CDM reforms: what project developers want, need and expect /// CARBON FINANCE

Hopes are high but expectations low for this year’s once-in-a-decade review of the rules governing the Clean Development Mechanism, says Gareth Phillips

It is important to be clear about the scope of the forthcoming review of the rules governing the Clean Development Mechanism (the ‘CDM Modalities and Procedures’, or M-P). The most important thing that project developers want is greater demand for high quality compliance-grade emission reductions. What we, the global population, need is greater ambition – if governments do not step up to the challenge by announcing tougher targets, emissions of greenhouse gases (GHGs) will not decrease and we will not achieve the aim of limiting the average rise in global temperatures to 2⁰C above pre-industrial levels.

Neither of these wants or needs are directly within the scope of the review. However, we do believe that changes which can be implemented via the review could influence demand for certified emission reductions (CERs) by improving the CDM’s credibility, and thereby helping governments to increase their levels of ambition.
So, the review of the CDM M-P – hopefully to be concluded in Warsaw later this year – is critically important for the future of the global fight against climate change. What do we expect? Unfortunately, we expect very little, but we hope that negotiators will take up the challenge of reviewing the CDM’s processes with the objective of making the CDM fit for the next stage of the fight against climate change.
The Project Developer Forum’s (PD Forum’s) full list of wants is laid out in our various submissions to the CDM Executive Board (EB) and the Subsidiary Body for Implementation (SBI), and is available at www.pd-forum.net. We have defined a package of measures which we believe are radical enough to alter the nature of the CDM such that it fulfills the expectations of a wide range of stakeholders. In summary, the most important improvements we seek include:

• Strengthening the environmental integrity of CDM projects, for example through the adoption of positive lists of technologies which are considered automatically additional, in terms of the emission reductions they achieve
• Addressing governments’ expectations that the CDM contributes to host country mitigation and is not just a pure offsetting mechanism. This could be achieved, inter alia, by ensuring that a share of the credits issued to CDM projects would be deducted and cancelled in favour of the host country’s emissions reduction target or pledge, or through the use of CERs in a host country's regional or sectoral emissions trading system.
• Fairer and more transparent treatment of conservativeness, through the adoption of accurate baseline and monitoring methodologies combined with the creation of a single methodology-specific conservativeness factor which is applied when CERs are issued.
• Allowing all nations to use CERs for offsetting purposes.
• Clear commitment to the rules of law, including the establishment of an appeals panel.
• A transparent review of the duration of the crediting period, with input from all stakeholders.
• Removal of the executive function from the EB (accordingly, renamed the Board) so that it focuses on guiding the CDM and ensuring that it generates the kinds of emission reductions which governments want to buy.
• Increased membership of the EB to 24 members (from 10), including two from civil society and two from the private sector, doing away with alternates.Creation of an Executive CDM Director within the UN climate secretariat to oversee the expanded role of the secretariat in the transparent execution of the CDM.
• Clarity on the role of E+ and E- policies (ie, those favouring more emission–intensive technologies or less emission-intensive technologies respectively) including a time limit on E- policies and the right to include E- policies in the establishment of the baseline and proof of additionality.
• Shorter time frames for registration and issuance.

In addition, the PD Forum has proposed that the CDM EB abandon the concept of small-scale projects on the basis that they are no easier to implement than normal-scale projects and have significantly complicated the CDM. With the removal of the small-scale classification, there is no need for Programmes of Activities (PoAs) which, to date, have taken up massive amounts of resources but not yet issued a significant number of CERs. PoA can be moved to the registry of Nationally Appropriate Mitigation Actions (NAMAs) where independent auditors – or Designated Operational Entities (DOEs) – can verify credits under a different accreditation programme.
Likewise, afforestation and reforestation (A/R) can be taken out of the CDM and relocated to the REDD+ mechanism (reduced emissions from deforestation and forest degradation). Again, A/R has consumed massive amounts of resources but issued very few CERs – on top of which, the main markets have shown no appetite for these credits or the underlying technologies.
We consider that such changes would reinforce the CDM’s role as the single standard for emission reduction projects and enable both developed and developing countries to use the CDM as a project-based mechanism which delivers: high quality emission reductions at a low price; sustainable development for host countries; host country mitigation; helps to build capacity for the development of NAMAs, domestic emissions trading schemes; and the most effective means of financing the development of renewable energy in developing countries. Additionally, the CDM could become a service provider to any new approaches under the Framework for Various Approaches, which seeks to account for efforts to reduce emissions outside the UN climate convention.
As to what project developers need, the overwhelming requirement at the current time is demand for emission reductions and higher prices for CERs. While this is beyond the scope of the current review, we believe that if negotiators give the right directions, starting at the Subsidiary Body 38 meeting in June, then they could trigger the start of a turn-around in the future of the CDM.
The right directions would include:

