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Global GHG Market Update Daniele Violetti Team Leader Registration and Issuance Unit Sustainable Development Mechanisms Programme UNFCCC Carbon Forum America.

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Presentation on theme: "Global GHG Market Update Daniele Violetti Team Leader Registration and Issuance Unit Sustainable Development Mechanisms Programme UNFCCC Carbon Forum America."— Presentation transcript:

1 Global GHG Market Update Daniele Violetti Team Leader Registration and Issuance Unit Sustainable Development Mechanisms Programme UNFCCC Carbon Forum America 2008 February , 2008 San Francisco

2 Global GHG Market Update| Structure of the global GHG market Recent developments and trends Overview of the CDM market Price drivers: the CER case CONTENTS:

3 Global GHG Market Update| Structure of the global GHG carbon market Global GHG market Voluntary Markets Compliance Markets KyotoMarkets New South Wales GHG Abatement Scheme EU ETS Chicago Climate Exchange UK ETS CDM -> CERs JI -> ERUs AAUs + RMUs EUAs VERs NGACs CCLAs International Emissions Trading Scheme

4 Global GHG Market Update| Recent Developments and Trends Annual Volumes and Values of Transactions on the Main Allowances Markets Source: State and Trends of the Carbon Market 2007, World Bank, IETA. EU ETS still the largest allowance-based GHG market in terms of number of participants and trading activity.

5 Global GHG Market Update| Recent Developments and Trends Annual Volumes and Values of Transactions on the Project Based Markets Source: State and Trends of the Carbon Market 2007, World Bank, IETA. CDM experienced a strong growth throughout JI entering the stage this year.

6 Global GHG Market Update| Recent Developments and Trends International Emissions Trading (IET) poised to become the predominant segment once all national registries are connected to the ITL. So far three national registries are fully connected (Japan, Switzerland and New Zealand). National and regional initiatives striving in most of the developed world and are expected to accept Kyoto units to certain extent.

7 Global GHG Market Update| Recent Developments and Trends National and regional initiatives to establish domestic GHG markets are well underway in different countries/states: –Australia: New South Wales GHG Abatement Scheme –Norway: emissions trading system –Japan: Keidanren Voluntary Action Plan –New Zealand: NZ Emissions Trading Scheme –US North-eastern states: Regional Greenhouse Gas Initiative (RGGI) –US: Chicago Climate Exchange

8 Global GHG Market Update| Recent Developments and Trends Voluntary GHG market has also seen strong performance based on: –National/regional/domestic initiatives –Corporate social responsibility (CSR) issues Most analyst remain optimistic about the growth potential for this sector. CDM units (CERs) have been used for voluntary offsetting purposes, which provides more depth to this market segment.

9 Global GHG Market Update| Overview of the CDM market 945 registered CDM projects 1.17 billion CERs expected from existing registered projects to the end of 2012 (assumption: no extension of crediting periods) To date: > 2,900 projects (including registered projects) > 2.6 billion CERs expected to the end of 2012 In pipeline: Map and statistics accessible at Figures as of February 20, 2008.

10 Global GHG Market Update| Overview of the CDM market CDM the largest CO 2 project based offset system in the world –945 registered projects by mid February 2008 –approx. additional 2000 projects in pipeline –49 countries –118,775,101 CERs issued (certified emission reductions) –2.6 billion CERs expected to end of 2012 The mechanism has a legal basis in the Kyoto Protocol –Run by Executive Board (EB) answerable to KP Parties –EB back-stopped by UNFCCC secretariat with support for: Registration and issuance Accreditation of third-party validators Methodologies for emissions baseline setting and monitoring

11 Global GHG Market Update| Overview of the CDM market

12 Global GHG Market Update| Overview of the CDM market CDM projects that entered pipeline in 2006 expected to result in USD 25 billion in capital investment (almost double the USD 14 billion in total investment leveraged through GEF in the climate change area since it started) CDM renewable energy and energy efficiency projects registered in 2006 expected to result in USD 5.7 billion in capital investment (about triple the ODA support for energy policy and renewable energy projects in the same countries. Almost as much as private investment in renewable energy and energy efficiency (USD 6.5 billion in 2006) in the same countries) Condensed from the report of the CDM Executive Board to the COP/MOP 2007, page 4.

13 Global GHG Market Update| * Assumption: All activities deliver simultaneously their expected annual average emission reductions ** Assumption: No renewal of crediting periods Overview of the CDM market

14 Global GHG Market Update| Overview of the CDM market

15 Global GHG Market Update| Overview of the CDM market

16 Global GHG Market Update| Overview of the CDM market

17 Global GHG Market Update| Price drivers – Evolution of the CER Price (secondary market, in EUR) Source: Reuters – TFS Energy

18 Global GHG Market Update| Price drivers The Secretariat observes a strong confidence on the CDM across the carbon market. CERs have consolidated as a reliable carbon asset class. Price of CERs still heavily indexed to the EU ETS through the linking directive, though further demand from Japan has introduced more volatility. Increasing interest in CERs for voluntary offsetting purposes may constitute another price driver in the future. Primary and secondary CDM markets have gained more depth by the launch of auction services offered by different carbon exchanges.

19 Global GHG Market Update| THANK YOU!!! Registration and Issuance Unit Sustainable Development Mechanisms UNFCCC


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