General Carbon Newsletter - March 2011


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In this issues of Monthly Carbon Newsletter:
- Reformation efforts in CDM
- India's Energy Efficiency Market Based Mechanism
- General Carbon Wins Award For Best Carbon Markets Service Provider, Asia
- VER price trend
- Many more news and updates of Carbon Market

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General Carbon Newsletter - March 2011

  1. 1. General Carbon NewsletterMONTHLY CARBON NEWSLETTER MARCH 2011, ISSUE:02Point of View GENERAL CARBON WINSThe new Chairman of the CDM Executive Board helped AWARD FOR BEST CARBONinfuse confidence on the ability of CDM to handle surge in MARKETS SERVICE PROVIDER,issuance of credits and registration of projects, as we ASIAapproach the 2012 deadline. The success due toappointment of external consultants to clear the backlog inissuance and registration has been a big boost for themarket in the first quarter of 2011.The post 2012 Green Climate Fund committed at Cancunwas to be established with the goal to reach US$100 billiona year by 2020. The Green Climate Fund is not makingmuch progress due to non-appointment of delegates bymember states. In another move that takes the focus away WORLDWIDE DEVELOPMENTSfrom CDM, the Federation of Electric Power Companies(FEPC) of Japan, one of the largest buyers of credits, has New host countries Libya andexpressed dissatisfaction with CDM procedures and Myanmar enter CDM.timelines. The FEPC has suggested bilateral offsetmechanisms and is conducting feasibility studies with ultra Togo, Burkina Faso, and Gambiasuper-critical coal-fired power generation and nuclear launch multicountry PoA:power projects to establish the framework for bilateraloffset mechanisms. Keep a close watch on bilateral “Promoting Efficient Stovestructures and NAMAs as this may throw open new Dissemination and Use in Westopportunities. Africa”, this project also includesThe market is still trying to cope with theft of EUAs, which Senegal.paralyzed trading activities as many registries were closedthrough most of February. Demand for post 2012 volumes World Bank post 2012 fund -UCFfrom renewable energy projects is picking up while VCSVER demand has yet to recover in the new year. T2 fully subscribedBest, India sees first issuance ofSatish Kashyap RECs, trading to commence in March. Over 40 projects (~300MW) accredited by theReformation of CDM: The Near And Far Of It respective state agencies.Continuation of EU ETS into a third phase post 2012 looks VCS Releases Version 3certain but it is not clear as to which types of CERs interms of technology and project host country will beaccepted into the EU ETS. Geographically, projects Kenyan Carbon Project Earnsoriginating in least-developed countries (LDC) would be at First-Ever VCS REDD Creditsan advantage as the EU laws will accept CERs from LDCsinto the scheme in a post-2012 regime. So far, majority ofthe CDM projects have been from India, China and Brazil;the LDCs are faced with capacity building problems (31LDCs have no CDM projects yet) while coming up tospeed. Project proponents, who are looking to registertheir project before Dec 2012, see the pace of CDMprocess as a serious challenge. Below, we have put
  2. 2. together the reforms undertaken by CDM recently and VCS VER PRICE WATCHwhat further action could be taken. India, China:1. Tackling procedural delays: The recent transition from a Renewables, EEtwo step review process (one round of review request Pre 2008 vintagesfollowed by final review by the EB) to a single step US$ 0.50- 1.00(assessment by secretariat & RIT after request of review) Post 2008 vintages US$ 1.00-2.75is a welcome change brought about by the EB. Historically,the bureaucratic procedure has been a stumbling block in Renewables, EE- Pre CDMstreamlining CDM work flow. While the average time for Pre 2008 vintagesapproval of a new methodology still takes about a year, the US$ 0.50-2.00start-of-commenting-period to registration time has been Post 2008 vintagesabout 21 months in 2010. CDM EB has recently been able US$ 2.00-3.50to reduce the waiting time for registration and issuancefrom three months to one month by deploying more Industrial gases, othersmanpower. Another area of delay that could be managed Pre 2008 vintages US$ 0.25-0.50with a similar approach is completeness check which takes Post 2008 vintagesa month or two before the project appears under US$ 0.50-1.00“requesting registration”. Rest of Asia, Africa:2. Improving transparency: The CDM guidelines andmethodology leave a lot of room for interpretations which Renewables, EEhave led to inconsistent treatment of similar projects Pre 2008 vintagesamong various DOEs and the EB. The recent steps US$ 1.00-2.00 Post 2008 vintagestowards DOE performance monitoring and appeal against US$ 2.00-4.00ruling by the CDM EB are a good relief. Renewables, EE- Pre CDM3. Balancing geographical distribution: Three of every four Pre 2008 vintagesprojects in the CDM pipeline come from China, India or US$ 1.50-3.00Brazil. The LDCs barely account for 1% of the share, while Post 2008 vintagesthe number of projects from small island-states, that are US$ 2.00-5.00likely to be worst affected due to climate change, isnegligible. This has led to criticism of the CDM mechanism Industrial gases, others Pre 2008 vintagesas a tool which is being manipulated by few players. In US$ 0.25-1.00response to that, the UNFCCC Secretariat has taken steps Post 2008 vintagesto make loans available for development of