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This Week In V-Carbon: Greening In The New Year

Despite the cold start here in D.C., January is blooming with carbon news. Quebec and California started off the year by officially linking markets, while a sustainable agriculture project in Kenya became the first to verify credits from carbon sequestration in soils under VCS in mid-January. These new developments only enhance 2013’s top stories, also featured in this Special 2014 New Year Edition.

Despite the cold start here in D.C., January is blooming with carbon news. Quebec and California started off the year by officially linking markets, while a sustainable agriculture project in Kenya became the first to verify credits from carbon sequestration in soils under VCS in mid-January. These new developments only enhance 2013’s top stories, also featured in this Special 2014 New Year Edition.


This article was originally published in the V-Carbon newsletter. Click here to read the original.

28 January 2014 | NY Times contributor Mark Bittman began the New Year by looking at all the good, bad, and ugly that has happened in Years Ending in 4. Here at Ecosystem Marketplace, we’re not superstitious, but we do like to mark the turning of the calendar with a look back before charging forward.

Our Year in Voluntary Carbon retrospective summarizes 2013’s major milestones, and below, our reader poll revealed your Top 10 stories of last year:

 

  1. California officially launches cap-and-trade program, issues first carbon offsets: After a one-year delay, California’s cap-and-trade program for greenhouse gas (GHG) emissions reductions got underway in January, spurring project development and offset purchases state-side. California regulators finally started to issue ozone-depleting substances offsets in September and forestry offsets in November, paving the way for more development activity in 2014.
  2. Voluntary demand for carbon offsetting grew 4% in 2012: In June, Ecosystem Marketplace released its 2013 State of the Voluntary Carbon Markets report, which found that purchases of voluntary carbon offsets rose 4% in 2012 to 101 million tonnes of carbon offsets (MtCO2e), but market value decreased 11% to $523 million as offset prices fell slightly for several popular project types.
  3. UN climate negotiators reach agreement on REDD+ rulebook, defer several decisions to next COP: At the United Nations climate change negotiations in Warsaw, agreement on the so-called “REDD Rulebook” established guidelines for determining national deforestation baselines, a key step for allowing compliance-based REDD finance to flow.
  4. China launches domestic pilot carbon trading programs: China spent 2013 launching four of its seven planned subnational carbon markets. Trading in Shenzhen started in June, Shanghai and Beijing’s markets launched in November , and Guangdong commenced trading in mid-December. China could offer a lifeline to Clean Development Mechanism (CDM) project developers by allowing them to re-register their credits as China Certified Emission Reductions, which would fetch higher prices on the domestic markets.
  5. Disney, Microsoft use carbon tax revenues to propel offset purchases: Some of the biggest names in the energy sector, including ExxonMobil, BP and Royal Dutch Shell, are using double-digit carbon price projections to guide their business planning decisions. Disney and Microsoft have gone a step farther by using the revenues generated from their internal carbon fee programs to invest in a wide range of offset projects, showing a particular affinity for REDD projects in Asia, Africa and Latin America.
  6. Clean cookstoves become all the rage, more than half use carbon finance: Carbon offsets contributed funding to half of the eight million clean or efficient stoves distributed in 2012, as high offset prices and corporate demand for the projects drove $167.3 million into the sector, according to a new report by Ecosystem Marketplace on behalf of the Global Alliance for Clean Cookstoves. Former US Secretary of State Hillary Clinton spoke about the report’s findings in New York in September.
  7. Costa Rica launches domestic carbon trading program: In support of domestic reforestation and conservation efforts, Costa Rica officially launched a domestic carbon market in September. Ecosystem Marketplace’s earlier coverage explores how the country’s independent carbon standard is helping it get REDD-ready.
  8. CDM market collapses, remains in limbo: Negotiators at the Conference of Parties (COP19) in Warsaw in November failed to lock in a concrete solution for the CDM market. Proposals to set a price floor and to have financial institutions such as the Green Climate Fund bail out the oversupplied market by buying up the very cheap credits both fell through. But key players such as United Nations Framework Convention on Climate Change Executive Secretary Christiana Figueres still see a role for market-based mechanisms such as the CDM in a future climate agreement.
  9. President Obama pushes power plant carbon regulations via EPA: The US Environmental Protection Agency’s upcoming rules to control carbon emissions from existing power plants is a landmark move to regulate climate pollutants in the United States. The Regional Greenhouse Gas Initiative is already making the federal case that its cap-and-trade program should be eligible for compliance, and many experts believe jumping on board the existing programs in California and the Northeast may be a much easier path for states than starting a new regulatory regime from scratch.
  10. EU ETS crashes to record lows, countries step in with backloading fix: EU ETS prices slumped to $2.81 euros per tonne in January and set a new record low of $2.63 euros per tonne in April after the European Parliament rejected an emergency fix for the beleaguered compliance market. After months of intense negotiations, however, EU countries finally agreed to the so-called “backloading” proposal, in which the sale of up to 900 million allowances will be postponed, a move that participants hope will prop up the market until a more permanent solution is reached.

