Tag Archives: green
China to Complete Climate Change Law Draft in Two Years
18/04/13 China plans to draw on the experience of seven regional carbon markets as it drafts new national legislation in one or two years, according to the country’s lead climate negotiator. The nation, the biggest emitter of greenhouse gases linked to global warming, will “actively promote” the legislation, Xie Zhenhua, vice chairman at the National Development and Reform Commission, said today in Beijing. “Shanghai and Shenzhen are trying to set rules for carbon trading,” providing expertise for the nation, he said. China, which surpassed Japan in 2010 to become the world’s second-biggest economy, plans to cut carbon emissions per unit of economic output by 40 percent to 45 percent before 2020 and learn from carbon-pricing efforts in South Korea, Australia and the European Union, Xie said. “The carbon price depends on emission-cutting efforts,” Xie said. The EU price is “very low,” probably because they allocated too many emission quotas when designing their market. “We are learning lessons.” The Shanghai carbon exchange plans to take back allowances when carbon prices are low and sell more when they are high “to maintain relatively stable levels,” Xie said. China’s national climate legislation will have a binding effect, Charlie Cao, a Beijing-based analyst at Bloomberg New Energy Finance, said by phone today. “This will bring stable expectations to investors on a carbon market. Otherwise they don’t have confidence.” China asked seven cities and provinces last year to set regional caps and pilot programs for trading emission rights. The country set targets to cut carbon intensity reduction and energy consumption by 2015 for each city and province, Xie said. The total amounts of carbon emissions can be estimated with planned economic growth, he said. China will then set quotas for carbon emissions and allocate them into key enterprises, Xie said. Shenzhen, scheduled to start June 18, will be the first to begin emissions trading, and Shanghai is likely to follow this year, he said. To contact the reporter on this story: Feifei Shen in Beijing at fshen11@bloomberg.net To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net Continue reading
Carbon Trading Scheme Facing Strife
April 18, 2013 Illustration: Malcolm Maiden. The collapse of Europe’s latest attempt to breathe life into its moribund carbon trading scheme is a hammer-blow for proponents of a global carbon trading system. So much has gone wrong with Europe’s scheme that a global trading regime may be out of reach for decades, even if the carbon price recovers. Europe launched its trading system in 2005, and it quickly became the world’s carbon trading hub, for European permits, but also for ones generated in other markets, including the world’s largest issuer of permits, China. European regulators issued too many permits when they launched the scheme, however. The glut was hidden for a couple of years as Europe and the world surfed to the top of the boom that led to the global financial crisis, but once the crisis hit, it emerged as a potentially fatal design flaw. Europe’s carbon price was above €20 a tonne in 2008, before the sovereign debt phase of the global crisis emerged and Europe plunged into a deep recession. By February this year it was at €5 a tonne as recession conditions kept industrial activity, power generation, emissions and demand for permits down. Then on Tuesday in Brussels, the European Parliament narrowly voted against a plan to shore up prices by quarantining surplus carbon credits, and the carbon price fell to €2.6 or $3.34 a tonne. The plan to ”backload” excess credits by withdrawing them, holding them for about five years and then reinjecting them into a European economy that regulators hoped would by then be growing strongly enough to push demand for permits higher will probably be resubmitted, but there is no great hope that the vote will be different. The collapse in European carbon trading prices directly pressures the carbon reduction regime that the Labor government has launched because the intention is to switch from a carbon tax to a carbon trading scheme in 2015-16, and link the Australian scheme to the European system at that time. Existing and proposed prices for Australia’s scheme are far above those that now exist in Europe. The carbon tax was introduced last year at a price of $23 a tonne, and the government’s budget papers predict a price of $29 a tonne by the time the scheme shifts to carbon trading. If the European price stays down, Australia’s price will be below $10 a tonne after trading begins. Permits will be cheaper than expected, government revenue from the sale of permits will be lower, budget balances will be pressured and the government’s commitment to carbon scheme compensation packages that range from power generators to households will be reviewed. The broader message from the collapse of carbon trading in Europe is, however, that a carbon trading scheme cannot be relied on alone to set a pathway that leads to sustained emissions reduction. In a regime where carbon trading was an ineffective forcing mechanism in this country, for example, the separate target for at least 20 per cent of Australia’s energy to be sourced from large-scale renewable energy sources by 2020 would become a much more important part of the emission reduction equation. Carbon trading is designed in part to be a pathway for the flow of emission credits to where they are needed. Credits are underpinned by a carbon price, and if that carbon price rises they have positive value – are ”in the money” in options market parlance. Emissions reduction in a functioning carbon trading system is therefore not just driven by steps emitters take to reduce their emissions as carbon costs rise, but by ”green” investment rate of return sums that are sweetened by the profitable sale into the trading system of credits earned by renewable