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General Carbon Newsletter MONTHLY ENVIRONMENTAL COMMODITIES NEWSLETTER JUNE 2011, ISSUE:04 Point of View PROJECT HIGHLIGHTS The CDM Pipeline saw 141 new The carbon market is digesting some interesting news projects entering in May (highest flow with Germany's decision to shut all of the nation's since 2007-08) exemplifying the nuclear power plants over the next 11 years. This 2012 rush amongst the project decision comes in a sharp reversal to an earlier decision proponents. to extend the life of the plants. With other nations likely to revisit their Nuclear plans, price projections of carbon The issuance of CERs in May offsets in the next phase has turned bullish again. EU was also high at ~19 MCERs ETS data on emissions for 2010 was ~3% higher than 2009, showing that the economic recovery had not In May six new PoAs entered the increased emissions above the cap for the 2008-2012 Pipeline taking the number of PoAs in Africa to 20 or 22% of trading phase. CERs accounted for 4.7% of all the 92 existing PoAs. This is a surrenders in 2008-2010. Data suggests that CERs are much higher percentage than being surrendered while EUAs banked for the next phase Africa‟s 2.6% of all normal CDM indicating a soft pricing in the early years of the next projects. phase. Policy makers could use this to show that greater emission reduction can be done at an economic cost. Pace of registration under India‟s REC mechanism has reduced in The REC market witnessed another interesting trading May; 36 projects registered as on session as well as more news flow. Changes in the 3rd June 2011 reporting/compliance period for RPO will have a major impact on pricing and prevent a holdup by distribution licensees. Regulatory clarity on the fine print with regards REC PRICE WATCH to electricity duty waiver and banking facility are awaited in the coming months 25th May 2011 Session IEX: Price (Volume) Non solar -INR 1,500 (14,002) Best, Solar - (Not traded) Satish Kashyap PXIL: Price (Volume) Non solar -INR 1,500 (4,500) Solar - (Not traded) Implementation hurdles in REC and the way forward VCS VER PRICE WATCH Unlike the March trading session, April and May witnessed India, China: low price for Renewable Energy Certificates (RECs) Renewables, EE certificates. The trading volumes though increased as Pre 2008 vintages sellers lowered their price expectation to clear most of the US$ 0.50- 1.00 issued volume of RECs. News flow indicates that CERC‟s Post 2008 vintages proposes to spread the renewable power purchase US$ 1.00-2.75
obligation (RPO) from an annual compliance to a more frequent interval (i.e. biennial or quarterly). Renewables, EE- Pre CDM Pre 2008 vintages Initially RECs were conceptualized to be claimed only if RE US$ 0.50-2.00 Post 2008 vintages power is sold to grid at a non-preferential tariff i.e. APPC US$ 2.00-3.50 (i.e. average power purchase cost) or at mutually agreed price through third party sale or on power exchanges. Industrial gases, others CERC‟s amendment to include captive power plants into Pre 2008 vintages the ambit of REC mechanism is still raising some US$ 0.25-0.50 questions. As per the amendment, renewable based Post 2008 vintages captive power plants (CPP) could avail REC if they do not US$ 0.50-1.00 receive concessional or promotional wheeling/transmission charges, banking facility or electricity duty waiver. Rest of Asia, Africa: Renewables, EE Many captive generators are unclear with regards to Pre 2008 vintages eligibility of their projects under REC. There are US$ 1.00-2.00 uncertainties regarding treatment of electricity duty waiver Post 2008 vintages or exemption even within regulatory circles. This has led to US$ 2.00-4.00 multiple accredited captive cogeneration projects in Maharashtra not getting registered with NLDC. Renewables, EE- Pre CDM Pre 2008 vintages The captive generators are awaiting clarity on issues US$ 1.50-3.00 Post 2008 vintages related to banking, electricity duty exemption etc. US$ 2.00-5.00 The numbers of projects under accreditation which was Industrial gases, others growing at a rapid pace, has slowed down in May. May Pre 2008 vintages witnessed major activity from Tamil Nadu which is the only US$ 0.25-1.00 state to have announced APPC. Post 2008 vintages US$ 0.50-1.00 While at the regulation end, out of 23 SERCs (State Electricity