Update: Climate Bonus!

My humble offering on this platform isn’t about providing solutions but at best, offering an overview.

In reference to my recent blog post on this subject, there exist both the state-vertically regulated compliance credits (emission certificates, where companies are obligated to purchase carbon credits from the state) as well as the horizontally voluntary carbon compensations (voluntary offset credits) among companies.

Market Value: In 2023, the market for regulatory compliance credits in the form of emission certificates in Europe witnessed significant trading activity. The European Emissions Trading System (EU ETS), the largest carbon market globally, reported a trading volume of approximately 850 million tons of CO2 equivalent for the year. The total market value for 2023 is estimated at around 50 billion euros (Deutsche Boerse) (Xetra) (Reference value: GDP Austria/Year 471 billion, i.e., roughly 10% of the sum of incomes generated within Austria’s production activities per year or a third of Austria’s total industrial value added per year). The price of EU emission allowances (EUAs), granting the holder the right to emit one ton of CO2 equivalent, also saw a significant increase, contributing to the overall market value (Deutsche Boerse) (Xetra). While the voluntary carbon market was estimated at about 400 million dollars last year, experts forecast the sector’s value to range between 10 and 25 billion dollars (worldwide) by 2030, depending on how aggressively countries worldwide pursue their climate goals—an incredible investment potential traded in various emissions trading systems.

Not to be overlooked in this context are all secondary and tertiary branches of the economy that generate additional revenue, such as digital identity management. Solutions for digital identity management offer a promising approach to enhancing transparency, accountability, and efficiency in the trade of emission certificates. By leveraging blockchain technology, these solutions can provide a secure and immutable registry of emission certificate ownership and transactions, reducing the risk of fraud and double counting.

Moreover, digital identity management can streamline the verification process for emission certificates, making it easier for companies to participate in carbon trading. Also, the tokenization process is being marketed: emission certificates are tokenized, meaning they are represented as digital tokens on a blockchain or other distributed ledger technology. Each token is linked to a specific emission certificate and contains metadata such as project information, verification data, and ownership details. To be able to participate linguistically in weekend or dinner conversations with friends, it is advisable to casually drop buzzwords like DIDs (Decentralized Identifiers) and VCs (Verifiable Credentials).

The pain point(s): Returning to the question „Do carbon offset measures actually reduce emissions?“ The answer is NO.

Greta rightly expresses her valid doubts. „There is no planet, blah, blah, blah!“ to emphasize her disdain for the lofty words of decision-makers focused on the economic aspect of trade and profit. „Of course, we need constructive dialogue, but they’ve now had 30 years of blah, blah, blah, and where has that led us?“

(Referencing the United Nations‚ efforts since 1949 in my previous blog, meaning 75 years of „making speeches full of empty promises and consciously wasting time while the situation needs urgent action.“ We must see the positive side; we’ve learned that the low-dopamine diet is behind the delay. Decision-makers will now adopt a new diet, perhaps the Nootropic 😉. The low-dopamine diet is likely also to blame for the Palestine-Israel problem, it’s responsible for many things. „Hope is not passive. Hope is not blah, blah, blah.“) Greta is right and justified, as illustrated perfectly by this Valentine’s card for Paris (so fitting, considering we have the Paris Agreement—an unbinding one).

Firstly, the enviable CO2 knows no bounds, freely migrating from one place to another (Exhibition recommendation: Dieter Nuhr, July 9, 2024, opening his exhibition „Elsewhere is Everywhere“ at the Bank Austria Kunstforum Vienna). Alongside this, there’s the somewhat dated NASA model from 2014 depicting the movement of CO2, using data from 2006!!

And suddenly, it becomes clear that from February to June, our plants have their CO2 peak season. Oh, the work those little mouths must do.

It’s also worth considering that winter isn’t exactly known for its abundance of leaves here, and of course, the global tree population has drastically decreased and continues to decline. Based on our projected tree densities, we estimate that over 15 billion trees are cut down every year, and the global tree count has declined by approximately 46% since the beginning of human civilization.

