The EU has reached a unanimous decision to create a central trading platform to manage sales of the majority of EU carbon permits which are traded through the bloc’s Emissions Trading Scheme (ETS).

The central trading platform will commence during the 2013 stage of the ETS, but individual nations will also have the freedom to opt-out and hold their own auctions.  The number of permits to be issued and dates of auction have yet to be determined.

During the first phase of the ETS trading scheme, most permits were distributed to industries for free.  However as phase 3 begins, the majority of emissions permits will be sold to companies through auctions.  This includes the aviation sector, which will be required to purchase 15% of their permits at auction when it joins the ETS in 2012.

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Grappling with skyrocketing energy demand, high pollution levels and international pressure to reduce greenhouse gas emissions, reports indicate China may consider instituting taxes on carbon or other resources to boost support for low-carbon energy technologies.

Experts from the Energy Research Institute under the National Development and Reform Commission – a Cabinet department focused on mid- and long- term domestic development – say if it is deemed beneficial, a carbon tax is likely to be levied during the 12th Five-year plan (2011-2015).

Jian Kejun, a senior researcher with the Institute, reaffirmed China’s commitment to reducing its carbon intensity 40-45% by 2020 in recent remarks to the newpaper China Daily.  To reach this target, the government is prepared to pursue “tougher measures” over the next five years, including subsidies and incentives for low-carbon technologies in addition to a potential tax.

Increasing support for scientific research is another top priority in China.  Right now, China’s investment in scientific clean energy research is only one-sixth that of the United States.  However by 2025, China’s investment in this area may overtake that of the United States.  ”If this comes true,” Jing said, “we can start to dream of becoming a low-carbon technology leader in the world.”

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Although carbon markets have struggled to find their footing in the aftermath of the Copenhagen climate talks, Reuters is reporting an uptick in demand for voluntary carbon credits.

“Since this year started we have seen a huge amount of interest – mostly from the U.S. – in carbon credits and it won’t be long before the voluntary market begins really to gain some momentum,” said Matthew Sullivan, CEO of carbon offset retailer the Carbon Advice Group.

The unregulated voluntary market is a mechanism for businesses to buy and sell credits – known as Voluntary Carbon Standard (VCS) or Gold Standards – for self-imposed and self-regulated emission reductions schemes.  It operates separately from the United Nation’s Clean Development Mechanism (CDM), and the European Union’s Emissions Trading Scheme (ETS), which together comprise the vast majority of the global carbon market.

Interest in both the CDM and the ETS has wavered since Copenhagen, as analysts and traders try to make sense of how the Copenhagen Accord, the non-binding agreement produced at the conference, will affect future demand and prices across the market.

The outcome of the Copenhagen climate talks has raised uncertainty over the future of the global carbon market, leaving many analysts and traders wondering about short term market activity.

The Copenhagen Accord which resulted from the talks did not include legally binding targets for carbon dioxide emissions, which may hurt prices for European Union carbon allowances (EUAs), which are traded on the EU’s Emissions Trading Scheme.  Certified Emissions Reductions (CERs), allowances traded under the U.N.’s Clean Development Mechanism (CDM), may also take a price hit.

Lack of political direction and and expected drop in the number of projects entering the CDM pipeline have made many analysts bearish for the short term.  However, with the addition of a possible U.S. cap and trade scheme, others are not so quick to write off the sector.

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Carbon traders on the European Union’s Emissions Trading Scheme (EUETS) predict the market will soon be worth twice that of today’s oil market.  Within the next decade, the global market could grow to $3 trillion a year.

Carbon traders are anxiously waiting on the Copenhagen climate summit to send a clear signal of support for the growing industry, but many traders believe that regardless of the summit’s outcome, carbon markets like the EUETS will inevitably expand across the globe.

Admittedly, carbon prices have fallen as a result of the recession, and some critics say current trading levels are too low to provide any meaningful boost to clean energy industries like wind and solar.  The UN’s Clean Development Mechanism program has also faced criticism as of late.  Despite the problems, analysts believe the market has come a long way from its humble beginnings, and will continue to progress in the future.

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The European Union’s carbon cap and trade scheme may have trouble incorporating large supplies of carbon credits held by some of the newest member states in Central and Eastern Europe.  Because of a drop off in economic activity, many of these nations easily met their Kyoto Protocol emissions targets, and thus arrived with a stockpile of emissions credits to sell. Critics say these “hot air” credits are not the result of true emissions reducing activities, and worry that the E.U. system is not equipped to handle an influx of this size.

Peter Zapfel, deputy director general of the environment department at the European Commission, says there are approximately 10 billion excess credits, or five times the amount currently traded in the E.U. system.  This oversupply could dramatically reduce prices across the board, making companies less likely to offset their carbon emissions or invest in cleaner and more efficient technology.  Read the full article…

New Legislation Will Charge Businesses for Greenhouse Gas Emissions

By the end of next year, California companies that emit greenhouse gasses will be required to pay fees for their pollution.  The California Air Resources Board has approved passage of the nation’s first statewide corporate greenhouse gas emission fee.  For every metric ton of carbon dioxide they or their customers emit, businesses will pay $0.15.  Most of the businesses that will be affected are in the fossil fuel production, distillation or refinement industries.  These approximately 380 companies produce nearly 85% of California’s greenhouse gas emissions.   The money raised from the fees will go to support the administration of the global warming bill passed in California in 2006.  Under that legislation, the state is required to reduce its greenhouse gas emissions 25% by 2020.  The business fee “takes us off borrowed money, and makes us self-supporting,” said Jon Constantino, climate change planning manager for the California Air Resources Board.

Energy Agency Pushes for More Inclusive Trading Mechanism

The International Energy Agency (IEA) believes that worldwide carbon trading mechanisms should be expanded to include nuclear and carbon capture and storage (CCS) projects in the developing world.  At present, these projects are not covered under the current trading system which exists under the Kyoto Protocol.  The Agency praised the carbon trading scheme for the new investments in low- or zero-carbon technology it has encouraged, but insists that more must be done in order to limit carbon emissions from the world’s power industries, which are growing to accommodate a rapidly expanding population.  The IEA’s latest report says the power generation sector is at the “core” of the “world-wide challenge to limit climate change,” and is responsible for 41% of global energy-related CO2 emissions.  IEA Executive Director Nobuo Tanaka pointed out that CO2 emissions from power generation industries in developing countries have grown 90% since 1990, and could double by 2030.  He is encouraging negotiators at the upcoming Copenhagen climate talks to seriously consider including nuclear and CCS projects into new carbon trading plans to allow for “broader access to the ‘carbon market,’ to introduce a price on CO2 emissions, and create incentives for most efficient and low-CO2 generation technologies” that can be implemented across the developing world, where power generation is increasing at the most rapid rate.

France to Impose Carbon Tax in 2010

Beginning in 2010, France will roll out a carbon tax on fuel, said French Prime Minister Francois Fillon in a statement today.  The tax will cover both transport and household fuels, and is part of France’s efforts to reduce consumption and cut back emissions of greenhouse gasses.  Prime Minister Fillion said the progressive tax will begin with the market price of carbon, currently €14, and will make adjustments accordingly post-2010.  Tax revenues, estimated to reach €4 billion, will be paid back to the consumer in either “green checks” or other tax cuts elsewhere.  France has committed to reduce its greenhouse gas emissions by 75% by the year 2050, and views this carbon tax as an important step to reaching that goal.