ResearchPDF Available
CARBON 2013
At a tipping point
One in five emitters surveyed say the EU ETS no longer has a significant impact on
emission reductions. However, survey participants have a positive long-term outlook. 65 percent
believe the EU will adopt the backloading proposal. A majority expect that most of the structural
reforms proposed by the European Commission will be implemented. Around half say the long term
carbon price is a decisive factor in investment considerations.
The CDM market is witnessing a termination of activities of an unprecedented scale.
Out of all surveyed compliance entities, 45 percent report termination of investment activities.
71 percent expect new demand to emerge in the medium term. However, more than half say the
market is beyond its peak and prices will remain low for the foreseeable future, against only 17
percent who disagree with this statement.
California’s emissions trading scheme has caused a quarter of regulated companies
surveyed to reduce emissions and another 20 percent to plan reductions in the future.
Some 57 percent consider the long term carbon price a decisive factor for new investments in their
industry.
The majority of participants in the Australian Carbon Pricing Mechanism believe a cap-
and-trade programme will start in July 2015, even though the elections in September are
likely to yield a change of government. Most regulated companies are preparing for the emissions
trading system by setting up trading operations or reducing emissions.
Among Korean carbon market professionals, two thirds believe the planned carbon
market will begin in 2015, while three quarters are confident it will reduce emissions.
Most survey participants do not expect the carbon price to affect the competitiveness of South
Korean industry in international markets.
A third of respondents believe some of China’s pilot carbon trading programmes will
start in 2013, down from 52 percent a year ago. However, 78 percent of survey participants
share the opinion that the world’s largest emitter will have a nationwide emissions trading
programme eventually.
Carbon market professionals are increasingly disappointed with the global climate
negotiations. For the first time since Copenhagen more than half of respondents are dissatisfied
with the outcome of the latest Conference of the Parties.
TO THE POINT
All rights reserved © 2013 Thomson Reuters Point Carbon
ii
Carbon 2013
About the report:
This report was written and edited by Emil Dimantchev, Ashley Lawson, Marcus Ferdinand, Hongliang Chai,
Anders Nordeng, Hæge Fjellheim, Stig Schjølset, and Frank Melum. For citations, please refer to: Point
Carbon (2013): ”Carbon 2013.” Dimantchev, E. et al. 33 pages.
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All rights reserved © 2012 Thomson Reuters Point Carbon
iii
EXECUTIVE SUMMARY
March 2013
We launch our eighth annual survey at a time when
the world’s largest carbon markets are in a state of
crisis. The EU ETS is gripped with uncertainty. Will
policy makers reduce the oversupply in the market
or will it enter a period of extremely low prices and
minor significance? In 2012, the challenges of the
CDM became more acute as oversupply soared and
prices tumbled. But CO2 trading has become a tale of
two markets – California’s carbon market is showing
resilience, after it withstood a legal challenge last year
and successfully came into force in January 2013.
The EU ETS is viewed as more cost-effective than a
year before. A lower share of participants however
considers it a mature market, after a year of high-level
discussions on market intervention. The recent growth
in the market’s oversupply and the drop in the carbon
price have impacted its ability to reduce emissions. One
in five regulated companies surveyed says that, while it
caused emission reductions in the past, the EU ETS has
little impact today.
However, our survey participants have a positive outlook
for the long-term. As many as 65 percent believe the
EU will pass the “backloading” proposal. The majority
of participants expect the EU to also adopt more radical
reforms - 77 percent expect that EU’s 2020 emission
reduction target will be deepened to 30 percent, while
72 percent think that the scope of the EU ETS will be
expanded.
The CDM market is witnessing an exodus of market
participants – 45 percent of compliance entities
surveyed say they will cease investing in CDM projects
in the next three years, up from only 14 percent in last
year’s survey; and 26 percent plan to stop procurement
and trading of primary CERs, up from only 8 percent
last year. Just over half agree to the statement that the
CDM is beyond its peak and prices will remain low in the
foreseeable future. Amid low prices, four in five project
developers and investors surveyed report readiness to
explore opportunities in the voluntary offset market.
In California, regulated companies have been preparing
for the inauguration of the state’s carbon market by
mainly setting up trading operations and planning
emission reductions. A quarter of compliance entities
surveyed report they have already reduced emissions as
a result of California’s cap-and-trade system. Another
20 percent plan to reduce emission in the future. More
than half consider the long term carbon price to be
a decisive factor in investment decisions. Trading of
California Carbon Allowances has ramped up recently
and will likely continue to accelerate this year. A majority
of carbon market professionals expect the price to be
between $10/t and $15/t in 2013.
More than half of participants continue to expect
Australia’s cap-and-trade programme to begin as
planned in July 2015, despite the likelihood of a change
in government in September 2013. Surveyed companies,
which have an obligation under the Carbon Pricing
Mechanism, are preparing for the scheme by mainly
establishing operations for buying allowances and
offsets and engaging in internal abatement. Regulators
of the Australian and the European carbon markets
announced last year they would link the two schemes
in 2015. However, only 11 percent say they are currently
investing in EUAs.
As South Korea prepares to launch an emissions trading
scheme in 2015, survey participants have positive
expectations about the scheme’s potential. Two thirds
expect the carbon market to become operational as
planned in January 2015. A further 74 percent share the
opinion that the scheme will drive domestic emission
reductions. Most do not expect Korea’s ETS to cause
carbon leakage, but still 18 percent think that it will
hurt Korean industry’s competitiveness in international
markets.
A lower share of participants believes that some of
China’s regional programmes will start this year. This
share is down to a third from 52 percent since last year’s
survey. Yet, most respondents, or 78 percent, believe
that the world’s largest emitter will have a nationwide
emissions trading system eventually. Around 60 percent
expect such a scheme to be in place by the end of 2020.
The latest high level climate change meeting produced
a continuation of the Kyoto protocol, which will cover
around 15 percent of global emissions. Our survey
results confirm a trend of increasing disillusionment
with the multilateral climate negotiations, which began
with the conference in Cancun. The share of participants
who believe there will be a global agreement with
internationally binding targets for major emitters fell to
27 percent from 34 percent from last year. More than
a third of participants expect the current pledge-and-
review climate regime to continue after 2020.
iv All rights reserved © 2013 Thomson Reuters Point Carbon
March 2013
1 INTRODUCTION 1
2 EU ETS 2
2.1 Does the EU ETS work? 2
2.2 Backloading and structural reform 5
2.3 Company positions in phase 3 7
2.4 Use of the credit limit 9
2.5 Price expectations 11
2.6 Aviation 11
2.7 Post-2020 12
2.8 Linking 13
3 CDM 13
3.1 Market strategies 14
3.2 The future of CDM 17
3.3 JI 18
3.4 CER/ERU prices 18
4 NORTH AMERICAN CARBON MARKETS 19
4.1 California/WCI 19
4.2 North American offsets 20
5 CARBON MARKETS IN ASIA AND OCEANIA 22
5.1 Australia 22
5.2 New Zealand 26
5.3 Korea 26
5.4 China 30
6 INTERNATIONAL NEGOTIATIONS 31
TABLE OF CONTENTS
vAll rights reserved © 2013 Thomson Reuters Point Carbon
March 2013
1Carbon market roles 1
2Assessing the EU ETS 2
3EU ETS and internal abatement 3
4EU ETS and carbon leakage 4
5 Carbon price importance for investment decisions 4
6Backloading to the future 5
7Outlook for permanent cancellation of allowances 6
8Timeline for permanent cancellation 6
9Options for market reform 7
10 What best describes your company’s situation in the EU ETS phase 3? 8
11 Use credits or bank them? 8
12 Expectations for CER/ERU surrender for 2012 compliance 9
13 Expectations for average EUA price in phase 3 9
14 Expectations for average CER price in phase 3 10
15 The future of aviation in the EU ETS 10
16 Will the EU ETS exist beyond 2020? 11
17 Will CERs be eligible for compliance after 2020? 11
18 Linking expectations 12
19 Assessing the CDM 12
20a-c Plans for 2013-2015 13
21 Opportunities in the voluntary market 14
22 Developing CDM niches - projects in Least Developed Countries 14
23 Developing CDM niches - investing in PoA projects 15
24 The future of CDM 15
25 The CDM policy dialogue 16
TABLE OF FIGURES
vi All rights reserved © 2013 Thomson Reuters Point Carbon
March 2013
26 Expectations for new demand in the medium term 16
27 Future EU ETS credit restrictions? 17
28 Sources of ERU issuance post-2012 17
29 What price level will spur new investments? 18
30 What price level will incentivize new request for issuance? 18
31 How to be in compliance? 19
32 What best describes your company’s situation in the California cap-and-trade programme
in the first compliance period?
20
33 Impact of the WCI cap-and-trade programme 21
34 Carbon price influence on investment decisions 21
35 Carbon leakage as a result of carbon cost? 22
36 Price expectations for WCI allowances in 2013 22
37 Price expectations for WCI allowances in 2020 22
38 Assessing the North American offset market 23
39 Evaluating North American offset types 23
40 Australia’s cap-and-trade programme a fait accompli? 24
41 How is your company preparing for Australia’s cap-and-trade programme? 24
42 Carbon leakage in Australia 25
43 Linking expectations 25
44 Impact of the NZ ETS on emission reductions 26
45 Will the South Korean ETS take effect in 2015? 27
46 Will the planned ETS reduce emissions in South Korea? 27
47 Carbon leakage in South Korea 27
48 Expectations for the South Korean carbon price in 2015 28
49a-b Towards emission trading in China 28-29
50 Outlook for a Chinese national ETS 29
51 I can’t get no satisfaction 30
52 What do you expect the overall global policy framework after 2020 to look like? 30
53 How likely is a global agreement for post-2020 by 2015? 31
54 ETSs around the world - Asia steps up 32
55 New crediting mechanisms - new opportunities? 32
All rights reserved © 2013 Thomson Reuters Point Carbon
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Carbon 2013
1. INTRODUCTION
The world’s largest carbon
markets are at a tipping point.
