This Week In V-Carbon: Yet Another 2014 Ranking


Ecosystem Marketplace readers don’t get to vote for the Oscar nominees that will be announced later this week, but you all had plenty to say about the most significant developments in the global carbon markets in 2014. Top picks included the US-China deal, California’s link to Quebec and more

13 January 2015 | Ecosystem Marketplace readers don’t get to vote for the Oscar nominees that will be announced later this week, but you all had plenty to say about the most significant developments in the global carbon markets in 2014. Here are your picks for the Top 10 stories, in order of importance as determined by our faithful readers.
1.US and China reach climate deal: After years of avoiding commitments during the international climate talks, the United States and China made headlines when they announced new emissions targets late last year. The agreement was announced just before the Conference of Parties (COP) in Lima, and symbolized the new focus on “Intended National Determined Contributions” (INDCs). INDCs hope to solve the major problem of common, but differentiated responsibilities to ensure countries all around the world participate in a climate solution.

2.California officially links cap-and-trade program to Quebec system and holds first joint auction: California and Quebec launched the first cross-border compliance trading program in North America on New Year’s Day 2014. The groundbreaking linkage proved to be only news in name, at first, as Quebec eased into its new program with a lackluster first auction. However, demand eventually soared as the first joint California-Quebec auction this November sold out and raised $407 million for the quarter.


3.US Environmental Protection Agency (EPA) Clean Power Plan: Defying an inactive Congress, President Obama released a 2013 edict to develop rules to reduce carbon pollution for the US power sector. The EPA delivered on that promise in 2014, with its proposed Clean Power Plan. The proposal recognized the efforts of proactive states by allowing for cap-and-trade programs, but disregarded a key part of California’s program by excluding the use of offsets.


4.Climate events of New York City (UN Climate Summit/People’s Climate March/NY Declaration on Forests/Global Leaders Pledge $1 Billion To End Deforestation By 2030): During Climate Week in New York City in September, a coalition of government, business, civil society, and indigenous leaders committed to ending deforestation by 2030 and halving it by 2020. If successfully implemented, the New York Declaration on Forests will prevent the emission of between 4.5 and 8.8 billion tonnes of carbon dioxide (CO2) each year.


5.Verified Carbon Standard assumes management of the Climate, Community & Biodiversity Standards: The Verified Carbon Standard (VCS) took over the day-to-day management of the Climate, Community and Biodiversity (CCB) Standards in November, with the aim of making it easier for project developers to verify co-benefits alongside emissions reductions. More than 70% of forest carbon offsets developed under VCS in 2013 also pursued CCB certification, according to Ecosystem Marketplace’s State of the Forest Carbon Markets 2014 report.


6.China to propose national Emissions Trading System (ETS) in 2015 for implementation in 2016: When the Chinese government makes a decision, it moves fast. After launching the first pilot emissions trading system in 2013, six more cities and provinces joined through last year. Now, officials look towards a national ETS to start in 2016. Experts caution against the haste as some pilots have experienced challenges which will need to be addressed in any larger scheme.


7.South Korea announces Emissions Trading System to start in 2015: South Korea launched the world’s second largest carbon market, as trading started this Monday. The country’s largest companies 525 of them transacted permits at around $8 USD per tonne (tCO2e). Officials expect modest volumes initially as participants get familiar with the system. Once trading picks up, forecasters have predicted it may become one of the most expensive trading systems in the world, up to an estimated $30/tCO2e by 2017.


8.Green Climate Fund receives $10 billion funding of initial pledges: With developed countries committed to providing $100 billion a year to support climate initiatives by 2020, $10 billion might not seem like a lot. But commitments are different than action, and the Green Climate Fund hopes to prove the latter is possible by the COP 21 in Paris. With financing in hand, the organization can start assessing projects.


9.California and Mexico sign pact to fight climate change: One partner is not enough for California. Following a linkage with Quebec, the state entered a pact with Mexico, which agreed among other things to cooperate on carbon pricing. This could eventually lead to another market linkage, where California would recognize avoided deforestation offsets generated in Mexico.