• a clear commitment to complete the review of the CDM M-P in Warsaw this year and not to drag it out for longer;
• full engagement at the planned workshop, where Parties and stakeholders can discuss their proposals; and
• clear commitment from the Parties to making the CDM the leading emission reduction mechanism of the future.

What do we expect to happen? Currently there are few signs of real commitment and no nation is stepping forward to champion the issues:

• The workshop on the review of CDM M-P is now scheduled, to take place during June’s meeting rather than before, which does not give stakeholders such as the PD Forum, and DOE Forum a chance to interact with negotiators before they adopt their positions on the review.
• The Executive Board’s input to the M-P consultation, in our opinion, falls far short of the kind of proposals we need to see to change the fate of the CDM. Given that several of the EB members are also negotiators for the mechanisms, we already face an uphill struggle.
• The media and the general public are largely unaware of the significance of the CDM and its role in international and, potentially, domestic emissions trading, alongside the many other benefits it brings.
• Environmental NGOs seem happy to see the mechanism remain constrained and despite the lack of other alternatives, they tend to focus on historic criticisms of the CDM.
• Investors are indifferent – they can more easily make adequate returns from fossil fuel than from CDM-supported renewables.

So, in conclusion, project developers have plenty of ideas about the future of the CDM and we hope that negotiators will make the most of this once-in-a-decade chance to listen to practitioners and other stakeholders. We hope that they will take the opportunity to build upon and improve the successes which we have already seen under the CDM and work to avoid more superstorms, droughts, wildfires and geopolitical instability.
Gareth Phillips is chief climate change officer with Sindicatum Sustainable Resources and chairman of the Project Developer Forum. E-mail: gareth.phillips@pd-forum.net

World Carbon Markets at a Turning Point

 

April 4, 2013

GLOBE-Net, April 4, 2013 - The world's carbon markets are at a turning point according to the latest Thomson Reuters Point Carbon annual survey of carbon trading.
While the volume of carbon credits traded globally will grow by an estimated 14 percent this year, reaching roughly 12 gigatons of carbon dioxide equivalents, concerns remain about depressed market prices in certain markets and uncertainties abound over the future direction of carbon trading generally.

The report - Carbon 2013 - reveals that the European Union's Emissions Trading Scheme (EU-ETS), the world's largest carbon market, is deeply challenged by an oversupply of credits that have been causing prices to fall. While EU policy makers have considered various measures to reduce the huge oversupply of allowances in that market which contributed to record low carbon prices, a community-wide consensus has yet to emerge.

The Point Carbon eighth annual survey covers the European Union's Emissions Trading System (EU-ETS); the Clean Development Mechanism (CDM) under the Kyoto Protocol; the Joint Implementation (JI) mechanism, also under the Kyoto Protocol; the Western Climate Initiative (WCI), and emerging carbon markets in Asia and Australia

.

Progress is being made on measures to fix the EU-ETS, notes the report, which also reports a strong positive conviction among survey respondents that structural reforms in this market will lead to higher prices and a resurgence of greenhouse gas (GHG) emissions reducing investments.
The uncertainties that do remain focus mainly on what remedial measures will be adopted (i.e., delaying allowance auctions or outright cancellations) and how quickly other structural reforms will be implemented.

