V-Carbon News: Single CCX Trade Trumps 2009 Voluntary OTC Volumes

The Chicago Climate Exchange’s voluntary cap-and-trade program expired last December, but its offset program lives on – and recently saw what is perhaps the single largest transaction in the history of voluntary (or any) carbon markets. The bilateral trade of 59.1 MtCO2e in offsets and allowances was worth approximately $1 million. Read about this and other current headlines in this week’s V-Carbon News.

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.

10 February 2011   |  Does the recent uptick in voluntary carbon headlines speak of a market again hitting its stride? You tell us! After you read through this week’s packed issue of V-Carbon News, please take part in our State of the Voluntary Carbon Markets 2011 survey if you supplied offsets to voluntary buyers in 2010.

It’s no exaggeration to say that the voluntary market events of the last two weeks will be a topic of conversation and conference panels for months – if not years – to come.

From the first REDD credits to be issued from VCS to potential delays to the California carbon trading program to what appears to be the largest single transaction in the history of the voluntary (or any) carbon marketplace, the short month of February has already packed a big punch for market participants.

First things first, the CCX’s cap-and-trade program may have ended in December, but not before seeing one bilateral transaction of Carbon Financial Units (CFIs) on December 22 that was approximately 5 MtCO2e larger than the entire voluntary “over-the-counter” market volume in 2009. After a transaction of 47 MtCO2 credits from the Mbaracayíº Forest Reserve in 1990, this is the single largest transaction of voluntary carbon credits tracked by Ecosystem Marketplace.

According to the (new) CCX website’s publicly available transaction data, the bilateral (non-platform) transaction of 59.1 MtCO2 equivalent consisted of CFIs from a variety of locations (domestic and international allowances and offsets), project types and a range of vintages – priced at US$0.017/tonne.

Market observers speculate that the trade is most likely too large to be a CCX member buying offsets to meet a legally binding end-of-phase target – but could have been the work of a large broker or one of several aggregators that are going out of business. Ecosystem Marketplace will continue to follow this development, so please contact Molly Peters-Stanley if you have any additional information.

Of course, the news heard round the world this week was that of the market’s first ever offset credits for the Voluntary Carbon Standard from a project designed to reduce emissions from deforestation and forest degradation (REDD).

Wildlife Works Carbon revealed this week that the Voluntary Carbon Standard (VCS) – soon to be Verified Carbon Standard! – issued its first REDD-based Voluntary Carbon Units (VCUs) to Wildlife Works’ Kasigau Corridor REDD project, which protects over 500,000 acres of forest in Rukinga, Kenya.

Wildlife Works’ project was validated and verified against the VCS’ most recently approved REDD methodology for addressing Avoided Mosaic Deforestation of Tropical Forests – “mosaic” referring to the patchwork quilt kind of deforestation pattern that arises in regions with many drivers of deforestation.

Keep reading for more news and insights about these and other headline-grabbing developments. And remember – if you value the V-Carbon News brief and other Ecosystem Marketplace services, become a supporting subscriber. For a suggested donation of US$150/year, you can help us keep the news and analytics flowing and earn your (or your company’s) name and website link in ~24 issues of V-Carbon News. Reach out to inboxes worldwide and Donate Now.
—The Editors

For comments or questions, please email: [email protected]

V-Carbon News

Voluntary Carbon

A little larger than the entire voluntary market

Everyone wants a sneak peek at Ecosystem Marketplace’s State of the Voluntary Carbon Markets report. Well, at least some of the transaction volumes we report – Chicago Climate Exchange’s bilateral “over the counter” trade information – are publicly available and give readers a preview of things to come. This month market observers were surprised to find that one December 2010 bilateral transaction of CCX carbon instruments (CFIs) was larger in volume than all of the transactions in the 2009 voluntary OTC market combined – and one of the single largest trades (if not the largest trade) in the history of carbon markets. This bilateral trade, confirmed to have transacted a mix of project types, locations and vintages from 2003-2010, was equivalent to 59.1 MtCO2. That’s roughly 5 MtCO2 more than was transacted in the entire voluntary OTC market in 2009. Not even we could wait to report that finding! Check out publicly available data and more on the CCX’s new website, which was just launched last week.

