An International Analysis of Emissions Trading Markets: Implications for Business Strategy

1. An International Analysis of Emissions Trading Markets: Implications for Business Strategy Sara Peary Master of International Business Programme University of Auckland Business School sarapeary@hotmail.com Sara Peary

2. NCRE placement: February-May 2005 Office of UK Conservative Member of Parliament, Neil Parish Chair of the Australia-New Zealand Delegation Committee on Agriculture and Rural Development Committee on Environment, Public Health and Consumer policy Vice President of the Animal Welfare Inter-group Deputy Chief WHIP, UK Conservatives Conservative Party Spokesman on Agriculture and Fisheries Committee on Fisheries Research at the European Parliament Sara Peary

3. Research and Involvement: • Attendance and reporting of Committee Sessions, Internal Meetings and Parliament Events • Observation and Recommendation • Interviewing • Networking • Research and Data Gathering Sara Peary

4. Research and Involvement • Committee on Industry, Research and Energy • Committee on Foreign Affairs • Committee on International Trade • Conference on Trade and the Environment • United States of America Delegation Sara Peary

5. Research and Involvement: Committee on Industry, Research and Energy • European Union Emissions Trading Scheme (ETS) (01/05) • Largest multi-country, multi-sector Greenhouse Gas emission trading scheme world-wide • Formation of the international market for managing the risks of global climate change Sara Peary

6. Research and Involvement: Committee on Industry, Research and Energy • Various new businesses emerging in Europe as a result of the EU ETS • EU carbon market: carbon traders, carbon finance specialists, carbon management specialists, carbon auditors and verifiers • New financial products: i.e. carbon funds Sara Peary

7. "…that which is common to the greatest number has the least care bestowed upon it. Every one thinks chiefly of his own, hardly at all of the common interest; and only when he is himself concerned as an individual. For besides other considerations, everyone is more inclined to neglect the duty which he expects another to fulfil…" ~ Aristotle (Politics, 1262a30-37) Sara Peary

8. The Problem of Climate Change • Rising temperatures, extreme weather events, altered rainfall • Jeopardising, industries, infrastructures, health, bio security and the broader international economy • Firms can be significantly effected through costly legislation Sara Peary

9. International Responses to Climate Change • UNFCCC – 1992 • First non-binding obligation of developed countries to stabilise GHG emissions at 1990 levels by the year 2000 • Kyoto Protocol - 1997 • 2/2005 went into force in 141 countries worldwide Sara Peary

10. Kyoto Protocol • Set the framework for emission reduction programs • Established new policy instruments or flexible mechanisms intended to encourage economic efficiency in emission reduction • National legislation or programmes facilitate domestic compliance Sara Peary

11. Emissions Trading Under Kyoto • Among Developed Countries • based on national allocations • Between Developed and developing countries • Based on project & investment • Private Sector Firms may participate if their domestic government allows Sara Peary

12. Emissions Trading Globally • Schemes are still in their infancy • Extreme diversity in International policy and regional implementation of Kyoto • Uncertianity of Emissions Trading in non-Kyoto Countries • Need for relevant policy, programme and corporate strategy research Sara Peary

13. An International Analysis of Emissions Trading Markets: Implications for Business Strategy • To contribute new strategic insights for firms, policy makers and NGOs from an international comparative study of the EU, US, Australian, and New Zealand Emission Trading Markets Sara Peary

14. An International Analysis of Emissions Trading Markets: Implications for Business Strategy • To investigate the link between emissions trading legislation and firm-level strategy and operations, and to assess implications for firms Sara Peary

15. Investigating • Roles and positions of current policy making institutions, NGOs, and private sector firms in regard to Emissions Trading Markets in the EU, US, Australia and New Zealand • Nature and relevance of stakeholder interactions of emissions trading markets and what influence do these groups have on each other? Sara Peary

16. Investigating • Strategic and operational preparations and/or changes are firms making in response to being stakeholders in an international emissions trading environment? • Whether firms in Kyoto party environments making more strategic changes than those in non-Kyoto regions? Sara Peary

17. European Union United States Australia New Zealand Notes Firm Level: Private Sector Interviews with Industry Organisations Interviews Industry Organisation Interviews Industry Organisations Interviews with Industry Organisations D Imens I ons 1: Sustainability Focused Organisation 2: Traditional Industry Organisation Institutional Level: Government Secondary Research: EU Members of Parliament EU Commission European Environment Agency State Governments: DEFRA/UK: Environmental Protection Secondary Research: Departments of State and Energy, Environmental Protection Agency. State Governments: California & New York Secondary Research: Australian Greenhouse Office, Department of the Environment & Heritage State Governments: Victoria & NSW Secondary Research: Ministry of Economic Development Ministry of Environment, Ministry of Foreign Affairs & Trade Appropriate government institution of each region in charge of emissions trading policy. Institutional Level: NGO’s The Climate Group Greenpeace Friends of the Earth Climate Action Network Europe (CAN) International Emissions Trading Association (IETA Toronto/Geneva) Carbon Trust- UK Emissions Trading Markets: Sampling Framework

18. Conclusions • What are the implications for Policy Makers, NGOs and Firms? • What can be learned from early emissions trading schemes (EU-ETS, UK-ETS)? • Is there a gap between policy-maker’s expectations and firm level strategic implementations? • Are there firm level strategic differences between voluntary and legislated regions? • What can NZ firms learn from business strategies in the EU and other regions? Sara Peary

19. An International Analysis of Emissions Trading Markets: Implications for Business Strategy For more information contact: Sara Peary Masters of International Business University of Auckland Business School sarapeary@hotmail.com027 460 8875 Sara Peary