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This Week in Voluntary Carbon: Making the Priceless Valuable

From California to Cancun, the month of December has seen the carbon market take some shape in time for the new year. In this issue, Ecosystem Marketplace also takes readers through its own journey of market contributions over the years while seeking a contribution or two in return.

From California to Cancun, the month of December has seen the carbon market take some shape in time for the new year. In this issue, Ecosystem Marketplace also takes readers through its own journey of market contributions over the years while seeking a contribution or two in return.

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.

17 December 2010 | Not so long ago, the voluntary carbon markets operated in an information void – where transparency was low and entry costs were high. Then, in 2007 Ecosystem Marketplace launched the first State of the Voluntary Carbon Markets report to shine a light into the black hole of information around the market for carbon offsets.

For over five years, Ecosystem Marketplace – a project of the 501(c)3 non-profit organization, Forest Trends – has delivered V-Carbon New Briefs to in-boxes around the world. Today, Ecosystem Marketplace continues in its efforts to make the priceless valuable, offering to the voluntary carbon marketplace a host of freely available services including reports, breaking news and commentary – all packaged for quick digestion in the V-Carbon News bi-weekly news brief.

V-Carbon editors scour the news from all parts of the world and in several languages to bring readers the most relevant market updates and insights in a concise, informed and often humorous medium. Since the publication’s launch, V-Carbon readership has grown to over 5,000 carbon market practitioners, investors, academics and policy leaders.

But this kind of priceless market insight costs both manpower and brainpower to bring to the market free of charge – the only freely available resource of its kind in voluntary carbon market. In order to continue providing this service, Ecosystem Marketplace is asking for readers’ voluntary support to continue this service.

For a voluntary donation of $150/year, readers can continue to benefit from Ecosystem Marketplace’s informed briefings and Ecosystem Marketplace can in turn expand the newsletter’s offerings to conduct a broader survey of market information, including voluntary carbon price discovery and special reports.
 
Click HERE to donate and HERE to learn about sponsoring the State of the Voluntary Carbon Markets 2011 report.
 
As an added benefit, donors at this level will be recognized in the newsletter by individual name or company name and website link for one year from the date of their donation.

—The Editors

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

V-Carbon News

Voluntary Carbon

New Methodology Sets Building Blocks for REDD

As formal negotiations regarding the role of forest conservation to fight climate change occurred behind closed doors, another major milestone was announced in the voluntary forest carbon market. After more than two years of development by Avoided Deforestation Partners, a broad new REDD methodology has finally cleared the second validation under the Voluntary Carbon Standard (VCS). The methodology is divided into modules that can be mixed and matched by projects to meet the needs for an adaptable standard for unique local conditions, while still offering the reassurance to buyers and investors that the projects are utilizing an independently vetted and verified set of procedures. Another REDD methodology developed by Terra Global Capital was approved by the VCS on the same day, the first to address mosaic deforestation.

Read the Ecosystem Marketplace article
Read more about the AD Partners methodology
Read more about the Terra Global Capital methodology

Olam to harvest carbon credits from tt Timber

It’s harvest season for carbon credits! Singapore-based commodity supplier Olam International Ltd. may be entering the global carbon credit market after acquiring timber projects in the Republics of Congo and Gabon with its purchase of tt Timber. Robert Hunink, Olam’s global head of wood products business, told Bloomberg that the company will review building a power plant fueled by biomass and ways to restore degraded forest areas. The acquisition expands Olam’s timber business in Africa to 2.3 million ha of hardwood with an output volume in excess of 500,000 tonnes of tropical lumber a year, and also offers the potential for generating revenues through REDD and Clean Development Mechanism (CDM) projects.

Read more from Bloomberg
Read more from TradingMarkets.com

Maine’s in-house performance benchmarks

A few months ago, Ecosystem Marketplace reported on what appeared to be a daunting energy efficiency project – to eventually engage every home in Maine in home weatherization efforts under the direction of MaineHousing, which sought approval of its unique methodology under the VCS. The program has proven viable given the most recent news that not only is the methodology approved, but brings to market the VCS’s first performance benchmark approach to crediting emissions reductions. Methodologies under the VCS have traditionally assessed additionality on a project-by-project basis, but MaineHousing’s methodology will utilize a performance benchmark approach to credit efforts in homes that achieve energy efficiencies beyond a pre-determined benchmark. Of the fresh approach, VCS CEO David Antolioli says, “The market, I think, needs to recognize that there are mechanisms that can help to increase scale, reduce transaction costs and increase transparency. So we’re very keen on seeing the development of new performance benchmarks under the VCS.”