Oversupply and consistently low
prices threaten to render the EU
ETS insignificant. Regulators
offered to withdraw allowances
from the market, but the proposal
faces an uncertain future in the
absence of clear support from
a majority of European policy
makers. Political uncertainty also
clouds the prospects for a carbon
market in Australia. Canberra
put a price on carbon in 2012;
however the projected winner of
the 2013 general elections pledges
to repeal it. Meanwhile, prices
for Certified Emission Reductions
(CERs) trade below 1 euro per ton
after collapsing in 2012 amid rising
issuance and low international
demand.
Yet emerging carbon markets offer
silver linings. California regulators
cleared their first auction in
2012 and initiated the state’s
carbon market on 1 January 2013.
Regulated companies are now
implementing their compliance
strategies and trading of permits
is accelerating. Last year South
Korea and China announced plans
for national and regional schemes.
In 2012, international negotiations
under the UNFCCC produced a
continuation of the Kyoto protocol.
The second commitment period
will run from 2013 to 2020
and include around 15 percent
of global emissions. Due to
constraints on public budgets at
home, developed countries in Doha
avoided scaling up current climate
finance pledges.
In this context, we release our
eighth annual survey of the world’s
carbon markets. In Carbon 2013,
we continue to explore how market
participants and observers view
the present and the future of CO2
trading. Our survey covers the EU
ETS, CDM, JI, New Zealand ETS,
the Western Climate Initiative
(WCI) comprised of California and
Quebec, emerging carbon markets
in Asia and Australia, as well as
international negotiations.
This year’s survey ran from 30
January to 24 February and
garnered views from a total of
2,041 respondents, using a web-
based tool. Compared to last year’s
survey, 1,108 fewer participants
took part, a fact which probably
1,108 fewer participants
took part after closures
of carbon market
activities in 2012
Figure 1: Carbon market roles
Categories of respondents, N=1948
Source: Thomson Reuters Point Carbon
1%
2%
6%
6%
7%
8%
13%
14%
16%
28%
0% 5% 10% 15% 20% 25% 30%
Lender (private/public/international bank)
International organisation (e.g. U.N., EU, OECD)
University
National government
Financial trader
Interest group (e.g. NGO, business federation)
Compliance entitiy with emissions subject to an ETS
Other
Project owner/developer/investor in CMD/JI projects
Service provider (e.g. consultancy, exchange)
All rights reserved © 2012 Thomson Reuters Point Carbon
2
March 2013
reflects the recent shrinkage
of carbon market activities,
particularly in the CDM segment.
Figure 1 illustrates the distribution
of participants according to their
role in their respective carbon
markets.
Among the respondents, 28
percent describe themselves as
service providers. In this subgroup,
project management consultants
comprise the largest segment,
accounting for 33 percent of
all service providers. Technical
consultants represent 26 percent
of this subgroup, followed by
professionals involved in research,
analysis, or news, accounting for
14 percent.
The second largest group of
respondents is investors and
developers involved in the primary
CDM and JI markets. These
account for almost 16 percent of
all participants. Within this group,
78 percent are involved in the CDM
market.
Compliance buyers with emissions
subject to a cap-and-trade scheme
represent 13 percent of our sample.
The majority of this group has
a compliance obligation under
the EU ETS. These make up 202
compliance buyers, or 80 percent
of all regulated entities in our
survey. The number of respondents
with emissions covered under
the Australian Carbon Pricing
Mechanism (CPM) is 19, followed by
compliance buyers in the Western
Climate Initiative (California or
Quebec), at 15.
It should be noted that this survey
is conducted among individuals
with significantly more than
average interest in carbon trading.
Since taking the survey is based
in part on individual motivation,
the sampling of various subsets
of the carbon community is less
than scientific and thus susceptible
to bias. All interpretations of
the survey should therefore be
read bearing in mind that the
sample has not been drawn in a
representative way. Furthermore,
inferences to general public
opinion should be avoided.
2. EU ETS
The oversupply of the EU ETS
has continued to rise. Last year
saw the largest gap between
annual supply and demand in the
market’s history. The average price
for European Union Allowances
(EUAs) dropped from double digits
in 2011 to 7.30/t in 2012.
Figure 2: Assessing the EU ETS
Share of respondents agreeing with the given statements, given as options 4 to 5 on a scale from “strongly disagree”
(1) to “strongly agree” (5). Asked to complaince companies, financial institutions, banks, carbon funds, brokers,
governments and consultants involved in the EU ETS, N=766
Source: Thomson Reuters Point Carbon
All rights reserved © 2012 Thomson Reuters Point Carbon
3
March 2013
2.1 Does the EU ETS work
Nearly half of all respondents
consider the EU ETS to be the
most cost-efficient way to reduce
emissions in the EU. The share
of participants who agree with
this statement is at its highest
level since we started the survey
seven years ago. We attribute
this sentiment to the proven
adaptability of the market
to broader macroeconomic
conditions. Last year, the EU ETS
responded to the contracting
economic activity in the EU by
generating lower EUA prices.
The recent market developments,
however, have affected the image
of the EU ETS as a mature market.
Only 27 percent of respondents
say the market is mature, down
by 10 percentage points from last
year. The fact that more and more
financial players have left the
EU ETS due to lower price levels
The low prices reflect the fact that
Europe’s emission reduction target
has become easier to meet. There
are two main reasons for this –
poor economic conditions and
the EU’s policies for promoting
renewable energy and energy
efficiency outside of the EU ETS.
However, many market
participants fear that low EUA
prices have an unintended
consequence – they can make the
EU ETS insignificant. Amid low
prices, governments that aim to
decarbonize their economies can
enact national climate policies
and gradually replace the pan-
European carbon market. Such
threats to the future of the market
have prompted the European
Commission to put forward
proposals to reduce the oversupply
of the EU ETS. Discussions on
these proposals ramped up in
2012 and became the main driver
for EUA prices.
and higher regulatory uncertainty
could be one reason why a lower
share of participants considers the
market mature. Discussions over
market intervention and changes
to the overall market design also
indicate a market which is still in
development.
Respondents’ perspectives on
emission reductions are in line
with previous surveys. Around half
of respondents report the EU ETS
has caused abatement in their
company. This year, we examined
this result further by including
two new response options in the
question – “the EU ETS has caused
and continues to cause emission
reductions” and “the EU ETS did
20 percent say the EU
ETS caused emission
reductions in the past but
is no longer significant
Figure 3: EU ETS and internal abatement
“To what extent has the EU ETS caused your company to reduce its own emissions?” Questions asked to EU ETS
compliance entities, N=178
Source: Thomson Reuters Point Carbon
48% 46% 47% 54% 59% 50%
33%
20%
17% 16% 15% 10% 9%
11% 6%
14% 30% 29% 25% 24% 31% 25%
20% 8% 9% 12% 9% 9% 17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013
Don't know/cannot answer
EU ETS has not caused any emission reductions in our company
EU ETS has caused reductions to be planned but not yet started
The EU ETS did cause reductions in the early years, but has little impact today (asked in 2013)
The EU ETS has caused and continues to cause emission reductions in my company (asked in 2013)
EU ETS has already caused emission reductions in my company
All rights reserved © 2013 Thomson Reuters Point Carbon
4
Carbon 2013
Figure 5: Carbon price importance for investment decisions
“How important is the long-term carbon price (e.g. in 2020) for new
investments in your industry?” EU ETS compliance entities, N=173
Figure 4: EU ETS and carbon leakage
“Has your company considered moving production outside the EU ETS area
because of carbon costs?” Question asked to EU ETS compliance entities, N=173
2% 4% 3% 6% 5% 5%
3% 2% 2% 2% 2% 1%
12% 13% 12% 13% 11% 8%
83% 81% 84% 80% 81% 86%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
No
moving production
Yes, have planned to
move production
Yes, have already
moved production
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
39% 38% 42% 47% 44% 38% 45%
53% 56% 48% 47% 52% 55% 49%
8% 6% 10% 7% 4% 7% 6%
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010 2011 2012 2013
Decisive factor
Influencing calculation, but not decisive
No importance
cause reductions in the early years
but has little impact today”. Of all
respondents, 20 percent say that
the ETS is not reducing emissions
in their companies anymore,
while 33 percent state the system
continues to cause emission
reductions.
The share of respondents who plan
to reduce emissions as a result of
the EU ETS has nearly halved from
11 percent in 2012 to only 6 percent
in 2013. These results imply an
overall weaker incentive to reduce
emissions, which most likely results
from the drop in prices and the
increased regulatory uncertainty.
The share of participants who are
unsure if the market is causing
emission reductions has almost
doubled from 9 percent to 17
percent.
Our respondents see a low risk
of carbon leakage for EU ETS
companies – moving production
to a region with a lower price of
carbon. Compared to previous
years, a somewhat smaller
share of respondents consider
moving production outside the
EU ETS territory (9 percent in
2013 compared to 13 percent in
2012). Meanwhile 86 percent of
the respondents see no reason
for moving production, up slightly
from 81 percent in 2012. One of
the factors behind these results is
likely the generous classification
of companies that are considered
under risk of carbon leakage, which
allows them to receive a larger
amount of allowances for free.
