State and trends of the
regulated A/R market
Side Event on Developments on Afforestation and
Reforestation in the Kyoto Protocol
Till Neeff
Carbon Expo at Cologne, 03 May 2007
© 2006 EcoSecurities Group plc
Carbon credits - origination to commercialisation
Obstacles to market success of forestry CDM
are overcome
60%
50%
40%
30%
20%
10%
0%
lack of meths
© 2006 EcoSecurities Group plc
temporary credits
high risk
others
Carbon credits - origination to commercialisation
Forestry CDM was a niche market in 2006
© 2006 EcoSecurities Group plc
Carbon credits - origination to commercialisation
Buyers start defining preferences
> Most buyers do not have
clearly defined policies
yet
–
–
Regional
preferences
“Green” projects
preferred
> Added value by quality
standards
Buyers and preferences
defined guidelines
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
regional
SD benefits
standards
Fund
© 2006 EcoSecurities Group plc
Government
Industry
Carbon credits - origination to commercialisation
Price indications still limited
> Factors influencing
prices:
–
Project risk and riskmanagement
–
Where in the cycle?
–
Replacement
obligation
> The World Bank has paid
ca. US$ 4 per t CO2-e
(until 2017)
> Standard forestry CDM
credits must be cheaper
Buyers and price limitations
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
high project risks
non-permanence
other
Fund
© 2006 EcoSecurities Group plc
Government
Industry
Carbon credits - origination to commercialisation
What needs to happen to make forestry CDM a
success on the markets?
> Limited market volume
–
Use by the EU governments, Japan and Canada, voluntary users
–
Use of forestry credits is capped to 5% of 1990 emissions (before
2012)
> Forestry CDM has comparative advantages
–
Particular socio-economic and environmental co-benefits
–
Low-cost compliance hedging
> Factors influencing markets success of forestry CDM
–
Will Kyoto markets be short or long?
–
Compliance strategies are yet to be defined
–
Innovative concepts by users and traders
© 2006 EcoSecurities Group plc
Carbon credits - origination to commercialisation
Markets for carbon credits
from forestry CDM
Till Neeff (Senior Consultant)
[email protected]
+44 1865 202 635
© 2006 EcoSecurities Group plc
Carbon credits - origination to commercialisation