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Carbon Offset Projects Look for Exit As UN Prices Crash 98%
Many companies not required to cut their pollution may do so regardless, to bolster their credentials. Photographer: Victoria W. Laka By Alessandro Vitelli Jun 12, 2013 8:48 PM GMT A 98-percent drop in the value of official UN-backed carbon credits is pushing sellers of emission offsets into the voluntary market, where prices are as much as 30 times higher. The trend is a signal that many companies not required by law to cut their pollution are doing so anyway to bolster their corporate sustainability credentials. Voluntary carbon credits — as opposed to the mandatory pollution-cutting regimes faced by industrial emitters in Europe and elsewhere — frequently offer benefits beyond CO2 cuts, such as reducing child labor, improving health and lowering energy costs in developing countries. The additional benefits, found only in non-UN certification programs, help companies claim they are doing more to make themselves and the world “sustainable.” “In the voluntary market, the project itself and the story behind it are almost more important than the price,” said Nathan Wimble, commercial director at the CarbonNeutral Company, a London-based voluntary offset seller. “People want to see additional benefits from an offset project, such as social, economic, sustainability and biodiversity.” You don’t see those benefits with a typical UN offset, he said. The UN’s Clean Development Mechanism has registered 6,700 individual projects that together are expected to generate more than 1.9 billion one-ton carbon offsets by 2020, according to a May 29 World Bank-commissioned report . That’s at least 800 million fewer tons than the bank estimated the previous year. What’s more, it’s also at least 300 million tons greater than the estimated demand for credits in 2020. Voluntary credits are generated when a certifying organization, such as the Gold Standard or the Verified Carbon Standard (VCS), invest in projects that support the deployment of low-carbon technology or energy efficiency measures. These initiatives consequently reduce pollution below the business-as-usual level that would be expected without them. The reductions are then sold to companies. The Gold Standard and the VCS have certified more than 1,750 projects and created almost 170 million credits since 2003. Gold Standard offsets can earn from 8 to 12 euros a ton. VCS sells credits from as little as $1 to $8 a ton, depending on the project type, the country and the methodology employed, according to Gareth Turner, a voluntary offset broker at Armajaro Securities Ltd. in London. UN credits for December delivery were at 43 euro cents today on London’s ICE Futures Europe exchange. The CarbonNeutral Company acquires certified voluntary offsets from projects around the world, which it packages into offset portfolios for corporate clients including Avis Budget Group Inc., Tata Steel Ltd., British Sky Broadcasting Group plc and Thomson Travel International. “I think most people hope that there will be a revival in the CER market” and want to keep their UN registration, said Renat Heuberger, chief executive officer of South Pole Carbon Asset Management Ltd., a carbon offset developer and aggregator in Zurich. “Selling CERs to voluntary buyers is probably going to be easier than re-registering” an entire carbon-reduction project with a voluntary market. Correction: The original post incorrectly stated the name of the Verified Carbon Standard . Analysis and commentary on The Grid are the views of the author and don’t necessarily reflect the views of Bloomberg News. Visit www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business. Continue reading
SocGen Cuts EU Carbon Price Forecasts On Plans To Cut Supply
Reuters Jun 13, 2013, 04.39PM IST LONDON: Societe Generale lowered its forecasts for European Union carbon prices on Thursday on concerns about obstacles to a plan to cut supply in the EU’s Emissions Trading System (ETS). The bank cut its forecasts for 2013 EU carbon permits, called EU Allowances (EUA), by 36 per cent to 4.1 euros a tonne, 2014 EUAs by 42 per cent to 4.3 euros, 2015 EUAs by 32 per cent to 5.7 euros and 2016 EUAs by 15 per cent to 8.1 euros. The ETS is over-supplied with permits as recession has dampened demand. Last year, the European Commission drew up a proposal to intervene in the market by delaying the sales of some EUAs to prop up low prices. The European Parliament in April rejected the proposal, sending carbon prices to record lows. Its environment committee will hold another round of voting on support for the world’s biggest emissions market on June 19. If the proposal clears, a plenary vote is scheduled for the first week of July. Since April, some EU lawmakers have been working on changing the wording of the proposal to gather more support ahead of the committee vote next week. On Wednesday, senior lawmakers from three major European Parliament parties said they had struck a deal which could allow regulators to intervene in the market. However, Societe Generale said there were still many regulatory and political hurdles to clear. “Even if the vote at parliamentary level in July is a positive one, it is very unlikely that the actual modifications to the auction regulations will be agreed upon and ultimately written into law before the end of the year,” it said. “There is the possibility that the proposal that gets approved may look slightly different in substance, if not in spirit, from the one we have been discussing thus far.” Continue reading
EU Carbon Defies Logic as UN Talks Stall, Climate Mundial Says
By Mathew Carr – Jun 17, 2013 Daniel Rossetto, managing director of Climate Mundial Ltd., comments on the European Union carbon market, plans known as backloading to delay supply temporarily and United Nations-overseen climate talks in Bonn that ended June 14. He spoke today and June 14 by e-mail. On EU carbon prices, which fell 4.2 percent today to 4.57 euros ($6.10) a metric ton after rising 16 percent last week: “EU carbon continues to defy logic, providing a price signal based on a belief that there will be long-term carbon cuts through 2030 and beyond that have yet to be agreed. There is no other way to explain why the commodity has any price whatsoever when there is no scarcity today and backloading only deals with half of the glut.” On UN envoys’ plans to negotiate changes to decision-making rules at climate talks: “I am far less concerned about this procedural issue than I am about the process for getting commitments within each country that would bind them to the negotiated outcomes in 2015. As we have seen in the case of Canada , it is very easy for a country to withdraw from the treaty without consequence. Given we are already at 2013, each country should by now have started the process of seeking a domestic mandate for what they can agree to in 2015 at the UN Framework Convention on Climate Change for post-2020. I don’t see much evidence of this going on, so it makes me very worried that we will get to 2015 and we will not be any closer to having a legally binding agreement.” On a proposal to change the decision-making threshold at climate talks to 75 percent of nations voting from consensus: “The threshold of 100 percent is unworkable. Giving the chair discretion is also too open to personal opinion. A lower threshold of 75 percent would be much better and allow decisions to be made. Financial penalties are also essential to ensure countries have the greatest possible incentive to comply in every way with the provisions of the eventual agreement. A best-endeavors basis is not enough.” On penalties under climate agreements: “The penalties can be paid into the Global Environment Facility and distributed to abatement and adaptation projects in the poorest countries. Each country should also have its own domestic law, not just ratification of the treaty, mandating its commitments under the UNFCCC.” Those domestic laws would make the UN agreement “fully legally enforceable.” 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