Read more from the CCX

Kenyan Carbon Project Earns First-Ever VCS REDD Credits*

Despite years of buzz, the creation of verified carbon credits from projects that reduce greenhouse gas emissions from deforestation and forest degradation (REDD) has been underwhelming. Last week, the first credits under a new REDD methodology were issued, and many observers are now waiting for the floodgates to burst open. The US-based conservation consultancy Wildlife Works Carbon won the race to issue the world’s first Voluntary Carbon Standard credits from a REDD project, yesterday announcing that VCS issued the first REDD-based VCUs to its Kasigau Corridor REDD project. The project, which protects over 500,000 acres of forest in Rukinga, Kenya, was validated and verified against the VCS’ most recently approved REDD methodology with a focus on activities that avoid mosaic deforestation in Kenya’s semi-arid tropical ecosystem. “This is a watershed moment for REDD projects everywhere because it demonstrates they can attract private investment to this critical work,” says VCS CEO David Antonioli. In its first 6-year crediting period, the project generated 1.45 million VCUs and is expected to reduce over six million tons of carbon emissions over its 30-year project cycle.

Read the Ecosystem Marketplace article
*This blurb was revised from the original version sent out via e-mail to correct an error.   We incorrectly stated the Kasigau Corridor project was the first to receive REDD  credits from a formal carbon standard.   Plan Vivo issued credits to the Sofala Community Carbon Project which includes avoided deforestation activities in 2004.   We regret the error.

“V” is for verified

Would a VCU by any other name smell as sweet to buyers and investors? What about regulators? While the world waited with rapt attention for those first REDD VCUs, the VCS slipped in another announcement – that as the carbon market game is rapidly changing, so is its name. On March 1 of this year, the Voluntary Carbon Standard will become the Verified Carbon Standard, highlighting one of several steps (that conveniently also start with the letter “v”) necessary to assure the quality of carbon offsets. In an interview with Ecosystem Marketplace, VCS CEO David Antonioli explains, “We’ve learned that there’s a lot of equity value in VCS and we wanted to make sure that the name conveys the bedrock of what we do – which is quality assurance.” He also emphasizes that “in order to do that, we felt that the word ‘verified’ was a much stronger descriptor than the word ‘voluntary,’ but it’s in no way abandoning the voluntary market.”

Read the letter to stakeholders
Read the FAQs

Wagenplan takes VERs around the (auction) block

Dutch car lease company Wagenplan is cruising for credits on the voluntary market. For a third year in a row, the company has contracted Climex as the platform to support its purchase of 27,000 issued VCS verified emission reductions (VERs) to voluntarily offset all kilometers driven by its clients. “Wagenplan was very much satisfied with the outcome and the efficiency of the previous auctions and the Climex auctions are the most direct and low cost channel available in the voluntary market at the moment,” explains Wijnand Akkerman, CEO of Wagenplan, “especially for a medium sized buyer like Wagenplan.” The credits, to be purchased by descending clock auction on February 16, must be generated only from renewable energy projects other than biomass and landfill.

Read the press release

US Fund Mines Carbon Gold in Arkansas Trees

Thanks to money from a New York-based carbon fund that believes it can generate positive returns via CO2 sequestration, 10,000 acres of privately-owned Arkansas forestland along the Mississippi River will remain in its natural state. The EKO Green Carbon Fund (GCF) – the first-ever US carbon fund to focus exclusively on Improved Forest Management (IFM) projects – was officially launched last week by EKO Asset Management Partners after wrapping up its first round of funding in January. Its first investment is designed to secure and produce IFM credits that will qualify under California’s cap-and-trade program through its use of the Climate Action Reserve’s (CAR) US Forest Project Protocol.

