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Vol. 2, No. 13: July 5, 2007
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The Ecosystem Marketplace's V-Carbon News
Carbon beyond Kyoto... Carbon for the Rest of us
Before we get into the big news for these last few weeks, we would like to
announce some news of our own: The Ecosystem Marketplace, in partnership
with New Carbon Finance (and with generous support from our top sponsors:
EcoSecurities,
Evolution Markets, and MGM International and contributors: Greenhouse Friendly,
Trust for Public Land, Carbon Neutral Company, Blue Source, Drive Green,
Hunton & Williams,
and JPMorgan), is pleased to invite you to the launch of our new comprehensive
and quantitative analysis of the State of the Voluntary Carbon Markets:
2006. The report will be launched on July 17 in London and
July 18 in New
York City. For the past several months we've been collecting
data on voluntary carbon markets transactions in and before 2006. Many
of our readers shared data and we thank you for your contributions. At
the launches we'll be releasing analysis from this comprehensive survey
on
the
voluntary carbon markets with insights into volumes traded, ratio of project
types, and the growth of offset suppliers. (As usual, once published, this
report will be made freely available on our website.)
We can't give away numbers just yet...but what we can say is that, while
2006 was a big year for voluntary carbon, it looks like the markets were
just gearing up for 2007!
Not only have we heard rumors that, if true, would mean a doubling
of trading volumes in 2007, but this week the Chicago Climate Exchange
announced it had already surpassed its 2006 volumes after just six months
of trading. And, outside
of the CCX, the number of 'over the counter' trades seems to be keeping
pace, as everyone from Google, to Pacific Gas & Electric (PG&E), to
the United States House of representatives are including offsets as one
component of their strategies to become carbon neutral. And the tide is
likely to
pick
up later this week as former U.S. President Al Gore and his partners put
on a major
concert to raise awareness on climate change on 07/07/07.
Beyond all this rising interest in climate change, two significant events related to carbon markets took place in the past two weeks. The first was the release of the final report of California's Market Advisory Committee (MAC) on climate change. The report recommends that California set economy-wide caps on carbon, that it set up a robust trading scheme, that it allow a wide range of offsets to enter the market, and that the state link up its scheme to other schemes, even those outside the U.S. It is unclear whether all the recommendations will be heeded, but if they are, California could soon become the hub of a major global carbon market.
The second piece of interesting news was the release by a group of investors in Europe, known as the European Carbon Investor Services (ECIS) of a new standard for the voluntary market. Backed by big names like Morgan Stanley, Deutsche Bank, Climate Change Capital, and others, the standard is likely to gain considerable attention (it has already been written about in the Financial Times and the International Herald Tribune). The bigger question, however, is how will this standard play out in relation to the many other standards that have either been proposed or are now in preparation (e.g. the Voluntary Carbon Standard, the Gold Standard for VERs, the VER+ standard, the CRS Green-E for Greenhouse gas standard, etc.) Only time (and carbon traders) will tell. Read on to learn more...
—The Editors
For comments or questions, please email: vcarbonnews@ecosystemmarketplace.com
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VOLUNTARY CARBON
Banking Heavyweights Announce Voluntary Carbon Offset Standard
A group of more than 10 banks, including ABN Amro, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley, recently announced they were creating a standard for carbon credits in the voluntary markets. Imtiaz Ahmad, vice-president at European Carbon Investor Services, described the standard as "a robust benchmark with environmental integrity in the voluntary market." The Voluntary Offset Standard is focused at bringing, "the voluntary market up to the level of the regulated and standardized procedures of the compliance market" and incorporates CDM and JI methodology. The standard will apply these methodologies to an "eligible geographical area beyond those countries that have ratified the Kyoto protocol" including the United States and Australia's pre- compliance markets. The standard also excludes some approved CDM methodologies, such as substitution or destruction of hydro-fluorocarbons.
– Read the International Herald Tribune Article
"Do No Evil" Impact on the Climate
Citing climate change as "one of the biggest, most challenging problems our planet faces" in mid June Google announced plans become carbon neutral that by the end of the year. Google's carbon neutral plan includes: reducing energy consumption, investing in and use renewable energy sources, and purchasing carbon credits to offset the emissions they can't reduce directly. According to a Google blog, the company views carbon offsets "not as a permanent solution but rather as a temporary tool which allows us to take full responsibility for our impact right away." Google plans to offset its internal corporate emissions, which includes energy consumed by the corporation's facilities, staff travel, construction, and manufacturing. The search engine's announcement comes after competitor Yahoo unveiled its plans to offset its corporate greenhouse gas emissions earlier this year.
