Eco Global Markets focuses on originating, developing and trading carbon credits generated from projects that directly mitigate climate change. We work with companies from developing countries across the globe to create carbon credits in a wide variety of sectors. Eco Global Markets also work with companies in the developed world to assist them in meeting their greenhouse gas emission compliance targets.
The carbon industry is expected to be one of the world’s biggest traded commodities markets in the next 10 – 20 years, if not the biggest and the carbon boom, or dot.com equivalent is still to come. In order to preserve a high probability of keeping global temperature increase below 2 degrees centigrade, current climate science suggests that atmospheric CO2 concentrations need to peak below 450ppm. We are currently at 395ppm and rising faster than at any time in the past 400,000 years, at a rate of 2ppm each year.
This requires global emissions to peak in the next decade and decline to roughly 80% below 1990 levels by the year 2050 (Baer and Mastrandrea, 2006). Such dramatic emissions reductions require a sharp move away from fossil fuels, significant improvements in energy efficiency and substantial reorganisation of our current economic system. The transition to carbon offsetting is an increasingly popular means of taking action. By paying someone else to reduce GHG emissions, the purchaser of a carbon offset aims to compensate for – or “offset” – their own emissions.
about the future. Emission markets worldwide will expand to 107 billion euros ($139 billion) this year from 93 billion euros last year as European power producers buy more permits before they are forced to pay at auctions starting in 2013. “In spite of the recession and little progress at the international climate
talks, the value of the global carbon market has continued to grow,” Guy Turner, director of carbon market research at New Energy Finance, said in the report. “With the advent of auctioning in the European scheme, we are likely to see even higher traded volumes and prices in Europe in 2011,”
Renewable Energy Projects
Prices of United Nations Certified Emission Reduction credits will rise by as much as
42% by 2012
as new rules reduce supplies, (Barclays Plc)
• Wind Power • Hydro Power • Solar Power • Biomass • Methane avoidance and capture
Traded on EU ETS
to meet legislation Carbon Credits are key components in the global aim to reduce Greenhouse Gases. One Carbon Credit is equal to the offset of one metric tonne of Carbon Dioxide and the aim by 2012 is to globally reduce emissions by 5% from 1990 levels. This creates an excellent opportunity for investors to take advantage of an emerging market.
Without change, emission levels will continue to rise, thus forcing major polluters to purchase more Carbon Credits. The simple rule of supply and demand will dictate that the market price of Carbon Credits will rise.
The European Union Emissions Trading Scheme (EU ETS) also known as the European Union Emissions Trading System, was the first large emissions trading scheme in the world. It was launched in 2005 and is a major pillar of EU climate policy. Under the EU ETS, large emitters of carbon dioxide within the EU must monitor their CO2 emissions, and annually report them, as they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions in that year.
The 1st EU ETS Trading Period expired in December 2007; it had covered all EU ETS emissions since January 2005. Since January 2008, the 2nd Trading Period is under way which will last until December 2012. Currently, the installations get their trading credits from the NAPs (national allocation plans) which is part of each country’s government. Besides receiving this initial allocation, an operator may purchase EU and international trading credits. If an installation has performed well at reducing its carbon emissions then it has the opportunity to sell its credits and make a profit.
In January 2008, the European Commission proposed a number of changes to the scheme, including centralised allocation (no more national allocation plans) by an EU authority, a turn to auctioning permits rather than allocating freely, and inclusion of other greenhouse gases, such as nitrous oxide and perfluorocarbons. The mentioned amendments are to become effective from January 2013 onwards, i.e. in the 3rd Trading Period under the EU ETS. The EU ETS has recently been extended to the aviation sector as well, but this change will not take place until 2012.
to meet the targets The operators within the ETS may re-assign or trade their allowances by several means:
• privately moving allowances between operators within a company and across national borders ·• over the counter (OTC), using a broker to privately match buyers and sellers • trading on the spot market of one of Europe’s climate exchanges.
Like any other financial instrument, trading consists of matching buyers and sellers between members of the exchange. Much like the stock market, companies and private individuals can trade through brokers who are listed on the exchange, and need not be regulated operators.
Like the Kyoto trading scheme, the EU scheme allows a regulated operator to use carbon credits in the form of Emission Reduction Units (ERU) to comply with its obligations. A Kyoto Certified Emission Reduction unit (CER), produced by a carbon project that has been certified by the UNFCCC’s Clean Development Mechanism Executive Board, are accepted by the EU as equivalent.
Projected carbon market size 2005 - 2011 (EURbn)
it makes you Phase Three Key Changes:
• inclusion of Aviation and Shipping Sectors • emission reduction targets quadruple • removal of Allowances • CER supply reduced by 77% as industrial gas credits become obsolete.
138% 40 20 0
28 12 2005
Source: Trading figures taken from Bloomberg, ECX, Bluenext, EEX, CCX, Nordpool. Other sources include UNFCCC and Bloomberg New Energy Finance estimations
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