Read the Ecosystem Marketplace article

How to save forests? More white paper!

With several of its protocols being used as the basis for compliance-grade offsets under California’s AB32 cap-and-trade scheme, CAR seems to be making sure its bases are covered. In the case of its Forest Project Protocol, this has resulted in a series of white papers that follow the 2009 adoption of its FPP v.3.0 that explore issues related to forest carbon accounting and forest management practices. CAR has made the first four white papers available for a 45-day public comment period ending March 25, and the papers will also be a topic of discussion at two public stakeholders sessions during this period. The purpose of the white paper discussions and comment period is to determine and discuss any necessary changes to the protocol’s accounting and eligibility requirements.

Read more from CAR
Read the current Forest Project Protocol

Everything old is New again

The aptly named Australian investment company New Forests is planning to make previously logged forests good as new again – and perhaps slightly more lucrative. The company aims to generate carbon credits by restoring 270,000 ha of land in the Green Triangle and Western Australia, purchased from failed timber business Great Southern Plantations. “When the trees are cut, the blue gum, it actually coppiced, so the trees just grow back from the stump, so there is a possibility to coppice the trees or they can be replanted,” said New Forests managing director David Brand.

Read more from ABC news

Indian villages lahk their trees

The Indian state of Maharashtra is tyring to get at the crore of the climate change issue by scaling up its ambitious rural tree planting scheme to earn carbon credits. Apparently, the state’s campaign to plant one tree per rural villager achieved plantings of 5.93 crore trees (that’s 53.9 million) over the last year and half, a few hundred thousand trees (measured in lahks) short of its rural population of 6.25 crore. Now the state is looking to carbon credit-earning incentives to continue to expand the program, with the government compensating villages for their plantings over the next three years. At the end of the three year effort, the state will account for the plantings and seek carbon credits. To ensure permanence, they will provide villages with tree guards. Tree guards are good, but just to be safe, one might also suggest investigating one of the lahks of AFOLU methodologies currently available.

Read more from the Hindustan Times
Read more from Inside Waste Weekly

Into the blogosphere

And now for a little shameless self-promotion, Ecosystem Marketplace was just informed by LexisNexis that our blog EKO-ECO.com has been nominated as one of the candidates for the LexisNexis Top 50 Environmental Law & Climate Change Blogs for 2011. Lexis has asked for comments from our readers – so we encourage you to visit their awards page and support our nomination (listed as “EKOECO” under the Environmental Law category)! EKO-ECO is an integral part of the Ecosystem Marketplace website, where we and our guest contributors update readers with news, policies, opinion and breaking blurbs about topics that span the environmental markets, including carbon, water, biodiversity and other payments for ecosystem services.

Visit EKO-ECO.com
Read more from LexisNexis

Reduce & Retire: The Latest on Carbon Neutral

A general service to the planet

Those who enjoy alternative work schedules (who doesn’t enjoy working from the comfort of their own couch?) might want to consider employment with the US federal government. The General Services Administration (GSA) is required by law to reduce the energy consumption of its buildings by 30 percent by 2015 and make new federal buildings carbon neutral by 2030. Plans include both a more mobile and flexible workforce, and greener buildings. According to Cathy Kronopolus, Regional Commissioner for GSA’s National Capital Region in the Public Buildings Service, green buildings are not only more efficient, but “actually sort of a talent magnet. Newcomers to the workforce are looking for being able to have some daylight, which helps with sustainability ratings, and not being in buildings with no natural light reaching them.”

