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Carbon Credits Surge to Six-Month High as EU Refines Eligibility
By Mathew Carr – Jul 18, 2013 United Nations Emission Reduction Units surged 39 percent after Europe specified which credits are ineligible for use in its carbon market, the world’s biggest. ERUs for December jumped as high as 25 euro cents ($0.33) a metric ton, the highest since Jan. 31, on the ICE Futures Europe exchange in London . The European Commission, the bloc’s regulatory arm, upgraded its carbon registry yesterday to clarify which offsets can be used to meet emissions obligations. ERUs fell to a record low in May after the European Union said it may restrict the use of some offsets from countries including Russia and Ukraine should they fail to adopt new carbon goals as of this year. The credits, created from carbon-reducing projects in developed nations and emerging countries, may now narrow the price gap with more expensive Certified Emission Reductions from developing countries, according to Bloomberg New Energy Finance. The majority of ERUs issued since the start of the year are “likely to be confirmed as eligible” because they have been certified by an audit firm, Richard Chatterton, a London-based analyst for New Energy Finance, said in an e-mailed note. ERUs were trading at 22 euro cents a ton at 1:55 p.m. in London, while CERs fell 1.9 percent to 52 euro cents. Factories, power stations and airlines in the EU market can use either CERs or ERUs to match a limited portion of their emissions obligations. “The difference between the CER and ERU price will continue to narrow as the market gains confidence that ERUs will ultimately be able to be exchanged for EU allowances,” Chatterton said. Price Plunge ERUs plunged to a record 6 cents on May 1 amid a surplus of carbon permits in Europe, where slowing economic growth has damped demand for the credits. EU lawmakers are still debating a plan to temporarily reduce supply and boost prices. EU carbon allowances rose 1 percent to 4.17 euros a ton. The UN 1997 Kyoto Protocol supports the development of carbon-cutting projects by awarding investors with ERUs or CERs that can be sold to companies and governments with pollution caps. One credit is equivalent to a one-ton reduction of carbon dioxide. To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Continue reading
Palace: Prince William’s wife Kate in labor
Palace: Prince William’s wife Kate in labor (AP) / 22 July 2013 Prince William’s wife, Kate, was admitted to the hospital in the early stages of labour on Monday, palace officials said. Kate — also known as the Duchess of Cambridge — is expected to give birth in the private Lindo Wing of the hospital, where Princess Diana gave birth to William and his younger brother, Prince Harry. She will be looked after by a top-notch medical team led by royal gynecologist Dr. Marcus Setchell. Britain’s Prince William stand next to his wife Kate.- AP Kate and William, who spent the weekend at Kensington Palace, travelled to the hospital without a police escort just before 6 a.m., their spokesman said. “Things are progressing as normal,” he added. The baby will be third in line for the British throne, and should eventually succeed grandfather Charles and father William as king or queen of Britain and 15 other countries including Canada and Australia. But little else is known about the eagerly awaited royal baby, from how it will arrive to its gender or its name. Kate — formally known as the Duchess of Cambridge — is expected to deliver in the Lindo Wing, where Princess Diana gave birth to William and his younger brother, Prince Harry. It is not clear if she will have a natural birth or deliver by a planned caesarean section. Royal watchers must wait to be told of the baby’s arrival from the palace, which is planning to reveal the news through a mixture of tradition and social media. Palace officials have said that the first hint will come when a royal aide emerges from the hospital with a signed bulletin carrying the Buckingham Palace letterhead. The bulletin will be given to an official who will be driven to Buckingham Palace, where it will be posted on an easel in public view in front of the building. At the same time the bulletin is posted, there will be an official announcement on Twitter and the media will be formally notified. The document will give the baby’s gender, weight and time of birth. It could be some time before the baby’s name is made public. When William was born, a week passed before his name was announced. Charles’s name remained a mystery for an entire month. But it is the baby’s gender that is of particular interest because the prospect of Kate’s pregnancy prompted a change to laws of succession to ensure a daughter would not be passed over for the crown by a younger brother. Boy or girl, the child will be third in line to the throne and the prospective future monarch. The birth of a new heir to the throne has been breathlessly anticipated since William and Kate wed on April 29, 2011, in a lavish ceremony at Westminster Abbey. When news of a royal pregnancy was announced, there was rejoicing in many households in Britain and throughout the world. Despite a rough start to the pregnancy, when she was hospitalized for acute morning sickness, the 31-year-old Kate made a number of public appearances that were halted only near the end of her term. Since the duchess has cut back on her royal duties, media outlets have been clamoring for position outside of the hospital in anticipation of the birth, jockeying to secure the best vantage point for filming William and Kate emerging, babe in arms. Officials have said that William plans to take two weeks’ paternity leave and then return to his military duties as a search-and-rescue helicopter pilot in Wales. His tour of duty is scheduled to wrap up around September, and he and Kate are expected to move from their isolated cottage on the island of Anglesey off the coast of Wales to Kensington Palace in central London. But major refurbishment works at the palace likely won’t be finished until at least a month or two after the infant is born — meaning that William and Kate will most likely have to make do with their current temporary home in London, a two-bedroom property at the palace. Come autumn, however, the family will be able to move into their permanent London home, Apartment 1a at Kensington Palace — a four-story house with a nursery, 20 rooms and a private garden. Continue reading