– Official Google blog
A Neutral U.S. Congress?: The U.S. House of Representatives will also Purchase Offsets
An amendment attached to the 2008 Legislative Branch appropriations bill, which passed in the House by 40 votes, requires the U.S. House of Representatives to become carbon neutral by increasing energy efficiency and purchasing carbon credits from the Chicago Climate Exchange (CCX). According to a report released by the Chief Administrative Officer (CAO) Dan Beard, even after the House reduces energy consumption and installs renewable energy technologies, the House must still offset up to 24,000 tons of carbon dioxide emissions, which will cost about $95,000.
– Read Congressman Kirk's press release
Where the Tropics meet Chicago: Rainforest Alliance Joins CCX
On June 8, 2007 the Rainforest Alliance, "an international nonprofit conservation organization," announced its associate membership with the Chicago Climate Exchange. Associate members commit to offset 100% of their GHG emissions resulting from electricity purchases and business travel for all its US operations. Tensie Whelan, the Executive Director of the Rainforest Alliance noted, "As a leader in promoting sustainable agriculture, forestry and tourism, the Rainforest Alliance is proud to further encourage responsible land-use practices and business practices by supporting forests that participate in CCX's program."
– Read the CCX press release
PG&E Gets Climate Smart
California Customers can now officially utilize Pacific Gas and Electric Co.'s Climate Smart program, which calculates and then offsets business and household greenhouse gas emissions resulting from electricity use. The program also includes educational information on how households can reduce emissions. For an average household, which produces 4.8 tons of carbon dioxide a year, offsetting would cost about $4.31 a month under the program.
– Read the San Francisco Chronicle article
– Climate Smart Website
Entergy Buys Credits derived from Enhanced Oil Recovery and Geologic Storage
Entergy indirectly recently "buried" a portion of its greenhouse gas emissions by purchasing 150,000 metric tons of CO2 emission reduction credits from Anadarko Petroleum Corporation. The credits, which are registered in the Environmental Resources Trust GHG registry "were created by capturing CO2 vent gases from gas liquids production and injecting the CO2 into oil-bearing formations for geologic storage and enhanced oil recovery." The transaction reportedly resulted in 270,000 megawatt hours of carbon neutral electricity. Both enhanced oil recovery and geologic storage are still controversial sources of carbon offsets.
– Read the Entergy press release
Air Canada Offering Offset Option
Air Canada is now offering their customers the option of offsetting emissions resulting from the jet fuel used in their travel. The airline with working with the supplier Zerofootprint to fund projects such as tree planting in British Columbia.
– Read the article
CCX's mid- 2007 Volumes Have Already Surpassed Total 2006 Volumes
Chicago Climate Exchange announced July 2 that its total trading
volume for the first half of 2007 surpassed the volume recorded in 2006. CCX recorded volume of 11,850,300 tons of carbon dioxide in the first half of 2007 versus 10,272,400 tons of carbon dioxide in all of 2006. Trading volume in the month of June was 2,142,300 metric tons carbon dioxide, making it the third highest trading month in the history of CCX. Trading occurred in all vintages from 2003 through 2010.
– Read the CCX press release (pdf)
CLIMATE NORTH AMERICA
Senate Supports Increased Fuel Mileage Requirements
Despite opposition from auto companies, on June 21 the Senate passed an energy bill, by a 65 to 27 vote. The bill includes the first big nationally legislated increase in fuel mileage requirements for passenger cars in more than two decades. The bill also supports penalties for gasoline price-gouging, provides funds for improving the fuel-efficiency of vehicles and provides support for further research on capture and geological storage of carbon dioxide emissions. The next challenge for the bill is approval in the House of Representatives.
– Read the Washington Post article
If you can't beat them, join them...The U.S. Climate Action Partnership makes a play in Motown
After losing the battle in the Senate against federally regulated increased in fuel economy standards Ford Motor Corporation and Chrysler Group seemed to be waving a white flag. On June 26, the two Detroit auto makers joined the high profile U.S. Climate Action Partnership. The coalition whose 29 corporate members have combined annual revenues of more than $1.9 trillion has not publicly backed specific legislation on Capitol Hill, but does support a national climate regulation and cap-and-trade system. "Now is the time for advancing a national approach to climate change where all of us -- individuals, industry and government -- take action toward reducing emissions of greenhouse gases," Chrysler's President and CEO Tom LaSorda said in a statement.