Our participants’ views on the
importance of the long term carbon
price for investment decision have
stayed largely the same. Out of
202 surveyed compliance entities,
45 percent say the long term
EUA price is a decisive factor for
investments in their industry. Since
last year’s survey, there has been a
shift from the share of respondents
who say the price only influences
calculations to those who consider
it a decisive factor.
Despite the current challenges of
the EU ETS, the compliance entities
we surveyed believe the market will
remain significant in the long term.
This belief is likely born out of their
expectations that policy makers
will implement measures to reduce
the oversupply in the market. In
the following section we explore
what participants expect from the
Commission’s proposals to reform
the market.
All rights reserved © 2012 Thomson Reuters Point Carbon
5
March 2013
2.2 Backloading and
structural reform
The European Commission has
proposed to reduce the oversupply
in the market through short- and
long-term measures. Its proposal
for short-term intervention is
to delay the auctioning of 900
million allowances to the later
years of phase 3, known as
“backloading”. This plan would
reduce the oversupply in the
next few years but not change
the overall supply and demand
balance in the market. To address
the long-term balance, the
Commission offers six options.
One of these includes the
cancellation of the “backloaded”
allowances. Other proposals
include deepening the EU’s
emission reduction target and
including other sectors in the EU
ETS.
The proposals for backloading and
Figure 6: Back-loading to the future
“Do you think that backloading will pass the political process and if so, when will the market have clarity?” Asked to all
respondents involved in the EU ETS. N=748
for structural reforms follow two
different legislative processes. We
asked our participants how likely
each is to be implemented and
when it will take effect.
A large majority of respondents,
or 65 percent, expect backloading
to be adopted. Views however
differ as to when the backloading
will take effect. Some 27 percent
believe it will be implemented in
the second half of 2013 while 30
percent say it will come into force
in 2014 or later.
Views also vary depending on
participants’ role in the market.
Out of all compliance entities, 63
percent anticipate backloading.
Financial traders are more
bullish- as many as 75 percent of
them believe allowances will be
backloaded.
Out of all market participants,
only 14 percent do not expect
backloading to pass, but a
significant share of respondents, 21
percent, expresses uncertainty over
if and when the EU will implement
the proposal.
Our survey participants are less
optimistic about the prospects
of permanent cancellation than
for backloading. Less than half,
or 42 percent, believe that some
allowances will be cancelled,
while 31 percent expect no
permanent cancellation at all.
Uncertainty among respondents
is also significant, with 27 percent
saying they are unsure. Among
those who believe allowances will
be cancelled, the largest share
expects a removal of 900 million
tons.
65 percent believe that
backloading will be
adopted
Source: Thomson Reuters Point Carbon
8%
27%
18%
12% 14%
21%
0%
5%
10%
15%
20%
25%
30%
First half of
2013
Second half of
2013
First half of
2014
Second half of
2014 or later
No,
backloading
will not
happen
Don't
know/cannot
answer
Figure 5: Carbon price importance for investment decisions
“How important is the long-term carbon price (e.g. in 2020) for new
investments in your industry?” EU ETS compliance entities, N=173
Figure 4: EU ETS and carbon leakage
“Has your company considered moving production outside the EU ETS area
because of carbon costs?” Question asked to EU ETS compliance entities, N=173
All rights reserved © 2013 Thomson Reuters Point Carbon
6
Carbon 2013
Figure 7: Outlook for permanent cancellation of allowances
“Do you think that there will be a permanent cancellation of allowances, and if so, how many allowances will be
permanently taken out of the market?” Asked to all respondents involved in the EU ETS. N=748
Looking at the likely timeline
for permanent cancellation, 38
percent expect it to take place
in 2016. Meanwhile, more than
half think it will take place
by 2015. This is an ambitious
timeframe since the cancellation
of allowances will require a
significant amendment of the EU
ETS directive.
We also asked survey participants
about when, if ever, they believe
that each of the proposals for
structural market reform will
take place (Figure 9). Most
respondents believe that most
of the proposals will be adopted,
with the greatest confidence
in a strengthening of the 2020
target. The results confirm an
overall consensus in the market
that the EU will act to reduce the
oversupply of the EU ETS.
Figure 8: Timeline for permanent cancellation
“When do you expect a permanent cancellation to start?” Asked to respondents
who expect cancellation. N=314
Source: Thomson Reuters Point Carbon
11%
21%
9%
2%
31%
27%
0%
5%
10%
15%
20%
25%
30%
35%
Yes, 400 Mt
allowances
will be taken
out.
Yes, 900 Mt
allowances
will be taken
out.
Yes, 1200 Mt
allowances
will be taken
out.
Yes, other
volume,
please specify:
No,
permanent
cancellation
will not
happen.
Don’t
know/cannot
answer
Source: Thomson Reuters Point Carbon
30%
27%
38%
5%
2014
2015
2016 or later
Don't
know/cannot
answer
All rights reserved © 2012 Thomson Reuters Point Carbon
7
March 2013
at least 80 percent by 2050,
compared to 1990 levels.
Another option our respondents
see as very likely is an extension
of the scope of the EU ETS. As
many as 72 percent of respondents
believe this will take place either
before or after 2020. The least
likely option according to our
participants appears to be the
implementation of a discretionary
price management mechanism.
Only a third of respondents believe
such a mechanism will ever be
implemented.
2.3 Company positions in
phase 3
Phase 3 of the EU ETS brings
with it major changes to how
allowances are allocated and
to whom. The EU grants free
allocation to the industry and
aviation sectors as well as
Looking at individual options
for reform, the highest share
of respondents, or 77 percent,
believes that the EU will increase
its 2020 emission reduction target
to 30%. One way to do this is to
increase the linear factor, which
determines the rate at which the
cap is reduced each year. There
are 61 percent of respondents who
believe this factor will be revised.
The current linear reduction factor
is 1.74 percent. We project that
an annual reduction in the cap of
1.74 percent will not be sufficient
to meet EU’s long-term climate
target - to reduce emissions by
utilities in Eastern Europe. For
industrial emitters, allowances are
allocated on the basis of efficiency
benchmarks. Installations receive
as many allowances as are needed
to cover most of the emissions
of the 10 percent most efficient
installations, which produce the
same product.
Partially due to the complexity
of this method, the process of
determining the exact amount of
allocation for each installation
has run into delays. When we
launched our survey, the allocation
per installation had not been
determined. Participants, however,
gave us their assessment of their
position in phase 3 (Figure 10).
A large share of participants, or
44 percent, reports a need to buy
allowances at auctions or in the
secondary market. This reflects
the shift from free allocation
Figure 9: Options for market reform
“When (if ever) do you think the proposed structural measures will be implemented?” Asked to all respondents involved in
the EU ETS. N=738
the results confirm an
overall consensus in the
market - the EU will reduce
the system’s oversupply
Source: Thomson Reuters Point Carbon
38%
51%
40% 32%
43%
19%
38% 13%
21% 40% 19%
14%
12%
19%
9%
10%
18%
30%
11% 17%
29%
18% 19%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Increasing the
EU GHG
target to 30%
Retiring a
number of
allowances
Early revision
of the linear
reduction
factor
Extension of
the scope
Limiting the
access to
international
credits
Discretionary
price
management
Don't
know/cannot
answer
Never
After 2020
Before 2020
All rights reserved © 2013 Thomson Reuters Point Carbon
8
Carbon 2013
Figure 10: What best describes your company’s situation in the EU ETS phase 3?
Question asked to EU ETS compliance entities. N=183
Figure 11: Use credits or bank them?
Question asked to EU ETS compliance entities. N=182
Source: Thomson Reuters Point Carbon
12%
8%
12%
2%
44%
22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Suplus EUAs to
sell
Allocation
equals
compliance
needs.
Need allocation
+ some of the
credit limit
Allocation + full
credit limit
needed for
compliance.
Need allocation,
full credit limit,
and to buy EUAs
Don't
know/cannot
answer
Source: Thomson Reuters Point Carbon
28%
22%
4%
47%
24%
23%
5%
49%
28%
23%
7%
42%
40%
18%
6%
37%
0% 10% 20% 30% 40% 50% 60%
Use entire CER/ERU limit in phase 2
Bank up to 50% of the CER/ERU limit into
phase 3
Bank more than 50% share of the CER/ERU
credit limit into phase 3
Don't know/cannot answer
2013
2012
2011
2010
All rights reserved © 2012 Thomson Reuters Point Carbon
9
March 2013
Figure 13: Expectations for average EUA price in phase 3
Asked to all respondents involved in the EU ETS. N=759
to auctioning as the default
method to distribute allowances.
Interestingly, for as many as 12
percent, the free allocation is more
than enough to meet compliance
needs. This could reflect low
production levels compared to
the historical production data
used to determine the amount
of allocation. Since the process
of allocating allowances was not
complete by the time we launched
our survey, understandably 22
percent reported they did not know
their position in phase 3.
2.4 Use of the credit limit
So far, 558 million credits have
been used for compliance in phase
2. The total amount that can be
used for phase 2 compliance
is 1400 million. Last year’s 90
percent drop in prices for Certified
Emission Reductions (CERs) made
it more profitable for compliance
entities to use credits for
compliance.
