Transcript The Carbon Market - Home - IIEA

The Carbon Market
Trading Carbon in Europe
Dublin November 09
Understanding Cap and Trade
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Kyoto Implementation
• Europe – global leadership
position
• Pre-Kyoto trading scheme (Phase I) 2005-2007
• Phase II coincides with Kyoto period
• EUETS legally binding across all 27 member
states
• Average reduction of 8% (from 1990 levels)
• 12% of allowances can come from CDM (national
limits ranging from 0 to 20%)
• 2013-2020 scheme being finalised
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Corporate structure
Climate Exchange
PLC
(CLE)
European Climate
Exchange (ECX)
Chicago Climate
Exchange (CCX)
Chicago Climate
Futures Exchange
(CCFE)
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ECX & ICE Partnership
WebICE Platform
ECX Carbon
• Product Development
• System infrastructure
• Client Relationships
• Clearing and Settlement
• Marketing
• Regulation
• Supervision and Helpdesk
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ECX Products
Futures and Options
based on underlying:
EUAs
CERs (secondary)
European Union Allowances
Certified Emission Reductions
EU ETS -
CDM -
European Union
Emissions Trading Scheme
Clean Development
Mechanism project credits
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Who is the Market?
Hedgers
Eg. Industrials,
utilities
Investors
Speculators
Eg. Banks, funds
Eg. Algo’s, proprietary
traders
Arbitrageurs
Eg. Banks, specialised
traders
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Price and volume ECX EUA Futures Contracts
• 94 million tonnes of CO2 traded in 2005 with a market value of €2.1 billion
• 452 million tonnes of CO2 traded in 2006 with a market value of €9 billion
• 1 billion tonnes of CO2 traded in 2007 with a market value of €17.5 billion
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Price Drivers
Key asset characteristics – EUA supply is theoretically fixed so demand
leads price formation. CER supply is variable but needs long-term signals.
• Macro
• Micro
– Political support
– Demand
– National developments
– Oil price
– Economic
– Coal price
(growth/recession)
– Innovation
– Gas price
– European
–
–
–
–
weather/temperature
Interest rates
Exchange rates
Other markets
CDM supply
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EUA-CER Prices (Dec 09)
€
35.00
30.00
EUA price
25.00
20.00
15.00
10.00
5.00
0.00
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Where Next?
Aus ETS
EU ETS
445Mt
2,080Mt
NZ ETS
100Mt
CERs bridge the
Regional Schemes
Japan ETS
1,272 Mt
US ETS
5,760Mt
Canada ETS
400Mt
China/India?
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Multiple roads to the same destination
Behavioral change
Renewable energy sources
Voluntary markets
(CSR
and pre-mandatory)
Mandatory cap & trade
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Watch this space!
“The total global carbon market value could reach
€2 trillion ($3.1 trillion) by 2020.”
- POINT CARBON, May 2008
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www.ecx.eu
[email protected]
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www.catlinarticsurvey.com
Upcoming Events
Climate Change Forum: What is at stake in Copenhagen?
Venue: European Parliament Office, 43 Molesworth Street, Dublin 2.
Date: Friday 20th November, 9.00 am - 12.30 pm.
Speakers: John Gormley, Minister for the Environment, Mary Kelly,
Director General of the EPA, Tom Arnold, CEO of Concern and others.
The Case for a Climate Change Law
Venue: The IIEA
Date: 23 Nov 2009
Speaker: Liz McManus
View www.iiea.com for more details
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