skill in the art. Data relating to the members'
consumption of energy sources includes consumption data 1536a, GHG
emissions data 1536b, and CFI data 1536c. In most embodiments, such
data are associated with time identifiers that identify their
vintage, i.e., the time intervals to which they pertain (e.g.,
consumption data for year 2000). In some of such embodiments, such
data may be used, e.g., by the members, the members' exchange,
and/or another institution in which the members participate, to
track or otherwise monitor the members' consumption of energy
sources, GHG emissions, etc. over time. Data relating to the
members' holdings on the market may include the members' holdings
of CFIs and other related instruments, as previously described
herein with respect to FIGS. 1-14.
[0192] Consumption data 1536a quantify the members' consumption of
energy sources. As described further herein, consumption data 1536a
are determined by and/or otherwise provided by the members to
system 1500. Since energy sources may include sources that are
consumed during transportation and sources that are consumed
independent of transportation, consumption data 1536a include
transportation data and non-transportation data.
[0193] Transportation data occur when a member (e.g., an employee
of a member company) travels in a vehicle from one location to
another. The vehicle may include an air-based vehicle (e.g., a
plane, a helicopter, and a hot-air balloon), a ground-based vehicle
(e.g., a train, a bus, a car, and a motorcycle), a water-based
vehicle (e.g., a boat and a submarine), or a mixed-media vehicle
(e.g., a hovercraft and an amphibious vehicle). In some
embodiments, transportation data are represented in terms of
vehicle fuel consumed during transportation. The amount of fuel
consumed can be determined based on fuel receipts and/or other
indicators known to those of ordinary skill in the art.
Alternatively and/or in combination, in some embodiments,
transportation data are represented in terms of distance traveled
by a vehicle. Such transportation data can be converted to fuel
consumed based on modifying the transportation data by the fuel
efficiency of the vehicle. The fuel efficiency of the vehicle may
be the default fuel efficiency of the vehicle (e.g., the efficiency
published by the vehicle manufacturer) or a customized fuel
efficiency of the vehicle (e.g., the efficiency as determined by a
member, e.g., an associate member).
[0194] Non-transportation data occur when a member consumes an
energy source in an activity other than transportation. Some
examples of these activities include, but are not limited to,
production of a product at a manufacturing plant and operation of
an office building. In some embodiments, non-transportation data
are represented in terms of energy source consumed (e.g., coal,
electricity, or natural gas consumed during production of a
product). The amount of energy source consumed can be determined
based on energy source receipts and/or other indicators that are
known to those of ordinary skill in the art. Alternatively and/or
in combination, in some embodiments, the non-transportation data
are represented in terms of an activity-specific intermediate,
e.g., an amount of a product produced or consumed, a feedstock
consumed during production of a product, and an amount of office
space occupied by an office facility. As will be understood by
those of ordinary skill in the art, such non-transportation data
may be converted to energy sources consumed based on modifying the
non-transportation data by an efficiency that is similar to a fuel
efficiency in the context of transportation data. For example, an
amount of office space can be converted to an amount of electricity
consumed based on the product of the amount of office space and a
weight (sometimes referred to herein as a consumption factor) that
represents a statistical measure of the amount of electricity
typically consumed per unit of office space. The statistical
measure can be associated with a geographic location (e.g., a
country (such as the United States, Mexico, United Kingdom, and
Canada), a state, a region, etc.) and can be determined based on
publicly available information, such as the information that is
described below with respect to emissions factors.
[0195] As understood by those of ordinary skill in the art,
consumption data 1536a may not be readily available to members. For
example, consumption data 1536a related to operation of a building
may not be readily available to members (e.g., tenants) who occupy
an amount of office space in the building, due to leasing
arrangements, rental arrangements, and/or other factors.
Preferably, therefore, as described herein, the disclosed systems
and methods provide and/or otherwise utilize emission factors,
weights, and other statistical factors that estimate energy
consumption in units that are likely to be accessible to members,
such as, but not limited to, units of occupied office space, units
of distance traveled in a mode of transportation (e.g., per unit of
distance traveled in a plane or a jet), etc.
