Environmental Valuation & Cost-Benefit News

Point Carbon, a provider of independent analysis and consulting services for governments and companies in the global power, gas and carbon markets, released its “Carbon 2008” report which includes the results of the largest survey ever conducted into the carbon market. This report was announced at a press briefing today during Point Carbon’s 5th annual conference, Carbon Market Insights 2008, in Copenhagen, Denmark.

Point Carbon received over 3700 responses to their comprehensive survey, 40 percent of which trade or own European Union Allowances (EUAs) or Certified Emission Reductions (CERs). Combined with additional Point Carbon analysis, the report presents an overview of the carbon market in 2007, an outlook for 2008 and expectations for the remainder of the first Kyoto period and beyond.

The report explores in-depth the following key findings:

Global carbon markets worth USD $60 billion (€40 billion) in 2007, up by 80 percent from 2006. The total traded volume increased by 64 percent from 1.6 Gt (1.6 billion tons) in 2006 to 2.7 Gt in 2007.

There seems to be a generally bullish sentiment on carbon, not necessarily reflected in current market prices. Survey respondents now on average expect a carbon price of USD $37/ton (€24/ton) in 2010 and USD $54/ton (€35/ton) in 2020, which is USD $9 (€6) and USD $15 (€10) higher, respectively, than they expected a year ago. This demonstrates that market participants now realize that the EU ETS will face a considerable shortage and that much of this will have to be met through reductions taking place in Europe.

General optimism that we are moving towards a global carbon market. More than 70 percent of respondents believe that a climate agreement for the post-2012 period will be agreed upon before the end of the Kyoto period. In Point Carbon’s view, getting the United States on board will be vital for a new agreement. Interestingly, survey respondents do not necessarily agree, with about 77 percent expecting an agreement to be reached regardless of whether or not the U.S. participates. However, more than half of respondents expect that the U.S. will take on reduction commitments and participate in a new agreement.

Carbon prices are now seen as an important factor in the operating and investment decisions of companies. Over two-thirds of survey respondents claim that the EU ETS has caused emission reductions of some kind, either already implemented or at the planning stage. While this might be good news for the development of greenhouse gas emissions in Europe, expect to see similar developments in other places around the world in the years to come. Over 72 percent of the survey respondents expect there to be a global reference price for carbon by 2020 and 73 percent of EU ETS survey respondents agree that the carbon price is relevant to investment decisions. As the world increasingly takes into account the cost of emissions and the value of reductions, the carbon market will continue to incentivize investments in cleaner technology and emission reductions.

“The global carbon market is heating up at a fast and furious pace, while forming at a time of ever-increasing attention to climate change,” said Kjetil Røine, Manager of Point Carbon’s Carbon Market Research team. “Last year was another record one in the market, with markets worth more than USD $60 billion (€40 billion) in 2007, up 80 percent from 2006.”

Point Carbon predicts that the global carbon market will see 4.2 billion tons carbon emissions (CO2e) transacted during 2008, up 56 percent from 2007. At today’s prices, that would make the market worth USD $92 billion (€63 billion).

“We expect that the general trend of increasing traded volumes will continue to expand exponentially as the global market becomes more mature and sophisticated. An increase in contract types, more players and markets and greater competition between market players together will generate momentum for higher volumes,” said Røine.

Point Carbon www.PointCarbon.com
http://www.pointcarbon.com/getfile.php/fileelement_134499/11_March_2008_Largest_survey_ever_conducted_into_the_world%E2%80%99s_carbon_market_released__today.pdf
Press Release dated March 11, 2008

A plan to promote energy efficiency, clean air and lower energy costs in the East Village has hit delays that organizers fear has cost New York City a trendsetting model for community-based solutions to environmental problems and high energy prices. But a resolution to the delays may be in the offing.

A new template for retrofitting old buildings called “Greening a Block” would work with landlords, tenants and community groups to replace inefficient appliances and light fixtures, install insulation and better-sealed windows, and create jobs while reducing the environmental impact of existing city residences. The designers of Greening a Block say the project could be replicated in as many as 6,000 blocks around New York City that have a mix of five- and six-story walk-up residences and commercial property.

