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This Week in V-Carbon: Weather or not carbon is hot…

It’s that time of year again – when the heavy summer sun illuminates the market’s mid-year performance. While the high-level reports are sunny, the current forecast (and pricing) is partly cloudy as California awaits draft regulation revisions. Across the pond, the market is also in a fog as some companies celebrate their offsetting successes while others rain on the good news parade.

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 by clicking here.

28 June 2011 It’s that time of year again – when the heavy summer sun illuminates the market’s mid-year performance. While the high-level reports are sunny, the current forecast (and pricing) is partly cloudy as California awaits draft regulation revisions. Across the pond, the market is also in a fog as some companies celebrate their offsetting successes while others rain on the good news parade.

Pricing for offsets deemed eligible for compliance in California recently got a second wind – at least for some credit types. Point Carbon’s weekly newsletter (PDF) reports that bids for compliance-grade credits from the destruction of ozone depleting substances (ODS) topped $8/tCO2e last week, but agricultural methane and forestry tonnes from the Climate Action Reserve (CAR) were bid at $7.25-7.5/tCO2e.

Analysts attribute the latter credits’ lower bids to rumors that the ARB will “discount” ag methane credits and require early action forestry credits to adhere to a stricter protocol. While details of the ARB’s offset treatment are expected to surface in a “15 day notice revision” of the draft regulations sometime this week, Ecosystem Marketplace caught up with CAR’s Gary Gero for his insights.

Regarding the ARB’s thoughts on livestock methane credits under CAR, Gero explained that the ARB has grappled with accounting for biogenic CO2 emissions and therefore reducing the volume of credits from agricultural methane projects.

However, Gero says that CAR and others have discussed with ARB the scientific basis for its credits and calculations. “My understanding is that they now believe that we got the accounting correct and there will be no discount for livestock,” he comments, “but we’ll know for certain when the regulation comes out.”

ARB’s expected treatment of some CAR forestry credits relates to the fact that early versions of CAR’s Forest Project Protocol didn’t have a buffer pool in place. Gero explains that for any project to be in the compliance program, early action or otherwise, it will have to contribute to the buffer pool.

“So it’s not a discount of the forest credits based on some calculation changes,” he says, “but it’s really taking a portion of issued credits and having them also contribute to the buffer pool.”
 
Elsewhere in this issue, prices are frozen at well below the market average (in 2010, $6/tCO2e) on the Climex platform, where VERs utilizing the VCS standard were auctioned at €1.10/tCO2e. For its unique public tender of ~800,000 tCO2e forestry tonnes from its Mozambique-based Sofala Community Carbon Project, project developer Envirotrade chose not to specify a minimum bid and let the chips fall where they may.

On the regulated front, credit prices began to thaw in the EU market, recovering to €13.02/tCO2e on Monday after falling precipitously when already-low prices triggered traders’ stop-loss thresholds.

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Voluntary Carbon

Climex auction a VER-itable steal

How low (priced) can VERs go? Last week on the Climex auction platform, Rabobank successfully purchased 170,000 VCS credits at €1.10/tCO2e. The auction announcement communicated a set of criteria set out by Rabobank, who were seeking VERs from VCS or Gold Standard projects preferably from renewable energy (excluding large hydro) agri-based methane capture and co-generation projects. The auction was attended by 12 VER sellers offering 29 projects. While Climex Managing Director Jeroen van de Kletersteeg asserted that “the final price is a reflection of the market,” the final auction price is lower than the global average price of $5.1/tCO2e for VCS projects as tracked in the 2011 State of the Voluntary Carbon Markets report.

Read more about 2010 price trends in the State of the Voluntary Carbon Markets report

Hot off the rails

European rail operator Eurostar has derailed its carbon offsetting program, opting instead to transform its “Tread Lightly” sustainability program into a broader initiative expected to cut emissions 25 percent by 2015. Eurostar previously offered carbon neutral journeys as part of its effort to reduce emissions per traveler journey 35 percent by 2012. Although this target remains, the company “didn’t feel it was working as well as it could have done,” said Peter Bragg, head of Eurostar’s environment team. “Customers didn’t get it [and] got confused with our carbon reduction target.”

