Weekly CDM and VER market summary - 2-8 November 2009

VER market activity was quieter than previous weeks partially due to participants attending an industry conference in New York. Demand for smaller clips of issued "charismatic" non-forestry, pre-CDM VCUs continues, at $4.50/$6 bid/offered. "Standard" issued RE VCU credits from China continue to trade at a $2 discount compared to Indian issued RE pre-CDM VCUs which are $4/$5 bid/offered for 08/09 vintages as buyers broaden their portfolios.

Gold Standard VER interest is muted as CSR demand remains slack and end-users "trade down" their offset preferences. There is buyer interest in credits from African projects, priced at €9-€11, depending on proximity to issuance. Issued non-African GS VERs are under downward pressure at €7/€8 bid/offered while forward credits are €5/€6 bid/offered as buyers delay purchasing.

CRTs are $7/$8 bid/offered for 2009+ vintages and supplies are expected to remain pretty tight despite new methodologies coming online. The prospect of Canadian and Mexican volumes in the near future will boost supply however this is heavily anticipated and could be snapped-up at the project stage. CRTs are the most popular US credit type as they are regarded as the best bet for inclusion as early action credits in a federal US carbon scheme.

The Dec09 CCX CFI closed up $0.05 at $0.15. Nearly all volume was seen at the beginning of the week, concentrated on the 2008 vintage. Total volume exchanged was 342,600 tonnes (3426 CFI contracts), much less than the previous week's volumes. There were no privately negotiated transactions.

The Dec 09 secondary CER contract settled at around €13.10, down €0.05c on the week. Carbon dipped late in the week on the back of worse than expected US unemployment figures having prior trading sideways with little volume
exchanged.

Japan sets 80 per cent goal

Japan will reduce GHG emissions 80 per cent below 1990 levels by 2050. Prime Minister Hatoyama made the announcement at a Budget Committee session Friday following criticism of the Democratic Party of Japan's (DJP) long term climate goals. DJP has already set targets of 25% reductions below 1990 levels by 2020.

Senate Committee passes climate bill

US Senate Committee approved Kerry–Boxer bill on Thursday by a majority vote of 11 to 1. Only Democratic Senator Max Baucus voted against the bill stating the emission reduction goal of 20 per cent below 2005 levels by 2020 was unrealistic. A boycott meant none of the committee's seven Republicans were present for the vote. Committee rules state that two minority party members must be present for amendments to be considered but due to the Republican absence Environment Committee Chair Barbara Boxer did not hear any of the 80 markups to the bill.

Co-author Senator John Kerry is attempting to draft a compromise with some moderate Republicans and the White House.

Kazakhstan pledges emission cuts

Kazakhstan pledged 15 per cent GHG reductions below 1990 levels by 2020, increasing to 25 per cent below 1990 levels by 2050.

Targets are conditional upon the outcome of climate talks in Copenhagen and the country will establish a national registry and was preparing procedures for JI projects. Kazakhstan ratified Kyoto in 2009 and has 25 JI projects in the
pipeline.

UN releases emission target data

Industrialised country emission reduction targets amount to cuts of between 16 – 23 per cent below 1990 levels according to the latest UN data.

The figures released at Barcelona talks aim to break the negotiating stalemate between rich and poor nations.

Rich countries want clarity on accounting rules and definition of carbon markets before committing to a second phase of Kyoto while developing countries want firm commitments from industrialized nations of 40 per cent reductions below 1990 levels by 2020 before exploring future mechanisms.

US bank stumps up cash for clean tech

The Export-Import Bank of the US will provide $250 million to fund the export of cleaner energy technologies including solar, wind and geothermal technologies. The credit line, a part of the bank's climate policy, also requires that the bank keep track of emissions from projects it supports, in keeping with Obama's promotion of green tech to help create new jobs.

VCS enables credit transfer

Voluntary Carbon Standard enabled the transfer of credits between its three registries. Credits from the US based APX, New Zealand based Markit and French registry Caisse des Depots can now be interchanged between registries
allowing for more transparent and streamlined delivery according to market commentators. The VCS has to date registered 153 projects and issued 11.4 million VCUs.

New US clean energy bill tabled

US Senator Debbie Stabenow (D-MI) announced last week the introduction of her legislation, the Clean Energy Partnerships Act. The bill will create partnerships among manufacturing, utilities, agriculture and forestry to reduce costs now as we transition to a clean energy economy tomorrow.

The legislation "offsets" our use of fossil fuels by investing in practices like sustainable agriculture and forestry projects that capture and store carbon.

Stabenow serves on the Senate Agriculture, Nutrition and Forestry Committee as well as the Senate Energy and Natural Resources Committee and Senate Finance Committee. Co-sponsors of the bill include moderate Democrats who represent rural and manufacturing states. Their support is essential to the passage of the Kerry-Boxer bill. Montana Democrat Max Baucus, the only Democrat on the environment committee to vote against passing Kerry-Boxer, supports the Stabenow bill.

The Stabenow bill lists specific eligible offset types which include: Coalmine methane, landfill gas and fugitive emissions from the oil and gas sector, afforestation and reforestation of acreage not forested as of Jan. 1, 2009, forest management and reduced deforestation, carbon capture and storage, recycling and waste minimisation projects, projects relating to agricultural, grassland and rangeland management, animal management practices and urban tree-planting.

VER Statistics

APX GS Registry: 134 Projects Listed
APX VCS Registry: 81 Projects with Issued VCUs
Markit VCS Registry: 69 VCS Projects on Public View
CCX CFI weekly volume: 342.6kt (-1,077.4kt)
CAR: 73 Projects Listed; 1.68Mt CRT issued
Source: APX; CCX; CAR; Markit

CDM Statistics

Total Issued CERs 344.4Mt
Total CERs Requested 9.9 Mt
Issuances 1,339
Host Countries 58
Registered Projects 1,884
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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