Other World Markets
Outside the EU, the outlook for nascent carbon markets is optimistic, suggesting that carbon trading has become a tale of two markets. While the oversupply of allowances and low prices became more acute throughout 2012 in the EU-ETS, the North American Western Climate Initiative (WCI) is stimulating positive action. The WCI is a multi-jurisdictional Canada-U.S. emissions trading group with California and Quebec currently the two active participants.
California's carbon market successfully came into force in 2012 and, unlike the exodus of traders from the EU-ETS, California regulated companies were busy preparing for trading or planning real GHG emissions reductions that could earn credits.

Over 60 percent of respondents to the Point Carbon survey who have compliance obligations under the WCI market said they have set up trading operations, and 53 percent said they have implemented internal emissions reductions strategies.
Over half of the participants consider the price of carbon to be a decisive factor in investment decisions, with the majority of respondents expecting California Carbon Allowances to be priced between $10-15 per tonne in 2013.

Of the other WCI partners, Quebec has announced it will be moving ahead with taking the necessary steps to formally link its emissions-trading program with California.
British Columbia's Greenhouse Gas Reduction (Cap and Trade) Act, provides the statutory basis for setting up a market-based cap-and-trade framework to reduce GHG emissions from large emitters operating in the province. British Columbia has been in discussions for several years with the WCI after being the first Canadian province to authorize hard caps on GHG emissions in 2008.
The Province is currently monitoring the performance of the WCI cap-and-trade program and depending on progress, has reserved the right to join the program in future.

The other U.S. carbon market showing signs of vitality is the Regional Greenhouse Gas Initiative (RGGI), involving seven northeastern states. This program covers large electricity generators only, and nearly 100 percent of allowances are auctioned. Revenues from allowance auctions go to state governments, which are required to invest at least 25 percent of those funds toward energy efficiency or renewable energy programs.

Other World Carbon Markets
Australia's cap-and-trade program also has been recently launched and will come into effect fully in July 2015. Surveyed companies in Australia are busy preparing for the scheme by establishing operations for buying allowances and offsets or by engaging in internal GHG emission abatement measures.

Similar optimism prevails as South Korea prepares to launch its emissions trading scheme in 2015. Most participants surveyed believe the Korean scheme will effectively drive domestic GHG emission reductions, though some fear it will hurt South Korean industry competitiveness in international markets.
A lower share of participants believe that some of China's regional programs will start this year, falling to a third from 52 percent last year. Yet, most respondents (78 percent) believe that the world's largest emitter will have a nation-wide GHG emissions trading system eventually, most likely by the end of 2020.

Survey participants state that South Korea and Japan have the highest probability of enacting national carbon markets by 2017. The third most likely host of a national cap-and-trade measure in their view is China. Some 33 percent of respondents believe the world's largest emitter will put in place a national GHG emissions trading scheme by 2017. Canada comes next (29 percent), followed by Brazil (27 percent), and the US (23 percent).
Regarding a U.S. carbon market, expectations have remained largely flat despite the implementation of California's ETS and President Obama's climate change pledge in his inaugural speech. Survey respondents still anticipate difficulties in passing cap-and-trade legislation through the currently divided U.S. Congress.

A host of other market-based mechanisms for meeting Kyoto commitments are emerging, including reducing GHG emissions from deforestation and degradation (REDD), from so-called "nationally appropriate mitigation measures" in developing countries and from bilateral projects in one country financed by an investor in another country without need for UN approval.

The Future of Carbon Trading
Overall, carbon trading markets are maturing and are becoming more effective in terms of stimulating investments in GHG emissions reduction technologies. Realistic market prices clearly are a key factor in stimulating GHG emission abatement measures, though by how much remains unclear.
So too, the availability of allowances has been proven to have a profound impact in determining which economic sectors within any market area will benefit most from carbon trading. Excessive allowances have been shown to be potentially destructive to the effectiveness of carbon trading in actually reducing GHG emissions.

Another key factor likely to influence future developments in carbon markets is the need to re-establish transparency with respect to the valuation of supposed carbon offsets arising from the project proposals.
Public confidence in the valuation process has been shaken in recent years by various revelations of wrongdoing for some EU-ETS projects, as well as undertakings funded through the Clean Development Mechanism.