Read more from BusinessGreen
Read more from ABTN

Dude, that’s so METI
Last week, news that Japan’s Ministry of Economy, Trade and Industry (METI) is scoping out new Feasibility Study projects for its Bilateral Offset Credit Mechanism (BOCM) spread like wildfire through project developer circles. That METI will again look at REDD+ projects as one of many project types under the BOCM sparked interest in the offset program that some market participants considered to be off the table due to Japan’s recent domestic challenges.

But in fact, a source from within the Japanese government confirmed to Ecosystem Marketplace that both METI and the Ministry of the Environment (MOE) together successfully supported four REDD+ feasibility study projects in FY2010 (out of 49 total projects). According to the source, the FY2011 budget starting April 2011 has been dramatically increased and it is expected that additional feasibility study projects for the BOCM (including REDD+) will be selected in mid-July. Suppliers expect that the ratio of REDD+ projects to other types will be similar to the previous year. Interested readers can track the MOE’s progress on BOCMs on its New Mechanisms Information Platform.

Envirotrade’s tender moment

Envirotrade has issued a public request for bids for the remaining unsold and unallocated carbon credits generated by its Sofala Community Carbon Project in central Mozambique – verified under Plan Vivo and the first project to be validated under the Climate, Community and Biodiversity (CCB) Standards at the Gold level in all three evaluation areas. In order to secure finance for the Sofala project and allow Envirotrade to focus on new, larger projects in Africa, the company is seeking bids for minimum quantities of 1,000 tCO2 from up to 800,000 available VERs. “The tender is an experiment for us,” said Charles Hall, Chief Executive of Envirotrade. “One of Envirotrade’s key objectives is to demonstrate that the carbon markets can fund projects like ours in a sustainable way.” Interested parties must submit a request for pre-qualification to sofalatender@envirotrade.co.uk by June 30th.

Read more about the Sofala Tender

Put that in your pipeline and smoke it
The VCS will soon add a new functionality to the VCS Project Database, by allowing project proponents to list forthcoming projects in a VCS project pipeline. According to VCS, projects that meet certain preliminary thresholds will be able to list while under validation (i.e. where projects have contracted a validator and are being validated) and also at an earlier stage. The criteria for listing have not yet been specified, but VCS expects to reveal additional details by Q3 2011. VCS CEO David Antonioli explained to Ecosystem Marketplace that the project pipeline has been in the, ah, pipeline for a while. “We hadn’t operationalized it until now because we wanted to make sure that the registry system was up and running effectively,” he says. “Now that we’re confident that it’s working well, we’re comfortable saying that you can actually list your projects at an earlier date to give the market more transparency.

Find the project pipeline here soon

Ding Dong Ditch!

The Danish utility Dong Energy may be “Moving Energy Forward” – but not via its carbon offset origination desk, which will soon be closing up shop. According to Dong, fuel mix changes – with a focus on offshore wind farms, biomass and natural gas instead of coal – will allow the company to meet emissions caps without the additional origination activities. “The consequence of this substantial change in the generation portfolio is a decreased need for own sourcing of carbon credits through projects,” Dong said. “The engagement in existing projects and funds will continue unchanged,” it added. No details have been made available on staff cuts or on the size of the company’s project portfolio.

