issue 20.0, New Values Newsletter

1. New Values news
New Values likes to involve you in its plans and ideas. We keep you constantly informed about what we're doing and how we're responding to the latest market developments.

2. Jos Cozijnsen's column
He's a familiar figure: Jos Cozijnsen, the man behind emissierechten.nl and guest speaker at various meetings on emissions trading. Every month he airs his opinion in his column.

3. Diary
It's important to stay up to date in a market that is continually subject to change. New Values keeps you informed about interesting congresses and workshops in the Netherlands and abroad.

1. New Values news

Preparing the market for CDM

While the prices for EU CO2 allowances reached new record levels last month (at the 30 € limit, lately), national parliaments have started to implement the JI/CDM Linking Directive in their national law system. Last week, the German Bundesrat agreed to the „ProMechG“, the law which deals with the development of JI and CDM projects and the acceptance of their certificates for compliance in the EU emissions trading system in Germany (enabling operators to surrender CER without limit for the first compliance period). The Netherlands government is preparing legislation; the government wants to allow companies to make use of CDM/JI to cover their emissions up to 8%. The UK has issued a consultations document and is expecting reactions mid August. There are 2 reasons why this acceptance is interesting. Firstly, because CDM and JI projects are presently cheaper per ton CO2; this could bring EU allowance prices down. Secondly, contrary to EU allowances that are allocated for 2005 to 2007, CDM credits are also valid after 2007.
The market for CER is currently still very fragmented and unstable. Therefore, New Values has focused the issue and is currently investigating, together with its partners Asia Carbon and 500 PPM, how the trading in CERs can be structured to provide a homogeneous, liquid market. As soon as the first CER is issued, spot trading on Climex will start; forward trading of CERs is considered.

Executive report on Climex trading

The international trade in CO2 emission rights was given the green light during the first half of 2005. This cleared the way for the launch of Climex, New Values' trading platform. Although a number of other market initiatives have been taken, bilateral or "over-the-counter" trading remains the most common form at present. Electronic spot trading is simply too difficult because many of the national registers are still not ready. This is not actually so surprising, since all Europe is going to be standardizing in one push. In fact, it will be quite an achievement if all the national registers manage to have everything in place and ready to go this year.

From the outset, New Values has tried to be as flexible as possible so that we can all face up to this challenge together.

That flexibility has proven an excellent strategy, becoming one of New Values' best qualities. For example, it has allowed us to test and improve the functionality of our trading application with the help of large groups of users. It has ensured that we are able offer everybody in the market, large or small, extremely attractive rates. And it has meant that trading has already taken place on the platform. Through the use of planned sessions, New Values has done everything possible to concentrate trading at one moment in time, thus creating liquidity.

We are convinced that this flexibility, together with plenty of energy and our extremely well-defined proposition augur a successful second half of 2005.

2. Jos Cozijnsen's column

Has the G8 summit delivered anything on climate policy?
In the 15 years that I have been active in climate change – for the government, for environmental organizations and as an emissions consultant – I have grown used to G7 and G8 summits inhibiting our approach to the problem. It is the participating EU member states which do their best to limit the damage. And so it was at Gleneagles in July 2005.

The dozens of pages of the final declaration and the "Gleneagles Plan of Action" contain no commitments, only good intentions, and they painfully reveal the gulf between the United States and the rest of the world. Here is one passage: "We acknowledge that the UN Framework Convention on Climate Change is the appropriate forum for negotiating future action on climate change. Those of us who have ratified the Kyoto Protocol welcome its entry into force and will work to make it a success." Who gains anything from this? The European Union, Japan, Russia and Canada will implement their obligatory emission reductions under the Kyoto Protocol. But as for the US, Kyoto might as well not exist; for it, the UN Framework Convention is sufficient.

As far as it goes, it is a good thing that Bush actually allowed himself to mention the word Kyoto when talking about "post-Kyoto" actions. And it is a good thing that the G8 has acknowledged that man is responsible for our climate problems and that reductions are needed. When Bush took office, he said that the US would not impose any limits on emissions until at least 2012. And he has kept that promise. Only last month, John Kerry failed in an attempt to make the Senate order Bush to negotiate on emissions at the international level. Even within the context of the UN Framework Convention! However, the American Senate did agree that the US should think about emission limits. It seems that the United States Senate, which declared the Kyoto Protocol ‘dead on arrival' back in 1997, needs plenty of time to do its homework.

But let us not try to understand this rationally, because rational it is not. Bush says that the Kyoto requirements would destroy the US economy and that American technology can tackle the climate problem – but that China and India must first reduce their emissions before the US will sign up. But he must surely also understand that that same technology will be given a real boost by the Kyoto requirements. And that it is the market instruments arising out of Kyoto – emissions trading, CDM, JI and CO2 storage, instruments derived from American experiences – which are what make the Protocol's targets achievable and affordable. With help from CDM projects, China and India are already involved in reducing CO2 emissions and in making sure that we can all benefit from payable reductions. These nations will eventually have to limit their emissions on a national level too, certainly, but that will take time.

3. Diary

17-18 aug, Nordic Energy Days, Oslo;
Chatham House, RIIA, London

15-16 sept, "Linking the Kyoto Project-Based Mechanisms with the EU ETS",
Austrian Centre, Wenen, organisation UNIDO

22-23 sept, "7e Renewable Energy Finance Forum",
London, Euromoney Energy Events;

27-28 sept, "IETA/IEA/EPRI 5th Annual Emissions Trading Workshop",
Paris; invitation only;

28-29 sept, "European Emissions Trading '05; Optimise your carbon strategy in phase 1 and position yourself perfectly to fully capitalise from phase 2 of the EU ETS", IQPC,
The Crowne Plaza, Brussels, Belgium.

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