PwC comment on Environmental Audit Committee Report on Carbon Markets
* Uncertainty over EU and international targets impacting market confidence
* Traders and market theorists will argue against price floors
* Reserve prices would be needed across Europe, not just UK
* London markets and skills are dominant in £75bn EU and Global emissions trading
A new look at carbon offsets - McKinsey Quarterly
Carbon markets will continue to play a role in pricing—and limiting—emissions, but the opportunity in developing markets may be less promising than once expected.
The article identifies the combination of reasons that sound like people are still figuring out the parameters of the market
Two factors hamper price equalization among the offset market, domestic carbon markets, and the global market as envisioned by the assigned amount units (AAU) established in the 1997 Kyoto Protocol on climate change.
* On the one hand, countries have limited the amount of offsets that can be imported into domestic carbon markets. For instance, the European Union will allow only 1.6 metric gigatons2 (GT) of offset credits to be imported into its market from 2008 to 2020, or on average 0.1–0.2 GT per annum. As this quota will probably be exhausted by 2015, prices on the European carbon market might start to deviate from offset market prices.
* On the other hand, the demand for offsets from Annex I countries is less certain, as the global market is oversupplied with “hot air,”3 which limits the need to buy offset credits. Therefore, national demand for offset credits is typically seen as “soft.”
Time to clean up: UN study reveals environmental cost of world trade - The Guardian
Political pressure is mounting to make businesses pay for the damage they cause to the environment, and the latest UN study assessing the impact of the world's biggest companies is almost certainly the first stage in a concerted campaign to calculate how much damage is caused, what it is worth and ultimately how it can be stopped.
Another report due later this year, The Economics of Ecosystems and Biodiversity, led by the economist and UN special adviser Pavan Sukhdev, will be another significant step towards this goal.
Sukhdev has already warned that damage to the environment will cause the global economy to decline by 7% by the middle of the century if it is not stopped.
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By far the most "damaging" were the utilities, where the $400bn total "cost" was dominated by carbon dioxide and other greenhouse gases blamed for global warming, nuclear waste, acid rain and smog precursors, and metal pollution in water.
The four sectors with the lowest impact – telecommunications, healthcare, technology and financial services – all caused environmental damage totalling less than $25bn each.
After the utilities, the two sectors with the biggest impacts were "basic materials" such as mining, forestry and chemical companies, with costs put at just over $300bn, and consumer goods such as cars, food, drink and toys, at just under $300bn. The breakdown of their activities is very different however.
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Look for the report that Mercer is going to deliver in Oct 2010.
Excluding climate change breaches fiduciary care - Natixis
The integration of climate change into portfolio management remains a difficult task but not doing so is a failure of fiduciary care by asset managers, an institutional investor has claimed.
Carlos Joly, chairman of the Climate Change Scientific Committee of Natixis Asset Management, told IPE the integration of climate change into portfolio management is still in its early stages.
“One way is to take the narrow thematic approach such as investing in alternative energy funds,” he said. “However, that is unsatisfactory for us because it does not address the breadth of climate change impacts throughout the economy. It is also a niche approach, which all investors tend to enter and exit at the same time. Carbon footprinting on an index is a step forward from the thematic approach, but ultimately does not reflect the solutions to the problems,” argued Joly.
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global consultancy Mercer has launched a research project to assess the implications of climate change on strategic asset allocation decisions made last October.
The two-part report– expected to be published in October this year – will consist of a public report in which the broad findings will be shared with the industry, as well as a tailored report for each asset owner that commits to the project, and they in turn will be benchmarked against other project partners.
The study will produce a qualitative framework to outline risks and opportunities by region and asset class, as well as considering the sector effects, which can then be used as an overlay to strategic asset allocation decisions.
Global Investments in Clean Energy Fell Less than Expected in 2009
Climate change: Agri experts paint grim future
India is confronted by a confluence of crises,” he explained. “Increasing energy demand, drought, deforestation, skyrocketing food prices and a population explosion threaten the very fabric of Indian society.” The dry tropics are home to over two billion people, 675 million of which comprise the poorest of the poor. According to Dar, the importance of rain-fed agriculture cannot be overstated. Rain-fed areas contribute over 40 per cent of all food grains and a majority of pulses and vegetables. Dar also accused the Indian government of showing “bias in grain price support and research subsides.” He claimed that “rain-fed agriculture is struggling against policies biased towards more favoured, generally irrigated land”.
Google gets go-ahead to buy, sell energy
Google has expressed a desire for access to larger amounts of renewable energy to help produce the electricity it consumes as part of its vast search-engine empire. Google has long maintained that its goal is to become a carbon-neutral company. As a side note, it's not unusual for large companies to be granted the authority to trade in the wholesale electricity market for the purpose of managing their own energy costs.
As recently as January--after Google Energy made its request to FERC--the company maintained that its expressed immediate wish was for more control over electricity pricing to more effectively gain access to affordable renewable energy.
"Right now, we can't buy affordable, utility-scale, renewable energy in our markets. We want to buy the highest quality, most affordable renewable energy wherever we can and use the green credits," Google representative Niki Fenwick told CNET News at the time.
But it seems that Google may actually enter the energy business. The search giant formed the Delaware-based subsidiary called Google Energy in December and when asked about it, hinted at a future in energy.
"We don't have any concrete plans. We want the ability to buy and sell electricity in case it becomes part of our portfolio," Fenwick told CNET News in January.
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