According to Reuters, “Developers behind the 19 Chinese wind and hydropower projects rejected by a U.N.-backed clean energy investment panel have accused the board in charge of making arbitrary and non-transparent rule changes.

Most said they had no choice but to reapply to try to earn internationally tradeable carbon offsets they said were needed to make their projects viable.

At its meeting in Bonn, Germany, at the end of July, the Executive Board running the U.N.’s Clean Development Mechanism (CDM) examined the documentation of 19 Chinese CDM applicants.

The panel said none of them managed to pass muster, even after revisions.

A manager at one of the rejected projects, the Mudanjiang Xiaoguokui wind power plant in northeast China’s Heilongjiang province, accused the executive board of moving the goalposts.

“The EB has changed the rules and we didn’t know about that when the projects were first proposed,” he said.

The CDM encourages investors from industrialized countries to fund clean-energy projects in the developing world by offering carbon credits known as certified emission reductions (CERs). The CERs can then be traded or used to comply with binding Kyoto Protocol emissions targets in rich nations.

China has generated more than half of the CERs so far in the scheme, but it has been widely criticized for exploiting the mechanism and flooding the market with cheap and dubious credits from projects that do little to reduce carbon dioxide emissions.

Chinese applicants have also been accused of deliberately under-reporting tariffs paid for renewable power in order to pass the CDM’s tough “additionality” test, designed to ensure that projects would only be viable if they receive CERs.”

Read more: Reuters

Steven Chu

According to the press release, “At the world’s first Clean Energy Ministerial, U.S. Energy Secretary Steven Chu today announced that the United States is helping launch more than 10 international clean energy initiatives.  These initiatives will cut energy waste; help deploy smart grid, electric vehicle, and carbon capture technologies; support renewable energy markets; expand access to clean energy resources and jobs; and support women pursuing careers in clean energy.  The new programs offer partners concrete, technical actions to promote economic growth while reducing greenhouse gas emissions and other pollutants.  The initiatives will eliminate the need to build more than 500 mid-sized power plants world-wide in the next 20 years.

“The Clean Energy Ministerial has brought together leaders from around the world to take unprecedented actions to deploy clean energy technologies – from energy efficiency to renewable energy to smart grids to carbon capture.  These steps will promote economic growth, create jobs and cut greenhouse gas emissions,” said Secretary Chu.  “What we’ve seen here is that working together, we can accomplish more, faster, than working alone.”

At this week’s Clean Energy Ministerial in Washington, D.C., countries are launching and joining innovative initiatives to accelerate the global transition to a clean energy and low-carbon future.  Ministers from 24 governments are participating in the two-day Ministerial.  These countries represent more than 80 percent of global energy consumption and a similar percentage of the global market for clean energy technologies.

The United States helped lead the development of several initiatives as part of a Global Energy Efficiency Challenge.  These projects will cut energy waste around the world by deploying super-efficient appliances, improving industrial and building efficiency for large-scale facilities, implementing smart grid technologies, and helping to put millions of electric vehicles on the roads.

Under the Super-efficient Equipment and Appliance Deployment (SEAD) Initiative, for instance, governments will work with the private sector to transform the global appliance market.  The program will address both ends of the efficiency spectrum – incentivizing the deployment of super-efficient appliances while implementing and enforcing stronger appliance standards that push the most inefficient appliances off the market.  The program will initially focus on televisions and lighting – two globally-traded products that together account for about 15 percent of household electricity use.  Leading experts estimate that international efforts to improve the efficiency of televisions alone could reduce energy use equal to about 80 power plants by 2030.

As part of the Global Energy Efficiency Challenge, governments also joined the U.S. to improve efficiency in the buildings, industrial and vehicles sectors.  The Global Superior Energy Performance (GSEP) Partnership will help large buildings and industrial facilities measure and manage their energy use, which will save money and reduce greenhouse gas emissions.  Under this public-private partnership, governments will establish internationally-recognized certification programs to recognize facilities that adopt approved energy management systems and achieve significant and independently validated efficiency improvements over time.  To start, eight companies representing over $600 billion in annual sales and the Massachusetts Institute of Technology will pilot the program.

In the transportation sector, the U.S. and other countries are participating in the Electric Vehicles Initiative (EVI) to enhance global cooperation on the development and deployment of electric vehicles.  Through sister-city partnerships, high-level discussions, and information-sharing on electric vehicle investments and best practices, EVI will help countries deliver on their respective deployment targets.  According to the International Energy Agency, this initiative will help put participating countries on the path to deploy at least 20 million electric vehicles by 2020 and reduce global oil consumption by approximately one billion barrels over the next decade.

