State of the Voluntary Carbon Markets: 2008 and 2009

Transcription

1 State of the Voluntary Carbon Markets: 2008 and 2009 Allison Shapiro Ecosystem Marketplace OAS Ecosystem Services Workshop Washington, DC 18 June

2 About Ecosystem Marketplace A program of the non-profit organization Forest Trends A free information and analysis service for Emerging Markets for Ecosystem Services Coverage of Payment for Ecosystem Service (PES) transactions--carbon, biodiversity, water markets Consistent information critical for building these environmental markets/ transactions News updated daily, with commissioned articles and newsletters, quantitative & qualitative market assessments 2

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5 Presentation Outline 1. WHAT ARE THE VOLUNTARY CARBON MARKETS? 2. GLOBAL VOLUNTARY CARBON MARKETS - Key findings of report Voluntary market volume/value over time Project types and locations selling credits Average credit prices Utilization of third-party standards, registries Buyers motivations and buyer types The voluntary markets in VOLUNTARY CARBON MARKETS IN LATIN AMERICA 4. Q & A - Project types and locations selling credits - Reasons for limited transaction volume 5

6 What are the Voluntary Carbon Markets? All trades of carbon credits for reasons other than compliance with regulation. Two voluntary markets: Chicago Climate Exchange (CCX) - est Voluntary Over-the-Counter (OTC) Market - est Types of credits traded: offsets and allowances Credits created for the voluntary markets specifically (known asvoluntary Emissions Reductions, or VERs) Credits created for CCX (known as Certified Financial Instruments, or CFIs) Credits created for the Kyoto markets (Clean Development Mechanism, or CERs; Joint Implementation, or ERUs; EU ETS, or EUAs) Credits created for other regulated markets (e.g. RGGI in Northeast U.S.) Another breakdown: pure vs. pre-compliance 6

7 Universe of Carbon Markets EU ETS Volume: 2,982 Mt (C0 2 e) Value: $94,972 Million CDM Volume: 1023 Mt Value: $21,703 Million Total volume, 2008: 4.3 Billion tc0 2 e Total value, 2008: US$118 Billion AAU Volume: 16 Mt Value: $177 Million RGGI Volume: 72 Mt Value: $254 Million CCX Volume: 69 Mt Value: $306 Million Voluntary OTC Volume: 51 Mt Value: $397 Million NSW Volume: 31 Mt Value: $152 Million JI Volume: 20 Mt Value: $294 Million Source: State of the Voluntary Carbon Markets 2009, Ecosystem Marketplace, New Carbon Finance

8 The voluntary markets doubled in transaction volume and financial value between 2007 and 2008 In 2008, the market responded to criticism of offset quality Tremendous infrastructure development & market maturation Consolidation around the most popular voluntary carbon standards Increased linkage between standards, credit accounting registries, and exchanges Increase in market analysis Key findings Corporate Social Responsibility (CSR) and Public Relations (PR) remain the core buyer motivations, but intermediaries are scaling up and the pre-compliance market is growing Increasingly sophisticated buyers 8

9 Voluntary markets nearly doubled in volume in 2008, led by CCX growth Voluntary Markets Volume % 123Mt MtCO 2 e Mt 164% 66Mt Other Exchanges CCX OTC Mt Mt 5Mt 11Mt 11Mt Pre

10 Voluntary markets value more than doubled in 2008, led by OTC credit price premium Voluntary Markets Value $705M 1 Average price: OTC = $7.34/t CCX = $4.43/t MtCO 2 e $171M 238% 111% $335M Other Exchanges CCX OTC $99M $43M 38 $23M $37M $42M pre

11 Renewable Energy and Methane Capture supplied most credits transacted (OTC) Transaction Volume by Project Type Not Specified 2% 13% Other Types 2% Fugitive Emissions 2% Avoided Deforest 1% Coal Mine 1% 3% 3% 4% 5% 32% RE: Hydro Landfill RE: Wind Aff/Ref Conservation Geological Seq Energy efficiency Aff/Ref Plantation 1% Fuel Switching 1% Forest Management 1% Ind. Gas 1% Ag Soil 1% 7% 15% 17% RE: Biomass Ag Methane Other 11

12 Renewable energy was the major winner capturing over half the volume, landfill gas second (OTC) Transaction Volume by Project Type 30 data labels = % of annual market share 51% % 27% 7% 4% 3% 5% 1% 18% 4% 9% 4% 2% 0.3% 0.6% 1% % 11% 5% 4% 5% 1% 2% 0.3% Ag Methane Landfill Coal Mine Renewable Energy RECs Industrial Gas Energy Efficiency Fuel Switching Geological Seq. Fugitive Emissions Forestry and Land Use Mixed / Not Specified MtCO2e 12

