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Freaking out about GHG targets and not Bali

with 20 comments

This Globe piece got me thinking about what the Canadian private sector should be freaking out over with respect to climate policy. Is it the emission targets to 2015? No, the price cap for the Technology Fund effectively caps the financial obligation for a given target out to 2017. One simply multiplies forecast emissions by the Technology Fund’s allowable contribution limit to approximate one’s obligation. Is it Bali? Clearly not, since Bali is more surreal than real at this point.

Then what? I think it is uncertainty and that 2020 “aspirational” target of -20% below current levels. Why? If I am sitting down now to plan a project I need an expectation of the price of carbon in the future. I need to know what this variable cost called “carbon liability” will do to my project economics and how I can minimize the liability through design.

But, what is that price? Recent modeling (thanks Chris and Nic) suggests that the carbon price will need to climb from $25 in 2015, the approximate price cap under the Technology Fund, to about $80 to $100 in 2020 to hit a -20% below current target (see thumb). This means that if policy is implemented to hit the target, the liability grows fast and in the order of three to four times between 2015 and 2020. And thus the uncertainty — will climate policy add a carbon liability of this magnitude to my project in 2020?

So I think industry is faced with a very open question and therefore stuck in some sort of mental loop that goes something like this:

The carbon liability could be significant. But, there is so much uncertainty right now I need to discount this liability somewhat. But, the risk is still there. But what is the size of the risk, and by how much do I discount it…repeat loop…

I think “no one is uttering a word about Bali” because they are to busy muttering incoherently to themselves.
Carbon Price to Hit -20% in 2020

Written by Dave Sawyer

December 19th, 2007 at 10:27 pm

20 Responses to 'Freaking out about GHG targets and not Bali'

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  1. .

    áëàãîäàðñòâóþ!!…

    Steve

    30 Jul 14 at 12:49 pm

  2. .

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    kelly

    18 Nov 14 at 6:02 am

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    oscar

    18 Nov 14 at 4:04 pm

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    áëàãîäàðñòâóþ!!…

    Rick

    19 Nov 14 at 3:00 am

  5. .

    tnx!…

    Kirk

    20 Nov 14 at 12:06 am

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    ñýíêñ çà èíôó!…

    wade

    21 Nov 14 at 2:43 pm

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    Lynn

    21 Nov 14 at 7:16 pm

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    Edgar

    27 Nov 14 at 9:04 am

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    ralph

    27 Nov 14 at 7:11 pm

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    Jeff

    28 Nov 14 at 4:35 pm

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    ñïñ….

    Phillip

    29 Nov 14 at 1:14 am

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    Paul

    29 Nov 14 at 7:54 am

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    Joel

    30 Nov 14 at 9:26 am

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    Tommy

    30 Nov 14 at 10:02 am

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    don

    1 Dec 14 at 3:26 pm

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    Scott

    8 Dec 14 at 8:54 am

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    ñýíêñ çà èíôó!…

    Darrell

    8 Dec 14 at 11:35 am

  18. .

    áëàãîäàðþ!!…

    Leo

    11 Dec 14 at 2:09 am

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    ñïñ çà èíôó!…

    Darrell

    12 Dec 14 at 2:50 pm

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    henry

    15 Dec 14 at 8:17 pm

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