Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

The Expected “CER Multiplier” Proposal Threatens CDM Investments by GlobalData

VIEWS: 41 PAGES: 7

The Expected “CER Multiplier” Proposal Threatens CDM Investments Summary The expected “CER Multiplier” proposal has affected the global carbon market. Under the proposal, the European Union Emissions Trading Scheme (EU ETS) marker participants will be required to buy two tonnes of CO2 to cover carbon emissions equalling one ton. This proposal is welcomed by environmentalists but has threatened the investors in the global carbon market. It has also resulted in an unusual increase in the EUA-CER price gap, which increased to around €2 in May, 2010. This has caused certain unpredictable changes in the carbon market. The expected proposal might increase the focus of European carbon investors towards EUAs in the coming months, thus leading to new trends in the global carbon market. Scope Its scope includes - - Overview of the Emissions Trading - Recent CER and EUA market developments - Features of the expected “CER Multiplier” proposal - Emissions trading market reactions pertaining to the leakage of “CER Multiplier” proposal Reasons to buy - Identify key growth and investment opportunities in the European carbon market on the implementation of either of the proposal - Position yourself to gain the maximum advantage of the industry’s growth potential in the future scenario - Facilitate decision-making based on upcoming market developments in emissions trading market

More Info
									               The Expected “CER Multiplier” Proposal Threatens CDM
                                  Investments
       Reference Code: GDAE0086VPT                                                                                                           Publication Date: May 2010

                                                                                                      2          Summary
                                                                                                      The expected “CER Multiplier” proposal has affected the global
       1         Table of Contents                                                                    carbon market. Under the proposal, the European Union
                                                                                                      Emissions Trading Scheme (EU ETS) marker participants will
       1  Table of Contents ...............................................................1
                                                                                                      be required to buy two tonnes of CO2 to cover carbon
        1.1   List of Tables ...............................................................1
        1.2   List of Figures..............................................................1          emissions equalling one ton. This proposal is welcomed by
       2 Summary ............................................................................1        environmentalists but has threatened the investors in the global
       3 The “CER Multiplier” Proposal Threatens CDM Investments                                      carbon market. It has also resulted in an unusual increase in
          1                                                                                           the EUA-CER price gap, which increased to around €2 in May,
        3.1   Introduction to Kyoto Protocol .....................................1                   2010. This has caused certain unpredictable changes in the
        3.2   Emissions Trading.......................................................2               carbon market. The expected proposal might increase the focus
        3.3   Market Updates ...........................................................2
                                                                                                      of European carbon investors towards EUAs in the coming
        3.4   The “CER Multiplier” Proposal Under the Kyoto
        Protocol..................................................................................4   months, thus leading to new trends in the global carbon market.
       4 Appendix ............................................................................6
        4.1   Methodology................................................................6            3          The “CER Multiplier” Proposal
        4.2   Contact Us ..................................................................7                     Threatens CDM Investments
        4.3   Disclaimer ...................................................................7
                                                                                                      3.1       Introduction to Kyoto Protocol
                                                                                                      The Kyoto Protocol is an international agreement linked to the
       1.1       List of Tables                                                                       United Nations Framework Convention on Climate Change. The
       Table 1:         CER Prices and Volumes (2010) 3                                               protocol aims at reducing Greenhouse Gas (GHG) emissions
       Table 2:         EUA Prices and Volumes (2010) 3                                               by setting up binding targets for 37 industrialized countries and
       Table 3:         EUA –CER Price Gap (2010)     5                                               the European Union. The target is to reduce GHG emissions by
                                                                                                      5% of 1990 levels in the five year period 2008-2012.

       1.2       List of Figures                                                                      The Kyoto Protocol was adopted in Kyoto, Japan, on December
                                                                                                      11, 1997, and came into force on February 16, 2005. It offers
       Figure 1:  Three Market-based Mechanism Under Kyoto
                                                                                                      three market-based mechanisms to help the countries to meet
                   Protocol, 2010 2
       Figure 2: EU ETS and Kyoto Protocol Trading Mechanisms,                                        their GHG reduction targets. The Kyoto mechanisms are as
                   2010 2                                                                             follows:
       Figure 3: CER Prices and Volumes (2010) 3
       Figure 4: EUA Prices and Volumes (2010) 3                                                            Emissions Trading
       Figure 5: Change in Emissions Trading Due to the Expected                                            Clean Development Mechanism (CDM)
                   “CER Multiplier” Proposal    4
       Figure 6: EUA – CER Gap, 2010      5                                                                 Joint Implementation (JI)
       Figure 7: GlobalData Methodology         6




                                                                                                                                                           Market Analysis Alert
The Expected “CER Multiplier” Proposal Threatens CDM Investments                                                                                 GDAE0086VPT / May 2010/ Page 1
                                                                                                          © GlobalData. This report is a licensed product and is not to be photocopied
                                                                                                                                        Under the Kyoto Protocol, the European Union has been
       Figure 1:              Three Market-based Mechanism Under Kyoto                                                                  assigned a target to reduce its GHG emissions by 8% below its
                              Protocol, 2010                                                                                            1990 level in the commitment period 2008-2012. To achieve its
                                                                                                                                        Kyoto target, the EU developed the European Union Emissions
            Joint Implementation                       Clean Development                    International Emissions                     Trading Scheme (EU ETS) in 2003, the largest multi-national
                                                           Mechanism                                 Trading                            GHG emissions trading scheme in the world. Later in 2004,
           Industrialized
           Country A
                               Industrialized
                               Country B
                                                     Industrialized
                                                     Country A
                                                                         Developing
                                                                         Country B
                                                                                            Industrialized
                                                                                            Country A
                                                                                                                       Industrialized
                                                                                                                       Country B        after the amendment of the EU ETS directive known as the
                                                                                                                                        “Linking Directive”, industrialized countries were allowed to use
                       Funds and
                                     Joint
                                     Emission
                                                                 Funds and      Joint
                                                                                Emission
                                                                                                             Payment                    Certified Emission Reductions (CERs) and Emission Reduction
                       Technology    Reduction
                                                                 Technology
                                     Project
                                                                                Reduction
                                                                                Project                                                 Units (ERUs) up to a certain limit which varies from country to
                                                                                                                        Emissions

                                    Amount                                    Amount
                                                                                                                        above
                                                                                                                        commitment
                                                                                                                                        country.
                                    Reduced                                   Reduced                                   level


                     Emission Reduction
                     Units (ERUs)
                                                           Certified Emission
                                                   
								
To top