13 Asia and US: Most common project locations (OTC) Transaction volume by project location Mixed / Not Specified, 2% 4% 4% 4% Asia EU 1% Canada 1% Africa 1% 15% 45% US Middle East Latin America/ Caribbean AU/NZ 28% Other

14 Project Type by Project Location, 2007 vs (OTC) Transaction Volume by Location and Project Type 25 data labels = % of annual volume 45% Mixed/ Not Specified 20 Fugitive Emissions 15 28% Renewable Energy (mostly hydro) Geological Seq. Fuel Switching MtCO 2 e 10 Landfill Gas (Methane) 39% Energy efficiency Industrial Gas 23% 15% Methane 5 0 8% 7% 4% 7% 4% 5% 5% 4% 2% 1% 2% 0.4%.0004% 1%.2% Forestry/Land Use Renewable Energy EU Non-EU (incl Russia) Canada US AU/NZ Latin America Asia Middle East (incl Turkey) Africa (excl Egypt) Mixed/Not Specified 14

15 The main goal is credit retirement, which has stayed level since Historic Transaction Values and Retirement Churn rate = 4.4 (or 2.9) MtCO 2 e 30 Sold Retired Pre

16 Project type has a clear price influence Average Prices and Price Ranges by Project Type Volumeweighted Average Maximum Transaction Price Minimum Transaction Price 16 US$/tCO2e Energy efficiency (30) Fuel Switching (9) Industrial Gas (2) Ag Methane (22) Landfill (40) Coal Mine (4) Fugitive Emissions (2) Geological Seq (1) RECs (2) RE: Wind (64) RE: Solar (6) RE: Hydro (32) RE: Biomass (29) RE: Other (1) Aff/Ref Plantation (32) Aff/Ref Conservation (17) Forest Management (4) Avoided Deforestation (10) Ag Soil (6) Other Land based (1) Other (11) Not Specified (5)

17 Average prices increase along the value chain although retail prices have declined from Average Prices by Supplier Business Activity US$/tCO 2 e % 11.1% % 8.9 Average Transaction Price Maximum Transaction Price Minimum Transaction Price - Developer Wholesaler Broker Retailer 17

18 Over 96% of transacted credits were third party verified Social Carbon 1% ISO % CDM/JI 2% VER+ 2% 3% 9% 3% 3% 4% 9% 48% Voluntary Carbon Standard (VCS) Gold Standard (GS) Climate Action Reserve (CAR) American Carbon Registry (ACR) Other Internal created 2% 10% Chicago Climate Exchange (CCX) Greenhouse Friendly Climate Community & Biodiversity (CCB) 12% Other 18

19 % 29% Four Dominant Standards in 2008 Transaction Volume by Standard data labels = % of annual market share 12% 11% 9% 16% 9% 7% 9% 3% 6% 3% 3% 2% 2% 3% 3% 2% 2% 1% 2% 1% 1% 0.2% 3% 12% 4% 0.3% 0.2% MtCO2e VCS Gold Standard CAR ACR CCX Greenhouse Friendly CDM/JI VER+ CCB Social Carbon ISO Internally created Green-e Climate VOS Other None/ I don't know

20 Prices (somewhat) consolidate around standards 50 Average Prices and Price Ranges by Standard Volumeweighted Average Maximum Transaction Price - Internally created (25) ACR(11) CarbonFix (3) CAR (22) CCX (26) CDM/JI (21) CCB (10) Gold Standard (32) Green-e (3) ISO (15) Plan Vivo (11) Social Carbon (6) VCS (89) VER+ (11) Greenhouse Friendly (18) Other (12) None (8) I don't know (5) US$/tCO2e Minimum Transaction Price Average OTC = $7.34/t 20

21 Registries Increasingly Integrated Transaction Volume by Registry 21% 25% data labels = % of annual market share 18% 13% 10% 13% 14% 12% 9% 9% 8% 5% 8% 5% 4% 3% 3% 2% 2% 2% 0.1% 1% MtCO2e American Carbon Registry (ACR) Climate Action Reserve (CAR) BlueRegistry Gold Standard (GS) Clean Development Mechanism (CDM) Chicago Climate Exchange (CCX) TZ1 DOE 1605 (b) New South Wales GGAS Greenhouse Friendly Bank of NY (BoNY) Internal Registry Other

