Tag Archives: scheme
UN Carbon Market Scheme Passes 7000 Project Mark
Last updated on 8 July 2013, 10:07 am By Ed King The world’s largest emissions trading scheme has passed the 7000 project mark, despite continued concerns over its viability and a collapse in carbon prices. The Clean Development Mechanism’s newest project is a biogas capture plant in a Philippine chicken farm, which will reduce emissions by 48,000 tonnes, equivalent to 10,000 cars. The news is welcome boost to the UN, which runs the CDM under the Kyoto Protocol. One thousand new projects have been accepted since February, but certified emission reductions (CERs) prices remain low, having dropped 90% in 2013. Biogas is produced by the anaerobic digestion with bacteria or fermentation of biodegradable materials such as manure, sewage & crops “Despite unfavourable market conditions, the CDM continues to provide a mechanism for real emission reductions and real sustainable development for those who wish to use it,” said Peer Stiansen, Chair of the CDM Executive Board. “The Board will continue its efforts to make the CDM the best tool it can be to reduce emissions and spur development, but Parties must do their part and set ambitious emission reduction targets to incentivize climate action and these types of green growth projects.” The CDM currently operates in 88 developing countries, allowing companies in the industrialised world to invest in emission reducing projects in developing countries and earn carbon credits in the process. Over the past decade the CDM has spurred more than USD 215 billion of low-carbon investment in developing countries, issued credits equal to 1.3 billion tonnes of CO2, and added more than 110,000 Mega Watts of renewable energy to global electricity grids. But with governments setting low emission reduction targets, the demand for credits has collapsed, leading to calls for the market to be saved with a $2.5 billion bailout. Speaking to RTCC two weeks ago, Joan MacNaughton, vice chair of the high-level policy dialogue that reviewed potential solutions to the CDM’s predicament in 2012, said the CDM would likely play a vital role in any global emissions deal agreed in 2015 and needed to be helped. “The fund is a temporary, interim means to ensure we can retain its functionality,” MacNaughton said. “The real solution is in increasing the demand for offset credits and that means higher levels of ambition on emission reductions by the parties and reaching that agreement will take some time. “Until we get an agreement on a new mechanism and higher [mitigation] ambition, then we will be able to take advantage of these projects. “All of this is not about maintaining the market for its own sake. It’s about retaining it as a means to an end, which is reducing greenhouse gases. Without it the wound continues to bleed.” – See more at: http://www.rtcc.org/…h.unadivFg.dpuf Continue reading
Commission Repeats Calls For Carbon Market Reform As Surplus Allowances Double
The number of surplus carbon permits under the European Union’s Emissions Trading System (EU ETS) doubled to two billion last year, the European Commission has announced. 21 May 2013 Topics Climate Action Commissioner Connie Hedegaard said that the figures for 2012 underlined the need for urgent action to address the “supply-demand imbalance” under the struggling scheme. “The good news is that emissions declined again in 2012,” she said. “The bad news is that the supply-demand imbalance has further worsened in large part due to a record use of international credits.” “At the start of phase 3, we see a surplus of almost two billion allowances. These facts underline the need for the European Parliament and Council to act swiftly on back-loading,” she said. The European Parliament rejected a proposal by the European Commission to ‘backload’ a number of allowances under the scheme , as a temporary measure to address falling prices and lack of demand, last month. The proposal will be refined by the Parliament’s Environmental Committee, before returning to Parliament for a new vote next month. The EU ETS was established in 2005 and was the first major emissions trading scheme in the world. Phase 3 began on 1 January 2013, and runs until 2020. Under the scheme there is a cap on greenhouse gas (GHG) emissions from prescribed energy intensive installations. Installations must purchase GHG emissions allowances, called European Union Allowances (EUAs), which represent the right to emit or discharge a specific volume of emissions in line with national allocation plans. Operators of installations must hold EUAs equal to, or more than, total emissions at the end of the EU ETS year and those with excess allowances can ‘bank’ them or trade with those who need to buy more allowances to comply with emissions limits. The European Commission’s proposals would see 900 million allowances that would otherwise have been made available for auction between 2013 and 2015 transferred to later in the third phase of the EU ETS. By doing this, the Commission hopes to address the build-up in allowances caused by reduced industrial activity during the economic downturn. The price of allowances is currently