As a result, our survey participants
Figure 12: Expectations for CER/ERU surrender for 2012 compliance
Asked to all respondents involved in the EU ETS. N=761
Source: Thomson Reuters Point Carbon
10%
9%
13%
10%
8%
7%
42%
More than 500 million
400-499 million
300-399 million
250-299 million
200-299 million
Below 200 million
Don’t know/cannot answer
Source: Thomson Reuters Point Carbon
2%
10%
17%
29% 32%
11%
0%
5%
10%
15%
20%
25%
30%
35%
Less than €1
per tonne
€1 - €2.99 per
tonne
€3 - €4.99 per
tonne
€5 - €7 per
tonne
More than €7
per tonne
No
opinion/cannot
respond
report a higher willingness to
use the entire phase 2 credit
limit for compliance. This share
of respondents has increased by
12 percentage points since last
year to 40 percent. Another factor
influencing participants’ intention
to use their credit limit is the
restriction placed on the use of
CERs from certain project types
from 2013.
Overall, the number of credits
used for 2012 compliance is likely
to increase compared to previous
years. One-third of the respondents
that provided a view on the
expected number of CERs/ERUs
All rights reserved © 2013 Thomson Reuters Point Carbon
10
Carbon 2013
Figure 15: The future of aviation in the EU ETS
“Which flights do you think will be included in the EU ETS after 2013?” Asked to all respondents involved in the EU ETS.
N=727
Figure 14: Expectations for average CER prices in phase 3
Asked to all respondents involved in the EU ETS and CDM. N=1138
Source: Thomson Reuters Point Carbon
12%
17%
21% 21%
14% 14%
0%
5%
10%
15%
20%
25%
Less than €0.50
per tonne
€0.50-0.99 per
tonne
€1 - €2.99 per
tonne
€3 - €5 per
tonne
More than €5
per tonne
No
opinion/cannot
respond
Source: Thomson Reuters Point Carbon
32%
41%
9%
1%
18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Intra-EU and extra-
EU flights
previously included
in the scheme
Only intra-EU
flights
All flights will be
excluded
Other, please
specify
Don't know/cannot
answer
All rights reserved © 2012 Thomson Reuters Point Carbon
11
March 2013
surrendered for 2012 compliance
believe more than 400 million
credits will be used. Compliance
entities surrendered 256 million
credits in 2011. We expect the
2012 credit usage to be between
400 and 450 million tons.
2.5 Price expectations
To gauge price expectations, we
surveyed traders, compliance
entities, project developers, and
service providers with a stake
in the EU ETS about what they
expect the average EUA price
to be in phase 3. The majority of
respondents think that the carbon
price will average €5/t or higher
in phase 3 with over 30 percent
saying that the phase 3 price will
average above €7/t.
These results imply that
respondents expect prices to
increase significantly from current
levels. So far in 2013, EUAs have
traded at an average of €4.90/t.
The higher price expectation is
consistent with the belief most
market participants share that the
EU will reduce the oversupply in
the market. The price projection
of most respondents most
likely reflects a backloading of
allowances as well as structural
reforms such as the cancellation
of allowances, as we think both
will be needed to increase prices
significantly.
We also asked carbon market
professionals involved in the EU
ETS where they expect CER prices
to be in phase 3. The majority
believe the average price will be
above €1/t, but only 14 percent
expect it to be above €5/t.
2.6 Aviation
When they entered the scheme in
2012, airlines had to comply with
Figure 16: Will the EU ETS exist beyond 2020?
Asked to all respondents involved in the EU ETS. N=757
Figure 17: Will CERs be eligible for compliance after 2020?
Asked to all respondents involved in the EU ETS. N=735
77%
11%
12%
77%
12%
10%
69%
18%
14%
0% 20% 40% 60% 80% 100%
Yes
No
Don’t know
2013
2012
2011
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
17%
23%
60%
Yes
No
Yes, but use of CERs will
be further tightened
the EU ETS for all flights arriving
or departing from EEA airports.
However, in November last year,
the Commission proposed reducing
the scope of the aviation sector by
exempting all extra-EU flights from
the 2012 compliance obligation.
The so called “stop the clock” plan
proposes to introduce these flights
again into the scheme in 2013, if
the meeting of the International
Civil Aviation Organization does
not produce a global framework for
reducing emissions in the aviation
sector.
A third of our respondents believe
that extra-EU flights will be
introduced in the scheme again. A
All rights reserved © 2013 Thomson Reuters Point Carbon
12
Carbon 2013
Figure 18: Linking expectations
Asked to all respondents involved in the EU ETS. N=735
Figure 19: Assessing the CDM
Share of respondents agreeing with the given statements, given as options 4
and 5 on a scale from “strongly disagree” (1) to “strongly agree” (5). Asked to
all respondents involved in CDM. N=755
larger share, of 41 percent, believes
that only intra-EU flights will be
included in the EU ETS after 2013.
2.7 Post-2020
A large majority of survey
participants expect the EU ETS
to continue beyond 2020. This is
not surprising considering that
current legislation stipulates the
continued existence of the carbon
market with a cap which falls by
1.74 percent each year. Notable,
however, is a slight decrease of
eight percentage points in the
share of respondents who believe
so. The share of participants who
do not expect the market to exist
post 2020 has also increased
slightly by six percentage points.
The eligibility of CERs will
most likely continue after
2020, according to most of our
respondents. The majority however
believes that there will be further
restrictions on eligible credits.
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
63%
21%
14%
8%
17%
40% 38%
33%
9%
20%
24%
37%
11%
19%
24% 22%
0%
10%
20%
30%
40%
50%
60%
70%
Australia California-Québec
(WCI)
South Korea China (national
and/or provincial)
By 2020 Between 2020 and 2030 After 2030/never Don't know/cannot answer
All rights reserved © 2012 Thomson Reuters Point Carbon
13
March 2013
Figure 20 a-c: Plans for 2013-2015
Asked to compliance entities in the EU ETS, Australian ETS, and NZ ETS. N=176
2.8 Linking
Considering the potential for
linking with other markets, survey
respondents indicate Australia as
the first destination to link with
the EU ETS, after regulators from
both markets last year announced
plans for linkage. A slightly higher
share believes the EU ETS will link
with the WCI (21 percent) than
with South Korea (14 percent) by
2020. A third believe the EU ETS
will link with carbon markets in
China between 2020 and 2030.
3. CDM
The CDM market experienced
severe difficulties in 2012.
Market supply surged as project
developers rushed to register
projects before the end of the year
to ensure their credits are eligible
for use in the EU ETS. Demand,
however, was stagnant – the
outcome of Doha’s Conference
of the Parties (COP) did not
generate any significant new
ambition to reduce emissions and
therefore led to no new demand
for Certified Emission Reductions
(CERs). Prices for secondary CERs
lost 90 percent of their value over
the year.
In this year’s survey, we continued
to ask CDM professionals about
the cost-effectiveness and
maturity of the market to examine
how opinions have changed over
time. Given the precarious state
of the market, we also asked
investors and project developers
how their business activities are
changing and where they see the
The share of participants
reporting termination of
CDM investments has
tripled since last year
Source: Thomson Reuters Point Carbon
5%
14%
38%
42%
14%
30%
33%
24%
45%
16%
30%
8%
0% 20% 40% 60%
Stop completely
Decrease
somewhat/significantly
Stay as it is
Increase somewhat/significantly
Investing directly in CDM projects
2013
2012
2011
4%
9%
47%
40%
6%
21%
44%
29%
16%
25%
37%
22%
0% 20% 40% 60%
Stop completely
Decrease somewhat/significantly
Stay as it is
Increase somewhat/significantly
Purchasing/trading sCERs
2013
2012
2011
CDM market going forward.
Market participants show more
certainty that the CDM is the
most cost-effective way to reduce
emissions in developing countries.
The share of respondents who
agree with this statement has
risen by seven percentage points
since last year’s survey. Similarly,
a higher share of participants view
the market as mature compared
to 2012.
All rights reserved © 2013 Thomson Reuters Point Carbon
14
Carbon 2013
However, despite their upward
trends, these statistics remain fairly
low. Less than half of respondents
think the CDM is the most cost
effective means of climate change
mitigation in the developing world
and less than a third think it is a
mature market.
3.1 Market strategies
Looking at investment and
purchasing plans for the next
three years, respondents report
a notable unwinding of activities.
A whole 45 percent say they will
cease investments in CDM projects.
The share of respondents reporting
termination of investments rose
to 45 percent, up from only 14
percent last year. Likewise, only 8
percent report plans to increase
investments, down from 24 percent
a year earlier.
Half of respondents plan to stop or
decrease procurement or trading of
primary CERs, up from 37 percent
last year. Similarly, the share of
investors surveyed planning to
increase purchasing of primary
CERs is 12 percent, half of what
this share was last year.
The slowdown of CDM activities
is somewhat less pronounced in
the secondary CER market. This
year, 16 percent of participants
report plans to stop purchasing
or trading, up from 6 percent last
year. The secondary market also
boasts the highest share, at 22
percent, of respondents who plan
to increase procurement or trading
activities.
Amid limited demand and low
prices, most participants, 64
percent, say they are ready to turn
to the voluntary offset market.
Meanwhile, only 19 percent of our
respondents do not plan to explore
this opportunity.
Figure 21: Opportunities in the voluntary market?