A UN audit published in 2010 found that at least 59 percent and possibly as much as 77 percent of the carbon offset credits that the UN had issued to date had no underlying value in terms of GHG emissions reductions. The UN audit also found that bogus UN credits accounted for roughly 85 percent of the offsets used in the EU carbon market.
The emergence of a diverse range of national and regional GHG emissions trading regimes signals another important transition in the nature of carbon trading, namely fading reliance on multi-lateral mechanisms to give legitimacy to how carbon markets will function and how or whether these programs will be linked together.

As noted in a recent study on Carbon Markets: Past, Present, and Future published by the National Bureau of Economic Research, the emerging international architecture of carbon trading features separate emissions trading systems serving distinct jurisdictions. This is in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol.
The absence of an overarching global emissions reduction target and growing disillusionment with the multi-lateral climate negotiations process is contributing to this trend. The Point Carbon survey noted the share of participants who believe there will be a global agreement with internationally binding targets for major GHG emitters is falling and that many respondents expect the current pledge-and-review climate regime to continue well after 2020.

What role international negotiations regarding carbon markets might play in this emerging, bottom-up world has yet to become clear. One role could be to address issues of comparability among different trading systems not only to diffuse potential competition between regimes, but also to ensure fundamental comparability in the accounting of emission reductions.
Rather than trying to command how carbon markets must operate from the top-down, major international institutions in the climate space could profitably be more directly supportive of carbon markets in a more decentralized world.

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Some content for this article was adapted from "Carbon markets at a tipping point" from PICS CLIMATE NEWS SCAN, April 3, 2013, Editors: Neil Thomson, James Tansey, Tom Pedersen, Robyn Meyer.

California link to Australia CO2 mkt a distant prospect-analysts

4:32AM ET on Monday Sep 03, 2012 by Thomson Reuters

 

WASHINGTON, Sept 3 (Reuters Point Carbon) - After announcing this week it will link its future carbon market to the EU's, Australia may look to California next as a potential emissions-trading partner, but the U.S. state may be less keen to cement a trans-continental link, analysts said.

On Tuesday, Australia announced it will link its emissions trading scheme to Europe's in 2015, a move hailed as the first union of two major emission markets.

 

The country's climate change minister, Greg Combet, told reporters that Australia will also pursue links with California, South Korea and New Zealand, which are developing their own carbon markets.

 

California officials have plans to travel to Australia in October to discuss potential market links with their counterparts, sources said, but some analysts and California officials said a tie-up between the two cap-and-trade systems would be a long way off.

California's reluctance to accept credits from U.N. carbon offset projects, as evidenced in the state's carbon market rules, signals that regulators are likely to be cautious when inking linkage deals with international partners.

 

"The opposition to CERs (certified emission reductions, or U.N. carbon offsets) and California's 'only in my backyard' approach to offsets will prevent any meaningful linkage with the EU ETS or Australia for the foreseeable future," said Emilie Mazzacurati, head of carbon market analysis at Thomson Reuters Point Carbon.

She said the state has already delayed formalizing what she said would be a much easier link to the Canadian province of Quebec, which is a member of the North American carbon market partnership, the Western Climate Initiative (WCI) with California.

 

State air regulators put off a planned vote to approve regulations linking the two markets in late June after the governor signed a law requiring that he review any plans to tie California's carbon trading system to similar programs in other states or provinces.

 

The state is expected to resume the Quebec linkage negotiations in the first half of 2013, a spokesman for the California Air Resources Board said.

"I think it's very unlikely that California would link with anybody outside of the WCI in the next couple of years," she said.

The ARB spokesman echoed that sentiment and said that for now California was solely focussed on getting its own system up and running.

 

When Australia launches its own emissions trading scheme on July 1, 2015, its emitters will be allowed to use EU Allowances (EUAs) to meet half their carbon emission targets, with the Australian scheme opening up to EU buyers three years later.

The link, as well as a decision to drop the A$15 ($15.56) price floor on carbon permits and ban on using U.N.-issued offsets, were designed to make it cheaper for Australian companies to meet its targets, analysts said.