Read the Reuters article

CarBonnaroo

What do Loretta Lynn, Eminem and and an offset supplier with a Jurassic logo have in common? All of the above plus 80,000+ screaming fans were part of the Bonnaroo music festival, which in 2010 offset 900 tCO2 and is currently recalculating its footprint for 2011. According to the Bonnaroo website, the Tennessee music festival’s 2010 emissions were offset by the Carbon Reduction and Energy Exchange (CREx), an initiative of the Florida-based Earth Givers organization. Also putting the “car” in carbon reductions is another Tennessee initiative to reward drivers that invest in carbon offsets with free downtown parking in Nashville. The program that originally rewarded drivers of hybrids, electric and biofuel vehicles elected to broaden its impact to a larger number of regional consumers. Reportedly, some of the investment will be channeled into local emissions reduction production projects through an ex-councilman’s company, EarthCredits, which transacts credits at an average price of ~$40/tCO2e.

Read more from Tri-Valley Dispatch
Read more about Bonnaroo Greening
Read about the TN carbon offset parking incentive

Camels, get your guns

The Australian government may soon be farming out the job of voluntarily reducing emissions to the nation’s offset suppliers that have eagerly awaited a mechanism for generating VERs on their own soil (literally). The Carbon Farming Initiative (CFI) passed last week in the House of Representatives and will now head to the Senate, where it is considered likely to pass with the support of the Greens. “After many months of discussions with the minister and the department, I have been given assurances that the regulations and the methodology will put appropriate land management rules in place,” said Greens Senator Christine Milne. The CFI aims to reward farmers and landowners for practices that reduce or store CO2 according to approved methodologies. Credits generated under the CFI – scheduled to begin on July 1st – are expected to be accepted under the government’s proposed carbon pricing mechanism.

Read more from Freehills
Read more from ABC

Going for broke(rs)

Ten weeks after launching their online marketplace for the primary carbon market, Brokers Carbon is betting its hand on two new markets – announcing its expansion into Africa and North America. The Melbourne-based start-up has welcomed South African businessmen Richard Bradshaw and Mark du Toit, who will lead the company’s expansion in Africa, and Montreal-based climate change specialist Pierre Daigneault, who will focus on the North American market. Since the launch of its platform, Brokers Carbon has managed to list over 30 million tCO2 online – reportedly with a three-year pipeline in excess of 100 million tCO2. Brokers Carbon founder Nathan Dale described the company’s long term growth model as fairly aggressive, adding that it will “require a number of these business partners to be based all around the world to help us develop and expand our existing global network.”

 

The tribe has spoken

US tribes are preparing to try their hand at the forest carbon market under a US$2.45 million pilot project on tribal lands – where at present no active projects exist. The initiative aims to “develop protocols that overcome the legal and technical barriers faced by tribes in entering carbon credit trading markets,” according to carbon advisory firm EcoAnalytics, who will partner with Finite Carbon, law firm Van Ness Feldman and the Confederated Tribes of the Colville Reservation of Washington State on the project. Although more than 80 forest carbon projects are currently underway across the US, none are located on indigenous reservations. Gene Nicholson, Chairman of the Board of The Colville Tribal Enterprise Corporation, calls the project “a milestone leading the way toward adapting approved and implemented forest carbon methodologies and protocols addressing issues involving tribal sovereignty.”

Read the Mongabay article

Putting the ING in fair climate funding

The Netherlands-based Fair Climate Fund (FCF) is the recipient of a €4.3 million loan from Dutch bank ING to help the non-profit organization advance investment in emissions reduction projects. The loan comes as part of a €10 million debt facility provided by the ING’s commercial banking arm, the Dutch ministry of foreign affairs and fund shareholders ICCO. FCF – a social enterprise that invests in sustainable emissions reduction projects based on the principles of fair trade – plans to use the loan to seek new investments, primarily in Africa. The FCF already has two projects on the go: a programmatic biogas initiative in India which aims to set up 18,000 installations and generate 40,000 Gold Standard certified emission reductions (CERs); and an initiative aimed at introducing an alternative way of lighting charcoal to 40,000 families across rural South Africa for the voluntary carbon market.

