The results are in… and VERs win?
While the mandatory carbon markets struggle with an oversupply of credits in the EU, voluntary carbon market participants are comparably optimistic. Takeaways from the Environmental Finance and Carbon Finance’s annual survey of the voluntary carbon markets reflect a renewed growth in voluntary carbon offset purchases since the height of the financial crisis. “[In 2008-2009], voluntary carbon offsetting went from being a public good to a luxury good,” says Kathy Benini of Markit, voted Best Registry Provider. “But we’ve seen growth in 2011. With the economy getting better, people are starting to purchase again.” The CarbonNeutral Company won Best Offset Retailer for the second year in a row, with its Director of Carbon Sourcing Zubair Zakir reporting that the company reviewed a whopping 52 MtCO2e of carbon in 2011. The Verified Carbon Standard was rated Best Voluntary Standard – a new category this year. South Pole Carbon Asset Management won Best Project Developer, ICF International took Best Advisory services, Baker & McKenzie took Best Law Firm, while First Environment won Best Verification Company.
– Read more from Environmental Finance
– Read more from MarketWatch
South Pole vaulting into Australian carbon market
The Australian government’s wandering carbon price path led VER project developer South Pole Carbon to recently become a major shareholder in AU-based retailer Climate Friendly. “This is the first investment by an international company into an Australian carbon business, sparked by the new carbon legislation,” says Climate Friendly CEO Freddy Sharpe. “There are many opportunities for us to pursue together and one of the most exciting is the development of new Australian carbon projects.” South Pole Carbon is headquartered in Switzerland with offices in 10 countries, while Climate Friendly services domestic companies from Qantas to the Body Shop.
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Government turns tables on Tullet Brown
Just three weeks ago, Tullet Brown, one of the UK’s leading carbon credit brokers, bowed to the title of “Commodities Broker of the Year in Western Europe” by World Finance. Since then, government inspectors from the Insolvency Service are moving to shut down Tullet Brown following an investigation, and the Secretary of State petitioned the High Court to ‘wind-up’ the firm on grounds that they were “marketing of land, precious metals and carbon credits to the public as investment opportunities.” Tullet Brown, along with three connected companies – Tamar Ltd, Johnnystone Ltd, and Brad Baker Ltd – are in provisional liquidation pending a court hearing on June 29. Launched in 2009, Tullet Brown predicted its revenue last year was £2M and forecasted turnover this year at £6M.
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ClimeCo deliVERs to Just Energy
ClimeCo America Corporation (ClimeCo America) and Rentech Nitrogen Partners, L.P. jointly announced ClimeCo’s delivery of 120,000 tCO2e Climate Reserve Tonnes (CRTs) to green energy retailer Just Energy for resale to its residential and commercial customers. The credits from Rentech Nitrogen’s N2O abatement system were developed according to the Climate Action Reserve’s Nitric Acid Protocol and will be delivered to Just Energy over a five year period. With the sale of the carbon credits to Just Energy, Rentech Nitrogen says it can cover a significant portion of its project construction costs for the N2O abatement system while Just Energy broadens its base of carbon offset projects.
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As clock winds down, voluntary buyers line up for PFSI VERs
In our March Forest Carbon newsletter, we put out a reminder to NZ forest owners to register with the NZ Emissions Unit Registry by the end of 2012 to qualify their credits for the first Kyoto period. Since then, Permanent Forests International reports it has received a surge in requests for Permanent Forest Sink Initiative (PFSI) VER registrations. The company has so far sold over 500,000 PFSI VERs, earning forest owners more than NZ$2M in profits, and is set to deliver 600,000 more to offshore buyers by mid-2012. Under the PFSI, the company develops credits for pre-2008 carbon that meets the voluntary market’s “high standard for environmental integrity,” according to Permanent Forests owner Mark Belton – standards and safeguards that he says are lacking under more current ETS forestry rules.
