issue 13.0, New Values Newsletter

To read the English version of the New Values Newsletter follow the link below.

In this issue:

1. Russian participation in Kyoto halves costs
Eurelectric, the organization that represents the general interests of energy companies in Europe, is delighted about Russia’s participation in the Kyoto Protocol. For one thing, of course, because the coming into force of the Protocol also brings a legal framework for emissions management. But above all because it appears that this will halve the costs of Kyoto! This is indicated by calculations carried out by the environmental consultancy firm ERM on behalf of Eurelectric, making use of various models. In the study ERM considered all sorts of long-term reduction goals and various kinds of policy, from renewable energy to CO2 storage.

On the basis of the model Eurelectric advises the EU not to agree on unilateral reductions of 30% for the period after 2012. Affordable reductions of this order will only be feasible if they really take place globally: the USA and developing countries will need to participate as well. The ERM model does not in fact indicate the euro/ton price at which Russia will be able to sell its remaining emission rights. But one can be sure that these prices will not be rock-bottom – after all, Russia wants a sustainable cash flow.

The model does however suggest that Russia will be able to achieve the necessary Kyoto reductions for the EU and Japan. Considering the current EU market prices, this will be somewhere between 5 and 15 euro/ton. But before this happens then Russia – just as companies need to prepare their monitoring protocol and data management before they are allowed to take part in emissions trading – must prepare its entire emissions inventory process and emissions register by 2007. In order to manage this, Russia will have to incur considerable costs, free up personnel and adjust legislation so that all these aspects can be checked by other Kyoto parties. There’s no such thing as free ‘hot air’.

To consult the Eurelectric study, click on: http://www.eurelectric.org/News/Articles/art152.htm

2. New Values news
Collaboration between New Values and the Amsterdam Power Exchange

The Amsterdam Power Exchange (APX) is a leading electronic platform for European energy trading, and has existed since 1999. Up to now the APX handled the customer service for New Values. But from the start of next year this collaboration will expand considerably. All New Values transactions will then be processed fully through the APX. This means that the payments will pass through the APX payment structure and also that the APX will handle the entering of deliveries in the registers.

This brings major advantages for New Values traders:

• New Values spot contracts will be cleared by the APX. This means that the counter party risk is borne by the APX.


• Parties that already have a relationship with the APX can now incorporate trading in CO2 emission rights and NOx emission rights within this relationship without having to make a lot of supplementary agreements.

New Values workshops
CertiChange workshop, World Trade Center Schiphol Airport, 1 pm
This workshop is intended particularly for large-scale users of renewable energy. The budding trader can learn all about trading in Certificates of Origin through the CertiChange electronic trading platform.

Would you like to know more about the workshop? Then contact Thomas de Zeeuw via thomas.de.zeeuw@newvalues.net
You can also register directly via csdesk@newvalues.net or +31(0)20 305 4073

Climex workshop, Mediaplaza Utrecht, 1 pm
The Climex workshop takes a close look at the results of the NEA demonstration, with the emphasis on the experiences with trading. The discussion will be opened by Hans Warmenhoven, who supervised and evaluated the trial period. The results will be examined from various perspectives: significance for the industry, legal agreements and the possibilities and applications of the Climex platform.

Would you like to know more about the workshop? Then contact Jos Cozijnsen via jos.cozijnsen@newvalues.net
You can also register directly via csdesk@newvalues.net or +31(0)20 305 4073

Improved Community
Prompted by user feedback we have given the New Values Community a facelift. Since many readers still find the discussion platform rather unclear in its structure, we have given extra attention to user friendliness. As a visitor you can now select information of particular interest to your specialist field. In addition, the Community is now multilingual and you can choose from Dutch, international or German news (500 PPM is our German partner and is already busy getting the platform off the ground in this country.) The standard language of the Community is English.

Unfortunately the responses to reports posted on the Community are still relatively limited. And this is precisely what should make the platform even more interesting and interactive. So don’t hesitate to air your opinion or ideas on the Community.

Visit the new Community and have your say!

New Values Masterclass
New Values not only brings together traders and their opinions and ideas on online platforms. We also do it ‘live’. And in a way that opens up frontiers. Literally. Because on 19 January 2005 we are organizing a Masterclass in Frankfurt for major players from England, Germany, Belgium and the Netherlands who will soon be involved in emissions trading. During the Masterclass leading speakers will share their expertise and be happy to answer all sorts of questions. Moreover, all national registers of the countries in question will be there to provide information and explanations regarding international trading.

For information please contact New Values viacsdesk@newvalues.net or tel: +31(0)20 305 4073.

