This Week in Voluntary Carbon:
Change at the Tops

Governments around the world are turning to the voluntary carbon markets and engaging the private sector in a wave that could shape tomorrow’s carbon market. Ecosystem Marketplace profiles 13 of the most advanced efforts across the Americas, Europe, Asia and Latin America in Bringing it Home: Taking Stock of Government Engagement with the Voluntary Carbon Market, a report which grew out of a meeting of national governments and carbon market participants convened by the International Emissions Trading Association’s (IETA) International Carbon Reduction and Offset Alliance and the Carbon Markets & Investors Association (CMIA) during climate talks in Durban in 2011. In a show of confidence in the voluntary markets as a valid complement to regulation, the study finds governments moving beyond their traditional role of providing oversight for voluntary offsetting programs to also developing methodologies and certifying projects. The report highlights these innovative domestic programs that in some cases are a testing ground for regional regulatory tools.

– Read more and download the report

One of the report’s featured sub-national programs that received a shout-out from international press is the Oklahoma Carbon Program. There, the Oklahoma Conservation Commission aims to give credence and value to carbon offset activities without necessarily relying on the climate change mantra – and possibly offering a potential model for other jurisdictions in the U.S. heartland that are interested in promoting carbon trading. Launched in 2008, the commission has verified over 30,000 acres of land for carbon sequestration despite local skepticism towards climate change and the lack of mandatory carbon market. The commission generates voluntary carbon offsets in an effort to restore rivers by creating riparian buffer zones between farmland and water, promoting grasslands and no-till agriculture. Growers of buffer zones can earn $0.70-$3.50 per acre annually. In addition to rewarding farmers, the program helps boost water quality and mitigate soil erosion while lessening local damage from extreme weather.

– Read more from E & E Climatewire (subscription)

The Carbon Offset Aggregation Cooperative, an association of truckers and heavy machinery operators based out of Prince George in Canada’s British Columbia province, has received $2 million from the Provincial Ministry of the Environment to install a computer technology that will reduce fuel consumption. The organization expects that those savings will translate into 13,400 tonnes of avoided CO2 emissions per 100 vehicles over three years and fuel costs of about 10 to 15 percent per truck.

– Read more

Dirk Forrester will be the International Emissions Trading Association’s (IETA) new president/CEO, starting in May. Forrester comes to IETA after posts with the White House, US Department of Energy, and carbon fund NatSource. He replaces Henry Derwent, who directed the organization for four years and will likely remain a fixture of the carbon market world into the future. IETA has developed a global presence in the carbon market, particularly with their work in policy and market development, and through the Carbon Expo and Carbon Forum North America events.

– Read more

Climate Spectator, the Australian online news site covering climate science, policy, and business, has placed Tristan Edis as its new editor. In a letter to the publication’s readers, Edis points to market and policy developments relevant to the Australian carbon pricing and other international programs as a key area of focus. The new editor comes to Climate Spectator after stints at the Australian Government’s Greenhouse Office (now the Department of Climate Change and Energy Efficiency), as well as the Business Council for Sustainable Energy and the Grattan Institute.

– Read more from Business Spectator

By May 2012, the Gold Standard will release Version 2.2, an updated version of its rules. But before that happens they’ve put out a call for public consultation to make sure the update addresses the issues market participants find important. They’re looking for input on lessons learned in implementing the standard, feedback on revised/new rules on Programmes of Activities (PoAs), additional guidance for designated operational entity (DOEs) for validation and verification of Gold Standard projects, as well as other topics.

– Read more and provide your feedback

The Verified Carbon Standard (VCS) has released updated technical recommendations for the integrated project and jurisdiction-wide accounting and crediting of REDD activities. This update provides flexible options for jurisdictions to develop REDD+ programs that may recognize and integrate project activities into jurisdiction-level accounting frameworks. The recommendations will inform the soon-to-be released VCS requirements for Jurisdictional and Nested REDD+ activities. The standard has also put out a call for experts in Standardized Methods and in Avoided Conversion of Grasslands and Shrublands (ACoGS). Applications must be submitted by March 30. See section 9 of the Methodology Approval Process document for detailed application. And in a move that telegraphs VCS’ global strategy, they’ve announced the hiring of regional advisor for Asia-Pacific based in South Korea and a regional director for Latin America, based in Chile.

– Read more about the technical guidelines
– Answer the call for experts
– Read the VCS newsletter update

Four new indices were released by the FTSE group this week that will help investors in Europe, Japan, and Australia track large firms’ exposure to carbon-related risk, such as environmental policy or climate change impacts. The indices were developed in collaboration with the Carbon Disclosure Project and analyst firm ENDS carbon, and are a response to a growing demand from institutional investors, who want to show that their portfolios take carbon-related risk into account. A new suite of investment products based on the indices is expected, as investors become able to identify firms with a carbon management strategy.

