GC Environmental Commodities Newsletter - June 2011


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GC Environmental Commodities Newsletter - June 2011

  1. 1. General Carbon NewsletterMONTHLY ENVIRONMENTAL COMMODITIES NEWSLETTER JUNE 2011, ISSUE:04Point of View PROJECT HIGHLIGHTS The CDM Pipeline saw 141 newThe carbon market is digesting some interesting news projects entering in May (highestflow with Germanys decision to shut all of the nations since 2007-08) exemplifying thenuclear power plants over the next 11 years. This 2012 rush amongst the projectdecision comes in a sharp reversal to an earlier decision proponents.to extend the life of the plants. With other nations likely torevisit their Nuclear plans, price projections of carbon The issuance of CERs in Mayoffsets in the next phase has turned bullish again. EU was also high at ~19 MCERsETS data on emissions for 2010 was ~3% higher than2009, showing that the economic recovery had not In May six new PoAs entered theincreased emissions above the cap for the 2008-2012 Pipeline taking the number of PoAs in Africa to 20 or 22% oftrading phase. CERs accounted for 4.7% of all the 92 existing PoAs. This is asurrenders in 2008-2010. Data suggests that CERs are much higher percentage thanbeing surrendered while EUAs banked for the next phase Africa‟s 2.6% of all normal CDMindicating a soft pricing in the early years of the next projects.phase. Policy makers could use this to show that greateremission reduction can be done at an economic cost. Pace of registration under India‟s REC mechanism has reduced inThe REC market witnessed another interesting trading May; 36 projects registered as onsession as well as more news flow. Changes in the 3rd June 2011reporting/compliance period for RPO will have a majorimpact on pricing and prevent a holdup by distributionlicensees. Regulatory clarity on the fine print with regards REC PRICE WATCHto electricity duty waiver and banking facility are awaitedin the coming months 25th May 2011 Session IEX: Price (Volume) Non solar -INR 1,500 (14,002)Best, Solar - (Not traded)Satish Kashyap PXIL: Price (Volume) Non solar -INR 1,500 (4,500) Solar - (Not traded)Implementation hurdles in REC and the way forward VCS VER PRICE WATCHUnlike the March trading session, April and May witnessed India, China:low price for Renewable Energy Certificates (RECs) Renewables, EEcertificates. The trading volumes though increased as Pre 2008 vintagessellers lowered their price expectation to clear most of the US$ 0.50- 1.00issued volume of RECs. News flow indicates that CERC‟s Post 2008 vintagesproposes to spread the renewable power purchase US$ 1.00-2.75
  2. 2. obligation (RPO) from an annual compliance to a morefrequent interval (i.e. biennial or quarterly). Renewables, EE- Pre CDM Pre 2008 vintagesInitially RECs were conceptualized to be claimed only if RE US$ 0.50-2.00 Post 2008 vintagespower is sold to grid at a non-preferential tariff i.e. APPC US$ 2.00-3.50(i.e. average power purchase cost) or at mutually agreedprice through third party sale or on power exchanges. Industrial gases, othersCERC‟s amendment to include captive power plants into Pre 2008 vintagesthe ambit of REC mechanism is still raising some US$ 0.25-0.50questions. As per the amendment, renewable based Post 2008 vintagescaptive power plants (CPP) could avail REC if they do not US$ 0.50-1.00receive concessional or promotional wheeling/transmissioncharges, banking facility or electricity duty waiver. Rest of Asia, Africa: Renewables, EEMany captive generators are unclear with regards to Pre 2008 vintageseligibility of their projects under REC. There are US$ 1.00-2.00uncertainties regarding treatment of electricity duty waiver Post 2008 vintagesor exemption even within regulatory circles. This has led to US$ 2.00-4.00multiple accredited captive cogeneration projects inMaharashtra not getting registered with NLDC. Renewables, EE- Pre CDM Pre 2008 vintagesThe captive generators are awaiting clarity on issues US$ 1.50-3.00 Post 2008 vintagesrelated to banking, electricity duty exemption etc. US$ 2.00-5.00The numbers of projects under accreditation which was Industrial gases, othersgrowing at a rapid pace, has slowed down in May. May Pre 2008 vintageswitnessed major activity from Tamil Nadu which is the only US$ 0.25-1.00state to have announced APPC. Post 2008 vintages US$ 0.50-1.00While