[0196] GHG emissions data 1536b include GHG emissions that are
computed by system 1500 based on consumption data 1536a. Usually,
the computed GHG emissions are expressed in conventional units,
e.g., tons or metric tons of CO.sub.2. In some embodiments,
however, the computed GHG emissions are expressed in
non-conventional units, e.g., units selected by and/or otherwise
provided by a member. These non-conventional units can generally be
converted to conventional using standard conversion factors.
[0197] GHG emissions data 1536b also include baseline quantities of
GHG emissions and target quantities of baseline emissions that are
computed by system 1500 based on the consumption data 1536a. As
previously described herein with respect to FIGS. 1-14, a rule
(e.g., an average) may be applied to a member's GHG emissions over
a first time interval to determine the member's baseline quantity
of GHG emissions, and another rule (e.g., a percentage reduction)
may be applied to the baseline quantity to determine a target
amount of GHG emissions for a second later time interval.
[0198] The system also advantageously computes emission reduction
equivalents through the use of conservation factors for
participants such as and in particular for the environmental
benefactors. This feature assists members in determining whether or
not purchases of additional CFIs are required to achieve the
reduction schedule. After calculating GHG emissions and emission
reduction equivalents, the member may still exceed its target
amount of GHG emissions. Therefore, it may be required to purchase
debits from other members or environmental benefactors to be in
compliance with its reduction schedule. In addition, the system
allows any entity to earn a credit or allowance by conducting
environmentally beneficial activities, such as the environmental
benefactors or even including the voluntary emission reducers, to
calculate a certain emission reduction equivalent for
environmentally friendly activities, such as planting trees or
reforesting, not disturbing soil for a particular acreage of land
in a specific location, or even for cleaning up or reducing
pollution in other areas. These credits may then be purchased by
the member, thus further facilitating trade among participants to
enable the voluntary emission reducers to achieve their desired and
state pollution reduction goals.
[0199] CFI data 1536c include compliance CFIs that are determined
by system 1500 based on computed GHG emissions and target GHG
emissions.
[0200] Computation rules 1542 include rules for computing the GHG
emissions, rules for computing baseline quantities of GHG
emissions, rules for computing target quantities of GHG emissions,
and rules for computing compliance CFIs. Usually, as further
described herein, a member's GHG emissions are computed based on a
product of the member's consumption data 1536a for each type of
energy source consumed and a corresponding emissions factor. The
baseline quantities and the target quantities are computed based on
applying the schemes previously described herein with respect to
FIGS. 1-14.
[0201] Computation parameters 1544 include emissions factors for a
variety of energy sources. Generally, each emissions factor in
computation parameters 1544 is associated with a type of energy
source; each emissions factor is also associated with a geographic
location and/or an energy provider. Emissions factors depend on the
type of energy source consumed and how that energy source was
generated by its provider. For example, the emissions factor for
automobile travel depends on whether the fuel is gasoline, diesel,
or electricity, as well as how efficiently the car uses fuel. Also,
emissions factors for energy sources that are not fossil fuels
(i.e., energy sources that are not, e.g., coal, gasoline, or
natural gas) depend on how that energy source is generated. For
example, the emissions factor for electricity produced by coal is
different than the emissions factor for electricity produced by
natural gas. Additionally, emissions factors for fossil fuels and
non-fossil fuels depend on the technology used by the providers of
the energy source (e.g., the technology used by a power plant).
Since different providers of an energy source tend to use different
technologies, and since different providers tend to serve different
geographic locations, the emissions factor for an energy source
tends to vary among providers and geographic locations. Emissions
factors for countries, geographic sub-divisions therein (e.g.,
provinces, regions, and states), and energy providers are published
by a variety of entities, such as governmental agencies (e.g., the
U.S. Environmental Protection Agency (EPA)), non-governmental
agencies (e.g., power plants), and intergovernmental agencies
(e.g., the Intergovernmental Panel on Climate Change). For example,
the U.S. EPA provides a database of emissions factors and other
information for U. S. energy providers that is commonly referred to
as E-GRID.
