Carbon 2009 Emission trading coming home - UNEP Finance Initiative

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17 March 2009 thought the carbon price would go much over $20 a ton. This general expectation is in line with some recent price forecasts, notably the Congressional Budget Office’s forecast of $19 for Lieberman-Warner, and Point Carbon’s analysis of the proposed 2010 federal budget, putting carbon at $13.70 a tonne in 2013. 3.6.2 North American offsets The discussion about a capand-trade program has deep implications for the voluntary market, most notably the question of which offsets, if any, may be recognised for early action or carry value into the new scheme. As shown in Figure 3.18, just over half US respondents thought CERs would make it in, and over 40 percent of them also trusted CCAR credits. Name recognition for the California Climate Action Registry’s offset certification, Climate Action Reserve, does not seem to have crossed the Atlantic yet, as few respondents from the rest of the world saw it as a likely option. CERs and CCAR credits candidates for use in US ETS Offsets from the CCX offset program also carried a good credibility with a third of respondents expecting CFIs would be eligible under a mandatory program. These answers are consistent with the signals given by the US Congress so far. Gold Standard and VCS credits are also perceived as likely to make it in, while the other certification programs were seen as less likely to be recognized. Brand name certainly seems to Figure 3.17: Price expectations under a US ETS Expected carbon price at the end of the first compliance year of a US federal cap-and-trade scheme. N=2328. Share of respondents 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: Point Carbon matter more than the rigour of the certification requirement. Experience with the voluntary market will be an advantage for anyone who wants to develop offsets for the US ETS. The US voluntary market encompasses a large variety of project types, from renewable energy to reforestation and enhanced oil recovery. As shown in Figure 3.19, our respondents reckon that renewable energy and energy efficiency projects catch the highest prices, whereas soil sequestration projects occupy the lower end of the scale. Figure 3.18: Offset standards in US cap-and-trade “Which of the following offset standards, if any, do you think are likely to be eligible for a US federal cap-and-trade program?” N=472. CER CCAR New gov't standard CCX CFI Gold Standard CERs VCS 2007 Gold Standard VERs VER+ CCBS VOS None of the above Plan Vivo Don't know Source: Point Carbon $0-5 $5-10 $10-20 $20-40 $40-100 More than $100 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Share of respondents US respondents All respondents Don't know/no opinion 29 All rights reserved © 2009 Point Carbon
Carbon 2009 Figure 3.19: Grading projects “In the voluntary market, grade each of the following project types on a 1 to 5 scale in terms of value they are able to fetch in the market, all else being equal.” Question to companies with emissions regulated under RGGI or offset project developer/aggregator in North American market. N=63. Renewable Energy method, while fewer think the voluntary market presents a risk for compliance markets. Higher marks for voluntary markets in 2009 than in 2008 Energy Efficiency When it comes to general evaluation, the voluntary market is also getting higher marks this year than last. This holds across the board, as Figure 3.20 displays. The market is seen as more transparent and mature than last year, and more respondents also agree that voluntary emission reductions are real. There is also greater agreement that the voluntary market fosters innovation in emission reduction Figure 3.20: Assessing the voluntary carbon market. Share of respondents agreeing with the given statements (options 4 and 5). N=2853 (2009) 50% Agricultural Methane Coal Mine Methane Industrial Gas (HFC, SF6, etc.) Enhanced Oil Recovery REDD/Avoided Deforestation Source: Point Carbon Landfill Methane 2008 Reforestation Afforestation Soil Sequestration 0 1 2 3 4 5 Consequently, the voluntary market appears better positioned to provide US-eligible offsets this year than last, just as the US looks much more likely now to take a leadership position in the global carbon market than it did just a year ago. 4. Carbon markets beyond 2012 What is the outlook for carbon trading after 2012? In this section, we look to the future in dialogue with what our survey respondents think will happen in the long term. We start with a note about the plans for the EU ETS phase 3 (2013-20) and then move quickly on to an analysis of the upcoming Copenhagen climate summit and the likely shape of the post-2012 international climate regime. Finally, we look at the consequences for global carbon trading in the long run. Share of respondents 40% 30% 20% 10% 0% 2009 The voluntary carbon market is transparent Source: Point Carbon The voluntary carbon market produces real emissions reductions The voluntary carbon market fosters innovation in emission reduction methods The voluntary carbon market is more mature now than one year ago The voluntary carbon market poses a risk for the reputation of the compliance markets 4.1 EU ETS phase 3 With the deal struck in December 2008, the EU has concluded on most key issues linked to phase 3 of the EU ETS. The allocation will be reduced by 21 percent compared to 2005 by 2020, the amount of auctioning will increase compared to phase 2, and the credit limit, which is set for the 2008-2020 period, is equal to 50 percent of the reduction effort. Outstanding issues include the determination 30 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 and 20: Carbon 2009 Figure 2.15: A question
Page 21 and 22: Carbon 2009 Delayed and reduced CER
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: Carbon 2009 On the international st
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

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