LONDON, July 1 (Reuters) - European carbon fell by nearly one percent on light volume in early trading on Thursday, pulled lower by falling crude oil prices and worsening macroeconomic sentiment, traders said.
Benchmark CER futures were also slightly weaker, losing a penny to trade at 13 euros.
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A price floor for carbon in the EU emissions trading scheme needs to be investigated, Martin Crouch, director of European strategy at UK regulator Ofgem said on Monday. “We support efforts to make a stronger carbon price,” Crouch told Montel on the sidelines of the annual Eurelectric conference in Dublin on Monday. “The price [of carbon] needs to be higher to drive investment decisions. There needed to be a bolstering of the predictability of CO2 prices so that they were not driven by analysis and forecasts of future energy policy, he told delegates earlier in the session. Source: MontelPowernews
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European Union carbon futures are poised for another bullish run which could push prices up to 18.60 euros ($22.67) a tonne by the end of June, a technical expert said on Friday.
A bullish technical formation on the Dec-10 EU Allowance futures show that prices have now consolidated in a range between 15 and 16 euros, and an upside breakout may be imminent.
"It's a bullish symmetrical wedge, which is identified by the direction that price enters to commence its construction," said Brett Genus of brokers Evolution Markets. "The breakout is typically a quick successive move, but when we get it we will look for a substantial pick-up in volume and open interest." 9Source: Thomson Reuters Carbon Market Weekly)
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May was the second busiest month to date for trading EUAs amid increased price volatility. Excluding options, around 558 million EU allowances (EUAs) changed hands across all platforms last month, second only to April, when 590 million were traded.
Around 92.5 per cent of the volume traded was on the futures market, with spot accounting for the remaining 7.5 per cent. Seventy-two per cent of the volume was traded directly on screen with the remaining 28 per cent cleared. The figures were compiled with data from exchanges Bluenext, EEX, ECX and Nord Pool.
Price volatility was the main catalyst as the bull run seen in April was extended into the first week of May, with the December 2010 bellwether contract climbing to a high of €16.73. However, prices collapsed to €14.33 following concerns over sovereign debt.
With more trading days in May, average daily volume was 2.59 billion compared with 2.95 billion in April. May’s volume takes the total number of allowances traded so far in the market to 2.26 billion, down 100 million year-on-year (Source Reuters Pointcarbon)
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According to a Bloomberg report, the government may ask companies to reduce carbon emissions per yuan of profit earned, rather than providing them with hard targets. To reach these goals, companies will be allowed to trade carbon credits in a market overseen by the government. The market will initially be limited to Chinese companies.
It was also recently reported that China could launch a carbon tax as early as 2012.
Meanwhile, carbon cutting initiatives in several more developed economies have stalled. President Obama’s climate bill is held up in the Senate, while Australia has halted progress on its climate goals in order to wait for action from other countries. The European Union also said this week it would only increase its carbon cutting targets if other nations moved first.
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The global market for carbon emissions grew by 6 percent to $144 billion last year, from $135 billion in 2008, the World Bank said on Wednesday. The European Union's emissions trading scheme, the world's biggest, grew by 18 percent to $118 billion from $101 billion, the bank said in a report.
Greenhouse gas emissions cuts in developing nations funded by carbon finance fell by half to 211 million tonnes in 2009, down from 404 million in 2008 and 552 million in 2007.
The sovereign Kyoto emissions rights market (AAU) rose to $2 billion from $276 million, while the United States' Northeast regional carbon market (RGGI) ballooned to $2.2 billion, up from $200 million in 2008. Source: Reuters
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EUA prices could hit EUR 40/t over the next 2-3 years if proposals to increase emissions reduction targets to 30% by 2020 materialise, a senior Deutsche Bank analyst told Montel on Wednesday.
Prices for EUAs were expected to reach EUR 18-20/t by the end of the year due to utilities hedging forward power contracts, however the picture further out would be much more bullish if the EU introduced stricter emission reduction targets, said Michael Lewis, managing director of commodities research at Deutsche Bank, at the sidelines of a McCloskey conference in Nice.
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Trying to strengthen carbon markets buffeted by allegations of tax fraud, dubious emissions reductions and uncertainty on the part of banks, supporters are preparing multiple ways to increase investment and trading in the markets intended to curb global warming.
"Estimates of the costs to reduce emissions keep rising, but the private sector is increasingly reluctant to invest in new projects," said Imtiaz Ahmad, an executive director at Morgan Stanley in London. The International Emissions Trading Association, of which Morgan Stanley is a member, plans to unveil this week a new mechanism called "green bonds" that could "cut through the current impasse and stimulate clean technologies globally," Ahmad said (Source: Greenwire)
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The Dutch State Treasury Agency auctioned 4 million European carbon emissions permits at 14.10 euros a tonne, it said on Thursday. The Netherlands' first auction raised 56.4 million euros ($76.93 million) for the Dutch Treasury. The auction was 4.18 times over-subscribed. On France's BlueNext spot exchange
The country’s next auction will be September, when another 4 million EUAs will be sold. The money from the sale will go towards paying for programmes to stimulate renewable energy projects in the country. (Source: Reuters)
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the first day after the 4-days break, the EUA-Dec10 contract continued its rally which was already started on Thursday. Supported by a strong energy complex and pushed by the publication of the emissions data in 2009 on April 1st, the EUAs rose up to EUR 13.44. The weekly auction of spot EUAs in Germany cleared at EUR 12.98.
The emission rights were even stronger on Wednesday, after a short-lived drop in the morning. But after the end of the auction in Germany, carbon found its way back to positive territory. The auction of future EUAs reached EUR 13.34, while the emissions rights closed at EUR 13.53 later this day (Source: Climate Corporation)
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Six months after introducing a sweeping climate change bill that flopped in the Senate, Democrat John Kerry is preparing to offer a compromise measure that seeks to reel in reluctant senators.
Kerry, collaborating with Republican Senator Lindsey Graham and independent Senator Joseph Lieberman, might introduce a new bill promoting clean energy early next week, just days before the 40th anniversary of Earth Day, environmental sources said.
Despite Kerry's consistently upbeat assessment of legislative prospects this year, the new bill also faces plenty of hurdles.
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The story of Interblue Group, which bought Slovakia’s excess carbon dioxide emissions quotas at well below market price, becomes a growing cast of characters to emerge during the past two months from the murk surrounding the deal, writes SME.Read about a Swiss investigation into suspected money laundering.how former environment ministers Jaroslav Izák and Ján Chrbet, both nominees of the Slovak National Party (SNS), negotiated the quotas deal with Bilas and Norbert Havalec, who represented Interblue as its project managers. Havalec also worked as an advisor to the Environment Ministry under Izák, from which he wrote an analysis of the market in emissions quotas. Havalec and Bilas were, Bilas said, each paid €500,000 by Interblue Group for their services. In a highly disadvantageous deal in late 2008, Slovakia sold Interblue quotas to emit 15 million tonnes of carbon dioxide at €5.05 per tonne. See here.
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The northern Chinese port city of Tianjin launched a small-scale energy intensity trading scheme on Tuesday with three pilot sales, taking a possible first step toward a nationwide carbon cap and trade scheme. International heavyweights Citigroup Global Markets and Gazprom Marketing and Trading were the buyers of a first set of "Carbon Emission Allowances," for energy savings equivalent to around 4,500 tonnes of coal, from three suppliers of heating.
After validation and verification, the more than 500,000 yuan ($73,250) deal could result in the trade of up to 11,500 CEAs, the companies involved said in a statement. "The traded unit is carbon emission credits, but it comes from the energy intensity target," clean energy firm Arreon, which has helped define the scheme's structure, told Reuters in a written answer to questions about how it works (Source: Reuters)
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The CO2-price hase been flat since the Copenhagen corrections. Market agents are waiting for:
- publication of verified 2009 emissions: amazing how decisive that still is;
- decision making on EUA auctioning: my opinion? This the one chance governments have to increase the carbon price: when U would be governmemnt, I would delay auctioning and limit early auctioning...
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The reputation of a Kyoto Protocol carbon finance scheme was dealt another blow after a UN climate panel late on Friday suspended the third emissions cut verifier in 15 months, and partially suspended a fourth. The scheme's executive board suspended emissions auditors TUEV SUED and partially suspended Korea Energy Management Corporation (KEMCO) after spot checks at the companies' offices revealed procedural breaches. The board, an arm of the UN's climate change secretariat, said it will work with TUEV SUED and KEMCO to ensure timely resolution of the issues. (Source: Reuters)
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Press Release, for immediate release from Climex and the Bundesministerium für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft (BMLFUW), Austria: "Climex’ 3rd Austrian Auction closed at € 12.78, no interest in non competitive auction"
In accordance with the Decree issued by the Austrian Government in January 2009, the 3rd Austrian Auction took place today offering 300,000 EUAs in a Competitive, as well as a Non-Competitive Auction. The full volume of the Competitive Auction – 200,000 EUAs – were sold at a selling price of €12.78. There was no interest in the 100,000 EUAs offered at the Non-Competitive Auction.
In compliance with the Austrian Allocation Plan, the auction was a joint effort of the National Ministry of Agriculture, Forestry, Environment and Water (BMLFUW), responsible for the sale of Austrian EUAs, and the Austrian Energy Consumer Association (ÖEKV). The auction was assigned to Climex for the third time by the BMLFUW.
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The European Commission has announced today that the process for surrendering allowances, ERUs and CERs is suspended until the application of the new rules in the amended Registries Regulation, except for the period between 19 April 2010, 8:00 CEST and 1 May 2010, 8:00 CEST (see EC statement).
This allows for an appropriate time period for the surrender of allowances or credits by operators for compliance with 2009 emissions by the 30 April 2010 deadline, while protecting the integrity of the European carbon market.
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The International Emissions Trading Association today warned of the dangers for investors and the carbon market from the recycling of CDM credits (CERs), following on from the news that the Hungarian Government has plans to sell ‘recycled’ Certified Emission Reductions (CERs) to an undisclosed intermediary. The CERs exchanged in this transaction had been previously surrendered by Hungarian firms to comply with their emission constraints under the EU ETS. The government subsequently swapped surrendered CERs with Assigned Amount Units (AAUs), allowing the CERs to be resold on the international market.President of IETA Henry Derwent said: “If Member States ‘recycle’ credits, they will place companies and other organisations at risk of purchasing CERs or ERUs on the international carbon market that have been already submitted to compliance authorities. This apparent double-counting could damage the reputation of the EU-ETS" (Source: Press release IETA: see here).
Comment: it is not the mere fact that 'individual CER certificates are used double, after a comnpany surrenders them, that impacts that market, but the fact that a Party can sell CERs again and uses it's surplus AAUs (Kyoto Budget) to meet its targets. Because via this 'smart move' a party can implicitely marketize surplus AAUs )often called hot air), and add carbon supply: that could indeed decrease the price over time (JC)
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Carbon dioxide emissions by companies regulated under the European Union's Emissions Trading Scheme fell by 11 percent last year in the wake of the economic downturn, analysts said on Thursday.
Emissions by heavy industry across the 27-nation bloc fell to 1.886 billion tonnes in 2009, 233 million lower than the previous year, Point Carbon estimated.
The drop means there was a surplus in allocated EU carbon permits of 77 million tonnes, Point Carbon added. It said emissions from utilities fell 88 million tonnes to 1.18 billion tonnes -- a 7 percent drop -- while those from industrial sectors like cement and steel tumbled by 17 percent or 145 million tonnes to 704 million tonnes.
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European carbon emissions futures lacked clear direction on Tuesday as traders seek news on the speed and volume of newly issued carbon permits coming to market.
EU Allowances for December delivery inched up 2 cents or 0.16 percent to 12.80 euros ($17.50) a tonne at 1355 GMT, having reached an intra-day high of 12.92 euros in early trade. Volume was heavy at 4,578 lots traded. Spot EUAs on France's BlueNext exchange were up 5 cents at 12.66 euros a tonne. A German spot EUA auction cleared at 12.62 euros on Tuesday.
The Dec-10 benchmark contract gained over two percent on Monday, as investors bought into the market after Friday's 3.4 percent drop.
"The market is trading sideways. There's not much direction. We're all looking for signs of industrial selling," said an emissions trader (Source: Reuters).
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President Obama remains committed to passing comprehensive energy and climate legislation in 2010 despite calls from Senate moderates to wait until after the midterm elections, a top White House aide said today.
"We want to do it this year," Carol Browner, the president's climate and energy adviser, told reporters following her appearance at a panel discussion hosted by The New Republic.
On Capitol Hill yesterday, several Senate Democrats -- including Finance Chairman Max Baucus of Montana, Commerce Chairman Jay Rockefeller of West Virginia and Carl Levin of Michigan -- questioned whether there is any momentum left for a sweeping bill that puts a price on carbon dioxide emissions. Levin said he expected that a pared-back energy bill had a better chance of passage. And Rockefeller said the White House would not mind more time, too, in order to better educate the public on the complex issue. But Browner denied Rockefeller's account of the legislative dynamics. And she explained that the climate debate has a better chance at picking up bipartisan Senate support in 2010 thanks to calls from many industries for greater regulatory certainty (Source: E&E News).
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The disappointing outcome of the Copenhagen climate change talks has led to questions about the future of the international carbon market. Failure to agree a post-Kyoto climate treaty has certainly dented confidence in the short term. But analysts and traders believe the carbon market is robust enough to survive even without such a treaty. A more fundamental question is whether carbon trading is an effective way of cutting greenhouse gas emissions. That debate is far from settled. See the new article on European Energy Review.
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US investment bank Citi and Gazprom Market & Trading (GM&T) have conducted the first trades in a municipal-based emissions trading programme in China. The two companies have bought so-called Carbon Emissions Allowances (CEAs) through the Tianjin Climate Exchange (TCX), said Dan Barry, deputy director of global carbon at GM&T.
We have both committed to up to a certain volume at a certain price, if the companies in the pilot phase exceed their target, he told Carbon Finance. Without disclosing the exact size of the trades, Barry said they are valued at less than $100,000.
The allowances are for a mandatory emissions intensity-based trading programme in Tianjin, targeting municipal heat suppliers: those that beat their target, measured in coal consumption, will be able to sell surplus CEAs at the end of the heating season in spring to those that have missed their target, subject to verification. The targets are based on the emissions-intensity goals in the government’s last five-year plan; the next plan is due in 2011.Barry explained effectively, it is cap and trade ... it is akin to the early stages of the EU Emissions Trading Scheme [ETS], just emissions intensity-based.
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Officials must be tougher on fraud, Barclays trading head says. Following last week's revelation that about 250,000 carbon dioxide allowances worth $4.4 million were improperly transferred after cyber attacks, fraud threatens to undermine the world's largest emissions market, the head of carbon trading at Barclays Capital said in an interview. Carbon trading volumes on Paris' BlueNext exchange fell to the lowest level since Dec. 28 on word of the cyber attacks.
"Without consistent and decisive action by the European Union, the world's flagship carbon market will become mired in fraudulent activity," said Louis Redshaw, managing director of Barclays PLC's investment bank unit (Source: E&E News)
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Obama's first State of the Union
"... to create more of these clean energy jobs, we need more production, more efficiency, more incentives. That means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean coal technologies. And yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America."
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Carbon offset retailers and brokers have seen increased interest in and demand for voluntary carbon credits this month, particularly from the United States.
"Since this year started we have seen a huge amount interest -- mostly from the U.S. -- in carbon credits and it won't be long before the voluntary market worldwide begins really to gain some momentum," said Matthew Sullivan, chief executive of carbon offset retailer the Carbon Advice Group. Source: Reuters
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See ft blog after Merryl Lynch story
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Carbon markets are under a “big, dark cloud” of uncertainty about future regulation and falling natural-gas prices, analysts at Bank of America Merrill Lynch said in a research report.
European Union carbon dioxide emission volumes from fossil fuels probably dropped 9.5 percent last year, reducing demand for EU permits, Merrill analysts including Sabine Schels said today. The EU market probably has 166 million too many allowances in the five years through 2012, they said. Prices are holding up because allowances can be saved and used after 2012, the report said, without giving a specific forecast. (Source: Business Week)
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U.S. federal climate legislation may still pass this year even though a Republican who opposes the bill won a seat in the Senate this week, a carbon markets executive said on Thursday.
"Our view is that it's not dead," Abyd Karmali, managing director and global head of carbon emissions at Bank of America-Merrill Lynch, told Reuters in an interview.A climate bill passed the House last year, but the legislation has been bogged down in the Senate and its future is uncertain after Republican Scott Brown, who has opposed capping emissions, won the seat held by Ted Kennedy.
The prospect of Environmental Protection Agency regulation as well as a growing threat of nuisance torts may be enough to garner support for the bill among emitters, Karmali said.
The cap-and-trade bill, expected to create a trillion-dollar carbon trading market, would cap carbon emissions and allow pollution permits to be traded. If the bill does not pass, the U.S. Environmental Protection Agency may begin regulating carbon emissions for the first time (Source: Reuters)
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The CO2 price has been corrected for the Climate Summit and Obama hype and is back to normal within the margins that fit with the market fundamentals. Th correction was a bit to steep, shortly after the Summit, which is now again corrected due to strong winter cold.
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See Financial Times.
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It was expected that Copenhagen could not deliver a new post 2012 legally binding agreement. Hence, the Bali Action Plan contained not the Mandate to do so, other than to report the debate. The US could only cautiously indicate their number, waiting for the Senate. The accounting rules for land use and land use change are not clear (a flaw in the 30% target of the EU), and there is no emissions baseline methodology for developing nations. We have the mandate more or less to postpone decisions to CoP16 Mexico, dec. 2010. And on top of that, we have the Copenhagen Accord, a coalition of willing nations, covering more than 60% of global emissions, including fast growing developing nations, is willing to limit emissions to remain below 2 degrees temp.rise. They want to use the carbon market. And developed nations will spend $ 30bln until 2012 and 100 bln by 2020 for support to developing nations Provisions on transparency and accountability have to be elaborated.
Before February 1st, nations that support the Accord will have top submit there name confirmation and the CO2 action numbers.
So, Decisions in the 2 tracks (Kyoto post 2012 targets and the Convention, incl US) will be taken up again december 2010 at the next Climate Summit in Mexico (Jos Cozijnsen).
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U.N. climate talks ended with a bare minimum agreement on Saturday when delegates "noted" an accord struck by the U.S., China and other emerging powers that falls far short of the conference's original goals.
The European Union said the accord -- weaker than a legally binding treaty and weaker even than the 'political' deal many had foreseen -- was not ambitious enough to persuade it to raise its carbon cutting target to a 30 percent cut by 2020 versus 1990 levels from a 20 percent cut.
The Copenhagen Accord also cast more uncertainty on the post-2012 future of carbon offset trading schemes under the Kyoto Protocol called the Clean Development Mechanism (CDM) and Joint Implementation (JI).
Analysts and traders weighed in on how this will affect prices for EU Allowances, the carbon permits traded under the EU's $92 billion Emissions Trading Scheme (EU ETS), for Certified Emissions Reductions (CERs), the offsets traded under the CDM, and how it will affect the development of global carbon markets in general (Source: Reuters)
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Carbon trading could be worth twice that of oil in next decade. Market could be worth $3tn a year but enthusiasm to place it at heart of Copenhagen is matched by growing criticism of concept (Source The Guardian.
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Germany is on track to have a surplus of more than 250 million AAUs by 2012 following a collapse of industrial production in the EU's biggest emitter. It could be the country with the fourth largest AAU‐surplus after Russia, Ukraine, and Poland, according to a report by Societe Generale.
Source: Plant Tree Capital
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The Goldman Sachs Group, Inc., Blue Source, and CE2 Carbon Capital have announced a $12 million U.S. carbon offset transaction. This is the largest publicly announced U.S. offset transaction to date and signifies confidence in the role carbon offsets will play in a U.S. regulated carbon market (Source: Mumbai (Blue Source).
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Fears are receding of a flood of EU allowances (EUAs) swamping the EU Emissions Trading Scheme (ETS), following a surprise court judgement against the European Commission (see here). Last month, the European Court of First Instance found in favour of Poland and Estonia, who had challenged the European Commission over how it set their EU ETS caps for Phase II of the scheme (2008–12) (Source: Carbon Finance)
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Democratic Senators John Kerry and Barbara Boxer offered a plan to limit greenhouse-gas emissions that scientists blame for global warming, saying they will work to get it enacted by December.
At a campaign-style rally on the Capitol lawn today, the senators cast climate change as a pressing national security issue that threatens to depress the economy and bring social upheaval.
“Unless we act decisively, climate change could become a threat multiplier, a lit match on the kindling of an already dangerous world,” said Kerry, chairman of the Senate Committee on Foreign Relations. “Our health, our security, our economy, our environment all demand we reinvent the way America uses energy.”
Kerry and Boxer’s bill seeks to curb emissions by creating a market for companies to buy and sell pollution permits. It would require U.S. power plants, factories, refineries and other large polluters to reduce greenhouse-gas emissions by 20 percent through 2020, a deeper cut than the 17 percent approved by the House earlier this year. (Source: Bloomberg.com)
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Transport projects moved a step closer to earning CO2 credits after a UN panel gave them the nod
UN experts recommended two ideas to be approved by the board which oversees the clean development mechanism (CDM), it emerged today.
These so-called methodologies are linked to projects which expect to generate 87,000 certified emission reduction credits (CERs) a year.
But the UN’s methodologies panel, which made the recommendations at its meeting last week, also advised the executive board to turn down eight different ideas for projects expecting to earn around 4.1 million credits a year. In addition, the panel deferred decisions on a further 13 methodologies, which will be examined further when it sits again next month (Source: Pointcarbon)
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Senate Democrats will unveil legislation to cut greenhouse gas emissions next Wednesday, kicking off what is likely to be a battle in Congress as lawmakers tussle over the economic impact of controlling global warming. Skip related content
The bill has not been released formally but will be coauthored by Massachusetts Senator John Kerry and California Senator Barbara Boxer, a Congressional source said on Thursday.
"The overall architecture of the Senate bill is going to be very similar to the House version of the bill," a separate source at an environmental group said via telephone from the G20 summit in Pittsburgh. The proposal will add to an already full plate for lawmakers in Congress who are still working to hammer out details on healthcare and financial reforms.