[0202] As known by those of ordinary skill in the art, the most
local emissions factor for an energy source tends to be the most
accurate measure of the GHG emissions that result from consumption
of that energy source. Preferably, therefore, the disclosed systems
and methods compute the GHG emissions that result from the
consumption of an energy source based on the most local emissions
factor available, in which the most local emissions factor is the
emissions factor that is associated with the provider of the energy
source.
[0203] As also known by those of ordinary skill in the art, the
emissions factors for fossil fuels are constant, but the emissions
factors for non-fossil fuels tend vary over time. As such, in some
embodiments of the disclosed systems and methods, one or more of
the software application programs 1508 is configured to update the
emissions factors in computation parameters 1544 at time intervals
based on communicating over network 1512 with one or more databases
(e.g., the E-GRID database) and/or other sources of emissions
factors.
[0204] In some embodiments, the disclosed systems and methods
provide and/or otherwise utilize one or more of the following types
of emissions factors and other factors related to consumption of
energy sources: (1) for office buildings in the U.S.: (a) regional
average electricity consumption factors per unit of office space
(e.g., factors for one or more of the fifty U.S. states), (b)
regional average natural gas consumption factors per unit of office
space, and (c) regional electricity emission factors; (2) for
office buildings in Canada, Mexico, and the United Kingdom: (a)
national average electricity and natural gas consumption factors
per unit of occupied office space, and (b) national electricity
emission factors.
[0205] As previously described, consumption data can be expressed
in a variety of units, including units of an energy source consumed
and units of distance traveled. For example, data quantifying
consumption of a transportation energy source can include gallons
of fuel consumed, liters of fuel consumed, miles traveled, and
kilometers traveled. As such, in some embodiments, computation
parameters 1544 include emissions factors in default units (e.g.,
tons of CO.sub.2 produced per units of energy consumed) and
computation rules 1542 include one or more rules for modifying the
default units so that they are compatible with the units of the
consumption data (or, alternatively, one or more rules for
modifying the units of the consumption data so that they are
compatible with the default units), i.e., so that the units of the
product of the emissions factor and the consumption data are units
of GHG emissions, e.g., tons of CO.sub.2 produced. For example,
computation rules 1542 can include one or more rules for converting
between units in a metric system and units in a non-metric system
(e.g., liters to gallons), rules for converting between units
within a system (e.g., kiloWatts to MegaWatts), and/or rules for
converting between units of an energy source consumed and units of
an activity-specific intermediate (e.g., miles traveled to gallons
of gasoline consumed). The rules for converting between units of an
energy source consumed and units of an activity-specific
intermediate can be based on one or more efficiencies, e.g., fuel
efficiencies.
[0206] FIG. 16 shows an illustrative display of a graphical user
interface that facilitates computations of GHG emissions and
compliance CFIs. As will be understood by those of ordinary skill
in the art, the illustrative display is to be interpreted in an
exemplary manner, and displays different than that shown and
described herein can be used within the scope of the present
disclosure. For example, features of the illustrative display can
be combined, separated, interchanged, and/or rearranged to generate
other displays. Also for example, displays within the scope of the
present disclosure can include one or more check boxes, one or more
response boxes, one or more radio buttons, one or more pull-down
menus, one or more icons, and/or one or more other visual objects
to facilitate computations. As will also be understood by those of
ordinary skill in the art, the illustrative display can be provided
by a server (e.g., a software application program 1508 residing on
a server 1510) to a client (e.g., a software application program
1504 residing on a client 1506) in system 1500. The illustrative
display is described in the context of interactions (e.g., requests
and responses) between client 1506 and server 1510 in system
1500.