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Carbon’s Maine event heating up
In the wake of the MaineHousing and Efficiency Maine controversy with the Lee siblings, Maine’s state legislature is considering a bill that would bring more legislative oversight to Efficiency Maine. MH board members have tried to determine how to recover the $6M+ in public dollars spent on Director Dale McCormick’s plan to bundle weatherization heat savings into carbon offsets. The underlying weatherization methodology developed by MH for its project was a landmark approach – not only the first approach approved by the Voluntary Carbon Standard to incentivize home weatherization, but also the first performance benchmark approach developed under VCS. Weatherized homes that achieve energy efficiencies beyond a predetermined benchmark are eligible for carbon credits.
– Read more from The Maine Wire
– Read more about the original project
Promethium adding new elements to African CSR
South Africa’s NedBank has seven new carbon projects in the pipeline, all awaiting validation from the UNFCCC. The projects, which will incur transaction costs between R100-R150million, are being developed by Promethium Carbon, a local advisory firm. The bank’s goals for this undertaking are two-fold: reduce its own emissions and operational costs from electricity consumption, and help the country’s coal company, Eskom, offset its carbon impacts. Completion of the projects is envisioned for the end of the first quarter of 2013, after which the credits generated can be traded in the marketplace. The company’s director noted that emerging South African projects seeking registration with the UN reflects the growing awareness in-country of the carbon market.
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carboNZeros in on CDP reporting verification
Earlier last week, the Carbon Disclosure Project (CDP) approved New Zealand-based carboNZero Holdings as one of 17 global standards to meet CDP greenhouse gas verification requirements. carboNZero’s Certified Emissions Measurement and Reduction Scheme (CEMARS) provides an outlet of verification for not just New Zealanders, but organizations around the world to submit data on emissions reporting and internally set reductions. NZ Crown Research Institute Landcare Research’s CarboNZero program is also a supplier of New Zealand-based carbon offsets, though voluntary offsetting activities are not currently recognized or rewarded through the CDP’s corporate emissions disclosure reports.
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Hilton to offset regional emissions after Hour(s)
In support of Earth Hour 2012 on March 31, the luxury hotel chain has partnered with Climate Friendly to have all of its Australasian hotels offset carbon emissions for every occupied room not only during Earth Hour itself, but on the second Monday of every month for the rest of the year. Hilton Australasia will offset customer emissions by purchasing carbon credits in the 150MW, 29,557-VER Gujarat wind farm project in India. Operational since September 2007, the wind farm displaces over 300,000 tCO2e per year. The project is CDM registered, follows the Voluntary Carbon Standard, and is verified by Bureau Veritas.
– Read more from Travel Blackboard
– Read more from Hilton
Honeywell raids refrigerants
Instead of selling its ozone-depleting refrigerants, Honeywell is destroying them in exchange for emission reduction credits in compliance with Climate Action Reserve’s protocols – and the CA Air Resources Board’s offset provisions. Honeywell looks to offset the cost of destroying the refrigerants by selling an estimated 125,000 Climate Reserve Tonnes to third parties who need credits for California’s upcoming greenhouse gas cap-and-trade program. So far the company has destroyed over 27,000 pounds of CFC-11, with plans to destroy its remaining inventory of CFC-11, CFC-12 and R-500 refrigerants this year for a total of 125,000 MtCO2e in emissions.
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VCS revisions on standardized methods and timing of credits
The Verified Carbon Standard (VCS) has announced that several of its methodologies are undergoing revisions to meet its latest requirements on standardized methods and the timing of credits from select carbon pools. Projects may follow the current methodologies until September 30 of this year, after which they must apply updated versions. Pending revisions cover baseline scenario requirements on accounting for GHG emissions released from biomass, soil carbon, and wood products for improved forest management and conversion of low-product forest to high-product forest, as well as those released from carbon pools for activities reducing emissions from mosaic deforestation and degradation. Other revisions concern using performance benchmarks to determine additionality for single and multi-family building weatherization. VCS will also be revising its methodology for conservation projects that avoid planned land use conversion in peat swamp forests.