Read more from Federal News Radio

Pay-at-Pump Carbon Reduction: it’s a gas

California’s GreenCo Station has taken its “Feel Better about Fueling” message to another level, teaming up with Carbonfund.org to create the nation’s first pay-at-the-pump offsetting program. For five cents per gallon, motorists can offset their emissions by supporting third-party validated carbon reduction projects. “GreenCo’s gasoline prices are competitively low in order to incentivize our customers to choose to add on the five cents per gallon right at the point of sale, the pump,” said GreenCo CEO Robert Warner. “Then Carbonfund.org can take the proceeds and do what they do best – combat the CO2 emissions that result from fossil fuels and support projects that provide the biggest environmental bang for the buck.” Carbonfund.org also recently partnered with indie-favorite Oasis Disc Manufacturing to produce a 100 percent carbon neutral CD.

Read more from CSP
Read the press release

Climate North America

Flight of the Concord?

New Hampshire’s Science, Technology and Energy Committee will today address Bill 519 to repeal the state’s participation in the Regional Greenhouse Gas Initiative (RGGI) at a hearing in Concord. The bill, which claims that RGGI participation has “increased the cost of doing business, pushed companies to do business with other states or nations, and increased consumer costs for electricity, fuel, and food,” nevertheless opens with a statement that there has been no credible investigation into the costs imposed by the program. Indeed, the state enjoys the fourth lowest unemployment in the nation and has saved ratepayers millions in energy costs through programs funded by RGGI revenues (which also contributed heavily to the state’s balanced budget in 2010). The House website will report the outcome of the hearing later today.

Read more about Bill 519
Read more from Gather

The little GHG rules that could

Let’s hope the state of New Hampshire takes a page from New Mexico’s book, where lawmakers recently shot down a bill aimed at repealing the GHG rules adopted by the state’s regulators last year. Senate Bill 190, introduced by Republican Carroll Leavell and termed an “emergency” action, was rejected in a Senate Judiciary Committee vote on February 4. The bill would have overturned the state’s GHG emissions reduction targets, cap-and-trade program and reporting and verification requirements in order to protect “the public peace, health and safety.” Earlier this year, incoming Governor Susana Martinez also moved to scrap the GHG rules – however, New Mexico’s Supreme Court ordered their publication on January 26.

Read more from Argus Media
Read more from Current-Argus

Putting the CARB before the horse

A California Superior Court has issued a preliminary ruling in favor of low-income groups that claim that the state’s Air Resources Board (CARB) – tasked with designing and implementing cap-and-trade in the state – did not carry out a California Environmental Quality Act (CEQA) review during its rule-making process. Environmental justice groups also claim that CARB did not sufficiently weigh the policy alternatives to carbon trading before moving ahead with its 2008 Scoping Plan. Berkley/UCLA Law’s Legal Planet writers conclude that the ruling is “quite narrow” and could at most cause a temporary setback – noting that if the ruling is finalized, CARB will likely seek a stay of the injunction preventing it from acting on its Scoping Plan.

Read more from Bloomberg
Read more from Legal Planet

Canada should fly solo on climate policy?

As America’s northern neighbor and trading partner, it’s not surprising that Canada is watching US climate policy with bated breath. But a new study released by the Canadian National Roundtable on the Environment and Economy (NRTEE) entitled “Parallel Paths: Canada-U.S. Climate Policy Choices” recommends that Canada chart its own climate course and adapt them to U.S. policies when – or if – the latter emerge. It recommends a “Transitional Policy Option” with a national cap-and-trade system that would “walk a middle line between harmonizing with the US on carbon price and on emission-reduction targets, balancing competitive and environmental concerns.” The report concludes, among other things, that matching Canada’s emissions targets to those in the US would lead to higher carbon prices in Canada.

Read more from the National Post
Read more from Canadian Energy Law
Read the report

GOP vs. EPA: the gloves are off

Things are heating up in Washington as Republicans continue their aggressive assault on US climate change policy. A bill proposed earlier this month that would overturn the EPA’s key ruling that GHGs can be regulated under the Clean Air Act, and effectively prevent the federal government from making any regulations designed to address climate change, received its first hearing yesterday in front of the House Energy and Commerce Subcommittee on Energy and Power. EPA Administrator Lisa Jackson argued that the proposed Energy Tax Prevention Act of 2011 would “eliminate portions of the Clean Air Act, the landmark law that all American children and adults rely on to protect them from harmful air pollution.” The GOP, however, continues to reject the scientific basis for climate change.

