Proposed New CO2 Emissions Mitigation Mechanism

Abstract

MM, the new CO2 Emissions Mitigation Mechanism (Mitigation Mechanism) proposed in this work, is the CO2 mitigation program assisting the countries to reach the 1.5°C-2.0°C global warming limit in the year 2100.
Considering climate justice, the countries which will not reduce their CO2 emissions to the limit in a specific year will buy carbon credits. The new CO2 Emissions Mitigation Mechanism introduces an efficient way to buy carbon credits and an efficient way to use carbon credits.
This work proposes a procedure to guarantee constant carbon credit price, known in advance. This procedure does not require the involvement of carbon traders, reducing the time between the creation of emissions reduction and the actual money transfer to the project participants.
The carbon credits issued by the operating organization will be sold to the countries which did not reduce their CO2 emissions to the required limit in the specific year. These carbon credits will have a constant price without a time limit, known in advance publicly.
The money received from the buying country will be used as an incentive for CO2 mitigation projects and will be transferred directly to the project participant instead of carbon credits. Considering the 50$ carbon credit cost the maximum cumulative cost of the carbon credits proposed in this work will be 0.61% of the world cumulative GDP in the period 2025-2100. The maximum yearly cost of the carbon credits will be in the year 2037, 0.70% of the world’s GDP.

Full text

Proposed New CO2 Emissions Mitigation Mechanism
Joseph Nowarski, M.Sc., ME – Energy Conservation Expert
Version 1.1.1, 1 November 2022
DOI:10.5281/zenodo.7270802
all versions DOI:10.5281/zenodo.7270801
Abstract
MM, the new CO2 Emissions Mitigation Mechanism (Mitigation Mechanism)
proposed in this work, is the CO2 mitigation program assisting the countries to
reach the 1.5°C-2.0°C global warming limit in the year 2100.
Considering climate justice, the countries which will not reduce their CO2 emissions
to the limit in a specific year will buy carbon credits. The new CO2 Emissions
Mitigation Mechanism introduces an efficient way to buy carbon credits and an
efficient way to use carbon credits.
This work proposes a procedure to guarantee constant carbon credit price, known
in advance. This procedure does not require the involvement of carbon traders,
reducing the time between the creation of emissions reduction and the actual
money transfer to the project participants.
The carbon credits issued by the operating organization will be sold to the
countries which did not reduce their CO2 emissions to the required limit in the
specific year. These carbon credits will have a constant price without a time limit,
known in advance publicly.
The money received from the buying country will be used as an incentive for CO2
mitigation projects and will be transferred directly to the project participant
instead of carbon credits. Considering the 50$ carbon credit cost the maximum
cumulative cost of the carbon credits proposed in this work will be 0.61% of the

Proposed New CO2 Emissions Mitigation Mechanism (MM) - Joseph Nowarski
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world cumulative GDP in the period 2025-2100. The maximum yearly cost of the
carbon credits will be in the year 2037, 0.70% of the world’s GDP.
Keywords: climate change, global warming, climate justice, CO2 emissions, Clean Development Mechanism,
CDM, Certified Emissions Reduction, CER, CERs
Glossary
Ave average
BAU Business-as-Usual scenario
BL baseline
CO2 emissions of Carbon Dioxide, CO2
Cp$ CO2 emissions per GDP, tCO2/$GDP
CpC CO2 emissions per capita, tCO2/y,cap (ton CO2 per year, per
population of the country)
Global Warming global surface temperature change over land+ocean above
1850-1900 baseline (°C)
GtCO2 Giga-ton of CO2, 109 ton, 10^9 ton, 1,000,000,000 ton of CO2
IO International Organization running the New CO2 Emissions
Mitigation Mechanism Program (International Organization)
MM Proposed New CO2 Emissions Mitigation Mechanism (Mitigation
Mechanism)
MMC CO2 emissions reductions certified by the New CO2 Emissions
Mitigation Mechanism (Mitigation Mechanism Certificate), 1 metric
ton of CO2
MtCO2 Mega-ton CO2 = 106 ton, 10^6 ton, 1,000,000 ton CO2
tCO2 metric ton CO2 = 10^6 gram CO2

