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The Week in Voluntary Carbon: Can it Get Any Worse?

Following a meager turnout at last week’s Carbon TradeEx America conference in Chicago, market participants are wondering what’s in store for upcoming events–and for the voluntary carbon market as it rounds the fourth quarter.

NOTE:   This article has been reprinted from Ecosystem Marketplace’s Voluntary Carbon Newsletter.   You can receive this summary of global news and views from the world of Voluntary carbon automatically in your inbox every two weeks by clicking here.

9 October 2010 | The fall carbon conference season is in full swing as Ecosystem Marketplace busily reports from the front lines. Following a meager turnout at last week’s Carbon TradeEx America conference in Chicago, market participants are wondering what’s in store for upcoming events – and for the voluntary carbon market as it rounds the fourth quarter.

If deals made over the last two weeks are any indication, Q4 2010 may not be as muted as US industry events would suggest. In fact, several panelists at the Chicago conference reported steady to increasing sales of voluntary emissions reductions (VERs), but were admittedly unable to pinpoint an exact driver for the recovering demand.

Some conference panelists attribute this growth to a fall-off in the number of active credit suppliers in the US market, driving buyers to the surviving offset providers. Others cited economic recovery as the impetus for corporations to recommit some spending for corporate social responsibility.

Blue Source VP Annika Colston also suggested that increased sales volumes “may be partly due to the lack of momentum federally and some large CSR buyers standing up in defense of these programs,” adding that Blue Source has “seen some pretty significantly priced sales for multi-year contracts.”

Whatever the cause, the headlines in this issue reinforce observations that, while the industry is slow to turn out and network, it seems to be churning out some high volume deals.

Of note is a term sheet executing the sale of 1,800,000 tCO2 from Canadian forest project developer ERA Ecosystem Restoration Associates to German-based Forest Carbon Group. This bulk of VERs will be delivered as 600,000 tCO2/year over 3 years.

ECCO2 also announced its intentions to list millions of CERs and, eventually, VCS-verified VERs on the CarbonTradeXchange platform, while CDC Climat unleashes another unleashes another 60 million euros ($80.06 million) in investment for carbon offset projects.

In Africa, Kenyan sugar miller Mumias Sugar Company is cooperating with Kenya Power and Lighting Company (KPLC) to generate and sell 43,000 tCO2 in carbon offsets from its sugar waste electricity generation plant. Also south of the equator, Wesfarmers insurance inked an offset deal with Carbon Conscious, which is already engaged in multi-million dollar deals with BP Singapore and Origin Energy.

Though small in volume, one recent sale of Gold Standard credits is also a big deal. The USA Pavilion at the Shanghai Expo, with support from the Alcoa Foundation, purchased 8,250 tCO2 in Gold Standard VERs to offset the pavilion’s emissions. As an expression of US buyers’ growing interest in international offsets, the deal was seen as a significant victory for the Gold Standard, which hopes to reshape US buyers’ propensity to buy credits from close to home.
—The Editors

For comments or questions, please email: vcarbonnews@ecosystemmarketplace.com



V-Carbon News

Voluntary Carbon

Pre-compliance market in Kazakhstan? Great success!

This Wednesday, Voluntary Carbon Standard CEO David Antonioli signed a Memorandum of Understanding with Kazakhstan to supports the nation’s development of a domestic carbon market. Where does VCS come in? VCS reports that the collaboration will “help establish the VCS Program as a framework that could be incorporated into a national compliance regime,” a regime that would be driven by Kazakhstan’s national target under the Copenhagen Accord. Antonioli signed the MOU with Kazakhstan’s Vice-Minister of Environmental Protection while presenting at and attending the KazEnergy Forum 2010 held this week in Astana.

 


CTX lists star-studded CO2

For those readers who’ve eagerly awaited news of activity on the CarbonTradeXchange’s (CTX) spot VER platform, the wait is over thanks to a $700 million clean-tech deal between project developer ECCO2 and CTX. In October, ECCO2 will begin trading live on the CTX platform with up to 70 million carbon credits after recently announcing its accreditation from the UNFCCC. It plans to generate and list another 125 million VERs verified to the Voluntary Carbon Standard (VCS) pending VCS Association approval. ECCO2 boasts projects from a variety of locations but most recently made news for its effort in Haiti, which was endorsed by Haitian presidential candidate Michel Martelly and Grammy award-winning group the Fugees.