New Values Tradegrounds 2005, an emission trading demonstration
In February 2005 New Values is organizing a game that simulates the trade in CO2 emission rights: the New Values Tradegrounds. This is an interactive, instructive but also highly enjoyable way of getting to know New Values and trading through an electronic trading platform. It’s all about the right strategy and the right insights. You can trade on the basis of data you select yourself (type of company, emission, number of employees, etc.), and these details can of course mirror a real situation if you wish.

The game lasts 3 weeks, in which each week stands for a year in the trading period 2005-2007. Participants from the Netherlands, England, Belgium and Germany will be playing the game. Just as in the ‘real world’, participants will be able to trade their allocationrights, and all sorts of political events take place that can influence the allocation and the chosen trading strategy.

The simulation game is open to all companies that will be involved in CO2 emissions trading. Interested other parties are all warmly invited to take part in the trading, if so, please let us know beforehand, so we can fit you a trading profile.

Would you like to participate in the New Values Tradegrounds? Then keep your eye on www.newvalues.net. If you would like more information beforehand then contact New Values via csdesk@newvalues.net or tel: +31(0)20 305 4073.

Post-Kyoto goals open to discussion
Although emissions trading has not yet even officially begun, the major players within the EU are already looking at the route to be taken once the Kyoto budget period is over (2008 - 2012). According to the Kyoto Protocol, negotiations on this matter must start in 2005 and be completed by the end of 2007. During a meeting with the fine-sounding name of ‘Stakeholder Conference: Post-2012 climate policy for the EU’, held in Brussels on 22 November of this year, some 400 representatives of government, industry, science and non-profit organizations achieved an impressive degree of disunity.

The only opinion shared by all was that drastic emission reductions will be necessary by 2050. But there was no accord on how drastic these reductions should be or not, and how they might be achieved. Time and again the discussions centred on the issue of what a ‘safe level’ is for greenhouse gases. Organizations such as Greenpeace and World Wide Fund for Nature advocate highly ambitious goals which would require a search for new technological solutions, thus in turn generating employment. Other groups would prefer more research to be done before new technologies are developed.

Both the European Commission (EC) and various delegates of European member states showed a great deal of interest in the results of the conference. This is because the EC is still in the middle of discussions about the goals for renewable energy after 2010. At the Spring Summit for government leaders in March 2005 the EC will present its first analysis regarding CO2 goals and their economic consequences. The United Kingdom hoped for decisive results which could be used during the UK chairmanship of the EU in the second half of next year. But it looks like they will have to wait a little longer.

Source: www.greenprices.com

Jos Cozijnsen’s column
So what kind of a market is the emissions market, then?
During presentations I like to show a graph that demonstrates the forward emission prices curve:

• The big industrialist: "That’s no real volume to speak of";
li>The trader: "Hardly any volatility, there are no earnings there";
• European Commission: "It’s a nice line, isn’t it, and still above the € 0 level".
li>The environmental activist: "That’s got no relevance at all, what’s the use of it?".
• Shell Trading: "Hey guys, don’t hoard things, keep buying, keep buying".
• CO2-market analyst: "Disgraceful, the market players are flouting the market fundamentals of supply and demand";
• The banker: "A 2-digit billion market, I repeat a 2-digit billion market";
• The consultant: "See, what a quiet market, you can risk a little flutter";
• The small industrialist: "Now I don’t want to speculate, but what if the price were suddenly to rise?";
• The accountant: "You just have to handle your supply of allocated rights carefully";
• The lawyer: "A lot of imponderables, but my client holds a strong position";
• Tradingplatform: "We’re quite simply the cheapest, that’s the main thing."

Personally I confine myself to the following piece of advice: take advantage of your possibilities and in the meantime count your blessings. The emissions market is an environmental market; climate policy isn’t so expensive, but it does still come with a price.

5. Diary

• 12-14 Dec: Energy for Development conference: supporting developing countries in their development in the field of energy and environment, Noordwijk;
• 14 Dec: CertiChange workshop specially for large-scale users of renewable energy and budding traders. Learn all about trading in Certificates of Origin through CertiChange. Participation free of charge. Registration via: csdesk@newvalues.net;
• 15 Dec: New Values Workshop workshop learn all about the results of the NEA demonstration and discover how easy it is to trade through the Climex CO2 trading platform. Participation free of charge. Registration via: csdesk@newvalues.net;
• 19 januari: New Values Masterclass Emissions Trade Frankfurt airport: international masterclass for traders of large companies, see www.newvalues.net for more information. Or contact csdesk@newvalues.net / tel: +31(0)20 305 4073