There is a growing consensus in the US of the pending climate legislation being delayed in the Senate, possibly to Q1 or even Q2 next year. This has removed some of the urgency seen in previous weeks, particularly for demand of CRT credits, the current choice US credit. Accordingly prices stuck at $7/8, bid/offered while supply ramps up.
Demand for VCUs is focused on issued RE, pre-CDM projects as offset retailers bolster their portfolios with interesting, smaller projects. Bids are around the $4.50 level with offers narrowing a little from recent weeks to $5.50. Industrial Chinese VCUs are being offered from $2.
The Gold Standard pipeline is growing, particularly from Turkish projects while demand remains very thin with €5/6 bid/offers and very little actual trading. African GS VERs are bid at a €4 premium currently.
There was no trading of CFIs on CCX Monday-Thursday save for a privately negotiated 250,000 tonnes of 2008 vintage USA Agricultural Soil Carbon Offsets, at $0.40. This constituted the total volume and indicates the continued popularity of PNT CFI transactions. The exchange traded Dec 09 CFI contract is static at $0.15.
Brazil announces 40 per cent cuts
Brazil has announced that it will reduce GHG emissions by 40 per cent, by 2020. The voluntary reduction goal equates to freezing emissions at 2005 levels and will form the official negotiating position of Brazil at UN climate talks in Copenhagen.
Environment Minister Carlos Minc stated that half of the 40 per cent reduction will come from avoided deforestation in the Amazon, aiming to reduce deforestation 80 per cent between 2006 and 2020, while the remainder will come from economic sectors including agriculture and heavy industry.
Brazil has previously opposed emission reduction targets citing the lack of responsibility from developed nations and stated that the pledge was a signal to the industrialised world.
Africa to debut first DOE
Africa may have its first DOE early next year. South African auditor Carbon Check has applied for UN accreditation which would make it the continent's only verifier. Previously PricewaterhouseCoopers South Africa did receive approval but resigned before having audited any CDM projects. Africa currently accounts for less than two per cent of all registered CDM projects, although increasing numbers of voluntary carbon projects are in development.
US Chamber calls for end to carbon targets
The US Chamber of Commerce has released a report calling for the removal of emission reduction targets from an international climate treaty.
Prospects for Copenhagen states GHG reductions of 50 per cent by 2050 are unrealistic for both developed and developing nations and have made negotiations impossible.
At the G8 summit in L'Aquila, leaders agreed to attempt 80 per cent GHG reductions by 2050 with no base year specification. The Chamber argues this would force developing countries to cap emissions to year 2000 levels despite expected rapid economic expansion in the future. Therefore global negotiations should focus on technology development and transfer rather than targets which would eliminate border tariffs.
The Chamber has recently lost a number of high profile members due to the lobby's trenchant opposition to US domestic climate legislation.
US states lead emission reductions
Emissions fell in 17 US states between 2004 and 2007 according to a study by Environment America. The report attributed the reductions to the promotion of energy efficiency and switching to cleaner energy for electricity generation.
Four northeastern states, including Connecticut and New York emitted less CO2 from fossil fuels in 2007 than 1990. However, emissions rose in 33 states over the period and overall domestic CO2 emissions rose by 19 per cent between 1990 and 2007.
IEA calls for energy policy revamp
The International Energy Agency (IEA) has suggested in a new report that current energy policies are unsustainable, and that a vast transformation of energy use will be required to fend off the worst consequences of global warming.
It states that in the absence of a global deal to limit emissions, and the expectation that energy consumption will soar in the next couple of decades, the result will be a catastrophic rise in global temperatures.
The recession, the IEA said, offers an opportunity to make big strides in lowering emissions. As a result of reduced economic activity this year, global emissions are expected to fall by as much as three per cent, the steepest decline in 40 years.
However, without a new global agreement, carbon emissions will rise by 40 per cent by 2030 according to the agency, with most of the increased emissions expected to come from China. This would correspond to a 76 per cent increase in global power demand, equivalent to five times current US production capacity.
VER Statistics
APX GS Registry: 133 Projects Listed
APX VCS Registry: 81 Projects with Issued VCUs
Markit VCS Registry: 73 VCS Projects on Public View
CCX CFI weekly volume: 250kt
CAR: 89 Projects Listed; 1.72Mt CRT issued
Source: APX; CCX; CAR; Markit
CDM Statistics
Total Issued CERs: 345.3Mt
Total CERs Requested: 9.5Mt
Issuances: 1,349
Host Countries: 58
Registered Projects: 1,895
Source: UNFCCC
This report was provided by MF Global, a leading broker in exchange-traded futures and options
For more details on the company's carbon market activities contact Gareth Turner at gturner@mfglobal.com
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