The House narrowly passed a climate change bill in June that called for a 17 percent cut in carbon emissions below 2005 levels by 2020, and about an 80 percent reduction by 2050. It would also require companies to acquire permits for the right to emit carbon. Initially about 85 percent of the carbon permits would be provided to companies for free. Another source said the Senators are contemplating requiring a 20 percent cut in greenhouse gases by 2020. (Source: Reuters)
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Estonia and Poland won legal challenges on Wednesday which could allow them more generous national caps on industrial carbon emissions under the European Union's emissions trading scheme (see here and click on Case T‑183/07 for the decision). The EU executive Commission, which administers the carbon market, has two months to appeal. "The Commission is extremely disappointed by the judgment of the court in these two cases," a Commission spokeswoman told a regular news conference. "The Commission is studying the judgment carefully with a view to a possible appeal," she added (Source: Reuters).
Comment: adjusting the these allocation plans might lead to an extra surplus to the current of maximum 75 Mt for Poland and 10Mt for Estonia and more of the other appeals are decided upon (Bulgaria, Czech Rep., Hongary, Latvia, Lithuaniua en Romenia. But maybe not. Hence, the European just needs to draft new allocation decisions and the definitive numbers can even be more reasonable, looking at the changed perspective due to the crisis. The EC will just have to agree with these member states on definitive allocation for 2008-2012, rather than apply the ECs numbers. Also, the Polish governement wants to restrict selling of surplus by Polish companies (see press release European Commission). So, the long term impact on the market remains unknown; todays price fall appears with 13,20/t 4%, compared to the price before the decision, 13,75/t (Jos Cozijnsen).
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China will throw down the gauntlet to western economies and businesses on climate change when it unveils its own emissions-trading scheme this week. The unexpected move will, for the first time, place limits on the amount of greenhouse gases Chinese industries are allowed to emit.
A delegation from the China Beijing Environmental Exchange, a government-backed platform for trading environmental equity, will outline the details in New York this week at a UN conference on climate change. China’s entry into the carbon-trading market holds significant implications for businesses and the environment.
The People’s Republic is the world’s largest polluter, accounting for 20% of greenhouse gas emissions. Thanks to the increasing energy demands resulting from industrialisation, China could be responsible for a third of emissions by 2030. (Source: Sunday Times)
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US government assessments of the American Clean Energy and Security Act have proven just how affordable a US federal cap-and-trade system will be, said Nat Keohane, director of economic policy & analysis for the Environmental Defense Fund in New York.
The US Environmental Protection Agency (EPA) estimated US emission allowance prices at $13-$17 per tonne of carbon dioxide equivalent (tCO2e) in 2015 and $17-$22/tCO2e in 2020 under a programme proposed by Congressmen Henry Waxman and Ed Markey, although that estimate assumes an abundant use of offsets. “That does represent what I think is the ‘Gold Standard’ of economic modelling,” Keohane said.
The Congressional Budget Office (CBO) and the US Energy Information Administration have released reviews of the Waxman-Markey bill that project similar impacts. For example, the CBO analysis said the price of greenhouse gas (GHG) allowances would rise from about $15/tCO2e of emissions in 2011 to about $26/tCO2e in 2019 (Source: Carbon Finance)
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Limiting global warming to 2°C above pre-industrial levels is absolutely crucial, says the G-8 and most of the world’s best climatologists. If this is to be more than lip service, the consequences will be radical.
For starters, until 2050, only a total of around 700 gigatons of carbon dioxide can be emitted into the atmosphere. At the current rate of emissions, this “budget” will be exhausted in 20 years; if emissions increase as expected, the world will become carbon “insolvent” even sooner. So reducing CO2 and other greenhouse gas emissions must begin as quickly as possible. Wasting any more time will cause costs to skyrocket and render the 2° limit obsolete.
By Claus Leggewie, Project Syndicate, Aug 2009, see here
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The current CO2 allowance illiquidity & warm weather lead to a modest, temporary price peak. Enjoy it and profit. The Euro 18 ceiling will probably not be broken through this year.
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The Offset Quality Initiative (OQI) explains in a new brief how and why renewable energy certificates (RECs) differ from greenhouse gas (GHG) emission offsets (offsets). OQI is a strong supporter of renewable energy and believes it has a critical role to play in addressing climate change, OQI does not believe that RECs sold in voluntary green power or mandatory renewable energy portfolio standard (RPS) markets should be treated as equivalent to GHG offsets. REC programs fail to meet two basic definitional requirements of emissions offsets:
First, they do not adequately establish a clear and unambiguous claim of ownership to emission reductions.
Second, they fail to adequately establish that RECs are associated with offsetting emission reductions. Specifically, REC programs do not ensure that emission reductions are additional to what would have occurred in the absence of a REC market.
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Aviation's entry into the European Union Emissions Trading Scheme (EU ETS) in 2012 is set to cost the sector €1 billion; this shows a report by carbon analysts Point Carbon written in conjunction with consultancy RDC Aviation. The figure was determined on the basis of today's spot price at €14.40 ($20.42) per tonne of carbon dioxide (CO2), but if Point Carbon's estimated spot price for 2012 is used (€20) the figure becomes even higher. The report estimates that airlines impacted by the EU ETS will collectively face a shortfall of 77 million tonnes of carbon dioxide (CO2) (Source: Energy Risk).
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As of July 15 the Dutch VAT on emissions allowance transactions is imposed on the customer instead of the supplier, a socalled "Reversed Charge Mechanism". By changing this by law, the socalled VAT carrousel fraude can be prevented (see also a previous posting.
Doing so, bonafide market participants are ensured that sellers cannot apply and invoice VAT. “We welcome the swift action taken by the Dutch Ministry of Finance to mitigate the risks of potential VAT irregularities, because these signals are very harmful to the Carbon Market, and we are therefore applying this measure as of today” says Axel Posthumus, CEO of Climex. “We already implemented our own measures to ensure the spot exchange was not subject to be used for VAT fraud, but it is very helpful the Dutch Government substantially supports the market with this decision. We hope that other countries will follow suit, or that action will be taken at EU level.”
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Carbon prices continue to firm on Monday on the back of short-covering and a build-up of long positions due to the ongoing shutdown at the Krümmel nuclear power plant in Germany, players said.
The December 09 EUA contract was last seen changing hands up EUR 0.40 at EUR 14.40/t on the ICE /ECX platform, almost EUR 1.50 up from a week ago.
Meanwhile, Brent North Sea crude oil for August delivery hit a low of USD 59.61/bbl on the ICE platform on Monday morning, about USD 4 lower week on week.
“CO2 is running completely opposite of oil lately,” said HVB trader Roman Richter in Munich. The latest gains in the CO2 market were probably a result of short-covering as players were buying back allowances when the price reached a certain level, said Richter (Source: Montel Powernews).
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See how Louis Redshaw, head of environmental markets at Barclays Capital, explains to Jos Cozijnsen in one of the InterActive Interview series, a new feature on the Thomson Reuters Carbon Market Community.
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Oil prices are coming down on Tuesday after trading above USD 73/bbl earlier in the session on the back of buying interest from funds, analysts said. The front month contract for Brent North Sea crude oil was last seen traded at USD 71.20/bbl, up 21 cents day on day. The price reached USD 73.50/bbl earlier in the session however, on the back of buying interest from funds, said analysts.
The market is awaiting a string of economic indicators to be released this week, including US employment data on Thursday, as well as inventory data later on Tuesday and Wednesday.
“Better than expected data this week could help propel crude prices to the USD 75/bbl area,” said analysts at Sucden Financial Research. Others were more cautious and pointed to a weak demand picture. (Source: Miontell Power News)
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Brokers are seeing a rise in spot EUA business in the wake of France exempting tax on carbon.
Around 1.7 million spot EUA contracts have been handled by brokers and cleared through the Bluenext exchange in the last two days, which is around 25 per cent of the volume going through the bourse.
Before the tax change on 9 June, brokers accounted for an average of 116,500 spot EUAs a day cleared though Bluenext since the start of May, just 1.3 per cent of the spot volume going through bourse.
“We have definitely seen a pick up in spot business over the last two days. People are looking to trade the spread (between the spot and the 2009 future EUA) more than anything,” said one broker.
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Rich countries may act on their own to reduce greenhouse gas emissions by developing a carbon market they hope will lure in poor nations even if U.N. climate talks get bogged down, experts said. Nearly 200 countries have been trying to reach an agreement to replace the Kyoto Protocol on global warming with a December deadline at a meeting in Copenhagen approaching. But there remains a large rich-poor divide. Developing countries want industrialized countries to make deep cuts in greenhouse gas emissions in the international agreement. Industrialized countries want poor countries to take on binding commitments. To get past the differences, the rich world, including the European Union and the United States, may form a carbon market outside or parallel to the U.N. talks. Rapidly developing countries like China may be inspired to join the market to sell emissions offsets such as clean energy projects.
One reason such a development would be attractive "is because countries like the United States, and other countries like China, South Korea, and Mexico may very well do more on their own domestic binding agreements than in a binding international agreement," said Nathaniel Keohane, director of economic policy and analysis at the Environmental Defense Fund (Source: Reuters)
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This is the heading of the article by Reuters, based on the Worldbank report; it is posted below. It will surely be take over by many sources. What it fails to report is that the allocation of emission allowances over 2008-2012 are already cut by 10% compared to 2005. So, there is the emission reduction. How big the (secundary) trade is that follow says nothing about amount of reductions. Yes indeed emission cuts via CDM projects were down, cause of many reasons, even because of the economic downturn. All the VERs, ERUs and primary CERs sales were down 27% compared to 2007, mainly in Q3 and Q4.
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The House Energy Commerce Committee voted 33-25 tonight to pass sweeping legislation that would overhaul U.S. energy and global warming policy.
Democrats largely held together in support of the 946-page bill shaped over several months of closed-door negotiations and nearly 40 hours of debate this week. Only one Republican supported thebill, as GOP opponents unified against the measure, insisting it was a costly and unattainable measure to be pushing in a tight economy. (Source: E&E)
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The price of the Dec 09 EUA contract may fall to EUR 14/t in the near term as the carbon market appears to be divorced from fundamentals, Société Générale analyst Emmanuel Fages said on Tuesday.
The Dec 09 EUA contract is currently trading down EUR 0.37 at EUR 15.50/t on the ECX/ICE platform, but has traded in a spread of EUR 13.80-16.00/t during May.
The recent rise in EUA prices was a result of the continuing rally of the oil and stock markets, said Fages. What was more, the price surge in both markets could indicate that markets were pricing in the end of the crisis and the recovery, he added.However, with economic recovery in Europe not expected before 2010, carbon market fundamentals remained “stubborn”, he said. (Source: Montel Powernews)
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A recent boost in prices for carbon permits under the European Union's Emissions Trading Scheme points to a recovery from a sell-off earlier this year when prices fell to a low of 8 euros, analysts and traders said. The EU ETS caps carbon emissions from factories and utilities in the 27-nation bloc and issues an annual quota of emissions permits to firms, forcing them to buy from others if they emit more carbon dioxide than allowed.
Cash-strapped industrial companies sold their permits, called EU Allowances (EUAs), in the economic slowdown to raise funds, causing prices to drop to a low of 8.05 euros ($10.79) in February from nearly 31 euros last July. Prices have been slowly gaining ground since then and climbed above a 4-month high of 15.25 euros on Friday. "We are climbing to correct an exaggerated fall to 8 euros," Jean-Francois Cauvet, trader at Sagacarbon in France, said. (Source: Reuters)
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The refining, cement and glass industries may get help dealing with the cost of meeting European climate targets to safeguard their global competitiveness, a draft European Commission report showed. Steel and aluminium appear to be the most at risk, figures seen by Reuters on Thursday showed, confirming a report last year on risks to the two sectors.
Heavy industries in Europe and the United States are battling hard to avoid paying for permits to emit carbon dioxide, saying the added cost will harm their ability to compete with overseas rivals, for example in India and China.
* EU executive lists sectors that may lose competitive edge
* Highest risk seen for metals, refining, glass, cement
* Lowest risk seen for food, timber and plaster
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Latest analysis predicts recession will result in oversupply of allowances during current phase of EU emissions trading scheme. Falling industrial output means the EU emissions trading scheme will face an oversupply of emissions allowances (EUAs) during the current phase of the market, which runs from 2008 to 2012, according to new research from Barclays Capital.
The price of EUAs has rallied to about €14 (£12) a tonne following the release of emissions data from the EU last week that appeared to be slightly better than some players in the market expected.
But according to Bar Cap, close analysis of the data suggests that the market will now face an oversupply of EUAs during phase II. "The phase is no longer short EUAs, rather it is moderately long by 23 Mt," says the report. "The market only becomes short again by 2012, when it will be balanced by the introduction of the aviation sector." (Source: BusinessGreen 17 Apr )
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The recent upturn in EUA prices will not last as market fundamentals remain unchanged, said Société Générale analyst Emmanuel Fages late on Wednesday.
The Dec 09 EUA contract has gained over EUR 2 since the beginning of April and was last seen traded at EUR 14.20/t on ICE/ECX. CER prices had also broken through the EUR 11/t barrier, with a last trade up EUR 0.13 at EUR 11.05/t.
'The continued surge in EUA prices even well after the 2008 emission reports can be attributed to hedging by utilities for the year 2009, but also more recently to the involvement of financial participants in the market, wanting to benefit from the rally,” said Fages in a research note.
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A feature of the current trading environment is that there is a significant premium for holding cash, as many firms struggle with weak order books and tight credit availability. A somewhat unforeseen and unheralded impact of the EU ETS, and the level of free allocation of EUAs provided to installations, is that the carbon market for many participants has turned out to be an important source of finance. (Source: Tendances Carbone (No 35) , by Mission Climat of the Caisse des Dépôts and BlueNext)
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Europe’s controversial trading system to cut carbon emissions is showing faint signs of working, according to analysis of preliminary figures released Wednesday by the European Commission.
Emissions among industries covered by the E.U. system fell between 4 percent and 6 percent during 2008 compared with increases of roughly 1 percent in the two previous years, according to analysts who reviewed the figures.
Most of the decline was from falling industrial and electricity production linked to the economic slump. Even so, the size of the decline compared with the increases in previous years showed that some businesses were becoming marginally cleaner as a result of the system, these analysts said.
“What we’re seeing today is that it is easier to meet the emissions targets in the short term because of lower economic activity in the world, but it doesn’t change the fact that carbon markets do work,” said Henrik Hasselknippe, the global head of carbon analysis at Point Carbon, a research company.(Source: Financial Times)
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US lawmakers on Tuesday unveiled their first legislative proposal for a radical shift in US energy policy.
The bill, sponsored by two powerful Democrats in the House of Representatives, has more aggressive climate targets than those of President Barak Obama but also includes protectionist measures that could prompt retaliatory action by Europe, China and Brazil. Those protectionist measures will likely be popular among US politicians, but could be challenged under World Trade Organisation, analysts and academics agree.
Under the proposed legislation, which includes a green house gas emissions cap and trade programme, companies would be eligible for rebates to compensate for cost they incur. Additionally a “border adjustment” programme would levy import taxes on foreign manufacturers to cover carbon contained
in US-bound products. Robert Stavins, environmental economics professor at Harvard University,
nevertheless calls the legislation “a very important step along the road.” (Source: Financial Times)
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Though fundamentals of the carbon market are yet unchanged, awaiting 2008 verification numbers in May, the CO2 price seems to float to wherever the wind blows. Now with the increasing oil price, than with the German power price.
Interesting is the growing interest in globally linked Emissions Trading systems; that is to say indirectly linked through the CDM. And though CDM is more and more seen as flawed and loaded with loop holes, it is seen as a transition to a globally linked carbon market. That means that CDM will keep pace with the EU ETS, as we see now.
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The U.S. Environmental Protection Agency today proposed the first comprehensive national system for reporting emissions of carbon dioxide and other greenhouse gases produced by major sources in the United States.
“Our efforts to confront climate change must be guided by the best possible information,” said EPA Administrator Lisa P. Jackson. “Through this new reporting, we will have comprehensive and accurate data about the production of greenhouse gases. This is a critical step toward helping us better protect our health and environment – all without placing an onerous burden on our nation’s small businesses.” (Source: US EPA
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The EU has long maintained that emission trading must form a central part of global efforts to combat climate change. This week it received fresh support from a hitherto unexpected quarter: America.
In his first speech to congress on Tuesday, new US president Barack Obama called on US lawmakers to propose a greenhouse gas emission trading scheme (ETS) for America. "I ask this congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America," Mr Obama said. The president's first budget, presented on Thursday, projects 2012-19 revenues from auctioning carbon allowances to industry would amount to US$646bn (€510bn). Some of this would go to clean energy projects and some to tax credits to help Americans transition to a low-carbon economy.
Meanwhile, Australia will publish draft legislation on a domestic ETS on 10 March, climate change minister Penny Wong announced on Friday (Source: Ends Europe)
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Twelve European countries have so far allocated permits to emit carbon dioxide to their industry ahead of Saturday's deadline, the European Union's executive Commission said on Wednesday. The countries are Belgium, Czech Republic, Estonia, Germany, Latvia, Luxembourg, the Netherlands, Slovenia, Slovakia, Sweden, Britain and Finland, a press officer for the environment commissioner Stravros Dimas said.
Prices for EUAs
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In his sort of State of the Union, President Obama said Febr 24:"So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America." And Obama may even have implicitely referred to the need to be more forward looking to purchase and bank allowances now when he said:"We have lived through an era where too often, short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. Well that day of reckoning has arrived, and the time to take charge of our future is here."
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The officials who created and run the cap-and-trade system for the European Union could use some good news. The price of a ton of carbon dioxide in the current phase of the trading system has fallen to record lows recently. And although there are few suggestions the price could collapse entirely, the recent drop still is a worrying reminder that a market-based system to reduce emissions can be subject to significant volatility.
In a boost for the system on Monday, however, a prominent research company, New Carbon Finance, said its calculations showed that the largest cause of a reduction in emissions in the European Union last year was attributable to the trading system — because it had encouraged greater use of gas in power generation rather than dirtier fuels like coal. “The design of the scheme is working as originally intended by the European Union.”
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Record low carbon prices have cut the attractiveness of investments in renewable energy and may even favour the construction of new, high-carbon coal plants, conflicting with the aims of Europe's carbon market. he EU emissions trading scheme is the 27-nation bloc's main weapon to fight global warming. It imposes a cap on carbon emissions by factories and power plants using a fixed quota of emissions permits.The scheme is meant to force power plants, for example, to cut their emissions by switching from coal to lower carbon gas or to wind power, or else buy carbon permits.
"If you look at the price today it may start to become very attractive, not for compliance purposes today, but for compliance purposes for years," said Citigroup's head of emissions trading, Garth Edward. (Source: Reuters)
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TOKYO, Feb 13 (Reuters) - The European Commission will not intervene to support the market for European carbon emissions where futures prices have nosedived along with the economic downturn, the EC's chief climate change negotiator said on Friday.
Artur Runge-Metzger was speaking in Tokyo after attending an informal dialogue on climate change.
"What we observe at the present in the carbon market is a sliding price for the tonnes of allowances that are in the market," he told reporters. "We think this follows the economic recession -- there is much less demand." (Source: Reuters)
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'Carbon trading may be the new sub-prime', says energy boss: System 'risks being diverted from purpose' and Weakness of government regulation highlighted
The row over the working of the European Union's emissions trading scheme intensified last night when EDF Energy warned that speculators risked turning carbon into a new category of sub-prime investment.
Vincent de Rivaz, the chief executive of the UK arm of the French-owned gas and electricity group, said politicians and regulators needed to revisit the way the ETS was working and whether it was bringing the results they wanted. "We like certainty about a carbon price," he said. "[But] the carbon price has to become simple and not become a new type of sub-prime tool which will be diverted from what is its initial purpose: to encourage real investment in real low-carbon technology." (Source The Guardian, Jan 30)
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The European Commission will Wednesday publish a communication in which they appeal the US to join in into a OECD wide cap-and-trade market. Also will the EC propose to phase out the CDM (offsets in developing countries) for the advanced developing countries; also they would in the end need to join in on the carbon market. In return part of the allowances, OECD countries would receive in the post Kyoto Treaty, would need to be sold on the market to offer developing countries support to adapt to the impact of climate changes.
The New York Times 'Green Inc' blog summarizes the elements of the draft EC paper [pdf].
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It just happened that some companies were overselling their assumed surplus of allowances, and some utilities are starting to purchase EUAs to compensate their 2009 shortage that created the price floor now at Euro 11,50. But it may get lower again when industrial ETS participants get new EUA ammunition (2009) in February and look for cash in stead of being forward looking. Hence with the allocation at 2005 level, there is still a shortage of more than 50Mt/a.
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Phase two carbon prices could drop below EUR 10/tonne on the back of weak macroeconomic fundamentals in the first six months of 2009, Deutsche Bank said in a report published on Monday.
“With the macroeconomic climate likely to remain very negative throughout the first half of 2009, any further sharp falls in the oil price could prompt the all-time low of EUR 11.8/tonne on front-end EUAs to be tested, and a breach of the EUR 10/tonne level would then be in sight,” analysts at the bank said.
Indeed, with oil at USD 40/bbl and coal at USD 90/tonne, the implied short-run fuel-switching price* would be EUR 9/tonne, the report added (Source: Montell Power News)
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European ETS commentary: EUAs fall sharply in afternoon
Carbon prices were volatile today, falling sharply in the afternoon as the energy complex weakened.
http://www.pointcarbon.com/news/1.1032104
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Branko Terzic (Regulatory Policy Leader at Deloitte Services LP): "A wagering person would find the odds in favour of US cap and trade legislation some time during the next Congressional session under the leadership of a new President. The odds are also in favour of legislation that leaves the really tough decisions about industry, geographic and sector limits to bureaucrats in those agencies": see further here (Source: European Energy Review).
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Continued economic backlash brings the CO2 price down to mid 2007 levels, Euro 15 and for sCER 13,80. Though for the longer term a price recovery is expected, we haven't seen the 2008 price floor yet! That could come lower than Euro 15 next month, that was noted by IdeaCarbon as a floor. The minimum regarded price for CDM-sCER is seen as the buffer to keep EUAs up. Nevertheless some see a floor at 5-10, other even expect 0. ABN-AMRO pointed at the fact that since banking of suplus EUAS is allowed to after 2012, the prive will not come to a single digit number.
For 2009 analists are optimistic, as power companies start to build up their compliance position for that year. Société Generale expects a price of 21-26 Euro. Pointcarbon 22 Euro.
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Market participants are bullish on prospects for the creation of a US federal cap-and-trade scheme following Senator Barack Obama’s presidential victory, but remain uncertain about when and how a system will be put in place.
Obama beat Republican presidential candidate John McCain by winning 349 electoral votes compared to McCain’s 163, according to the latest tally. Obama won 52 per cent of the popular vote versus McCain’s 44 per cent.
