CARBON IN THE NEWS
WEEK 10 2012
JPMorgan buys Voluntary Emission Credits
JPMorgan Chase & Co. (JPM) bought voluntary emission credits from a first-of-its-kind project that distributed water filters in Kenya, said ClimateCare, which is helping market the Gold Standard Foundation credits. Vestergaard Frandsen SA, the Lausanne, Switzerland-based provider of health and emergency services, earned about 1.4 million metric tons of credits in its first tranche, an unspecified portion of which were bought by JPMorgan, Edward Hanrahan, chief executive officer of ClimateCare, said in a phone interview from London. Credits have been sold at a price of more than 8.75 euros ($11.48) a ton, Hanrahan said, declining to be specific. That’s more than double the price of United Nations Certified Emission Reduction credits for December, which dropped 8.5 percent to 4.01 euros on the ICE Futures Europe exchange in London as of 3:44 p.m. local time. To read this article in full click here
Can India take a lead in clean energy?
In world-leading economies such as China, Germany and the US, huge investments are being made to position them for a low-carbon future. The rationale behind this investment includes the benefits of improved energy security, stronger trade balances, growth in employment and industry leadership, not to ignore the associated environmental gains. In this article, we look at the huge potential for the continued modernisation of the electricity sector in India. At the present rate of growth, India is poised to overtake Russia and Japan to become the third largest electricity market in the world in 2012. Over the next decade India is very likely to be the second largest market globally, in terms of new power-generating capacity installations. How India meets its massive growth in energy demand will have a dramatic impact on the global issue of climate change, and with the added clout of India and China potentially working in parallel, the joint step-up in demand could drive the next leap in economies of scale that is required to make renewable energy technologies cost competitive with existing fossil fuel alternatives. The implications for the global economy over the next decade should not be underestimated. To read this article in click here
Carbon Overtakes Gasoil as Open Interest Surged 55% in Past Year
Open interest in European Union carbon futures on the ICE Futures Europe exchange overtook those in gasoil after surging 55 percent last year, making emissions the second biggest market by that measure after Brent crude. Open interest for EU carbon contracts aggregated across all expirations as of March 1 was 643,000 contracts, compared with 416,000 on the same day last year, according to data from ICE Futures Europe. Interest in carbon has surged as the bloc begins to sell nearly all allowances to power utilities rather than giving most of them for free. They have plunged 46 percent in the past year, on concern about oversupply. They’ve rebounded by more than a third since Jan. 4, when they reached a record low. “Among energy markets, carbon is the second most liquid after crude” in Europe, said Mark Owen-Lloyd, head of carbon trading at CF Partners (U.K.) LLP in London. “Banks, utilities, proprietary traders can all access it and they do,” Owen Lloyd said in an interview March 1, citing volumes on ICE Futures Europe and open interest. “As a proxy for the energy markets, carbon is the best way in.” To read this article in full click here
Volkswagen will invest more than $55 billion to cut vehicle, factory emissions
Volkswagen AG announced this week that it will spend more than $55 billion over the next four years reducing carbon emissions from both its vehicles and factories, as the German automaker looks to increase sales by boosting its credibility as an environmentally friendly vehicle maker. You can see the beginnings of this plan in the company's Chattanooga plant, which we visited late last year. VW said that "well over two thirds" of the 62.4 billion euros ($82.5 billion U.S. at current exchange rates) it will invest through 2016 will be earmarked towards making more fuel-efficient vehicles as well as more ecologically friendly factories worldwide. The company, which unveiled its plan at the Geneva Motor Show this week, estimated that its 2015 model-year vehicles will, on average, have 30 percent lower emissions than the 2006 model-year vehicles, and that each new generation of a model will boost fuel efficiency by at least 10 percent compared to the previous version. To read this article in full click here
Shipping Emissions Next Target for EU Carbon Scheme?
The International Maritime Organization (IMO) could soon find itself butting heads with Brussels over how best to tackle emissions from international shipping, analysts say, after the UN shipping body was unable to make “tangible progress” in this area at last week’s major meeting. The London-based IMO has been struggling for years to agree upon market-based measures for curbing emissions, such as a levy on CO2 emissions or a cap-and-trade scheme. With the organisation’s 170 members slow progress last week - and with the next major meeting not scheduled until October - it is unclear when such measures will ultimately be agreed upon. Meanwhile, the European Commission has announced that it will take measures into its own hands if the IMO is unable to implement an effective strategy. With international shipping responsible for some three percent of greenhouse gas production, Brussels views the sector as an important area for reaching its climate change reduction goals. EC officials maintain, however, that they would prefer an international solution if possible. To read this article in full click here
CO2 floor price has long-term merit
Setting a minimum price for CO2 permits would appeal to investors and could improve the EU cap-and-trade system after 2020, an advisor to the European Commission President said Tuesday.
The EU has a floating price for carbon under its Emissions Trading Scheme, which sets caps for about 15,000 installations and airlines by allocating a fixed number of tradable permits. The aim of the scheme is to cut greenhouse gas emissions and encourage investment in low-carbon technologies. Investors, environmental groups and industrial associations have this year called for reforms to the market where CO2 prices are trading near record lows because of a build-up of surplus permits largely as the bloc’s sluggish economy curbed emissions. Mark Meyrick, a carbon trader at Dutch utility Eneco, questioned whether a market without a minimum price mechanism was doing enough to make investments in green technologies profitable. He said permit prices would need to reach 30-35 euros - more than three times current levels - to spur even the potentially investment-free abatement of switching from coal to cleaner natural gas as a fuel for producing electricity. To read this article in full click here
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