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The VER market had a quiet week as the majority of participants attended Carbon Expo in Barcelona. Demand and pricing therefore remained static with exotic, recent vintage RE VCUs holding at around $5.25. Conversely, US CAR CRT OTC interest is growing with new counterparties and credits appearing week after week. The CAR CRT Dec09-Dec18 strip is unmoved at $7.02 on exchange. The Gold Standard VER market is also quiet with a lack of inertia maintaining price levels at €8/9 for issued and €6 for forward credits, with bid interest focussing on unusual locations and methodologies.
CCX CFI prices finished down $0.10 at $1.20 during the week, trading a meager 67,300 tonnes compared to last week’s giant 4 million tonne volume.
The Dec 09 secondary CER contract closed up €0.15 at €12.75 tracking rising levels of coal and gas as well as crude oil prices which hit a six month high, midweek.
RGGI prices firmed slightly over the week supported by stronger oil prices and continued optimism regarding the US energy bill. The May09 RGA contract on CCX settled at $3.52 Friday up from last Friday’s $3.41 settlement. Dec09 RGA was up .10 cents on the week settling at $3.56. The next RGGI auction is scheduled for June 17 where RGGI states will auction 30.9 million allowances for 2009 and 2.2 million for the 2012 period.
Canada will align regulation of GHGs from certain sectors in parallel with the US. The Waxman – Markey climate change bill will begin regulating emissions from power and transportation in 2012, manufacturing from 2014 and commercial and residential sectors in 2016. Adopting joint start dates will enable Canadian industry to remain competitive with its biggest trading partner according to environment minister Jim Prentice. The US administration gained committee approval for the climate bill May 21st and aims to pass full legislation by 2010 to reduce emissions 17% below 2005 levels by 2020.
A US delegation meeting with top Chinese officials last week failed to reach a consensus as to how they would jointly approach an international agreement on emissions reductions. The US reactions were mixed. Nancy Pelosi (US Speaker of the House) remains confident the US can work together with the Chinese regarding climate change policy while other senior US representatives saw China as moving in their own direction regardless of what the rest of the world negotiates in Copenhagen.
UN data has shown that over 400 CDM projects have been rejected by auditors at validation stage. DOEs have blocked 140 Indian, 83 Chinese and 51 Mexican low quality CDM projects. The majority of failures are Hydro (82), biomass (73), agriculture (54) and landfill gas (37), with DNV, Tuev Nord and SGS respectively rejecting the greatest number of projects. There has long been criticism that validators are too lenient on scrutinising projects leading the WWF and Oko institute for applied ecology launching an auditor rating service. WWF stated that ratings, ranging from A for good to F for poor, were determined from data of over 900 projects spanning the last two years concentrating on five main DOEs. DNV scored an F which would have been a D without its 3 month suspension, Bureau Veritas an F, Tuev Sud and Tuev Nord a D rating, while SGS achieved an E. WWF stated they hope to add more transparency with DOEs viewed as CDM quality control despite the EB rejecting 104 projects for breach of additionality rules.
Clean Development Mechanism is to become more streamlined through a ‘completeness check’ procedure by doubling the number of approved verifiers, the launch of a standard manual for auditors, improved stakeholder consultation and more efficient procedures for reviewing projects. The most far-reaching change is the EB’s agreement to accept minor project changes post-registration in a move to prevent hold-ups for developers. Climate talks in Copenhagen in December will focus on reform of CDM and carbon credit mechanisms, with many believing the future US cap and trade scheme will be better suited to cope with demand.
A British parliamentary committee has called on the government to improve estimates of emissions from shipping and the implementation of port levies according to environmental performance. The panel recommends the inclusion of shipping emissions in the UK carbon budget promoting increased measurement techniques to improve data accuracy. International shipping accounts for up to 3% of world GHG emissions and are currently not included in the EU-ETS.
EU GHG levels have fallen for the third year in a row, reducing by 1.2% from 2006 to 2007: a 59 million tonne reduction. EU bloc emissions are now 9.3% below 1990 levels in line with the original 15 countries’ Kyoto reduction target of 8% between 2008 – 2012.
African governments last week agreed the Nairobi declaration, a platform to promote the adoption of low carbon policies with support from rich nations. The assembly agreed that increased support for Africa should focus on adaptation, financing, technology development and improving capacity. African nations are looking to developed nations to set ambitious targets of 25-40% below 1990 levels by 2020, while calling for improvements to current inefficient market mechanisms. Africa accounts for only 2% of CDM projects with African nations wanting the UN to expand methodologies such as forestry to be more inclusive aiming for a post 2012 Kyoto agreement.
VER Statistics *NEW!
Source: APX; CCX; CAR; TZ1
APX GS Registry: 96 (+0) Projects Listed
APX VCS 23 (+1) Projects with Issued VCUs
CCX CFI weekly volume 4,079.3Mt (+3,474.6Mt)
Climate Action Reserve 40 Projects Listed (6 Issued)
TZ1 VER Registry 28 VCS (+4) Public View Projects
CDM Statistics
Source: UNFCCC
Total Issued CERs: 287.8Mt Issuances: 1101
Total CERs Requested: 11.04Mt Host countries: 55
Registered Projects: 1648 Requests: 99
Australia’s GHG emissions increased 1.1% from 2007 to 2008. Emissions were 7% higher than 1990 levels which would still see the country achieve its Kyoto target of 8% from 2008 – 2012. However GHG output has been steadily rising at 1.5% p.a. over the last 3 years and Climate Minister Penny Wong has stated that without action, Australia will emit 20% above 1990 levels by 2020. The CPRS cap and trade scheme, scheduled to be voted on in July, is facing strong opposition with splits now appearing in the coalition over the way forward.
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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