Environmental Business International (EBI)

National and Regional Commitments Drive Carbon Trading in Gap Left by Kyoto


San Diego, Calif. -- In its annual review, CCBJ brings readers up to date on the global carbon trading market and talks to U.S. companies positioning to deliver the carbon-related products and services that will be demanded in ever greater quantities in the United States over the next decade.

After five consecutive years of robust growth, the total value of the global carbon market has stalled at around $142 billion in 2010*, due primarily to doubts that the Kyoto Protocol will be extended beyond 2012. In the absence of an international climate agreement, diverse national and regional initiatives are driving global carbon trading markets.

Purchase CCBJ's Carbon and REC Markets edition (44 pages, 30,000 words, 18 charts) for $150

'Climate change policy has shifted to what analysts call 'pledge and review,' in which countries or sub-national jurisdictions make unilateral commitments and decide on their own how to meet them,' said CCBJ senior editor Jim Hight. 'This trend, along with changes in the EU's emissions trading scheme that will weaken the CDM market, are creating new challenges and opportunities, forcing market participants at all levels of the carbon markets to adapt and innovate.'

Carbon Market Prospects in the United States
Prospects for the North American carbon market are mixed, but positive in the long term. Companies are positioning for opportunities in anticipation of California's cap and trade market, and CCBJ reports that even with the one-year delay in implementation, regulated companies, their consultants and carbon offset suppliers are still working hard to prepare for this market because compliance obligations by 2014 remain the same. 'Firms up and down the carbon trading value chain are refining their strategies and closely tracking the remaining regulatory questions in what promises to be a huge California carbon market,' said Hight.

Quebec and British Columbia are on track to join California, while questions remain about Ontario's commitment. Alberta's market topped $130 million in 2010, although it's not clear if the province will ever join other jurisdictions in the Western Climate Initiative.

In the Northeast, the Regional Greenhouse Gas Initiative is adjusting to the loss of New Jersey's participation and debating how much to tighten its cap on power sector emissions. At the same time, demand for voluntary carbon offsets that have social and economic co-benefits is growing in North America. 'The North American market is bifurcating into mandatory and voluntary markets, with credits verified by Gold Standard and other premium validation outfits leading in price,' said Hight.

In this Edition of CCBJ:

  • Current oversupply in the market for renewable energy certificates (RECs)-the result of Recovery Act funding, federal tax credits for renewable energy projects and the recession's impact on electricity demand-means prices are trending down, especially in solar energy RECs. However, trading activity is growing as states race to meet clean energy targets set by renewable portfolio standards (RPSs). LEED certification for existing buildings is a dynamic new segment.
  • Alberta leads North America's first cap-and-trade scheme, creating investments in carbon capture & storage and energy efficiency. Future engagements for consulting engineers are likely to call on specialized carbon management skills, good news for vendors with a deep knowledge of specific industries and new technologies.
  • Environ Corp. reflects on an alternative to big offset projects—programs that accumulate energy savings from small changes made on big scale. North American electric and gas utilities could be the natural candidates for these dispersed PoA projects.
  • Verdeo Group, a company specializing in methane offset projects, adapts to the reality that its leading offset type-landfill gas abatement-won't be valid in California; the company is optimistic that its other methodologies will come out on top in California's continuing offset program development.

Also in this Edition: Global carbon market context

  • A comprehensive overview of global carbon markets, including exploration of how new EU rules will radically shift carbon trading in the world's largest market
  • Summary of the status of climate policies nation-by-nation
  • Update on California's cap and trade program in light of its postponement to 2013
  • Review of the value chain for RECs and pricing, a key metric for the rate of return of renewable energy projects
  • Update on the compliance REC market, which is entirely driven by state RPS requirements
  • Update on voluntary carbon trading as sustainability becomes core to business.

18 charts and graphs include:

  • Annual Green Power Sale by Market Sector
  • Portfolio Standard
  • Top Green Power Production in US
  • Global Carbon Market Traded Value
  • Alberta GHG Reductions
  • Alberta's Top GHG emitters
  • Carbon Market Evolution in $ 2004-2010
  • CDM Projects by Category, etc.

Cited in this edition:

  • World Bank
  • Point Carbon
  • Barclays Capital
  • US EPA
  • NREL
  • Alberta Environment
  • Environment Canada
  • UNEP and more

Purchase CCBJ's Carbon and REC Markets edition (44 pages, 30,000 words, 18 charts) for $150

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