The US is currently dominating trading activity in the global voluntary carbon market. While the rest of world endures a slowdown, strong demand for CRTs as well as persistent volumes on CCX coupled with a growing stream of privately negotiated transactions are eclipsing activity in Europe and elsewhere.
CRTs remain highly sought after with prices varying depending on methodology type and proximity to issuance. 2009+ vintage credits are preferred with 09-13 strips the most common. A shortage of supply is causing projects to be contracted at earlier stages, nearer the bottom of the emerging $6-10 spread. Increased methodologies and locations are expected to help satisfy demand in the mid-term but shortage of supply is expected to persist for 2009.
Charismatic pre-CDM VCUs are still priced $4/5 bid/offered with cheap Chinese VCUs offered around $2 at the other end of the spectrum. Demand is still small as offset retailers watch the market. US VCUs, offered at $5.50 are still priced at a premium reflecting limited supply and increasing demand while Gold Standard credits remain on the shelf as two new Turkish projects were added to the GS Registry.
Trading on CCX was slim for the week with 215 CFIs (21,500 tonnes) transacted. CCX CFI prices were unchanged on the week, with Dec09 CFIs ending Friday’s session at $0.20. There was only one ‘privately negotiated transaction’ listed on the CX this week, for 200 tonnes of 2008 vintage USA Forestry Offsets at $0.20/t, temporarily bucking the recent trend of PNT activity being greater than on-exchange.A bi-partisan panel on the Senate energy committee expressed concern over the lack of price floors and ceilings in the House Waxman-Markey cap and trade carbon bill. Fearing excessive speculation and other manipulative practices in a carbon trading scheme, the Senators felt that the proposed protections were not enough. The mooted protections include a $10 dollar floor designed to keep prices from going too low and a $28 dollar ceiling that would trigger an auction of allowances held in reserve to keep prices from going to high. Nevertheless, it is encouraging that debate on finalising the carbon bill is ongoing though many expect the healthcare bill to derail any short-term schedule.
The Dec 09 secondary CER contract closed the week down €0.45 at €12.45.
At a press briefing in Vienna last week, US Energy Secretary David Chu suggested 30-40% cuts in emissions by 2020 might be too ambitious to get through the US Senate. He emphasized that develop nations need to get realistic goals and involve as many nations as possible.
California governor Arnold Schwarzenegger passed an executive order early last week which will ensure a third of the state’s electricity will come from renewable sources by 2020. The governor superseded the legislature’s plan which although having the same 33% renewable target, did not allow power firms to allocate electricity from outside of California. Schwarzenegger stated the plan would help the state better meet its needs by importing power while preventing extra regulatory requirements for the construction of solar thermal plants. California aims to reduce emissions to 1990 levels by 2020 and the state’s Air Resources Board will now develop and implement guidelines by mid 2010.
The US EPA released its new vehicle standards on Wednesday, requiring cars and light trucks to average 35.5 mpg by 2016. The standards are expected to be met by improving transmissions, tires and engine efficiency. The plan expects to cut GHGs by 950 million tonnes reducing GHG emissions by 21%. The EPA provides the public a 60 day comment period.
VER Statistics
Source: APX; CCX; CAR; Markit
APX GS Registry: 122 (+2) Projects Listed
APX VCS 69 Projects with Issued VCUs
Markit VCS Registry 51 VCS (+1) Public View Projects
CCX CFI weekly volume 215kt (-261.1kt)
CAR: 66 (+0) Projects Listed; 1.62Mt CRT issued
CDM Statistics
Source: UNFCCC
Total Issued CERs: 330.6Mt Issuances: 1263
Total CERs Requested: 4.1Mt Host countries: 58
Registered Projects: 1822 (+13) Requests: 67
The US, Canada and Mexico have agreed to include HFCs in the Montreal Protocol to protect the ozone layer. HFCs have a high global warming potential consisting of industrial gases used in refrigerators and air conditioning which the Environmental Investigation Agency predicts will account for 40% of world GHGs by 2040 if unchecked. HFCs are covered under the six greenhouse gases included in the Kyoto agreement and final provisions will be concluded in Egypt in November.
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