[0207] As shown in FIG. 16, the display 1600 (also referred to
herein as an emissions calculator window 1600) includes an
identification region 1602, a certification region 1604, a location
region 1605, a consumption data region 1606, a computation region
1608, and an opt-in region 1609. The identification region 1602
includes a query box 1610 for providing a member name and a
pull-down menu 1612 for selecting a compliance year, e.g., the year
for which the member seeks to compute his GHG emissions and/or
compliance CFIs so as to comply with regulations of the market
administered by system 1500. The certification region 1604 includes
a query box 1614 for providing a user signature and a timestamp
1616. The location region 1605 includes a pull-down menu for
selecting the geographic location of the energy consumption. The
consumption data region 1606 includes pull-down menus 1620 for
selecting consumption units (labeled "reporting units" in FIG. 16)
and query boxes 1622 for providing consumption data in the selected
consumption units. The consumption data region 1606 also includes a
pull-down menu 1620a for selecting among consumption data reporting
methods for an automobile, e.g., actual fuel receipts, distance
traveled and default fuel efficiency, or distance traveled and
customized fuel efficiency. The computation region 1608 includes
response boxes in which system 1500 provides emissions factors
(labeled "conversion factor" in FIG. 16) from computation
parameters 1644, computed GHG emissions (labeled "CO.sub.2
emissions" in FIG. 16), compliance CFIs, and other related
parameters. The opt-in region 1609 includes query boxes in which a
member can provide additional data relating to GHG emissions, e.g.,
GHG emissions resulting from energy sources other than those shown
in the consumption data region 1606. As shown in FIG. 16, the
display 1600 presents a single display "screen" for calculating CO2
emissions from a range of energy sources, including, but not
limited to, energy sources for offices. As will be understood by
those of ordinary skill in the art, one or more features of the
display 1600 can be presented on two or more display "screens."
[0208] In one illustrative operation and with reference to FIG. 15,
the software application program executing within the memory 1518
of the client 1506 can detect a request 1548 to compute GHG
emissions from the member 1502 by, for example, receiving an
indication from the I/O subsystem 1524 that detected a mouse click,
a keyboard entry, and/or another input event initiated by the user
1502. In response to the request 1548, the software application
program 1504 instructs the graphics subsystem 1522 (via the
processor 1514) to display the calculator window 1600. The
parameters selected by and the consumption data provided by the
member 1502 can be maintained in the memory 1518 of the client 1506
prior to transmission to the server 1510 via the network 1512. The
software application program 1504 can apply one or more data
validation rules to the parameters and/or the consumption data to
reduce the occurrence of erroneous entries. One or more of these
rules can be contained in memory 1518. Alternatively and/or in
combination, the software application program 1504 can access one
or more of these rules from the database 1534 via the network
1512.
[0209] With continuing reference to FIG. 15, the software
application program 1504 can instruct the network connection
process 1528 of the client 1506 to transmit the parameters and the
consumption data provided by the user 1502 to a calculation process
or another software process associated with the software
application program 1508 executing on the server 1510 by, for
example, encoding, encrypting, and/or compressing the selected
request 1548 into a stream of data packets that can be transmitted
between the networking subsystems 1520 of the digital data
processing devices 1506, 1510. The network connection process 1530
executing on the server 1510 can receive, decompress, decrypt,
and/or decode the information contained in the data packets and can
store such elements in a memory accessible to the software
application program 1508. The software application program 1508 can
process the received data by, for example, storing the received
data in computation data 1536a, applying one or more computation
rules 1542 to the computation data 1536 so as to compute GHG
emissions data 1536b and/or CFI data 1536c, and provide the
computed GHG emissions data 1536 and/or computed CFI data 1536c to
the member 1502.
[0210] FIG. 17 schematically illustrates an embodiment of a method
for computing GHG emissions for a member of system 1500. As will be
understood by those of ordinary skill in the art, the disclosed
systems and methods are not limited to the embodiment shown in FIG.
