The Tokyo Stock Exchange Group Inc. (TSE) and the Tokyo Commodity Exchange (TOCOM) will jointly study carbon trading systems with an eye to possibly creating a domestic market, sources said.
TSE, the operator of Japan's largest stock exchange, and TOCOM, the market for futures trading in precious metals, aluminum and oil, will form a study panel by the end of this month, according to the sources.
It is part of a broad agreement to be signed by the two entities as early as Wednesday to raise Japan's international competitiveness, the sources said.
While trading in greenhouse gas emissions credits emerged as a thriving business in Europe, Japan dragged its feet in creating a market due to opposition from business circles.
Even so, the two exchanges said there is clearly a growing need for Japan to have one as it comes under stronger pressure to reduce emissions of carbon dioxide (CO2) and other greenhouse gasses.
Trading in emissions rights forms part of the mechanisms introduced under the 1997 Kyoto Protocol to fight global warming.
Countries and companies unable to meet the CO2 reduction targets are allowed to buy emissions credits from those which have cut emissions beyond their goals.
In 2005, the European Union introduced a system to set emission quotas to each company within the region that will allow those unable to meet the criteria to buy credits from those which more than met theirs.
The system is aimed at promoting CO2 reductions on the strength of market forces as successful cuts would lead to benefits while greater emissions mean higher costs.
There has been growing interest in the United States and Canada in following the EU's lead.
In Japan, however, Nippon Keidanren (Japan Business Federation) and related organizations are opposed to the introduction of such systems on grounds emission quotas would mar competitiveness.
Within the government, the Environment Ministry is studying a domestic emission credits system while the Ministry of Economy, Trade and Industry remains cautious.
The two exchanges plan to study systems abroad, such as the European Climate Exchange, to see how they function and to determine the demand for such trading in Japan.
The panel is expected to propose a system that will meet Japan's needs and circumstances as well as point to possible problems.
Under the Kyoto Protocol, Japan is obliged to cut greenhouse gas emissions by 6 percent on average between 2008 and 2012 from levels in 1990.
But meeting that goal appears to be difficult because preliminary figures show that Japan's emissions in fiscal 2006 actually rose 6.4 percent from the 1990 levels.
Against this background, the two exchanges apparently decided it is possible that the need for a domestic market will emerge naturally, according to the sources.(
Showing posts with label GlobalCarbon Trading Market. Show all posts
Showing posts with label GlobalCarbon Trading Market. Show all posts
Thursday, January 17, 2008
HKEx looks to carbon trading
Hong Kong Exchanges and Clearing on Wednesday said it was looking to partner with an overseas exchange this year to create a trading platform for carbon credits or other emissions-related products.
It joins a number of its Asian rivals hoping to tap into the increasingly mature market. Mumbai-based Multi Commodity Exchange of India and the New Zealand Stock Exchange have both announced similar plans.
Most emissions-related trading take place in Europe under the European Union’s emissions trading scheme, with a smaller amount also traded through the Kyoto Protocol’s clean development mechanism.
Exchanges, however, have faced strong competition. In the EU ETS market, less than one-third of the carbon trade was conducted on exchanges, with the rest occurring either over the counter through brokers or in bilateral agreements.
Paul Chow, HKEx chief executive, yesterday also announced a plan to introduce trading in gold-related products within this year.
It joins a number of its Asian rivals hoping to tap into the increasingly mature market. Mumbai-based Multi Commodity Exchange of India and the New Zealand Stock Exchange have both announced similar plans.
Most emissions-related trading take place in Europe under the European Union’s emissions trading scheme, with a smaller amount also traded through the Kyoto Protocol’s clean development mechanism.
Exchanges, however, have faced strong competition. In the EU ETS market, less than one-third of the carbon trade was conducted on exchanges, with the rest occurring either over the counter through brokers or in bilateral agreements.
Paul Chow, HKEx chief executive, yesterday also announced a plan to introduce trading in gold-related products within this year.
Wednesday, December 19, 2007
It sounds attractive - does it work as a way of dealing with climate change?
