Tag Archives: carbon
Global Carbon Trading System Needs Urgent Support Warns UN chair
7 June 2013, 1:27 pm By Ed King The world’s main system of carbon trading needs urgent support from governments if it is to continue functioning effectively and give developing countries access to green technologies. The UN’s Clean Development Mechanism (CDM) has 6900 registered projects in 86 countries, and has issued 1.3 billion certified emission reductions (CERs) since its launch. One CER is the equivalent to a tonne of carbon dioxide. But falling demand for these credits and a lack of policy clarity from governments has left the CDM struggling, with prices dropping by 90%. CDM Executive Board chair Peer Stiansen told a meeting at the UN climate talks in Bonn he was happy with the integrity of the mechanism, but said the global economic outlook and struggling EU emissions trading system indicated there would be no quick fix. “We have proved we can deliver on scale, and that is an important achievement, because we need scalability for this mechanism,” he said. “But currently we are seeing low demand in CERs, which rests in low prices and lack of incentives. It is very frustrating, and we’re seeing the market cannot continue for project developers, and many are leaving.” CDM projects aim to develop low carbon solutions in developing part of the world (Photo: Curt Carnemark/World Bank) Last September a panel set up to assess the health of the CDM warned that allowing it to fail would make it harder to raise finance in the future to help developing countries cut carbon. Joan MacNaughton, vice chair of the high level panel and a former UK civil servant, told the Guardian : “The carbon market is profoundly weak, and the CDM has essentially collapsed. It’s extremely worrying that governments are not taking this seriously.” New restrictions on what types of projects would be accepted by the CDM were introduced at the end of 2012, leading to a spike in applications before that came into effect. Since then Stiansen says they have fallen to around 20 a month. It’s a substantial drop compared to previous years, and the chairman suggested it was indicative of the current uncertainty in the markets over the global desire to pursue a low carbon agenda. “We hope this will be a temporary dip and that countries will move and make decisions to create more demand,” he said. “In 2014 there is a provisional step-up of ambition on the Kyoto Protocol, and positive movements in the ADP [talks on a global emissions deal in 2015] would hopefully raise expectations and raise more demand.” The UN is taking steps to simplify what critics say has become a complicated and lengthy application process. Stiansen said the initial registration and review process on new submissions will be streamlined to just over two weeks. The CDM has also opened three offices in Africa, with a fourth planned in the Carribbean, to promote applications from those regions. “What we have to offer is our moral support. The ones who can take action would be the parties – such as voluntary cancelation of CERs,” he said. “It is limited what the board can do. I want to re-emphasise this is a problem of demand – I do not see this as a problem of supply.” Stiansen’s bleak forecast is shared by analysts, some of whom fear continued lack of demand could hit investment in green development projects in poorer parts of the world. Anja Kollmuss from Carbon Market Watch told RTCC the CDM board has to tighten its application process to ensure projects are environmentally acceptable, but admits that unless governments took steps to drive demand the short-term outlook is bleak. One hope is that a possible aviation emissions agreement could boost demand for CERs. Earlier this week the world’s leading airlines called on governments to agree to a new greenhouse gas offsetting scheme for the aviation industry. “What may happen is that if ICAO [international aviation body] comes to an aviation agreement and they do agree on a market-based mechanism there might be an increase in demand from aviation – but this wouldn’t start till 2020. “I’m not too optimistic that anything will change anytime soon in terms of prices in the CDM” Continue reading
Give Credit Where Carbon Credit’s Due
CRITERION From:The Australian June 06, 2013 AS the two listed providers of carbon sinks — growing trees to generate carbon credits — Carbon Conscious (CCF, 2.8c) and CO2 (COZ, 9.5c) have endured the pall of political uncertainty around the abatement issue. But they may be in a better than anticipated position when (barring a Ruddy miracle) Tony Abbott and his climate sceptics storm the frontbenches in September. It’s widely assumed that given the Coalition has pledged to abolish the carbon tax — Senate willing — there’s no incentive for companies to invest in carbon-soaking schemes. Indeed, Carbon Conscious client Origin Energy last year declined to extend a tree-planting deal. But there’s bipartisan agreement to reduce Australia’s emissions by 5 per cent by 2020, with the Coalition pledging to set aside $1.5 billion over three years to buy credits generated by polluters. This equates to a somewhat theoretical price of $15 a tonne, compared with the current temporary floor price of $23/t. Given the slowdown in sequestration investment, CO2’s Andrew Grant says the government may struggle to obtain local credits, in which case the market will push up the price. And, no, dirt-cheap European credits can’t be imported. CO2 yesterday announced the first issue of Australian Carbon Credit Units (ACCUs) from a reforestation project, on behalf of goldminer Newmont. In other words, Newmont can now offset any carbon tax liability from its two Australian mines and avoid paying the carbon tax. Carbon Conscious also announced its method for measuring the carbon-soaking abilities of its 18,000ha of forests had been approved by the clean energy regulator. Carbon Conscious chief executive Andrew