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Spotlight Cancun: Negative Carbon and the Green Power Fund

by Guest • December 2, 2010 @ 10:01 am

The UN Climate Change Conference started this week in Cancun, México. The Spotlight Cancun series, a joint series by Real Climate Economics  and Triple Crisis , invites experts to comment on the negotiations and the prospects for real progress addressing climate change in the months and years ahead.

Graciela Chichilnisky, Professor of Economics and Mathematical Statistics at Columbia University, is the architect of the carbon market of the Kyoto Protocol and author of Saving Kyoto. In this piece, she offers her recommendations for financing green technologies in developing countries.

The Kyoto Challenge

Most people know that the United Nations Kyoto Protocol limits global carbon emissions. It is the only international agreement we have for resolving potentially catastrophic climate change. But few people know how it works. Few people are aware that the Kyoto Protocol has already funded US$50 Billion in clean technology projects in developing nations through its Clean Development Mechanism (CDM). Since the Protocol became international law in 2005, this funding took place in a short period of five years, and continues growing. During this five year period, the carbon market of the Kyoto Protocol grew from zero to US$165 billion in annual trades, and the projects funded by the CDM achieved a real impact. These projects have decreased carbon emissions by the equivalent of 40% of EU emissions.[1] The record documents a very substantive success in an area—the global climate negotiations—where progress has otherwise been slow and scanty. It is a strong endorsement for the Kyoto Protocol carbon market, which trades carbon credits at the EU Emission Trading System, on which the CDM is based. How does the CDM work in practice? The CDM provides carbon credits to projects in developing nations that can be demonstrated to reduce carbon emissions in the right amounts. The credits can then be converted into cash by the industrial nations’ investors who sell them in the EU carbon market. The circle closes to everybody’s advantage. Investors are more profitable and carbon emissions are reduced.

As the first market-based international agreement, the Kyoto Protocol is also the first ever to generate cash and use this cash make such significant monetary transfers to developing nations in a short period of time. Created in 1997, and signed by 165 nations, the Protocol has been since then ratified by 195 nations. The CDM transfers are not given to governments but to the private sector, and may thus be less subject to political corruption forces. CDM transfers go to private and profitable projects that implement new and clean technologies. These can transform the development patterns of poor nations, who can develop in a new way without exhausting the world’s environmental resources, in this case, without having a negative impact on the planet’s atmosphere and on the stability of its climate.

As impressive as the numbers are, however, the CDM needs serious improvements. The data is clear. Up to now the large majority of all CDM projects are in China and in India, the largest developing nations emitters, and very few projects have been funded in Latin America, in Africa or in the Small Island States[2] where the funding could have most effect in development and in future emissions. Why this bias?

The reason is simple. As currently designed, the Kyoto CDM supports projects that reduce emissions. China and India have very substantive emissions to reduce – the two of them together exceed 20% of the global human emissions of carbon. By contrast, Africa, LA and SIS emit too little and have little to reduce: Africa emits 3% of the global emissions, Latin America 5.5%, and all the 43 small island states emit a mere 0.3% of global emissions. The arithmetic is clear: since they emit so little Africa, Latin America and the SIS attract little CDM project support.

The question is how to use CDM to support clean projects in LA, Africa and SIS?

The solution to this problem is simple and radically new: it is Negative Carbon.

Negative Carbon Technologies

Negative Carbon technologies are processes that capture more carbon than they emit. Trees do that—and they are important also for biodiversity conservation that is located in forests. Biochar is also a negative carbon process, by which carbon is buried and reduces the atmospheric concentration as the carbon fertilizes the ground. Trees and biochar are negative carbon processes, and they must be encouraged for many reasons. But they are too slow for what we need in terms of climate change. We have procrastinated too long and we have no time to wait 40-50 years until the world can be reforested enough to make a difference. There are, however, other technologies that are carbon negative and can make a difference in 10 or 20 years from now. One example is provided by Global Thermostat (GT), a new company—which the author has co-founded in 2006—that has created a Carbon Negative technology to capture carbon from air.  GT technology transform a fossil power plant into a net carbon sink: for example, a plant that emits 1 million tons of CO2 annually becomes a 1 million tons sink using GT carbon capture technology. The GT process uses the residual heat in a power plant—called ‘process heat’—to cogenerate CO2 capture with electricity. In this way, the more electricity one produces, the more carbon one reduces. GT is not just for fossil fuel plants—it works with any source of heat to capture carbon from air.  GT can accelerate the transition to renewable power plants. With GT cogeneration, renewable power plants such as concentrated solar plants (CSP) become more profitable, and larger carbon sinks. In this way the technology accelerates the transition to renewable power. The captured CO2 need not be buried. It is fed to algae to produce gasoline and clean water.

This type of technology—there are several available today—changes the equation, and can make the CDM offer funding to low emitting poor nations. With Negative Carbon technologies regions in Africa, LA and SIS could reduce 30% of global emissions even though they emit only 8% in total. This can attract significant CDM resources for carbon negative projects.

Why do we need Negative Carbon? 