Read more from MarketWire
Read about Martelly’s ECCO2 endorsement


Sizing up ERA’s term sheet tonnage

Q: How big is a 1.8 MtCO2 transaction of carbon credits relative to the size of the global voluntary carbon markets? A: Almost 4% of volumes transacted globally in the last year. In that light, the recent deal between Canadian project developer ERA Ecosystem Restoration Associates and Forest Carbon Group is big news – for the voluntary market as a whole and for the Pacific coast forest ecosystems that ERA’s reforestation and conservation projects call home. The term sheet executes the sale and delivery of 600,000 tonnes of VERs each year from 2011 – 2013, all validated and verified to the ISO 14064-2 standard and in some cases to the Climate, Community and Biodiversity Alliance standards.

Read the press release


Millions of dollars in carbon finance? Oui!

Parlez-vous français? It may not be a bad idea for market participants to brush up on the romance language as France’s CDC Climat lays down 60 million euros ($80.06 million) in investment for carbon offset projects. Best known for administering one of three registries in the VCS Registry System, CDC Climat recently introduced its new investment arm, which will reach out to VCS, Gold Standard and Kyoto-quality projects but steer clear of industrial gas projects. The credits will be acquired in the primary market with a focus on projects in the Mediterranean, Sub-Saharan Africa and Europe. This effort builds on CDC’s similarly-sized investment in French domestic offsets and the Mediterranean Carbon Fund, operational in 2011.

Read more from Reuters


ACR’s IFM “Made in the USA”

Perhaps the commercial forests managed under the American Carbon Registry’s new Improved Forest Management methodology won’t all bear the telltale red white and blue logo. But the methodology developed by Pennsylvania-based Finite Carbon does focus on what ACR’s Nick Martin calls “a critical gap in the U.S. forest carbon market” – by providing a framework to manage a subset of the hundreds of thousands of acres of private US forestland. The methodology focuses on US industrial timberlands managed under an existing commercial timber harvesting program. ACR and Finite Carbon hope the IFM methodology will address the fact that, though US forest carbon resources abound, only five US-based IFM projects have been registered and verified to date.

Read the press release (pdf)


Happy cows make great offsets…

…and lower verification costs could make for happy livestock project developers thanks to the Climate Action Reserve’s updated Livestock Project Protocol 3.0. Adopted by the CAR Board of Directors on September 29th, the protocol update includes revised guidance on determining projects’ GHG assessment boundary, including new options for complying with the reporting period and verification requirements. One aim of the update is to reduce the costs of verification. At this week’s 4th International Greenhouse Gases and Animal Agriculture (GGAA) Conference, University of Illinois’ Dr. Katherine Baylis commented on the potential for livestock-based offsets, noting that “the right systems can go a long way to creating a push toward emissions reductions.”

Read about the protocol update
Read more from the GGAA conference


Catering to carbon conscious Ceylon

Sri Lanka: land of cinnamon, tea, rubber and… carbon offsets? The island national could soon add CO2 reductions to its list of notable exports with the launch of the Carbon Credit Company (CCC). In partnership with the UK’s CarbonNeutral Company, the CCC was formed with an aim to develop the Sri Lankan economy as “a hub of ethical manufacturing and eco tourism,” according to Subramaniam Eassuwaran, one of the CCC’s founding Directors. The CCC is an approved reseller of The CarbonNeutral Company’s services – including its carbon offsets – putting it squarely in the voluntary carbon space. It will also offer the full spectrum of carbon services to companies with carbon reduction commitments.