To further accelerate the introduction of electric vehicles, improve the reliability of the electrical system, promote the growth of renewable energy, and help consumers and businesses better measure and lower their energy use, 15 governments also joined the International Smart Grid Action Network (ISGAN).  This partnership will accelerate the development and deployment of smart electricity grids around the world by facilitating cooperation in key areas, including smart grid policy, regulation and finance; standards policy; technology research, development and demonstration; workforce skills and expertise; and consumer engagement.

Governments also came together to participate in an additional seven initiatives that will support the growing global market for renewable energy and carbon capture technologies; bring solar LED lanterns to more than 10 million of the world’s poorest citizens by 2015; launch virtual Clean Energy Solutions Centers to help developing countries transition to low-carbon technologies; and encourage young women to pursue careers in clean energy.

At the conclusion of the meeting, the United Arab Emirates offered to host the second Clean Energy Ministerial in spring 2011.  The United Kingdom offered to host the third Ministerial at a date to be determined.”

Read more: DOE Press Release

Steven Chu

According to the press release, “U.S. Energy Secretary Steven Chu today announced that three projects have been selected to receive up to $612 million from the American Recovery and Reinvestment Act – matched by $368 million in private funding – to demonstrate large-scale carbon capture and storage from industrial sources.

The projects – located in Texas, Illinois, and Louisiana – were initially selected in October 2009 for phase one research and development grants.  Following successful completion of their Phase 1 activities, these three projects were identified as the most promising industrial CCS projects through a competitive process and will now enter into Phase 2 with additional funding to begin design, construction, and operation.

Today’s project selections are aimed at testing large-scale industrial carbon capture and storage, an important step in moving CCS technology toward eventual commercial deployment.  The Obama Administration has made a goal of developing cost-effective deployment of CCS within 10 years, with an objective of bringing 5 to 10 commercial demonstration projects online by 2016.

“Capturing carbon emissions and storing them underground is a crucial technology as we build a clean energy future and address the threat of climate change,” said Secretary Chu.  “These investments will create jobs and help ensure that America can lead the world in the clean energy economy.”

Projects announced today include large-scale industrial carbon capture and storage projects that capture carbon dioxide emissions from industrial sources – - and store the carbon dioxide in either a deep saline formation or via enhanced oil recovery. The selections announced today are expected to capture and store 6.5 million tons of CO2 per year- the equivalent of removing nearly one million cars off the road- and increase domestic production of oil by more than 10 million barrels per year by the end of the demonstration period in September 2015.

Phase 2 of these projects includes $612 million in Recovery Act funding and $368 million in private sector cost-sharing for a total investment of $980 million. The projects will be managed by the Department of Energy’s National Energy Technology Laboratory.

Potential additional applications for funding of large-scale industrial carbon capture and storage projects are pending further review.

Phase II Large-scale Industrial Carbon Capture and Storage Selections:

• Leucadia Energy, LLC (Lake Charles, LA)-Leucadia and Denbury Onshore LLC will capture and sequester 4.5 million tons of CO2 per year from a new methanol plant in Lake Charles, LA. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield, starting in April 2014. The project team includes Leucadia Energy, Denbury, General Electric, Haldor Topsoe, Black & Veatch, Turner Industries, and the University of Texas Bureau of Economic Geology.  (DOE share: $260 million)
• Air Products & Chemicals, Inc. (Port Arthur, TX)-Air Products will partner with Denbury Onshore LLC to capture and sequester one million tons of CO2 per year from existing steam-methane reformers in Port Arthur, Texas, starting in November 2012. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield. The project team includes Air Products & Chemicals, Denbury Onshore LLC, the University of Texas Bureau of Economic Geology, and Valero Energy Corporation.  (DOE share: $253 million)
• Archer Daniels Midland Corporation (Decatur, Ill.)-The project will capture and sequester one million tons of CO2 per year from an existing ethanol plant in Illinois, starting in August 2012. The CO2 will be sequestered in the Mt. Simon Sandstone, a well-characterized saline reservoir located about one mile from the plant. The project team includes Archer Daniels Midland, Schlumberger Carbon Services, and the Illinois State Geological Survey. (DOE share: $99 million)”

Source: DOE Press Release

This acquisition strengthens Thomson Reuters offerings to the energy sector through the combination of Point Carbon’s critical insight, market fundamentals and powerful analytics of key price drivers with Thomson Reuters leading news and pricing service.

Point Carbon provides banks, traders, portfolio managers, corporations and governments with critical insights based on deep industry knowledge and sophisticated modelling capabilities across the carbon, power, and gas markets. Point Carbon’s valuable demand, supply and price predictive models are based on proprietary data collection and are used by thousands of traders and analysts globally.