Read more from the Los Angeles Times
Read more from BusinessGreen
Read the Congressional Testimony

Kyoto & Beyond

Meanwhile, back on the European market…


Five of Europe’s 30 carbon registries were allowed to reopen and spot trading resumed on Friday after a long, drawn out, and embarrassing few weeks for the European carbon market. The remaining national databases remain frozen, and spot trading limited, after hackers illegally transferred about US$40 million in permits from Austria, the Czech Republic and Greece. “We have seen the first registries open again, more will follow later this week, and we’ll slowly come back to normal,” said EU Climate Commissioner Connie Hedegaard. “Security comes before speed. Everybody has acknowledged that.”

BlueNext SA exchange resumed spot trading last week, with 17,000 tons handled on Wednesday compared to an average of 134,000 tons in the 20 days prior to the suspension. The price of permits was unchanged at €14.30 as of 4:52 p.m. Spot emissions trading on the Germany-based EEX, ICE carbon Exchange and Green Exchange remain suspended. “There is still no official list of the stolen EUAs so there is no guarantee that you are not going to buy them,” said Alessandro Vitelli of IDEAcarbon. “Some traders are saying that they are just not bothering with the market until the issue is resolved.”

Read more from Bloomberg
Read more from BusinessGreen
Read more from BusinessGreen

What’s bad for the coffers is good for NZ


At least someone has managed to make good of a troubled market – UN CERs are being snatched up like hotcakes for trading in New Zealand’s emissions trading scheme (NZ ETS), which admits both CERs and New Zealand Units (NZUs). CER prices have dropped to around €11/ton due to record issuance levels and economic recessions in many European countries, and New Zealand firms have been buying them up to cover their 2010 or 2011 emissions. “The NZU price is now capped by the price of a CER instead of the NZ$25 government cap,” said Richard Hayes, director of carbon broker EITG. The spot price of emission credits gained 0.8 percent last week on low trade volumes, rising to NZ$19.45/tonne compared with NZ$19.30/tonne a week earlier, said Auckland-based broker OMFinancial Ltd.


Read more from Reuters
Read more from Bloomberg

Looking for a nuclear reaction

This week, the Philippines’ Energy Secretary Jose Rene D. Almendras publicly appealed to EU to allow developing countries – including the Philippines – to earn carbon credits for the construction of nuclear power plants. Almendras cited competition between low-energy development and the need for food production as a problem with carbon crediting, and the nuclear option as one solution. “Now, because of the carbon credits in sugarcane areas and other areas, the fuel revolution competes with fueling food,” he said. “If you put all of these carbon zero technologies together, it is miniscule compared to carbon savings of a single nuclear power plant.”

Read more from the Manila Bulletin

Are you REDD-y?

Building on the success of the Cross River State initiative, four more Nigerian states are getting ready to jump on the REDD bandwagon. With the help of Lagos-based environmental watchdog Lekki and the Nigerian Conservation Foundation (NCF), readiness activities are already underway in two major forest reserves, the Omo-Oluwa-Shasha Forests (in Ogun, Osun and Ondo states) and the Kurmi Forest (in Taraba State). According to NCF Technical Programmes Director Alade Adeleke, a successful REDD scheme would not only serve to reduce deforestation in the areas, believed to hold over half of the country’s remaining forest stock, but contribute towards sustainable economic development through the generation of carbon credits. “This is potentially a large amount of revenue if protection is effective,” said Adeleke.

