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VER market activity has constricted with prices of recent vintage non-US RE VCUs trading down at around $4.50. Demand for both VCS & Gold Standard credits remains focused on non typical locations and methodologies with Gold standard price levels stagnant at €8/9 for issued and €6 for forward credits. In divergence, interest in US CAR CRTs is rampant with demand centering on 5 year forward strips to 2015. OTC issued CRTs are $6.50/$7.25 with forward strips $5.50/$6.50 bid/offered. Ag methane projects continue to dominate buyer lists trading at a premium to LFGTE, closely followed by LFG Flaring and Forestry methodologies. On exchange the Dec09-Dec18 CAR CRT futures strip finished down a few pennies on the week. The June 5th close was $6.97 on the 10 year strip down from $7.02. 15 contracts traded on Friday. The Dec09-Dec 11 strip settled at $5.91.
The Dec 09 secondary CER contract closed the week down €0.75 at €12.00 amid financials, utilities and traders liquidating long positions and weakening oil and energy prices.
CCX CFIs continue to come under pressure as supply outstrips demand. The 2009 CFI settled at $1.10 down from $1.20 while volumes picked up a tad on the week with a total of 196,700 tonnes traded.
RGGI CCX volumes continue to expand witnessing a record week with 43,720 contracts traded. The Dec09 contracts settled at $3.53 on Friday, down $0.03 from last week’s $3.56 settlement. Market participants suggest that increased volume is a function of computer system trading, suggesting that commodity funds are speculating in RGGI. The narrow trading ranges however suggest the market is balanced between the $3.50 - $3.55 level. Expectations on price at the upcoming June 17 auction are near the $3.50 mark.
An EU draft report has outlined that poor countries will require funding of $142 billion a year by 2020 to aid adaptation to climate change. The report will form a key text for finance ministers for the EU approach to climate discussions in Copenhagen in December. The issue of funding will be central to persuading developing nations to commit to reductions, a problem most attribute to industrialized nations. The report outlines that over 50% of the cheapest GHG projects up to 2025 are in emerging economies and include avoided deforestation and agriculture offsets.
California state assembly approved a bill by 45 – 30 votes to limit the use of offsets for compliance to 10% in the states ETS midweek. The California Air Resources Board (Carb) cap and trade framework would enable firms to use reduction offsets for 49% of their emissions total and will likely tie in with WCI scheduled to begin in 2012. The bill would force Carb to promote domestic offsets to cover emissions in their construction of a scheme helping to promote jobs and aiming to reduce the states huge financial deficit. Market participants have voiced opposition muting that such legislation would make the Californian market insignificant. The bill now progresses to state senate and is likely to be considered in June.
South Korea’s ‘Low Carbon, Green Growth’ domestic ETS bill is on track to pass a vote by end of June. The legislation will invest billions of dollars over the next decade into energy efficiency and clean technology projects while establishing an ETS and carbon tax. South Korea is awaiting the outcome of climate talks in Copenhagen to shape the schemes design amid growing pressure for the country to undertake binding targets due to recent economic growth and its position as a world top ten emitter. In tandem the ministry of environment is preparing a voluntary scheme likely to be operational by 2010. A voluntary baseline and credit scheme has been in operation since 2007 with the government proposing the use of UN credits for compliance.
Voluntary offset registries have seen huge growth in US originated credits. The Climate Action Reserve has issued 1.3 million US credits since May 2008, the Voluntary Carbon Standard issued around 1.6 million US credits and the American Carbon Registry around 3 million in 2009, from a total of 30 million since 1997. Despite the growth, demand is expected to outweigh supply if the Waxman – Markey bill becomes reality with two billion compliance offsets earmarked. Accepted methodologies have not yet been defined in the bill but the inclusion of agricultural and forestry credits, likely to reduce over 600 million tonnes of GHG’s, will help meet significant demand. The legislation aims to reduce emissions 17% below 2005 levels by 2020 and the US has 755 million acres of forested land able to meet over 10% of annual US greenhouse emissions.
Mexican state owned oil firm Pemex’s greenhouse emissions jumped 20% in 2008 totaling 54.9 million tonnes. Pemex’s GHG’s last year accounted for 8.2% of Mexico’s total emissions with the majority originating from burning gas with high nitrogen content. The company stated it will implement policies in line with the countries goal of reducing GHG emissions 50% by 2050.
VER Statistics *NEW!
Source: APX; CCX; CAR; TZ1
APX GS Registry: 99 (+3) Projects Listed
APX VCS 25 (+2) Projects with Issued VCUs
CCX CFI weekly volume 196,700Mt (-3,882.6Mt)
Climate Action Reserve 46 Projects Listed (6 Issued)
TZ1 VER Registry 31 VCS (+2) Public View Projects
CDM Statistics
Source: UNFCCC
Total Issued CERs: 293.7Mt Issuances: 1113
Total CERs Requested: 2.81Mt Host countries: 55
Registered Projects: 1661 Requests: 89
Australia’s lower parliament passed the CPRS bill last week despite 3 days of debate. The ruling Labour party blocked opposition calls to delay a vote on the bill until 2010. The final bill is to be discussed in the upper house from June 15th with the government needing 7 opposition votes to make the bill law. If successful the scheme would introduce a domestic ETS for 1000 facilities from 1 July 2011.
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