Technological advances are increasing the breadth, depth and frequency with which information is available on physical commodity flows and fundamentals, such as power production, consumption and weather, as well as events like political actions or operational outages. As global economic development continues to boost energy needs in a carbon constrained world, the combination of Thomson Reuters and Point Carbon will deliver the critical information and tools to allow market participants to optimize their business, investment and trading strategies in this evolving marketplace.”

Point Carbon Press Release

France’s finance ministry commissioned Michel Prada, former head of the country’s AMF stock market watchdog, to publish a report on the CO2 emissions market.

Prada’s report said there should be stricter fines against those who abuse the CO2 market or commit fraud in the sector. His report also advocated harmonizing laws across Europe for the carbon industry.

Last month, Hungary carried out the first sale of certified emissions reductions (CERs) which Hungarian companies had already used to offset against their emissions in the European Union’s emissions trading scheme.

Such used CERs are invalid as carbon offsets in Europe and the EU executive Commission consequently amended its trading rules to stop them from re-entering the EU carbon market.

The European Commission said that from August onwards, it would prevent the re-entry into its emissions trading scheme of carbon permits which companies had already used for compliance with their emissions caps.

Last year, European police agency Europol said fraudulent trading in European Union carbon emissions credits over the past 18 months has caused more than 5 billion euros ($6.99 billion) in tax revenue losses for several EU nations.”

Source: Reuters

According to Reuters, “Talks to define a mechanism for global forest protection should not be rushed if it is to work efficiently and fairly, a panel of experts said on Tuesday. Talks began in Paris last month to define an interim and global architecture for a financial incentive scheme to reduce emissions from deforestation and degradation called REDD-plus.

“We know any system which looks good on paper on day one is no good if it doesn’t stimulate long-term results,” said Lars Lovold, director of the Rainforest Foundation Norway.

U.N. climate talks in Copenhagen last December failed to deliver much guidance on the scheme and a meeting in Bonn on April 9-11 is not expected to make much progress on the issue.

Under REDD-plus, governments could receive payments for their emissions cutting efforts while ensuring the sustainable management, conservation and restoration of forests.

Norway, which will host the next round of the talks in May, would like to get plans defined for an interim mechanism, ideally defining governance and administrative bodies, the distribution of funds, application of standards and the monitoring and verifying of emissions.

The idea is to arrive at the U.N. climate talks in Cancun, Mexico, in December with a concrete plan aimed specifically at the issue of deforestation.

But balancing the interests of 64 nations, local governments, indigenous peoples, private investors and environmental organizations will be tough.

“We need to be realistic about what we can achieve and how quickly. With different countries involved there are different drivers and conflicts,” said Pat Hardcastle at consultancy LTS International.

The direct participation of all parties, especially including indigenous peoples in all parts of the process is crucial, the panel said.

“We need to revise the timeframe to allow for proper consultation. Putting a document on a website is not enough,” said Francesco Martone, policy adviser at the Forest Peoples Programme.

Defining financial rewards for governments that make progress in cutting emissions and sustaining forests was also key, said Dan Nepstad, senior scientist at the Woods Hole Research Center.

“It will be a rough road but if there are no rewards for good performance it will not work,” he said.”

Source: Reuters

According to Reuters, “Investors are becoming less convinced that a global carbon market, estimated to be worth about $2 trillion by the end of the decade, can be established as uncertainty over global climate policy persists.

The absence of legally binding global climate deal and a federal emissions trading scheme in the United States are standing in the way of the market in global emissions trading growing to achieve yearly turnover of $2 trillion by 2020.

“There will only be a $2 trillion market if the U.S. gets on board,” Trevor Sikorski, head of carbon research at Barclays Capital, told Reuters at a carbon conference in Amsterdam.

The market for carbon credits was worth around $136 billion last year, according to analysts Point Carbon.

Highlighting these fading hopes, a Point Carbon survey on Wednesday showed 61 percent of respondents said they expected a U.S. emissions trading scheme by 2015, down from 90 percent last year. They also predict a lower global carbon price of 31 euros ($41.92) a tonne in 2020, compared to 35 euros.

Carbon markets allow polluters to buy and emit carbon dioxide, blamed for global warming. Under such “cap-and-trade” schemes, companies or countries face a carbon limit. If they exceed that limit they can buy allowances from others.”

To read more, source: Reuters

According to Reuters, “Voluntary carbon markets in the United States will grow especially at the regional level even if a stalled federal climate bill fails to impose “cap and trade” on American industry, the chairman of the Chicago Climate Exchange (CCX) said on Tuesday.