Market participants applauded this decisive win, predicting it will help ease the creation of a national cap-and-trade scheme. (Source~: Pointcarbon)
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For those who want to learn:
• How the Carbon market works
• Who are the most important players
• Volume and price developments
• What is Climex is and how can you join
• How the Climex trading platform works
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A good market, which means enough liquidity and best market prices, is in the interest of both traders, industries and Climex. Climex is therefore willing to remunerate parties contributing to this goal with lucrative trading fees and extra services. The trader needs to place one order per day on Climex which is conform to the market.
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Auctioning is becoming more and more relevant as a national allocation method within the EU ETS. Germany has announced it will be auctioning 40 million EUAs at the latest from 2010 on. The UK will auction its first volume mid November and Austria is planning to auction the 2008 EUAs early December.
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In June 2008, the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management (short: Lebensministerium) announced annual auctions of 400,000 EUAs. The first auction was planned to be held in October 2008.
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Spot Trading in the EU ETS is very much dependent on the availability of EUAs and the functionality of and trust in the registries. Therefore, the role of Spot trading was quite insignificant during the first months of 2nd phase trading activities. This might change throughout the end of 2008.
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Market analyst Point Carbon expects a "robust" carbon price for the 2008-12 trading period, despite a current downward slide amid economic uncertainty. The prediction is in line with previous forecasts. "Prices could go lower in the short-term but they will be higher in the longer-term," manager Kjersti Ulset told ENDS on Monday. The EU carbon price dropped to an 18-month low of EURO 17.60 per tonne in early trading on Monday as European firms sold carbon allowances freed up by lower production forecasts (Source: Ends Daily)
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The European Parliament voted for an amendment to open the door for forestry credits, including Reductions of Emissions through Deforestation and Degradation (REDD) to the EU CO2 Market. This could happen as part of forestry projects in developing countries, under a new treaty (Copenhagen, 2009) of under a bilateral agreement, when there is no treaty. It contains of course conditions for sustainability etc. and the EU Commission wants to set criteria the projects would need to meet.
It sets the cap at max 5% of emission reductions needed by installations under ETS. That is of course a vague factor now, when we do not not know what post 2012 targets will be. Also, it is expected that when the EU goes after 2012 for 30% or more this number can increase.
Though a limit of 5% may mean a total of 40 Mton for 2013-2020, REDD can be banked for after 2020 of course.
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Oct. 7 (Bloomberg) -- The European Parliament's environment committee voted to let energy and manufacturing companies import 18 percent more emission credits through 2020 to cut the cost of stricter domestic caps on pollution blamed for climate change.
The panel inserted the provision in a draft European Union law that would tighten carbon-dioxide curbs on electricity, steel, paper and other industries now in the EU emissions- trading system by 11 percent on average in 2013-2020 compared with 2008-2012. The system, the world's biggest greenhouse-gas market, requires companies that exceed their quotas on CO2 discharges in the EU to buy allowances from businesses that trimmed emissions.
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Ten states in the US Northeast kicked off the country's first cap-and-trade market on greenhouse gas emissions on Thursday, gaining accolades from environmentalists and many businesses but also eliciting concerns about how the states will spend the money the plan raises.
The states from Maryland to Maine formed the Regional Greenhouse Gas Initiative to limit emissions of carbon dioxide from power plants in the absence of guidance from the Bush administration on regulating planet-warming gases.
The group on Thursday conducted its first auction of permits to emit CO2 to utilities and investors who believe that their value will rise. It offered 12.5 million permits in the auction, each representing 1 ton of carbon dioxide, and will offer up to 188 million permits annually for three years.
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London, 14 August: The market is currently undervaluing carbon allowances, according to a report by ratings and analysis firm IDEAcarbon. In the latest edition of its Global Carbon Report, the London-based company suggests that changing market fundamentals point towards higher prices than at present.
IDEAcarbon forecasts that EU allowances (EUAs) will see an average price of €29/tonne ($43.20/t) of carbon dioxide equivilent over 2008-12, and certified emission reductions (CERs), from Clean Development Mechanism (CDM) projects in the developing world, of €24. The December 2008 vintages settled at €23.67/t and €19.85, respectively, on the European Climate Exchange last night (Source: Environmental Finance)
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Press Release, Utrecht, the Environmental Exchange Climex today welcomed the 100th member (Mitsui & Co Energy Risk Management Ltd) and number 101 (Ecosur) was also registered today. Since July 2008, Atlas Capital, BTS Energy Advisors, Carbon Retirement Ltd, Carbon TF, Ecosecurities, Ecolutions, Kas Energy BV and Wagenplan all became members of Climex. Over 15 companies are currently in the signing up process.
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Japan, under pressure to meet emission reduction targets set by the Kyoto Protocol, approved an October start for the trial trading of carbon dioxide, the main greenhouse gas blamed for global warming.
"We'll set down rules in September on how to take part in (a trial carbon trading scheme) and in October we'd like to get started," Hiroshi Kamagata, director for the cabinet secretariat at Cabinet Office, said at a briefing on Tuesday.
Tuesday's cabinet agreement takes forward an announcement by Prime Minister Yasuo Fukuda last month that Japan would put a price on CO2 in order to help move the world's fifth-biggest polluter towards a low carbon society. Fukuda had called for an autumn start to such a scheme.
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Verification company SGS has launched a ‘carbon neutrality label’, designed to allow companies to demonstrate that they have reduced and offset between 20% and 100% of their emissions. The initiative is understood to be the first offered by an independent verifier, although some providers of carbon offsets provide neutrality labelling, and it is likely to prove controversial, given the nature of the carbon neutrality debate.
Robert Dornau, Zurich-based director of the climate change programme at SGS, said that the label is particularly aimed at companies that want to make the first steps towards carbon neutrality. The label involves five ‘ticks’, each of which represent 20% of emissions neutralised (Source: Environmental Finance Online)
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Traders note a very volatile CO2 price trend and don't know what to expect tomorrow; neither do we.... These days very active traders may loose some ground indeed. Nevertheless, traders that need to ensure long term compliance for their clients can feel more certain. The overall perspective for 2020 didn't change much. For news on tighter CER supply we had news on greater shortage when aviation links up. Moreover, this shortage combined with the strategy of banking extra allowances when prices fall, will make long term prices remain between Euro 35 and Euro 40. So, today's contract for 2014, noted at the ECX for Euro 32 looks interesting!
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Poland has joined seven eastern new member states of the European Union in demanding changes to the bloc's plans for curbing greenhouse gas emissions to fight climate change, its environment minister said on Friday. Maciej Nowicki told Reuters that Warsaw wanted auctioning of permits for the power sector to emit carbon dioxide phased in from a starting level of 20 percent in 2013 instead of the 100 percent proposed by the European Commission from 2013.
He said he had presented a joint position with Hungary, Slovakia, Romania, Bulgaria, Latvia, Lithuania and Estonia to take account of the specific problems of fast-growing former communist economies with carbon-intensive energy sectors.
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Carbon market traders and backers of clean-energy projects aren't holding their breath for a strong statement on fighting change during this week's G8 summit and are more focused on who wins November's US election.
Market players say they don't expect any breakthrough agreements on fixed emissions reductions targets at the talks at a secluded Japanese resort on the island of Hokkaido. But some are hoping for the leaders to strongly support renewable energy as a way to fight rising greenhouse gas emissions that are blamed for global warming (Reuters)
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A total of around 45,000 VERs from two small Hydro Projects in China will be on offer in a VER Auction on the Climex Exchange. The auction is scheduled for 17 July 2008.
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Bundesministerium für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft (BMLFUW), Austria
Austria will offer for sale by auction 400,000 EU-Allowances (EUAs) annually, during the second trading period 2008-2012. The regulation in which the modalities for the auction are defined is currently under appraisal and the first auction is expected to take place in autumn 2008.
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The market in greenhouse gas emissions could outstrip the conventional commodities markets to become the biggest traded commodity, the head of the US Commodities Futures Trading Commission said yesterday. Bart Chilton, commissioner of the CTFC, said: "The potential size and scope of a structured carbon emissions market in the US is unequivocally vast. It is certainly possible that the emissions markets could overtake all other commodity markets."
Carbon trading was worth about $64bn last year, according to the World Bank, but the US accounted for a small fraction of this. Most of the trading - about $50bn - was carried out under the European Union's emissions trading scheme, with nearly all of the rest carried out under the Kyoto Protocol, which the US has not ratified.
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A total of around 45,000 VERs from two small Hydro Projects in China will be on offer in a VER Auction on the Climex Exchange. The auction is scheduled for 17 July 2008. The pre-CDM VERs stem from 2006 – 2008 vintages and will be validated and verified by TÜV Sued and accredited with the VER+ standard. VCS II is possible on request. The auction will start at minimum prices of €3 and €3.50.
Members of Climex automatically receive full details on the auction and the project. Buyers interested in participating in the auction can contact Climex for more information or register for free membership to the Climex exchange at the website: www.climex.com.
The auction is scheduled for 17 July from 14.00 - 16.30 hours Central European Time. The format of the auction will be open, which means anonymous bids will be visible to all participants.
"With these auctions we offer buyers a direct way to purchase the carbon credits they need, straight from a project and in an easy manner.”, Axel Posthumus, CEO of Climex commented.
“The main goal of the Climex auctions is to create standardisation, liquidity and transparency, to optimise the distribution chain and to provide easy access to Carbon Emission Rights at low costs.
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China's central bank has drawn up a tentative outline for a domestic emissions trading scheme that could cover everything from greenhouse gases to water pollutants, and speed the country's push for greener growth.
It is the first sign that Beijing is seriously considering a comprehensive national strategy to force its companies to either control their pollution or pay for their excess, as it struggles to meet its own tough environmental goals.
A quota scheme would also help the country keep track of greenhouse gasses at a time when it is coming under international pressure over its rising carbon dioxide output, and could pave the way for eventually joining an international system.
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European carbon prices surged to fresh two year highs Friday morning after oil prices jumped in overnight trade to lead the energy complex higher. By 13.00 CET, the 2008 EUA contract was trading at €27.35, up €0.85 on yesterday’s close.
The most actively traded contract opened at €17.20 and then dipped to a low of €27.00 in the morning before climbing back to a high of €27.45 just before midday.
Crude oil prices surprised the carbon market in the morning after rallying around $8/bbl in overnight trade.
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EU CO2 Prices are tempering a bit last week and this week from € 26,5 to € 26 because of the downwards pressure on crude oil, gas and coal, traders say. In the mean time Deutsche Bank is warning for a short term peak of € 100, when power companies seek supply for compliance, while liquidity is low in the Summer. We believe that power companies still can make that switch from gas to coal in Summer, when gas prices are at its lowest. Though demand and supply sets the price, we want to underline that compliance seekers use more the long term market perspective to avoid such price spikes; also to avoid power price peak.
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Corporations, environmental groups, labor unions and state and local officials are lining up to offer endorsements for the Senate global warming bill scheduled for floor June 2.
General Electric Co., the Natural Resources Defense Council and the International Brotherhood of Boilermakers urged senators today to pass the Leiberman-Warner Bill (S. 3036), a bill that seeks to curb U.S. heat-trapping emissions by midcentury by 71% compared to 2005 levels (Source E&E News PM)
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Following a vote of the Committee of Environment, MEPs decided that airline companies should not be allowed to continue emitting the same levels of greenhouse gases. The MEPs reintroduced most of the Parliament's first-reading amendments, previously rejected by the Council, to a proposal to include airline traffic in the EU's Emissions Trading Scheme. (Source: GLOBE)
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By Katherine Hamilton and Thomas Marcello
In the classic comedy The Producers, an unscrupulous businessman sells one product to scores of investors, each of whom believes they are the sole owner. In ecosystem markets, we call that "double counting" – and it's what registries have been set up to prevent. The Ecosystem Marketplace takes stock of carbon credit registries in the voluntary markets; see here.
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Canada will be investigated on suspicion of violating rules for registering greenhouse gases that are the mainstay of a UN-led fight against global warming, official documents show.
Canada played down the news, saying it was taking quick steps to ensure it complied by the rules.
Ottawa could be suspended from rights to trade carbon dioxide if found to be in breach of the rules by the enforcement branch of the UN's Kyoto Protocol. Greece was suspended last month, the first state to face such a sanction.
"On 5 May 2008 Canada was given an official notification of the decision of the enforcement branch to proceed" with a formal question over compliance with rules on registering emissions, the enforcement branch said in a statement (see here)
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In January 2008 the first CER spot trade was executed and cleared on Climex. Because the ITL and CITL are not yet connected, the only possibility to clear the CERs was by using the Swiss Registry. Read more on how to trade CERs on Climex by using the Swiss Registry by clicking here.
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Participants in the EU ETS still did not receive any clarity or deadline on when allocation of their 2nd phase EUAs is going to take place. So far, national governments, except Austria, Denmark and Finland, hesitate to allocate because of the missing link between the ITL and the CITL. The consequence of the missing link could be that allocations and transactions undertaken on the CITL will be displayed incorrectly on the ITL, when the connection is in place. This would then require a lot of manual corrections. To avoid this risk, national governments are postponing allocation of 2nd phase EUAs.
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Reducing the pollution that causes global warming is both affordable and critical. The cost of capping global warming pollution over the next two decades is almost too small to measure. That's the conclusion of a new report by Environmental Defense Fund (US): "What Will It Cost to Protect Ourselves From Global Warming?". The first-of-its-kind report synthesizes the predictions of a range of peer-reviewed economic models, and finds that:
* We can afford an aggressive cap-and-trade policy to tackle global warming. The cost to the economy will be minimal -- less than one percent of U.S. gross domestic product in 2030.
* We cannot afford to wait. Further delay will greatly increase the costs of making necessary emissions cuts and will risk locking in irreversible climate change.
* Strict limits on global warming pollution can harness the power and creativity of capital markets. Transitioning to a low-carbon economy is best done through the powerful engine that drives our economy.
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After a Month of cosy waving carbon prices, up and down within a margin between € 20 and € 22, April brings clearly appetite to the carbon market. Today's 2008 contract reached the € 25 per ton of CO2, where € 24 was even a challenging level to test for a year. True, oils ad gas are up, coal is down again; so we will probably see some extra shortage for a while. But that will be followed by an early Summer fuel switch from coal to gas for power, given the high carbon price. This will make up for the temporary extra shortage.
Hence, you are used to this analysts' saying that supply and demand are the key carbon price drivers and that the threat of an overheating carbon market is always nearby.
That is why we will probably see today high volumes again, and lowering prices, because of profit takers, selling against this attractive price.
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A multibillion-dollar experiment designed to curb global warming is stumbling as regulators question whether the program is doing enough environmental good. The United Nations is the main global policeman in an effort by wealthy nations to reduce the impact of their own pollution by paying for cleanups in the developing world. The program, known as the Clean Development Mechanism, is one of the most important coordinated efforts to attack global warming. In recent months, however, U.N. regulators who administer the program have objected to dozens of these developing-world projects, ranging from hydroelectric plants to wind farms, questioning whether the projects would produce a real environmental payoff.
U.N. regulators are also concerned that some independent auditors of these projects, who are responsible for vetting their environmental legitimacy, have been letting project developers push through ventures of questionable environmental value. (Source WSJ).
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)Souce: Commodity Online ) In a significant development, India's National Commodity & Derivatives Exchange Limited on Thursday launched its futures contract for Certified Emission Reduction.
Forward Markets Commission, chairman, B. C. Khatua inaugurated the launch at NCDEX Exchange Platform. The CER contract of NCDEX will be traded in multiples of one lot of 500 CERs each.
India is the first developing country to offer a hedging tool for CERs, a Kyoto protocol compliant emissions instrument under the Clean Development Mechanism of the United Nations Framework Convention on Climate Change.
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LONDON, April 2 (Reuters) - European Union industry emissions were roughly flat in 2007, preliminary EU executive Commission data showed on Wednesday, with low gas prices and a mild winter slowing growth.
As expected, emissions were less than industry's quotas of permits to emit the greenhouse gas carbon dioxide (CO2) under an EU climate change scheme meant to drive emissions cuts through permit shortages.
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WASHINGTON, March 17 (Reuters) - The World Bank on Monday launched a new carbon credit trading guarantee that will allow private-sector firms in developing countries to tap the growing 40 billion euro ($63.11 billion) global carbon market, a senior official said.
The International Finance Corp, the World Bank's private-sector lender, said it signed its first carbon delivery guarantee agreements with fertilizer producers Omnia of South Africa IMNJ.J and Rain CII Carbon in India.
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COPENHAGEN - Evidence is slim that the European Union's four-year old carbon market is sufficiently penalising emissions of the greenhouse gas carbon dioxide, in the fight against climate change, analysts said on Tuesday. The tighter the supply of permits, the higher the carbon price, and the more economic it is to improve energy efficiency or switch to low carbon-emitting sources of energy.
But the construction of coal-fired power plants, the biggest emitters within the carbon-intensive power sector, is continuing despite an EU carbon price, in part because some countries such as Germany are planning to phase out nuclear. For example, half of investment by Denmark's DONG Energy is now in renewable sources such as wind, but the company is also planning "a very big" new coal plant in northern Germany, Chief Executive Anders Eldrup said on Tuesday. "It's difficult to see the world surviving without coal for many, many years to come," Eldrup told a carbon market conference in Copenhagen. Asked whether the carbon price was influencing DONG Energy's investment decisions, Eldrup said the price was too low to make it economic to bury coal plant's carbon emissions underground, considered a vital technology.
"We really need a higher price, clearly this is not good enough," said Rajendra Pachauri, chair of the IPCC, the UN climate panel. Pachauri was referring to prices of $20-50 per tonne of avoided carbon dioxide (CO2) by 2030, adding that a price of up to $100 by 2030 was a better target. EU carbon emissions permits were trading at around 22 euros ($34.04) on Tuesday (Source: Reuters).
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On Friday 29 February 2008, the first European Allowances (EUAs) for the second Phase were traded in a cleared spot transaction on Climex. A total of 1,000 tonnes were traded against a price of 21.10 Euros per tonne. The trade was cleared by APX BV, the central counterparty of Climex.
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Any European Union requirement for imports to meet the same greenhouse-gas emission standards as goods made in the 27-nation bloc would be seen as "acting in bad faith," the top UN climate official said Monday. The EU on Jan. 23 proposed cuts in carbon-dioxide allowances for the most-polluting industries. The bloc also plans to move to a full auction of tradable permits to pollute in the EU's emissions-trading system, instead of allowing some grants by governments. The European Commission estimates that the plan would reduce economic output in the European Union by 0.5 percent. Because of that, some European governments argue that European competitiveness needs to be protected, and have suggested a carbon tax on imports from countries with less-stringent targets (source: Bloomberg).
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AFP, 25 February 2008 - The United States is ready to accept "binding international obligations" to reduce greenhouse gases, which could be announced as soon as July, a senior White House official said here Monday. Daniel Price, assistant to President George W. Bush for International Economic Affairs, said the undertaking would have to be made as part of a "global agreement" in which all major economies would make the same commitment. The agreement could be announced "in conjunction" with the G8 summit of the world's most industrialised nations in Japan in July, Price told journalists, without fixing a date. "We would like to reach an agreement on a long term global reduction goal -- this is a collective goal," Price said.
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BEIJING - Tokyo could set up a pioneering emissions trading scheme by the end of the decade, a city official said, potentially adding to pressure for a nationwide exchange but also providing a model for the country.The ambitious city government hopes, by 2020, to reduce greenhouse gas emissions to three-quarters of 2000 levels through Japan's first major venture into the cap-and-trade system now supported by most rich nations (Reuters).
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Heavy industries in the European Union must be told as soon as possible whether they will continue to receive pollution permits for free, France and Germany have warned [RED: or to buy them on an auction].
Paris and Berlin are among seven capitals to have written to Brussels urging clarity on the overhaul of the union’s emissions trading scheme. The move marks the latest controversy in the EU’s efforts to fight climate change and cut greenhouse gas emissions. The letter, sent on Friday to both the European Commission and the Slovenian EU presidency, is signed by Christine Lagarde, France’s economy minister, and Michael Glos, minister for economic affairs in Germany, among others. Other supporters include Austria, Finland, Luxembourg, Hungary, and the Czech Republic.In it, the countries stress that industries – especially those that are energy-intensive – need more clarity on what their contribution to climate change measures is going to be. Source: Financial Times.
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OSLO - Half a kg of salmon; two kg of potatoes; a tonne of greenhouse gas reductions -- shoppers at one Norwegian mall can now buy cuts in their carbon footprint as they pick up their weekly groceries.
The Stroemmen Storsenter shopping centre outside Oslo began selling the certificates on Saturday, at 165 Norwegian crowns ($30.58) per tonne, to people who feel bad about contributing to climate change.
By midday on Monday, its second day of offering the UN-approved Certified Emissions Reductions, it had sold more than a third of the 1,000 CERs on offer and would consider buying more if they sell out, the mall's managers said.
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Pointcarbon: Partners of the Climex Alliance, an agreement between several carbon exchanges, are to merge to create one pan-European carbon exchange with operations in both eastern and western Europe, the partners announced today.Owner of euets.com, Vertis Environmental Finance, a self-titled emissions trading finance house, will become a shareholder in the new company and retains exclusive rights to be the distribution partner of the exchange in central and eastern Europe (www.climex.com ).
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UK firms covered by the EU emissions trading scheme emitted 33.8 million tonnes of carbon dioxide more than their allocation, according to a final report released by the UK department for environment, food and rural affairs (Defra).
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HONOLULU - The world's biggest greenhouse polluters applauded the United States at climate change talks on Thursday, but some urged Washington to take the next step by setting goals to reduce its emissions of climate-warming carbon. The United States, alone among major industrialized countries in rejecting the carbon-capping Kyoto Protocol, noted that the two-day Hawaii meeting addressed the toughest areas of disagreement among the countries that use 80 percent of the planet's energy.
Brice Lalonde, the French ambassador for climate change, noted a shift in the US position, which he said had previously been "a bit lagging" in failing to set goals to reduce its overall emissions of greenhouse gases.
"And now we are seeing that the United States is discussing the matter," Lalonde said at a news briefing. "We welcome this move. Of course we are waiting for the next step, which would be that the United States will also have a goal in reducing its greenhouse gases, joining in that way all developed countries."
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The price of allowances in Europe’s emissions trading on Thursday slid almost €1.00, as high coal prices dampened the appetite to buy, while further big sell-offs in UN-approved carbon credits clouded sentiment, traders said.
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(Pointcarbon,Oslo)If there is no international agreement on curbing greenhouse gas emissions after 2012, EU carbon prices would rise to €48 per tonne, according to an analysis by Belgo-Dutch bank Fortis, publisahed today.