Carbon Supply Crunch Set to Extend Longest Rally: Energy Markets
By Alessandro Vitelli July 18, 2013 The longest-ever rally in United Nations carbon prices shows little sign of easing as traders bet companies running emission-reduction projects will stop creating credits because it’s no longer profitable to do so. UN-approved Certified Emission Reductions, or CERs, for December have more than doubled to 49 cents (64 U.S. cents) from a record low in April on the ICE Futures Europe exchange. It costs a combined 50 to 80 cents a ton to have emission cuts at clean-technology projects verified and the corresponding certificates issued by the UN, said Luca Bertali, an emissions broker in London at TFS Green, a unit of Cie. Financiere Tradition SA, one of the largest inter-dealer brokers. Prices for the credits used by 34 of the richest nations from Germany to Australia to offset domestic emissions by investing in greenhouse-gas-reduction projects elsewhere tumbled 98 percent since peaking at 23.38 euros in 2008 as the global economic slowdown cut demand. The number of CERs being issued by the UN in 2014 may drop 23 percent from this year, according to Bloomberg New Energy Finance. “Unless the price of CERs covers the costs of verification and the UN share of proceeds, people aren’t going to deliver them,” Bertali said in a telephone interview. “We’ll see the result a year from now.” UN contracts climbed to a seven-month high of 56 euro cents a ton on July 3, when the European Parliament approved a plan to reduce the region’s record surplus of permits and buoy prices that had dropped to all-time record lows. They closed at 49 cents on the ICE Futures Europe exchange in London after seven weeks of gains, the longest streak since they were first offered in March 2008. CDM Support The UN’s Clean Development Mechanism, set up by the 1997 Kyoto Protocol, has supported the development of more than 6,900 projects in 87 countries and was worth 6.6 billion euros last year, according to New Energy Finance. Falling UN and European Union carbon prices shrank the value of emissions traded worldwide by 36 percent to 61 billion euros last year, New Energy Finance said in a January report. Investors in CDM projects get CERs that they can sell to companies and governments with pollution caps. The EU allows emitters to use UN offsets to comply with obligations in its cap-and-trade program, the largest in the world. One credit is equivalent to a one-ton reduction of carbon dioxide. One such investor is the Climate Cent Foundation, a group formed by the Swiss Petroleum Federation, the Swiss Trade & Industry Federation and the Swiss Road Traffic Federation, which buys CERs from a 15 megawatt hydroelectric plant in Peru, according to the United Nations Framework Convention on Climate Change, or UNFCCC. The facility is designed to generate 42,000 CERs a year for as many as 21 years from July 2009, which can be used to meet emission caps. Unbuilt Projects The low UN carbon offset price may mean new emission-reduction projects won’t be built or existing facilities are dismantled, according to Renat Heuberger, chief executive officer of project developer South Pole Carbon Asset Management in Zurich. “It’s going to be a significant amount,” he said July 12 in an e-mailed response to questions. “For example, in the landfill and biogas space there is no point keeping the collection systems in place if CER prices are so low.” CER supply in 2014 will total 260 million tons, down from the record 339 million supplied in 2012, according to New Energy Finance. July issuance of CERs will be 12.5 million tons, the fourth consecutive month of declines and the lowest since February, according to UNFCCC data. The UN regulator has issued 202 million credits this year. Limited Gains UN credit price gains may be limited because of caps on demand for existing and future certificates together with oversupply. Market rules will restrict European demand for CERs from 2013 through 2020 to 578 million tons, compared with an immediately available supply of about 500 million tons, according to New Energy Finance. Any shortfall will be met by future issuance, which may be as much as 1.3 billion tons through 2020. “There’s a total of about 500 million tons of offset supply in the market at the moment that hasn’t been submitted as part of compliance,” Richard Chatterton, an analyst at New Energy Finance in London, said by phone on June 19. “That’s a huge overhang, which could push the price back below the cost of issuance.” Trading volume in CER futures has dwindled this year to 10 million tons a week on average, a 67 percent slump from 2012, according to ICE Futures data. This decline in activity is contributing to price volatility as there are fewer parties available to buy or sell at a given time, said Fred Payne, a carbon trader at CF Partners (U.K.) LLP, a risk advisory and investment firm specializing in renewables and commodities. “If you want volume, you’re going to have to pay the offer price, and that’s squeezed prices higher,” Payne said in a July 3 phone interview. Price Recovery Project owners and investors may still be generating CERs on expectations that prices will recover, according to Trevor Sikorski, a London-based analyst at Energy Aspects Ltd. By issuing credits now, they can profit from an increase in price, he said July 12 by e-mail. “It’s hard to understand why issuance occurs at prices below 0.50 euros, which either suggests enough projects have issuance costs below that or you have some project developers that are happy to punt on the CER price going higher,” said Sikorski, a former head of carbon analysis at Barclays Plc. “I think that this would be relatively odd behavior unless you had very deep pockets and a high risk threshold.” To contact the reporter on this story: Alessandro Vitelli in London at avitelli1@bloomberg.net To contact the editor responsible for this story: Rob Verdonck at rverdonck@bloomberg.net Continue reading
