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GC Environmental Commodities Newsletter - July 2011


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GC Environmental Commodities Newsletter - July 2011

  1. 1. General Carbon NewsletterMONTHLY ENVIRONMENTAL COMMODITIES NEWSLETTER JULY 2011, ISSUE:05Point of View PROJECT HIGHLIGHTS In June, 169 new CDM projectsThe last month witnessed frantic trading activity in the entered the Pipeline.carbon market with significant volatility in CER prices.News flow from Greece caused further pressure on Along with Gambia, Burkinaprices with expectation that Greece would sell EUAs. Faso, and Senegal, Togo isCDM project flow continued to surprise the market with already participating in the multi-record numbers of new projects and issuances. The country POA “Promoting EfficientCDM EB came up with clarifications on cost of equity in Stove Dissemination and Use ininvestment analysis apart from other moves aimed at West Africa”.reducing validator liability in PoAs. Four new POAs entered the CDM pipeline.A recommendation by the Meth Panel has increased theregistration risk of supercritical technology based power Five new small-scale approvedgeneration projects (coal based). The Meth Panel note CDM methodologies and ananalyses difference in CER estimate of various projects Afforestation / Reforestationand recommends placing the methodology on hold which methodology have been added towill increase the risk of 25 large projects totaling 30 the CDM system.million offsets.Analysts were busy updating CER supply forecast based REC PRICE WATCHon the latest EB decisions while reducing price 29th June 2011 Sessionprojections for the current phase and next phase of EU IEX: Price (Volume)ETS. Revised estimates place the CER price range forthe next phase at close to EUR 15 compared to EUR 20, Non solar -INR 1,505 (15,902)projected earlier. No progress was witnessed at the Solar - (Not traded)negotiation process, while bilateral programmes continueto grab attention. PXIL: Price (Volume) Non solar -INR 1,500 (483) Solar - (Not traded) VCS VER PRICE WATCHBest, India, China:Satish Kashyap Renewables, EE Pre 2008 vintages US$ 0.50- 1.00 Post 2008 vintages US$ 1.00-2.75 Renewables, EE- Pre CDM Pre 2008 vintages US$ 0.50-2.00 Post 2008 vintages
  2. 2. US$ 2.00-3.50 Industrial gases, others Pre 2008 vintages US$ 0.25-0.50 Post 2008 vintages US$ 0.50-1.00Post 2012 CPAs from Non LDCs acceptable under EUETS Phase III Rest of Asia, Africa:The European Commission clarified that it will accept Renewables, EEcarbon credits generated under the programmatic CDM Pre 2008 vintagesapproach even if the component project activities (CPAs) US$ 1.00-2.00are added post 2012. The clarification is applicable for only Post 2008 vintages US$ 2.00-4.00those PoAs (also called Programmes of Activities or stProgrammatic CDM) which are registered before 1 Jan Renewables, EE- Pre CDM2013. Thus the CERs generated from such projects can be Pre 2008 vintagesused for compliance purpose in the next phase (2013-20) US$ 1.50-3.00of the EU ETS which is the largest carbon credit market. A Post 2008 vintagesCDM PoA approach is different to the normal CDM project US$ 2.00-5.00activity approach in the sense that unlimited number ofsimilar technology projects (called CPAs) can be added Industrial gases, others Pre 2008 vintagesinto the PoA after the registration of the PoA. US$ 0.25-1.00The Article 11a of the EU ETS Directive 2003-87-EC lays Post 2008 vintagesrestrictions on CDM projects for compliance purposes US$ 0.50-1.00under the EU ETS Phase III. As per the Directive, projectsnot hosted by a least developed country (LDC) should beregistered before 2013 in order for their CERs to beconsidered valid under the trading scheme. The market till OTHER NEWSnow was seeking clarity on this subject as the additionalCPAs added later into a PoA do not undergo through a CARBON OFFSETS FALL BELOWregistration process but are only subjected to a 10 EUROS, NEW 2-YEAR LOWconsistency check by the DOE before their inclusion intothe PoA. Thus as per this new clarification if a PoA fromNon-LDC is registered before 2013, additional CPAs CARBON CREDITS: UN PANELadded into the PoA even after 2012 will be marketable in FOR TAKING THERMAL PLANTSthe European market. OFF LISTThe clarification which was issued in response to a queryby PD-Forum does also highlights the authority of theCommission to propose appropriate regulatory measures EU STANDS BY CARBON TRADEin case the application of this clarification goes against the IN CLIMATE FIGHTspirit of its original Directive regarding restriction inallowing post 2012 projects only from LDCs. INDIA, US RELEASE FUNDS TO BOOST CLEAN ENERGY TRADERS „IN GOOD FAITH‟ MAY WIN TITLE OF STOLEN CARBON,REC Market Update EU SAYSThe REC trading session in June resulted in REC price of1505 on IEX and 1500 on PXIL. The cleared volume was £7BN WINDFALL FOR UK16,385 across the exchanges. While buy bids were for a UTILITIES FROM CARBON PRICEvolume of 82,002 across both exchanges, it looks like the FLOORprice view is cemented close to the floor price. The tradingsessions in April, May and June have witnessed REC priceof 1500, clearly pointing to a medium term trend on pricing. GE AWARDS $63 MILLION TO 10