Read more about the methodology

What’s driving CAR?

Astute researchers can discover who’s utilizing the Climate Action Reserve’s (CAR) methodologies and tools by simply scanning CAR’s registry website. The “why’s” a little trickier – until now, since CAR recently released the results of its internal survey about user motivations and satisfaction. That profit is motivation numero uno for 75 percent of users is hardly a surprise. One interesting outcome of the survey, however, points to CAR users’ strong pre-compliance plays. The survey found that almost half – 45.8 percent – of respondents participate in CAR to prepare for mandatory regulation, and 85.7 percent of account holders find it very important for state or federal governments to support voluntary GHG emissions reductions frameworks like that of the Reserve.

Read more from CAR

China poised for Panda Standard pilot, sectoral progress

“China Blossoming” was the title of one side event benchmarking China’s carbon market position at the UNFCCC’s 16th Conference of Parties (COP16). It’s an accurate description of China’s progress on domestic voluntary mechanisms – including a pilot project and sectoral specifications under the Panda Standard for voluntary carbon offsets. One year after partners China Beijing Environment Exchange (CBEEX), Winrock International and BlueNext launched the Panda Standard in Copenhagen, they offered an outline of the Panda Standard’s AFOLU specifications (PS-AFOLU) and signed a MOU between the Agence Française de Développement (AFD), CBEEX and BlueNext to launch the Standard’s first pilot forestry project. The anticipated 15,000 ha project is one component of AFD’s large scale rural carbon program in the Yunnan province to include reforestation, the promotion of rural biogas and the development of sustainable agriculture techniques.

Read the Ecosystem Marketplace article
Read more from Bloomberg

The voluntary market’s nest egg

All of this talk about nesting, pre-nesting and trees might have you thinking it’s springtime in the voluntary carbon world – in a way, it is. VCS and CAR are both taking a first look at how their programs’ REDD projects can continue to generate additional credits (aka “nest”) within the jurisdictions of existing and future sub-national emissions reductions programs. Both programs are approaching the question according to their REDD scope – CAR is looking at nesting as it relates to its Mexico Forest Protocol, while VCS recently introduced its global approach to project crediting at the jurisdictional and project levels. Says CAR CEO Gary Gero, “A lot of this is pioneering and cutting edge, so maybe not everyone has heard about ‘nesting’ yet. But I think once they do they’re going to know that that’s the way that you get the market providing early capital into REDD projects.”

Read more from the VCS

ERA seals the forest carbon deal

British Columbia is already known for its forests, and continues to gain recognition for its forest carbon. Not long after the release of the province’s draft Forest Carbon Offset Protocol, Vancouver-based ERA Carbon Offsets Ltd. has announced the successful conclusion of an Offset Sales Agreement valued at over CAD$11 million with German company Forest Carbon Group AG (FCG). The transaction will deliver FCG validated and verified carbon offsets generated from ERA’s forest restoration and conservation projects based in Canada from 2011 though 2013. The offsets will be validated and verified to the International Standard Organization’s ISO 14064-2 standard and, if applicable, to the Community, Climate and Biodiversity Alliance’s CCB Standards or a mutually agreed upon equivalent standard.

Read the press release

Monks meditate on carbon market participation

A group of forward-thinking monks in northern Cambodia are taking a break from meditation and prayer to become players in the global carbon market. The Sorng Rukavorn monks have spent nearly two years winning legal control over 18,000 ha of forest, and now hope to protect it under a UN-recognized REDD project. Although there is concern over Cambodia’s history of corruption and poor forest management, the monks are hopeful. ”Any revenue from the forest will be important for the people here, and for Cambodia,” monk Lee Ragana told The Age. Their community forest is one of 13 such sites in Oddar Meanchey province that collectively cover nearly 68,000 ha of forest, expected to sequester 7.1 million tCO2 over 30 years.

Read the Age article

CTX offers buyers a Golden opportunity

Although the official agreements struck in Cancun may have been less than groundbreaking, there were some exciting voluntary carbon deals being hashed out on the sidelines. One such deal saw the Gold Standard Foundation sign an agreement that will allow its credits to be transacted on the Carbon Trade Exchange (CTX), the world’s first web-based electronic platform for spot trading of voluntary carbon credits. Adrian Rimmer, CEO of The Gold Standard Foundation said, “In order for the voluntary market to mature, it needs greater price transparency, customer choice and liquidity. Recognizing our influential role in the voluntary carbon market, we are making Carbon Trade Exchanges’ robust platform available to our stakeholders because it will drive the growth that the market needs.”