The experts agree: there are precisely 422 trees per person worldwide. An adult beech tree absorbs approximately 12.5 kilograms of CO2 per year. It takes 80 trees to offset one ton of CO2. An average household (as mentioned in my introduction to this topic) produces about 16 tons of CO2 annually. So, 16 multiplied by 80 equals 1280 trees per household. Ladies and gentlemen, without even considering industry, it’s barely feasible for a household of two and a half people to achieve CO2 neutrality. With this tree math, we won’t be getting anywhere—quite literally, onto no green branch. And then there’s the Sahara problem, where significantly fewer trees grow.

In this case, sound advice truly comes at a premium. In reality, when examining the landscape of solutions, we’re faced with the highest peak of perplexity (having forgotten our mountain boots at home), only surpassed by the hopeless activism of climate gluers.

National, regional, EU and international grants provide further impetus and ideally also a reason to boost the voluntary carbon offset market. There’s a veritable competition in carbon offsetting (mind you, without removing a single ton of CO2 from our actual atmosphere, all merely fictional on paper, best case removing future CO2), naturally with the primary focus on the Paris (paper) goals rather than profit margins.

Because the numbers are increasing even without wars (as mentioned earlier, we receive a full dose of CO2 from Russia and Ukraine). After 18 months of just this war, we have an additional burden equivalent to the entire annual CO2 emissions of admittedly a smaller EU member state. And this isn’t the only war currently happening. This brings us to a specific proposal of mine, namely, the war CO2 levy, which must be paid immediately in cash by the aggressor upon attack (and it is certainly double the value of all deployable war materials). However, what happens in the case where the aggressor isn’t an aggressor but a defender? In short, then there won’t be a war because it must first be determined by international courts who has to pay. That becomes a legal issue, takes an eternity and is expensive.

Personally, I favor the Swiss model of extraction (the hoovering). We’ll disguise the „CO2 extractors“ as trees and simply give them bigger mouths.

And I’ll conclude with Greta today, „Those numbers… rely on my generation sucking 100 of billions of tons of your CO2 out of the air with technologies that barely exist.“

Update: Climate Bonus

The Climate Bonus, as introduced in Austria, is a specific measure and is not widely adopted globally. However, other countries have similar mechanisms for redistributing revenues from CO2 pricing or environmental taxes. Here are a few examples:

Switzerland: Switzerland levies a CO2 tax on fossil fuels. A portion of the revenue is returned to the population and businesses as a „climate dividend.“

Canada: In Canada, there are „Climate Action Incentive Payments,“ which redistribute revenues from CO2 pricing to residents. This is part of the federal carbon pricing program.

Sweden: Sweden has one of the oldest carbon taxes in the world and uses the revenue to reduce other taxes, which indirectly has a similar effect to a climate bonus.

Germany: Germany has implemented a „climate bonus“ in the form of CO2 pricing in the transport and heating sectors. The revenues are used to reduce other taxes and levies, as well as to promote climate protection measures.

California, USA: In California, there is the „Cap-and-Trade“ program, which auctions emissions permits. A portion of the revenue goes into programs supporting low-income households and promoting renewable energy.

Since 2022, Austrian citizens have been receiving the Climate Bonus, a government measure to compensate for the additional costs arising from CO2 pricing. Carbon dioxide (CO2), a harmful greenhouse gas, has a price that must be paid by companies producing or importing fuels in Austria. This CO2 pricing leads to higher costs for fossil fuels, which are ultimately passed on to consumers.

In the first year, the Climate Bonus was distributed as a uniform payment of 500 euros per person. This served as an immediate compensation for the increased cost of living due to the introduction of CO2 pricing. The aim was to provide direct and swift support to the population while new climate protection measures were being implemented.

From the second year onwards, the Climate Bonus is being paid out on a regional scale. This gradation takes into account the different mobility costs and infrastructural conditions across various regions of Austria. People in urban areas, where public transport is more accessible, receive a smaller bonus compared to those in rural areas, where dependency on private vehicles is higher and public transport is less available.

The Climate Bonus is also directly linked to the redistribution of funds generated from emission certificates. Revenues from the sale of CO2 certificates are partially used to finance the Climate Bonus. This ensures that the funds generated through CO2 pricing are returned to the population, helping to mitigate the economic burden of higher energy prices and increase the acceptance of climate protection measures.