Regulatory Commissions), 21 have designated the state agency and 19 of them have finalized the state CARBON NEWS level regulations. Andhra Pradesh, West Bengal and Delhi have not taken any steps towards finalizing the regulations. Only 7 states have started accrediting Global CO2 market growth stalls in projects; these are Gujarat, Maharashtra, Chhattisgarh, 2010 amid uncertainty Haryana, Rajasthan, J&K and Tamil Nadu. Kenyan wind farm gets UN carbon Though the capacity building at the state agency level is in full swing across the country most of the states have yet to credit approval see a project entering into the pipeline from its region. These states also need to specify the APPC tariff and Carbon price may push up Kyoto streamline the process of signing PPAs based on APPC. bill Most of the current projects in REC pipeline are the pre- existing projects which are selling power on the exchange Designing Targeted Financing to or through bilateral agreements. Key questions remain on Build Africa's Carbon Market the ability to enforce RPO obligations on distribution licenses and APPC numbers for most states. California judge puts carbon market on hold Canadian Solar to build 600 MW solar cell plant in China
Aviation Carbon Suit to Stir Trade Carbon Credits from Watershed Management Tension at Durban Talks, Derwent Recently World Bank entered into an agreement with the Says Himachal Pradesh Government (India) for buying the carbon credits from the new forests being developed on Offsets „Crowding Out‟ Utility degraded lands under a watershed management program. Demand for Carbon, Orbeo Says The main objective of this reforestation project in watershed areas is to improve livelihoods and generate carbon revenue for the community. It is proposed to China says EU airline CO2 cap implement the project in 11 watershed divisions covering should protect poor countries 4000 hectares of land. UN clean energy scheme grows, While, reforestation activities sequester CO2 emissions and also conserve the natural resources and are known to 3,000 projects so far be eligible under CDM to earn carbon credits. Watershed management programme also helps in sequestration of IATA sees 10 airlines joining soil carbon through indirect activities like soil erosion carbon scheme this year control, fertilizer leaching control etc. Electricity savings from reduced use of pumps due to increase in ground water level will also reduce carbon emission. But so far World Bank Auctions Adaptation there is no approved methodology to assess credits from Fund CERs watershed management activities in VCS, CDM and other such similar standards. UK Sets GHG Emissions Tone for Europe: Cut 50% by 2027 Cement firms eye biodiversity, Other News water goals after CDM disappointment CERC could implement staggered RPO targets over the year UN Proposes Changes to Hydrofluorocarbon-Reduction Over 90% RECs traded in the largest-ever Indian REC trading session Projects India takes unique path to lower carbon emissions PCRA to set up carbon credit aggregation centre in Rajasthan Govt panel says carbon growth cut possible by upto 35% Turkana: Carbon Credits For No environmental nod needed for solar power Africa‟s Largest Wind Farm projects: MoEF India's new trading schemes to curb carbon emissions EVENT WATCH Torrent Power Ltd to enter renewable energy sector Clean Power Asia 2011 On 28-30 June 2011 at India‟s Renewable Credits Trade Sees Volume Surge InterContinental Bangkok, in May Session Thailand. This is Asia's largest conference & exhibition focusing on the latest global and regional clean power technologies, projects and initiatives
EDITORS Vinodini Chitrakaran, vinodini.c@general-carbon.com Rameez Shaikh, rameez.shaikh@general- carbon.com GENERAL CARBON PTE LTD 16 RAFFLES QUAY, #33-03 HONG LEONG BUILDING, SINGAPORE 048581. This newsletter is brought to you by General Carbon. Contact gcnews@general-carbon.com if you have any queries or comments or wish to contribute news and updates. We welcome your suggestions and contributions. If you wish to unsubscribe from this newsletter please reply to this email with "unsubscribe" in the subject line. General Carbon is a leading emission reduction consulting, sustainability advisory and investment firm with presence across Singapore, India, Sri Lanka, Thailand, Philippines, Indonesia, South Africa, Nigeria, Ethiopia and Kenya.