Read the press release
Read more from Commodities Now

Standard Bank ILLUMI-nates the way in Tanzania…

… though it won’t be using fossil fuels to do so. Standard Bank is supporting ILLUMI Nation Tanzania, a Clean Development Mechanism (CDM) initiative aiming to replace kerosene lamps with hand-held LED lights in 31 million Tanzanian homes by purchasing the carbon credits generated through the replacement of fossil fuels. “We’ve been working very hard during the past two years to bring the projects to fruition – and the Tanzania LED light initiative is the first of several that will get off the ground in 2011,” says Fenella Auoane of Standard Bank’s London-based carbon trading division. Standard Bank has also signed a deal with the Kenya Power and Lighting Company (KPLC), who generate carbon credits from energy saving light bulb and renewable power generation projects.

Read more from Sceptre Group Ltd.
Read more from Business Daily

That’s my Global Carbon Guarantee, baby

Gary Hattem, President of the Deutsche Bank Americas Foundation, and First Climate Director Nikolaus Schultze were on location in Cancun to unveil their multi-million dollar investment tool. The “investment vehicle” – called (GC)2: the Global Carbon Guarantee Consortium – aims €80 million at small projects in Latin America and Africa, with a focus on forestry, renewables and other CO2 mitigation technologies that have significant social and other co-benefits. According to First Climate, the tool “proposes to monetize future carbon credits so that independent project sponsors in Africa and Latin America can successfully raise funds to implement clean businesses,” and is intended to address the dearth of funding for small- to medium-sized projects.

 

 

 

Reduce & Retire: The Latest on Carbon Neutral

Thanks a gigaton

Billionaire entrepreneurs like Ted Turner and Sir Richard Branson probably know a winning business prospect when they see one. For such corporate heavyweights to take part in the Carbon War Room’s first ever Gigaton Awards for low-carbon leadership suggests that private sector climate action is still going strong. At the event, private sector climate leaders like 3M, Nike and GDF Suez celebrated their weighty emissions reductions in spite of negotiators’ and some governments’ inability to produce meaningful international and domestic commitments. CNN and United Nations Foundation founder Ted Turner seized the podium as the evening’s honoree to put it bluntly to the business community: “You know you’re right. You’ve got more motivation than somebody who’s wrong and knows they’re wrong. We’re gonna win – we’re gonna win big and we’re gonna win soon.”

Read the Ecosystem Marketplace article

Nike on track to a Better World

One Gigaton Award recipient was Nike, which has over time made significant strides toward corporate sustainability. During the Climate Group’s Better World reception in Cancun, Nike’s Hannah Jones rallied a cheer from private sector attendees by asserting that “when we look back at Cancun, the message that we will remember is that Business came to Cancun and said ‘We’re here to do business'”. Nike still leads the pack of climate business leaders rated through the Climate Counts scorecard and its climate friendly product design tool and patent-sharing program were recently featured at the Dreamforce cloud computing conference. Jones promises more climate action from Nike and its partners in 2011: “We’re going to collaborate in ways we’ve never collaborated before, we’re going to do deals together in ways we’ve never done deals before, and we’re going to keep on asking government to partner with us.”

Read more about Climate Counts
Read more about Dreamforce

Green Grid takes a CUE from PUE

The Green Grid, a consortium of technology companies aiming to boost data center efficiency, has expanded its efficiency metrics to include both the carbon output and the water use of a data center. The Carbon Usage Effectiveness (CUE) formula follows on the Green Grid’s widely accepted Power Usage Effectiveness (PUE) formula for IT equipment energy efficiency. The next metric to be released will be the Water Usage Effectiveness (WUE). “At the end of the day, PUE has driven the right behaviors overall, but I look at the whole and not the individual, and the whole has driven to vast improvements,” said Green Grid board member Christian Belady to GreenBiz. “I think you’re going to see the same with CUE and WUE.”

Read the GreenBiz article

Climate North America

Nine out of ten California regulators agree
In a landmark move for carbon regulations in the US, California’s Air Resource Board (ARB) voted to adopt and enact the rules it set out for administering the state’s broad-based cap-and-trade scheme. Thanks to a 9-1 vote, the regulations will move forward, including AB32’s provisions for allowing capped companies to surrender up to 8 percent of their regulated obligation in offsets from four ARB-approved protocols – as well as early action crediting under four Climate Action Reserve protocols. Now that the program has been approved by the January 1, 2011 deadline, next up is a focus on the nitty-gritty of enactment – determining additional qualifying protocols throughout 2011 and securing a place in the program for international credits from REDD projects.

