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From the Editors

Germany is a flurry of climate action this month. In Bonn, climate negotiators are haggling over how to operationalize the Paris climate agreement. In Cologne, hundreds of private and public sector stakeholders are gathering for the 13th annual Carbon Expo to find ways to scale up carbon markets – with or without the help from the folks in Bonn.

It’s along the River Rhine (well, in a conference hall near it…) that Ecosystem Marketplace is launching our newest report, Raising Ambition: State of the Voluntary Carbon Markets 2016, which is available for download here. This year’s report documents a 10% increase in voluntary demand for carbon offsets in 2015 as mainly private sector actors sought to neutralize their unavoidable emissions outside and ahead of carbon regulation. These voluntary buyers hailed from 35 different countries and transacted a total of 81.4 million tonnes of carbon dioxide equivalent (MtCO2e) last year.

They overwhelmingly looked for offsets developed under a third-party standard and purchased tonnes from a wide range of project types, led by wind (12.7 MtCO2e transacted) and avoided deforestation (11.1 MtCO2e). Alongside the growth in the compliance cap-and-trade market in California, voluntary action in the United States flourished as U.S. buyers purchased 16 MtCO2e – the most of any country.

However, the growth in offset demand came at the lowest average prices ever tracked in Ecosystem Marketplace’s report series: $3.3/tonne, for a total market value of $278 million. Though prices ranged widely – from as little as $0.1/tonne to as much as $44.8/tonne – average prices dropped across almost all project types, and suppliers reported a buyers’ market in most regions. Offset retirements reached a record high of 39.5 MtCO2e in 2015, reflecting the fact that more end-users are taking this final step, but still new issuances outpaced them slightly, contributing to the pile-up of existing supply.

Still, offset suppliers are hopeful that a number of new initiatives – some directly connected to the Paris Agreement, and others outside of it – could grow offset demand in the future. To date, 157 companies, from Coca-Cola to Sony, have signed up for the Science-Based Targets initiative which aims to get companies to commit to emissions reductions targets in line with a 2˚ C temperature rise threshold. The World Bank’s Carbon Pricing Leadership Coalition, officially launched in December at the Paris talks, includes 74 countries and 1,000 companies that support carbon pricing. Both of these high-profile lists may be a good place to start in terms of drumming up voluntary offset demand.

Voluntary carbon market participants are also increasingly engaging with emerging compliance programs to see if they might adopt emissions reductions methodologies originally developed for voluntary buyers. The in-progress market-based mechanism for airline emissions looks somewhat promising on this front, as does South Africa’s upcoming carbon tax.

The production of this report would not have been possible without our Donors the MacArthur Foundation and Good Energies, our Sponsors BioCarbon Partners, Eco-Act, and InfiniteEARTH, and our Supporter The Climate Trust. For information about how to support further research on ecosystem services finance, click here.

More news from the carbon markets is summarized below, so keep reading!

 
   

HERE’S THE DEAL

JetGreen

JetBlue’s recently released sustainability report reveals that the company purchased about 500,000 tCO2e (they report it as “1.1 billion pounds”) in 2015, offsetting its emissions for the “Earth month” of April. The purchases flowed through carbon offset supplier Carbonfund.org and supported seven projects, including the Amazon Tropical Rainforest Conservation Project in Acre, Brazil. In addition to JetBlue’s direct offset purchases, the company offers its customers the option to offset emissions from their flights, and flyers have signed up to offset a total of 665,000 tCO2e to date, according to JetBlue. In other 2015 developments, the airline opened a 24,000-square-foot airport farm in JFK’s terminal 5, where they grew 2,000 pounds of blue potatoes.

- Read the report (and check out its cartoons!)