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Necessary Change in CO2 Emissions to Reach 1.5°C-2.0°C Global Warming Limit in
2100
The publications “Necessary Change in CO2 Emissions per Capita to Reach 1.5°C-
2.0°C Climate Change Limit in 2100” [1] and “Necessary Change in CO2 Emissions
per GDP to Reach 1.5°C-2.0°C Climate Change Limit in 2100” [2] analyze required
CO2 emissions reduction to reach the 1.5°C-2.0°C Global Warming limit in 2100.
Not all countries will be able to reach this target, like countries whose main source
of CO2 emissions is oil refineries or countries that did not develop efficient public
transport. Considering climate justice, the countries which will not reduce their
CO2 emissions according to the above limits in the specific year will buy carbon
credits. The new CO2 Emissions Mitigation Mechanism (MM) described in this work
introduces an efficient way to buy carbon credits and an efficient way to use the
carbon credits.
New CO2 Emissions Mitigation Mechanism - MM
In most carbon credits programs, the price of the carbon credits is unknown before
the planning and construction of the emissions reduction projects.
The uncertain price of carbon credits is a major barrier to GHG mitigation.
After the mitigation project is completed the project participant receives
certificates, which can be sold to the carbon credits trader at a lower price than
the trader will finely receive. The market prices of carbon credits vary with time
and may be much lower than originally expected. This procedure causes serious
risk to the project participant regarding the planned income from carbon credits
and loss of income related to carbon credits trader’s fees.
This work proposes a different procedure to guarantee constant carbon credit
price, known in advance. This procedure does not require the involvement of
carbon traders, reducing the time between the creation of emissions reduction
and the actual money transfer to the project participants.

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MM, the new CO2 Emissions Mitigation Mechanism (Mitigation Mechanism)
proposed in this work, is the CO2 mitigation program assisting the countries to
reach the 1.5°C-2.0°C global warming limit in the year 2100.
The MM may be run by International Organization (IO), like UN-FCCC-CDM or
World Bank.
Countries that did not reduce their CO2 emissions according to the required limit in
the specific year, should buy carbon credits from IO, even if the IO has not yet any
CO2 mitigation project.
The carbon credits sold by the IO are MMCs - CO2 emissions reductions certified by
the new CO2 Emissions Mitigation Mechanism (Mitigation Mechanism Certificate),
1 metric ton of CO2 each.
The MMC has constant value known in advance publicly, equal for all countries.
IO will issue CO2 mitigation certificates (MMCs) to the buying country.
IO will use the money received from the buying country as an incentive for CO2
mitigation projects according to the criteria. Once the CO2 mitigation project is
registered by the IO, the project participant may submit a verified monitoring
report to the IO. After the verified monitoring report is approved, the IO will transfer
the money equivalent to the CO2 emissions approved, directly to the project
participant’s bank account. The amount of money the IO will pay to the project
participants for each ton of CO2 equals the price of MMC sold to the buying
countries less some small fees to run the MM.
IO operation procedure
 buying country transfers to IO amount of money relevant to the
missing CO2 mitigation to the annual target, based on the constant
MMC price
 IO sends MMCs to the buying country
 Project participant submits the project to IO for registration
 IO approves the project registration
 Project participant submits verified monitoring report to IO
 IO approves the verified monitoring report

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 IO transfers to the project participant amount of money according to
the approved CO2 emissions reduction and constant MMC price
 There will be some MMC price difference between the price for the
buying country and the price paid to the CO2 mitigation project
participants, to cover the IO operation cost
Advantages of the MM - new CO2 Emissions Mitigation Mechanism
 The MMC price is constant and guaranteed without time limits and
without any conditions, which dramatically decreases the financial risk
of the CO2 mitigation project
 The guaranteed MMC price is known to the project participants
before the decision and planning of the project, allowing exact
financial analysis
 The project participants will receive the full amount of the MMCs price
without paying fees to carbon credit traders
 There is no need for contracts between the project participants and
carbon credits traders
 Project participants will get the money much faster than in other
carbon credit programs
Carbon Market Prices
Publication [3] contains CERs (UN FCCC CDM) and EUAs (EU ETS) prices. The
publication includes the following information regarding the CERs prices in the
period 2008-2012: “From a peak near Euro 30/t CO2, carbon traded roughly in the
Euro 10 – 15 range before falling steadily toward Euro 5 at the beginning of 2012”.
The publication includes also an estimation of “carbon social cost” which is 15.7-
65.0 $/tCO2.

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Internet site “Trading Economic - EU Carbon Permits” [4] includes a chart of “EU
Carbon Permits (EUR)” from April 2005 to current (October 2022).
Table 1 - EU Carbon Permits prices 2005-2022 [4] [EUR]
EUR
Apr-05 16
May-06 27
Jul-07 0.5
Jun-08 29
Apr-13 3
Jul-19 28
Mar-20 17
Jun-22 90
Oct-22 81
Min 0.5
Max 90
Ave this table 32
Ave(Min-Max) 45
Publication [5] contains a dataset of EU ETS prices.
Table 2 - EU ETS prices 2021-2022 [5]
EUR/tCO2 $/tCO2 Date
From 04/01/21
to 15/09/22
Min 31.62 38.18 18/01/21
Ave 65.86 74.95
Max 98.01 114.65 19/08/22
Latest 71.85 71.71 15/09/22
Considering the above, this work applies the MMC price of 50 $/tCO2, constant for
the period 2022-2100 and beyond.
The MMC price for the buying country is slightly higher considering the IO operation
cost, estimated as 1%, 50.50 $/tCO2 cost for the buying country.
Maximum Volume of MM Program
Publications [1] [2] analyze the CO2 emissions per capita (CpC) and per GDP
(Cp$) determining the necessary annual change in CpC and Cp$ to reach the
1.5°C – 2.0°C Global Warming limit in 2100.

