Weekly CDM and VER market summary 7-13 September 2009

Voluntary trading has seen an encouraging resurgence following the return of market participants from the summer break.

Increasingly bullish VER offers were the hallmark of the week with demand starting to catch up with recent vintage pre-CDM RE VCUs $3@4. Charismatic pre-CDM VCUs are $4@$5.25 bid/offered while pure and non RE VCUs are $1-$2 lower.

Forestry offsets of all methodologies are receiving interest however considerable project volumes and complexity combined with delivery risk are promoting a cautious approach from buyers. Forestry credits are currently $4@$9 bid/offered. African credits remain on buyer wish lists despite a lack of issuance, $5@$10 bid/offered depending on project.

US Climate Reserve Tons are still highly sought after with demand increasing from spec players.

Ag. Methane and Forestry credits remain choice, though a lack of volume and issuance is driving interest in 2009+ forward strips of LFG credits, trading around $6.50/$7.25. On exchange, the CCX CAR-CRT Futures Dec10 V09 settled at $6.75; while the CCX CAR-CRT Dec10-Dec15 vintage 09 strip settled at $6.95: both with no volume traded.

Gold Standard interest persists though the delayed issuance of African projects is pushing buyer demand towards alternative projects both from non typical locations and/or cheap issued offsets. African spot credits are €9/11 bid/offered with non-African spot offsets €7/9.

The Dec09 CCX CFI settled Friday at $0.20 cents with exchange traded volumes expanding considerably to 476,100 total tonnes traded. Privately negotiated transactions continue to attract considerable pricing premiums though size remains limited. 3,631 CFI contracts (363,100 metric tonnes), all pre-2009 vintage were privately transacted and reorted to CCX, making it easily the busiest week to date.

The Dec09 secondary CER contract closed the week down €0.55c at €12.90.

Following Thursdays UK EUA allowance auction, which was five times oversubscribed, trading was thin. German power prices slid though coal prices remained unchanged.

SGS UK suspended

The UNFCCC CDM Executive Board, at their forty-ninth meeting, decided to suspend SGS United Kingdom Ltd. The suspension will not apply to existing activities that had been submitted for registration and issuance before the enforcement. The DOE has six months to "undertake corrective actions".

US steel emissions slump

The economic crisis, resulting in global recession, has resulted in emission reductions of over 30 per cent in the US domestic steel industry. The industry remains firmly opposed to cap-and-trade legislation while arguing for a larger free permit program as well as the roll-out of border tariffs on carbon intensive imports.

Oz top emitter

Global risk analyst Maplecroft's CO2 energy emissions index reported that Australia emits the most carbon dioxide per capita recently surpassing the US. The top five emitters per capita (in order) are Australia, US, Canada, The Netherlands and Saudi Arabia. The biggest overall emitters in the world are China, The US, Russia and India. Ominously, Russian Prime Minister Putin stated on Friday that he would reject any new climate change pact that did not include the US and China.

Paraguay unveils first CDM project

Paraguay became the 58th host country with a registered CDM project, a 215.2 hectares small-scale reforestation project based in Paraguari department.

South Africa voices opposition to carbon targets

South Africa's government last week stated that it would not agree to any emission reduction targets that would undermine its economic growth.

Industrialised nations have been pressuring developing countries to commit to binding GHG targets with South Africa, China, India and Brazil unwilling to agree to enforceable reductions without stronger targets and adaptation financing from the developed world.

South Africa is heavily coal dependant and one of the developing world’s largest GHG emitters. The country's former government, also dominated by the ANC, outlined plans to adopt climate policy within three years to halt cut emissions by 2020. The current administration vowed to create a committee to implement a national climate change programme to develop a mandate for the UN.

African nations stated earlier this year that developing nations will require $270 million from industrialised countries to fight climate change.

US firms call for cap-and-trade

A group of 12 major US corporations submitted a letter to the US Senate calling on them to pass cap-and-trade legislation this year.

The group, which includes Levi Strauss, DuPont, Florida Power and Light, Google and Nike, stated in their appeal that comprehensive climate legislation will benefit the private sector by inspiring new business opportunities and practices "leveling the playing field for all US businesses and ensuring that the US economy can compete in growing global markets for clean energy".

VER Statistics

APX GS Registry: 120 (+3) Projects Listed
APX VCS: 68 Projects with Issued VCUs
Markit VCS Registry: 50 VCS (+4) Public View Projects
CCX CFI weekly volume: 476.1kt (+421.2kt)
CAR: 66 (+5) Projects Listed; 1.62Mt CRT issued

Source: APX; CCX; CAR; Markit

CDM Statistics

Total Issued CERs: 328.5Mt Issuances: 1,247
Total CERs Requested: 4Mt Host countries: 58
Registered Projects: 1,809 (+12) Requests: 68

Source: UNFCCC

This report was provided by MF Global, a leading broker in exchange-traded futures and options

For more details on the company's carbon market activities contact Gareth Turner at gturner@mfglobal.com

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