19 april 2013

[4C note: These two articles were sent us by a reliable source, with access to the E&E website.]

E.U. market troubles will prevent emissions trade linkage -- Calif. air chief

Debra Kahn, E&E reporter, Friday, April 19, 2013

SAN FRANCISCO -- California's top air regulator doesn't foresee linking
with the world's largest carbon market because of a glut of credits
overhanging the European market.

Mary Nichols, chairwoman of the California Air Resources Board (ARB),
yesterday dismissed speculation that the Golden State's carbon market
-- the second-largest in the world, after the European Union's -- would
accept credits from the E.U. Emissions Trading System.

"We don't see ourselves joining with that program because of the
overallocation issues and other problems that we would have from a
legal and administrative perspective in fully linking," Nichols said in
response to an audience question.

Prices on the European Union's Emissions Trading System plummeted this
week after its Parliament unexpectedly rejected a proposal to take 900
million CO2 allowances out of auctions scheduled in the next three
years and add them back into the system in 2019 and 2020 to solve
oversupply issues (ClimateWire, April 16).

Prices fell as low as €2.46 ($3.21) per metric ton after the vote;
California allowances are trading at around $14.50 per ton for December
2013 delivery, according to market analysis firm Thomson Reuters Point

California is still willing to formally link to other states and
provinces and discuss softer types of linking, like sharing information
and developing carbon offset projects, with national governments,
Nichols said. She mentioned Mexico as a possible source of offsets.

ARB is scheduled today to formally approve a link to the Canadian
province of Quebec, after Gov. Jerry Brown (D) signed off on the plan
earlier this month (ClimateWire, April 9).

But exchanging carbon credits with national governments is probably not
feasible, she said, also rejecting the idea of linking to Australia,
which has announced plans to link to the European Union starting in
2015. In the absence of an international agreement to reduce emissions
in the long term, linking fragmented carbon markets is seen as a
backdoor way to achieve a global price on greenhouse gases
(ClimateWire, April 11).

Linking to British Columbia is some time off

"For a state to link with a sovereign nation presents some legal
challenges that would be difficult to work through, and also our
economies are just very different," Nichols said on the sidelines of
the Navigating the American Carbon World conference in San Francisco.

By contrast, international climate policy figures are urging California
to link. Earlier in the week, a top U.N. official said California and
other burgeoning carbon markets should eventually accept each others'
credits (ClimateWire, April 18).

"The more they are linked, the less of an impact that these regional
decisions will have," said Christiana Figueres, executive secretary of
the U.N. Framework Convention on Climate Change, in an interview
Wednesday, referring to the E.U. system. "You want to do that in order
to be able to soften the impact of regional decisions."

Nichols said she was in talks with Oregon and Washington and mentioned
low-carbon fuels as one area of cooperation. Of the European Union, she
said, "there's a lot we could do short of that linkage that could help
both of us if, for example, we were to pursue some sort of
international emissions tracking efforts."

The two jurisdictions could also "pool our information on the
enforcement side, particularly when it comes to the use of offsets" and
discuss environmental justice issues that could arise from allowing
facilities to invest in more-remote pollution reductions rather than
directly reducing their own emissions, she said.

A link with British Columbia, which is formally connected to California
and Quebec through the nonprofit Western Climate Initiative, is also
some time off, a Canadian official said.

"As a small jurisdiction with a carbon tax, there was a decision not to
move on the same timeline as California and Quebec," said James Mack,
head of the British Columbia Climate Action Secretariat.


U.N. official describes a 'dark night' for global carbon trading

Debra Kahn, E&E reporter, Thursday, April 18, 2013

SAN FRANCISCO -- Depressed carbon markets in the European Union
underscore the need for a globally linked trading scheme, including
California's first-in-the-U.S. economywide cap-and-trade program, a top
international climate official said yesterday.