Carbon Crystal Ball 2014

Our readers can’t exactly forecast the future, but they often come close. Last year, they (correctly) predicted that 2013 would be a year for innovation in methodologies and project development; that cookstove and water filtration projects would gain in popularity; that voluntary market players would begin to diversify their attention to compliance markets; and that buyers would continue to seek out quantifiable co-benefits to differentiate their offsetting efforts.

Roberto L. Gí³mez of Fundacií³n Natura Colombia, predicts that 2014 will be a year of consolidation in the voluntary market. “The most effort will go towards strengthening the instruments that grow demand for verified emissions reductions,” he said.

 

Martin Clermont of Will Solutions envisions an increasing presence of the voluntary carbon market beside the efforts to structure the dozens of regulated ones.

 

On the compliance side, Harold Buchanan of CE2 Carbon Capital thinks the California Air Resources Board (ARB) will approve the Mine Methane Capture protocol that they delayed last October. But, “Offset supply will fall far short of ARB/Analyst/Registry expectations due to [the] buyer liability policy,” he said.

 

Even as climate negotiators gear up for the 20th Conference of the Parties in Lima, Peru in December, our readers predict that jurisdictional approaches to limiting carbon emissions will continue to move forward throughout the year.

“Jurisdictional carbon markets will continue to grow in North America,” said David Rokoss of Offsetters Climate Solutions. “We’ll see policy drafts from a number of Canadian provinces as they try to address emissions ahead of potential Canadian Federal policy (in certain sectors)…I would also expect to see movement in a few US states that have indicated carbon policy interest – particularly western coastal states.”

David Antonioli of the Verified Carbon Standard (VCS) predicts the issuance of the first jurisdictional REDD+ credits in 2014, as well as new issuance of AFOLU (agriculture, forestry, and other land uses) credits: “Issuance to a number of agriculture-related projects [will be] important because it will serve as demonstration and help to further the integration of agriculture and forests into broader landscape approaches,” he said.

 

Here at Ecosystem Marketplace, we’re getting ready to begin data collection for our 2014 State of the Voluntary Carbon Market and State of the Forest Carbon Market reports, and we’ll also be launching a revamped survey of clean cookstoves projects in collaboration with the Global Alliance for Clean Cookstoves.

We look forward to again providing reliable and transparent market information in the New Year, with many thanks going to those organizations that support our research. Most recently, this includes Impact Carbon, ClimateCare, and the Forest Carbon Group. In addition to the gratification of helping us provide market information and insight to the world free of charge, sponsoring organizations (above a certain level) receive a few perks. To inquire, email Molly Peters-Stanley.

May this Year Ending in 4 bring you much happiness and fewer emissions. Best wishes from all of us here at Forest Trends’ Ecosystem Marketplace.

—The Editors

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



V-Carbon News


2014 So Far

2014 has already seen plenty of action on the voluntary carbon market front. Last week, a sustainable agriculture project in Kenya became the first to verify credits from carbon sequestration in soils under the VCS. The standard’s new Reduced Impact Logging methodology is now open for public comment, and more projects are beginning to work towards the Climate, Community and Biodiversity Standard’s new Triple Gold designation, which certifies beyond-carbon benefits such as endangered species protection and climate adaptation (more to come on this from EM).

On the compliance side, Quebec officially linked its carbon market with California’s as of January 1, opening the opportunity for cross-border offset purchases. A new Environmental Defense Fund report projects offset market growth in California in 2014, though market experts say that Quebec will not contribute much to this demand until more sectors are regulated beginning next year. Supply is also beginning to ramp up in North America’s compliance markets: Finite Carbon and Potlach Corporation registered the second-ever forest carbon project with the California ARB at the beginning of January.

Recent news from across the pond is a bit more mixed. While China has already launched subnational carbon markets in Guangdong province and four cities, a lack of transparency about the number of emissions permits issued and pricing could undermine the market, and a permit surplus could be looming, according to recent reports. And things look pretty stark in Australia, where the proposed abolition of the country’s carbon tax led the head of CO2 Group, Australia’s largest carbon project developer, to leave his position last week. Meanwhile, the EU is expected to vote todayon the backloading provision that would tighten its carbon market.

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