“I think we will continue to see interest in voluntary carbon markets … And I would expect that without a federal law you will continue to see growth in regional initiatives in the United States,” Richard Sandor, the exchange’s founder, told Reuters in a telephone interview.

He noted regional moves that he said were gaining traction such as the Western Climate Initiative.

“After all, we started CCX when there was virtually no movement in Washington (on mandatory emissions caps) back in 2003,” Sandor said.

U.S. lawmakers face an uphill battle enacting a climate bill in 2010 that includes a cap-and-trade market in greenhouse gases after December’s U.N. meeting in Copenhagen failed to hammer out a global pact on emissions cuts.

U.S. climate legislation remains likely as lawmakers feel pressure to help the country lead in production of low-carbon energy sources such as wind, solar and nuclear power.

But the Copenhagen Accord did not include mandatory emissions targets. This will make it difficult for lawmakers to argue that the U.S. should have a binding emissions cap.

Political uncertainty has contributed to low carbon prices in the United States. The Carbon Financial Instrument contracts on the Chicago exchange have fallen to about 15 cents per tonne from about $2 early last year. In Europe, carbon allowances are worth about $18.50 a tonne.

But Sandor, an innovative and key figure in the history of the global derivatives industry, said he still saw “momentum” for cap and trade in the United States.

He also said he saw a lot of growth and excitement around a U.N.-backed system to pay poorer nations for saving or replanting their forests, known as the reducing emissions from deforestation and degradation, or REDD.

“I think REDD will continue to grow and capture the imagination of many, many people in and out of the environment movement,” he said.

He said he saw regional markets and exchanges being set up in places like Brazil while Africa would begin to benefit from offset projects.

Sandor is executive chairman of Climate Exchange PLC, which owns not only the CCX but the European Climate Exchange, a key part of the European Union’s carbon trading scheme put in place after the U.N.’s Kyoto Protocol in 1997.

Asked if it was seeking new partners or markets, he replied: “We continue to explore other markets.”

Source: Reuters

According to Reuters, “The French Constitutional Council annulled the tax, hailed by President Nicolas Sarkozy as a ground-breaking tool to fight climate change, on Tuesday on the grounds that it offered too many exemptions.

After the Constitutional Council complained that some 93 percent of industrial emissions were exempt from the tax, Lagarde told French radio this would change in a reworked version to be presented next year.

“We are going to review the law for industrial sectors that are already part of the market for emission quotas,” she said on RTL radio. Such businesses were previously given a free ride.

The law’s many loopholes were needed to win over critics who feared business competitiveness, people in rural areas and workers whose livelihood depended on cars or boats would be unfairly punished.

Others accused the government of inventing new taxes to bolster depleted public finances.

France’s politically influential farmers and fishermen in particular were granted tax relief under the law, and Lagarde promised they would keep that special status after the revision.

Business daily Les Echo reported on Thursday that the government wanted to bring businesses under the carbon tax regime without harming competitiveness, for example by applying a lower tax rate.

France’s junior minister for ecology, Chantal Joanno, has announced the new version will be proposed to parliament in February and could come into force in April.

But Sarkozy might find it difficult to persuade lawmakers to revive the project so close to regional elections in March.

Sarkozy’s defeat over the carbon tax follows the disappointing Copenhagen summit on climate change, dealing a double blow to his efforts to project himself as a “green” reformer.”

Source: Reuters

Crude oil or gold have often been used to hedge against inflation risk or equities, as investors believe they can offer some protection against rising consumer prices.

“The carbon market is expanding on a rapid basis,” said Andrew Ager, head of emissions trading at Bache Commodities Ltd.

“As the U.S. gets cap-and-trade legislation and the Australian bill is passed, the market could mature to become a similar commodity to oil in the way it is used by hedgers as a strategy,” he added.

The EU’s flagship emissions trading scheme (EU ETS) began in 2005. Prices for permits traded under the scheme, called EU Allowances (EUAs), are the global benchmark for emissions markets.

EUAs frequently correlate to oil and German power prices, as well as natural gas and coal. A sign of the relatively young market’s development is that these markets have started to look at carbon prices for direction.

“There’s now a situation where oil, coal and gas traders are looking at carbon prices for direction. That’s a complete 180 (degree turn),” Ager said.

“Say you have a portfolio of mining shares, it is possible to use carbon as a hedge as part of your portfolio. (Carbon) has even correlated with copper quite strongly recently. As people look at copper as an indicator of industrial growth, it makes sense.”

Reuters estimates show EUA prices have shown a weekly correlation of 0.75 with copper since November 1, and 0.85 in the corresponding period the previous month.”

Source: Reuters