Meanwhile, the Bombay Stock Exchange (BSE) recently launched Greenex, a Green Index that measures the performance of companies in terms of carbon emissions. The index is geared towards socially-aware investors and those trying to limit their exposure to companies with carbon-related risk. Greenex will comprise 20 stocks from a variety of sectors listed on the BSE 100 based on a minimum carbon footprint, market capitaliZation and turnover, with the energy efficiency of firms being calculated based on energy and financial data. According to the BSE, during the pilot runs, this index has performed better than the Sensex, a top-performing index tied to the BSE.

– Read more about FTSE’s green indexes
– And here
– Read about Bombay’s green index

City Project, a U.K.-based carbon services firm, has signed a partnership agreement with Brazilian forest project standard Brasil Mata Viva (BMV). City Project will use the BMV’s Sustainability Credit Units (UCS) in their carbon offsetting operations.The BMV standard appeared on our radar in last year’s State of the Forest Carbon Market report as a Brazilian standard reporting large volumes of credits in its pipeline.

– Read more about the agreement

The French provider of parcel and express services, DPD, will soon be shipping carbon-neutral at no extra cost to its customers. The first initiative of its kind, Total Zero, DPD’s carbon neutrality commitment, will boost the company’s goals for insetting— reducing carbon emissions. The approach is three-pronged: measuring emitted carbon, reducing the carbon produced by DPD, and carbon offsetting. DPD has kept track of its carbon footprint since 2006, including at a per-parcel rate. The company’s emissions of approximately 500,000 tonnes each year will be offset for five major markets through the use of carbon credits. In parallel, DPD’s parent company GeoPost will offset their unavoidable emissions through a partnership with CDC Climat. Some global insetting activities will include compressed natural gas-powered vans in Netherlands, zero-emissions vans in Germany and motion-detector light switches in DPD’s Belgian office.

– Read more

BBDO Lanka Private Limited is the first advertising agency in South Asia to have gone carbon neutral. The way to a zero carbon footprint involved efforts on two ends: the company reduced its internal carbon emissions, and then purchased carbon credits to offset the emissions it could not avoid. It had the guidance of the Carbon Consulting Company (CCC), who advised Lanka on a strategy for reaching carbon neutrality. The CCC is a Carbon Footprint Expert certified company and is accredited by the Carbon Trust, the UK Government’s carbon standards body.

– Read more

An unlikely cooperation has formed to reignite the debate on a US climate change plan: Democrats Waxman and Markey have teamed up with Republicans Boehloert and Gilchrest to propose a carbon tax as the solution to both the environmental and fiscal crisis the US faces. The argument they put forth is that the 2008 proposal by Waxman and Markey for a national emissions trading scheme should be revived as it would raise “$200 billion or more over 10 years” and “cut carbon emissions by 17% by 2020”. With the debt ceiling likely to rise at the end of the year, new green taxes could provide a much-needed fiscal boost. The former and current congressmen say that such a market-based policy could push clean energy up the agenda and provide industry with certainty around their investments. They also propose that this fresh approach for generating revenue could topple the bipartisan deadlock over spending cuts or tax hikes for the wealthy. This resurgent interest appears to be part of the push to revamp US climate change policy if President Obama gets re-elected this year.

– Read the opinion piece
– Read more from Business Green

The Environmental Protection Agency (EPA) proposed last Friday to keep US limits on permitting requirements for GHG emissions just to power plants that discharge more than 100,000 tons per year. This announcement was made without prior notification, and at a time when states and industries are arguing that the EPA’s rule violates the law by limiting the affected businesses. The proposal would maintain standards set in 2010 for new or revamped plants and require that companies build plants that qualify in order to get state permits. Since Congress failed to pass climate change legislation, the EPA has been advancing its plans to regulate carbon emissions. The EPA will accept comments on this proposal for 45 days after it is published in the Federal Register and a public hearing will be held on March 20 in Arlington, Virginia.

– Read more from Bloomberg
– Read more

A forecast from Point Carbon shows the volume of carbon traded globally continuing to grow, with 13% growth in 2012. Much of the growth will come from the transaction of 7 billion EUAs and 2.2 billion CERs. The transition of the EU ETS from phase 2 to phase 3, in which CERs from industrial gas projects are banned, should result in higher secondary trading of the credits this year. The forecast warns that volumes traded on global carbon markets will stall as the market awaits the next wave of emission reduction programmes in 2015, and that the overall value of the markets will drop this year to $80bn, a 36% reduction compared to 2011. Although the picture in Europe was not particularly rosy, across the pond carbon markets in the U.S and Canadian would see trading volume of around 200 million tons, about twice the amount seen last year and worth an estimated EU $607 million.