22 The buyers: EU and US supplied 92% of demand 6% 2% 0% EU countries US 39% 53% Australia/ New Zealand Canada Other 22

23 Type of Buyer 1% 1% 1%1% Business for-profit (for resale) 2% Business for-profit (for retirement, without pre-compliance motive) 35% Not Applicable/ I don't know 29% Individuals (for retirement) NGOs/ non-profit organisation (for retirement) Governments (for retirement) Other 29% Business for-profit (for precompliance) 23

24 However, sellers still think that CSR and PR are the main motivations of their buyers 5.0 Customer Motivation according to Sellers Importance Ranking Investment/ Anticipation of Corp. Resp. PR / branding Business Easier than Other resale regulation model direct reductions 24

25 Similar to last year, 2007 vintage and beyond are by far the most popular 86% of the transactions 18 Vintage by Credit Transaction Volume 16 31% 14 data labels = % of market share 12 MtCO 2 e % 12% 13% % 0.1% 2% 0.6% 2% 1% 3% 2% 4% 8% 19% 6% 5% 2% 6% 5% 5% 1% 1% 2% Pre Post-2012 N/A, Unknown 4% 11% 14% 10% 25

26 Voluntary carbon markets expected to reach 257 MtCO2e in 2012 and 476 MtCO2e in Projected Market Growth for the Voluntary Carbon Markets, according to Participants 2008 projection Sales (MtCO2e) Historic Growth Projected Growth (by 2008 participants) Projected Growth (by 2007 participants)

27 VCS, CDM, GS, CAR and CCB are poised to win the Standards battle for longevity 120 Future Standard Usage, According to Participants data labels = % of respondents projecting to use the standard 52% % 32% 60 28% 27% 40 12% 11% 11% 11% 20 8% 8% 7% 6% 5% 5% 5% 4% 3% 3% 3% 3% 2% 1% 0 VCS CDM Gold Standard CAR CCB VER+ CCX ISO Other RGGI Internally created CarbonFix JI Plan Vivo ACR Social Carbon EPA Climate Leaders Green-e Climate Greenhouse Friendly I don't know yet Alberta TUV NORD GE AES GGHS 27 Number of companies

28 % 23% data labels = % of respondents projecting to use the registry 21% 21% 19% Future Registry Usage, According to Participants 11% 9% 9% 8% 7% 6% 5% 5% 5% 4% 4% 3% 3% 2% 2% 2% 2% 2% 2% CAR 28 Number of companies Gold Standard Registry APX TZ1 CDM CCX I don't know yet CCB Database Other Internal registry BlueRegistry ACR Bank of New York NSW GHG RGGI Caisse des Depots GHG CleanProjects Australia Climate Exchange Plan Vivo Projects Registar Globe Carbon Registry TUV NORD Registry Triodos Climate Clearing House Not Applicable Regi None Asia Carbon Registry

29 Brazil and Mexico lead Latin America in OTC market Latin America transaction volume by project type Total volume, 2008: 2.2 MtC02e Total value, 2008: $15.53 Million

30 Latin American Registered CCX volumes grew in 2008 Total Reg. Volume, 2008: 6.6 Mt Total Reg. Value, 2008: $29.2 Million (est) L.A. countries that registered credits on CCX in 2008: Uruguay: 4.0 Mt Chile: 1.4 Mt Brazil: 0.88 Mt Mexico: 0.27 Mt Source: State of the Voluntary Carbon Markets 2009, Ecosystem Marketplace and New Carbon Finance

31 Reasons for limited Latin American VER transaction volumes It s an issue of supply, not a lack of demand. Limited government capacity to support CDM Supplementary CDM laws that restrict eligible CDM project types (e.g. Brazil has restrictions on landfill gas project types) Low-hanging fruit already harvested Investment risk associated with smaller-scale projects Lack of understanding of CDM, VER markets Need for capacity building Katoomba Group Ecosystem Services Incubator

32 Main take away lessons The global voluntary carbon market is maturing and growing rapidly. Voluntary offsetting is very important for CSR/PR purposes and fills a unique niche alongside compliance markets. The growth of the voluntary markets in the next 1-3 years is heavily dependent on the scope of regulation. The pre-compliance subset of the voluntary market will grow in 2009 and Standards are key to determining which offsets are likelyto be used in a cap-andtrade scheme. The voluntary market is likely to continue to exist even after au.s. cap-and-trade scheme takes effect. Regulation will never cover all emissions sources. More than their volumes or valuse, the greatest contributions ofthe voluntary markets may be their incubation of new project types (e.g. REDD) and providing policymakers and the public an understanding of how offsetting can fit into a climatechange abatement strategy. Growth in the L. American VER supply is associated with development of L. American CDM projects. 32

33 Questions? Allison Shapiro Ecosystem Marketplace +1 (202)