Green groups said it would put pressure on the EU, which is suffering from record low prices amid an estimated surplus of 1 billion units, to speed up plans to reform its market by permanently cutting supply.

EU policymakers are mulling plans to withhold allowances from the first three years of phase three in a bid to prop up ailing EUA prices, which have halved in the past 18 months on oversupply and slumping demand due to stalled economic growth.

EUAs closed at 8.07 euros ($10.15) on Friday.

Meanwhile, California carbon allowances (CCAs) for delivery in 2013 finished Thursday at $16.30 per ton. Prices are expected to rise significantly after the state's first carbon permit auction takes place in November.

 

Mazacurati said California may consider a link to Australia and the EU in the more distant future, when both EU and Australian prices stabilize.

"Down the road, I could see California setting up a partial link with Australia and/or the EU ETS, where it might allow a limited amount of allowances from those markets for compliance in California," she said.

 

"This would lower prices and help with liquidity in the California market."

Others agreed that EU-Australia link can provide a good example for California and others.

"Cooperation like this expands the range of possible emissions reduction opportunities for both parties, and it could bolster the prospects for others to follow their example," said Dirk Forrister, president and CEO of the International Emissions Trading Association.

 

"We will be closely watching the process unfold between the EU-ETS and Australia and offering support to ARB in its ongoing process of linking with other carbon markets," he said. (Reporting by Valerie Volcovici)

Brazil carbon market to experience 'huge' growth

 

© Xicoputini

Brazil's new carbon market could experience 'huge' growth in the next eight years, as the government seeks to curb emissions from deforestation and industry.

That is the bullish prediction of some of Brazil's leading economists, who are also looking to the UK for advice in developing a successful emissions trading scheme, according to KleanIndustries.

Speaking to reporters at Sao Paulo's FGV school of economics, Mario Monzoni, founder and director of sustainability studies, predicted a cap-and-trade scheme would be the most important mechanism to cut emissions from deforestation.

Deforestation currently accounts for around 80 percent of Brazil's greenhouse gas emissions, driven by the growth of agri-businesses including cattle farming, soya bean and sugar cane.

Brazil's first government-backed carbon trading scheme, Bolsa Verde do Rio de Janeiro (BVRio), was launched in December last year. Last week it opened pre-registrations for a new forestry credit market, which can be used by farmers to comply with the country's Forestry Code.

The code requires landowners to retain certain levels of vegetation on their land, but those with more forest than the legal minimum would be able to sell it as a carbon credit to those falling short of the minimum requirement.

His bullish forecasts were echoed by Gustavo Loyola, former president of Brazil's central bank. In a separate interview in Sao Paulo he told reporters that financial mechanisms such as cap-and-trade would be crucial to cutting emissions in Brazil.

"The way to conciliate these is two ideas - growth with conservation of the environment - is to use mechanisms to reduce carbon emissions. So I think Brazil is one of the few countries in the world that could benefit from this kind of mechanism," Loyola said.

Irish tax innovation to support REDD

 

Date:

February 11, 2012

 

• Forest Bonds
• Ireland
• REDD
• Tax Code
• Emissions Trading
• Forests
• Newswire
• Biosphere
• Finance

According to a report in Environmental Finance, Ireland has become the first country in the world to recognize forest carbon credits in its tax regime – paving the way for the issuance of forest bonds, according to a leading banker.

On Wednesday, Ireland’s government published a finance bill which extends the range of carbon offsets recognized in its tax code to explicitly include those generated by projects that reduce emissions from deforestation and forest degradation (REDD).

The inclusion of REDD credits in the tax code makes establishing a special purpose vehicle (SPV) to buy forest carbon credits and then issue forestry bonds “very tax efficient, very cost-effective,” said Paul Harris, head of natural resources risk management at the Bank of Ireland in Dublin.
“This is part of the effort to ensure that Ireland offers the best possible environment for green finance,” he told Environmental Finance.

In recent years the Irish tax code has been amended to recognize mandatory and voluntary carbon credits. The new section allows costs associated with the creation of SPVs to be offset, and gives favorable treatment to any profits generated.

An SPV can be used to securitize carbon credits, with the cashflow used to pay the bondholders’ interest and principal.