17 and can compute GHG emissions for a member based on features
that are different than and/or additional to those shown in FIG.
17.
[0211] As shown in FIG. 17, a request from a client (e.g., client
1506 in communication with member 1502) for computing GHG emissions
based on consumption of energy sources is received at a server
(e.g., server 1510) in system 1500 (1710 in FIG. 17). Based on
receiving the request, server 1510 (e.g., a software application
program 1508 residing on server 1510) provides a location feature
that is related to the geographic location of energy consumption
and/or the resulting GHG emissions and that is associated with
location options for selection by client 1506 (1720 in FIG. 3). For
example, server 1510 can provide the location feature via the
location region 1605 in the calculator window 1600 of FIG. 16. The
location options include geographic locations, such as countries
and sub-divisions within countries (e.g., provinces, states,
regions, etc.). Alternatively and/or in combination, in some
embodiments, server 1510 provides a location feature that is
related to the energy sources consumed and that is associated with
energy source provider options for selection by client 1506. The
provider options can include identifiers for energy providers,
e.g., identifiers based on the E-GRID database.
[0212] With continuing reference to FIG. 17, based on receiving the
request, server 1510 provides energy source features, in which each
energy source feature is related to a type of energy source
consumed (e.g., coal, electricity, natural gas, or vehicle fuel)
and is associated with consumption units for selection by client
1506 (1730 in FIG. 3). For example, server 1510 can provide the
energy source features via the consumption data region 1606 in the
calculator window 1600 of FIG. 16. Generally, server 1510 provides
energy source features that are related to at least two types of
energy sources. The energy sources can include sources that are
consumed during transportation and/or sources that are consumed
independent of transportation. The consumption units can include a
variety of units, such as units for an amount of an energy source
consumed (e.g.,Watt hours of electricity) and units for an
activity-specific intermediate (e.g., kilometers traveled in a
vehicle). In some embodiments, the units of the activity-specific
intermediate are modified by an efficiency. For example, the units
of a transportation source consumed can include an amount of the
source consumed based on source purchase receipts, an amount of the
source consumed based on distance traveled in a vehicle and a
default fuel efficiency of the vehicle, and an mount of the source
consumed based on distance traveled in a vehicle and customized
fuel efficiency of the vehicle (e.g., a fuel efficiency determined
and/or otherwise provided by a member).
[0213] With continuing reference to FIG. 17, server 1510 requests
and/or otherwise queries client 1506 to provide consumption data
for each energy source in the consumption units that were selected
for that energy source (1740 in FIG. 17). For example, server 1510
can query client 1506 to provide the consumption data via the
consumption data region 1606 in the calculator window 1600 of FIG.
16. The consumption data can be obtained by member 1502 and
provided to client 1506 based on the schemes previously described
herein with respect to FIGS. 1-14.
[0214] Subsequently, server 1510 determines an emissions factor for
each energy source based on the energy source type, the selected
geographic location, and the selected consumption units (1750 in
FIG. 17). Generally, server 1510 makes this determination based on
querying the databases 1534 (i.e., computation parameters 1544) to
determine whether they include an emission factor that is
associated with the energy source type and the selected location.
Based on finding the emissions factor, server 1510 proceeds to
compute GHG emissions (1760 in FIG. 17).
[0215] In some scenarios, the emissions factor for a combination of
energy source type and selected location may not be available in
databases 1534. In some embodiments, therefore, server 1510 may
search for the emissions factor. For example, server 1510 may
request the emissions factor from a database that is in
communication with network 1512, such as a database that is
maintained by a governmental agency, e.g., the E-GRID database
hosted by the U.S. EPA, and/or may search one or more networks in
communication with network 1512 for the emissions factor based on
schemes known to those of ordinary skill in the art. Alternatively
and/or in combination, in some embodiments, server 1510 queries the
databases 1534 to determine whether they include an emissions
factor that is associated with the energy source and a location
that is less specific than the selected location (e.g., a country,
instead of a geographic sub-division of a country). Based on
finding such an emissions factor, server 1510 proceeds to compute
GHG emissions (1760 in FIG. 17).
