Overview of Global Carbon Market
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Overview of Global Carbon Market Presented by: Iftekhar Enayetullah, Director, Waste Concern April 8, 2008. Presentation Outline. What is Carbon Financing? Structure of Global Carbon Market Carbon Market Relevant for Bangladesh How Big is the Global Carbon Market?

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Overview of Global Carbon Market Presented by: Iftekhar Enayetullah, Director, Waste Concern

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Overview of global carbon market presented by iftekhar enayetullah director waste concern

Overview of Global Carbon Market

Presented by:

Iftekhar Enayetullah, Director, Waste Concern

April 8, 2008


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Presentation Outline

  • What is Carbon Financing?

  • Structure of Global Carbon Market

  • Carbon Market Relevant for Bangladesh

  • How Big is the Global Carbon Market?

  • Current Trends in the Carbon Market

web: www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Payment made in different forms to abate GHG

IN KIND CONTRIBUTION FOR TECHNOLOGIES

DEBT/ SOFT LOAN

CASH

EQUITY

What is Carbon Financing?

  • Carbon financing can be defined as financial resources provided to projects generating (or expected to generate) green house gas emission reductions in the form of the purchase of such emission reductions.

  • In simple term, carbon finance is a purchase contracts whereby one party pays another party in exchange for a given quantity of Green House Gas (GHG) emission reductions.

web: www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Global Warming Potential (GWP) of Key GHG

Green House Gas Global Warming Potential

Carbon dioxide (CO2 )1

Methane (CH4)21

Nitrous Oxide (N2O)310

HFC’s140-11,700

Perflorocarbons (PFC’s)7,000-9,200

Sulphur Hexafluoride (SF6)23,900

web: www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

investment $$

Industrialized country

Emission reduction credits)

Project Reducing GHG emissions in developing country

web: www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Structure of the Global Carbon Market

Global CARBON market

Compliance Markets

Voluntary

Markets

Kyoto

Markets

EU ETS

New South Wales

GHG Abatement

Scheme

UK

ETS

Chicago

Climate

Exchange

CDM ->

CERs

JI ->

ERUs

VERs

CCLAs

AAUs

+

RMUs

EUAs

NGACs


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Carbon Market

Compliance Market

Voluntary Market


Overview of global carbon market presented by iftekhar enayetullah director waste concern

maximum

minimum

Investment Opportunity from CDM/VER


Carbon market at a glance 2005 2007 and projected 2008

Carbon Market at a Glance 2005-2007 and projected 2008

Annual Volumes and Values of Transactions

Source: 2005-2006 World Bank and IETA; 2007 and 2008 Point Carbon (Press Release Feb 26, 2008)


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Carbon Market at a Glance 2005-2007 and Projected 2008

Billion US $

Source: 2005-2006 World Bank and IETA, May 2007 and 2008 Point Carbon (Press Relaese Feb 26, 2008)


Overview of the cdm market

Overview of the CDM market

  • CDM has the largest CO2 project based offset system in the world

    • 979 registered projects by April 1 2008

    • Approx. additional 2021 projects in pipeline

    • 49 countries

    • 134,993,328 CERs issued (certified emission reductions)

    • 2.7 billion CERs expected to end of 2012

  • CDM 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


Overview of the cdm market1

Overview of the CDM market

No. of Projects/ CERs before 2012 (million)


Overview of the cdm market2

Overview of the CDM market

Map and statistics accessible at http://cdm.unfccc.int/


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Overview of the CDM market


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Overview of the CDM market


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Overview of the CDM market

Bangladesh 0.2%

Overview of the CDM market


Registered cdm projects all over the world

Registered CDM projects all over the World

www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Overview of the CDM market


Overview of global carbon market presented by iftekhar enayetullah director waste concern

carbon trading

Present Price of CERs and VERs (Carbon Credits)

Both the CERs and VERs are represented in terms of carbon dioxide equivalent (CO2e).

The present price (As of 1 April, 2008):

CERs : US $ 18.50-23/ton

VERs : US $ 7 to US $ 10/ ton

Crediting Period for CERs and VERs

Emission reductions can be claimed for maximum ten years, without revision of the project baseline,

or

for a period of seven years with two extensions of seven year each, provided the project baseline is revised at the time of each extension.


Carbon market at a glance 2005 2007 and projected 20081

Carbon Market at a Glance 2005-2007 and Projected 2008

Source: 2005-2006 World Bank and IETA, May 2007 and 2008 Point Carbon (Press Relaese Feb 26, 2008)


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Price drivers – Evolution of the CER Price (secondary market, in EUR)

Source: Reuters – TFS Energy

Overview of the CDM market


Overview of global carbon market presented by iftekhar enayetullah director waste concern

CURRENT TRENDS IN THE CARBON MARKET

  • CDM experienced a strong growth (from US $ 5 b to 17b) throughout 2007.

  • With increase in the volume of emission reduction, price of carbon credits ( CERs and VERs) is also increasing ( $ 7.5 in 2005 to $ 23 in 2008).

  • CERs have consolidated as a reliable carbon asset class.

  • Increasing interest in CERs for voluntary offsetting purposes may constitute another price driver in the future.

  • Voluntary GHG market has also seen strong performance based on:

  • National/regional/domestic initiatives

    • Corporate social responsibility (CSR) issues


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Country wise Number of CDM projects

www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

  • Assigned Amount Units (AAUs) – Each Annex I Party that ratifies the Kyoto Protocol has a GHG emissions limitationcommitment for 2008-2012, which is its "assigned amount." If a country's emissions are lower than that amount, it may sell the unused units.

  • Certified Emission Reductions (CERs) - These are credits issued for emission reductions achieved by a project under the CDM. CERs can be used by an Annex I Party to help meet its emissions limitation commitment under the Kyoto Protocol. The credits issued for sink enhancements achieved by afforestation or reforestation projects under the CDM are either temporary CERs (tCERs), or long-term CERs (ICERs) that are subject to provisions to protect against possible reversals of the sink enhancements.

  • Emission Reduction Units (ERUs) - These are credits issued for emission reductions or removals achieved by a project under the JI mechanism as defined in Article 6 of the Kyoto Protocol. ERUs can be used by an Annex I Party to help meet its emissions limitation commitment under the Kyoto Protocol. Each ERU equals 1 tonne of carbon dioxide equivalent (CO2 e).

  • Removal Units (RMUs) - These are credits issued for net sink enhancements achieved by eligible activities under Articles 3.3 and 3.4 of the Kyoto Protocol. RMUs can be used by an Annex I Party to help meet its commitment under the Kyoto Protocol. Each RMU equals 1 metric tonne ofCO2e.


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Country wise Number of CDM projects

www.wasteconcern.org


Overview of global carbon market presented by iftekhar enayetullah director waste concern

Country wise Number of CDM projects

www.wasteconcern.org


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