“If demand for CERs in compliance market keeps low, would you turn to the
voluntary market?” Asked to developers, investors and owners of CDM/JI
projects. N=271
Figure 22: Developing CDM niches - projects in Least Developed
Countries
“Is your company investing in CDM projects based in least developed countries
(LDCs)?” Asked to developers, investors, and owners of CDM/JI projects and
project portfolio managers. N=296
Source: Thomson Reuters Point Carbon
64%
19%
17%
We are rather flexible
to switch to voluntary
market in future
We consider only CDM
Pre-CDM credits of our
projects have already
been traded as VERs
Source: Thomson Reuters Point Carbon
32%
24%
44%
30%
16%
55%
0%
10%
20%
30%
40%
50%
60%
Yes, we have already
invested in LDC-based
CDM projects
No, but we are planning
to invest in LDC-based
projects
No, and we have no
specific plans to do so
2012
2013
All rights reserved © 2012 Thomson Reuters Point Carbon
15
March 2013
Figure 23: Developing CDM niches - investing in PoA projects
“Is your company investing in CDM projects based in least developed countries (LDCs)?” Asked to developers, investors, and
owners of CDM/JI projects and project portfolio managers. N=296
Figure 24: The future of CDM
Participants asked to indicate the degree to which they agree with the following statements. Asked to all respondents
involved in the CDM market. N=745
Source: Thomson Reuters Point Carbon
22%
16% 20%
5%
37%
26%
7%
18%
1%
47%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Have already
invested in at
least one PoA
Have already
invested in at
least one and
plan to invest
in new PoAs
No, but we are
planning to
invest in PoAs
No, but we are
planning to
participate as a
buyer
No, and we
have no
specific plans
to do so
2012
2013
Source: Thomson Reuters Point Carbon
17%
28%
26%
26%
57%
46%
0% 10% 20% 30% 40% 50% 60%
The CDM market is beyond its peak
-
prices are likely remain low in the
foreseable future
The CDM will continue after 2020
Agree
Neutral
Disagree
All rights reserved © 2013 Thomson Reuters Point Carbon
16
Carbon 2013
In late 2012, the CDM Executive
Board enabled the cancellation
of CERs in the CDM Registry.
Project owners can now sell their
credits in the voluntary market
without the need for registration
with another system. However,
the ability to sell CERs will
likely be limited to projects that
bring environmental and social
benefits other than the amount of
emissions abated. Sellers in the
voluntary market must meet the
diverse requirements of buyers,
whose purchases are most often
motivated by corporate social
responsibility and branding.
Credits from projects registered
after 2012 outside of a Least
Developed Country (LDC) will not
be eligible for use in the EU ETS.
However, the majority of CDM
investors surveyed report no plans
to develop projects in LDCs. This
share is higher than last year’s by
11 percentage points, a rise which
can be attributed to the sharp
drop in CER prices. The share of
respondents planning to invest in
LDC countries has also dropped
from 24 percent to 16 percent this
year. The low CER prices mean
that projects in LDC countries
will continue to be driven by
government aid funds rather than
private capital.
A niche segment of the CDM
market, Programme of Activities
(PoA), has seen an important
development since we published
last year’s report. The first PoA
project issued credits last year for
distributing Compact Fluorescent
Light bulbs across Mexico. It
was quickly followed by two
other projects, which issued their
first credits in early 2013, one in
Bangladesh and one in China.
However, the drop in CER prices
has affected the PoA market. The
share of respondents reporting no
Figure 25: The CDM policy dialogue
“How useful do you find the recommendations from the CDM Dialogue?”
Asked to all respondents involved in the CDM market. N=742
Figure 26: Expectations for new demand in the medium term
Asked to all respondents involved in the CDM market. N=739
Source: Thomson Reuters Point Carbon
34%
21%
13%
33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Medium useful, some
of the proposals are
likely to be
implemented
Not very useful, few
of the proposals will
be implemented
Very useful, many
are likely to be
implemented (and
would boost CDM
development)
Don't know/cannot
answer
42%
29%
29%
Yes, in local emission
trading systems (e.g.
China's regional pilots)
Yes, incorporating my
CDM project into
national initiative (as a
part of NAMA for
example)
No
Source: Thomson Reuters Point Carbon
All rights reserved © 2012 Thomson Reuters Point Carbon
17
March 2013
plans for investments rose by ten
percentage points to 47 percent.
Similarly, the share of survey
participants who have invested
in PoAs before and plan to invest
in the future fell by 9 percentage
points to seven percent.
2.2 The future of CDM
Most respondents believe the
woes of the CDM market are here
to stay. More than half agree to
the statement that the market is
beyond its peak and prices will
remain low for the foreseeable
future. Even at low prices, 46
percent of respondents expect
the CDM to continue to exist after
2020. Meanwhile, 28 percent
believe the CDM will cease to exist
by 2020.
Figure 27: Future EU ETS credit restrictions?
“Carbon credits from which CDM project types do you find the most likely to be subject to new restrictions in the EU ETS?”
Asked to participants involved in the EU ETS and CDM markets. N=1106
Figure 28: Sources of ERU issuance post-2012
Will JI issuance come from Russia and/or Ukraine ? Asked to participants
involved in the JI market. N=242
Source: Thomson Reuters Point Carbon
27% 27%
3%
17%
3%
7%
2%
13%
30% 28%
5%
21%
6% 4%
1%
4%
0%
5%
10%
15%
20%
25%
30%
35%
Large
hydro
N2O nitric
acid
Wind
Energy
efficiency
at coal
power
plants
Waste
All
renewable
projects
Other
No further
restrictions
on project
types in
phase 3
2012
2013
Source: Thomson Reuters Point Carbon
43%
33%
23%
1%
Issuances will come from
Ukraine, not from Russia
JI will continue without
issuance from Russia and
Ukraine
Issuance will continue
from both Russia and
Ukraine
Issuances will come from
Russia, not from Ukraine
More than half expect
prices to remain low in
the foreseeable future
All rights reserved © 2013 Thomson Reuters Point Carbon
18
Carbon 2013
The CDM Policy Dialogue in 2012
put forward many proposals to
address the challenges facing
the CDM market. Over half of
our survey participants describe
these talks as somewhat or not
very useful and do not believe
many of the proposals will be
implemented.
However, asked whether they
expect any additional demand in
the medium term, most survey
participants answer in the
affirmative. Some 42 percent
expect CDM credits to be eligible
for compliance in local emission
trading systems such as China’s
regional pilot programs. Another
29 percent believe that other
national initiatives such as
Nationally Appropriate Mitigation
Actions (NAMAs) can draw CERs.
A significant 29 percent, however,
believe there will be no new
demand for CERs in the medium
term.
Most of our participants, 96
percent, expect the EU to impose
further restrictions on eligibility
of CERs. The largest share of
respondents believes that large
hydro will be first on the firing
line, followed by nitric acid and
energy efficiency at coal power
plants. The share of those who
expect no new restrictions has
fallen by nine percentage points
since last year after a recent
proposal in the EU to impose
further restrictions on the use of
ERUs in the EU ETS.
3.3 JI
The European Commission
voted to ban the use of Emission
Reduction Units (ERUs) in phase
3 of the EU ETS from countries
without a second commitment to
the Kyoto protocol. This restriction
will affect credits from Russia,
Figure 29: What price level will spur new investments?
“What price expectation for sCERs/ERUs in 2016 is sufficient for justifying
investments in new CDM/JI projects?” Asked to developers, investors and
owners of CDM/JI projects. N=274
Figure 30: What price level will incentivize new request for issuance?
“What minimum sCER price is needed for you to request issuance for currently
operational CDM and JI projects?” Asked to developers, investors and owners
of CDM/JI projects. N=275
Source: Thomson Reuters Point Carbon
1% 3% 3% 5% 11% 10%
67%
0%
10%
20%
30%
40%
50%
60%
70%
Less
than
€0.25/t
€0.5/t €1/t €2/t €3/t €4/t €5/t or
more
Source: Thomson Reuters Point Carbon
1%
6% 9%
15% 12% 13%
44%
0%
10%
20%
30%
40%
50%
Less than
€0.25/t
€0.5/t €1/t €2/t €3/t €4/t €5/t or
more
which is not likely to sign up to a
second commitment period.
Most respondents believe JI
will continue post-2012 without
issuance from Russia. While 43
percent believe issuance will come
mainly from Ukraine, 33 percent
agree there will be no issuance
from either Russia or Ukraine after
2012.
3.4 CER/ERU prices
How will future investment depend
on the price of CERs/ERUs?
Two-thirds of respondents say a
price at or above €5/t is enough
to justify new investments in CDM
or JI projects. We therefore think
investments will likely be limited
given our forecast for average CER
price of €0.44/t between 2013 and
2020.
All rights reserved © 2012 Thomson Reuters Point Carbon
19
March 2013
Figure 31: How to be in compliance?
Asked to WCI compliance entities. N=15
Source: Thomson Reuters Point Carbon
53% 50%
20%
10% 7% 10%
60%
53%
20%
0%
7% 7%
Preparing to buy
allowances/offset
credits
Reducing our
emissions
Investing in offset
projects
Other We have not
started preparing
Don’t know
2012
2013
CDM projects issued credits in 2012
under contracts negotiated prior
to the collapse in prices. But what
price for CERs will be required in the
future for project owners to request
issuance? A share of 44 percent
report they need a price at or above
€5/t to request issuance. Only 7
percent will continue to issue if
prices are below €1/t. These results
imply that requests for issuance
should decline once current
contracts expire.