10.Voluntary carbon offset purchases totaled 76 million tonnes valued at $379 million: The latest State of the Voluntary Carbon Markets report found that roughly 90% of 2013 purchases came from “repeat customers” a testament to many companies’ ongoing loyalty to their offsetting commitments, but also a stark reminder of the challenge the market faces in attracting new buyers. Overall, global demand fell short of 2012 levels by 26.7 million tonnes and $144 million, and saw the average per-tonne price drop 16% to $4.9/tCO2e. Some of these “lost” tonnes were still transacted but not voluntarily. Instead, these buyers now participated in California’s compliance cap-and-trade program.


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


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V-Carbon News


Sound the trumpets

The Gold Standard Foundation will be under new leadership beginning February 1. Adrian Rimmer, CEO for the last five years, is now stepping down. In his place will be Marion Verles, Founder and former Executive Director of Nexus Carbon for Development.

Read more here

En-gendering supply change

Cookstoves offsets have fetched high prices in recent years for their perceived co-benefits  with benefits to women and children topping that list. Yet while women are primary users, they are rarely the primary producers. The reasons for this aren’t always obvious. One organization, Sustainable Green Fuel Enterprise, found women to be better workers yet they would skip some days when they had to find cash immediately to pay off debts. Another organization, EcoZoom, changed its approach with female sales agents after learning that nearby cookstove projects failed to improve their income. In those cases, the workers’ husbands had spent their wives incomes on short-term purchases. EcoZoom now focuses on educating both husbands and wives in financial literacy.

Read more from Ecosystem Marketplace here

The soot hits the fan

Concluding Ecosystem Marketplace’s series on carbon finance and cookstoves, the latest case study examines the Nepalese government’s initiative to ensure clean cooking for all by 2017 through the lens of a Dutch partner non-profit SNV. The organization is trying to build up a private market for stoves from scratch, so they started in the remote western provinces. Working with local manufacturers, SNV is now using carbon finance to lower costs to work towards their goal of 150,000 stoves distributed in the region by mid-2017.

Read more from Ecosystem Marketplace here

Yet another 2014 review

As the Lima climate talks went into overtime, they followed the 20-year tradition of previous international climate negotiations: starting with a bang of enthusiasm and ending, two days over schedule, in a whisper. Luckily, that isn’t discouraging progress within voluntary circles. Some of the biggest events of 2014 including the Super Bowl, the Sochi Olympic Games, and the World Cup offset their greenhouse gas (GHG) emissions. Carbon-conscious companies continued their involvement in the space: corporations such as Chevrolet and Disney supported voluntary carbon offset projects under new methodologies, some of which they helped develop.

Read more from Ecosystem Marketplace here


South Korea is bigger than China … in carbon

South Korea’s ETS became the 2nd largest in the world after trading kicked off on Monday The scheme covers 525 entities and is a central part of the country’s goal to reduce GHG emissions 30% below current levels by 2020. The initial price hovered just under $8/tCO2e USD, consistent with forecasters’ expectations. However, the price is expected to rise sharply as the power and energy industries will likely fall short nearly 90m tCO2e (tonnes of CO2 equivalent).

Read more from India Times here
Read more from MarketWatch here

Chinese ETS full go(at)

Analysts predict big things for China’s carbon markets in the Year of the Goat now that all seven pilot ETS programs are up and running. The more than 2,000 participating companies will likely trade an estimated 40 million tonnes in 2015, an increase from the 24 million tonnes traded in 2014. Ever mindful of business opportunities, non-regulated companies may also get involved. Two Shanghai-based companies just launched a 200 million yuan ($32 million USD) fund to invest in Chinese carbon projects and sell the resulting Chinese Certified Emissions Reductions to power companies and manufacturers seeking to meet part of their compliance obligations through offsets.

Read more from RTCC here
Read more from Reuters here

Smooth driving in the carbon pool lane

California’s cap-and-trade program picked up a big passenger on January 1. The program expanded to include gasoline and diesel: a move that gas companies warned would trigger higher pump prices. Yet, no one could have predicted Saudi Arabia’s recent moves, which have helped push gas prices in the US to historic lows. Safe to say, no Californian has noticed the add-on when gas is $2.65 a gallon. The rest of the state’s carbon market remains strong, with trading volumes at the start of the year topping 2.7 million allowances.