Read more about the FCF

La vie en vert

Ville de Laval, Quebec has become the province’s first municipality to launch an offset program for GHGs aimed at new development projects. The initiative requires all developers that submit an application to the City to obtain certain construction permits to shell out CAD$0.32/m2 of the new development to fund the municipality’s corresponding offset purchases. The offsets will be purchased from the Canadian Standards Association (CSA) GHG registry from both local and international emission reduction projects. Ville de Laval expects to annually offset approximately 50,000 tCO2 through the program, part of its overall plan for reducing GHG emissions.

Read the press release
View an illustration of the compensation mechanism (pdf)

Southern forests on the line

Railway-based Norfolk Southern and GreenTrees LLC kicked off a US$5.6 million, five-year reforestation and carbon sequestration program earlier this week – planting the ceremonial first of over 6 million trees to be planted on 10,000 acres in the Mississippi Delta area served by the railroad. Over time, the program is expected to generate over a million carbon credits – significantly offsetting the company’s CO2 emissions while creating a national environmental legacy. The trees will be planted on privately owned land under long-term leases, protected by family owners and farmers. Restoration of the Mississippi Alluvial Valley (MAV) will support commercial, climate, and energy interests served by the river while protecting wildlife habitats, improving water quality and preventing soil erosion and nutrient run-off.

Read the press release

Seepless in Colorado

A new methodology to quantify the GHG benefits of capturing methane seeping from coal bed methane deposits – that would otherwise leak directly into the atmosphere – has been approved by the VCS. Developed by the Colorado-based Southern Ute Indian Tribe Growth Fund and WSP Environment and Energy, the methodology sets specifications for quantifying the precise volume of GHG emissions avoided when methane seeping out around coal bed methane deposits is captured and flared or used. According to VCS CEO David Antonioli, VM0014 Interception and destruction of fugitive methane from Coal Bed Methane (CBM) seeps “addresses an issue that is potentially very important for the Western United States and other areas where coal bed methane production is taking place.”

Read the program announcement
Read more about the methodology

MOE emissions, mo’ problems

Why reduce when you can erase? Korea’s Ministry of the Environment (MOE) and the National Nature Trust are teaming up to launch a commitment-based “carbon erasing club” – an association where companies, NGOs and citizens can sign up to support the government’s emissions reduction strategies. Club members will participate in carbon offsetting activities – including ecological tourism, planting trees and buying land for restoration – in order to offset their emissions generated through driving, traveling, leisure and other activities. The National Nature Trust will cooperate with local governments and companies to develop carbon offset projects, and plans to recruit around 1,000 members by the end of the year.

Read the Korea IT Times article

Reduce & Retire: The Latest on Carbon Neutral

Cleaving to CSR

Marks & Spencer (M&S) is thrilled with the consumer support it has received for its carbon neutral bra, which has quickly become a bestseller – boosting sales in its carbon footprinted Leaves range. According to Mike Barry, an M&S spokesperson, more than 250 of the bras are sold every day – but the company still has far to go in reducing its supply chain emissions. The acclaimed brazier is manufactured at an eco-model factory in Sri Lanka that uses renewable energy and waste initiatives to reduce carbon emissions by 33 percent relative to a typical clothing factory. The remaining 77 percent is offset through a project run by the Conservation Carbon Company.

Read the BusinessGreen article

Gentlemen, start your offsetting

That’s what many residents of Austin, Texas are calling on Formula 1 to do if it hopes to enter into a proposed 10-year contract with the city. The conflict between Austin’s commitment to being a sustainable green city and a long-term deal with the GHG-heavy event is not lost on locals, who are now encouraging F1 to get in line with other major competitions such as the World Cup, Olympics and Superbowl by committing to carbon neutrality. One of the measures designed to achieve the city’s Climate Protection Plan is to “promote carbon neutrality among visitors by providing mechanisms and incentives for the purchase of offset credits by travelers, conventions, trade shows and festivals.” According to local writer Stephan Wray, the answer is “a strict and enforceable carbon neutrality plan as a term of the contract” – or no deal.