  • To contain rising levels of atmospheric carbon because we procrastinated too long and carbon emissions reductions do not suffice[3]
  • To provide clean energy in poor regions by using the carbon market of Kyoto Protocol and the funding provided by its CDM to build negative carbon power plants in Africa, Latin America and the Small Island States. At present it is not possible to use the CDM in these nations without negative carbon technologies, since they emit too little to attract CDM project funding.
  • To power development in the poorest regions in the world and thus help resolve the global divide which is the cause of environmental havoc
  • To enhance the probability of survival, the future of our Species—our common future

 All this seems reasonable but the time dimension is pressing and needs to be faced. We have a short time fuse and there is no time to waste. Solutions to the climate change issue are needed right now because they must be implemented in the next 10 and 20 years. Negative Carbon is needed now. This takes us to the real topic of this article—Green Capitalism. How to use profit motives in tandem with the carbon market to fund a Negative Carbon Solution. How to meet global energy needs and at the same time contain carbon in the atmosphere?

 The transition from our fossil fuel economy to a renewable power economy can neither be easy or fast. Indeed 87% of the US$ 55 trillion power plant infrastructure[4] is based on fossil energy, and we need to turn this global infrastructure into renewable energy sources in rich and poor nations now.  This is a challenge of enormous magnitude.

 A Blueprint for Transformation: the Green Power Fund

 The world needs energy—and the power plant industry as we saw is the key to the problem. It is also the key to the solution. The power plant US$55 Trillion infrastructure represents 41% of global CO2 Emissions. Without transforming this infrastructure into renewable power sources the problem caused by fossil fuels will never go away. How to achieve such an enormous transformation in a timescale that matters?

My proposal is a Green Power Fund.  I proposed this Green Power Fund first in Copenhagen COP 15 and explained this in articles I provided to the US Department of State[5] and the US Department of the Treasury[6], and published the concept in a number of articles that appeared in the Financial Times and Europe’s World.[7] It was supported by Hilary Clinton who announced it three days after my proposal was made. The proposal is relatively simple although the details are technical and depend on the intricacies of the Kyoto Protocol and its CDM, as well as Article 4 of the UN Framework Convention on Climate Change. It starts with the creation of a $200 Bn/year Private Fund for 15 years, with public support.  A period of 15 years with this level of funding is needed to change the global power industry direction and this number was based on the number of GT power plants would be needed to capture all the CO2 emitted by humans today – about 30 gigaton/year. The Green Power Fund will be based on private funding but will have governments’ support. The GPF will invest only on investible grade power plant firms building Negative Carbon power plants and based on Power Purchasing Agreements—PPAs or Off-Take Agreements—that are paid over time by the Kyoto Protocol CDM in Africa, LA & SIS. In Copenhagen COP15 I introduced the wording into the CDM that would allow Negative Carbon projects to be funded from the CDM – wording that is still going through the process of becoming international law. The Green Power Fund can use the CDM to resolve the global climate risks of our time. At the same time that it is self funded, it can increase development—through clean power provision—in the poorest regions of the world. By helping resolve the Global Divide it can have an impact on the real source of the global environmental crisis of our times—all of which are connected and based on extreme poverty and human suffering. The Green power Fund is based on the Kyoto Protocol and its unique market that is based on equity and efficiency, a new type of market for a sustainable future.

 Our vision of Sustainable Development is to create a Carbon Negative economy.  An economy where the more one drives, produces, creates jobs, uses electricity—the cleaner is the atmosphere.

Green Capitalism can drive the equation: 

  • Resolving the Global Climate Negotiations—the North-South Divide 
  • Economic Growth that is Harmonious with the Earth Resources

 A Vision of Green Economics

 Green Markets like the carbon markets lead the transformation, the way to Green Capitalism. These are new types of markets. They are efficient and provide funding to the poorest nations to help resolve the Global Divide. Carbon Negative solutions are the future of energy. They can resolve the Global Climate negotiations and provide clean energy and growth for the North and for the South, economic development that is harmonious with the Earth’s resources. Thus building the future, our common future.


[1] See The World Bank Annual Report: “Status and Trend of the Carbon Market” 2009.

[2] The actual statistics are provided in The World Bank Annual Report: “Status and Trend of the Carbon Market” 2009. See the Appendix.

[3]  This is confirmed by IPCC data, see also, Chichilnisky and Eisenberger 2009, and Eisenberger and Chichilnisky, et al. 2009

[4] Data from International Energy Agency (IEA) and from DOE (US Department of Energy).

[5] Jonathan Pershing, Deputy Special Envoy for Climate Change US Department of State

[6] William Pizer Assistant Secretary for Energy and the Environment US Department of the Treasury

[7] See References 

1.     Chichilnisky, G. “Are financial instruments the right tool to help developing countries?”Financial Times, Climate experts’ forum, December 11, 2009. 

2.     Chichilnisky, G. “The Copenhagen agreement – A disappointment or a relief?”, Financial Times, Climate experts’ forum, December 19, 2009.

3.     Chichilnisky, G. “The Kyoto question” , Financial Times, Climate experts’ forum, December 15, 2009. 

4.     Chichilnisky, G.  “The Copenhagen Solution”, Europe’s World, March 2, 2010. 

 5.     The World Bank Annual Report: “Status and Trend of the Carbon Market” 2009.

 6.     Graciela Chichilnisky and Peter Eisenberger, et al. “Global Warming and Carbon-Negative Technology: Prospects for a Lower-Cost Route to a Lower-Risk Atmosphere”,   Energy and Environment, Vol. 20, Issue 6, 2009.

7.     Graciela Chichilnisky and Peter Eisenberger, “Energy Security, Economic Development and Global Warming: Addressing short and long term challenges“, International Journal of Green Economics, Vol 3, Issue 4, 2009. 


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