Read the Wall Street Journall article
Read the NPR report
Keep checking here for updated documents

Governors touting Mexi-Cali offset deal

The Mexican state of Chiapas is hoping to team up with California to protect its rainforest under California’s cap-and-trade program. Both Chiapas Governor Juan Sabines Guerrero and California Environmental Protection Agency Secretary Linda Adams were touting the deal at last week’s climate talks in Cancun. “We want most offset [projects] to be in California, but a small portion outside the state,” said Adams. Although Chiapas signed a memorandum of agreement (MOU) with Governor Arnold Schwarzenegger last month committing the states to work towards allowing international offsets in California’s trading market, things remain uncertain. “We are nowhere near bringing in Chiapas into an offset program,” California Air Resources Board spokesman Stanley Young warned. “There is a memorandum of understanding, but we need more discussions.”

Read the Los Angeles Times article

RGGI: too much of a good thing?

Although the tenth Regional Greenhouse Gas Initiative (RGGI) auction yielded US$48.2 million for investment in energy savings and clean energy programs, the news is not all rosy for RGGI. Clearing prices for both current and future control period allowances were US$1.86, the minimum reserve bid for the auction, while 19.4 million permits (43 percent) offered at the auction did not sell. “Supply clearly exceeds demand and the states should cut back the number they are making available,” Peter Shattuck, a carbon-markets policy analyst at Environment Northeast, told Bloomberg. RGGI CO2 futures have fallen 19 percent this year, hitting a record low of US$1.87 on the Chicago Climate Futures Exchange on December 8.

Read more from Bloomberg
Read more from Bloomberg

You’re gotta fight for your right… to regulate

Environmentalists were crying victory last week as the US Environmental Protection Agency (EPA) won a landmark legal battle challenging its right to regulate GHG emissions under the Clean Air Act. The US Circuit Court of Appeals rejected challenges from business groups who argued that the regulations will damage the economy and that the EPA is overstepping its authority. The court ruled against the companies, which it said “have not shown that the harms they allege are ‘certain’, rather than speculative”. Many have welcomed the ruling, but the battle is not over yet. Several industry groups are expected to appeal the court’s ruling, and the Republican-controlled House of Representatives is threatening to launch investigations into the EPA’s role in regulating emissions.

Read the BusinessGreen article

Kyoto & Beyond

UN process saves… UN process

Another year, another round of climate negotiations… but this time ending on a more positive note. COP 16 concluded in Cancun last week with a broad set of agreements on key areas such as financing, forests, technology and adaptation. Although they fall short of a comprehensive global accord, the agreements represent real progress and may have renewed some faith in the UN process. Among the developments were: emissions targets put forth in the Copenhagen Accord being officially recognized under the UN negotiating process; the establishment of a green climate fund to help developing countries tackle climate change; formal backing for REDD; a more detailed agreement on monitoring, reporting and verification (MRV); acceptance of carbon capture and storage (CCS) under the CDM; and a new technology transfer mechanism.

Read the Carbon Positive article
Read the BusinessGreen article
Read the Guardian article

REDD+ progresses, LULUCF regresses

Among the agreements forged last week in Cancun, considerable progress was made on the acceptance of REDD, with several experts suggesting that it might be a green light signal for further progress in the climate discussion. “Historically the forestry issue is difficult to deal with technically and politically. If negotiators can roll up their sleeves, construct functional negotiations and agree on REDD, I don’t see why they can’t make this kind of progress across other issues next year at COP17 in South Africa,” notes Gus Silva Chavez, Climate and Forest Specialist at Environmental Defense Fund. On the land use, land-use change and forestry (LULUCF) front, less progress was made as countries remained divided over the “logging loophole”, which has dogged negotiations for years.

Read the Ecosystem Marketplace article
Read more from BusinessGreen

CCS captures UNFCCC’s attention

Finally, companies will have somewhere to store those troublesome emissions. Under the Cancun Agreements, carbon capture and storage (CCS) projects will now be eligible to generate certified emissions reductions under the CDM. Countries “decided that carbon capture and storage in geological formations is eligible as project activities under the CDM, provided issues, such as permanence, boundaries and safety, are addressed and resolved,” the UN Framework Convention on Climate Change said in an emailed statement. Decisions about whether to include CCS in the CDM have previously been delayed over concerns that the technology may be unsuitable for developing countries.

