WebConnect

1 December 2009

1st December 2009, London - While the world is waiting for the outcome of the COP 15 negotiations in Copenhagen, IDEAcarbon, an independent and professional provider of ratings, research and strategic advice on carbon finance, is predicting market growth irrespective of the outcome of the COP 15 negotiations after 2012.

While a political agreement rather than a final binding treaty is the most likely outcome from the talks in Copenhagen, IDEAcarbon believes that individual nations are going to be the drivers of a post-2012 market structure. These domestic markets are being built today, in the United States, Australia, Japan and South Korea among others.

Nationally-based cap-and-trade schemes will underpin the bulk of emissions reductions in the period 2012-2020, as countries ramp up their market-based response to the challenge of climate change.

As these schemes develop and mature, nations will look to link their schemes to other national emissions trading systems to help boost efficiencies and drive down the cost of compliance for their compliance sectors.

IDEAcarbon foresees these national forces and linkages driving the growth of the global market. In the December edition of CARBONfirst, the company’s monthly policy analysis report, IDEAcarbon presents its view that a post-2012 global carbon market will look something like this:
  

• EU: The EU Emissions Trading Scheme was launched in 2005, and is now in its second compliance phase (2008-2012). To date more than 8 billion tonnes of CO2 equivalent have traded on European exchanges and in the over-the-counter marketplace. Through this and other measures, the EU is on track to meet its emission reduction goal under the Kyoto Protocol.
• New Zealand: The NZ ETS was established in September 2008, with the forestry sector the first sector of the economy to come into the scheme in January 2009. Since then the regulations have been amended in parliament, and the largest emitters will come into the scheme in July 2010. New Zealand has yet to confirm a medium-term emissions goal, but the target is likely to be between 10-20% below 1990 levels by 2020.
• Australia: The Carbon Pollution Reduction Scheme faces a second vote in the country’s Senate this week. If the legislation fails to pass into law this time, it may trigger a general election. Australia is proposing a target of between 5-25% below 2000 levels by 2020.
• United States: The House of Representatives passed a bill to establish a federal cap-andtrade scheme in the summer. The Senate is now considering similar legislation, and it is expected that the upper house will vote on its bill in the first half of 2010. The US is proposing a target of between 14-20% below 2005 levels by 2020.
• Japan: The recently elected government of Prime Minister Yukio Hatoyama is considering launching a mandatory cap-and-trade scheme to replace the voluntary schemes that have been in place for several years.
• South Korea: While not a developed country within the definitions of the UNFCCC, South Korea is considering launching an emissions trading scheme for its industrial sectors.

Announcing the release of the report Shandi Modi, CEO of IDEAcarbon noted that:

“There will be certain elements of a post-2012 framework that will be more centrally-run, such as financing mechanisms or flexible mechanisms that link developed and developing countries. But these elements will feed into, and be fed by, sovereign activities among developed countries and this will help the growth of the market”.

Alessandro Vitelli, Director, IDEAcarbon Strategic and IDEAcarbon Markets further added that “The clear preference among the various national proposals is for domestic schemes that can eventually link to other systems around the world, rather than a single, centrally-administered global market”.