  3. 3. SOLAR, HOME EFFICIENCYWhile registration volume of new projects has increased in STARTUPSthe last few months, the overall volume is lower than mostanalyst expectations. In June, Himachal Pradesh becamethe second state in India to announce APPC, which is GOOGLE, SOROS INVEST $25needed to increase project flow in RECs. MILLION IN ENERGY EFFICIENCY COMPANY130 projects have been accredited in India out of whichonly 68 projects are registered. Maharashtra leads thetable with 75 accredited projects, followed by 20 Projects AUSTRALIA CARBON TAXaccredited from Tamil Nadu. The frequency of new Wind SPARKS CONTROVERSYprojects entering the system has increased with almost 85wind projects accredited till date. CARBON STORAGE PROJECT TOWhile REC volume has increased, a number of challenges BE ESTABLISHED NEAR COLLIEneed to be addressed. Clarifications on captiveconsumption are expected from Tamil Nadu, which will be NEARLY HALF UKS BIGGESTkey to assess the volume of supply that will come from COMPANIES FAILING TO ACT ONexisting projects. While the first project from UP has beenregistered, many states are yet to open their score. CARBON EMISSIONS LAWEnforcement of REC obligations on DISCOMs andobligated entities will be key to future growth of the market. ENERGY GIANTS PLAN FOR NEW SCOTS ONSHORE CO2 PIPELINE CARBON TAX DEBATE DRIVING AUSSIE INVESTORS AWAYIndia News GROUP FILES SUIT TO STOP NYCERC proposes 6.7% to 17.9% reduction in Indian REC CARBON-TRADING PROGRAMprices for FY2012-13The Central Electricity Regulatory Commission has issued DUBBO MEETING OPPOSESa suo motu petition with reference to the determination of CARBON TAXthe floor and forbearance price of the Renewable EnergyCertificates (RECs) for the financial year 2012-13. CARBON CAPTURE FUNDING APPROVEDIndia to be third largest investment destination forrenewables this year: KPMG CARBON TAX TO HIKEIndia is the third most favored destination globally for ELECTRICITY PRICEinvestments in the renewable energy sector and will alsobe a major source of new entrants into the sector, behind CALIFORNIA PROPOSESthe US and China, according to a survey released today by DELAYING CARBON MARKET Aglobal consulting firm KPMG. YEARNalco to set up Rs 274 Cr wind power project in APAs part of its diversification plans, the aluminium major EUROPE CUTS CO2 EMISSIONSNational Aluminium Company Limited (NALCO), has FROM CARS BY 3.7 PERCENTdecided to start a 50.4 MW Wind Power Project atGandikota in Kadapa district of Andhra Pradesh. The SHELL GETS C$865 MILLION FORNavratna PSU has been endeavouring to foray into othermetals and energy sectors. CANADIAN CO2 PROJECT
  4. 4. OPIC pours $500m into „renewable resources‟ fundsThe US Overseas Private Investment Corporation (OPIC)has approved $500 million in financing for five fundsinvesting in the renewable energy and agriculture sectors EDITORSin developing countries. Rameez Shaikh, rameez.shaikh@general- carbon.comIBM Teams With Bureau of Energy Efficiency to prepare Sagar Mankar,for India‟s first smart grid project sagar.mankar@general-IBM has announced collaboration with The Bureau of carbon.comEnergy Efficiency (BEE) in India to create the country‟sfirst smart grid project. Together they will create a cost GERERAL CARBON PTE LTDbenefit analysis for smart grid activities as part of the 16 RAFFLES QUAY, #33-03 HONGNational Mission for Enhanced Energy Efficiency LEONG BUILDING,(NMEEE). SINGAPORE 048581.Energy efficiency industry to get incentives from thegovernmentThe government is set to provide incentives to theemerging energy efficiency industry including LightEmitting Diode (LED) under the National Mission forEnhanced Energy Efficiency (NMEEE). This newsletter is brought to you by General Carbon. Contact if you have any queries or comments or wish to contribute news and updates. We welcome your suggestions and contributions. If you wish to unsubscribe from this newsletter please reply to this email with “unsubscribe” in the subject line. General Carbon is a leading emission reduction consulting, sustainability advisory and investment firm with presence across Singapore, India, Sri Lanka, Thailand, Philippines, Indonesia, South Africa, Nigeria, Ethiopia and Kenya.