[0216] In some embodiments, such as the embodiment shown in FIG.
16, server 1510 provides the determined emissions factor to client
1506 via the computation region 1608 in the calculator window 1600
of FIG. 16.
[0217] As previously described, the consumption data for an energy
source can be expressed in a variety of consumption units. In some
embodiments, therefore, server 1510 applies one or more rules from
computation rules 1542 to modify the default units of the emission
factor so that they are compatible with the units of the
consumption data. In some of such embodiments, such as those
embodiments in which the determined emissions factor is provided to
client 1506, server 1510 applies those one or more rules prior to
computing the GHG emissions. Alternatively, server 1510 applies
those one or more rules during computation of the GHG
emissions.
[0218] With continuing reference to FIG. 17, server 1510 computes
the GHG emissions for each energy source type based on the product
of the consumption data and the emissions factor that correspond to
that energy source type (1760 in FIG. 17). As previously described,
server 1510 may apply one or more rules from computation rules 1542
to the emissions factor and/or the consumption data so that their
product has units of GHG emissions, e.g., tons of CO.sub.2 or
another unit, such as a unit selected by and/or otherwise provided
by a member. In some embodiments, server 1510 computes total GHG
emissions for a member based on the sum of the GHG emissions for
each energy source type consumed (1770 in FIG. 17). Additionally,
server 1510 may compute the fraction of the total GHG emissions
that are attributable to the consumption of each energy source
type. In some embodiments, such as embodiment shown in FIG. 16,
server 1510 provides the computed GHG emissions data, e.g., the GHG
emissions that are computed for each energy source type and the
total GHG emissions for the member, to client 1506 via computation
region 1608 in calculator window 1600.
[0219] As previously described herein with respect to FIGS. 1-14,
members may offset their GHG emissions by exchanging and/or
retiring CFIs. (As used hereinafter, the term CFI can be understood
to be a collective reference to GHG emissions offsets, including,
but not limited to, the GHG emissions offsets previously described
herein with respect to FIGS. 1-14.) FIG. 18 schematically
illustrates an embodiment of a method for computing a quantity of
compliance CFIs for a member, i.e., the quantity of CFIs that will
offset the member's GHG emissions. As will be understood by those
of ordinary skill in the art, the disclosed systems and methods are
not limited to the embodiment shown in FIG. 18 and can compute
compliance CFIs based on features that are different than and/or
additional to those shown in FIG. 18.
[0220] As shown in FIG. 18, a request from a client (e.g., client
1506 in communication with member 1502) for computing compliance
CFIs is received at a server (e.g., server 1510) in system 1500
(1810 in FIG. 18). Based on receiving the request, server 1510
requests and/or otherwise queries client 1506 to provide location
data that represents the geographic location of the member's energy
consumption and consumption data that quantifies the member's
energy consumption (1820 in FIG. 18). Generally, server 1510
requests and/or otherwise queries client 1506 for the location and
consumption data based on features previously described herein with
respect to 1720-1740 in FIG. 17. Subsequently, server 1510 computes
the resulting GHG emissions based on features previously described
herein with respect to 1760-1770 in FIG. 17 (1830 in FIG. 18).
[0221] With continuing reference to FIG. 18, server 1510 determines
compliance CFIs for the client based on a measure of the difference
between (i) the GHG emissions computed at 1830 and (ii) target GHG
emissions (1840 in FIG. 18). The measure of difference can include
a difference, a difference of squares, a root mean square
difference, and/or other measures of difference known to those of
ordinary skill in the art. In some embodiments, such as the
embodiment shown in FIG. 16, server 1510 provides the determined
compliance CFIs to client 1506 via computation region 1608 in
calculator window 1600.