Read more from the Asian Tribune


Kenyans ink a sweet deal

Kenyan sugar miller Mumias Sugar Company is cooperating with Kenya Power and Lighting Company (KPLC) to generate and sell 43,000 tCO2 in carbon offsets from its sugar waste electricity generation plant. Mumias will receive Sh22 million for the project that enables KPLC to reduce its intake of power generated from diesel engines. It expects that the credits will generate a minimum price of $6.5/tonne on international exchanges, where the credits will be “shopped around” by Japanese Carbon Finance Ltd. Mumias will apply for new verification for activities conducted from March to December 2010. Another Kenyan company, KenGen, also announced its hopes of selling up to 177,600 tCO2 in offsets generated by sourcing power from geothermal sources.

Read more from business Daily Africa


APP fighting fire with… REDD

Recently, Asia Pulp and Paper has caught a lot of flak for alleged illegal logging practices – its critics ranging from GreenPeace to French retailers. In response, APP is offering up peat forest protection via a 33-year pilot project to encourage greener plantation firms. APP’s Aida Greenbury says the 15,640 hectare project (an area about a fifth the size of Singapore) is “a gift from Indonesia to the world.” Green groups say the project is a good start but not an overnight fix for APP’s purported misdeeds. Created through a deal with Singapore-based Carbon Conservation, the Kampar project is the first privately funded project turning a pulpwood plantation concession into a carbon reserve. Its credits are expected to hit the voluntary market within two years.

Read more about the Kampar project
Read more about GreenPeace criticisms


Wesfarmers signs Carbon Conscious deal

Wesfarmers Insurance is acting on its carbon conscience – by signing a deal with Subiaco-based Carbon Conscious to offset its emissions. Through its Carbon Capture program, Carbon Conscious will plant 26,000 Mallee eucalyptus trees in Western Australia, aiming to store carbon over a 30-year period and assist with WA’s rural environmental issues of salinity and soil erosion. As part of the agreement, Carbon Conscious has also retired Voluntary Carbon Standard credits from renewable energy projects on behalf of Wesfarmers – making the effort compliant with Australia’s National Carbon Offset Standard. Carbon Conscious has also engaged in multi-million dollar deals with BP Singapore and Origin Energy.

Read more from WA Business News


The social (carbon) network

You don’t stabilize at 350 ppm without making a few sacrifices – at least according to Mumbai-based NGO NO2CO2’s Up by 2 campaign. The “social carbon” campaign has restaurant and cafe-goers across India asking establishment owners to dial up their room temperature by – you guessed it – two degrees to conserve energy. If successful, the patron then logs on to Facebook and reports the time, date, location and other details of the action on NO2CO2’s wall, which the NO2CO2 team will randomly verify and catalog by user name. While campaign participants don’t earn “real” carbon credits for their eatery activism, the website does encourage users to calculate and offset their carbon footprint.

Read more from the Hindustan Times
Check out the Up by 2 campaign


Reduce & Retire: The Latest on Carbon Neutral

US Pavilion backs international offsets

The Shanghai Expo wraps up on October 31 after six months of energy-devouring fairs and exhibitions, but the US Pavilion leaves behind zero emissions after investing in Chinese Gold Standard credits. The deal was a significant victory for the Gold Standard, which hopes to reshape US buyers’ propensity to buy credits from close to home. “In the past, international credits have gotten a bad rap among US buyers,” explains Lisa Hodes Rosen, the Gold Standard’s General Counsel and Director of US Markets, “but as the US market becomes more educated about what constitutes a high-quality offset project, that will benefit international projects.” The credits are sourced from three Chinese projects, including two projects in China’s northwest Gansu Province and one project in the Jiangsu Province on the east coast.

Read more at Ecosystem Marketplace


Disney’s happiest carbon tax on earth

Lions, tigers and bears (oh my!) aren’t the only beneficiaries of the Walt Disney Company’s ongoing investment in conservation efforts. The climate, too, could benefit from Disney’s $7 million investment in forest preservation through the Nature Conservancy and Conservation International’s avoided deforestation and reforestation projects in the Congo, Peru and the US. In a recent Q&A with the Natural Resources Defense Council (NRDC), the Walt Disney Company’s Senior Vice President of Environmental Affairs Beth Stevens discusses Disney’s internal carbon “tax” against the projected emissions of each of its business segments under their five-year plan. The tax revenue is channelled into a Climate Solutions Fund to finance its land-based offset investments.