Read the Statesman article

Climate North America

One small step for utilities, one giant leap for the EPA

The Supreme Court rejected last week a landmark climate change lawsuit against 5 major power companies that would have forced them to cut their GHG emissions. The justices unanimously overturned a US appeals court ruling that the lawsuit, involving six states, can proceed in forcing the electric utilities to clean up their act. Although the ruling has been called a victory for the utilities and the Obama administration, it may also be a victory for the EPA – reaffirming its authority in regulating GHG emissions under the Clean Air Act. “The decision comes at a useful time as we’ve seen efforts to take EPA’s power away, and we know there will be further efforts,” said David Doniger, policy director for the climate center at the Natural Resources Defense Council.

Read more from Reuters
Read more from ClimateBiz
Read more from Bloomberg

Don’t stop believing

Things are looking up for California’s contentious cap-and-trade program, which – despite its ongoing legal troubles – may begin on schedule in January 2012 after all. On Friday, the California First District Court of Appeal ruled that the California Air Resources Board (ARB) could continue work on the program while it awaits a final decision on the legal action. ARB recently released a court-ordered policy analysis of alternatives to a cap-and-trade system that concludes that a cap-and-trade system is in fact the most cost-effective choice for regulating GHG emissions. “I think the analysis is thorough and supports cap and trade as the most environmentally sound outcome,” said Ann Carlson, a law professor specializing in climate change policy at UCLA. ARB is accepting written comments on the revised analysis until July 28th, and will hold a hearing on August 24th for the Board to reconsider its approval of the program.

Read more from Reuters
Read more from BusinessGreen
Submit your comments to ARB

A corpus for Christie

New Jersey Governor Chris Christie’s plan to withdraw the state from the embattled Regional Greenhouse Gas Initiative (RGGI) cap-and-trade program may not be as easy as he would have hoped. Last week, the Assembly Environment and Solid Waste Committee and the state Senate Environment and Energy Committee approved two sets of identical bill texts invoking the state’s climate change law in an attempt to stop Christie from unilaterally withdrawing from the program. Although likely to be vetoed by the Republican Governor, the legislation “absolutely clears up any ambiguity of [Christie] being able to pull us out unilaterally,” John McKeon, chairman of the Assembly Environment and Solid Waste Committee, told SolveClimate News. “We are a country of laws. By disregarding the intent of the legislature, which required New Jersey to be a member of RGGI, Gov. Christie is ignoring the will of the people,” he said in a news release.

Read more from Reuters
Read more from NJ.com
Read more from Ecoseed

Partners plug along

Draft recommendations for the Western Climate Initiative (WCI) Offset Systems Process have been released and are now available for public comment. The recommendations identify the critical elements of offset project approval that it is hoped will lead to an adequate supply of high-quality offsets exchangeable across Partner jurisdictions. A stakeholder conference call was held to present the draft recommendations on June 15th, the slides for which can be found here. The WCI Offsets Committee invites written stakeholder comments on the draft recommendations, which should be submitted here by Friday, July 8th.

Read more from WCI
Read the draft recommendations

Kyoto & Beyond

Down and out in Bonn

International climate talks wrapped up in Bonn on June 17th with little progress made toward salvaging the Kyoto Protocol. Although insiders suggested that encouraging progress had been made on a range of technical issues, the ongoing stalemate seems to have overshadowed these efforts. Developing nations, including China, are demanding that developed nations commit to extending the treaty. But with Canada, Japan and Russia still refusing to get on board, the EU remains the only group of rich nations willing to sign on to a “Kyoto 2” – though they won’t go it alone. Although this uncertainty has plagued the Clean Development Mechanism (CDM), the UN has no plans to kill the market. “What the discussion is around the CDM is whether they will keep it as is – and then create some other market mechanisms that work in tandem with the CDM – or whether the improvements that they are looking for will be internalized into the CDM,” said Christiana Figueres, head of the UN Climate Change Secretariat.