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Reduce & Retire: The Latest on Carbon Neutral
Allianz ups its CO2 ante
Publishing both its Annual and Sustainability reports at the same time (for the first time), Alianz for the first time verified its environmental data using an independent auditor (KPMG) – and announced a recent increase in its emission reduction target by 10%. The insurance giant is now looking at a 35% reduction since 2006 by 2015. Last year, the firm began investing in carbon projects to offset its CO2 emissions, making it carbon-neutral from 2012 onward. This plays out through Allianz’s 10% stake in Wildlife Works Carbon, supporting its 200,000-ha Kasigau Corridor REDD project in Kenya. The Kasigau project was the world’s first REDD project validated and verified under the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity Standard (CCB) – and Allianz has secured the rights to some carbon credits from the project that will bring it closer to meeting its carbon neutral 2012 deadline.
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And the envelope, please?
BP Target Neutral and shipping giant FedEx are teaming up to neutralize (via carbon offsets) emissions from shipping all FedEx Envelopes around the world. The shipping emissions, calculated annually, will be offset from BP Target Neutral’s portfolio, including a biogas farm facility in the Netherlands, a reforestation project in the Tanzanian Southern Highlands that is converting degraded grassland to commercial forest, and a landfill gas collection system at Thailand’s first sanitary landfill. FedEx says the costs of its new carbon neutral commitment will not be passed on to its customers.
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A climate-change scientist’s inconvenient truth
Scientist Kevin Anderson rekindles a familiar debate with a story in Nature on how he recently declined to attend or present his group’s research at London’s Planet Under Pressure conference. The conference organizers marketed the event as being “as close to carbon neutral as possible” via carbon-offset projects financed through a £35 (US$56) fee levied on all delegates – as opposed to taking actions to abate actual conference emissions. While Anderson acknowledges that offsets can help finance development, he objects to claims that offsetting and the Clean Development Mechanism (CDM) truly reduce emissions to levels at or below BAU levels. Comments below the article offer several counterpoints, inquiring about the lack of alternatives to offsetting in some circumstances and the long term sequestration benefits of forests.
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Climate North America
Double trouble for CARB
The California Air Resources Board (ARB) has pushed back its initial auction date for California’s economy-wide GHG cap-and-trade program until November in order to safeguard the market from potential gaming. ARB Chairman Mary Nichols says that the new auction date would not affect overall timeline for implementation.
Beyond the delay, the Citizens Climate Lobby and Our Children’s Earth Foundation have also filed a lawsuit against the ARB over its offsets provision, concerned that its performance-based offsets protocols cut too much slack on additionality testing. If the plaintiffs win, the ruling will prohibit the ARB from allowing the use of offsets (of any kind) as compliance instruments under AB 32, with drastic implications for the WCI’s supply of carbon credits.
If the ARB wins the case, it will still need additional protocols in order to accommodate demand. An article in Environmental Leader cites Point Carbon’s estimate that the current four protocols can only meet one-third of the offset quota through 2020. Point Carbon expects that offset supply will constitute the main long-term allowance price driver once California and Quebec link their programs under WCI next year.
– Read more about the delay
– Read our spin on the lawsuit
– Read more on offset supply from Environmental Leader
New Hampshire House kicks out RGGI
While WCI looks to California to pull itself together, the Regional Greenhouse Gas Initiative (RGGI) eyes New Hampshire. New Hampshire’s participation in the regional program is under Congressional fire for the second time in two years, having drawn criticism over its ‘stealth tax’ toll on electric users. The New Hampshire House has overwhelmingly passed a bill (237-110) that, if passed in the Senate, would withdraw the state from RGGI by 2015. Repeal opponents say that state consumers would lose RGGI benefits while state rates would still reflect cap-and-trade costs included in regional power pool rates. Gov. John Lynch successfully vetoed a similar bill last year. Catherine Corkery, director of NH Sierra Club, said she believes that the Senate fundamentally disagrees with the House and will again veto the repeal bill.
– Read more from Concord Monitor
– Read more from Seacoast Online
Florida’s cap-and-trade obituary
In the Sunshine State, Gov. Rick Scott signed the HB 4001 bill last Friday, repealing the state’s cap-and-trade law (remember that?) designed to control in-state power plant emissions. The 2008 law, unimplemented, had fallen out of favor among Republican members of the Florida Legislature who argued that it would kill jobs and questioned the scientific evidence underlying climate change.