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(pointcarbon, Oslo)Amsterdam-based carbon spot exchange New Values today announced the first cleared spot trade in certified emissions reductions (CERs), executed on the Climex platform on Thursday.
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(pointcarbon, Oslo)Euroclear Bank on Wednesday said it will launch settlement and safekeeping services for carbon credits, enabling post-trade processing for EU allowance units (EUAs) and certified emission reductions (CERs) in the same way as bonds and equities.
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(pointcarbon, Oslo)The Tokyo Stock Exchange Group (TSE) and the Tokyo Commodity Exchange (TOCOM) have agreed to jointly study the possibility of creating a domestic greenhouse gas (GHG) emissions trading market.
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BRUSSELS - Europe's top business lobby attacked on Tuesday European Commission plans for implementing deep cuts in greenhouse gas emissions, saying that auctioning pollution permits could hurt industry in global competition. In a letter to Commission President Jose Manuel Barroso, BusinessEurope urged the European Union executive to avoid forcing firms to buy carbon dioxide emissions permits, rather than receiving them for free as they do now.
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(Pointcarbon, Oslo)Five of the eight leading US presidential candidates have voiced support for a federal cap-and-trade system to reduce greenhouse gas emissions, according to the US Chamber of Commerce.
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LONDON - The European Commission is debating whether to push for a carbon tariff on imports from countries that do not tackle their greenhouse gas emissions, as part of climate change proposals due out this month. Supporters of the measure say it would level the playing field for European companies facing tougher domestic emissions penalties. The new rules would be part of a raft of post-2012 proposals covering issues including national emissions targets and clean energy subsidies.
Unlike the European Union, neither China, India nor the United States have yet agreed to binding emissions reductions.The idea of imposing some kind of tariff on goods imported from countries with less strict controls on greenhouse gases was first put forward by former French President Jacques Chirac. But the plan has run into opposition from European Trade Commissioner Peter Mandelson who has said it would be hard to implement and could lead to trade disputes. A preliminary draft, seen by Reuters, says companies importing goods into the 27-nation European Union from countries that do not similarly restrict greenhouse gas emissions would have to buy EU emissions permits.
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(pointcarbon, Oslo)German public bank Kfw, which will sell up to 80 million CO2 allowances on behalf of Germany’s government, has become a member of the European Climate Exchange (ECX), the exchange announced on Wednesday.
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(pointcarbon, Oslo)Transfers of EU carbon dioxide (CO2) emission allowances for the 2005-2007 trading period have been halted because of a likely error with a registry software, market participants told Point Carbon on Wednesday.
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The market will leave the ETS pilot phase '05-'07 on Dec 31 with ambivalent feelings. Glad, that the real market will have to prove it is right; and the 2008 price is firm at € 22-23 per ton. Sad, because the learning phase showed us mistakes and flaws in the carbon market. And not all of them have been solved to date. But even in a thin illiquid market of today, the price remains at € 22-23; it has been at that level for some time, and the projections for the second and third phase still show a reasonable shortage growing from 200 Mt/a to maybe 400 Mt/a, with a futures price margin of € 25-35 for 2020. Not high enough for most CO2 storage projects, but low enough to keep climate cost down and to create some incentives for companies to keep emissions low and to benefit from carbon sales. Moreover, only limited price levels will bring the US on board to a global market. The Warner-Lieberman Bill prepares the US economy for such global link-up. Secundary CERs prices of around € 17 still lag the ETS price with around € 5; but there is no reason why we would not see a smaller spread between EUAs and CERs and have only one global carbon price, within a few months.
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Spanish banking group Banco Sabadell announced it has acquired 10 per cent of Sendeco2, a carbon credit trading platform operating in Italy, Portugal and Spain.
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The press may have been to much focussed on the actual Bali Action Plan or the Bali Roadmap; doing that we miss the point the Kyoto party countries have indeed succeeded in what was wanted, namely to corner the US administration and give a placeholder for the next, more ambitious administration. Here is how it works.
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(pointcarbon, Oslo)OMX Nordic Exchange on Friday announced it will purchase several of Oslo-based Nord Pool’s activities, including its carbon credit market, and is now looking to establish a broad CO2 market on its platforms.
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(pointcarbon,Oslo)Polish internet-based power and carbon dioxide trading platform Poee and Germany’s European Energy Exchange (EEX) will link up spot markets for European CO2 allowances next year.
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(pointcarbon, Oslo)German government-owned bank Kfw has been picked to sell up to 80 million EU allowances on behalf of the German government in 2008 and 2009, according to the environment ministry.
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(Pointcarbon, Oslo)The price of carbon on Thursday continued to make small gains in response to a move higher across the energy complex, particularly in the price of natural gas.
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(pointcarbon, Oslo)The European commission will propose auctioning two-thirds of all EU allowances in the third phase of Europe's cap-and-trade scheme for carbon dioxide emissions and an EU-wide emissions cap starting in 2013, according to Jos Delbeke, a senior official with the commission.
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Moments ago, the US Senate Environment and Public Works Committee passed the Climate Security Act, a bipartisan bill, prepared by senatores Liberman and Warner, that would set a hard, economy-wide cap on America's global warming pollution. With the Senate having taken the first historic step of passing a climate bill out of committee, now the House will discuss their related proosal (see press release Environmental Defense).
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(pointcarbon)European carbon for next-year delivery firmed Tuesday morning on the back of stronger German power and oil, with a higher fuel-switch level lending support, traders said.
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LONDON - One in five carbon credits issued by the United Nations are going to support clean energy projects that may in fact have helped to increase greenhouse gas emissions, environmental group WWF said on Thursday. The United Nations runs a scheme under the Kyoto Protocol that allows rich nations to invest in clean energy projects in developing countries and in return receive certified emissions reduction credits (CERs) to offset their own emissions.But WWF said in a report that the credits are being delivered to projects that would have gone ahead anyway, even without the extra incentive provided by UN approval under the scheme, called the Clean Development Mechanism (CDM).
The report, prepared by Germany's Oeko Institute for Applied Ecology, said projects lacking this so-called 'additionality' help increase gases blamed for global warming by giving firms a spurious justification for continuing to pollute.
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(Pointcarbon, Oslo)The price for European carbon dioxide allowances could rise next year if member states delay auctioning their permits to pollute in the face of a supply shortage, analysts say.
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(Pointcarbon, Oslo)Carbon prices edged slightly higher this morning, brushing aside bearish signals from other commodities, according to traders.
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Climex Exchange is supporting the market by currently offering trading fees of only 0.5 cent per traded tonne first Phase EUA and 0.25 cents per tonne traded for OTC transactions of 50.000 tonnes and above
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Climex Exchange has developed Intermediary Functionality to make traders' lifes easier.
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In December 2007 Climex will start to sign up members who want to use spot trading for the trade of multiple products simultaneously. Current spot-members of Climex will automatically have access to the spot trading of first and second phase EUAs and CERs combined on one screen. They will be contacted to inform them about all the extra possibilities.
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On 7 November 2007, the European Court decided that Germany’s ex-post corrections (retroactive adjustments) are legal. The German Government decided to impose ex-post corrections, because the allocation of CO2 permits to companies for the 2005-2007 trading period was based on projected emissions.
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(pointcarbon, Oslo)Switzerland's carbon emissions trading scheme will cover 3-3.5 million tonnes of carbon dioxide emissions from around 500-600 installations when it starts in just under six weeks, according to an official with the Swiss environment ministry
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(pointcarbon, Oslo)The price of European carbon for delivery next year hit a five-and-a-half month high during trade on Wednesday, as concerns over whether the EU and UN carbon market would be linked in time to allow imports of cheap offset credits in 2008.
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European carbon credits hit a 5-month high on Tuesday (€ 23,68) as the market rallied on higher natural gas and weaker coal prices, and as a trading snag raised fears of a bottleneck in supply of cheap carbon offsets. The European Union's emissions trading scheme (ETS) will now not link with a UN-run Kyoto Protocol scheme until 2008, the UN said on Tuesday, raising fears of an EU shortage of carbon offsets imported from developing nations, under Kyoto.
The link had been expected to complete in 2007, and a shortage of offsets would raise the demand for and price of EU emission permits, called EU allowances (EUAs). "The EU ETS will be linked to trading under the Kyoto Protocol next year," the UN's climate change body said in a statement.
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(pointcarbon,Oslo)Singapore Exchange Ltd (SGX) could become the latest in a long line of trading platforms to offer carbon contracts after announcing it is conducting research into creating a range of financial derivatives, including property derivatives, Asian credit derivatives and carbon trading.
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(pointcarbon, Oslo)European CO2 allowances for next-year delivery lost around 1.75 per cent of their value in early Thursday trade on the back of softening German power and UK gas prices, traders said.
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Pointcarbon, OsloThe price of European carbon for next year delivery firmed marginally during trade on Friday, as higher continental power and UK gas prices underpinned demand.
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Pointcarbon, OsloUN expert groups have so far said that 12 countries are set to achieve eligibility under the Kyoto protocol and be cleared to participate in international emissions trading next year.
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NEW YORK - Some of the biggest US exchanges are eyeing a piece of the global carbon trading market, which is expected to double in size by 2012 from current levels as governments and industry step up efforts to reduce pollution. The market for trading carbon emissions reached 22 billion euros (US$32 billion) in 2006 and will cross 40 billion euros (US$58 billion) by 2012, according to a report by Boston-based research firm Celent. "The opportunity is that it's a new product area that's not traded very heavily on exchanges right now," said Niamh Alexander, an analyst at Keefe, Bruyette & Woods. "Lots of exchanges are likely to come up with different structured products to participate in that market," she said. Analysts said carbon trading is likely to be among the slew of lucrative new products that exchanges are racing to offer customers. Exchanges the world over are buying stakes in each other to take advantage of new technologies that allow customers to swiftly trade a variety of products, from currency options to weather futures, across national boundaries.
New York Stock Exchange operator NYSE Euronext recently said it has partnered with French bank Caisse des Depots (CDC) to launch a carbon trading market in early 2008.
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European Union states may make changes to their carbon emissions plans for 2005-2007, an EU court ruled on Wednesday, dealing a blow to the key regulator of the bloc's emissions trading system. The EU's Court of First Instance ruled Germany may take away excess carbon permits handed out to companies during the first trading phase of the scheme and put them in a separate reserve. The ruling came as a setback to the European Commission, the regulator of the climate change scheme, which said attempts by Germany and other EU states to change their emissions allocation plans with "ex-post adjustments" after approval from Brussels were incompatible with EU law.
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(pointcarbon,Oslo)European Energy Exchange (EEX) and financial derivatives exchange Eurex will launch option contracts for EU allowances and Kyoto project credits over the next two years, the companies told reporters in London today.
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(pointcarbon,Oslo)The price of European carbon for delivery next year fell to a seven-week low in early trading on Tuesday, depressed by a combination of flagging European coal and power prices and technically-related selling, traders said.
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(pointcarbon, Oslo)Budapest-based consultants Vertis Environmental Finance has changed its market outlook to "perplexed" after the European commission ruled that German companies will be allowed to surrender Kyoto project credits up to 22 per cent of their EU carbon permit allocation, it said today.
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(Oslo, pointcarbon)European carbon allowances fell around 2 per cent during morning trade on Thursday, on the back of poor liqudity and softer German power.
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Europe’s carbon price for delivery next year shed 3.8 per cent in early trading on Wednesday, with profit-taking amid weak prices in the energy complex dragging the carbon market down for the second consecutive session, traders said.
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29 oktober 2007
LISSABON (Energeia/ANP) - De Europese Unie wil samen met zestien Amerikaanse staten, zeven Canadese provincies, Australië en Nieuw-Zeeland komen tot een gemeenschappelijke markt voor de handel in CO2-rechten. Maandag sloten vertegenwoordigers van de deelnemende landen, staten en provincies in Lissabon een partnerschap dat gaat onderzoeken hoe de emissiehandelssystemen gekoppeld kunnen worden.
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For the first time since 4 Months the CO2 price for 2008 EUA futures is at the € 23 level. Speculators and funds are waking up again. After some profit selling last 2 weeks and a small price drop, the CO2 price remains at that level. The daily transaction volume has been now and than between 5 and 7 Mton again. The high oil price itself ($ 100/barrel) seems to have less impact on the CO2 Price, as it did in 2005 and 2006 when CO2 prices were peaking at € 30. Of course did the bullish energy market play some role in the current increase of gas and coal price. German utitilies already announced upcoming power price increases. Main trigger for this price level is the expected long term shortage of EUAs, instigated by the EU press release">European NAP decisions, causing a 9,4 % cut compared to proposed NAP-2 and a 10% cut compared to NAP-1 (see entire posting)
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On Oct 29 leaders of nations and states with national and regional CO2 cap-and-trade systems will convene in Portugal to launch the International Carbon Action Partnership (ICAP). The aim of this high level gathering is to establish an expert forum to discuss relevant questions on the design, compatibility and potential linkage of regional carbon markets. See the declaration. Important is that is says it will support te UN process in developing a gobal market. So, it will suport and not disturb the Climate Convention (UNFCCC) and Post Kyoto process. Speakers at the event include: Sócrates, President of European Union, Barroso, President of European Commission, Governor Schwarzenegger (CA), Governor Spitzer (NY), Governor Jon Corzine (NJ), Premier Campbell (British Columbia, Canada,, Gabriel, Federal Minister for the Environment, Germany, Timmermans, Minister of EU Affairs, Netherlands, John Hutton, Secretary of State UK.
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(Reuters) European industry will have to emit 10% less CO2 than governments had wanted from 2008-12, after the European Commission tried to put the bloc back on track to meet its Kyoto targets on Friday. Industry got too many emissions permits in the first trading period of Europe's carbon trading scheme from 2005-07, harming the credibility of Europe's flagship weapon against climate change and heaping pressure on the EC. Many EU states are well behind their binding, 2012 greenhouse gas emissions targets under the Kyoto Protocol on global warming, notably Spain, Portugal and Italy.
The Commission only accepted proposed emissions quotas for the next phase of the scheme, from 2008-12, for Britain, France, Slovenia and Denmark, in an approval process which started last year and ended on Friday with the last two decisions, to cut emissions for Bulgaria and Romania.
"We have assured a robust market with real emission reductions which will constitute an important contribution to meeting our Kyoto target," EU Environment Commissioner Stavros Dimas said in a statement.
National governments had tabled requests for 2.3 billion tons, 12 percent more than the final quota of 2.1 billion. The EU scheme is meant to give industry a shortage of permits to emit the planet-warming CO2, and is being closely watched in the United States where senators have tabled proposals to introduce a carbon market. This time the EC has got it about right, analysts say, estimating a shortage of permits equivalent to about 250 Mton of CO2 emissions per year from 2008-12.
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(Pointcarbon, Oslo) The price of European CO2 allowances for next-year delivery closed €0.15 higher today, pushed up by demand from German utilities, according to traders.
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(pointcarbon, Oslo)French state bank Caisse des Depots and NYSE Euronext, an international stock exchange, today announced they would open a global CO2 exchange in early 2008.
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(Pointcarbon, Oslo)The boards of the main French and German power exchanges are set to make a decision on a possible merger, but the exchanges have no plans for a joint carbon trading platform.
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(pointcarbon,Oslo)The price of European carbon moved sideways during morning trade, despite softer coal and firmer European power prices swelling the profits of coal-fired power plants
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(pointcarbon,Oslo)Romania could see the number of EU carbon allowances it can issue to its industry slashed by 23 per cent, while Bulgaria will see its allocation reduced by 21 per cent, according to research published today by Deutsche Bank.
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EU emissions Allowance prices broke out of a three-week slumber Wednesday and hit levels not seen in over three months, as utility buyers won the day over financials. December 2008 delivery EUA prices reached an intra-day high of €22.30 ($31.33) on the European Climate Exchange in mid-afternoon, as utilities were reported to be busy selling forward power for 2008 delivery and hedging their fuel and carbon exposure at the same time. Early in the session financial players were reported to be the main sellers, keeping a lid on prices at €22.00 and below with sustained selling into the utility demand. (Source:Platts)
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(point, carbon, Oslo)The price of carbon rose to a 14 week high of €22.10 on Wednesday, after a morning of struggling to break through the €22.00 level after one large European utility was said by traders to be stifling any move higher in the benchmark 2008 contract.
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(pointcarbon, Oslo)Denmark's CO2 emissions up 16.1% in 2006 on coal consumption
Denmark's CO2 emissions rose 16.1 per cent in 2006 compared to the previous year on the back of strong economic growth and electricity exports from coal-fired power plants, according to statistics released today.
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LONDON - The European carbon market will probably see a continued over-supply of emissions permits through 2008-12, damaging the credibility of the climate change policy, energy consultants Wood Mackenzie [see here] said on Tuesday. Carbon markets are meant to drive cuts in greenhouse gases blamed for global warming by ensuring a shortage when issuing emissions permits for heavy industry. But the European emissions trading scheme (ETS) allows affected businesses to buy additional permits, or carbon offsets, from developing countries outside the scheme. The report estimates approximately 560 million credits will be required in Phase II but that the number of available CERs could reach nearly 770 million, creating a surplus of approximately 40 million credits per year. This will occur against the backdrop of no net abatement in European CO2 emissions. Our analysis shows that the European Commission is likely being too lenient in the allowance of (offset) imports." [Source: Reuters]
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(Pointcarbon,Oslo) German emissions could fall by 26 per cent at €20/tonne: McKinsey
Germany's greenhouse gas emissions could be lowered to 26 per cent below 1990 levels by 2020 at an average cost of €20.00 per tonne of CO2 equivalent, according to analysis by consultants McKinsey published today.
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The battle to beat climate change has come down to one weapon -- the price of carbon. And analysts say it is not working. Much lip service has been paid to cutting climate warming carbon emissions through measures such as improved energy efficiency, technological innovation, reduced demand, higher standards and carbon output restrictions. But in most cases the vital incentive is supposed to be provided by achieving a high price for carbon, from which all else would follow. Neither has happened and time is running out.
"The policy instrument of choice pretty well everywhere is a price for carbon, and it is not going to work," said Tom Burke of environment lobby group E3G. "To stop climate change moving from a bad problem getting worse to a worse problem becoming catastrophic, you have to make the global energy system carbon neutral by 2050 -- and that will not happen just using carbon pricing." [source; Reuters]
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(pointcarbon, Oslo)The price of carbon in Europe’s emissions trading scheme on Thursday continued its recent move higher as utilities across Europe were busy in the market, traders said.
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( pointcarbon, oslo)Japan’s power industry to acquire 70 million carbon credits: report
The Federation of Electric Power Companies of Japan (FEPC) has said its 10 members and two other companies are likely to buy around 70 million carbon credits by the end of 2012.
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(pointcarbon, Oslo) European ETS commentary: 2008 carbon drifts
European CO2 allowances for 2008 delivery drifted slightly downwards Monday as the contract could not sustain prices around the €21-level.
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( pointcarbon) Kyoto projects approved by Japan could yield almost 100 million credits
Greenhouse gas (GHG) emissions set to be achieved by Japanese government-approved Kyoto projects has reached nearly 100 million tonnes of CO2 equivalent per annum, according to government data.
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See Pointcarbon's press release here.
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( pointcarbon, Oslo)14.09.07 Midday market update: Carbon largely unchanged
The price of carbon was barely changed during Friday morning trading, as much of the market appeared reluctant to take major new positions after some brisk selling on Thursday afternoon
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( pointcarbon, Oslo)4.09.07 Road transport candidate for carbon trading: report
Including cars in the EU emissions trading scheme is an alternative if auto makers fail to meet EU emissions standards, Germany’s Deputy Economy Minister Joachim Wuermeling told the Berliner Zeitung.
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12 September 2007
Press Release, for immediate release
A total of approximately 350,000 VERs will be on offer in what will be the first VER auction on the Climex Exchange. The auction is scheduled for 18 October 2007.
Ecocem, a privately owned company with head-office in Ireland, will be selling 150,000 issued VERs from environmentally friendly cement. L2I Financial Solutions, based in Canada, is coordinating the offer of 100,000 issued VERs from a waste diversion project in Canada and 100,000 issued VERs from a deforestation avoidance project in Belize. All VERs have been validated and verified by acknowledged verifiers and accredited with the VCS standard.
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( pointcarbon, Oslo)Carbon finance to play key role in post-2012 deal, German environment minister
An expanded international carbon market will play a major role in stimulating low-carbon technology development, said German Environment Minister Sigmar Gabriel in Berlin today
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(pointcarbon , Oslo)Japan’s environment ministry announced on Tuesday that under its Voluntary Emissions Trading Scheme, participant companies slashed their carbon dioxide (CO2) emissions by a total of 29 per cent in fiscal 2006, which ended in March this year.
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Power producers are starting to safeguard their compliance position for 2008 and further, now their holidays are over. This causes a bullish sentiment for now of the EUA price to almost € 23 for the 2012 futures contract. Near 6 Mton has been traded today. This led to an increase of the EUA-CER spread of about € 4; this spread was dropped from € 5 to € 2 since July [see here]. This spread offers the market interesting options again. Nobody knows whether power companies have already used up their CER compliance option for 2008 and whether industrials will use this option at all. Certainly trading houses will step into this vacuum. Some volatility is expected for the CO2 price next week.
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Now that the pioneering first phase of the EU ETS within the framework of the Kyoto Protocol comes to an end, other jurisdictions initiate emissions trading systems as well. While considering the carbon market as a global commodity market, there may be analogue markets to draw lessons from. Several commodity markets (oil, natural gas) use an accepted set of standards to achieve global reach, notwithstanding the heterogeneity of those standards.
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EU and UN Agree Long-Awaited Carbon Market Link. A long-awaited trading link between carbon markets in the European Union and under the UN-sponsored Kyoto Protocol on global warming should be completed in November, EU and UN officials said on Thursday. The statements calmed market doubts about the timing of the link and sparked sales of EU carbon emissions permits.
The European Union plans the switch on Nov. 17-18, barring any technical problems, a European Commission official said. The official said two trial runs on the link would take place before that weekend.
"If those work out well, then the planning is (for) that weekend," the official said. "If it doesn't work, then it will be later."
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28.08.07 Midday market update: EUAs firm 1.5% in early morning trade
European CO2 for delivery next year recovered to Friday’s levels, with demand from German utilities and short-covering by some financial institutions providing underlying strength, traders said.
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On 17 October 2007, New Values holds a workshop in Duisburg, Germany, together with EnergieAgentur.NRW (German energy agency) and NRW.Bank (a German bank) for medium sized companies in Germany. In a hands-on online trading session, the participants have the opportunity to learn about different compliance instruments for the second phase EU emissions trading system and find out how easy it is to buy and sell emissions certificates on the Climex Exchange.
