Global Carbon Policy Handbook 2010 - Policies Driving the Growth of Carbon Trading Markets

New and Proposed Carbon Trading Policy Instruments by the EU, the US and Other Majors will drive the Global Carbon Market Beyond 2012

Online PR News – 19-April-2010 – – The global carbon market experienced strong growth between 2007 and 2008 due to the expansion of allowance markets. The EU ETS experienced robust growth during this period. The carbon market will grow significantly beyond 2012 due to the EU’s initiatives to build worldwide carbon trading mechanisms, the prospective US Federal cap-and-trade program and the strong emergence of other regional market trading mechanisms.

In April 2010, Britain announced the new CRCEES, a mandatory scheme for 5,000 companies to evaluate, assess and report energy usage and carbon emissions. The scheme is being introduced to reduce 4 million tonnes of GHG emissions and achieve GBP 1 billion in corporate savings from electricity bills. From April 2010, companies are mandated to measure and assess the energy usage and carbon emissions from their energy usage. These emissions need to be reported to the UK Environment Agency. Companies failing to register or report or exceeding emission targets would face a fine and carbon tax. These taxing mechanisms to improve energy efficiency would boost the carbon allowance market and hence promote the carbon trading market in the region.

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The RGGI states in the US - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont - have been participating in numerous clean energy projects and initiatives. RGGI states have invested in renewable energy sources and energy efficiency projects to decrease their carbon footprints. These states have created employment opportunities and generated lower electricity bill values due to their low-carbon investments. These states are investing in green building programs and are conducting workshops and training programs to improve awareness on energy efficiency measures. The clean energy initiatives have therefore boosted carbon trade in the region and the trading of carbon permits experienced a rise of 42% in the last few auctions, from 28.6 million allowances to 40.6 million allowances.

The EU countries are considering the sale of surrendered credits and these surrendered credits would influence the credibility of the EU ETS market. In March 2010, Hungary announced that it will sell 2 million metric tons of United Nations credits for $21 million. These credits reenter the market and might be mistaken for compliance grade credits. The entry of these credits into the market would lead to a lack of transparency and increase the risk of transactions. UN Certified Emission Reduction credits are on the ones generated by emission reduction projects in emerging nations and these credits can be used for compliance with GHG emission reduction targets or they can be used by power generation companies as an alternative to EU permits by governments. Hence, the Eastern European countries are using the surrendered credits in the trading markets. The International Emission Trading Association (IETA) has brought in certain initiatives to counter the resale of surrendered credits. The IETA mandates that credits surrendered to the EU registry cannot be deployed for compliance or for carbon trading systems. The European Commission (EC) and the IETA are working together to reduce the risk of surrendered transactions and therefore improve the transparency in those transactions. There are other challenges pertaining to surrendered allowances, such as that the credits can also be sold to markets outside the EU and there is no international authority to monitor these transactions beyond the EU ETS currently.

GlobalData’s new report “Global Carbon Policy Handbook, 2010: Policies Driving the Growth of Carbon Trading Markets” provides an in-depth analysis on the carbon policy initiatives by the European Union(EU), the US, Canada, Australia and other developed and developing economies. It details the regional climate change initiatives and the Kyoto Protocol and its mechanisms. It also provides an analysis on Clean Development Mechanism (CDM) and Joint Implementation (JI) projects. The report provides an overview on various carbon registries, carbon exchanges and the major companies participating in the carbon trade. The report provides the latest information on the value, volume and price of the emissions traded in project-based mechanisms such as CDM, JI and secondary CDM, and allowance markets such as the EU Emission Trading System (ETS), New South Wales Exchange, Chicago Climate Exchange, the Regional Greenhouse Gas Initiative (RGGI) and Assigned Amount Units (AAUs). The report provides a forecast of the carbon market up to 2020.

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