– Read more
EPA gives market-based compliance the cold shoulder
Brevity speaks. As law firm McGuireWoods points out, EPA’s newly released 257-page proposal on performance standards for new power plants’ CO2 emissions includes just two sentences on market-based compliance option alternatives. Both rule out the possibility of incorporating emissions averaging or credits for use of biogenic fuels or offsets. McGuireWoods notes that “there was some expectation that the EPA would at least seek comment on such options if for no other reason than to build crosswalks to an existing source standard.” The law firm is concerned that the EPA’s rule will be inadequate in supporting the development of carbon capture and sequestration (CCS) and supercritical coal technologies in the U.S.
– Read the article from McGuireWoods
– Read the proposal
Kyoto & Beyond
To intervene or not to intervene
As the EU carbon market reaches new lows in price with the highest first-quarter volumes on record, it may not be surprising that the results of Point Carbon’s annual carbon market survey lean in favor of market intervention in the EU ETS. Any deus ex machina, however, seems to be on hold. The EU’s Danish presidency references neither an allowance set-aside nor other options to maintain a robust carbon price signal in its briefing note released for upcoming ministerial discussions on the future of the EU ETS. The text notes that despite the recession, some stakeholders advocate “leaving the market to respond itself, as the ETS will help deliver the reduction objective it has been designed to meet.” New member states like Poland argue that low carbon prices mitigate the risk of carbon leakage. The ministers’ debate will touch upon how the ETS will be able to incentivize and finance low-emission investments going forward. Formal negotiations over final language of the directive will take place on April 11.
– Read more about the Point Carbon survey
– Read more about the Danish briefing note
Russia foments carbon credit glut
Russia is likely to eventually issue all of its 300 million Emissions Reduction Units (ERUs), which would add to the current oversupply of credits and potentially push prices further below the current low. Russia has already issued about 50 million ERUs since the start of the United Nation’s Joint Implementation (JI) program, which allows projects that reduce emissions in former Soviet countries to earn credits, and will soon inject another 90 million ERUs from sixty-five JI projects already approved by the government into the European market. Low prices could however deter interest from companies with carbon projects, especially with the paperwork that is needed to get their projects approved.
– Read more
Global Policy Update
NSW and Victoria throw in their towels
Australia’s state-based commitments to GHG reductions are falling by the wayside as the federal government prepares to introduce a $23-per-tonne federal carbon tax. NSW’s Greenhouse Gas Abatement Scheme (GGAS) is older than the EU ETS, but its days are limited. The NSW Government will shut down the state’s trading scheme on July 1 to minimize costs to consumers and avoid redundancy with the federal tax. Since the program’s inception in 2003, the price of certificates has plummeted from $8.50 to the current spot price of $0.85. NSW Energy Minister Chris Hartcher said the federal government should be responsible for any fallout, having promised in 2009 to compensate holders of unused GGAS certificates, which now total at about $16M. The Commonwealth reneged on this commitment.
Further south, Victoria’s state government is also vacating the climate change space, dropping its emissions reduction commitment and winding down the Climate Change Act. As in NSW’s case, Victoria’s government contends that any state-based policy would be redundant in the presence of a national tax.
– Read more on NSW from The Australian (Business)
– Read more on NSW from The Australian (National Affairs)
– Read more on Victoria
A call to action in Arab countries
Qatar, whose economy depends highly on fossil fuel sales and has the world’s highest GHG emissions per capita, is set to host this year’s UN climate change conference (COP18) in December. Rt Hon John Gummer of the Global Legislators Organization believes that the arrangement provides an opportunity to engage with the oil-rich Gulf States, fundamental to the success of any long-term climate change strategy. He posits that Qatar and other Gulf States can make a difference on climate change by investing in the development of carbon capture and storage (CCS), with China on the demand side.
On the other end of the Arabian Peninsula, there has been some encouraging news with the launch of the Yemen National Climate Change Forum (YNCCF), an interactive platform for Yemen’s climate change activists. YNCCF aims to facilitate national dialogue among parties concerned with climate change and attract major industrial countries to implement CDM projects in Yemen under the Kyoto Protocol. While Yemen is party to conventions relating to climate change, it has not yet entered the carbon market. Anwar Abdul Aziz, chairman of the climate unit at EPA, says that if Yemen fails to join the carbon market, the country “will not only be deprived of the financial be