What makes Greening a Block different from other models of community-based environmental programs ...is that designers hope to make improving the environment something building owners and tenants have to choose not to do.....

But four years after implementation of the program was first envisioned for parts of the East Village, residents, building owners and business owners are still missing out on the program's promised benefits. ...

The original proposal for Greening a Block promised a decrease in local air pollution as well as lower energy costs. According to the original feasibility study, building owners would net a savings of $7,200 per year on heat, hot water and electric bills. Apartment tenants could expect savings of $210 per year; for small business owners it would be $1,390 per year. Small particulate matter, produced by burning fossil fuels in energy production linked to asthma and other severe respiratory problems, was predicted to decrease.

The Greening a Block program grew out of a 2002 settlement between Community Board 3 and Con Edison over the controversial expansion of the 14th Street power station in 2000. In the settlement, the community gave up the right to sue Con Ed, and the utility agreed to give $3.75 million to CB3 and local environmental groups to lessen the effects of increased power generation on the Lower East Side.
...
By Evan Weinberger

FOR FULL STORY GO TO:
http://www.citylimits.org/content/articles/viewarticle.cfm?article_id=3522
City Limits Weekly www.CityLimits.org
#631; March 17, 2008

IFC, a member of the World Bank Group, has signed its first carbon delivery guarantee agreements in Sub-Saharan Africa and South Asia. The new carbon finance product is expected to give companies selling carbon credits the chance to access a wider range of potential buyers by mitigating country and project risk, and it therefore helps to boost the carbon market in these regions.

In South Africa, IFC’s agreement covers up to 900,000 carbon credits from Omnia, one of the country’s leading fertilizer producers. In India, IFC signed a deal for 850,000 carbon credits from Rain CII Carbon (India), an IFC client for over 15 years and now the largest merchant of calcined coke in the world with production in India and the United States.

Under the new carbon delivery guarantee, IFC facilitates delivery of carbon credits from companies in developing countries to buyers in developed countries. IFC acts as an intermediary, selling companies’ credits in the market and passing an attractive price back to the projects. Clients profit from IFC’s AAA credit rating by gaining access to markets and benefit from full price transparency. For buyers in developed countries, IFC also eliminates the risk of not receiving the promised carbon credits.

“IFC is in a unique position to help clients maximize the benefits of the carbon credit market, given our experience in the carbon market and our financial strength,” said IFC Executive Vice President and CEO Lars Thunell. “We are eager to work with companies in developing countries who want to undertake climate friendly projects and commercialize carbon assets.”

Under the Clean Development Mechanism of the Kyoto Protocol, companies in developing countries can qualify to sell carbon credits, known as Certified Emission Reductions, in global commodity markets when they reduce their output of environmentally harmful substances. The process aims to decouple economic growth from an increase in the greenhouse gases that cause global warming.

IFC is actively pursing carbon delivery guarantee deals throughout the developing world. In Rain’s case, the Indian company used IFC financing to install waste heat recovery facilities that help eliminate its dependence on fossil fuels for power generation and generate carbon credits as a result.

Omnia’s emission reductions will come from a nitrous oxide destruction facility that will significantly reduce emissions. Nitrous dioxide and other greenhouse gases are considered the leading cause of global climate change.

IFC has been active in the carbon market since 2002, largely through the IFC-Netherlands Carbon Facility and the Netherlands European Carbon Facility. IFC purchases emissions reductions in developing countries on behalf of the Dutch government, which, in turn, uses the emissions reductions to comply with its Kyoto Protocol commitment.

The new carbon delivery guarantee is an integral part of IFC’s climate change strategy, through which IFC helps its clients maximize their potential for clean energy, including by generating carbon credits.

About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC's vision is that people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit www.ifc.org.

International Finance Corporation www.ifc.org
http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=E98BE5B64B0B132F8525740F005ECE10
Press Release dated March 17, 2008