Read the BusinessGreen article
Read the Bloomberg article

EU ambitious following Cancun agreements

EU carbon permits gained the most in almost a month following the agreements reached in Cancun, with allowances for December 2011 rising up to 1.8 percent to €15.17 per tonne on Monday. “For the EU allowances market, the Cancun Agreements increase the likelihood of more ambitious long-term agreement in the future,” reports Bloomberg New Energy Finance. “However, the market risks getting ahead of itself if it believes the Cancun Agreements will lead to an international agreement involving binding emissions targets for the U.S., China and Japan – arguably perquisites for the EU to move beyond its current 20 percent target in 2020.” The EU has indicated that an increased emissions reduction target of 30 percent may now be back on the table.

Read more from Bloomberg
Read more from Carbon Positive

Korean company gets creative with carbon

Korean steelmaking company POSCO is taking their slogan, “Resources are limited; Creativity is unlimited,” seriously, by investing US$55 million in a CDM afforestation project on 20,000 ha of land in Uruguay. POSCO has already purchased 1,000 ha, on which 880,000 Eucalyptus trees have been planted, and plan to purchase the remaining land next year. The company predicts that the project will sequester 200,000 tCO2 each year on an area approximately one-third the size of the Korean capital, Seoul. Korea is expected to introduce mandatory GHG reduction regulations in 2013.

Read the MercoPress article

Carbon Finance

BlueNext: money in, money out

As nations in the Former Soviet bloc are increasingly bringing Emissions Reductions Units (ERUs) from Joint Implementation projects to market, BlueNext is banking on the trend by offering a new product on its platform – an ERU spot contract. The exchange’s spokesperson Keiron Allen anticipates the exchanges could see ERU volumes traded at upwards of 40,000 tonnes of contracts daily, at least initially. In the mean time, BlueNext is having a hard time tracking down about €15 million (US$19 million) worth of EU ETS allowances that disappeared from the account of the Romanian unit of Holcim Ltd., the world’s second-biggest cement maker. BlueNext has asked for confirmation of the theft from the Romanian National Registry. The European Commission is also advising EU ETS participants to not give their account information to the European Climate Registry, which despite claims to the contrary is not a part of the EU ETS registry system.

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

UN credits so hot, they’re put on ICE

UN Certified Emission Reduction (CER) credits are heating up after the ICE Futures Europe exchange proposed that offsets used for settlement against its contracts must comply with EU trading rules, reports Bloomberg. CERs for December 2011 gained as much as 2.4 percent, the most since November 15, to US$15.21 per tonne on ICE in London. According to ICE’s website, the planned changes to the treatment of UN credits follows the EU’s November 25 proposal to ban offsets generated by projects linked to the controversial industrial gases HFC-23 and nitrous oxide, effective from January 1, 2013.

Read the Bloomberg article

Domesticating the World Bank

Domestic markets were the talk of the COP in Cancun, where China, Indonesia and others flexed their domestic carbon capping intentions to legitimize their seat at the negotiating table. The world – and its Bank – took notice. During the COP, the World Bank announced its multi-million dollar fund for supporting the scale-up of domestic carbon markets in developing countries, from China and Indonesia to Chile and Mexico. The World Bank hopes the fund will be bankrolled by developed countries to the tune of US$100 million. This new fund is additional to US$6.4 bn it pledges to deliver through its Climate Investment Funds and a further US$2.5 bn through its carbon finance funds.

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

New UN climate fund “green”…

… but the money remains unseen. The Cancun Agreements have paved the way for a new centralized Green Climate Fund for developing nations. According the agreement, delivered by the Ad Hoc Working Group on Long-term Cooperative Action under the Convention, the fund will be governed by a board of 25 people “comprising an equal number of members from developing and developed country Parties”. However, it failed to provide detail on how the US$100 billion a year in climate funding will be raised. The fund will be managed by the UN rather than the World Bank, a decision being hailed as a victory for developing countries that opposed the World Bank’s past management of climate change finance.

Read the BusinessGreen article

China’s €500 million climate change IOU

Despite Europe’s own financial woes, the European Investment Bank (EIB) has agreed to provide a €500 million loan to China for climate change mitigation projects. The loan is the second of its kind and will support energy efficiency and renewable energy projects, some of which may generate carbon credits. EIB Vice-President, Magdalena í¡lvarez Arza, said, “the EIB is renewing its support for China in its fight against climate change. This operation ranks among the EIB’s most efficient loans in terms of GHG emissions reduction. It is estimated that up to 3 million tonnes of CO2 will be saved every year with its first Climate Change Framework Loan, and we are looking forward to achieving the same performa

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