– Read more about Point Carbon’s forecast

An EU draft law states that the forestry and agricultural sector will have to monitor and report changes in land use that could affect greenhouse gas emissions. However, the draft doesn’t specify targets or announce limits to land use change. The rules wouldn’t rely on the EU ETS to achieve reductions, but would call on member states to create accounts of forest management and agricultural land management connected to greenhouse gas emissions, and then draw up action plans to limit emissions.

– Read more

The UK will make use of its surplus of EU ETS second phase permits, selling 3.5 million EUAs, more than was planned for this year. Those allowances will be sold in an auction in March, with further auctions later in the year. However, the exact number of allowances to be sold remains unknown. EUAs are currently trading for around EU $8.60. The UK has netted $1.80 billion from the sale of 99 million permits sourced from a new entrant reserve for phase two, and the Department of Energy and Climate Change plans to auction 125-130 million EUAs annually between 2013 and 2020, as well as 7 million EU Aviation Allowances a year.

– Read more from Reuters

Over the past several months, the EU Commission has been discussing a plan to withhold some permits from the next phase of the EU ETS in order to improve prices and market stability. The EU Parliament has now approved the amendments to the forthcoming energy efficiency directive which will allow the EU Commission to address the issue of oversupply. However, the specifics, like how many permits will be withheld and when, are yet to be decided. Indeed, the amendments did not explicitly call for a set-aside or say that measures taken should be permanent or not. Although market participants were hailing the decision, saying it sent “important message to the carbon market,” the prices told a different story. At least for now. Carbon prices fell 5.2 percent following the announcement, which many felt lacked specifics. The amendments will next be discussed by finance ministers before facing a vote by the EU Parliament, around May or June.

– Read more from Business Green
– Read more from Business Week
– Read more from Environmental Finance

ICE Futures Europe announced the firs trade of European Union Aviation Allowances (EUAAs), a single lot representing 1,000 EUAAs for December 2012 delivery. Belektron and Vertis Environmental Finance, two environmental commodities brokers, made the first-of-its kind trade. The EU has required airlines flying through Europe to cover their carbon dioxide emissions with allowances. GreenX has announced the April 2 launch of their exchange. Non-EU governments are still rallying against the EU policy, with a two-day meeting in Moscow last week resulting in 23 countries signing what they called the “Moscow Joint Declaration.” The Declaration stated a willingness to coordinate retaliation against the EU, putting forward a variety of retaliatory strategies.

– Read more
– Read more from the New York Times

South Africa will introduce a carbon tax starting next year, though the Treasury put forward a plan for a 60 percent tax-free threshold on annual emissions for all sectors. That means that almost two thirds of emissions will be exempt from the program until 2020. Companies that aren’t exempt can expect to pay 120 rand per ton of CO2 for emissions above the established threshold, with the levy increasing by 10 percent each year until 2020. They may also be able to offset up to 5-10% of non-exempt emissions. Electricity generation is the most heavily taxed, getting no reductions and no chance to off-set costs by buying credits.

– Read more

South Korea has delayed a vote on its cap-and-trade program for at least a month, even after offering concessions to large Korean companies. Those concessions had South Korea delaying the program by 2 years, until 2015, as well as giving out as many as 95 percent of permits for free. The country had put forward a voluntary emissions reduction target in Copenhagen back in 2009, saying it would cut emissions by 30 percent from forecast levels by the end of the decade. The cap-and-trade program is a key part of the strategy towards attaining that goal. Andrea Du Rietz, a London-based analyst at New Energy Finance, said that South Korea would need to cut its 2020 emissions to 520 million tons to meet a 30 percent reduction target, generating demand for abatement of 775 million metric tons over six years.

– Read more from Bloomberg

Dubai, one of the oil-rich United Arab Emirates, has announced a plan to become home to the Middle East’s first carbon trading scheme. The Dubai Carbon Centre of Excellence (DCCE), formed early last year, will help create a platform to monitor and benchmark the Emirate’s carbon performance. They plan to complete a detailed inventory of greenhouse gas emissions, but details are sparse on how that carbon trading scheme would operate.

– Read more

The World Bank has resumed sales of UN emission credits after being instructed to do so by the Adaptation Fund Board to do so. The multilateral stopped selling credits back in October after the attempted theft of CERs. The Board then instructed the Bank not to resume selling CERs in November because prices were below a “defined price level.” In December, the board announced that they would resume selling once prices reached a certain level. If prices didn’t return to that level, sales would resume by February 1, regardless of price. Meanwhile, the fund’s trove of CERs, 5.5 million tons of credits, has lost value as prices declined. The CERs are worth 27.5 million euros at current prices, compared with 43.2 million euros at Oct. 5 prices.

– Read more