CCBJ Vol IV No 06-07: Carbon and REC Markets


CCBJ's new double-edition on carbon markets features penetrating analysis of the trends shaping this $142 billion industry. Despite the lack of a second global agreement to cap emissions, carbon markets will continue to grow. Europe is tightening its reduction targets, changing its rules for CDM offsets and exploring new bilateral crediting schemes. California and two Canadian provinces will create - albeit a year late - the second largest mandatory carbon market. Alberta's carbon regime is driving industrial efficiency investments. REDD and programmatic CDM approaches to clean development are maturing.

The value of the global carbon market has leveled off as the United Nations' Kyoto Protocol on climate change-which gave birth to carbon trading-looks set to expire at the end of 2012. Whether Kyoto takes a gap year or gap decade, individual countries are pledging emissions reductions, and this is what's driving new carbon markets today. The EU ETS presses ahead but recent and planned changes to its emissions trading scheme will impact the carbon trading project supply. California's program is set to be the largest cap-and-trade scheme outside Europe-but its timetable and rules are still uncertain.

Inside this edition:

  • Trading of renewable energy certificates (RECs) is growing as states race to meet clean energy targets, but oversupply means prices are trending down.
  • California, BC and Quebec are still on track to create the second-largest mandatory carbon market. CCBJ draws on top analysts and exhaustive research to explore the economic and policy factors shaping this market, which is now set to launch in 2013.
  • Alberta leads North America with the continent's first GHG regulation scheme. While the province's rules are incompatible with other cap and trade regimes, it is driving hundreds of millions of investment in facilities, offsets and clean energy fund payments.
  • In Europe, emissions caps tighten in Phase III as more sectors face restrictions, more allowances go to auction and new rules reshape the CDM. World Bank partnership works with Europe, USA and developing countries to pilot bilateral sectoral and NAMA crediting approaches.
  • Programmatic CDM projects focus on wresting big reductions from distributed energy efficiency measures. Can it work in North America?
  • REDD (reduced emissions from deforestation and degradation) projects take shape as voluntary protocols are firmed up and national readiness efforts in developing countries receive funding.
  • Efficient cookstoves and water filters draw financial commitments from major investors looking for a side of economic and social benefits with their carbon entree.

Firms and Organizations:

3Degrees, Atkins, Bloomberg New Energy Finance, California Air Resources Board, CantorCO2e, Center for Resource Solutions, Climate Action Reserve, Climate Focus, Community Energy, DEFG, EcoSecurities, Ecosystem Marketplace, ENVIRON, European Commission, Hunton & Williams, Karbone Carbon and Renewable Research, KPMG, Lloyd's Register Quality Assurance, Mott MacDonald, National Renewable Energy Lab, NYSE Blue, Orbeo, Spectron Environmental, Stantec, Thomson Reuters Point Carbon, UNEP and others.



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