More information can be found in German in this posting.
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The Lithuanian Environmental Investment Fund will offer 552,000 EU Allowances (EUAs) for sale by online auction. The auction will take place on 10 September 2007.
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23.08.07 European ETS commentary: CO2 ends up on rebounding energy prices
European carbon prices rose more than 1.0 per cent on Thursday, with rebounding energy prices – oil, gas and German power – helping the CO2 market recover somewhat from a four-month low hit in the previous session, traders said.
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(Pointcarbon, Oslo) 23.08.07 Midday market update: 2008 CO2 firms in quiet trading
Europe’s CO2 price for delivery next year moved into positive territory amid light compliance buying in late-morning trading Thursday, although the market lingered near a four-month low hit in the previous session, traders said.
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Kyoto projects could generate $100 billion: UN
Demand for projects that generate greenhouse gas emission-reducing credits could be as high as 6 billion tonnes of carbon dioxide equivalent and total as much $100 billion (€74 billion) in 2030, according to a new UN report.
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( Pointcarbon, Oslo) Denmark targets CO2 emissions in tax reform
The Danish government has scrapped a threshold on energy taxes, in a move the country hopes will lower carbon dioxide emissions by 400,000 tonnes per year.
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( Pointcarbon, Oslo) Denmark targets CO2 emissions in tax reform
The Danish government has scrapped a threshold on energy taxes, in a move the country hopes will lower carbon dioxide emissions by 400,000 tonnes per year.
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According to a recent Point Carbon publication [see press release], greenhouse gas emission permits and credits were traded for €15.8 billion in the first six months of 2007 as compared with €22.5bn in all of 2006, an increase of 41% in annualised terms. A total of 1.2 billion tonnes of CO2 equivalent were traded in the first half of the year, up 45% on the same period in 2006.
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For further informational check the website of STX
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Morgan Stanley have launched the Morgan Stanley Carbon Bank to assist clients seeking to become carbon neutral [press release]. The new service is being offered in conjunction with Det Norske Veritas (DNV), a carbon certifier. Morgan Stanley claims it is the market’s first broadly offered service providing integrated carbon verification and offsetting
capabilities, aiminng toi apply the highest recognized international standards.
This can be seen as a further step to a professional carbon offset market. See also our previous posting: Competing Standards for Voluntary CO2 Offsets...
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LONDON - Huge profits made by London-based brokers who arrange emissions-cutting projects in developing countries contrast [CERs] with little benefit for the world's poorest nations, company and United Nations data shows. The Kyoto Protocol on global warming allows rich countries to meet greenhouse gas emissions targets by paying poor nations to cut emissions on their behalf, using the so-called clean development mechanism (CDM).
But evidence is emerging that while brokers stand to make enormous profits, least developed nations, especially in Africa, will get next to nothing -- raising questions over whether Kyoto is fulfilling its social as well as environmental goals. "We're either going to have bend the rules and be softer with CDM in Africa or forget it and give them more aid," said Mike Bess, an Africa specialist working for London-based project developer Camco. [Reuters].
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OSLO -(Dow Jones)- International commodity exchange Nord Pool said Monday that trading of global carbon contracts has got off to a good start since it was launched June 1. The exchange said more than 1.7 million tons of carbon dioxide have changed hands since its members began trading certified emission reduction, or CER, contracts, with steady growth recorded month by month. In August to date, 1.13 million tons of CERs have been traded. That compares with 145,000 tons in the first month of trading, in June. "The market has welcomed the new global carbon contracts and we believe it is very important that the members can trade and clear standardized CER contracts in a secondary market," Nord Pool's Chief Executive Torger Lien said.
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Deutsche Bank has raised its average price forecast for EU carbon credits to € 35 per tonne for 2008-20 [see here]. The bank previously predicted an average price of € 25 per tonne for the second trading period of the EU emission trading scheme, 2008-12. It has upgraded this and introduced an estimate for phase three, which it expects to run from 2013-20.
The EU's goal to cut emissions by at least 20 % by 2020 will require a very tight cap on industrial carbon emissions during the third trading period, says Deutsche Bank. It predicts that allocations will have to be cut by 17 % or about 370 Monnes compared with phase two.
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A new offsetting code is to be launched by the government later this year, as a response to widespread criticism of the carbon offsetting industry. Established by DEFRA, the new voluntary Code of Best Practice will spin out from a host of recommendations made in a consultation launched in January of this year. The Code will be voluntary, meaning that offsetting providers or companies that sell offsets alongside their goods and services will be able to choose whether they want to seek accreditation for some or all of their products. "People need to be sure that when they buy an offsetting product the emissions reductions are actually taking place, which is why we are developing this Code, which will be accompanied by a quality mark for accredited products," said Joan Ruddock, Minister for Climate Change, Biodiversity and Waste. But last month, trading association European Carbon Investors and Services (ECIS), consisting of several banks and financial institutes launched its own voluntary carbon standard. And IETA today announces a new Global Voluntary Carbon Standard (VCS), which is also being promoted by the Climategroup, the World Business Council for Sustainable Development and the World Economic Forum.
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The decision when to link European and UN carbon trading schemes, to allow carbon credits to flow from developing countries into Europe, will be decided in the autumn, UK officials said on Wednesday. A European carbon market puts a cap on industry emissions of such gases, but allows companies to meet these targets partly by buying carbon credits from developing countries, under a UN trading scheme. The first major market contract for delivery of such credits falls due on 1 December 2007, but a technical link between European countries and the United Nations isn't ready yet. "There'll be a decision in the autumn when to make the switch... when sufficient member states are ready," said UK environment ministry official Martin Hession, adding that it was up to the European Union's executive Commission to decide exactly when. -REUTERS-
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Norwegian Prime Minister Jens Stoltenberg on Wednesday accused the European Union of "protectionism" for limiting the amount of offset carbon dioxide emission quotas that can be bought from developing countries.
"The EU wants most of the offset quota purchases to be made within the EU," Stoltenberg told the Norwegian daily Aftenposten, adding that the policy qualified as "protectionism".
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As prices on the carbon market move downwards, players say that financial institutions are the driving force.
This week the settlement price of the bellwether December 08 contract has dropped from EUR 21.12/t (9 July) to EUR 20.67/t (11 July) on the ECX. “The financials are selling,” one continental carbon analyst argued, adding that liquidity on the market was lower. He was of the opinion that the market saw mostly speculative trading.
So far today, the December 08 contract has traded between EUR 19.75/t and EUR 20.55/t, with the last trade at EUR 20.10/t (-0.57) on the ECX. “The low prices are exaggerated,” the analyst maintained. He believes that the market might see a correction in the not so distant future. “Maybe the market will hit some stop-loss limits,” he noted, adding he was convinced that the market would bottom out and prices rise again. Source: Montell Power News.
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European environment ministers have agreed to revise the EU's CO2 emissions-trading scheme with the aim of clamping down on weak caps proposed by member states and ensuring that all significant emitters pay the right price for their pollution. EU ministers called on 28 June 2007 for a full review of the emissions-trading scheme.
Responding to criticism that too many allowances have been handed out in recent years, ministers agreed that the cap-setting mechanism for member states should be bolstered, giving governments fewer opportunities to over-allocate. They also said that a larger number of credits should be auctioned in the future, rather than given to companies for free – a move so far resisted by companies. But a move towards 100% auctioning – as demanded by green groups – still appears unlikely, with ministers instead calling for a minimum rate to be established [source: Euractiv].
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Dubai has launched a bid to become a centre for trading greenhouse gas emissions permits, diving into a fast growing market and the potential to turn the region's sizeable carbon footprint into cash. Famed for its man-made islands, non-stop construction and cavernous air-conditioned shopping malls, Dubai is part of The United Arab Emirates, one of the highest per capita producers of greenhouse gas in the world. State-run Dubai Multi Commodities Centre (DMCC) and London-listed carbon-credit company EcoSecurities have signed a deal to try and make Dubai the regional centre for trading carbon offsets. The two are eyeing several projects in the United Arab Emirates that could cut greenhouse gas emissions and generate carbon emissions reduction certificates (CER) under a United Nations scheme. Later, they will look at similar projects across the rapidly growing economies of the Middle East. "For sure, it is on our agenda to launch a futures contract on carbon emissions," Tilak Doshi, DMCC's executive director of energy told Reuters. "It is very hard to say when. There must be trade (first)." The market in the Middle East is still nascent.
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-REUTERS- Global warming is the focus of at least seven bills on Capitol Hill, but whether any of them will become law before President George W. Bush leaves office in 2009 is a matter of keen debate. At this point, there are no front runners -- just bills with some chance of prevailing in some form and those that are dead on arrival, industry and environmental analysts said. A comprehensive US law to address the challenges of global climate change is at least two years away, the analysts said. Wall Street, however, has begun to prepare for possible changes, including a US market on greenhouse gases.
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(Montel Powernews) - The December 08 carbon this morning strengthened for the fourth day in a row, following strong buying interest from utilities and financials which yesterday lifted the closing price of the contract over 60 cents to EUR 21.84/t.
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REUTERS - The price of EU carbon emissions permits fell 9% on Wednesday as investors cashed in on a three-month bull-run, in the busiest day ever for the benchmark contract. The fall on the European Climate Exchange, to as low as 22 € came at the end of a strong rally since mid-February. The closing price on Wednesday, at 23 €, was still up over a quarter since the start of the year. "Primarily you've got serious profit-taking, and as is always the case when everyone exits at the same time the price falls," a trader said. "Plus German power has turned around (down) again, which allows utilities to buy back power contracts they'd sold and sell carbon," he added.
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The Environment Service [DCMR] of the Rotterdam harbour and industrial area [Rijnmond] published today a large study, showing that CO2 capture, transport, storage and party storage [CCS] can be done against a cost of € 24 per ton CO2 within 5-10 years. That means that against todays post-2008 carbon prices CCS can be payable and even beneficial post 2012.
The total plan shows a CO2 storage potential of 20 Mton per year. The specific location of Rotterdam, with the large and concentrated CO2 sources; refineries, petrochemicals and coal fired power plants, available industrial waste heat for CO2 capture, many horticulture houses with CO2 demand and the Harbour for shipment into North Sea gas fields appear to make CCS more affordable than elsewhere. The Rotterdam area has currently 20% of the national CO2 emissions; in the future that will be 25%. The study says that no additional subsidies are needed, when the government organises the transport of CO2 with a pipeline infrastructure and when CCS is correctly linked with the EU ETS; the Dutch Second Allocation Plan allows CO2 storage.
A study published last week [Energy Transition] showed that cost of CCS amounts to € 40 when it is done in emptied gas fields in the North of the Netherlands with CO2 coming from coal fired power plants. But there no industrial waste heat can be used for capture and storage.
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President Bush surprised the world with his sudden call for global greenhouse targets and offering to bring together the largest polluting countries to come to an agreemenmt on this, before the end of 2008. US NGO Environmentals Defense said in reactionthat the requisite first step for the President to have credibility in convening other nations will be the enactment of bipartisan legislation, now under consideration in Congress, to reduce emissions through a mandatory cap and trade system [press release]. A growing number of leading U.S. companies have called for tough emissions reduction targets with trading, and the administration should set the example for the world by working constructively with U.S. lawmakers to pass a cap and trade bill. "A new willingness to engage in international negotiations is a positive step, but the administration needs to turn words into action. The president will lose the opportunity to lead internationally if he fails to show leadership at home."
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Banks are jostling for a piece of what may be the world's fastest growing market, trading carbon emissions permits: Citigroup has just waded in, Bank of America is set to and Deutsche has doubled its team.
Societe Generale, Fortis Bank and Morgan Stanley have all added to their carbon trading desks this year.
Global carbon market traded volumes were worth less than US$1 billion in 2004, US$11 billion in 2005 and over US$30 billion last year, according to the World Bank.
Rejection of the fledgling market by the world's biggest carbon emitter, the United States, as well as a price collapse last year have not dented hopes it will be a key plank in the world's response to climate change.
"It's got beyond the phase where people thought it's a flash in the pan," said Deutsche's Mark Lewis, who became a full-time carbon analyst last month.
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According to a recent report of Man Investments the rapidly developing carbon trading markets are creating a range of promising opportunities for hedge funds to participate in this new market. Man sees expects continued rapid growth, particularly if the US and China in due course join in and establish their own carbon markets, as is widely anticipated.
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NEW YORK - Reuters -The New York Mercantile Exchange is considering trade in global warming emissions credits, a bourse senior executive said Wednesday. "We have been looking at it, and will continue, and think it has promise," Robert Levin, senior vice president of research at NYMEX, told reporters. He said NYMEX had no set timetable to launch the emissions. The global carbon market last year tripled to US$30 billion, with the lion's share taking place on the European Union's emissions market, according to the World Bank. The EU launched the market in 2005 to help countries meet their emissions obligations under the Kyoto Protocol on global warming.
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reuters: The European carbon market should link with carbon trade under the UN-sponsored Kyoto Protocol in time to allow the settlement of a widely used contract on Dec. 1 this year, EU and UN officials said on Friday. This means linking the nationals CO2 Registries with the Kyoto carbon market framework via the International Transaction Log [ITL]. "I would expect the 1 December deadline should be achieveable without any trouble," UN official Andrew Howard said.
The European Commission wants all 27 European Union member states to link simultaneously, but that deadline may be a problem for new EU member states Bulgaria and Romania, said European Commission climate official Artur Runge-Metzger. "From our side there's certainly political commitment to make the connection happen. We are certainly aware that there may be a problem with Bulgaria and Romania." "When it comes nearer to 1 December we'll have to decide how much damage will be done by leaving one or two member states out."
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Windfall profits that power generators are making from Europe's carbon market are damaging the integrity of the scheme, a senior European Commission official said on Thursday. "It's undermining the credibility of the scheme. It would be helpful if participants think very hard about it," said Jos Delbeke, director at the EC's climate change directorate, speaking at a World Bank-sponsored carbon conference. Europe wants to show the world its flagship climate policy is working, ahead of global climate change talks in December in Bali, Indonesia, on a deal to extend the Kyoto Protocol.
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(Montel Powernews) - Despite its efficiency, the EU ETS alone will not solve pollution problems in Europe or the world, said Magid Shenouda, managing director of fixed income and commodities at Goldman Sachs.
Shenouda told delegates at the Carbon Expo conference in Cologne that political decisions were an important price driver for the carbon market, but far more significant factors were the oil prices and the weather.
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Source: Montel Powernews) - The second phase Dec. '08 contract has been gradually gaining in value this week after a substantial drop in prices before Easter, seemingly triggered by the release of the verified emissions data for 2006. Today the contract has traded at EUR 16.80/t (+0.15) at the lowest, climbing at one point to 17.15 (+0.50) on the ECX. The contract seems to have currently stabilised in a 17.00-17.05 range. One market player said today that price levels are returning back to the levels seen at the end of March when the contract traded as high as 17.70 on the ECX. “The drop [after the release of the verified emissions 2006 data] made no sense but the market players are realising that now and the prices are moving up again,” the player said.
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"Linkup test with Japan and New Zealand was successfull; EU to follow testing in April.May. Link-up before CER delivery date December 2007 is feasible". See Press release UNFCCC Secretariat, April 2
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Greenwire The Bush administration may not be ready to join international talks on the next binding treaty to address global warming. But that isn't stopping California. After a week of meetings across Europe, California EPA Secretary Linda Adams said yesterday she expects her state and perhaps others to form a trans-Atlantic union starting in 2012 to reduce heat-trapping greenhouse gas emissions. "The timing is really good," Adams said in an interview at the United Kingdom's regal Foreign & Commonwealth Office headquarters here. "We found all the right people to move forward on that."
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BRUSSELS/LONDON - European industry's emissions of the greenhouse gas carbon dioxide in 2006 once again undercut their quota of free emissions permits, as in 2005, preliminary data showed on Monday. The figures further undermined the 27-nation bloc's flagship weapon against climate change, although Brussels was quick to state that the European Union was still on track to meet its emissions targets under the Kyoto Protocol on global warming.
Europe's carbon market is supposed to curb emissions of CO2 by handing heavy industry like steel mills and power plants too few emissions permits, forcing them either to clean up or buy extra allowances. Instead, last year as in 2005, the first year of the scheme, companies got a surplus -- all but consigning the market's first trading period from 2005-07 to the status of experiment. "I think the first phase shows you have to have the politics and the market right," said Nick Mabey, the chief executive of E3G, an environmental group focused on sustainable development. "Markets aren't magic, they only work if the politics creates scarcity."
To salvage the market's credibility Brussels has taken a tough line with member states for the scheme's second phase from 2008-12, demanding further cuts to 14 out of the 17 proposed quotas it has ruled on so far.
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Greenwire. Members of the US Congress have begun dissecting European climate policies for guidance in crafting a U.S. effort to reduce greenhouse-gas emissions. House Democrats pressed at a hearing yesterday for a better understanding of the European Union's three-year-old, cap-and-trade system for greenhouse gases. Meantime, top Republicans quizzed witnesses on the costs the E.U. system has imposed on consumers and industry in its 27 participating nations. "We intend to gain the full benefit of the European experience with cap and trade ... as we design a mandatory control program for the U.S.," said Rep. Rick Boucher (D-Va.), chairman of the House Energy and Air Quality Subcommittee.
Jos Delbeke, climate change policy chief at the European Commission, said Congress could learn from his program's mistakes."Keep the system simple," he said. "That gives the maximum amount of clarity and the maximum of certainty to all those involved."In an interview, Delbeke warned lawmakers to set up a program with some similar traits so that they could have a better chance of linking up with each other. And he urged Bingaman not to follow through with plans to push for a "safety valve" price limit on carbon dioxide credits -- something the Europeans did not consider."We don't think it's a good idea because it destabilizes the expectations," Delbeke said. "You may get all kinds of perverse reactions."
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Dear Climex member,
On Monday 26 March and if necessary also on Thursday 29 March New Values will be executing auctions on the Climex Trading Platform for the sales of European Allowances (EUAs) from the Hungarian Government. The Climex Alliance partner euets.com has been coordinating the selling.
We would like to inform you about some crucial preparations and proceedings for these auctions.
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[Pointcarbon] Barcelona-based Sendeco2 will open an Italian branch of its electronic CO2 exchange in April, it announced on Friday. Sendeco2 launched its Spanish operation in December 2005 and set up a Portuguese exchange last month. On Friday it set up a representative office in Milan, in preparation for the launch of an Italian exchange, the company said in a press release. “It is of utmost importance to convey as soon as possible to the whole range of companies of the Italian market the efficiency and transparency created by a pan-European CO2 Exchange such as SENDECO2,” commented Pietro Valaguzza, managing director of the Italian operation in the press release. Sendeco2 targets primarily small- and medium-sized companies. It is a member of the Climex alliance, a network of European electronic CO2 exchanges which includes New Values and Vertis Environmental Finance.
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LONDON - Permits to emit greenhouse gases could be the hottest new commodity among city traders, speculators and investment bankers -- if only someone knew what they were worth. A swelling carbon investing community gathered in Copenhagen this week to trade analysis, gossip and most importantly carbon credits -- the rights to emit a tonne of greenhouse gases which policymakers are turning to in an effort to curb global warming.
The price of such permits is not purely of market interest -- the higher the carbon price, the more expensive it is to burn fossil fuels, raising electricity prices for everybody, and some say harming economic competitiveness of affected countries. In practice it seems anyone's guess what permits will be worth over the next five years, partly because of their novelty. "Closer to zero than a hundred euros," said Fortis Bank's Kris Voorspools, making a "mid-range" estimate of 20 euros (US$26.38) for permits traded from next year in a European market. Other analysts at the conference gave estimates for European Union allowances (EUAs) over the next two years ranging from 20 to 40 euros.
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openhagen, March 14 Morgan Stanley and RNK Capital yesterday said at bthe Pointcarbon conference they have completed the first CO2 trade for third phase EU Allowances scheme. The price was settled at 20.05 for a 50Kton CO2 allowances, to be delivered December 2013.
This trade is meant to test the specifics of such a trade and also to try and digest current CO2 price signals, based on the unilateral 20% reduction target of the EU for 2020, where the EU will have to look fopr an additional shortage of at least 200Mt a year. The European Commission said that the EU ETS Directive has no end date, and will continue after 2012, no matter where global climate talks will go.
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LONDON - The decision by European Union leaders on Friday to cut greenhouse gas emissions by a fifth by 2020 strengthens the future of carbon markets both in Europe and under the Kyoto Protocol. Carbon markets allow companies and countries, facing targets to cut their greenhouse emissions, to shop around for the cheapest emissions reduction permits. Such markets depend on tough targets, without which there would be no demand. Analysts and officials said Friday's EU announcement would help to provide those essential goals.
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The Climex trading platform offers spot trading of EU allowances (EUA) and facilitates auctions of EUAs, Kyoto project credits and voluntary credits. Besides New Values, who set up the platform, Spanish exchange Sendeco2 and Hungary's euets.com also trade on Climex.
New Values evaluated the first ETS phase and Climex's role at its third Emissions Trading Masterclass. CEO Axel Posthumus told the audience that Climex was now the second-largest spot exchange in the EU emissions trading scheme, having surpassed NordPool. Powernext remains, by a clear margin, the busiest spot exchange.
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Hungary is preparing the second auction, probably in March; 900,000 ton CO2 EUAs will be auctioned.
1.2 million EUAs were auctioned in December, using euets.com, a trading window of the Climex Alliance. Buyers had been bidding a total volume of 3.42 million EUAs. A total of 1.197 million EUAs have been sold then to optimize revenues, for a price of € 7.42 per tonne [see here].
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[Pointcarbon] Barcelona-based CO2 exchange Sendeco2 said today it will offer members the possibility to swap phase one and phase two contracts for the EU emissions trading scheme. Sendeco2 is a member of the Climex Alliance, a network of electronic exchanges offering CO2 trading to clients in various European regions. The Spanish exchange has only offered spot trading to its members until now, but as of today participants can also trade forward contracts. Sendeco2 members, primarily small and mid-sized companies in the industrial sectors, will not be offered outright trading in phase two EU allowances, but can swap spot contracts and December 2008 contracts, according to a press release.
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PricewaterhouseCoopers' new report, 'Building Trust in Emissions Reporting’ argues that the current CO2 market is like a patchwork of differing schemes. When system rules and acountancy regulations do not come closer, the CO2 Market will not be able to tackle climate change. The key message of the report, which highlights a dozen emissions trading schemes, is that there is a need for a ‘Global Emissions Compliance Language’ to ensure trust in emissions trading.