Read more from the NRDC


Beijing’s Lexus year-end car(bon) event

Get your 2010 model luxury car (and carbon credits) before time runs out! Now through the end of 2010, four of Beijing’s major Lexus dealerships are cooperating with the China Beijing Environment Exchange (CBEEX) to offer another luxury good alongside their high-end 2010 models. Through CBEEX, the four franchises will purchase carbon credits to account for the first 20,000 km worth of emissions for each 2010 model RX270, IS250 or IS250C sold at their dealership. According to the announcement, the move represents the first time a major automotive brand has made the case for zero-emissions travel via automobile in China.

 


Climate North America

Throwing the omnibus under the bus

Given US Senate climate bills’ misfires, backfires and nonstarters, the Obama Administration and key Democrats have abandoned “comprehensive omnibus legislation” in favor of bite-sized wins. The pared down legislative chunks could include utility-sector carbon caps, renewable power incentives or nuclear loan guarantees. One of many such “chunks” is the Department of Energy’s $1 bn Recovery Act funding investment in the newly restructured FutureGen project (now FutureGen 2.0) that seeks to retrofit an Illinois power plant with Carbon Capture and Storage capabilities. One catch to the project, of course, is where to store the more than 1 million short tons/yr of CO2 captured at the plant.

Read more at the New York Times
Read more about FutureGen 2.0


RGGI keeps its chin up

States in the US northeast once again announced an upcoming auction for the 10-state cap-and-trade program’s allowances. The program took a hit at its last auction on September 8, when allowance sold at the minimum bid ($1.86/tonne) and some allowances were left unsold due to an over-allocated market. RGGI member states decided back in 2005 how many permits to issue, not anticipating the recession that would drive down emissions and demand for the allowances. Nevertheless, on December 1 the states will offer another 45.3 million allowances for sale with the same price floor of $1.86/tonne.

Read the BusinessWeek article


AB32 revenues? Don’t count on it

Clearly, California’s Gov. Arnold Schwarzenegger won’t be caught counting his carbon revenues before they’ve hatched. Last week, the governor vetoed a bill that would have redirected 10 percent of AB32 revenues to poorer California communities – reportedly because the community benefits bill was seen as “premature” given AB32’s November ballot challenge and 2012 implementation. Some supporters of the vetoed bill disagree: “Without a Community Benefits Fund to supplement our climate law, we are putting Californians – especially those who already breathe the dirtiest air – at an even greater risk,” said Nidia Bautista, policy director at the Coalition for Clean Air.

Read more about the veto


Global Policy Update

Camco ventures in to Malaysian partnership

Walking in the “regional footprint” of Malaysian investment giant Khazanah Nasional, Camco recently announced its joint venture with the Malaysian government’s investment arm – focusing on investments in emission-to-energy projects, carbon credit development and advisory services. According to the statement, Khazanah will leverage its “regional footprint and presence” and Camco’s existing projects in the region to develop a platform for scaling up CDM activity in Southeast Asia and target Malaysia’s voluntary energy intensity targets. Khazanah will invest RM9.1 million into Camco for five percent ordinary shares and 19.6 percent shares from the secondary market. Combined, this gives the company a final shareholding in Camco of 23 percent.

Read more about the joint venture


Tokyo model fit for scale-up

Tokyo’s nascent carbon trading market might well be the cornerstone for a national carbon trading program as adjacent prefectures discuss how to tie in to the metropolitan scheme. Tokyo’s carbon trading program launched in April 2010 and since saw its first (and very pricey) carbon credit transaction in August. Since then, Japan Climate Exchange Corp.’s Masanori Eto says the prefectures of Saitama, Chiba and Kanagawa are discussing how to participate, suggesting nationwide trade will develop. “Tokyo is ahead of Japan’s government and as more regions join, it becomes more likely that the Tokyo program is adopted as the national system,” Eto says. Last month, a panel under Japan’s Ministry of Environment recommended that national trading should commence in 2013.

