Carbon 2009 Emission trading coming home - UNEP Finance Initiative

More documents

Recommendations

Info

17 March 2009 Figure 2.16: RGGI prices and volumes Prices and volumes of RGGI allowances (RGAs) for December 2009 delivery, New York Mercantile Exchange (Nymex) and Chicago Climate Futures Exchange (CCFE), 15 August 2008 – 7 January 2009. Contracts (1,000 short tons CO 2 ) 1800 1600 1400 1200 1000 800 600 400 200 Nymex volume CCFE volume CCFE Dec-09 price Auctions 7 6 5 4 3 2 1 US$/short ton 0 0 15 Aug 3 Sep Sources: CCFE, Nymex 19 Sep 7 Oct 23 Oct 10 Nov 26 Nov 15 Dec 5 Jan of national approval procedures, 2008 saw a boom in JI projects under Track 1 – a simplified JI procedure where countries exercise the right to approve projects. The strong increase in Track 1 host country approvals compared to the extremely slow registration procedure needed under Track 2 gives Track 1 JI a significant advantage. Track 2 projects need to be approved by the UN-sponsored JI Supervisory Committee (JISC), which is roughly speaking the equivalent of the CDM EB for JI. New Zealand, Hungary, Germany, Romania, and Ukraine started national approval procedures, and even switched projects between tracks to eliminate registration uncertainty related to the JISC. The current Track 1 pipeline of 28 projects has a potential of 42m ERUs over the 2008 – 2012 period compared to 13m from the only six registered Track 2 projects. Track 1 pipeline with potential of 42m ERUs to 2012 As for prices in the JI market, ERUs gained to €14 for standard take-off contracts following the ascent of EUA and sCER prices in the first half of 2008. However, the EUA/sCER market plunge in the second half led to a sharp bid price decrease to €9-11. Despite repeated promises, none of the Russian JI projects have been recommended for approval by the Russian JI Commission. Thus, the biggest potential ERU supplier is yet to give a green light to project backers. Moreover, in early January, the UN suspended Russia from the International Transaction Log (ITL) because it had failed to pay the required fees. This made the country unable to transfer emission rights or emission reduction units to a foreign buyer. As Figure 2.15 shows, our respondents see a falling evaluation of the JI market in general. Notably, the share of respondents seeing the JI market as a success has declined from 12 percent last year to only eight percent this year. The second half of 2008 has seen the beginning of AAU trading. 15 All rights reserved © 2009 Point Carbon
Carbon 2009 Delayed and reduced CER/ ERU supply has augmented the interest of buyer governments in AAU trading, as has the need to close countries’ Kyoto shortages. The first AAU transactions saw Hungary selling 2m ‘hard-greened’ AAUs to Belgium in September and 6m in a similar transaction with Spain in November. Slovakia subsequently sold 10m nongreened AAUs to a private buyer in December. Sovereign and private buyers were reported in active negotiations with Latvia, Hungary, Poland, the Czech Republic, Ukraine, and Slovakia, with several deals that may be concluded in early 2009. 2.5 RGGI and North America Covering power plants in ten states from Maryland to Maine, the Regional Greenhouse Gas Initiative (RGGI) officially entered into force on 1 January, 2009. Forward trading of RGGI allowances (RGAs) started as early as March 2008, however, with a deal for 2009 delivery of 5,000 RGAs at $7 per short ton (€4/metric tonne). Two price-setting auctions in RGGI in 2008 In August, both the Chicago Climate Futures Exchange (CCFE) and the New York Mercantile Exchange (Nymex) launched futures contracts for RGGI allowances. Since then, the CCFE has seen much higher volumes for RGAs, with over 300,000 allowances trading per day at the end of December. But the most important pricesetting events of the year for RGGI were its two auctions, held on 25 September and 17 December. These were both oversubscribed, and saw more participation from covered entities than from financials, selling 12m and 31.5m 2009 allowances, at $3.07 and $3.38 per short ton, respectively. As might have been expected in a system with very few allowances given away for free, our respondents from RGGI-regulated companies see auctions as the most important compliance option. As Figure 2.17 shows, 86 percent of respondents reported participating in auctions to comply with RGGI. Note, however, that our survey only included 14 respondents in this category, implying that one should be cautious about drawing conclusions based on this material. Figure 2.17: RGGI compliance strategies “What is your company currently doing to comply with RGGI?” Only asked from companies regulated by RGGI legislation. N=14. Developing offset projects Buying RGGI-eligible offset credits Buying options on allowances/permits (RGAs) Buying allowances/permits (RGAs) elsewhere (secondary market) Buying allowances/permits (RGAs) in auction Source: Point Carbon Reducing our own emissions (internal abatement) Share of respondents Other The CCFE in November announced a contract for US government-approved GHG emission allowances that would be accepted for compliance under a federal cap-and-trade scheme. A total of 37,000 “CFI-US“ allowances (Carbon Financial Instrument-US) for December 2013 delivery changed hands on the CCFE on the day of the contract’s debut, closing at $11.75. CFI-US allowances have traded since November The election in November of Barack Obama as the next US president provided the strongest signal of the year that 2009 will see the US pursue active climate policy both domestically and internationally. Obama’s climate plan calls for a federal cap-and- 0% 20% 40% 60% 80% 100% 16 All rights reserved © 2009 Point Carbon
Page 1 and 2: Carbon 2009 Emission trading coming
Page 3 and 4: 17 March 2009 Executive Summary The
Page 5 and 6: 17 March 2009 Table of contents 1 I
Page 7 and 8: 17 11 March 2009 2008 Figure 1.1: T
Page 9 and 10: Carbon 2009 Figure 2.2: Still domin
Page 11 and 12: Carbon 2009 The EUA bull run starte
Page 13 and 14: Carbon 2009 power and industry to d
Page 15 and 16: Carbon 2009 Figure 2.10: The EU ETS
Page 17 and 18: Carbon 2009 to October 2008, but we
Page 19: Carbon 2009 Figure 2.15: A question
Page 23 and 24: Carbon 2009 by 2020, which could be
Page 25 and 26: Carbon 2009 3.2 Impact of the econo
Page 27 and 28: Carbon 2009 part from projects in w
Page 29 and 30: Carbon 2009 surpluses may thus have
Page 31 and 32: Carbon 2009 Delivery risk also appe
Page 33 and 34: Carbon 2009 On the international st
Page 35 and 36: Carbon 2009 Figure 3.19: Grading pr
Page 37 and 38: Carbon 2009 a total breakdown of th
Page 39 and 40: Carbon 2009 enhancement of forest c
Page 41 and 42: Carbon 2009 and limitation or exclu
Page 43 and 44: Carbon 2009 mandatory emission trad
Page 45 and 46: Carbon 2009 Figure 4.13: EUA price
Page 47 and 48: About Point Carbon Providing critic

Carbon 2009 Emission trading coming home - UNEP Finance Initiative

Create successful ePaper yourself

Delete template?

Save as template?