CDM project US$ 0.50-1.00activities in countries with less than 10 registered projects.Programmatic approach has come in as a handy tool topenetrate other developing countries as well. Less than3% of the total CDM project submissions originate from CDM EB NEWSAfrica, but in the case of PoAs, Africa accounts for a Two new small scalequarter of all PoA submissions. The CDM EB has intended methodologies approved at EB59:to address the operational barriers of PoAs through anopen call for inputs till 18th of March 2011. AMS-I.I: “Biogas/biomass use for thermal application for4. Negative economies from project size and transaction households/small users”, andcost: The transaction costs associated with CDM projectslike consultancy fees, DOE fees, UNFCCC registry fees, AMS-III.AS: “Switch from fossiletc, are a big hindrance for project activities with lower fuel to biomass in existingemission reductions. In case of new technologies, the time manufacturing facilities for non-and money taken to develop a new methodology is a bigdeterrent even for an average sized project. Many worthy energy applications.”projects cannot pursue CDM these costs. Bundling of AMS-III.AJ: “Recovery andsimilar project activities has its own limitations which has recycling of materials from solidled project proponents to look at a programmatic approach wastes” was expanded to alsoto address the shortcomings of the process. The futuredirection from EB on PoAs will be something to watch for include recycling of PET coming months. Assessment of CancunThe reform efforts are showing results and the EB clearlyseems to pursue the path. In its last meeting the EB Agreements by UNFCCCadopted a two year Management Plan with objectives Executive Secretary nowtowards improving operational efficiency, transparency and online.capacity building activities across regions.
  3. 3. Driving Indias energy efficiency plan EDITORSthrough a market based mechanism Vinodini Chitrakaran, vinodini.c@general-carbon.comOver the last year, the Bureau of Energy Efficiency Rameez Shaikh,(BEE) in India has started engaging with industry to rameez.shaikh@general-draw the framework for a domestic energy efficiency carbon.commarket. Large industrial establishments consumingenergy greater than a threshold have been identifiedand brought under the purview of the Energy GERERAL CARBON PTE LTDConservation Act, 2001. These industrial establishments 16 RAFFLES QUAY, #33-03have already started reporting and auditing their energy HONG LEONG BUILDING,consumption. BEE has worked with industrial SINGAPORE 048581.establishments in energy intensive sectors like thermalpower plants, iron & steel, cement, fertilizer, aluminum,textile, pulp & paper and chlor-alkali to: This newsletter is brought to you by General Carbon. Contact Establish the baseline energy consumption if Develop targets for each sector you have any queries or Outline process for measurement and verification comments or wish to contribute Establish market for trading of the certificates news and updates. We welcome your suggestions andDuring the next few months the framework will be rolled- contributions.out which will govern the first phase of the energyefficiency market from April 2011 to March 2014. Someof the significant decisions that will be addressedinclude: If you wish to unsubscribe from1. Baseline - Developing baseline energy consumption this newsletter please reply to thisfor a sector, covering different establishments, varying email with “unsubscribe” in thetechnologies, age of establishment, production capacity, subject line.raw material and product-mix output, poses numerouschallenges. General Carbon is a leading2. Target setting - Setting targets based on absolute emission reduction consulting,numbers will be unlikely given the differences betweenestablishments. A percentage based target may lead to sustainability advisory andpunishing early movers, whose previous energy investment firm with presenceefficiency improvements may penalize them. across Singapore, India, Sri Lanka, Thailand, Philippines,3. Measurement and Verification - Norms foraccreditation of energy auditors have already been Indonesia, South Africa, Nigeria,rolled out. Framework for supervision, monitoring and Ethiopia and Kenya.policing of auditors to ensure accurate implementation ofpolicy will be essential.4. Market process - Clarity on penalty has beenprovided. Key market establishment principles will haveto be implemented to ensure participation of financialinstitutions who can invest in energy efficiency projects.If structured and rolled out well, this could become aninteresting study in a first of its kind domesticenvironmental commodity.
  4. 4. Other Carbon NewsCompanies go for project approvals before KyotoexpiresAirlines to get 213 million EU CO2 permits in 2012Delayed Solar-Power Plants Face Fines as IndiasGujarat Sets PrecedentReforestation Project Is DRC’s First RegisteredUnder Kyoto ProtocolJapan proposes new CO2 market mechanisms to UNAustralia government to set carbon price from mid-2012Biofuel appeal stokes bullish palm price outlookCarbon Trust and Siemens Strike £550M GreenFinance DealIFC Launches €150 Million Carbon Credit Fund toPromote Climate-Friendly Economic GrowthNZ Clean Energy Centre on track to open in AprilCambodias Isolated Villagers Change Their LivesWith Lower-Cost SolarGlobal CCS industry builds momentum with 21 newprojectsUS, India to convene Joint Task Force on reducingclimate damaging HFCsEU Carbon Rises to Five-Month High on Natural-Gas,Coming Rules