Though I do admit that systems need to be compatible in order to allow for cross border trade, systems do not not need to be similar. The CO2 Market itself appears to be pretty well capable to internalize systems differences or risks into the CO2 price itself. Condition is that at least emission caps are absolute. Moreover, when there is political will in the US and Australia to cut CO2, they will move closer to the EU design.
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Germany wants to institute a global emissions trading scheme and will float the idea for discussion during its presidency of the Group of Eight industrialised nations this year, an official said on Wednesday.
"It would be ideal if an emissions certificate trading model could be built up internationally," said Deputy Economy Minister Bernd Pfaffenbach, stressing that Germany did not expect to secure a deal during its G8 presidency. Pfaffenbach is also in charge of German preparations for June's meeting of G8 leaders.
"Climate change is an increasing concern. Pfaffenbach said the issue of what to do after the expiry of the UN's Kyoto Protocol, which binds 35 industrial nations to cutting CO2 emissions by 2012, would also come up at the summit. "These issues will be discussed.
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China and the United Nations are working to set up a carbon trading exchange in Beijing, a move that could establish the Chinese capital as a centre for the global trade in carbon credits, according to the UN's top official in China. If successful, the exchange - the first in the developing world - would compete with private sector carbon exchanges in Europe and the US, and would help open further the lucrative Chinese market in carbon credits.
Carbon credits ['CERs' from CDM projects] are issued by the UN under a provision of the Kyoto protocol known as the clean development mechanism, by which developed countries invest in ventures - such as wind farms or hydroelectric projects - that reduce greenhouse gas emissions in poor countries. The credits can fetch $15-$18 on the international market.
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Most of the national, local registries for emissions and emission allowances have now been operational for over a year. Every registry offers its user the possibility to initiate the transfer of allowances using an Internet screen. And it must be said: for both national and international transactions this has been very stable to work with and with very little hiccups. Even though it requires time, both for entering the details as for waiting for the final confirmation.
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The new publication by Environmental Defense, "Harvesting the Low-Carbon Cornucopia: How the European Union Emissions Trading System Is Spurring Innovation and Scoring Results" shows that, while there are a lot more results to sift through, preliminary reports indicate that putting a price on carbon is producing real reductions in heat-trapping gases and innovation in the market to find cost-effective climate solutions. So, while innovation is occurring in many different pockets of Europe, the publication shows a few that give an idea of how carbon trading is taking off and producing real results. The report describes some practical case, that will be also of interest for US legislators, since various cap-and-trade proposals are submitted before Congress.
The report discusses CO2 abatement projects in participating sectors - e.g. Trash to Tulips: The Shell Pernis Refinery - and in non ETS participants - Burning Hog Waste Instead of Fossil Fuels. It discuses the May 2005 CO2 price correction and shows how the ETS should be disigned to enhance its innovatiive character.
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Today, ten major U.S. businesses and four national environmental organizations issued a joint report, A Call to Action, which calls on the federal government to quickly enact strong national legislation to cut global warming pollution. The companies are: Alcoa, BP America, Caterpillar, Duke Energy, DuPont, Florida Power and Light, General Electric, Lehman Brothers, Pacific Gas & Electric, and PNM Resources. They have joined Environmental Defense, the World Resources Institute, Pew Center on Global Climate Change, and Natural Resources Defense Council to form the United States Climate Action Partnership (US-CAP).
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(Reuters) The Dutch government is unlikely to challenge in court the European Commission's decision to reject its proposed emission plan for 2008-12 and demand a cut, the State Secretary of Environment said on Friday. Pieter van Geel told Reuters in an interview that the government generally accepted the EU's executive demand to cut the Dutch emissions cap by five percent given that it was part of the Commission's tough stance on other EU members as well. "We accept this," van Geel said. "All allocation plans so far have been analysed and treated using the same approach by the European Commission, so there will be a level playing field in Europe. This is an important point." Asked whether the Netherlands would consider legal actions, van Geel said: "No, that's not our intention. We are studying the decision at the moment but especially related to the cut of five percent, I don't think that's (a legal challenge) wise."
Brussels on Tuesday set an annual allocation for the Netherlands at 85.8 million tonnes for 2008-12, compared with the country's proposal of 90.4 million tonnes.
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FT, by Fiona Harvey in London, January 17, Companies offsetting their greenhouse gas emissions by purchasing carbon credits on the international carbon markets have been warned to verify that their investments are going towards genuine projects to reduce emissions. An increasing number of companies, including HSBC bank, Marks and Spencer and BritishSkyBroadcasting, are choosing to become “carbon neutral”, meaning they have no negative impact on the climate. This is achieved by reducing a company’s emissions through energy efficiency measures and the use of renewable energy, and then “offsetting” the remainder.
Companies can do this through third party offsetting specialists. However, environmental activists and the British government said companies must do more to ensure their offsetting partners were investing in projects that were yielding real improvements in emissions
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FT, by Fiona Harvey in London, January 17, Companies offsetting their greenhouse gas emissions by purchasing carbon credits on the international carbon markets have been warned to verify that their investments are going towards genuine projects to reduce emissions. An increasing number of companies, including HSBC bank, Marks and Spencer and BritishSkyBroadcasting, are choosing to become “carbon neutral”, meaning they have no negative impact on the climate. This is achieved by reducing a company’s emissions through energy efficiency measures and the use of renewable energy, and then “offsetting” the remainder.
Companies can do this through third party offsetting specialists. However, environmental activists and the British government said companies must do more to ensure their offsetting partners were investing in projects that were yielding real improvements in emissions
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"The climate here has definitely changed according", to FELICITY BARRINGER and ANDREW C. REVKIN from the New York Times (Jan. 17). In todays article they write that legislation to control global warming that once had a passionate but quixotic ring to it is now serious business. "Congressional Democrats are increasingly determined to wrest control of the issue from the White House and impose the mandatory controls on carbon dioxide emissions that most smokestack industries have long opposed. Four major Democratic bills have been announced, with more expected. One of these measures, or a blend of them, stands an excellent chance of passage in this Congress or the next, industry and environmental lobbyists said in interviews.Many events have combined to create the new direction — forsythia blooming in lawmakers’ gardens in January, polar bears lacking the ice they need to hunt and Al Gore’s movie, “An Inconvenient Truth,” along with pragmatic executives seeking an idea of future costs and, especially, the arrival of a Democratic-controlled Congress. There was evidence of the changed mood all over Washington this week.
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"The climate here has definitely changed according", to FELICITY BARRINGER and ANDREW C. REVKIN from the New York Times (Jan. 17). In todays article they write that legislation to control global warming that once had a passionate but quixotic ring to it is now serious business. "Congressional Democrats are increasingly determined to wrest control of the issue from the White House and impose the mandatory controls on carbon dioxide emissions that most smokestack industries have long opposed. Four major Democratic bills have been announced, with more expected. One of these measures, or a blend of them, stands an excellent chance of passage in this Congress or the next, industry and environmental lobbyists said in interviews.Many events have combined to create the new direction — forsythia blooming in lawmakers’ gardens in January, polar bears lacking the ice they need to hunt and Al Gore’s movie, “An Inconvenient Truth,” along with pragmatic executives seeking an idea of future costs and, especially, the arrival of a Democratic-controlled Congress. There was evidence of the changed mood all over Washington this week.
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Prices for the first phase of the European emissions trading scheme will trade on average at €3.00 throughout 2007 as the scheme is oversupplied by 341 million tonnes for the first three years, according to analysis by investment bank UBS.
The research note, published today, suggests that the first phase of the scheme, which runs from 2005-2007, will be 5.4 per cent oversupplied, and could end the year at €1.00. Currently, the December 2007 contract is trading at a record low of €4.45, down 85 per cent from its high recorded in April 2006.
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Sendeco2, Spanish CO2)exchange, trading over the Climex forum, will lauch the Potuguese window this quarter. Javier Tordable told Pointcarbon: “The alliance already has a platform for participants. We are just awaiting the final ok, which should come anytime soon,” Tordable said, noting that an official launch was set to take place over the next two months. Barcelona-based Sendeco2 is currently engaged in broker-type services in Portugal, focusing on small-scale clients until legal authorities give the final green light. Once officially launched, the exchange will provide a spot market for CO2 emissions allowances and carbon credits for Portuguese market participants. The exchange primarily targets companies in the industry sectors covered by the EU emissions trading scheme. Tordable expects monthly trading turnover of about 150,000 emission allowances on the Portuguese exchange.
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Jan.10 the EU Commission published the so-called 'Strategic Energy Review Package' containing 12 documents 'Energy Policy for Europe', 'Limiting Global Climate Change to 2 degrees Celsius; Policy Options for the EU and the world for 2020 and beyond' and 'Sustainable Power Generation from Fossil Fuels: Aiming for Near-Zero Emissions from Coal after 2020'. It will; be discussed at the EU Spring Council, March 8-9.The documents concern future use of fossil fuel in the energy sector, with less CO2 and less dependency on gas and oil import from outside the EU. Below some interesting elements, with impact on the EU ETS will be listed.
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Though most analysts expect CO2 cap-and-trade systemens in place in the US not before 2010, it is expected that US companies will look for acces to the global carbon market to gain credits for early action. Thay might even be competitotrs o the CDM market. See for recent developments in the US the NY Times article of Dec. 28, 2006:
"While the trading of credits to emit carbon is under way in bits and pieces and California has moved to cap its production of greenhouse gases, no one expects nationally imposed limits to go into effect in the United States soon. Most experts see 2010 as the earliest possible date.Even so, a rapidly growing number of American companies are preparing for what they think will be a booming market after rules are approved."
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The delay in the submission of the 'eligibility reports' under the Kyoto Protocol may cause a delay in the use of the Kyoto Mechanims by Germany, Estonia, Greece, Latvia, Luxembourg, Poland, Portugal and Slovenia. The dead line was December 31st. Belgium, Finland, France, Liechtenstein, Lithuania the Netherlands and the European Commission did submit theirs. Countries that don’t comply with the deadline run the risk of delayed access to the transaction of Kyoto credits (CERs/ERUs). That means that those nations' companies under the EU ETS will not be able to have CERs and ERUs on their account for compliance under the Linking Directive. The UN body has 16 months to make a decision on whether or not to approve the initial reports, though they will try to do that faster. So countries that were on-time will get their official approval April 2008 ultimo, just in time for compliance for the first EU ETS Phase. Of course it also depends on the link of the national registries with the ITL. This can be too late for the other member states. As a solution brokers can swop CERs for EUAs for a German company for example. But it limits the total overall use in the EU of CERs for the first ETS phase.
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(Reuters) Andreas Troge, president of the federal environment office, said Germany, Europe's biggest polluter, had made pledges to cut CO2 emissions in 2000 and should not now be fighting new allocation cuts assigned by the European Commission. "Industry in Germany can do more," Troge told the Handelsblatt business newspaper in an advance of an article to appear on Wednesday. He added he could not understand why industry was challenging the Commission's tougher CO2 quotas. "The BDI German industry association pledged in 2000 to lower CO2 emissions in the industrial sector by 45 million tonnes by 2010," Troge said. He said he hoped the German protests would not damage the EU's carbon trading scheme.
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Due to the upcoming Germany EU G8 and Presidency (Jan-June 2007) it appears that the Germany has dropped going to the EU Court over the Commission cut of it's draft allocation for 2008-2012 with 12 Mton. This is what was said on behalf of Chancler Merkel: „The initiatives on behalf of the Kanzlerin can only be successfull when Germany has a reliable national climate policy. That is why mrs Merkel has to put of her fight with the Commission over the Allocation for 2008-2012 as fast as possible“. Germany will rather try to change the method of allocation to power companiers from merely based on historic emissions into the direction of benchmarking per kilowatthour and per type of fuel burnt. Than Germany would have a tool to reduce the overall allocations for NAP-2.
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[By Andrew Bounds in Brussels] The European Union’s trade commissioner Mandelson will today dismiss French proposals for a “green” tax on goods from countries that have not ratified the Kyoto treaty as not only a probable breach of trade rules but also “not good politics”. Peter Mandelson says that the levy, aiming to cancel the competitive advantage of countries that are not cutting carbon emissions to fight global warming, would be “highly problematic under World Trade Organisation rules and almost impossible to implement in practice”. The proposals are gathering support after Günter Verheugen, industry commissioner, backed the idea after it was separately proposed by an advisory group of EU government officials and industry leaders (high-level group on competitiveness, energy and environment) he co-chairs.
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The European Commission is to present January 10 plans to reduce emissions by fossil fuels in the energy sector. Two proposals are very important: 1. The Commission wants to allocate allowances to power plants on the basis of kilowatthours generated: a maximum CO2 emission per kWh. 2. The Commission will propose that new coal fired power plants should make us of carbon capture and storage. These propoposals will be part of the Evaluation of the EU ETS that is currenty in preparation, due to be published beginning 2007 and Emissions Trading Directive Proposals the Commission will do later in 2007.
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The European Commission will publish a proposal on 20 December to bring all aviation companies flying to and from the EU into the ETS for CO2 as of 2011.
A spokeswoman for Environment Commissioner Stavros Dimas said according to European Voice that the proposal was the best way to tackle growing concerns about the impact of aviation on climate change. “Our plans are not too ambitious,” she said. “We have done our homework and concluded that the price that needs to be paid is reasonable, as far as it is transferred to the customer, and can be borne by industry.”Commission impact assessments estimate that including all flights in the ETS will add €0-€9 to the price of a ticket. British Airways is in particular unhappy with the Commission proposal to make governments auction 40% of annual aviation emission permits by 2022
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At the Sparks & Flames Conference in Amsterdam Walhain from Fortis showed that during Summer the emissions trading system has led to less CO2 emissions. He showed that during the Summer gas prices tend to be lower and that made it beneficial - for CO2 cost reasons - to use more gas for power generation, than without that system.
For such a fuel switch in Winter he believed a CO2 price of 100€ would be needed. He said weather in general is a dominant factor: if the temperature in Germany is 2 degrees higher, 70.000 ton CO2 less is traded.
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Guardian Unlimited; For the first time today British companies were penalised for noncompliance with a European scheme to control carbon emissions. The Environment Agency fined four companies £750,000 out of 535 after they failed to account for their greenhouse gases under the European Union's emissions trading scheme. The companies must either reduce their emissions or buy permits from other companies to allow them to pollute above their agreed limits. They also have to submit details of the emissions and allowances to the Environment Agency.
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On Monday 11 December and if necessary also on 18 December we will be executing auctions for the sales of European Allowances (EUAs) from the Hungarian Government. The Climex Alliance partner euets.com has been coordinating the selling.
We would like to inform you about some crucial preparations and proceedings for these auctions.
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Reuters: European Commission sharpened its main weapon for fighting climate change on Wednesday, drawing fire from EU governments after demanding cuts in their carbon dioxide emissions plans for 2008-2012. The move set up a fight with some EU member states, while the rest of the world watched what is a possible model for a future worldwide carbon market to tackle global warming.German Economy Minister Michael Glos said the decision was "totally unacceptable" and would push up electricity prices. Germany is Europe's biggest polluter. France withdrew its plan at the last minute after indications it too faced rejection."I think that with today's decisions the European Union will affirm its leadership role in fighting climate change and also our strong commitment to achieving the Kyoto Protocol targets," Environment Commissioner Stavros Dimas told a news conference.
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Republic of Hungary, Ministry of Finance
25 November 2006
The Ministry of Finance of Hungary (“auctioneer”), in accordance with the Gov. decree 109/2006 (V. 5.), announces the sale of EU Allowances valid in the EU Greenhouse Gas Emissions Trading Scheme (EU ETS), as defined in section 3. § c. of the XV. law of 2005 of Hungary.
The quantity to be sold in 2006 is 1,200,000 emission allowances. The allowances will be sold within the framework of a public electronic bidding process (“auction”). The auction will be conducted on the euets.com CO2 trading platform. The electronic auction will comprise a maximum of two rounds; if the whole amount of allowances cannot be sold during the first round, a second round shall follow. All entities or individuals holding an account at an emissions trading registry of any of the EU member states can participate in the auction.
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Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets, today announces that the amount of CO2 traded within the European Union’s Emissions Trading Scheme (EU ETS) will this week pass 1bn tonnes (see press release). This is roughly equivalent to the annual greenhouse gas emissions of Germany – Europe’s largest economy and biggest greenhouse gas emitter. In terms of financial value, the traded CO2 market so far is worth € 18bn.
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As reported earlier (see here) the European Commission is to add aviation emission to the EU ETS. To start in 2011 with specifuic aviation allowances. This was published today by Reuters, based on a draft they saw.The European Union will require all airlines flying in its territory to monitor their carbon dioxide (CO2) emissions from 2010 and to join the bloc's emissions trading scheme in 2011, the EU executive is proposing. The European Commission proposal said a cap would be set on the number of pollution permits issued to airlines based on average 2004-2006 aviation emissions. That cap would come into effect in 2011, it said. "From 2011 emissions from the aviation sector will be subject to a cap and aircraft operators will be required to surrender allowances to cover their emissions," the draft said.
In the Financial Times, the Airline industry on Wednesday criticised plans to include it in Europe’s ETS as early as 2011, accusing Brussels of acting unilaterally, that is without mainly the US. “This is about politics, not the environment,” said Anthony Concil, communications director at IATA, which represents the world’s big carriers. “Air travel is responsible for 2% of emissions and for Europe to act before a global agreement is putting the cart before the horse.”
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Reuters. The European Commission launched on Monday a review of its carbon dioxide (CO2) emissions trading scheme (see here) the centrepiece of the bloc's efforts to comply with the Kyoto Protocol on combating global warming. It said in a statement it would study adding new gases and extending trading periods to run longer than five years. The European Union executive said the review would seek to streamline the process of how emissions rights are allocated to industry. It said it would explore the option of setting an "EU-wide cap" after 2012.
"The Commission shares the widely expressed view that giving greater certainty to investors for longer than five years ahead, as the scheme does currently, is desirable," it said. "Increased predictability, as well as further harmonisation of the process under which member states set an overall cap on their emissions and allocate emission allowances to installations, will thus be key strategic issues for the review," it said in the statement.
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In a press release Pointcarbon today estimates the additional cuts the Commission will ask Member States to take in NAP-2 at 10%; 240Mton per year, leaving a total cap of 2.084 Mt per year.
In the first phase of the EU ETS, the Commission cut the submitted NAPs by about 290 Mt per year, equivalent to 11%. Despite this cut, the market revealed itself as long, causing the carbon price to drop dramatically in April this year, before recovering. Commenting on the likely size of the market in the second phase, Henrik Hasselknippe, Manager of Point Carbon’s EU ETS Team, said “although in the first phase the market was long, we don’t expect this to be repeated this time around. Having learnt from mistakes made in the first phase, we expect the Commission to make the market short, at least initially, and to ensure many of the NAPs are shorter than the national governments have proposed.”
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LUXEMBOURG (Reuters) - The European Commission attacked European Union states over their emissions plans on Monday, demanding cuts in the number of pollution permits proposed for the 2008-2012 period of the bloc's trading scheme. The EU executive, struggling to make sure the scheme achieves its goal of reducing emissions blamed for global warming, said the plans submitted by EU states were not tough enough and needed corrections to be approved. Environment Commissioner Stavros Dimas said the 17 plans received by the Commission so far allowed for a cap on emissions that was 15 percent higher than actual 2005 emissions levels. "If member states put more allowances into the market than are needed to cover real emissions, the scheme would become pointless," Dimas told a news conference after a meeting of EU environment ministers. "I cannot let that happen."
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LONDON - Investment bank Barclays Capital has sparked a debate on how greenhouse gas emissions are traded between rich and poor nations and how to account for the fact that key infrastructure is not yet in place. Specialist funds have been hoovering up credits from developing countries in the so-called primary market, ready to sell these on into a secondary market that is now some six months old and expected to take off next year.
Britain's Barclays Capital on Monday launched a proposed standard contract for such secondary trade -- designed to act as a benchmark for physical trades -- and the initiative has drawn a mixed response. "The market initiative to get a standard contract has failed," said Mats Ahl, head of carbon trading at RWE Trading, referring to a conference call vote among major buyers and sellers two weeks ago, when he said no clear consensus emerged. "We don't want to support one contract proposal yet, clarity will come... and we can carry on trading bilaterally in the meantime." Others back the Barclays Capital initiative. "I'm in favour of it," said Chris Leeds, head of emissions trading at Merrill Lynch.
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AMSTERDAM - Developing markets in emissions of carbon dioxide (CO2), aimed at fighting global warming, need more long-term regulatory stability if they are to flourish, investors said on Monday.
"It is a volatile market of sharp fluctuations... one of the biggest drivers of this volatility is government policy," Richard Burrett, managing director for sustainable development at Dutch bank ABN AMRO, told a climate change conference in Amsterdam. Burrett noted the example of Germany, where he said stable policy promoting renewable energy had helped drive investment in solar power.
James Cameron, vice chairman of Climate Change Capital, an investment banking group specialising in carbon markets, said the financial community had shown itself ready to invest but needed more regulatory certainty beyond 2012. "They will bring more capital if they see a longer-term signal," he told the "Make Markets Work for Climate" conference. "Unless we send these long-term signals in the next 18 months to two years we will lose momentum ... capital will find somewhere else to go," Cameron said.
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Europe’s industrial emission trading scheme (ETS) risks failing to deliver any net domestic emission reductions at all in its second phase unless the European commission cracks down on lax national allocation plans (Naps), green group WWF warned this week. The commission is expected to issue its assessment of a first group of Naps in November. WWF identifies "very weak" national emission caps and "extremely generous" rules on Kyoto project credits purchased abroad as the key problems. Together, these effectively transfer emission cuts to developing countries and act as a disincentive to clean technology investments in the EU, it warns.
If the scheme does not deliver domestic emission reductions then this would breach the underlying ETS directive, which requires use of project mechanisms to be "supplemental" to domestic action, WWF says.
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LONDON - The European Union's executive will try in the coming weeks to revive its floundering carbon trading scheme from 2008, after a miscalculation on targets last year capsized its concept of driving emissions cuts. (Reuters). The market's second phase from 2008-12 could be its last chance, and it is seen a test case for carbon trading, rather than carbon taxes, as a way to tackle global climate change.
The Emissions Trading Scheme (ETS) was supposed to help combat climate change by capping emissions by heavy industry of the commonest greenhouse gas, carbon dioxide (CO2), and forcing companies that exceed their caps to buy extra permits. But last year's cap was some 100 million tonnes above actual CO2 emissions -- an excess seen lasting through the market's first phase from 2005-07 and putting the scheme in limbo.
The EU executive now wants to take a tougher line with industry, in a potential make-or-break for carbon trading.