below €4 per tonne according to Thomson Reuters Point Carbon – well below a historical average of €30 per tonne. According to the Commission’s figures, the number of surplus allowances rose from around 950 million at the end of 2011 to almost two billion by the end of 2012. This was due to a “combination” of the use of international credits, auctioned allowances from earlier phases of the scheme and remaining free allowances granted to new entrants to the scheme. Since 2008, the EU ETS has allowed installations to use international emissions reduction credits generated under the Kyoto Protocol to offset part of their emissions. Compliance with the rules of the scheme was “high” in 2012, according to the Commission. Less than 1% of participating installations did not surrender allowances to cover their 2012 emissions by the deadline of 30 April 2013, while aircraft operators responsible for over 98% of 2012’s aviation emissions had also fulfilled their responsibilities under the scheme. This year, aviation emissions fell under the EU ETS for the first time; however aircraft operators were given the option to limit reporting to only those flights within Europe. Environmental law expert Eluned Watson of Pinsent Masons said previously that backloading was merely a “quick fix” for the EU ETS, but that more time would be needed to put together a longer term reform package. ” Urgent action is required, backed by clear legislative support, to structurally reform the EU ETS and to rebalance the supply and demand of allowances in the EU ETS market, ” she said, as prices fell to a record low of €2.81 a tonne at the start of this year. “Although the backloading proposal is very much a ‘quick fix’, reactionary measure, it is clear that longer term structural reform will take time, with changes unlikely to be in place until 2017 at the earliest,” she said. Continue reading
Report: South Korea To Launch World’s Most Ambitious Carbon Trading Scheme
Bloomberg New Energy Finance predicts price of carbon in South Korean scheme could hit $90 a tonne By BusinessGreen staff 14 May 2013 South Korea is preparing to introduce the world’s most ambitious emissions trading scheme, potentially paving the way for carbon costs as high as $90 a tonne for many of the country’s key industries. That is the stark conclusion of a major new report from Bloomberg New Energy Finance (BNEF) and Ernst & Young, which hails the proposed scheme as the world’s most ambitious carbon-pricing policy but warns that changes to the proposals may be required before the scheme is introduced in 2015 to avoid “punitive” costs on industry. “If the government implements the scheme without any changes, it will have major implications for Korean companies,” said Richard Chatterton, lead analyst for carbon markets at BNEF, in a statement. “A carbon price will lead to higher power prices and impose additional costs on industrial firms. The government is mitigating the impact for covered entities by handing out most allowances for free, but costs could still rise quickly.” The report calculates that if South Korea adheres to its national target of cutting emissions to 30 per cent below business-as-usual levels by 2020 emissions reductions delivered through the planned emissions trading scheme would have to reach 836 million tonnes between 2015 and 2020. But it also predicts the “need to reduce emissions will, however, exceed the options available within industrial companies and from the country’s current fleet of gas fired power stations”, meaning that the target is likely to be missed and the price of carbon in the scheme will effectively be set by a $90 a tonne penalty price for company’s exceeding their emissions cap . The government hopes that businesses will be able to comply with the cap by accelerating the shift toward lower carbon energy sources, such as gas, renewables, and carbon capture and storage plants. But the BNEF report warns that the cost of such technologies is likely to be significantly higher than the penalty price, meaning many firms are likely to opt to exceed their targets. It recommends that the government consider a number of options to improve the proposed scheme, including relaxing the number of offset credits companies can use to count towards their carbon target or loosening the over-arching cap on emissions. “The challenge is to put in place a carbon price high enough to impact investment decisions, but low enough to transition smoothly towards a carbon-constrained economy,” said Milo Sjardin, head of Asia research for BNEF, in a statement. “With the proposed design, demand and supply within the ETS are not well-matched and will lead to unnecessarily high carbon prices. Policy-makers will need to look at cost containment measures closely while not compromising the ambitions of the scheme.” However, Yoon Joo-Hoon, senior manager at Ernst & Young, warned that while changes to the proposals could be made businesses still needed to be preparing now to the likely impact of the scheme, arguing that firms should be looking at carbon mitigation options and developing a plan for operating effectively under an emissions trading scheme. Continue reading