Read more from the Scientific American here
Read more from Reuters here

The Evergreen state could get even greener

Washington state Governor Jay Inslee proposed a new cap-and-trade program that will look remarkably familiar to those involved in California’s program and could pave the way for further collaboration between the Evergreen and Golden states. The proposed program would cover an estimated 130 facilities and fuel distributors operating in the state that emit more than 25,000 metric tons of GHG emissions per year. The Washington proposal would allow the use of offsets to cover up to 8% of a regulated entity’s annual emissions and make offset buyers liable for the integrity of the offsets, following the lead of California’s controversial buyers’ liability provisions.

Read more from Ecosystem Marketplace here

Oilberta gets an extension

Alberta extended its $15 per ton carbon levy on large emitters for another six months, and environmentalists aren’t happy. Though the regulation has been in place since 2007, allowing companies to pay $15 per tonne or buy offsets, Alberta still emits more carbon than Ontario and Quebec (home to over 60% of Canada’s population combined) and is not on track to meet its self-imposed reductions targets (below Canada’s national targets). Despite this, the Prime Minister Stephen Harper expressed interest in carbon pricing and cited Alberta as a model example. However, the Pembina Institute, an environmental think-tank, believes both Alberta and the Prime Minister should look to British Columbia’s carbon tax for effective carbon pricing.

Read more from the Huffington Post here
Read more from Pembina here

The dark side of repeal

Australia recorded the largest emissions drop in a decade a full 1.4% over a 12-month period – which environmentalists attribute to an effective carbon price. Emissions reductions increased during both years of carbon pricing, though the greatest gains were seen this past year. However, this success may not last as Tony Abbott’s federal government scrapped the carbon price in favor of an Emissions Reductions Fund that will finance some carbon offset projects. Interim data has shown that Australia’s emissions have increased since repeal of the carbon price.

Read more here


Is Summers out to ruin your summer?

Nearly 90 million Americans celebrated the lowest gas prices in five years by driving to visit friends and family over the Christmas and New Year’s holidays. However, the more than $1 per gallon decline in gasoline prices over the past three months has also exacerbated the problem of energy overuse, says former Treasury Secretary Larry Summers. His solution: a national carbon tax in the United States. A $25 per tonne carbon tax would raise more than $1 trillion over the next decade, but would lift gasoline prices by only about 25 cents per gallon, he argued in a Washington Post Op-Ed. But a return to higher gas prices may be inevitable if demand increases in China and India and gas prices rise in the summer as usual.

Read more from the Washington Post here
Read more from the Triple Pundit here

All hail the chainsaw queen

Brazilian President Dilma Rousseff is not the climate leader she claims to be not after making two bad choices in appointing government ministers who could unravel some of the progress the country has made in reducing deforestation, said Steve Schwartzman, NGO Environmental Defense Fund’s Director of Tropical Forest Policy. Katia Abreu, the new Minister of Agriculture, has advocated both for weakening forest protection legislation and a constitutional amendment that would effectively halt the legal recognition of indigenous territories stances that earned her the nickname “chainsaw queen.” Aldo Rebelo, Brazil’s new Minister of Science, Technology and Innovation, denies climate change is real or caused by humans.

Read more here


Going for the gold

The Gold Standard is seeking comments on the framework for its Sustainable Cities Programme. The new framework goes beyond GHG-driven interventions to allow funding agencies and developers to include significant social benefits such as providing access to clean water. The deadline for submissions is February 6.

Read more here

The Rice is Still Simmering

California once again delayed the potential adoption of a new offset protocol for rice cultivation projects that reduce methane emissions. California Air Resources Board (ARB) officials project potential offset supply under the new protocol in the range of 500,000 and 3,000,000 tonnes of GHG reductions through 2020 the scheduled end date for California’s cap-and-trade program. Stakeholders widely praised the ARB’s efforts to include forestry projects located in Alaska in the program, but objected to several proposed technical updates to the forestry protocol, including planned changes to standards for even-aged management of forest stocks. California regulators also took some flak for the market uncertainty created by their recent invalidation of ozone-depleting substances offsets.

Read more from Ecosystem Marketplace here

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