To good health

California-based healthcare company Kaiser Permanente announced its intention to become a “carbon net positive” company by 2025. It plans to buy renewable energy certificates and carbon offsets in greater quantities than its annual emissions, which it anticipates will be about 580,000 tCO2e annually by 2017. (In 2012, Kaiser set a goal of reducing its greenhouse gas emissions 30% by 2020, and they’re expecting to meet that goal ahead of schedule.) Kaiser’s announcement cites climate change’s impacts on public health, including increases in injuries and death from extreme weather events and heat, the spread of infectious diseases and mosquito-borne illnesses, and worsening asthma conditions.

- Read the press release

157 caveats

Houston-headquartered infrastructure company Kinder Morgan Inc. recently received a regulatory license for a $5.4 billion expansion to its Trans Mountain pipeline, running from Alberta to Burnaby, Canada. But the National Energy Board’s approval of the project came with 157 conditions, including a requirement that the company completely offset the greenhouse gas emissions associated with construction. As for the 890,000 barrels of oil per day that could run through the pipeline – those emissions are another story. First Nations including the Tsawwassen plan to fight it, and Kinder Morgan needs a final green light from the federal government, which is expected to make a decision before the end of the year.

- Read more from Business Vancouver

PROJECT DEVELOPMENT

Patient money

When the smoke cleared in Cuyamaca Rancho State Park in California after the 2003 Cedar Fire, almost every tree across 25,000 acres had been killed. The devastation was so complete that a few years later there was still almost no regrowth. So the Park came up with a plan, and to date they’ve raised at least $8 million through carbon finance to plant one million seedlings in areas of Cuyamaca where forests previously grew. Investing partners include American Forests and ConocoPhillips, Coca-Cola Bottling Company, Poseidon Water, Stater Bros Markets, and Odwalla. The Park has replanted over 1,400 acres so far, and now it’s a waiting game: the project is expecting to issue its first offsets under the Climate Action Reserve within the next few years.

- Read more from Ecosystem Marketplace

A few for you, a few for me

Japan’s Joint Crediting Mechanism (JCM) launched in 2013 with the idea of bilaterally cooperating on emissions reductions technologies. Now, three years later, the JCM’s first project has issued tonnes: just 40 of them, from a project in Indonesia that installs more efficient freezers in food factories. Twenty-seven of those tonnes will go to the Japanese government and four will go to Mayekawa Manufacturing Co, the Tokyo-based company that provided the technology. The remaining nine tonnes will stay with Indonesia, five with the government and four to PT Adib Global Food Supplies, which installed the freezers. The tiny issuance is more symbolic than anything else, but sets a precedent for how the JCM might split offsets between Japan and a host country.

- Read more from Carbon Pulse

POLICY WATCH

Acronym soup heating up

Moods were positive as climate negotiators met in Bonn this month to start ironing out the details of the Paris Agreement. “No Earth-shattering decisions are expected to come out of Bonn; this is primarily an agenda-setting meeting,” writes Gus Silva-Chavez of Forest Trends. In a recent blog post, Silva-Chavez explains some of the key negotiating channels to watch: Market-based mechanisms will be negotiated under the SBSTA (Subsidiary Body for Scientific and Technological Advice), while modalities and procedures for keeping track of countries’ climate commitments will be negotiated under the SBI (Subsidiary Body for Implementation). A new negotiating track, APA (Ad Hoc Working Group on the Paris Agreement) will deal with transparency, compliance, and the “global stocktake” of countries’ plans.

- Read more from Ecosystem Marketplace

Bumpy take-off

At a meeting of the UN’s International Civil Aviation Organization (ICAO) this month, rifts emerged around the draft proposal for a market-based mechanism for airline emissions. The U.S. is pushing for offsetting obligations to be differentiated based on airlines’ individual growth rate rather than the industry average – a move that would put more onus on emerging economies. Meanwhile, China submitted a paper that suggested countries enter into the market on a “nationally-determined” basis to avoid undue burden on developing countries. “Now we will see negotiating lines begin to harden. People have been pretty careful until now,” Annie Petsonk, a lawyer with the Environmental Defense Fund, told Carbon Pulse. ICAO’s full assembly is scheduled to vote on the market-based mechanism in October.