McBain expects this acreage to generate 300,000 ACCUs over the next 10 to 15 years, with 10 per cent owned by the company and the rest by clients. “The revenue potential is substantial, especially for a smaller company like ourselves,” McBain says. CO2’s tapestry is more complex as it derives revenue from eco investments and advice and is building a low-cost tiger prawn hatchery in Western Australia. Grant is unfazed by the abysmal listed history of aquaculture plays.”Collingwood doesn’t benchmark itself against Melbourne,” he says. Like the hapless Demons, both stocks are chalking up nasty losses, but we give them credit for being years ahead of sequestration rivals. We’ll avoid Carbon Conscious (market cap $2.9m) in favour of the bigger CO2 ($43m). ISS Group (ISS) 32c MICROEQUITIES’ Carlos Gil has a sense of deja vu as he saddles up to ward off a US takeover attempt at a local mining-focused house. P2ES Holdings is offering 33c a share for ISS, which boasts a proprietary IT system for the oil and gas sector called BabelFish. Microequities owns 9 per cent of ISS and Gil reckons the offer price (a 50 per cent premium on Tuesday’s close) doesn’t reflect the value of the “great little software”. In 2011 Microequities fought in vain to prevent Triple Point from taking over QMastor, but not before the suitor improved its offer. This time around it’s trickier because the offer is board-endorsed, but Gil reckons he can still get the 25.1 per cent support to stymie the scheme of arrangement. We had ISS as a spec buy at 17c and now call the stock a hold. For the record, Gil would accept 40c a share. Given the Hitchhiker’s Guide to the Galaxy allusion to BabelFish, let’s make it 42. Macmahon Holdings (MAH) 16c THE mining contractor yesterday had no idea why Swiss giant Glencore had dumped it from a $110m project — and by sunset was still as bemused as a lost puppy. Investors won’t give mining-service plays the benefit of the doubt and Macmahon’s already trashed shares lost another 2c (11 per cent). The terminated assignment — extending the main shaft of the CSA copper mine near Cobar — was minor in the scheme of Macmahon’s $1.4bn revenues and $3.9bn job book. On a brokers’ trip to the Pilbara last month, Fortescue reps waxed lyrical about Macmahon’s prosecution of the $1.8bn Christmas Creek expansion. Macmahon has guided to a full-year loss of up to $20m. CSA won’t be the last shafted mining project, but we believe the Macmahon sell-off has been overdone and rate the stock a buy. borehamt@theaustralian.com.au The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author does not own shares in any of the companies mentioned. Continue reading
Carbon Pricing Is Catching On Around The Globe — Just Not In Washington, D.C.
By John Upton Shutterstock Should it cost money to do this? More than 40 national governments and 20 states or other “sub-national” governments are now charging polluters for emitting greenhouse gases, or plan to start in the coming years, according to a new report from the World Bank . The U.S., of course, is not one of the countries with a national cap-and-trade plan or carbon tax, but California and parts of New England are pushing ahead despite Congress’ refusal to act. All in all, about 7 percent of the world’s greenhouse gases are now priced — the equivalent of 3.3 gigatons of carbon dioxide out of the total 50 gigatons emitted annually worldwide. Not a lot. But, says the report, “If China, Brazil, Chile, and the other emerging economies eyeing these mechanisms are included, carbon pricing mechanisms could reach countries emitting 24 [gigatons of CO2 equivalent] per year, or almost half of the total global emissions.” From The W ashington Post : The World Bank report also notes that many cap-and-trade programs are beginning to join together — California is partnering with Quebec, and the E.U. has joined up with Switzerland — which, in theory, should make it easier for companies to make the easiest cuts first. And many programs are trying to expand coverage. Australia and Korea are hoping to get 60 percent of their emissions covered, while California is aiming for 85 percent. That said, the World Bank concludes that there hasn’t been nearly enough progress to avoid the worst effects of global warming. “The current level of action puts us on a pathway towards a 3.5–4°C warmer world by the end of this century, [which] would threaten our current economic model with unprecedented and unpredictable impacts on human life and ecosystems in the long term.” What’s more, many of these pricing programs could prove fleeting. In Australia, for instance, Liberal leader Tony Abbott has promised to dismantle the country’s carbon law if his party gains power in the September elections (which is looking likely). So carbon pricing could just as easily shrink as expand in the years ahead. And even where cap-and-trade systems are in place, polluters aren’t paying a hefty sum. Many systems are awash with a glut of carbon credits and allowances, which has pushed prices to “a historic low,” the World Bank says. From the report: Under conditions of lower growth the demand for carbon assets from compliance buyers fell [since the global economic crisis of 2008-09]. The imbalance created by reduced demand and an unchanged supply (put in place in a more favorable economic environment) in the main carbon markets has led to a surplus of allowances and credits in the market, causing carbon prices to plummet since mid-2011. Kyoto offsets are currently being traded at a few Euro (€) cents, while EU Allowance (EUA) prices fell from about €30 in mid-2008 to lows of below €4 in early 2013, substantially less than what is needed for a transition to a sustainable, low-carbon world. John Upton is a science fan and green news boffin who tweets , posts articles to Facebook , and blogs about ecology . He welcomes reader questions, tips, and incoherent rants: johnupton@gmail.com . Continue reading