4. NORTH AMERICA
Since we published last year’s
survey, the North American
carbon markets have seen several
important developments. In
California regulators set up crucial
market infrastructure and saw the
state’s ETS successfully take effect
on 1 January 2013. Meanwhile,
Northeastern states involved in
the Regional Greenhouse Gas
Initiative (RGGI) agreed to tighten
the market’s cap, which has been
30 percent higher than emissions
since the market’s inception.
Shortly after the destructive
Hurricane Sandy hit New York’s
financial centers, President Obama
put climate back on the national
agenda. In his State of the Union
Speech on 12 February, he urged
Congress to pass market-based
climate change legislation. And
if Congress fails to do so, he
pledged to increase regulation
under current laws such as the
Clean Air Act. Under the Act, the
Environmental Protection Agency
(EPA) can set direct emission limits
on new and existing power plants.
4.1 California/WCI
Preparations for the Californian
carbon market ran full tilt in 2012.
The California Air Resource Board
(CARB), which oversees the state’s
carbon market, launched an online
registry for holding allowances and
offsets and tracking transactions.
CARB held a successful practice
auction in August and later cleared
its first real auction in November
2012. Bidders bought all offered
allowances for the first compliance
period and some allowances
eligible in the second compliance
period beginning in 2015.
This year’s survey garnered the
views of 15 participants with an
obligation in the Western Climate
Initiative (WCI), of which California
is the predominant member.
Seven of the respondents operate
in the power sector, and the rest
represents a mix of manufacturers
including oil, gas and cement
producers.
Ahead of the market’s launch,
companies in our survey continued
compliance activities – internal
abatement, investment in offset
projects, and purchasing allowance
or offsets - in the same manner as
in 2011. About half of companies
Figure 30: What price level will incentivize new request for issuance?
“What minimum sCER price is needed for you to request issuance for currently
operational CDM and JI projects?” Asked to developers, investors and owners
of CDM/JI projects. N=275
All rights reserved © 2013 Thomson Reuters Point Carbon
20
Carbon 2013
are reducing their emissions
internally, nearly the same as last
year.
Looking at companies’ positions,
only one of the 15 respondents
indicated they will receive
allowances for free during the first
compliance period. In comparison
to 2012 when 30 respondents
provided their input, the share of
respondents who would need to
buy either allowances or offsets
almost doubled to 73 percent.
California’s ETS has caused almost
half of our respondents to reduce
emissions or plan reductions in the
future. Four of our participants, or
27 percent, report the system has
already caused them to reduce
emissions. Another 20 percent of
our respondents plan emission
reductions in the future.
Out of the 15 compliance entities
surveyed, 57 percent say the long
term carbon price is a decisive
factor for investments in their
Figure 32: What best describes your company’s situation in the California cap-and-trade programme in the
first compliance period (2013-2015)?
Asked to WCI compliance entities. N=15
44%
7%
15%
33%
40%
27%
3%
30%
73%
7% 7%
13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Need to buy
offsets or
allowances
Receive enough
free allowances,
will not need
offsets
No compliance
obligation in the
first period
Don’t know
2011
2012
2013
industry. Meanwhile, 36 percent
say it influences their calculations.
In the questionnaire, we tried to
assess the number of companies
that would leave the state as
a result of the requirements
to reduce emissions. Of the 15
respondents, 67 percent indicated
their company did not think about
relocating to avoid emissions
regulations. Although this is down
by six percent from last year’s
survey, the share of companies
that have already moved
production or are considering
moving grew to 13 percent.
To gauge price expectations,
we surveyed a pool of 239
professionals involved in North
American carbon markets. A third
of these respondents include
consultants and analysts; another
29 percent are regulated entities,
project developers or financial
traders.
Almost 60 percent said they
expect the price of California
allowances will range between the
price floor of $10.71/t and $15/t
in 2013. This is on par with our
WCI price forecast, as we foresee
a price of $15/t for 2013. About 19
percent of respondents expect the
price will be below the price floor,
and 18 percent said they think the
allowance price will be in the range
of $15-20/t.
Just over half of all participants
foresee prices in the $17-30/t range
by 2020. Some 27 percent were
more bullish, expecting the price to
be between $30 and $50/t. These
price expectations are modest
compared to our price forecast for
WCI allowances of $73/t in 2020.
4.2 North American
offsets
We surveyed 319 professionals
involved in North American carbon
markets about the effectiveness
of offsets from this continent.
More than half say they believe
Source: Thomson Reuters Point Carbon
All rights reserved © 2012 Thomson Reuters Point Carbon
21
March 2013
Figure 34: Carbon price influence on investment decisions
“How important is the long-term carbon price (e.g in 2020) for new
investments in your industry?” Asked to WCI compliance entities. N=15
Figure 33: Impact of the WCI cap-and-trade programme
“To what extent has the California and/or Quebec cap-and-trade
programme caused your company to reduce its own emissions?”
Asked to WCI compliance entities. N=15
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
36%
24%
28%
12%
35%
31%
21%
14%
20% 20%
27%
33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Has not caused
emission
reductions
Reductions to be
planned but not
yet started
Already caused
emission
reductions
Don't know
2011
2012
2013
57%
36%
7%
Decisive factor
It does influence our
calculations, but not
decisively
No importance
the North American offset market
produces real emission reductions,
up by 12 percent from last year.
Forty-five percent said that they
think the American offset market
fosters innovation in emission
reduction methods. This share is
only slightly higher than last year by
six percentage points.
Over the last three years, offset
standards in North America have
consolidated, more methodologies
have been created by various
standards, and almost all offsets are
now listed on a registry. The era of
selling offsets without verification to
a standard is gone. Our respondents
confirmed this trend, and since 2011,
the percentage of respondents who
consider the North American offset
market transparent has grown to 38
percent.
We asked respondents to rank the
value of various project types on 1-5
scale. Most respondents assigned
the highest value to afforestsation,
All rights reserved © 2013 Thomson Reuters Point Carbon
22
Carbon 2013
Figure 36: Price expectations for WCI allowances in 2013
Asked to all respondents involved in North American carbon markets. N=317
Figure 35: Carbon leakage as a result of carbon costs?
Asked to WCI compliance entities. N=15
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
19%
59%
18%
3% 1%
0%
10%
20%
30%
40%
50%
60%
70%
$0-10 (below
auction
reserve price)
$10-15 $15-20 $20-30 $30-40
reforestation, energy efficiency
and projects which destroy ozone
depleting substances (ODS).
REDD/avoided deforestation,
enhanced oil recovery, and soil
sequestration were seen as the
least valuable projects.
5. Asia and Oceania
5.1 Australia
Australia’s Carbon Pricing
Mechanism (CPM) came into effect
on 1 July 2012. Regulated entities
must pay a fixed price for their
emissions until 1 July 2015, when
they will enter a “flexible price
period” – a cap-and-trade system.
The potential for a carbon market in
Australia however is uncertain due
to strong political opposition by the
Liberal Party. Led by Tony Abbott,
the party is projected to win the
Australian 2013 general elections in
September.
Figure 37: Price expectations for WCI allowances in 2020
Asked to all respondents involved in North American carbon markets. N=317
13%
53%
27%
6%
1%
0%
10%
20%
30%
40%
50%
60%
$0-17 (below
auction reserve)
$17-30 $30-50 $50-69 $69-87 (Price
Containment
Reserve price)
20%
7%
3%
13%
3%
13%
Have planned to move
production
Already moved
production
Considering moving
production
73% 67%
2012 2013
production
No
All rights reserved © 2012 Thomson Reuters Point Carbon
23
March 2013
Figure 38: Assessing the North American offset market
Share of respondents who agree with the given statements, given as options 4 and 5 on a scale from “strongly disagree” (1)
to “strongly agree” (5). Asked to all respondents involved in North American carbon markets. N=319
Figure 39: Evaluating North American offset types
“How much value, on a scale of 1 to 5, can you assign to offsets from the following project types? Please answer based on
projects originating in North America.” Asked to WCI compliance entities. N=15
50%
43%
25%
43%
39%
30%
55%
45%
38%
0%
10%
20%
30%
40%
50%
60%
The North American
offset market
produces real emission
reductions
The North American
offset market fosters
innovation in emission
reduction methods
The North American
offset market is
transparent
2011
2012
2013
2,3
2,5
2,6
2,6
2,8
3,1
3,2
3,2
3,4
3,4
3,5
3,5
0 0,5 1 1,5 2 2,5 3 3,5 4
REDD/Avoided Deforestation
Soil Sequestration
Coal Mine Methane
Enhanced Oil Recovery
Industrial Gases (HFC, SF6, etc.)
Agricultural Methane
Landfill Methane
Ozone Depleting Substances (ODS)
Reforestation
Renewable Energy
Afforestation
Energy Efficiency
Average value from 1 to 5
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
All rights reserved © 2013 Thomson Reuters Point Carbon
24
Carbon 2013
However, most of our respondents
believe the cap-and-trade program
will come into force as planned in
2015. This share of respondents
has declined somewhat to 65
percent from 69 percent a year
ago. Observers who believe the
CPM will not start in 2015 have
also seen their share drop by five
percentage points to 20 percent.
A higher share of participants,
equal to 15 percent are uncertain,
compared to 6 percent last year.
Repealing the CPM is an ambitious
campaign pledge on behalf of
Abbot. Current polls place him
in the lead for Prime Minister,
but repealing the CPM would
require that his Liberal Party gain
a majority in the Senate as well
as the House of Representatives,
which appears unlikely. A double
dissolution could give Abbott the
power he needs, but such a bold
political move is unfeasible if
September’s election results are
narrow.