Proposed New CO2 Emissions Mitigation Mechanism (MM) - Joseph Nowarski
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Table 3 - Maximum volume of the MM program [1] [2]
Cumulative CO2 emissions in
2100 without international
transport
BAU 4.1°C 2.0°C 1.7°C 1.5°C
annual change in CpC %/y 0.078% -4.46% -7.85% -17.00%
according to CpC [1] MtCO2(BL1875) 5,672,105 2,678,071 2,275,981 2,002,048
Δ to BAU MtCO2(BL1875) -2,994,034 -3,396,124 -3,670,057
annual change in Cp$ %/y -1.315% -5.91% -9.34% -18.00%
according to Cp$ [2] MtCO2(BL1875) 5,672,105 2,677,536 2,275,412 2,007,987
Δ to BAU MtCO2(BL1875) -2,994,569 -3,396,692 -3,664,117
Max MtCO2(BL1875) -2,994,569 -3,396,692 -3,670,057
MMC price to buying countries $/MMC 50.50 50.50 50.50
MMCs cost (2025-2100) M$MMC/75y 151,225,733 171,532,955 185,337,874
Cumulative world GDP [6] M$GDP/75y 30,410,471,114
MMC cost per GDP $MMC/$GDP 0.50% 0.56% 0.61%
The maximum MM Program cost is 0.50%-0.61% of the world’s expected cumulative
GDP in the period 2025-2100.
The CO2 emissions mitigation projects probably will increase the world GDP by
more than 0.6% of the GDP, however, for the conservativeness of the estimation,
this is not considered in this work.
Annual Cost of MMC per GDP
Chart 1 - Annual Cost of MMCs per GDP (50.50$ per MMC) [6] [$MMC/
$GDP]
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
2026
2030
2034
2038
2042
2046
2050
2054
2058
2062
2066
2070
2074
2078
2082
2086
2090
2094
2098

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The maximum yearly cost of MMCs to GDP is 0.695% ($MMC/$GDP) in 2037 [6].
Contribution of Mitigation Projects to GDP - Example of Solar Water Heaters in Israel
Table 4 - Contribution of mitigation projects to GDP - example of solar water
heaters in Israel
GDP 2020 [2] 359,908,802,382 $GDP/y
SWH 2,000,000 units
Electricity saving [7] 1,200 kWh/y per unit
National saving 2,400,000,000 kWh/y
EF [8] 0.570 tCO2/MWh
Emissions Reduction 1,368,000 tCO2/y
MMCs cost 69,084,000 $/y
MMCs to GDP 0.019%
SWH unit cost 1,000 $
lifetime 10 y
national SWH product 200,000,000 $/y
SWH to GDP 0.056%
SWH/MMC 2.9 $/$
EF – Emission Factor of the last CDM project in Israel (7777) = 0.570 tCO2/MWh [8]
In the above example, the contribution of the mitigation project to the GDP is
much higher than the cost of carbon credits. As mentioned before, the
contribution of the CO2 emissions mitigation projects to GDP is not considered in
this work for the conservativeness of the estimations.

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References
1. Necessary Change in CO2 Emissions per Capita to Reach 1.5°C-2.0°C
Climate Change Limit in 2100 – Joseph Nowarski,
DOI:10.5281/zenodo.7264419
2. Necessary Change in CO2 Emissions per GDP to Reach 1.5°C-2.0°C Climate
Change Limit in 2100 – Joseph Nowarski, DOI:10.5281/zenodo.7264421
3. INFORMING THE CARBON MARKET POLICY DIALOGUE: THE EMISSIONS
TRADING SYSTEMS AT A GLANCE, World Bank, DOI: 10.2870/323576
https://www.researchgate.net/publication/340455667
4. Trading Economic - EU Carbon Permits
https://tradingeconomics.com/commodity/carbon
5. EU Carbon Price Tracker, The latest data on EU ETS carbon prices
https://ember-climate.org/data/data-tools/carbon-price-viewer/
6. Dataset CO2 Emissions per GDP Forecast 2020-2100 - Joseph Nowarski,
DOI:10.5281/zenodo.7264415
7. Solar Israel: A practical and legislative model – Joseph Nowarski, Renewable
Energy World - March-April 2000 p.92-99, DOI:10.6084/m9.figshare.21443073
8. UN-FCCC CDM project 7777
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