[0222] As previously described, server 1510 determines the
compliance CFIs based on computed GHG emissions and target GHG
emissions for the member. In some embodiments, the target GHG
emissions are determined and/or otherwise provided by client 1506
(i.e., member 1502 in communication with client 1506) to server
1510. Alternatively, in some embodiments, server 1510 computes the
target GHG emissions based on the schemes previously described
herein with respect to FIGS. 1-14. For example, in one such
embodiment, server 1510 computes the target GHG emissions based on
applying a rule (e.g., a reduction rule) to a baseline quantity of
GHG emissions for the member. The baseline quantity of GHG
emissions may be determined and/or otherwise provided by client
1506 to server 1510. Alternatively, server 1510 may compute the
baseline quantity based on the schemes previously described herein
with respect to FIGS. 1-14. For example, in one such embodiment,
server 1510 computes the baseline emissions based on applying a
rule (e.g., an average or a weighted average) to consumption data
for a time interval.
[0223] In some embodiments, server 1510 provides a time interval
feature to client 1506 at 1820 in FIG. 18. The time interval
feature is related to the time interval of the member's energy
consumption (e.g., a compliance year) and is associated with
selectable time interval options. For example, server 1510 can
provide the time interval feature via the identification region
1602 in the calculator window 1600 of FIG. 16. In one such
embodiment, server 1510 provides the time interval feature so as to
obtain consumption data from the client 1506 for different time
intervals. Using such consumption data, server 1510 can compute GHG
emissions for each of the different time intervals, a baseline
quantity of GHG emissions based on those computed GHG emissions, a
target quantity of GHG emissions for a later time interval, and
compliance CFIs for that later time interval based on the
previously described schemes.
[0224] Advantageously, the systems and methods shown and described
herein with respect to FIGS. 15-18 can be used by a member to
compute its GHG emissions and compliance CFIs and thereby manage
its consumption of energy sources. For example, an associate member
can use those embodiments to compute its direct GHG emissions
(e.g., emissions that are associated with the operation of its
office facility and emissions that are associated with the
operation of vehicles that it owns, rents, or leases for business
purposes), its indirect GHG emissions (e.g., emissions that are
associated with its purchases of electricity and other
non-transportation sources for business purposes and emissions that
are associated with business travel (via, e.g., aircraft, urban
bus, commuter rail, and intercity rail), its opt-in GHG emissions
(e.g., emissions associated with its business events (such as
retreats, annual meetings, and holiday parties) and emissions
associated with its employees' non-business activities (such as
commuting, home energy usage, travel, and materials consumption)),
and its compliance CFIs for offsetting those GHG emissions.
[0225] As previously described herein with respect to FIGS. 1-14,
members may trade CFIs on a market so as to reduce their GHG
emissions and obtain a quantity of CFIs (and/or other related
instruments) that is at least equivalent to their compliance CFIs.
FIG. 19 schematically illustrates an embodiment of a method for
registering a member to trade CFIs on the market. As will be
understood by those of ordinary skill in the art, the disclosed
systems and methods are not limited to the embodiment shown in FIG.
18 and can register a member to trade CFIs on a market based on
features that are different than and/or additional to those shown
in FIG. 19.
[0226] As shown in FIG. 19, a request from a client (e.g., client
1506 in communication with member 1502) for trading CFIs is
received at a server (e.g., server 1510) in system 1500 (1910 in
FIG. 19). Based on receiving the request, server 1510 determines
whether the GHG emissions and compliance CFIs have been computed
for the member based on the schemes described with respect to FIGS.
17 and 18 (1920 in FIG. 19). Generally, server 1510 makes this
determination by searching databases 134 to find consumption data
1536a, GHG emissions data 1536b, and CFI data 1536c associated with
the member 1502. Based on determining that the GHG emissions for
the member have been computed, server 1510 registers the member to
trade on the market at least the compliance CFIs that were computed
at 1840 in FIG. 18 (1940 in FIG. 19).