– Read the E&E News article
Lieberman and Warner Plan New Bi- Partisan Climate Legislation
Senators Joe Lieberman (Connecticut- Independent) and John Warner (Virginia- Republican) announced plans to draft a new bipartisan Climate bill, which would include an economy-wide, cap-and-trade program. The Senators have not specified specific emission targets. However, a Lieberman aide suggested that legislation would not dip below the levels endorsed by the U.S. Climate Action Partnership. The plan was to have a draft bill prepared before Congress' August summer recess. The announcement comes a soon after Representative John Dingell (Michigan- Democrat.) also announced plans to propose another climate bill.
– Read the E&E News article
– Read Lieberman's press release
California Market Advisory Committee Releases Recommendations
On June 29, 2007, California's 14-member Market Advisory Committee (MAC) released its final report and recommendations for the design of a California greenhouse gas cap and trade system. The 100-plus-page report outlines the various opportunities and challenges of different design elements in an emissions trading program. The Committee's final report will be submitted to the Air Resources Board, the agency responsible for implementing the Global Warming Solutions Act.
– Read the California Environmental Protection Agency press release (pdf)
GLOBAL POLICY UPDATE
The Panda pushes for increased EU based emission reductions
A
recently released World Wildlife Fund report, Emission Impossible,
notes that "Carbon trading is sound in principle, but the first phase
of the EU scheme (2005 to 2007) has been seriously undermined by weak
political decisions." Now that its become clear that EU governments
granted too many emission reduction credits in Phase I, governments
are tightening the cap for phase two. However, the report suggests
these caps could also be undermined by the influx of Clean Development
Mechanism credits into the system. The report examines the emission
reduction of nine EU member states and estimates that 88-100% of these
countries' combined emissions reductions targets under the scheme
could be met by buying credits from outside the EU.
– Read the Planet Ark news article
Facing Demand for Credits, China Pushes to Increase Supply
Like
pandas, in many cases Clean Development credits originate in...China.
According to a recent World Bank State and Trends of the Carbon Market
report, in 2006 61% of CDM credits were supplied from China. While
the EU debates to what extent these credits will influence local emissions
reductions, China is gearing up to continue producing more credits.
The only hurdle is the CDM Approval Board. The director of the Chinese
government's CDM project management centre notes that while the Chinese
government has approved 524 (CDM) projects, only 90 projects have
been registered under CDM.
– Read the Greenwire article on demand for chinese credits
– Read the Planet Ark article on backlog of Chinese CDM applications
Switzerland Announces CO2 Tax
The
Swiss government announced that beginning
in January 1, 2008 the country will tax imported fossil fuels as a
means of reducing its carbon dioxide
emissions. The country failed to
reach its Kyoto emissions target for 2006 as is now working to meet
its 2012 goals. Not surprisingly
the Swiss Petroleum Association does
not support the initiative.
– Read the SwissInfo article
CARBON FINANCE
Stern Reports to HSBC
This
week HSBC appointed Sir Nicholas
Stern, the former World Bank Chief
Economist, as Special Adviser to
the Chairman on Economic Development
and Climate Change. Sir Nicholas
will be responsible for advising
HSBC on economic development issues,
the implications of climate change
for the bank, and emerging related markets. Sir Nicholas commented
that, "HSBC understands that climate
change is an issue we cannot ignore...Unless
organizations of this scale embed
the principles of sustainability
into their business and respond to
what we already know about the causes
and likely impacts of climate change,
they will be letting down their
customers, their shareholders and future generations."
– Read the Financial Times article
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by Steve Zwick
The World Bank says that carbon funds are the leading providers of liquidity for Clean Development Mechanism (CDM) offset projects around the world—but what exactly is a carbon fund, and how are they evolving? The Ecosystem Marketplace examines the issues.
by Mark Lutes, Rubens Born, and Paulo Moutinho
Three climate change experts from Brazil tell the Ecosystem Marketplace why they think any successful mechanism to address deforestation must be incorporated into the global carbon market.
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