Three provinces expected to join California in carbon market

Sayeh Tavangar 1 day ago
Electric Power Daily (31-Oct-11)
A trio of Canadian provinces is on track to form a regional greenhouse gas cap-and-trade market with California, the deputy secretary of the California Environmental Protection Agency said Friday.

British Columbia, Ontario and Quebec are moving forward with implementing cap-and-trade programs that can be linked together to create a single carbon dioxide market, Michael Gibbs, deputy secretary for climate change at the California EPA, said at an emissions trading conference in Los Angeles.

"There have been lots of discussions about the benefits of creating a larger set of linked programs," such as greater emissions reductions and greater geographic diversity, he said.

Jeff King, managing director of environmental markets at Scotia Bank, said he too was "bullish" on the provinces forming a regional cap-and-trade market with California.

However, other partners in the Western Climate Initiative are not expected to join anytime soon, Gibbs said.

The WCI consists of six states, Arizona, California, Montana, Oregon, Utah and Washington, as well as four Canadian provinces, British Columbia, Manitoba, Ontario and Quebec.

In October, California finalized its cap-and-trade regulations. The cap covers power plants and industrial sources beginning in 2013, and then expands two years later to transportation fuels and distributors of natural gas.

Linkage will require harmonizing cap-and-trade programs with other jurisdictions, Gibbs said. This means coordinating rules to ensure the consistent design of various aspects, like auction allowance methodology, rules on holding limits and penalty levels for non-compliance.

The California Air Resources Board, which is responsible for writing the cap-and-trade rules, left a placeholder in the regulations regarding linkage. The board has said it plans on examining the issue in 2012 to determine which areas of the regulations need to be tweaked to guarantee consistency across borders.

One area of the regulations that will not be further considered is a provision placing the burden for replacing an invalidated offset credit upon the buyer, Gibbs said.

Offsets are one of two compliance instruments that entities may use to cover GHG emissions. California's cap-and-trade rules place an 8% cap on their usage.

The offset buyer liability has generated considerable criticism from offset project developers, emissions traders and compliance entities. They contend that the current rules will impede the trading of offset credits and slow the development of eligible projects, thus raising compliance costs.

Gibbs acknowledged that the buyer-liability language was "the single most controversial" area of the regulations. But he said discussions with officials from British Columbia, Ontario and Quebec led the group to conclude that offset liability was one area where differences would be tolerable.

"At this point, we believe that we can coexist with one jurisdiction doing it one way, and another jurisdiction doing it another way, by ensuring that all the jurisdictions manage the steps necessary to respond in the event an offset is found to be inadequately documented," Gibbs said.

Geoffrey Craig

US voluntary market to see steady demand: observers

US voluntary market to see steady demand: observers
Published: 04 Jan 2011 00:33

 “Charismatic” carbon and California-compliant offsets will dominate the voluntary market in 2011.


While federal efforts to create a US carbon cap-and-trade system have stalled indefinitely, the voluntary market will remain steady this year, market participants said.

They said the market will be divided into two groups of buyers – emitters and speculators who want to buy “pre-compliance” credits before California’s cap-and-trade system begins in 2012 and corporates seeking offsets for social responsibility mandates.

“In 2011 sources of demand in the US will be a balance between California pre-compliance and pure voluntary buyers,” said Lisa Hodes Rosen, director of US carbon markets at the Gold Standard Foundation.

Pre-compliance credits are likely to be generated from project types endorsed by California. So far, this includes four Climate Action Reserve (CAR) protocols.

Meanwhile corporate buyers are likely to seek out what some in the offset business call “charismatic carbon” – credits from projects with brochure appeal like forestry and renewable energy.

Market rebound?
In the latest version of the annual State of the Voluntary Carbon Market report published last June by Ecosystem Marketplace and Bloomberg New Energy Finance, the voluntary market saw a 27 per cent drop in activity in 2009.

The report said the market had been hit by the economic downturn, which affected companies’ corporate sustainability budgets, but was kept afloat with pre-compliance demand from those that anticipated the creation of a federal cap-and-trade scheme.