Figure 40: Australia’s cap-and-trade programme a fait accompli?
“Do you think the Australian cap-and-trade programme’s “flexible” period
(with a floating carbon price) will go ahead as planned, and start on 1 July
2015?” Asked to all respondents involved in the Australian carbon market.
N=206
Figure 41: How is your company preparing for Australia’s cap-and-trade programme?
Asked to entities with compliance under the Carbon Pricing Mechanism. N=18
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
69%
25%
6%
65%
20%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No Don't know
2012
2013
61%
67%
0%
17%
6% 6%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Reducing our
emissions
Preparing to
buy
allowances or
offsets
Investing in
international
offsets (CERs,
ERUs)
Investing in
domestic
offsets
Don't
know/cannot
reply
We have not
started
preparing
Investing in
EUAs
All rights reserved © 2012 Thomson Reuters Point Carbon
25
March 2013
Given the regulatory uncertainty
around Australia’s CPM, how do
regulated companies manage
their compliance? A large
majority of participants covered
by the scheme, or 67 percent, are
setting up trading operations for
allowances and offsets. The second
most prominent compliance
strategy is internal abatement.
Some 61 percent or 11 participants
in our sample of regulated entities
say their companies are reducing
or preparing to reduce emissions.
Only a few are directly involved in
purchasing offsets or EUAs. The
rules governing the linkage with
the EU ETS stipulate that entities
can use EUAs for up to 37.5 percent
of their compliance obligation. The
usage of CERs for compliance is
limited to 12.5 percent. There are
no respondents who plan to invest
in these offsets at this time.
Most respondents with a liability
under the CPM, 79 percent, haven’t
considered moving production
abroad because of carbon costs.
The operations of most Australian
emitters, which are tied to the
country’s rich natural resources,
make relocation unlikely. Just two
respondents report having moved
production in 2013.
In 2012, Australia announced it will
forgo its plans to include a price
floor in its cap-and-trade scheme
to allow it to link with the EU ETS.
The removal of the price floor could
also facilitate linking with other
CO2 markets. Figure 43 illustrates
our participants’ views on the
potential for linking between
Australia’s ETS and any one of
three other systems - South Korea,
New Zealand, and the WCI market.
The expectations for linking with
New Zealand’s ETS are high,
with the majority of respondents
Figure 42: Carbon leakage in Australia
“Has your company considered moving production out of Australia because
of carbon costs?” Asked to entities with compliance under the Carbon Pricing
Mechanism. N=19
Figure 43: Linking expectations
“Has your company considered moving production out of Australia because
of carbon costs?” Asked to all participants involved in the respective carbon
markets. N=456 (WCI), N=228 (New Zealand), N=240 (South Korea)
84%
6% 3% 0%
6%
79%
5% 0%
11% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
No We have
considered to
move
production
We have
planned to
move
production
We have
already moved
production
Don't know
2012
2013
Source: Thomson Reuters Point Carbon
14% 22%
8%
40%
56%
47%
23%
12%
28%
23%
10% 17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
South Korea New Zealand WCI
Don't know/cannot answer
No, they will not link
Yes, but they will link later
than in 2018
Yes, they will link in 2018
Source: Thomson Reuters Point Carbon
All rights reserved © 2013 Thomson Reuters Point Carbon
26
Carbon 2013
anticipating a link before 2018.
A large share of participants, or
47 percent, believes Australia’s
system will link with the WCI
market comprised of California and
Quebec and that such a link will
occur before 2018. Respondents
are the least optimistic about
linking between Australia and
South Korea.
5.2 New Zealand
The New Zealand ETS, which
started operating in 2008,
mandates companies to surrender
New Zealand Units (NZUs) for their
emissions. It is the only mandatory
carbon market to include the
forestry sector, which can act
as a carbon sink by increasing
forest cover and earn NZUs in the
process.
This year’s survey garnered the
views of eight participants in the
New Zealand ETS, down from 19
last year.
In this year’s survey, 19
respondents are companies
covered by the New Zealand ETS,
down from 32 last year.
This year’s results strengthen a
trend observed since last year - an
increasing share of participants
report that emission reductions
have taken place due to the New
Zealand ETS. Similarly, the percent
of respondents who report no
emission reductions has been
decreasing since 2011.
5.3 Korea
The past year was also an
eventful one for carbon markets
in South Korea. On 2 May 2012,
the National Assembly passed a
cap-and-trade bill, with a nearly
unanimous vote. The government
decided on basic market features
and allocated responsibilities to
different governmental agencies
before signing the bill into law
in November. It also set up a
committee to establish design
details such as the cap, allocation
methods, offset use, and banking
and borrowing rules. The deadline
for finalizing these rules is July
2014. The market is to start
operating in January 2015.
Out of 80 observers surveyed, a
majority believe that the system
will start on time, as shown in
Figure 45. There is a generally
positive attitude towards the
carbon pricing scheme in Korea.
The ETS proposal enjoys strong
support from both the conservative
party in power and the liberal
opposition, who believe an
emission trading scheme will spur
clean-technology innovation.
Observers also believe that it
Figure 44: Impact of the NZ ETS on emission reductions
“To what extent has the New Zealand Emission Trading Scheme (NZ ETS) caused your company to reduce emissions?”
Asked to NZ ETS compliance entities. N=8
Source: Thomson Reuters Point Carbon
16%
22%
47%
16%
26% 26%
32%
16%
25%
38%
25%
13%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Caused
reductions to be
planned but not
yet started
Already caused
emission
reductions in
my company
Has not caused
any emission
reductions in
our company
Don't
know/cannot
answer
2011
2012
2013
All rights reserved © 2012 Thomson Reuters Point Carbon
27
March 2013
will also reduce emissions.
An overwhelming majority of
participants, or 74 percent,
believe that the Korean ETS
(KETS) will deliver climate change
mitigation. Korea has pledged to
reduce emissions by 30 percent
compared to business as usual by
2020.
The key concern of the Korean
industry, which is heavily export-
oriented, is whether a cap-and-
trade system will cause them
to lose competitiveness against
rivals from countries with no cap
on emissions. Such a scenario
could lead to carbon leakage
- while reducing emissions at
home, the KETS could cause
relocated companies to increase
emissions elsewhere. Most of
our respondents dismiss such a
scenario, with 62 percent stating
that the KETS will not reduce
industries’ competitiveness.
Some 18 percent believe
competitiveness will be affected,
and 20 percent are uncertain.
Asked what they think a
reasonable price of allowances
would be in 2015, most
respondents with an opinion, or
25 percent, point towards the
$10-14/t range. Therefore, price
expectations of these observers
fall in line with the current price of
allowances in California, a market
of roughly the same size as the
KETS.
Price levels however are too early
to call, as market design rules
have not been finalized yet. This
explains why just over half of
our respondents do not have an
opinion on what a reasonable
price should be.
Figure 45: Will the South Korean ETS take effect in 2015?
Asked to all respondents involved in the Korean carbon market. N=80
Figure 46: Will the planned ETS reduce emissions in South Korea?
Asked to all respondents involved in the Korean carbon market. N=78
Figure 47: Carbon leakage in South Korea
“Do you think that the KETS will negatively impact Korean industry
competitiveness on international markets?” Asked to all respondents involved
in the Korean carbon market. N=79
66%
19%
15% Yes
No
Don't know/cannot
answer
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
74%
10%
15% Yes
No
Don't know/cannot
answer
62%
18% 20%
0%
10%
20%
30%
40%
50%
60%
70%
No Yes Don't know/cannot answer
74 percent believe the
Korean ETS will reduce
emissions
All rights reserved © 2013 Thomson Reuters Point Carbon
28
Carbon 2013
Figure 48: Expectations for the South Korean carbon price in 2015
“What do you think would be a reasonable price for the Korean allowances in 2015?” Price is given on a per ton basis.
Asked to all respondents involved in the Korean carbon market. N=80.
Figure 49a: Towards emission trading in China - a comparison of respondents
“Do you think the seven planned regional pilot emission trading schemes in China will be operational in 2013?” Asked to
all survey respondents. N=1768
4% 8%
25%
6% 5% 1%
51%
0%
10%
20%
30%
40%
50%
60%
₩0-5,000 ($0-
4.5)
₩5,001-
₩10,000 ($4.5-
9)
₩10,001
-15,000
($9-14)
₩15,001
-20,000
($14-18)
₩20,001-25,000
($18-23)
More than
₩25,000 ($23)
Don't
know/cannot
answer
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
6%
30%
26%
8%
31%
20%
52%
20%
5% 5%
0%
10%
20%
30%
40%
50%
60%
Yes, all of
them
Yes, but only
some of
them
No, but some
of them by
2015
No, none of
them
Don't
know/cannot
answer
All
respondents
Chinese
respondents
All rights reserved © 2012 Thomson Reuters Point Carbon
29
March 2013
Figure 49b: Towards emission trading in China - changes from last year
“Do you think the seven planned regional pilot emission trading schemes in China will be operational in 2013?” Asked to
all survey respondents. N=1768
Figure 50: Outlook for a Chinese national ETS
“When do you think China will establish its national ETS?” Asked to all survey participants who expressed an opinion in
the question in Figure 49. N=1219
11%
52%
19% 18%
6%
30% 33% 31%
0%
10%
20%
30%
40%
50%
60%
Yes, all of them Yes, but only
some of them
No, none of them Don't know
2012
2013
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
All rights reserved © 2013 Thomson Reuters Point Carbon
30
Carbon 2013
5.4 China
We asked our survey respondents
about the potential for carbon
markets in China and the most
likely date of implementation.