- Read more from Carbon Pulse

Keep this secret safe

On July 1, the “safeguard mechanism” under Australia’s Emissions Reductions Fund (ERF) will kick in, requiring about 140 large businesses with emissions of more than 100,000 tCO2e annually to “keep emissions within baseline levels.” Though no one seems to be talking about it much, the safeguard mechanism is pretty much a “secret” Emissions Trading System (ETS) writes Alan Kohler, editor of the Australian Business Review. Though the official ETS was repealed in 2014, this new mechanism bears close resemblance: Covered entities that exceed their historical 2009-2014 emissions in any given year will need to buy Australian Carbon Credit Units (ACCUs). The mechanism is coming into place after the government’s ERF has spent AU$1.73 billion on ACCUs, leaving AU$816 million left in its pot.

- Read more from The Guardian

HUMAN DIMENSION

Unexpected founding fathers

In “Hot CO2mmodity,” a six-part ClimateWire series, E&E reporter John Fialka (also the publication’s first editor) explores the personalities behind what he calls “America’s most complex export”: carbon markets. The series introduces readers to John Dales, the Canadian economics professor who in 1968 wrote a slim book that (accidentally) launched the concept of cap-and-trade. It takes them to the jungles of Acre, Brazil, where rubber tapper Chico Mendes was assassinated in 1988, spurring a movement to join economic development with forest protection. It describes the early days of the Environmental Defense Fund’s involvement in China, when Dan Dudek took the first of what would become more than 150 trips to help the country build its carbon market. In short, it is worth reading.

- Read the series in ClimateWire

NEW RESEARCH

Great expectations

Four out of five respondents to a survey of International Emissions Trading Association (IETA) members conducted by PwC said they expect carbon markets to expand as a result of the Paris Agreement. This was an increase from three out of five respondents that expected expansion last year. Market participants expect carbon prices to range between 6 euros and 15 euros per tonne through 2020 – far less than the 40 euros per tonne that respondents said is needed to adequately curb climate change. The survey also covered voluntary carbon markets and REDD+, with participants expressing concern as to whether REDD+ can generate compliance offsets.

- Read the report

Jobs

Forestry Program Officer – Winrock International’s American Carbon Registry

Based in Sacramento, California, the Forestry Program Officer will fill a mid-level technical role that involves reviewing project listing applications, formulating responses to technical questions, and supporting business development and outreach activities. The successful candidate must have at least five years of experience working with projects in the carbon market and be familiar with fundamental greenhouse gas accounting principles.

Read more about the position here

Senior Consultant, Climate Finance & Emissions Trading – First Climate

Based in Bad Vilbel, Germany, the Senior Consultant will work on business development in climate finance, carbon markets, and national mitigation activities; acquire clients; manage and deliver consulting projects; and develop a consulting team. The successful candidate will have a relevant academic background and five years of work experience in consulting, with a track record in business development in relevant markets. English proficiency is essential, German and any other language is a plus.

Read more about the position here

Land Use Consultant – Climate Focus

Based in Washington, D.C., the Land Use Consultant will advance new research, analysis, and implementation of land use finance and policy. The position involves coordinating public and private investment projects in Latin America that support REDD+. The successful candidate will be a strong team player and have at least five years of experience working in climate channge or land use, strong analytical skills, and prior experience working with the private sector. Spanish fluency is a plus.

Read more about the position here

Researcher, Nature-Based Climate Adaptation and the Private Sector – Conservation International

Based in Arlington, Virginia, the Researcher will begin to address the question: Why and through what pathways are private-sector actors scaling up and financing ecosystem-based adaptation? The researcher will be responsible for the day-to-day management of the project, lead a survey dialog with a targeted cross-sector of private sector actors, and collate and synthesize existing tools. The position requires a master’s or business degree in a related field, two to four years of relevant experience, and a demonstrated understanding of relevant corporate contexts.

- Read more about the position here

   
   

ABOUT THE ECOSYSTEM MARKETPLACE

Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact info@ecosystemmarketplace.com. 

 
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