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Barclays Capital announced that it has drawn up terms and conditions that will standardise and promote OTC trading of CERs in the secondary market, and that it will quote bids and offers on the contract through London-based broker ICAP. Barclayes felt that the CERs supply is not fully fungible because a lack of contractual standardisation. Barclays Capital will offer a bid and offer spread using a standard CER forward agreement(SCERFA).
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At a conference in Geneva, Fortis told the audience that phase one of the ETS could be short by 100Mton, despite an oversupply in the first year of the scheme of almost the same amount. “In 2006 the outcome will be different. Allocations will be different, emissions will increase, and they have. Throughout 2006 we burned more coal than we did in 2005 and there is increased power demand. So in my opinion 2006 emissions will be significantly larger than 2005,” according to Kris Voorspools, with Fortis Bank. See also previous posting here).
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Do you need support in finding the right moment to buy or sell? Or do you just want more information on prices or other market developments? Please contact the New Values Trading desk to support you with your trading.
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New Values would like to introduce the intermediary function (the IM function) on her trading platform Climex. The IM function gives industries and traders the option to centralise or decentralise their trading and still manage, administer and control all EUA trading on Climex. The IM function was especially built for:
o Industries where one trader trades on behalf of all his outlets and wants to keep track of the trades
and account balances per separate outlet;
o Traders who trade for several clients and who want to keep track of the trades and account
balances executed per client;
o Traders who want to give their clients the possibility to trade by themselves without the need for
those clients to become a direct member of Climex.
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The new carbon trading window for Climex will be opened by Sendeco2 in Lisbon in October. From the start the window will have around 10 members. Already 2 companies signed.
Sendeco2 has already closed trades on behalf of the new Portuguese members, but on the Barcelona exchange of Sendeco2. The next country Sendeco2 looks at for trading opportunities is Italy.
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(Reuters) The Dutch government sent a new, tougher plan to parliament on Monday, and expected to submit it to Brussels by next week (see here).
Further, The Netherlands is proposing to increase the installation-level limit on the use CDM/JI credits to cover emissions under the EU ETS from 8% to 12% per year for the second phase of the scheme.
The Dutch set an annual limit for carbon dioxide (CO2) emissions in 2008-2012 of 77.9 million tonnes, excluding reserves, down from 86.4 million in the current 2005-2007 trading period, according to the plan published on the economy ministry's website.
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The Climate Secretariat said in June that CDM projects would cut a billion tonnes of CO2 in the period to 2012 "I'd expect it at least to double by 2012," Einar Telnes, director of climate change services at Det Norske Veritas (DNV) certification group told Reuters of gas volumes likely to be cut in developing nations by 2012. "But I wouldn't be sure that it would triple or more," he said. DNV has about 50% of the world market verifying the climate projects under the CDM. "These days we even see countries like in the Middle East -- Saudi Arabia, the United Arab Emirates, Qatar -- getting interested," Telnes said. He sees large potential in:
- in the Middle East to reduce flaring of natural gas;
- overhauling chemicals factories producing acetic or nitric acids, used in goods such as nylon which emit N2O
- former Soviet Union and Russia: gas pipeline projects, flaring reduction projects, upgrading of district heating, industrial energy efficiency.
- tapping gases from decaying landfills or destroying HFC gases in China which are used in making refrigerants, were already being carried out
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HONG KONG (XFN-ASIA) - The World Bank and 11 utilities, banks, trading firms and others have put together the largest greenhouse-gas emission trades in history, in a $ 1 bln deal that will help two Chinese chemical companies reduce emissions by the equivalent of 19 million tons of CO2 a year.
The transaction is almost double the size of previous deals. "We think this is a very positive development. It says something about the commitment of China to do something about climate change," Joelle Chassard, manager of the World Bank's carbon finance unit, was quoted as saying.
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Prices of CERs in China are usually lower than for example in India. Moreover, they also point out that it is relatively easier to enter into contracts with Chinese projects. See August 26 article at The Hindu Businss Line.
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EU Energy Commissioner Andris Piebalgs told Reuters on Wednesday the EU member states' proposed plans for phase 2 (NAP-2) of EU ETS show enough ambition to avoid a carbon price collapse. Asked if the carbon price could collapse from 2008-12, given a market concern that plans submitted so far were too lenient, he said: "At least what we have seen so far they (phase 2 plans) have been ambitious enough. Definitely we shouldn't expect a collapse in the carbon price." So far Estonia, Germany, Ireland, Latvia, Lithuania, Luxembourg, Poland and Britain have submitted plans. In particular the east European countries Estonia, Poland and Latvia have posted big proposed increases in carbon credit quotas, as well as Luxembourg.
When asked when the European Commission would formally respond to the 2008-12 carbon emission plans submitted so far Piebalgs said: "I think as soon as possible we'll come up with our conclusions, in the next month or so. As far as I'm informed... we shouldn't expect big delays."
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Fortis Energy Monthly August shows an increes in CO2 emissions stressing the chance that 2006/207 will show an EUA shortage. As reasons for the emissions increase Fortis points at the largere energy demand because of the recent hot European weather, the fact that utilities preferred burning cheaper coal than natural gas and the sustained EU economic growth.
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The announcement of the Climate Convention Secretariat of contracting Trasys and Logica CMG to build and maintain the ITL is a further step bringing a really global carbon market closer (Aug 15). The value of the contact is around EUR10 million up to 2012. Whether it is correct to call this contract 'a significant milestone', as the Secretariat's Kinley does in the press briefing remains to be seen. It took too long and there are ample time consuming hurdles to be taken (see previous postings here and here). The fact that Trasys built the CITL for EU ETS is certainly an advantage. Logica was involved in building National Registries.
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Nanjing Iron and Steel is doing something once unthinkable for a mainland steelmaker: spending money on environmental protection and playing a role in fighting global warming. The company is installing the latest equipment to capture emissions released from its blast furnaces during the production of iron and will use this gas to generate power. It will also sell carbon credits to an Italian government fund through the World Bank, becoming the first mainland steel mill to take part in such a scheme under the Kyoto Protocol, which seeks to reduce emissions of greenhouse gases such as carbon dioxide. "We originally had a target of reducing emissions, but if we can earn some income from doing so, it gives us more motivation," said Xu Lin, secretary of the company board.
Beijing's recent announcement that it will launch pilot emissions- trading schemes comes after the fact. Like many reforms, companies and local governments are already experimenting.
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The Climate Convention Secretariat briefed Reuters last week on the upcoming launch of the ITL, April 2006 (see also previous posting). But James Emanuel, Vice President of Environmental Markets at brokers CO2e/Cantor Fitzgerald said: "People are contracting now to buy CERs but no-one is able to guarantee delivery on a specific date". "Uncertainty relating to the date on which the ITL becomes operational is complicating contracts... Secondary market CER trading will take off when the ITL is operational." .
We indeed note that compliance buyers are calling for CERs, but there is still no trade in CER derivatives, causing absence of a transparent market price for CERs.
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The Climate Convention secretariat has told Pointcarbon today, it is certain the International Transaction Log (ITL) is on-line and linked with National Emissions Registries as from April 2007. Though the necessary software providers are not contracted yet, it is certain this will be done in short time. Uncertain factor is whether the EU Registries will indeed be able to comunicate with the ITL; this has to be tested for at least 6 months too.
The ITL is needed for the international transfer of carbon credits and allowances under the Kyoto Protocol, in order to help parties to meet their emission commitments (dead line mid 2013). But also for the continious transfer as from January 2008. For 2 reasons the ITL is needed for the EU CO2 Market:
1. As soon as the ITL is up and running, EU companies can get CERs tranferred to their account for compliance and to other market participants. Because the dead-line for compliance under the first EU ETS is April 2008, there is a good chance CERs will indeed be used for compliance.
2. As from 2008 the allocation and transfer of EUAs have to be backed-up by national AAUs
3. As from 2008 also transfer of ERUs is possible (with the same compliance and market value as CERs).
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By Axel Posthumus, CEO of New Values.
As the figure below shows, in June, July and we expect also in August trading volumes have dropped substantially. At first glance it looks like the drop in volume can be explained by seasonal effects. June, July and August are the summer holiday months. But if you neglect the trading volumes in May, especially on the forward market, you could also conclude that forward trading volumes on exchanges are dropping structurally every month since January 2006.
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According to Environmental Finance, Seb Walhain of environmental markets at Fortis, told Environmental Finance’s EU Emissions Trading 2006 conference in Brussels on 10 July that his bank predicts that the market will be 120Mt ‘short’, within an error margin of 50Mt long and 250Mt short.
Walhain joins with this suggestion our view (see for example our May14 posting) of an overall shortage in the 2005-2007 ETS compliance period. Though the shortage was deeply decreased due to the 2005 allowance surplus, the picture for 2006 and 2007 is changing more and more.
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British Environment Secretary David Miliband announced that its Government is contemplating issuing tradeable personal carbon allowances to the public to combat rising emissions from the domestic sector. He said he believes it is worthwhile giving people a limited amount of carbon allowances, of which they can sell any surplus for cash should they opt to reduce their emissions. The scheme would be fairer he said than tax increases as it offers free entitlements and only penalises those that exceed their entitlement. Personal carbon allowances cover people's direct use of energy through their electricity, gas, petrol and air travel and make up to 44% of the economy's total emissions. “Imagine a country where carbon becomes a new currency,” he said. “We carry bank cards that store both pounds and carbon points. (see press release)
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Monday July 31, Governor Schwarzenegger and British Prime Minister Tony Blair signed a collaboration between California and Britain to address climate change (see press release). Britain and California are preparing to sidestep the Bush administration and fight global warming together by creating a joint market for greenhouse gases. British Prime Minister Tony Blair and California Governor Arnold Schwarzenegger plan to lay the groundwork for a new trans-Atlantic market in carbon dioxide emissions. The Governor said: “We do not want to wait for the federal government to take action,” Blair stated that "the UK is hoping for an international post-2012 climate action framework, that should contain a binding CO2 concentration target and a market mechanism and start a tie-up with California as first step.
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Brussels, 13 July: The third phase of the European Emissions Trading Scheme (ETS) could see a single cap on carbon dioxide emissions set for all Europe, rather than 27 country-by-country targets. This is one of many ideas under review for Phase III of the scheme, which begins in 2013, according to Peter Zapfel, EU ETS co-ordinator at the European Commission. The Commission's policy paper on the scheme beyond 2013 will be published in the next few weeks; it has no relevance for to the second phase of the EU ETS, which runs from 2008-2012.
"Harmonised allocation has been mentioned a lot in the debate," said Zapfel. The 'burden sharing agreement' – by which the EU accepted a single Kyoto Protocol target, to which member states made differing contributions – only lasts up to 2012. Beyond that date, there is more freedom for harmonisation of allocation plans, he said (Source: Environmental Finance).
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The price volatility in the CO2 market between late April and mid-May induced record trading volumes in May of almost 90Mt in the exchanges and OTC markets combined, according to PointCarbon, 7Mt up on the figures for April. Prices gyrated between a low of € 8.50/t and a peak of € 21.50/t for the Dec 2006 contract and the market briefly threatened meltdown. But lessons can be learned from the experimental NAP 1 phase. The EC now needs to encourage a more accurate set of emissions targets for NAP 2, although early indications are that some of the biggest emitters for example Germany will try to push through even greater allocations for NAP 2. Poland too is seeking an additional 20 Mt over its NAP 1 allocations. This could be a tough internal battle within the EC, and meanwhile the ETS market is left looking for direction [ see Fortis Energy Monthly June 2006]
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The sixth on-line CER auction via Climex will be held after Summer 2006 along a modified set-up. To speed-up the process New Values will liaise with buyers and sellers will seek the projects itself. It will use listing agents to conduct a standardised due diligence on them ahead of the auctions. Buyers and sellers will sign up to the same rules and regulations a term sheet will be created, “to make it clear what is fixed before the auction,” New Values' Sacha Bloemhoff said. Another new point is that sellers guarantee a 10-day period of exclusivity before the auctions to make sure a project is not pulled out after announcing the auction.
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It seems that market participants didn't come to rest after last Month's price corrections. There is no interest in taking clear positions yet. Trade volumes are low, around 1Mton a day. And the sudden Summer temperatures and the World Championship gets all the attention. The next compliance moment is far away, April 2007. It appears that companies witness theitr own higher emission levels and realize that they better stick to their surplusses. Companies that sold their EUAs in April to banks and power companies are satisfied with their profits.
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Sendeco2 announced today that it is preparing the launch of a Portuguese CO2 exchange in September; and also an Italian platform before the end of the year. Sendeco2 is part of the Climex Alliance, and has generated trades totaling just over 300,000 allowances since trading started in Spain in February.
“It is of utmost importance to convey to the Portuguese market the efficiency and transparency created by a CO2 exchange, reducing commissions and intermediation costs as much as possible, so that the operators can apply these benefits in modernizing its industrial units,” Managing Director Eduardo Marcos said in a press release today.
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According to the Pointcarbon's JI/CDM Monitor of June 13, indexing the CER price to the EUA price is still perceived as somewhat risky. It seems sellers are choosing to go with fixed price contracts instead. Furthermore, China, where the prices seem to be lower than in for example India or some South American countries, continues to be buyers’ preferred country for CDM investments.
Uncertainties
One unclear element seems to be whether Canada will buy CERs. Another uncertainty surrounds the development of Green Investment Schemes and AAUs. So far any talk of concrete governmental plans for purchasing AAUs has been vague although the EC requested EU member states to inform about such initiatives in their phase 2 NAPs.
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“The start of the EU ETS was a bit shaky, but this was not a surprise to us,” said Jos Delbeke, director of air and chemicals at the European Commission´s DG Environment. “The market based instruments did work.” While speaking to the delegates of the annual Eurelectric event inOslo, Delbeke said that what happened around 15 May was to be expected as companies had been overly pessimistic about their emissions. “When the first year of compliance came to an end, we observed that the market reacted, and that the traded volumes have been increasing,” Delbeke said. “The market based instruments worked, roughly, but they did.” He also stressed that compared with the “very imperfect data” from before; the first ever real emission database was now in place after the first compliance period [source: Montel Powernews].
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(Bonn, 9 June 2006)According to the United Nations Climate Change Secretariat, the Kyoto Protocol’s clean development mechanism (CDM) is as of today estimated to generate more than one billion tonnes of CERS (emission reductions) by the end of 2012. “We have crossed an important threshold with these emission reductions”, said Richard Kinley, acting head of the United Nations Climate Change Secretariat. “It is now evident that the Kyoto Protocol is making a significant contribution towards sustainable development in developing countries”.
More than 800 projects are presently in the pipeline, of which 210 are registered and another 58 are requesting registration. Last year, only around 140 activities were registered or being considered for registration. CERs can be used by companies to offset part of their CO2 emissions under the EU ETS, replacing or adding EUAs. Climex will announce soon its sixth on-line CER auction.
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The High Level Group (HLG), installed by the European Commission, consists of Commissioners for Enterprise and Industry, Competition, Energy and the Environment, Ministers, Members of the European Parliament, industry, environmental NGOs, consumers, trade unions and regulators. The HLG will function as an advisory platform bringing together the Members of the Commission for Enterprise and Industry, Competition, Energy, and the Environment as well as all relevant stakeholders. The HLG has published its first report, June 2nd. To deal with problems like windfall profits, competition distortion, energy dependency, high E prices, they suggest to strengthen the EU ETS, in the following way:
Short term (within 2 weeks! NAP-2):
- make the current inactive mass of companies more familiar with CO2 trade;
- harmonise the NAPs in the assessment phase via consultation regarding: site closure/transfer of EUAs;
- use different allocation for different sectors; allow compensation of windfall profits, within State Aid Rules;
- use auction, is allowed up to 10% and small sites;
- improve the institutional arrangements (registries to facilitate transfer)
- maximise the use of JI and CDM (linked with the foregoing): no quantitative caps, and linkup with ITL from Kyoto Protocol): EU should consider a contingency plan, when ITL is not operational mid 2007.
further:
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Recent Drafts of the Second Allocation plans up for consultation don't show a large ambition and are not a clear shortage signal yet. In the chart below NAP-1 (1) and draft NAP-2 (2) are shown of 16 Member States. Some Second NAPs contain more allowances, but also more sites. Some NAPs are more generous, other NAPs are more stringent. We have to wait for more concrete numbers, but we must realize that again, the European Commission will have to play the 'bad guy' and to lift possible over allocation. They will be even more attentive than before, since the 2005 emission numbers showed a surplus.
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The European Parliament Environment Committee voted May 31 for a specific cap-and-trade systrem for the aviation sector. It should not be included into the EU ETS yet, since aviation emissions are not covered under Kyoto yet; the ETS emissions are. It would cover all flights to and from any EU airport. The draft resolution suggests a pilot phase for the 2008-2012 period, and a cap on how many EUAs can be brought into the aviation emissions trading scheme. The same should apply to CERs and ERUs. This would increase the burden that airlines would have to bear in reducing emissions, either through better practice or technological advance. The European Commission is expected to put forward a formal proposal to include aviation in the EU ETS by the end of the year. The aviation industry is divided over the issue, with Lufthansa and many of the low-cost airlines protesting that it would cost to much, while other flag-carriers, including British Airways, are cautiously in favour of the inclusion in the EU ETS.
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CO2 prices fell to their lowest in 12 days, as German power declined and summer U.K. natural gas lost ground. Permits for Dec. 2006 fell as much as 1.20 euros, or 6.8 percent, from yesterday's close to 16.50 euros . That's their lowest since May 19. Permits for December 2008 fell 70 cents to 22.5 euros. Traders believe that there is an increase in industrial selling, suggesting that more supply is being sold in volume. Hence, also more spot contracts are offered. Volumes are limited, between 1 and 2 Mton a Day.
The large price volatility is a concern for many. Reason is that on one hand the market is looking for stability, but gets mixed signals regarding future allocation. And, besides, Poland still needs to report their surplus in 2005, which can be large. On the other hand is the liquidity still limited and the price gets moved by each large transaction. It will take a while before the market reaches more stability.
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A first round of UN climate negotiations for the period following the end of the first commitment period of the Kyoto Protocol has successfully concluded in Bonn, Germany. “We have set an ambitious agenda which focuses on a sound process leading towards science-based emission reduction targets on the part of industrialized countries within the next few years” said Michael Zammit Cutajar, Chair of the “Ad Hoc Working Group on Further Commitments for Industrialised Couuntry Parties under the Kyoto Protocol”. “There is a strong sense of urgency and there’s clear consensus that there should be no gap after 2012, when the first commitment period ends”, he added (see here). The next rounds of negotiations under Kyoto Protocol and talks under the Convention will take place at a United Nations Climate Change Conference from 6 to 17 November in Nairobi, Kenya (see WWF: 'Kyoto negotiations, inch ahead'). The text contains a list from the Chair with possible approaches for future commitments. Without any having made any step closer, the parties leave the door still open for the US to return and the developing countries to voluntarily participate in CO2 action. See here for further reports.
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Unexpectly, CO2 prices for 2006/2007 futures contract are inceasing fast in the direction of pre verification levels (see snapshot). While the 2005 surplus is 60Mton, the overall shortage for the period up to 2007 will be in our view be at least 60Mt. Hence, we witnessed a cold and long winter and slowly growing economies. This prognosis, plus the fact that supply of the 2005 surplus allowances seems lagging, is putting pressure again on the current prices.
The spread between 2008 futures contracts and that for 2007 is decreasing slightly, but still obvious. The first more concrete Second Allocation Plan published yesterday, the Dutch, does not create a clear picture though on the shortage situation of Netherlands' companies. The Draft Plan suggests an allocation of 92,7Mton contains much more installations (500; 200 before) new sectors; so until the draft numbers for individual installations will be published - within a few weeks - the overall picture remains unclear. The market for post 2007 futures didn't show higher price levels either.
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The 2006 futures and spot contract prices are recovering slowly from € 10 to € 16. It seems clear that the forward curve for future allowances is here to stay; their prices level is above € 22 now.
We have been updating surplus numbers whole day yesterday. Getting market relevant information is one thing, getting the numbers transparent and verified appeared to be a challenge in the young carbon market. And even now, we are not sure how deep the Polish 2005 emission reports will increase surplus numbers and impact the price. The recoverage of the price means allowances have kept their value and that companies realize that 2006 and 2007 can curb the surplus numbers into shortage, with a few percent extra economic growth. Therefore, it is no surpsrise that the volume is large: 5 Mton for half a day, driven by compliance buyers as well as financials.
Last week experts at the Carbon Expo concluded the emissions trading market is already a mature market, despit the prive volatility: see press release.
More detailed analysis of the emission reports show a very diversive picture. Some companies are long: Corus in the Netherlands was 4Mton long, Essent 1,5 Mton long; while Nuon was 4 Mton short. Fuel switch played a role, as well as circumstances in specific sectors.
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The European Commission's publication of the emission performance figures of companies that participate in the ETS show that there was an allowance surplus in 2005 of at least 63Mt (see press release). That is 4 % less than the 2.1 billion allocated. A handfull of countries had a shortage. The largest in the UK, 36,4 Mt, followed by Spain with 9,2Mt. The largest surplus was in Germany, 21 Mt, followed by France 19,1Mton, Czech Rep, 15,8 Mton. We are still waiting for some final data, including Poland. That means that the projected shortage of 180 Mton max has shrunken more than 66% to 60 Mton max. That is, if we isolate the 2005 performance from the next 2 years. Hence, for a large part the lagging economic growth has caused this surplus. We expect that the reserves for new entrants have not been fully used. We must keep in mind that the current economic rise can speed up emissions fast. Moreover, in some member states there were large unexpected shutdowns. And, yes, there were more energy management investments than anticipated due to Kyoto and the high oil prices (Imtech 2005 report).
For the Second Allocation Plan, it is crucial to get the reference emissions data more robust and to use conservative growth numbers, because it is said that there was a lot of 'gaming' amongst companies. The Second Allocation Plan is due June 30th.
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"Companies in the European Union's greenhouse gas trading scheme must prepare to report their carbon emissions quarterly if the scheme is to work properly, according to the World Bank. Karen Capoor, author of a World Bank report into the state of the carbon market, told a conference in Germany yesterday that quarterly estimates of emissions were needed to give the market transparency and avoid situations that led to the collapse of the carbon price on the EU market late last month, See: Financial Times, May 11, 2006, By Fiona Harvey in London.
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Since the EU has implemented mandatory emissions caps in 2005 for companies, the amount of reduction projects in preparation has tripled compared to 2004 to 368 Mton in CDM/JI projects The first quarter seem to bring 2006 at the same levels. The value has grown five times for CDM/JI to $ 2,5 billion.
