Carbon 2009 Emission trading coming home - UNEP Finance Initiative

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17 March 2009 sample has not been drawn in a representative way. Furthermore, inferences to general public opinion should in general be avoided. The outline of the report is as follows: In Chapter 2, we look at carbon market development in 2008, with a focus on transaction volumes as well as evaluations of the various segments by market participants. In Chapter 3, we look to the remainder of the first Kyoto commitment period (2009-12). Among several topics, we examine the effect of the global economic slowdown on carbon markets, as perceived by our respondents. We have also expanded the section on US carbon markets and the outlook for federal cap-and-trade under the Obama administration. Finally, Chapter 4 provides an outlook of the post-2012 landscape, with views on the most likely international climate framework, country caps, deforestation and numerous other issues. 2. Carbon markets and policies in 2008 The first year of the first Kyoto commitment period, and of the EU ETS phase 2, proved eventful in both the market and political spheres. Healthy growth has again been seen across the main segments – the EU ETS, CDM and JI. We have also seen the first AAU transactions and first forward trades under RGGI and the Australian CPRS. 2.1 Overview Opening with the European Commission’s proposal for a post- 2012 climate and energy policy, the year brought a sustained bull run in the carbon markets that was punctured by the financial crisis and the economic slowdown. Going down to the regional level, the EU ETS was marked throughout 2008 by the ETS review. The EU institutions reached an agreement on the EU energy and climate change package in December, which has significantly increased certainty in the largest market segment by determining its post-2012 architecture. Year 2008 marked by EU ETS review Throughout the year, the UNFCCC hosted four post-2012 negotiation meetings, but the negotiators have made little progress. Positions have not changed, and most countries seem to be waiting for the new US president to break the current logjam. The election of Barack Obama in November promised a more Figure 2.1: Stairway to 2008 Reported and estimated contracts 2003-08, Gt CO2e Annual volume (Gt) 6 5 4 3 2 Other JI CDM total EU ETS total 1 0 Source: Point Carbon 2003 2004 2005 2006 2007 2008 3 All rights reserved © 2009 Point Carbon
Carbon 2009 Figure 2.2: Still dominated by the EU ETS Distribution over the different market segments of transaction volumes (left) and financial value (right) in 2008. sCER bilat 9% sCER exch 4% sCER OTC 9% pCER 11% EUA opt 2% EUA bilat 6% Source: Point Carbon CER opt 0.5% JI 1% EUA auct 1% Other 2% EUA exch 24% EUA OTC 31% sCER OTC 8% sCER bilat 8% sCER exch 3% pCER 7% EUA opt 1% EUA bilat 7% EUA auct 1% CER opt 0.2% JI 1% Other 0.5% EUA exch 28% EUA OTC 36% constructive US climate policy in the years ahead. In line with our expectations, the COP 14 in Poznan in December did not bring any more clarity on the post-2012 framework, but prepared the ground for further negotiations towards the Copenhagen COP/ CMP in December 2009. The negotiations continue to follow two tracks, the Convention track within the AWG-LCA, and the Kyoto track, within the AWG-KP. The Convention track includes all parties to the UNFCCC, hence also the US, while the Kyoto track gathers only the Parties that have ratified the Kyoto Protocol. Share of global carbon market Figure 2.3: Carbon market segments over time Relative share of each of the major segments from 2003 to 2008 100% 80% 60% 40% 20% Other RGGI AAU JI CDM EU ETS Across the pond, RGGI, the ten-state cap-and-trade scheme stretching from Maryland to Maine in the US, started its first compliance period on 1 January 2009, but two auctions took place in 2008, in September and December. Efforts to create a federal US cap-and-trade failed in June, when the Lieberman- Warner bill died on the Senate 0% Source: Point Carbon floor after failing to muster the 60 votes needed to break a filibuster. In Australia, the government has drafted plans for a federal cap-and-trade scheme, called the Carbon Pollution Reduction Scheme (CPRS), and a legislative 2003 2004 2005 2006 2007 2008 bill will be submitted to Parliament on 10 March 2009. 2.1.1 The carbon markets The world’s carbon market exchanged 4.9 billion tonnes (Gt) 4 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: 17 11 March 2009 2008 Figure 1.1: T
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 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

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