Trading, whether between companies or countries, only works if emissions are reduced enough to contain global warming. Creating a market does not, by itself, reduce emissions.
Moreover, the benefits could be severely limited if trading is not comprehensive.
As important as what or who is included is what is not included.
Carbon dioxide represents only part - albeit a crucial part; more than 70% - of all greenhouse gases.
Furthermore, the US, the world's largest CO2 polluter, excluded itself by choosing not to ratify Kyoto.
And while the US is the biggest emitter today, China, which is projected to exceed the US in emissions by mid century, has no obligation to reduce emissions.
Even within trading schemes such as the ETS, whole sectors' emissions are excluded, such as transport, homes and the public sector.
Aviation is the fastest-growing source of CO2 emissions, and some experts have calculated that if it were included, the UK's entire allowance would soon be used up.
Critics say trading carbon condones the idea of "business as usual" and fails to emphasise the need to invest in renewable energies and move away from fossil fuels.
Trading, while it may acknowledge the threat posed by global warming, does not address the seriousness and scale of the problem, argue environmentalists.
For trading to work it would have to become much broader - perhaps even embracing personal carbon allowances for individuals, some say.
More and more scientists are saying that the carbon dioxide ceilings under the treaty are too high - perhaps far too high - to help avert serious climate change.
http://officialglobalwarming.blogspot.com/
Moreover, the benefits could be severely limited if trading is not comprehensive.
As important as what or who is included is what is not included.
Carbon dioxide represents only part - albeit a crucial part; more than 70% - of all greenhouse gases.
Furthermore, the US, the world's largest CO2 polluter, excluded itself by choosing not to ratify Kyoto.
And while the US is the biggest emitter today, China, which is projected to exceed the US in emissions by mid century, has no obligation to reduce emissions.
Even within trading schemes such as the ETS, whole sectors' emissions are excluded, such as transport, homes and the public sector.
Aviation is the fastest-growing source of CO2 emissions, and some experts have calculated that if it were included, the UK's entire allowance would soon be used up.
Critics say trading carbon condones the idea of "business as usual" and fails to emphasise the need to invest in renewable energies and move away from fossil fuels.
Trading, while it may acknowledge the threat posed by global warming, does not address the seriousness and scale of the problem, argue environmentalists.
For trading to work it would have to become much broader - perhaps even embracing personal carbon allowances for individuals, some say.
More and more scientists are saying that the carbon dioxide ceilings under the treaty are too high - perhaps far too high - to help avert serious climate change.
http://officialglobalwarming.blogspot.com/
How big is the market today?
Exact figures are hard to come by because the market is still fairly new, since data is not easily available and since several different schemes exist, not all directly comparable.
The World Bank, one of the main players in carbon financing, estimates the value of carbon traded in 2005 to be about $10bn.
The Bank believes the carbon market has the potential to bring more than $25bn (£14bn) in new financing for sustainable development to the poorest countries and the developing world.
Trading firms, brokers and banks are among those expected to make money through commissions for organising carbon deals.
The Bank's own carbon finance fund has more than doubled from $415m in 2004 to $915m last year
http://officialglobalwarming.blogspot.com/
The World Bank, one of the main players in carbon financing, estimates the value of carbon traded in 2005 to be about $10bn.
The Bank believes the carbon market has the potential to bring more than $25bn (£14bn) in new financing for sustainable development to the poorest countries and the developing world.
Trading firms, brokers and banks are among those expected to make money through commissions for organising carbon deals.
The Bank's own carbon finance fund has more than doubled from $415m in 2004 to $915m last year
http://officialglobalwarming.blogspot.com/
What is the idea behind carbon trading?
Carbon trading is a market mechanism intended to tackle global warming. Though it dates back to 1989 it only took off as a market after the Kyoto Protocol was signed. Under the Kyoto treaty - which came into force in February 2005 - industrialised countries must reduce total greenhouse gas emissions by an average 5.2% compared with 1990 levels between 2008-2012.