Read more from the Daily Independent

Global Policy Update

B-b-b-baby, you ain’t seen nothin’ yet

Cyclone Yasi, which hit the Aussie state of Queensland last week, kicked up a resurgence of discussion around Australia’s extreme climate events and action on climate change. Professor Ross Garnaut, who recently issued the first of several updates to his famous climate change review, warned Australians to expect more extreme cyclones and other events to follow a lack of strong emissions mitigation. “If we are seeing an intensification of extreme weather events now, you ain’t seen nothing yet,” Garnaut stated as he again advised the Gillard government to institute a carbon price. Garnaut noted, too, that a carbon price in Australia would necessarily influence similar decision-making in the US and other industrialized (or emerging) economies.

Read more from the Sydney Morning Herald
Read more from Inside Waste Weekly
Read more from Reuters

South Korea not seouled on fast-start carbon trading

Though waffling on a start date to its cap-and-trade program (who’s not these days?), South Korean officials said to expect a draft bill by the end of this week. Amidst opposition to the policy from industries, the government promised to implement cap-and-trade in a “flexible manner,” possibly delaying the bill for up to two years (from 2013 to 2015) to satisfy groups like the Federation of Korean Industries. Last month, Korea Energy Management issued a claim that the system would cost companies 14 trillion won (US$13 billion) annually. “Some people worry that policies for energy saving and reduction of greenhouse gases might lead to a substantial burden on the economy,” President Lee Myung Bak said. “However if that path is inevitable, we need to be leaders in taking it.”

Read more from Bloomberg
Read more from BusinessGreen
Read more from the Korea Times

“You say you want a revolution”

Well, you know, we all want to change the world – at least China is poised for a clean revolution, according to the Climate Group, which last month released a white paper on the nation’s prospects for carbon trading. The paper briefly addresses several questions about China’s CO2 intentions, like, “How likely is it that China will go forward with a carbon trading system? And if the country were to adopt a carbon trading system, when and where would it start?” Richard Sandor, founder of the Chicago Climate Exchange, is himself looking to the east for progress on emissions. “I find more reception for cap-and-trade in Beijing than I do in this city,” he remarked at a carbon markets conference in Washington DC last week.

Read more from Bloomberg
Read more from the Climate Group

They say the best way to appreciate your job…

…is to imagine yourself without one. Luckily carbon market practitioners feel relatively secure in their current positions, where they’ve seen higher salaries and relative security even in the face of recession. According to the Carbon Salary Survey 2010, players in the Australian market were particularly satisfied with and adequately compensated for their work. The study also found that consultants and contractors were compensated 18 percent more than other full-time respondents. Men also came out ahead in the market as the gender pay gap widened from an average of US$15,000 to US$20,000 in 2010. The study found that nearly half of respondents also received no annual bonus. One talent acquisition specialist claims that gender inequality and lacking pay incentives will improve as the industry matures.

Read more from Carbon Positive

Carbon Finance

Green Exchange’s Californication

The anticipation is building in California’s emergent carbon market (SanFrancisco court case pending), with Green Exchange Holdings LLC the latest to jump on board. The trading hub recently announced plans to offer CO2 futures contracts for the cap-and-trade program, set to begin next year. “We’re writing contracts as we speak to issue in the California market,” said Green Exchange CEO Thomas Lewis at a conference in Washington on carbon markets hosted by the Commodity Futures Trading Commission. According to Henrik Hasselknippe, the company’s managing director of global product development, they have been working on California carbon contracts for “quite some time,” with trading set to begin as early as next summer.

Read the Bloomberg article

Not so open and shut

Major league carbon player Barclays Capital (Barcap) – which late last year participated in the first forward transaction of CO2 permits under California’s CO2 scheme – recently urged the EU to restrict CO2 trade to compliance buyers and regulated firms under its ETS. The bank cautioned that regulators refusal to do so could result in “irreversible damage” to market integrity. This is in contrast to the US Commodity Futures Trading Commission’s inter-agency work group finding last month that a carbon market in the US would work best if open to a variety of players, with oversight. “At a minimum, carbon markets should provide access to end-users of allowances and offset producers so that such entities would be free to trade allowances and offsets,” note the report authors.

Additional resources

Please see our Reprint Guidelines for details on republishing our articles.