Read the Bloomberg article


Nigeria’s high low-carbon hopes

Is it too much to ask to double one’s GDP and achieve carbon neutrality by 2025? Nigeria’s federal government thinks not, aspiring to achieve zero emissions and a spot in the world’s top 20 economies by the turn of the next decade. That’s no small goal for the world’s 12th largest supplier of crude oil, as Nigeria plans to grow GDP by increasing crude oil reserves to about 40bn barrels through 2020. To counter this, the government will continue to crack down on international oil companies’ gas flaring activities in the Niger Delta and leverage CDM project finance. Nigeria also recently developed a Draft Policy to address climate change, focusing on adaptation, mitigation, finance and technology.

Read the All Africa article


Middle East CDM is in their DNA

Recently, South Korea made known that it will invest $500,000 for a two-year capacity building program to develop Jordanian CDM projects, to assist in preparing and promoting the projects in the global market. The Middle East has historically lagged behind other regions in its engagement with the CDM, generating only 1.3 MtCO2e of the global total 439.2 MtCO2e CERs. Ecosecurities senior consultant Charbel Moussa partially attributes this lag to the unavailability of designated national authorities (DNAs) in the region to facilitate project participation. Moussa says progress on development of DNAs in the region could expand pipeline of credits from the Middle East.

Read more about the investment
Read more from Argus


Carbon Finance

LDCs victory at Waterloo

Though Canadian Environment Minister Jim Prentice admittedly ranks the environment behind the economy and health care as a national priority, carbon finance took top billing at a weekend climate conference in Waterloo. There, Prentice outlined Canada’s strategy for distributing the $400 million in international climate funds it initially committed to at last year’s Copenhagen summit. The International Finance Corporation – a member of the World Bank Group – will receive the majority of the funds valued at $285.7 million. Behind that, forty million will go to the World Bank’s forestry fund, and another twenty million to fund climate adaptation among Least Developed Countries (LDCs). Prentice also announced that Canada will contribute an additional $238.4 million to the Global Environment Facility (GEF) over the next four years.

Read the National Post article


BioCarbon banks Brazillian CO2

In a recent issue we reported on the World Bank’s sale of 500,000 CERs to contribute to the UN’s adaptation fund. This month, the World Bank Group’s International Bank for Reconstruction and Development is racking up credits, recently purchasing 400,000 CERs from Brazilian utility AES Tiete SA on behalf of the World Bank BioCarbon Fund. The BioCarbon fund provides carbon finance for projects that sequester or conserve greenhouse gases in forests and other ecosystems, and the credits were generated by a 13,900 hectare reforestation project around reservoirs created by AES Tiete’s hydroelectric plants in Sao Paolo, Brazil. The law firm that advised on the transaction, Shearman & Sterling, did not disclose the value of the deal.

Read the Reuters article


Science & Technology

If you can’t beet ‘em…

When you think of carbon capture and storage, sugar beets are probably not the first thing that comes to mind. British Sugar’s flagship beet factory may change that, following an £8.5 million investment to equip the factory to capture 70,000 tCO2/year produced during the natural fermentation process. Green business is nothing new to British Sugar, as its factory’s low-grade surplus heat and CO2 is channeled to a neighboring plant nursery to produce about 80 million tomatoes a year. British Sugar was also the first sugar manufacturer to calculate its carbon footprint to an international standard.

Read more about British Sugar’s CCS

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Terra Global Capital is seeking an AFOLU Carbon Development and Project Finance Specialist to develop project leads, scope of work and proposals for AFOLU carbon development work to be provided by Terra and assess carbon feasibility of AFOLU projects versus various market standards, among other responsibilities.

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Manager of State Agency Services, the Climate Registry

The Climate Registry is currently looking to hire a new Manager of State Agency Services, to support greenhouse gas inventory building work with state agencies. This is a new position, based in Sacramento, and available immediately for a one-year term. This individual must have an expert understanding of GHG accounting and familiarity with California state government, and particularly its climate change programs.


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