[0227] Based on determining that the GHG emissions for the member
have not been computed, server 1510 requests and/or otherwise
queries client 1506 for data based on which to compute those
emissions (1930 in FIG. 19). Server 1510 may request and/or
otherwise query client 1506 based on the features previously
described herein with respect to 1720-1740 in FIG. 17 and/or 1820
in FIG. 18. Subsequently, server 1510 computes GHG emissions and
compliance CFIs for the member (1935 in FIG. 19) and proceeds to
1940 in FIG. 19.
[0228] Advantageously, the systems and methods shown and described
herein with respect to FIG. 19 can be used to monitor members' GHG
emissions and their compliance with market regulations. For
example, a market administrator can use embodiments of the
disclosed systems and methods to determine whether members are
complying with their obligations to reduce GHG emissions and to
inhibit rogue members for trading unregistered CFIs on the market.
Moreover, requesting that members provide their consumption data to
the market via signed and dated submissions (such as the submission
shown in FIG. 16) can enhance the accountability of the members'
conduct on the market.
[0229] The systems and methods described herein are not limited to
a hardware or software configuration; they can find applicability
in many computing or processing environments. The systems and
methods can be implemented in hardware or software, or in a
combination of hardware and software. The systems and methods can
be implemented in one or more computer programs, in which a
computer program can be understood to comprise one or more
processor-executable instructions. The computer programs can
execute on one or more programmable processors, and can be stored
on one or more storage media readable by the processor, comprising
volatile and non-volatile memory and/or storage elements.
[0230] The computer programs can be implemented in high level
procedural or object oriented programming language to communicate
with a computer system. The computer programs can also be
implemented in assembly or machine language. The language can be
compiled or interpreted.
[0231] In some embodiments, the computer programs can be
implemented in one or more spreadsheets. For example, the computer
programs can be implemented in one or more spreadsheets based on
Microsoft.RTM. Excel and can include one or more macros and/or
other functions.
[0232] The computer programs can be stored on a storage medium or a
device (e.g., compact disk (CD), digital video disk (DVD), magnetic
tape or disk, internal hard drive, external hard drive, random
access memory (RAM), redundant array of independent disks (RAID),
or removable memory device) that is readable by a general or
special purpose programmable computer for configuring and operating
the computer when the storage medium or device is read by the
computer to perform the methods described herein.
[0233] Unless otherwise provided, references herein to memory can
include one or more processor-readable and -accessible memory
elements and/or components that can be internal to a
processor-controlled device, external to a processor-controlled
device, and/or can be accessed via a wired or wireless network
using one or more communications protocols, and, unless otherwise
provided, can be arranged to include one or more external and/or
one or more internal memory devices, where such memory can be
contiguous and/or partitioned based on the application.
[0234] Unless otherwise provided, references herein to a/the
processor and a/the microprocessor can be understood to include one
or more processors that can communicate in stand-alone and/or
distributed environment(s) and can be configured to communicate via
wired and/or wireless communications with one or more other
processors, where such one or more processor can be configured to
operate on one or more processor-controlled devices that can
include similar or different devices. Use of such processor and
microprocessor terminology can be understood to include a central
processing unit, an arithmetic logic unit, an application-specific
integrated circuit, and/or a task engine, with such examples
provided for illustration and not limitation.
[0235] Unless otherwise provided, use of the articles "a" or "an"
herein to modify a noun can be understood to include one or more
than one of the modified noun.
[0236] While the systems and methods described herein have been
shown and described with reference to the illustrated embodiments,
those of ordinary skill in the art will recognize or be able to
ascertain many equivalents to the embodiments described herein by
using no more than routine experimentation. Such equivalents are
encompassed by the scope of the present disclosure and the appended
claims.
[0237] For example, other embodiments may include different
additional, or fewer market rules to facilitate the operation and
acceptance of the GHG trading market.
[0238] Accordingly, the systems and methods described herein are
not to be limited to the embodiments described herein, can include
practices other than those described, and are to be interpreted as
broadly as allowed under prevailing law.
* * * * *