But with federal cap and trade no longer in the picture in the near term and the economy on a path to recovery, the sources of demand have shifted, market participants said.

“We have seen a substantial increase in the corporate voluntary buyer market since late summer and expect this to continue, said Eric Carlson, president of offset retailer Carbonfund.org.

He added that sustainability and corporate social responsibility help companies “enhance brand awareness and customer loyalty”.

Quality counts
Josh Margolis, CEO of environmental markets brokerage Cantor CO2e, said buyers will be willing to spend money this year for certain types of offsets.

“Voluntary offset buyers will pay up for higher quality offsets and ignore others, contributing to a chasm in pricing,” he said.

This could bridge the gap in prices that has emerged over the past few months between California-compliant offsets and those that are not.

“By year end, some may trade at only a modest discount to AB32 compliance (California) offsets,” he added.

Bids for some California-compliant offsets have surpassed $7/tonne in late-December, brokers told Point Carbon News.

Meanwhile, credits from other programmes such as the Voluntary Carbon Standard, have ranged from $3-$9 for renewable energy projects and $1.2-$1.6 for non-renewable projects, according to Point Carbon’s North American project manager.

But others, such as Mary Grady of the American Carbon Registry (ACR), said that pre-compliance buying may not be limited to just California, and that future federal regulations could still create demand for offsets.

"ACR expects to see increased voluntary market activity from corporate social responsibility buyers as well as continued selective buying to hedge against potential future regional and federal obligations," she said.

When, not if?

And Gold Standard’s Hodes Rosen said some buyers may choose to buy offsets this year to send a signal to US lawmakers that they still want market-based solutions to reduce their greenhouse gas emissions despite Congress’ failure to pass a bill.

“California pre-compliance buyers are only part of the story,” said Hodes Rosen.

“With EPA regulations looming, I think we’ll see demand in the US from pure voluntary buyers who know that broader regulations are a question of 'when' and not 'if' and, therefore, the private sector should lead the way.”

She added that despite the weakened financial picture in the US over the past two years, demand for Gold Standard offset credits never waned.

“Our pipeline has been steadily increasing despite the economic downturn,” she said.

As of November 2010, Gold Standard has approximately 550 projects in its pipeline and has issued approximately 4.5 million credits, she said.

Prices for Gold Standard certified offsets have ranged from $8.30 to $14, according to Point Carbon’s North American project manager.

By Valerie Volcovici – vv@pointcarbon.com

Washington DC

REDD in the Carbon Market: A General Equilibrium Analysis

November 15, 2010

by Francesco Bosello, Fabio Eboli, Ramiro Parrado and Renato Rosa

- In this paper we analyze the impact of introducing avoided deforestation credits into the European carbon market using a multiregional Computable General Equilibrium model. Taking into account political concerns over a possible "flooding" of REDD credits, various limits to the number of REDD allowances entering the carbon market are considered. Finally, unlike previous studies, we account for both direct and indirect effects occurring on land and timber markets resulting from lower deforestation rates.

Bosello, F., F. Eboli, R. Parrado and R. Rosa (2010).
"REDD in the Carbon Market: A General Equilibrium Analysis."
FEEM Note di lavoro No. 2010.142, Nov 2010.

Start the Chinese or the domestic carbon market by 2014 /// FrFRy-China

Tagged with: 2014 Carbon Chinese coercive Domestic half market Measures start Taken

China will likely start no later than 2014 domestic carbon emissions trading market, and for Chinese companies to set up a "semi-mandatory" (half-mandatory) 的 targets to limit their greenhouse gas emissions. National Energy Research Institute, deputy director of CDM project management Feng Sheng waves on May 27 interview with the media in Cologne, Germany, made the statements.

Feng Sheng Bo said the government is drafting rules to develop the carbon market; carbon market will be under the supervision of the government by the "related units" (associations, which means carbon exchange) to run. "The government does not directly control the market. But if the unit developed a misguided policy, the Government will make a guide."

Feng said that the Government may every dollar of profits for Chinese companies to limit carbon emissions. "I do not think that those goals will be high, but if they are too loose, we can make changes."