at the regulation end, out of 23 SERCs (StateElectricity Regulatory Commissions), 21 have designatedthe state agency and 19 of them have finalized the state CARBON NEWSlevel regulations. Andhra Pradesh, West Bengal and Delhihave not taken any steps towards finalizing theregulations. Only 7 states have started accrediting Global CO2 market growth stalls inprojects; these are Gujarat, Maharashtra, Chhattisgarh, 2010 amid uncertaintyHaryana, Rajasthan, J&K and Tamil Nadu. Kenyan wind farm gets UN carbonThough the capacity building at the state agency level is infull swing across the country most of the states have yet to credit approvalsee a project entering into the pipeline from its region.These states also need to specify the APPC tariff and Carbon price may push up Kyotostreamline the process of signing PPAs based on APPC. billMost of the current projects in REC pipeline are the pre-existing projects which are selling power on the exchange Designing Targeted Financing toor through bilateral agreements. Key questions remain on Build Africas Carbon Marketthe ability to enforce RPO obligations on distributionlicenses and APPC numbers for most states. California judge puts carbon market on hold Canadian Solar to build 600 MW solar cell plant in China
  3. 3. Aviation Carbon Suit to Stir TradeCarbon Credits from Watershed Management Tension at Durban Talks, DerwentRecently World Bank entered into an agreement with the SaysHimachal Pradesh Government (India) for buying thecarbon credits from the new forests being developed on Offsets „Crowding Out‟ Utilitydegraded lands under a watershed management program. Demand for Carbon, Orbeo SaysThe main objective of this reforestation project inwatershed areas is to improve livelihoods and generatecarbon revenue for the community. It is proposed to China says EU airline CO2 capimplement the project in 11 watershed divisions covering should protect poor countries4000 hectares of land. UN clean energy scheme grows,While, reforestation activities sequester CO2 emissionsand also conserve the natural resources and are known to 3,000 projects so farbe eligible under CDM to earn carbon credits. Watershedmanagement programme also helps in sequestration of IATA sees 10 airlines joiningsoil carbon through indirect activities like soil erosion carbon scheme this yearcontrol, fertilizer leaching control etc. Electricity savingsfrom reduced use of pumps due to increase in groundwater level will also reduce carbon emission. But so far World Bank Auctions Adaptationthere is no approved methodology to assess credits from Fund CERswatershed management activities in VCS, CDM and othersuch similar standards. UK Sets GHG Emissions Tone for Europe: Cut 50% by 2027 Cement firms eye biodiversity,Other News water goals after CDM disappointment CERC could implement staggered RPO targets over the year UN Proposes Changes to Hydrofluorocarbon-Reduction Over 90% RECs traded in the largest-ever Indian REC trading session Projects India takes unique path to lower carbon emissions PCRA to set up carbon credit aggregation centre in Rajasthan Govt panel says carbon growth cut possible by upto 35% Turkana: Carbon Credits For No environmental nod needed for solar power Africa‟s Largest Wind Farm projects: MoEF Indias new trading schemes to curb carbon emissions EVENT WATCH Torrent Power Ltd to enter renewable energy sector Clean Power Asia 2011 On 28-30 June 2011 at India‟s Renewable Credits Trade Sees Volume Surge InterContinental Bangkok, in May Session Thailand. This is Asias largest conference & exhibition focusing on the latest global and regional clean power technologies, projects and initiatives
  4. 4. EDITORSVinodini Chitrakaran,vinodini.c@general-carbon.comRameez Shaikh,rameez.shaikh@general-carbon.comGENERAL CARBON PTE LTD16 RAFFLES QUAY, #33-03 HONGLEONG BUILDING,SINGAPORE 048581.This newsletter is brought to youby General Carbon. Contactgcnews@general-carbon.com ifyou have any queries orcomments or wish to contributenews and updates. We welcomeyour suggestions andcontributions.If you wish to unsubscribe fromthis newsletter please reply tothis email with “unsubscribe” inthe subject line.General Carbon is a leadingemission reduction consulting,sustainability advisory andinvestment firm with presenceacross Singapore, India, SriLanka, Thailand, Philippines,Indonesia, South Africa, Nigeria,Ethiopia and Kenya.