Weekly CDM and VER market summary - 21-27 November 2009

The advent of Thanksgiving in the US and posturing from governments ahead of international negotiations reduced demand this week.

Bread and butter Indian wind VCUs are $4.25 offered with exotic VCUs like Thai biogas at a $1.75 premium. Chinese VCUs continue to attract very little demand, at present Gold Standard VER transactions are increasing slightly after a quiet 11 months with small volumes being traded at €6-7/t spot and forwards around €5.

US CRT V09 agricultural methane is $7.50 bid amid constrained supply, while pre-09 vintages are struggling to find buyers due to market uncertainty of future grandfathering eligibility for older credits into a future US cap-and-trade scheme.

On the CCX, the traded weekly volume reduced considerably from last week's 4.6Mt. 1,103 US agricultural methane CFI contracts from 2007 and 2008 (110,300 tonnes) were transacted privately at $0.65. The benchmark Dec09 CFI remained at $0.10/t.

The CCX increased price limits in the CCX CFI cash/spot contract at the start of the week to a maximum of 200 per cent from 100 per cent above/below daily price movement from the previous night's close, while the tick size remains at $0.05. With the Dec 09 contract at $0.10, and constantly changing legislation, the increase means that CCX is enabling the contract to better react to news and/or customer demand in a transparent manner.

China sets carbon intensity target

China pledged carbon intensity reduction targets of 40–45 per cent below 2005 levels, by 2020.

The voluntary "domestically binding" target issued by China's state council is viewed as vital to getting global climate talks back on track but is unlikely to prevent the country's emissions doubling by 2020.

The cabinet will unveil new taxation and financial steps while a five year plan to boost energy efficiency and renewable energy by 2010 is expected to help China achieve 50 per cent of its goal.

Australia finalises offset standard

The Australian Department of Climate Change has finalised its National Carbon Offset Standard which will come into force from next July, replacing the current Greenhouse Friendly program.

In a reversal of policy, the DCC has green-lighted Gold Standard and VCS credits as providing sufficient integrity for Australian consumers.

US proposes 17 per cent emission cuts

The United States has proposed a cut in GHG emissions of 17 per cent below 2005 levels by 2020. The target is in line with the Waxman–Markey bill which successfully passed in the House but is less ambitious than the planned 20 per cent reductions listed in the Boxer–Kerry Senate markup.

President Obama vowed to attend climate talks hoping to add momentum to the outcome of negotiations at Copenhagen. Beyond 2020, the US will project emission cuts of 18 per cent by 2025 and 32 per cent by 2030 compared to 1990 levels, according to the White House.

Canada launches new offset fund

A voluntary carbon fund launched in Canada on Monday with the aim of offsetting the emissions of Canadian businesses from domestic projects. The Greening Canada Fund is being backed by two banks and is looking for additional investment as well as Canadian-originated projects.

NZ passes ETS changes

New Zealand passed amendments to its ETS scheme meaning that from July 2010 energy, industry and transport will join forestry which has participated since January 2008.

The country's largest emitting industry, agriculture, will be applicable under the climate framework from 2015. From 2013 carbon will be fixed at NZ$25 with firms only accountable for 50 per cent of their emissions.

No allocation plan exists with companies allowed to emit in line with industry specific carbon intensity standards. UN CDM credits can be used for compliance but only forestry can sell credits abroad. The nation plans to cut emissions 10–20 per cent below 1990 levels by 2020, dependent on the outcome of international negotiations.

Canada touts carbon plan

Canadian Environment Minister announced Wednesday that Canada's environment program is very close to Obama's plan. Canada's stated target is to cut GHG emissions 20 per cent by 2020, from a 2006 base.

Indonesia slams emissions study

Indonesia has rejected a 2007 World Bank study that ranked the country as the world’s third largest GHG emitter. The Second National Communication submitted to the UN described the World Bank's report as inaccurate due to the fact that other countries have not reported data while figures produced as evidence were far in excess of actual emissions.

In 2000 Indonesia's GHGs were around 1.42 gigagrams: far lower than the 3 gigagrams reported by the World Bank. Indonesia pledged emission reduction targets of up to 26 per cent by 2020 or 41 per cent by 2050 achievable with funding and technology transfer from developed countries.

Other strategies include development of geothermal and waste energy schemes and the reduction of illegal deforestation.

Oz delays climate bill vote

Australia's parliament delayed a final senate vote on CPRS following a split in the opposition liberal party that saw the resignation of 10 politicians.

Despite an agreed deal following weeks of discussion between parties a last minute revolt dashed hopes of the bills successful passage with former conservative minister Tony Abbott stating he would challenge Turnbull for opposition leadership.

The government requires seven of the remaining 19 opposition votes to pass the climate law. Failure may lead to snap elections with polls showing Rudd and Labor with an 11 point increased majority.

VER Statistics

ACR 21 Projects Listed: 32.2Mt issued
APX GS Registry: 300 Listed Projects; 1.8Mt issued
APX VCS Registry: 85(+1)Projects; 6.3Mt issued

Source: ACR; APX

CAR: 95 Projects Listed; 1.87Mt CRT issued
CCX weekly volume: 110.3Kt (-4,488.6kt)
CdD VCS Registry: 5 Projects; 737.1kt issued
Markit VCS Registry: 103 VCS Projects; 6,77MT issued

Source: CAR; CCX; Caisse des Depots; Markit

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