MF Global Weekly CDM & VER Market Summary 11th - 17th May 2009

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By Gareth Turner 17 May 2009

Activity in the VER market is expanding as locations and products diversify further. There is heightened European demand for both issued and forward bilateral CAR CRTs despite no CRTs trading on CCFE this week. The Dec09-Dec18 strip is priced at $7.01 on the Exchange. VCU interest continues to centre on ‘exotic’ South American and South East Asian renewable credits, trading round a dime lower from last week at $5.15. Vintage matching is growing in prevalence with end-users demanding 2009 credits to offset 2009 emissions.

Gold Standard VER offsets remain around €8/9 for issued and €6 for forward credits. Demand continues to focus on unusual locations and methodologies.

CCX CFI prices finished lower against last week’s settlement, reflecting industry’s disappointment over changes to the Waxman-Markey bill. The 2009 CFI closed at $1.20 on Friday, down from $1.40 the previous week. Total traded weekly volume increased from 175,100 tonnes to a sizeable 604,700 tonnes with a focus on newer vintages.

The Dec 09 secondary CER contract closed the week down €1.00 at €11.55 resulting mainly from a volatile swing in German power prices and heavy selling by financials and utilities.

RGGI prices recovered slightly, following a correction from last week’s sell off to all time lows since the inception of the contract. The RGGI CCFE 09 contract settled at $3.47 on the CCX with the contract plumbing as low as $3.33 on Thursday.

The US Energy and Commerce Committee released a summary of emissions allowance allocations, following a week of negotiations and compromise. The proposal is a dramatic shift from President Obama’s original plan to auction 100% of allowances, but he is expected to support it. The document outlines the breakdown of allowances by sector, awarded “to protect consumers from energy prices increases, to assist industry in transition to a clean energy economy and to spur energy efficiency and development”. The electricity sector will receive 35% of the allowances (representing 90% of their emissions). Energy intensive and trade exposed industries will receive 15% of the scheme’s allowances starting in 2014, which is the year manufacturing is brought into the system. The free allowances are to be phased out between 2026 and 2030. The concessions in the bill will result in an aim to reduce GHG emissions 17% below 2005 levels by the year 2020. The Energy and Commerce Committee will meet next on May 18, and will begin a “mark up” of the bill which the Committee intends to complete before the Memorial Day recess on May 22.

The Canadian province of Quebec passed ETS legislation on May 12 enabling participation in the Western Climate Initiative (WCI) trading scheme, to begin January 2010. Quebec joined WCI, which consists of seven US states and four Canadian provinces, in April 2008 but had not passed formal laws necessary to enable it to meet state reduction targets of 6% below 1990 levels by 2020 and WCI targets of 15% below 2005 levels by 2020. Quebec has the lowest per capita emissions in Canada resulting from widescale usage of hydroelectricity.

Australia’s government proposed the CRPS cap and trade scheme to parliament last Thursday with Climate Change Minister Penny Wong urging all parties to support and pass it before the end of the year. The bill faces major delays with staunch opposition from all sides despite a one-year postponement to July 2011. Success depends largely on support from the coalition of Greens and Independents and may lead to an early election.

VER Statistics *NEW!
Source: APX; CCX; CAR; TZ1

APX GS Registry: 95 Projects Listed
APX VCS 25 (+4) Projects with Issued VCUs
CCX CFI Volume traded in the week 604.7kt (+429.6kt)
Climate Action Reserve 36 Projects Listed (6 Issued)
TZ1 VER Registry 19 VCS (+0) Public View Projects

CDM Statistics
Source: UNFCCC

Total Issued CERs: 286.1Mt Issuances: 1080
Total CERs Requested: 2.901Mt Host countries: 55
Registered Projects: 1620 Requests: 89

The UN published a draft report Friday outlining a series of options for discussion by industrialised nations at Copenhagen in December. The report looks at scenarios for reducing GHG’s by 30%, 40% and 45% below 1990 levels by 2020. The 27 nation EU bloc currently has a 30% reduction target below 1990 levels by 2020. Submitted proposals include specific US reductions across 6 greenhouse gases of 24% – 39% below 1990 levels between 2013 – 2017, increasing to 52% - 66% from 2018 – 2022. The draft promotes mechanisms to achieve targets such as an international emissions trading scheme and advocates the inclusion of REDD, CCS and nuclear technology.

To request live project pricing information or to discuss any of the above, please contact Grattan MacGiffin [email protected] or Gareth Turner [email protected] in London on +44 20 7144 5780; Mary Haskins in New York [email protected] or Akshat Jaswal in Singapore [email protected]

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