The New EU Allowances Market was in 2005 300 Mton . For EU Allowances the future value seems to triple in 2006 to 1 billion ton with a value of $ 24 billion. This can be drawn from the Carbon Market Trends 2006 report, published by the Worldbank at the Carbon Expo.
Based on the total Kyoto demand of OECD countries, when each purchases 50% of its commitment on the carbon market, the demand for CDM/JI credits will be 2.5 billion ton.. This means that only 14% is in the pipeline. CDM/JI supply needs to grow 10% anually the next 7 years.
The anticipated shortage of EU allowances in 2005-2007is not clear yet. At least for 2005, this will be published by the European Commission, May 15th. An even higher CDM/JI growth is needed to limit prices in the EU market.
Whether CDM/JI project supply wil increase to meet global demand will depend on 1) speeding up of the CDM/JI process, 2) the upcomoing climate negotiation, for long term signals, 3) the anticipated EU allocation for 2008-2012. The administrative condition, the linkage of regristries and logs, seem to be met beginning 2008 ultimately, the European Commission said at the Carbon Expo.
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As the Climex Alliance trade statistics show, April was the month with the most EUA spot activity, with 0,4 Mton, of which half of it in the last week before the surrender date, April 30th. The majority of the transfers were done through OTC spot deals. In total February through April 0,9 Mton was traded via Climex. Knowing that the Spanish window, Sendeco2 and the Eastern window EUETS.com, from Vertis Finance were recently connected with the local Emissions Registries, needed for spot transactions, the Climex Alliance perspectives look promising. Another succesfull Climex tool are the on-line CER auctions, organised with Asia Carbon. At the 5th Auction on 21st April 130,000 CERs were sold (see here). Both partners will present the auction results at the upcoming Carbon Expo on May 12th, 11-13)
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The CO2 price for spot contracts and futures for 2006 and 2007 appear to stabilize from the current level of €12 upto €15; a price traders feel compliance buyers will accept. The spot price has dropped less and the spot-futures spread is €0,40. As expected, the limited 2005 emission reports (see below) have led to a rise of the 2008 futures price, €21, with a potential to grow to €23 . This is€7,50 above 2006 futures price; the highest spread ever! Hence, when the first allocation period will prove to be over-allocated (the Commission's report is due May 15), the chance is higher that governments will strengthen the second allocation period. This expectation finally creates a forward CO2 price curve (see snapshot). Part of this expectation is speculative, because the CER/ERU supply can subdue further price increases.
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The significant downward correction in the price of carbon continues. We have now reports about long positions in the Netherlands (6Mt), France (19Mt), Czech Republic (14Mt), Lithuania (5,7Mt), Wallonia (4Mt), Estonia (4Mt), Sweden (2,5 Mt), Slovenia (0,4Mt) A chance for buyers to lower their opening bids. Even with the expected shortfall in Spain of 10Mt, the EU shortage decreased with these few reports already with 30% to 110-130 Mton.
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This is one of the conclusions of IPA Energy Consulting in their report for the British Department for Trade and Industry. After similar reports in Germany and The Netherlands. government are ready to tackle such profits. The IPA report may fuel such concerns in the UK. It confirms that a combination of free allocation to power stations and full pass-through of marginal costs to consumers has led to a large increase in the electricity industry's profitability. Peter Bedson, a director at IPA Energy Consulting, said the main winners of the system would be gas and nuclear companies as they produce the lowest levels. Conservative environment spokesman Peter Ainsworth said: "The problem will not be sorted out until the market is made to work properly by forcing firms to bid for their permits instead of being allowed to lobby Government for them free of charge."
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The Association of Iron and Steel Companies, UNESID and SENDECO2 have signed an Agreement to facilitate and guarantee, to more than 50 companies of the iron and steel sector, access to the Climex trading platform through Sendecos2 window. Technical Director of UNESID, Mr. Santiago Oliver:"given the complications that this market has, this is an advantage to be able to offer to our members a preferred access to SENDECO2, which is an outstanding Exchange thanks to the multiple alliances that SENDECO2 is creating and thanks to the cultural and physical proximity to us. SENDECO2 is an easy way to access to the required allowances."
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The hall of the Omniversum Theater in The Hague was packed again on Tuesday April 25th as hundreds of representatives from companies that fall under the ETS, brokers, consultants, accountants, lawyers and NGOs heared Paul van Slobbe, Chairman of the Allocation Group announce the first sketches of NAP-2. Many were be relaxed, because one of the base-years for the allocation will be 2005. And the National Emissions Authority reported last week that the companies that fall under the EU ETS appeared 6Mton long over 2005 emissions, when they sent in their verification report. It was alawys expected that the Dutch allocation was relatively generous - compared with companies in other member states - because many had already invested in energy savings under the Benchmarking Convenant. Companies that did not meet the Convenant were allocated 15% less. But that the participants werealmost 7,7 % overallocated , namely 80,4 Mton of the 86,5 Mton allocation seems due to the lagging economic growth in the Netherlands and some temporary shutdowns.
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A total of 350.000 tonnes of forward CERs were on offer of 3 CDM projects from Brazil, India and Sri Lanka. One project was sold for € 11.90.
The first ACX-Climex auction was held on November 25, with a highest selling price of € 4. Since this first auction, prices have continued to rise, because there is more trust in the market in the CDM process and there is an upward pressure from the high EU Allowances price, currenty around € 30. Installations in the EU trade system can use either EU Allowances , or CERs, for compliance.Interestingly, differences in the perceived value between various CDM projects remain. This can be the type of project (energy vs waste etc.), location, the timing of the project or the 'standing price' (se below).
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Asia Carbon Exchange and New Values scheduled its 5th auction of CERs on April 21th. It is the largest offer, with nearly 9 Mton of CERs (up to 2012). The originating CDM projects are situated in India, Brazil and Sri Lanka.
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In parallel with the opening of the Hungarian emissions registry, trading started on the euets.com internet-based CO2 exchange. It was launched today by Vertis Environmental Finance, the Budapest-based emissions trading firm. Euets.com is part of the Climex Alliance, providing a pan-European spot market for the trading of EU Allowances. Operators and traders from eight countries are already actively trading on the Climex platform, which is now open to operators and traders from Hungary, Czech Republic, Slovakia and Poland, in their own language.
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Silence of the CO2 market is history. On the slowly increasing oil price flow, the CO2 price reaches, just like during the Katrina event, all time highs. We saw a long unexpected price of € 30,40 for current futures; 32,15 for 2008 futuresand spot prices follow closely with € 29,75. With an EU wide shortage of 180 Mton on 2.200 allocated allowances high prices were expected, but not that high so soon. And against these high oil and CO2 prices, even short term measures become beneficial. But this 2008 CO2 price test boosts fears that CERs will be kept out of the 2005-2007 window, where they were supposed to keep prices low. Nevertheless, it all depends on the CER supply to come; waiting for after Summer can be beneficial. Until than, making can be cheaper than buying. Watch your cost curve for energy and CO2 measures.
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As said earlier (here) EU States seem willing - at least in their preliminary plans - to cut deeper in allowed emissions than in the previous allocation. This, besides increasing crude oil shortage, is pushing bearish sentiments on the carbon market, touching the time high of € 31/ton. Panic is not needed though (see here). The 2008 futures are still below €30; but there is finally backwardation: they are for the first time priced higher than 2006 contracts! . Latest signal comes from Germany where Environment Minister Gabriel appears committed to meet the Kyoto cap of a 21% cut in greenhouse emissions against the 1990 baseline. Currently emissions stand -19%. He said total allocation would be 495,5 Mton, 0,7% lower than the first phase with 499Mton (see preliminary NAP-2).
Largest cut shall be allocated to the power sector, with 15% less allowances than Nap-1. Other sectors will have allocations cut by 1.25%.
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For the second time the € 30 ceiling has been reached. During the first time, July 2005, the fundamentals were clear: after Katrina the already high oil prices peaked for weeks. Gas prices followed and CO2 prices too. The then few active power traders and banks were used to high price levels. They felt no reason to hedge for low carbon prices.
But this time though the fundamentals are slowly climbing. Unnoticed by many, oil and gas prices are moving North with a slow pace; slowly the water reaches boiling temperatures. Some traders are testing compliance buyers now, with April 30, surrender day, coming closer. Maybe they want to reach the power fuel switch level, by many seen at €40. Volumes were limited; prices went down € 0,50 next day. And, importantly, the 2008 price didn't break the € 28 level yet. Signals for the second allocation, after 2007 are still unclear and bearish movements are not excluded, as CDM credits will be available then.
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Voor de tweede keer in het bestaan van het emissiehandelssysteem is een prijs van € 30 bereikt. Het betreft '2007 futures'. De eerste keer toen dat gebeurde - juli 2005 - was duidelijk dat de al hoge olieprijs verder werd opgestuwd door Katrina. Gas-, CO2- en stroomprijzen stegen mee. Energiehandelaren en banken, de weinige actieve CO2-handelaren op dat moment, waren toen aan hoge prijzen gewend en hadden geen interesse in het beperkt houden van CO2-prijzen.
Maar deze keer verklaren de 'fundamentals' niet makkelijk de CO2-prijsstijging. De 'fundamentals' veranderen langzaam; en haast ongezien komt het water tot boven kookpunt.
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We regret to inform all that the scheduled CER auction for 7th April is postponed in respect to the passing away of Dr. Nguyen Head, Climate Change and CDM Department, Asia Carbon Vietnam (ACVN) on 6th April 2006, in Hanoi, Vietnam.
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The recent signals in the UK, Germany and The Netherlands to move some of the CO2 emissions budget away from the power sector to the energy intensive industries as a windfall profit fix is followed close by the industry. This development implicitly means a shift in the allocation approach from an 'upstream based' (allowances for the smoke stacks/direct emitter) to a more 'downstream based' (allowances for the energy users/indirect emitter) emissions trading system. The EU had chosen for an upstream system, because that would give power companies the opportunity for fuel switch and to compete over the CO2 price. Current practice indicates nevertheless that power companies are not interested in competing on the price. Moreover, they say that switches from coal to gas will occur only with higher oil & gas prices and a CO2 price above €40/t. Linked with the problems governments and energy users have with the high electricity prices and the windfall profits power companies are assumed to have, governments are considering changing the allocation.
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Though signals are nor to obvious, the first signs of the allocation process for the next round show that member states seem willing to sharpen NAP-2 compared to the first one. The UK (-4%), Spain (-18%), Austria (-17%), Ireland and Slovakia have announced cuts to the allocation in order to reach their Kyoto targets. Of other states, Germany, Netherlands the situation is not clear. Though both announced to cut the allocation to power companies in favor of energy intensive industries, to overall picture is not clear. The German Environment Minister ensured coal fired power plants that they will receive the allocation they need. Also the Netherlands wants to ensure the growth of installed capacity, but did not make clear what base load is accepted. Besides, more than hundred extra sites will be included in the Dutch NAP (9 chemical plants, 100 smaller facilities 50-80 CHP heated horticulture sites). Also the Swedish NAP will include more sites. And last but not least, the UK still needs to decide whether to appeal against the Commission's disapproval of the required 20Mt NAP extension, or to compensate power companies for this loss.
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The current relative silence and illiquidity on the carbon market is apparently used to test new financial products and to publish test trades. Spectron explained Dowjones (see Emissions Trade Watch) for example the new call and put option contracts by Spectron with underlying CERs and other products to manage CO2 price risks for the period after 2008 or to speculate on price peaks in the future. Because price expectations differ so much (see here) traders and brokers are getting appetite in these instruments. Last weeks we saw small pioneering trades for 2008-2012 EUAs (at 27€); a price forecast that is pretty at the high end though. And also an increasing volume of trades in forward CERs, whereby the price is indexed to the price of EUAs, meaning that the higher the EUA price the higher the CERs price and vice versa. This is a clever solution to link 2 commodities that will have the same compliance value anyway. Ecosecurities went a more straightforward way in offering CERs from their portfolio of CDM projects at a fixed € 12/ton.
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CO2 prices seem stalled for quite a few weeks already (see snapshot below). Traders and industrial companies are waiting for more certainty on their emissions numbers and therefore shortage or long position numbers as the verification of 2005 emission reports is due end of March. The April month is the true-up time for companies to come within compliance and to purchase or sell. April is also the month when we will see more draft allocation plans for consultation for the second period, 2008-2012. That will give a first indication for the long/short position in the long run. So, stalled prices will probably mean silence before the April storm.
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Asia Carbon Exchange and New Values scheduled its 5th auction of CERs on April 7th. It is the largest offer, with nearly 9 Mton of CERs (up to 2012). The originating CDM projects are situated in India, Brazil and Sri Lanka.
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Sendeco2 is reporting its first spot trades of EUAs of about 200.000 tCO2. Spot trades will be crucial for Spanish power companies that have mostly short positions to get into compliance end of April. Trades are done through the Climex Alliance platform, through which New Values, UKPX, Vertis Environmental Finance and STX Services cooperate. Sendeco2 has now 10 members; one of the larger ones is Endesa. See here for Climex trade statistics.
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Das Handelsblatt berichtet das der Preis für Kohlendioxid-Emissionsrechte nach Ansicht von Experten in den kommenden Monaten sinken wird. Damit dürften auch die hohen Strompreise nachgeben, weil die Versorger ihren Kunden die Verschmutzungsrechte in Rechnung stellen. „Die Fundamentaldaten des Marktes werden sich in den nächsten Monaten deutlich ändern“, sagt der geschäftsführende Direktor des Finanzdienstleisters Natsource, Paul Vickers. Denn in den kommenden Monaten dürften zusätzliche Verschmutzungszertifikate auf den Markt kommen und den Nachfrageüberhang ausgleichen.
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Asia Carbon and New Values are in the process of organising the next on-line ERPA/CER auction via Climex. Postponement is needed to allow for due diligence of the Clean Development Mechanism projects from which the carbon credits would be offered.
Asia Carbon is expecting offers of about 0,5 Mton CO2e through various CDM projects. More information here.
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The correlation between the CO2 price and the power price still of course exists, but seems to become less importrant. More and more analyses -recently CEPS - show that CO2 is only one of the drivers of the power price. Now the CO2 price seems not to increase so much - see here - the need to pass through that part seems less relevant. The power price keeps changing of course due to other market fundamentals. The European Commission anounced to discuss the relation between the energy related market and political issues (here). But already clear seems that there are no real plans to modify the ETS for power price reasons. Also our poll shows there is no straightforward answer to the issue of windfall profits (see left left).
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Now fossil prices seem more relaxed and the winter is nearing it's end, we see that carbon prices appear stabile at around €26 (spot), €27 (2006 futures) and € 28 (2008's). This reflects the role of compliance. Companies that need to surrender their allowances over 2005 in April know they have the option to wait for lower prices or to surrender their 2006 allowances. In that regard it is crucial the remaining 6 national registries get on-line (see here).That gives more room for supply and at the same time enables companies to get the allowances for compliance in their operator account. Traders with long positions anticipate crunch time after 2007, so they see no need to test higher levels now. On the other hand crunch time may become lunch time IF CO2 credits from developing country CDM projects (CERs) enter the EU ETS in April 2008 ultimo. So, it seems we will see a narrow window for speculation and a narrow window for lower prices. Currently, highest CERs bids are € 11.
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Finally, complete compliance within the EU ETS and full liquidity is expected when the last 7 national emissions registries will get on-line in March (Hungary, Italy, Luxembourg) or by the end of April at the very latest (Cyprus, Greece, Malta, and Poland). In the mentioned 7 countries, companies cannot comply yet, nor will they have been trading. April is the last month for them to get the allowances allocated on their accounts, and surrendered for compliance.
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The new Executive Board, with growing financial support for staff and meetings (US $ 8,188,050) and the recent JI Supervisory Committee give the market high expectations. When we look at the numbers, we see that credits are underway to meet the Kyoto Protocol shortage of 2,5 billion CO2 credits for the Industrialised Kyoto Parties together in 2008-2012. That is, when we assume that half of the credits to meet Kyoto will be purchased on the market. Though only 0,2 % of the credits needed, 4Mton has been issued by the CDM Executive Board, with 1.500 Mton ERUs and 800 Mton CERs somewhere in the pipeline (1300 CDM/JI projects, the supply can ultimately meet the demand in 2012. Whether this supply also meets the 2005-2007 dead-line in April 2008 is unknown. Analysts believe that 30% of the ETS shortage, 60Mton, could enter that narrow window in time. This depends on the CDM process itself and the finalisation of the linkage of the national registries with the ITL (see here).
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Most discussed issue these days at the Pointcarbo Conference was whether the International Transaction Log (ITL) will be up and running in time: (1) to be able to surrender CERs into the national registries for ETS compliance for the period 2005-2007; (2) to generate cash for early vintage CERs. The ITL enables the factual transfer of AAUs, ERUs, CERs.
In our view the ITL seems NOT a limit to ETS compliance. Though the ITL itself will be on-line as from May 2007; it needs heavy security and communication tests. The National Registries and EU registries wil be linked as from April 2008. Hence, the ITL is meant for Kyoto, which has obligations as from 2008; industrialised Kyoto Protocol Parties have to surrender their AAUs and credits for compliance in 2013! So, April 2008 is the true-up month for the 2005-2007 ETS period: better not hold the 5th Pointcarbon event than... we need a lot of CER traffic. Advice: purchase CERs now, prices wil be skyhigh by than. Of course, if it's on-line earlier, the better. But the fact that the European Commission and the UK said they don't see the need for a back-up plan, in case of ITL delay, it means they take some sort of responsability.
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Most significant news last week was the Commissions rejection of Britain's request to emit an additional 20 Mton/a. When the Commission first rejected the request, Britain obtained a ruling from the EC's Court of Justice that Britain was entitled to revise its NAP. But the Commission has rejected it because it was submitted after the Sept. 30, 2004 deadline. The UK will go to Court again. This decision means a 10% EUA shortage increase from 160 to 180 Mton for 2005-2007. Why did the CO2 price not increase but remain €26-27 and trade volumes were limited? Did traders really calculate this crunch in?
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Die wichtigste Nachricht der letzten Woche im Emissionshandel war die Ablehnung der britischen Forderung, 20 mio. t/a zusätzlich zu emittieren, durch die EU-Kommission. Als die Kommission den Antrag zum ersten Mal ablehnte, erreichte Großbritannien vor dem Europäischen Gerichtshof ein Urteil, dass ihm die Überarbeitung des NAP gestattete. Aber die Kommission lehnte diese erneut ab, weil sie nach dem Stichtag 30. September 2004 zugegangen sei. Die britische Regierung wird dagegen erneut klagen. Diese Entscheidung bedeutet eine 10%ige Zunahme des Mangels an Emissionsberechtigungen, von 160 auf 180 mio. t, für die Periode 2005-2007. Warum stieg dann der CO2-Preis nicht an, sondern blieb bei 26 - 27 €/t, und warum war das Handelsvolumen so gering? Hatten die Händler diese Kürzung wirklich bereits eingepreist?
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Rund 500,000 t CER-Forwards waren während der CER-Auktion am Donnerstag letzter Woche (16. Februar) im Angebot, die von Asia Carbon Exchange und Climex abgehalten wurden. Es wurden 5 CDM-Projekte aus 3 Ländern und 2 Kontinenten angeboten (Indien, Vietnam und Brasilien). Die Preisgebote reichten von 5,05 €/t bis 11,75 €/t CO2, abhängig von den Projektdetails. Insgesamt wurden in fünf Transaktionen 180.000 t verkauft (siehe die Pressemitteilung). Die nächste Auktion wird am 17. März 2006 stattfinden. Informationen: Sascha Bloemhoff, CER-Auktionmanagerin von New Values: +31 (30) 2919940; Fax: +31 (30) 2919833; Email: sascha.bloemhoff@newvalues.net.
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Belangrijkste wapenfeit was deze week het besluit van de Europese Commissie de verhoging van de Britste allocatie met 20Mton toch niet toe te staan. Men gaf als reden dat het amendement na de dead-line, 20 sept 2004, was bekend gemaakt. Dus niet omdat de hercalculatie o.g.v. prognoses van de energie-emissies niet zou kloppen. In principe wordt de schaarste van emissierechten in de EU hierdoor met 10% beperkt van 180 naar 160Mton. Toch liep de prijs hierdoor niet op en bleef de prijs van emissierechten voor 2008 iets hoger dan die van 2006 en 2007 (boven €27), al is het verschil nihil. De gasprijs verlaagde iets, wat gunstig voor de CO2-balans is. De spotprijs blijft achter (beneden €27), wat de markt nog steeds een onvolwasen karakter geeft: boter bij de vis zou toch beloond moeten worden. 
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Around 500,000 tonnes of forward CERs were on offer during the CER auction last Thursday 16 February held by Asia Carbon Exchange and Climex There were5 CDM projects offered, originating from 3 countries on 2 continents (India, Vietnam and Brazil). Bid prices went from € 5.05 to € 11.75/tCO2 depending on the project details. A total of 180,000 tons were sold over five transactions (see press release). The next auction will be held on March 17 2006. Information: Sascha Bloemhoff, CER auctions manager New Values: +31 (0)30 2919940; Fax: +31 (0)30 2919833; Email: sascha.bloemhoff@newvalues.net .
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Een nieuw rapport van Markedskraft, gebaseerd op een nieuw CO2-prijs prognosemodel waarschuwt energiebedrijven en EU-regeringen voor een dreigend groter tekort in 2007 aan emissierechten. Achtergrond hiervan is de grotere droogte in de Alpen, Spanje en Scandinavie, waardoor daar minder waterkracht opgewekt kan worden.
Als dat vervangen wordt door stroomopwekking door kolen, komt dat op 36Mton CO2-uitstoot extra. Het totale tekort aan emissierechten kan in 2007 oplopen tot 174 tot 220 Mton. Dit is afhankelijk van eventuele extra investeringen door bedrijven, de aanwezigheid van CDM-credits (CERs) en aanpassingen aan het Allocatieplan. Overmacht is wellicht een reden de allocaties aan te passen; de Europese Commissie zal dit niet snel toestaan.
De waarschuwing van Markedskraft staat haaks op de recente analyse van UBS aan hun klienten. Deze stelt hierin dat als de Europese Commissie op 15 mei 2006 de geverifieerde emissiecijfers publiceert van de 11.000 installaties die onder emissiehandel vallen, en er uit blijkt dat het tekort kleiner is dan gedacht de markt en prijs wel eens in zou kunnen zakken.
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While Mr. Bush talked about alternative fuels, hybrid cars etc. in the speech, his budget actually cuts spending for R&D on renewable energy, while maintaining the tax credits that stimulate the oil industry. And he keeps being opposed to proposed legislation to improve vehicle fuel economy.
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