Feng Sheng Bo said, in order to help these companies achieve targets, companies can reduce emissions, industrial or urban self-reduction of carbon intensity, the purchase of carbon offset credits (to balance the carbon emissions). He added that initially, only the Chinese companies will be allowed to trade in the carbon market.

But Von did not specify the companies involved in the carbon market, voluntary or mandatory emissions reduction.

International environmental organization Greenpeace (China), Climate and Energy Project Manager, both Yang on May 30 on the newspaper, said more may be caused by a large central enterprises (such as the five major power groups) to participate in the carbon market, for small-scale pilot.

Both Yang said the Chinese Government's efforts by Greenpeace to try the carbon trading market welcomed. First carbon trading within a certain range, can help China in the future to assume a greater responsibility to prepare mitigation.

National Development and Reform Commission earlier this year during two sessions that are working on guidance for a low carbon economy, and consider a number of specific industries and regions small-scale carbon trading pilot. Sources revealed that the power, oil and chemical industries and other industries more likely selected.

Huang Jiefu, vice president of the Chicago Climate Exchange on May 30 newspaper was also introduced from the international carbon market development experience, both the European Union or the United States, carbon emissions are from large electric power industry to find a breakthrough.

EU 90 in the last century trying to launch from the electric power sector carbon trading, first select the appropriate power plant started several simulated trading, and gradually improve the trading rules. To January 2005, the EU carbon emissions trading system in EU-ETS began formal trading.

Northeastern United States in 10 states in the state government level, but also the power industry's carbon emissions trading as a breakthrough in the establishment of a regional carbon trading market RGGI. Voluntarily join the participating enterprises, including the largest U.S. power plant American Electric Power (AEP). Transactions carried out so far, the auction more than 580 million U.S. dollars of total revenue. Latest emissions auction will be conducted this year on June 9.

At this point, the electric power industry is in turmoil, a new round of emission reduction. Following the completion of the "Eleventh Five-Year" shutting down 50 million kilowatts of small thermal power missions, the National Energy Board requirements "determined to ensure the third quarter of this year completed before shutting down 10 million kilowatts of small thermal power of the target."

Huang Jiefu told this newspaper that, unlike the United States and Europe, China De electricity companies start carbon-trading past, coal, electricity, natural gas and oil, the market actually trading Huan Meiyouchuxian. Therefore, the transaction itself, but also a large number of capacity-building.

"Transactions of the ultimate aim is to enable enterprises (including power companies) to 45% of the lowest cost (carbon intensity) indicators." Huang Jiefu said.

Interview the market responded positively to this news. Shanghai Environment and Energy Exchange, Hui Bin, head of research said to the newspaper, whether to start the domestic carbon market will depend on the national policy considerations; and exchanges, and trading system from a technology a complete ready to do a good job.

Carbon Consultancy Company Beijing Yi Cheng Lin Wei, general manager of CIGNA, said the news of the domestic launch carbon trading is not unexpected, is "imperative" to do.

The Development and Reform Commission by the energy system and energy market analysis director Jiang says to the newspaper said, to establish (sufficient) domestic carbon market is not easy, provided that "should (Emission) total control", now "wants to become a domestic (carbon credits) seller, but not (appropriate) the buyer. "

Says Jiang said, adding that energy is currently studying how to carry out industry-wide emission reduction (including the power industry), to promote industry emissions (carbon credits generated) to enter the international carbon market.

Feng Sheng Bo said that day: "From the government point of view, the absolute emission reduction at this stage of China, is unrealistic." November 26 last year, China formally announced the action to control greenhouse gas emissions targets, decided in 2020 carbon dioxide emissions per unit of GDP than in 2005 40% -45% decline.

Both Yang also think that the domestic carbon trading pilot launch more of a big order to clarify the carbon emissions statistics, enhance the internal, the greenhouse gas measurement, statistical analysis and verification of capacity-building; while the carbon market "semi-mandatory" nature is likely to means that no punitive measures, which will result in reduction of its short-term nor will it form a real push.

World Bank///Ten years of CDM///Learned Lessons

Apresentação do Banco Mundial sobre as experiencias adquiridas na área de MDL nos ultimos 10 anos.