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Experience Level: Expert
The VER market remains buoyant with consistent trading activity. Depressed secondary CER prices are promoting a flight to quality through voluntary credits. Large clips of recent vintage staple Issued VCU credits from India and China now dominate demand trading at around $6. Buyers are supplementing portfolios with small clips of exotic credits with increased flow coming from South East Asia and Latin America. The Dec 09 CFI closed Friday at $2, up $0.05 on last week. CCX CFI prices continue to steadily increase though the volume of trades is beginning to constrain.

GS VERs continue to see a persistent lack of activity as buyers await an expected influx of credits. However low CER prices may provide the stimulus required, driving down perceived value with spot GS VERs being offered €9 @ €10 and forward strips at €7.

The Dec 09 secondary CER closed the week down €0.92 at €10 consistently trading sideways as technical indicators point to the market being oversold. Prices are holding at current levels as installations await issuance of EU allowances while higher oil production than forecast is driving down price.

EU MEPs have called for energy efficiency limits to be made legally binding across all 27 member states. The EU Industry committee’s proposals would cut GHG emissions by up to 860 million tonnes p.a. by 2020 and include tougher standards for building and electrical goods. The plan would require each member state to draw up a national action plan and enforce the current non binding resolutions aiming for reductions of 20% below 1990 levels with 20% of energy coming from renewable sources by 2020. The bill is to be debated at the EU council in March 2009.

US President Barack Obama last week announced an $825 billion economic stimulus package which included a total of $77 billion for clean energy. $37.8 billion for energy efficiency, $27.8 billion for renewable energy and $11.6 billion for transportation programmes. Committee’s approved funding for the expedient implementation of smart grid technology and refundable investment tax credit for renewable energy producers. Obama stated congress was on target to deliver the legislation by 16th February 2009.

China will receive $2.8 million in financial support from the Asian Development Bank to design and implement a national emissions trading scheme. The technical assistance grants will be employed to cut carbon emissions from coal reliance by 10% from 2006 to 2010, increase energy efficiency 20% by 2010 and boost low carbon projects. China’s economy has grown by an estimated 10% per annum over the past 20 years and has the potential to generate up to 50% of the world’s annual CDM carbon credits.

The EC plans to inject a further €35 million Euros to revolutionise power distribution through an electricity supergrid in the North Sea. The commission is looking to build on 2008’s commitment to deliver 20% of the continents energy from renewable sources by 2020, with Russia and Ukraine’s recent gas dispute adding urgency to plans. However the 27 EU member states must confront the substantial electricity infrastructure upgrade required. At a cost of up to €1 trillion Euros by 2030, the European commission hope industry and EU member state contributions will aid funding despite Power providers voicing concern over who will foot the bill.

Japan has launched the world’s first greenhouse gas observation satellite despite competition from Europe, USA, Russia, China and India. Known as Ibuki’, the satellite will obtain the levels of carbon dioxide and methane in the atmosphere every 3 days from 56,000 locations across the globe over a period of 5 years. The Japanese space agency hopes to establish a common method of precisely measuring GHG emissions to aid international efforts to tackle global warming.

Canadian government owned power firm, Ontario Power Generation (OPG) is to limit GHG emissions from its coal fired generating stations to 19.6 million tonnes through planned outages and raised electricity prices. OPG will enact the 27% emission reduction on 2008 levels by raising the price of electricity by $7.50 per megawatt hour, to a total of around $50 per megawatt hour while only producing electricity from coal plants when no alternative energy source is available. The Ontario government has stated the province must phase out the use of coal for electricity by 2014 in line with it being a member state of the Western Climate Initiative seeking to reduce emissions 15% below 2005 levels by 2020.


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