energy projects. The collapse of the European price has been so severe, however, that the investment incentive component of the trading scheme has been seriously undermined. Funds in China and elsewhere that were set up to create green projects assumed a much higher carbon price than now applies, and the profitable sale of carbon credits that enabled their projects to hit their rate of return hurdles. They are now stranded, and their investors have retreated. Underlying rate of return sums on green projects could be similarly affected when trading begins if the carbon price is lower than expected, but Australia’s separate target for at least 20 per cent of Australia’s energy to be sourced from renewable energy sources is a partial backstop. Energy prices would be lower without it, but it is a key renewable energy investment forcing mechanism: while it exists, energy companies must either buy or build renewable energy generating capacity. Given that and given the state of the political polls, the Coalition’s attitude to the 20 per cent target is going to be crucial, and so far it is not clear. It has pledged to kill the carbon tax and axe Labor’s $10 billion Clean Energy Finance scheme, but Opposition Leader Tony Abbott was circumspect about the renewable energy target when pressed earlier this month, saying only that a Coalition government would subject it to a ”serious review”. Read more: http://www.theage.co…l#ixzz2QpHmrUr5 Continue reading
Ten Tax Planning Points To Raise With Clients
Author: Tim Hills IFAonline | 17 Apr 2013 Tim Hills, financial planner at JLT Wealth Management, offers his tips. Most clients have ample opportunity to keep more of their hard-earned wealth, using well established and non-contentious plans that will never appear on HM Revenue & Customs’ (HMRC) radar. But how many clients use all that is available to them? The following are some questions that may be useful to use with new clients, as well as to reinforce and refine plans for existing clients. 1 Rates Do you both pay the same rate of income tax? If not, is it possible to rebalance incomes so that this can be achieved, thereby making the most of the available personal (and age) allowances? 2 Thresholds If you are fortunate enough to earn over £100,000, what can be done to bring the income level below that threshold? The personal allowance reduces where the income is above £100,000 – by £1 for every £2 of income above the limit. Someone under the age of 65 earning £118,880 will lose their whole personal allowance. 3 Allowances Have you used your full ISA allowances, not just the cash element? If you have no “new” money you wish to commit to your portfolio, do you have any other investments in tax wrappers? While we tend to think of OEICs and unit trusts to ‘Bed&ISA’, a partial encashment from an investment bond (which, of course, notionally suffers basic rate taxation within the fund) is another source to fill ISA allowances. Clearly, care must be taken to avoid triggering tax charges using funds from a bond. 4 Assets Are you considering disposing of any assets and, therefore, incurring capital gains tax (CGT)? Who owns the asset? Transfers between spouses are not disposals for CGT. Plan when to crystallise gains – for example, if a client is considering a gift of property, now may be a good time due to the effect of the market on current values. Do you have losses that may be offset? This is often missed. 5 Pensions Have you made full use of your annual allowance for pension planning? If so, what about the previous three years? Attention needs to be paid to pension input periods and ensuring the client was a member of a pension scheme for eligibility purposes. 6 VCTs, EISs… If you do not wish (or cannot) commit any more investment into pensions, consider enterprise investment schemes (EISs) and venture capital trusts (VCTs). These offer the potential for tax relief on contributions, no CGT and, in the case of EISs, qualifying for business property relief (BPR). The latter means the investment will fall out of account for inheritance tax (IHT), as long as it has been held for two years and remains held at the date of death. The effective savings on income tax, CGT and IHT make such investments look very attractive. Note, however, that these are considered ‘high risk’ investments and care must be exercised. The tax tail should not wag the investment dog. 7 IHT Have you done everything possible to reduce your IHT liability? Gifts out of regular income (as long as they do not affect your standard of living) are not taken into account. Use your annual allowance of £3,000 each and remember you can carry forward the previous year’s unused allowance. Make the maximum gifts on marriage. Consider investments that qualify for BPR that, perhaps some clients , will consider are less ‘risky’ than EIS/VCT. For example, there are a number of schemes that are asset backed, targeting a modest and more predictable performance , the main purpose being BPR qualification. 8 Gifts If you are making gifts to children consider investing into Junior ISAs and/or a stakeholder pensions. In addition to the potential IHT savings available by making gifts, the beneficiaries can then receive the advantage of having their investment in a tax efficient wrapper, rather than simply cash in a deposit account. Tax relief is available for minors who do not pay tax, as they have personal allowances. 9 Process Understand that tax planning is a cyclical process – not an event. Tax legislation and personal circumstances change constantly. Do not be lulled into a false sense of security by thinking that a particular aspect has been dealt with (perhaps some years ago) and it remains completely effective. 10 Check, check and check again Check everything you receive from HMRC – they have been known to get it wrong! Read more: http://www.ifaonline…s#ixzz2QopEAqVo IFA Online – News, blogs and analysis for IFAs. Visit the website now. Continue reading