Figure 49a provides a comparative
view of the results given by all
respondents and those given only
by respondents located in China, a
total of 66 respondents.
Out of all participants, 30 percent
believe that some of the seven
pilot emission trading schemes will
start in 2013. Another 26 percent
believe that none of the pilots will
be ready by 2013, but that some
will become operational in 2015.
In comparison, 70 percent of our
Chinese respondents believe
at least some of the pilots will
begin in this year, which shows
local carbon stakeholders are
much more optimistic about the
prospects of China’s pilot ETSs
than their foreign counterparts.
Figure 49b compares the prospects
for China’s pilot programs to
last year’s results. Notably, the
share of respondents who expect
some regional systems to begin
operating in 2013 has dropped
from 52 percent to 30 percent.
On the prospects of a national
Chinese ETS, as much as 60
percent of our respondents believe
that such a market will take place
by 2020. The expectations of
Chinese respondents are even more
positive as 78 percent foresee a
national Chinese ETS by 2020.
Figure 51: I can’t get no satisfaction
“How satisfied are you with the final outcome of the Doha Climate Change
Conference (COP-18/CMP-8)?” Asked to all survey respondents. N=1754
Figure 52: What do you expect the overall global policy framework after
2020 to look like?
Asked to all survey respondents. N=1743
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
6%
21% 21%
13%
22%
39% 32%
26%
72%
41%
47%
60%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Copenhagen,
2009
Cancun, 2010 Durban, 2011 Doha, 2012
Satisfied
Neutral
Dissatisfied
39%
34%
18%
7%
3%
39%
27%
22%
9%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
A pledge-and-
review framework,
covering major
emitters
Internationally
binding targets for
major emitters
No framework,
countries fail to
agree
No opinion Other
2012
2013
for the first time since
Copenhagen, the
majority of respondents
express dissatisfaction with the
COP outcome
All rights reserved © 2012 Thomson Reuters Point Carbon
31
March 2013
Even as most respondents believe
a national ETS will eventually
be in place in China, we believe
the reliability of reported data,
verification and enforcement
are still the main challenges to
overcome before China can have a
transparent and liquid market.
6. INTERNATIONAL
NEGOTIATIONS
The key achievement of last year’s
COP in Doha was the decision to
extend the Kyoto Protocol in the
form of a second commitment
period from 2013 to 2020. Parties
in Doha also set the stage for future
negotiations towards a global post-
2020 climate regime, by agreeing
on a timetable towards 2015, the
deadline for reaching a global deal
set.
Since 2009, we have asked carbon
market participants and observers
about their level of satisfaction
with each annual COP. This has
allowed us to build a time series of
satisfaction levels (Figure 51).
This year, the majority of
respondents, or 60 percent, is
dissatisfied with the outcome
of Doha’s COP. The level of
dissatisfaction has increased
significantly since negotiators
gathered in Durban, by 13
percentage points. Similarly,
the level of satisfaction with
the multilateral climate change
negotiations has fallen by 8
percentage points to 13 percent.
In Durban, negotiators agreed to
put in place by 2015 a “protocol,
another legal instrument or an
agreed outcome with legal force
under the Convention applicable
to all Parties”. This framework
would then be implemented after
2020. The Doha climate summit
elaborated a timeline for reaching
Figure 53: “How likely do you think it is that the new global
agreement (for post-2020) will be decided in 2015?”
Asked to all survey respondents. N=1738
this deal. Parties agreed that a
draft text for the 2020 agreement
should be ready by May 2015 for
final adoption by the 2015 COP
(in Paris). How has this impacted
our respondent’s expectations for
a global policy framework post-
2020?
Around one quarter of respondents,
or 27 percent, continues to expect
an international deal on a globally
binding emission reduction
scheme. This group has shrunk
since the Durban climate summit,
when 34 percent believed a global
deal would emerge. Meanwhile,
the share of participants who do
not anticipate a global framework
has edged up to 22 percent, from
18 percent previously. The largest
portion of respondents, or around
39 percent, expects a pledge-
and-review system covering major
emitters, which would represent
a continuation to the current
framework.
Looking at the likely timeline for a
global binding framework, almost
half of respondents, or 46 percent,
believe that the UNFCCC will fail to
reach an agreement by 2015. Only
12 percent of respondents expect
the agreement to be sealed by the
meeting in Paris. Some 35 percent
see an equal probability whether
the deadline will be met or not.
Our respondent’s cautious outlook
reflects the very challenging
timeline facing UNFCCC parties.
The agreement to extend the Kyoto
Protocol, a comparatively simpler
task, took seven years. Some
respondents commented that a
vague overall framework may be
agreed in 2015, but that details and
even commitments will be added
later.
Until such a deal emerges, our
respondents suggest a pledge-and-
Source: Thomson Reuters Point Carbon
All rights reserved © 2013 Thomson Reuters Point Carbon
32
Carbon 2013
Figure 54: ETSs around the world - Asia steps up
“Which of the countries below will have mandatory cap-and-trade at the national level in 2017?” N=1606
Figure 55: New crediting mechanisms - new opportunities?
“Do you think the following types of credits will become tradable in the coming years?” N=1694
44%
37%
34%
26% 25% 24%
17% 16% 15%
11% 9% 7%
38%
33%
37%
27% 29%
23%
17%
12% 12% 11%
8% 9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2012
2013
Source: Thomson Reuters Point Carbon
Source: Thomson Reuters Point Carbon
18% 20%
36% 31%
44% 49%
38% 40%
14%
17% 11% 14%
23% 14% 16% 16%
0%
20%
40%
60%
80%
100%
NAMA credits New market
mechanism
credits
Bilateral credits REDD credits
No
Yes, by 2030
Yes, by 2020
Yes, by 2016
All rights reserved © 2012 Thomson Reuters Point Carbon
33
March 2013
review system will likely continue
to govern the world’s mitigation
efforts. Nations will set their
own emission reduction targets
with no legal responsibilities
towards an overarching global
target. Stemming the rise of
global greenhouse gas emissions
will therefore depend on the
emergence of national climate
policies. But how likely are nations
to implement cap-and-trade
schemes in the near future?
Survey participants state that
South Korea and Japan have the
highest probability of enacting
national carbon markets by 2017.
The third most likely host of a
national cap-and-trade measure
in their view is China. Some 33
percent of respondents believe the
world’s largest emitter will put in
place a national emissions trading
scheme by 2017. Canada comes
next (29 percent), followed by
Brazil (27 percent) and the US (23
percent).
Expectations for national CO2
markets have shifted somewhat
since last year’s survey. The share
of respondents who foresee a
national Chinese ETS by 2017 has
fallen by four percentage points,
which likely reflects the lack of
progress on market infrastructure
development seen from the
country. Meanwhile, the outlook
for a Canadian ETS has improved,
following the emergence of a
carbon market in Quebec on 1
January 2013. Regarding a US
carbon market, expectations have
remained largely flat.
Despite the implementation of
California’s ETS and President
Obama’s climate change pledge
in his inaugural speech, our
respondents’ views likely reflect
the difficulties of passing cap-
and-trade legislation through the
currently divided Congress.
In Doha, parties agreed that the
credits from market mechanisms
other than CDM or JI can be used
to meet Kyoto commitments. These
could include credits from reducing
emissions from deforestation
and degradation (REDD), from
so-called “nationally appropriate
mitigation measures” (NAMAs)
in developing countries, and from
bilateral projects financed by an
investor country without need for
UN approval. The “new market
mechanisms”, which are still in
early stages of development, could
generate sectoral credits from
reductions below a sector level
emission baseline.
Our survey respondents are most
optimistic for the emergence of
bilateral credits and credits from
REDD activities. REDD is the
most internationally advanced
crediting mechanism to date.
California signed an agreement
with the Brazilian state of Acre and
the Mexican state of Chiapas to
cooperate on generating credits
from avoided deforestation. In
2012, Acre passed legislation on
REDD and collaborated with a
private project developer to issue
the first credits from the state in
2013 verified through the Verified
Carbon Standard. Japan has also
come a long way in developing its
bilateral crediting mechanism.
Participants are most bearish on
the prospects of credit generation
from NAMAs. Some 18 percent
anticipate such credits by 2016 and
62 percent by 2020. At the same
time, 23 percent do not believe
NAMAs will ever generate credits.
for compliance.
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Article
Public awareness has an important effect on the legislation and implementation of climate change policies. Against the backdrop of the "Big Data Era," social media is an appealing and promising tool for a timely and complete understanding of public perception and attitudes towards climate policies. This paper examines the public's spontaneous attention and awareness about carbon emissions trading (ETS). Tweets related to the EU-ETS, published between 2008 and 2019, were collected for multi-dimensional analysis. Empirical results show several important findings. First, public attention on the EU-ETS has increased significantly since 2011. Second, government officials and industry practitioners have a stronger influence in the discussions than the public and industrial enterprises. Third, topic followers mostly gathered in Belgium (16.65%), the UK (11.6%), and some non-regulated countries like the US and Australia. Fourth, the public mainly focused on the policies and legislation, allowance price, and allocation. The innovation of this study rests in the development of a social media data-based research framework to examine the public's cognition of climate policies, which integrates the advantages of public social media, social network analysis, and text topic analysis. This study provides comprehensive analysis and support for climate policy implementation and public acceptance improvement.
ResearchGate has not been able to resolve any references for this publication.