The European Parliament's rejection of a plan to fix a heavily
oversupplied emissions trading program has led to a "dark night" among
participants, said Christiana Figueres, executive secretary of the U.N.
Framework Convention on Climate Change, at a carbon conference in San

"The environment, the carbon world environment in which California
inserts itself, is not as optimistic as California," she said,
unspooling an extended metaphor invoking the conference's theme of
"Navigating the American Carbon World."

"Those who are in the carbon markets, I would say, are not in their
best mood right now; I would say if they are navigating a boat, they
feel like they're navigating in a very dark night, without instruments,
in a perfect storm."

Prices on the European Union's Emissions Trading System plummeted this
week after the Parliament unexpectedly rejected a proposal to take 900
million CO2 allowances out of auctions scheduled in the next three
years and add them back into the system in 2019 and 2020 (ClimateWire,
April 16).

"I don't know who's more depressed, the prices or the participants in
the market," she said.

Despite the European Union's woes, she urged California to think about
eventual linking, reeling off a list of fledgling markets including
Australia, Brazil, Chile, Costa Rica, South Africa, Thailand, Japan and
several Chinese cities. "Ultimately California, large as it is as an
economy, is not going to be alone."

Visions of a growing global market

"These markets will eventually be interlinked, they will allow each
other to scale up and they will be interlinked in a way that they will
be fungible with each other and they will be capable of growing with
the global growing economy."

Talk of linkage also featured in discussions at the conference.
Panelists agreed that linking is some way off for most governments but
that communicating among each other and building off existing markets
will help boost prospects.

Governments should focus on building accounting systems to make sure
that the same carbon credit cannot be counted for reductions in more
than one system and also that their methods of measuring emissions are
in sync, said a World Bank carbon expert.

The goal is to "make sure 1 ton of carbon measured in one jurisdiction
is the same ton of carbon you would measure in another jurisdiction,"
said Adrien de Bassompierre, a senior carbon finance specialist with
the World Bank. "The lack of an international agreement does not mean
that countries can't start working."

When asked why international climate policy has not been following the
lead of private businesses eager to invest in renewable energy,
Figueres said that companies interested in maintaining the current
energy mix are "much louder" than climate policy advocates.

"We don't have a private sector," she said. "We have at least two
private sectors," she said. "Those in this room ... and then we have
the other private sector that is very interested in keeping the status

"That other private sector is, with all due respect to all of you, much
better-organized, certainly much better-funded, and is much louder."

Chevron straddles the pros and cons

"We have a battle of the old technologies that we know are becoming
every day more and more stranded assets, and we have the new
technologies that are coming on board," Figueres continued. "Those
companies in the oil and gas industry need to understand that they have
a future here, that they can continue to be energy providers if they
also invest, and they are."

Splitting the difference would seem to be Chevron Corp., which paid
$40,000 to become a "platinum sponsor" of the conference alongside the
Natural Resources Defense Council. The San Ramon, Calif.-based oil and
gas giant has about 10 employees attending, but they are not speaking
on any panels, a conference organizer said.

Chevron is also a member of the group Fueling California, which is
opposed to the state's low-carbon fuel standard policy as currently
written. That regulation, along with cap and trade, is part of a suite
of measures aimed at lowering the state's emissions to 1990 levels by
2020. The group held a meeting in January aimed at changing the program
(ClimateWire, Jan. 25).

Chevron climate change analyst Julia Bussey pointed to the company's
investments in concentrated solar power, alternative fuels and energy
efficiency. "I don't know ... if it's really true there's just one kind
of company or the other," she said.

An environmentalist compared Chevron's activities to McDonald's shift
in recent years to healthier menu options and promoting fitness events.

"They recognize there's this need ... for healthier options and
renewables on the side, but they're still going to go to their
moneymaker, the Big Macs, the fries -- the stuff that sells and that is
their bottom line," said Environmental Defense Fund spokesman Joaquin
McPeek. "To me, it's not shocking Chevron is sponsoring this event."

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