Read more from Reuters
Read more from BusinessGreen
Read more from Carbon Positive

Corporate climate crusaders

An unlikely group of advocates joined forces last week to urge the EU to up the ante on its climate change goals – increasing its emissions reduction target to 30 percent from the current 20. More than 70 companies, including bigwigs (and some big voluntary offsetters) BT, Ikea, Google, Puma and Unilever, signed a joint declaration arguing that the target will help spur innovation and investment, create jobs and enhance European energy security. “Politicians across Europe must listen to this clear message from forward-thinking businesses,” said Keith Allott, head of climate change at WWF-UK. “Sticking with the current EU 20 percent target would simply perpetuate a cycle of low ambition.” A group of countries, including the UK, France and Germany, are also pushing hard for the more ambitious target, which is opposed by some eastern and southern EU states.

Read more from BusinessGreen
Read more from ClimateBiz

Global Policy Update

Please don’t take my offsets away

The UK government is urging MPs not to scrap an option to use 55 million international offsets to help the country meet non-ETS emissions goals for the period 2013-2017, arguing that – although the government is eager to meet its targets through domestic measures – flexibility is needed. In response to a claim by Green Party MP Caroline Lucas that offsets were a “get out of jail free card,” Climate Change Secretary Chris Huhne maintained that the use of international credits should be retained. “If we can meet targets domestically, we should. But (economic) forecasts are enormously uncertain. We think it makes sense to keep that flexibility”, he said. The government’s willingness to keep the option of using offsets is at odds with a recommendation earlier this year from the Climate Change Committee (CCC) that the UK should rule out the use of international carbon credits.

Read the Reuters article

From many, one

According to the Beijing News, China plans to set up a unified national emissions trading platform by 2015. According to the China Securities Journal, the nation is currently focused on trading pilot programs in the cities of Beijing, Chongqing, Shanghai, Tianjin and the provinces of Hubei and Guangdong during the five years through 2015 – though there is currently no set timeframe for the establishment of a carbon trading market. In the mean time, many pilot programs like the China Beijing Environmental Exchange (CBEEX) and Tianjin Climate Exchange (TCX), operate purely in the voluntary market space but are viewed as the testing grounds for a future national model. China, the world’s most prolific emitter, has pledged to cut its carbon emissions per unit of economic output by as much as 45 percent from 2005 levels by 2020.

Read the Bloomberg article

FCPF’s unlikely hero

Beleaguered oil and gas company BP has pledged US$5 million in support for the World Bank’s Forest Carbon Partnership Facility, which facilitates the sale of forest carbon credits from participating countries to investors. The oil company – along with Britain, Germany, Norway, the EU and the Nature Conservancy – is a founding member of the fund, through which it will be able to both offset its own emissions and potentially profit from buying and selling credits on the open market. But some campaigners have expressed concerns that the launch of the fund was premature and lacks safeguards to protect people who live in and depend on forests. “This sets a worrying precedent,” said Kate Dooley of EU forest watchdog group Fern. “Decisions on the eligibility of the fund have not been taken yet.”

Read the Bretton Woods Project update
Read more from the Guardian

Science & Technology

Soylent Green is…. low carbon!

If you choose to eschew meat for environmental reasons, chew on this: a new study has shown that lab-grown artificial meat would not only generate a fraction of the GHG emissions associated with conventional livestock production, but could help feed the world’s growing population. According to scientists from Oxford and Amsterdam University, lab-grown tissue would reduce GHG emissions by up to 96 percent, require between 7 and 45 percent less energy, and could be engineered to use only 1 percent of the land and 4 percent of the water associated with producing conventional meat. “Simply put,” said Hanna Tuomisto, the researcher at Oxford University who led the study, “cultured meat is potentially a much more efficient and environmentally friendly way of putting meat on the table.”

Read the Guardian article

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