The most important greenhouse gas contributing to global warming is carbon dioxide, which is mainly emitted by burning fossil fuels. Under Kyoto, each participating government has its own national target for reducing carbon dioxide emissions.
Other reduction initiatives - not part of Kyoto - include company-based schemes, which also have specific targets.
The key idea behind carbon trading is that, from the planet's point of view, where carbon dioxide comes from is far less important than total amounts.
So, rather than rigidly forcing the reduction of emissions country-by-country, (or company-by-company), the market creates a choice: either spend the money to cover the costs of cutting pollution (emissions), or else continue polluting (emitting), and pay someone else to cut their pollution.
In theory this enables emissions to be cut with the minimum price tag.
http://officialglobalwarming.blogspot.com/
The most important greenhouse gas contributing to global warming is carbon dioxide, which is mainly emitted by burning fossil fuels. Under Kyoto, each participating government has its own national target for reducing carbon dioxide emissions.
Other reduction initiatives - not part of Kyoto - include company-based schemes, which also have specific targets.
The key idea behind carbon trading is that, from the planet's point of view, where carbon dioxide comes from is far less important than total amounts.
So, rather than rigidly forcing the reduction of emissions country-by-country, (or company-by-company), the market creates a choice: either spend the money to cover the costs of cutting pollution (emissions), or else continue polluting (emitting), and pay someone else to cut their pollution.
In theory this enables emissions to be cut with the minimum price tag.
http://officialglobalwarming.blogspot.com/
Tuesday, December 11, 2007
GlobalCarbon Trading Market
The global market in carbon trading tripled last year to $30bn (£15bn) but its role in the battle against climate change could be hit by worries about the effectiveness of unregulated carbon offset projects, the World Bank warned yesterday.
The bulk of carbon trading, some $25bn, was carried out through the sale of allowances under the European Union's emissions trading scheme - which covers industries pumping out large amounts of carbon dioxide - according to the bank's seventh annual carbon market intelligence study which was published yesterday.
Officially-backed carbon offset projects, where, under the Kyoto agreement, companies and countries can invest in emission reduction schemes in developing countries and economies in transition, doubled to $5bn, the report said.
The World Bank also estimated that carbon purchases have raised $14bn in "associated investments" supporting clean energy in developing countries since 2002.
"These numbers are relevant because they demonstrate that the carbon market has become a valuable catalyst for leveraging substantial financial flows for clean energy in developing countries," Warren Evans, the World Bank's director of environment said.
"The greenhouse gas markets continued to grow and mature in 2006," Jack Cogen, president of Natsource LLC, an emissions and renewable energy asset management firm, said.
"In 2006 we saw growing activity in this asset class not only from industrial companies, but also from newer participants, like commercial firms, banks and financial institutions that recognise the attractiveness of this market for managing risks and earning returns on capital."
Carbon trading is seen as a market based alternative to either direct taxation or a "command and control" approach which would directly impose emission limits.
However the EU's emission trading scheme has come in for criticism because allowances under the initial phase proved too generous, causing a fall in the carbon price, offering little incentive to cut emissions. Allocations have been toughened for the second phase, which runs from 2008 to 2012. Supporters believe the new levels will make the system more effective and that the European model could provide the hub of a global carbon trading mechanism in coming years.
As well as reducing emissions in developed economies, policymakers are hopeful that carbon trading will help provide the finance to clean up heavy industry in poor countries where economic expansion is set to increase emission levels.
The World Bank cautioned that moves in carbon offsets outside the regulated "cap and trade" systems could pose a threat to the development of the overall market. There has been growing criticism that schemes where companies or individuals seek to offset their emissions by investing in projects to cut emissions elsewhere, are either not delivering or funding developments that would have been financed anyway. Critics say that the system needs a greater degree of standardisation.
The World Bank said that on some estimates voluntary carbon offset schemes could rise to 400m tonnes by 2010. It added: "This high potential voluntary sector, however, lacks a generally acceptable standard, which remains a significant reputation risk not only to its own prospects, but also to the rest of the market, including segments of regulated emissions trading and project offsets."
The concern was underlined yesterday by Yvo de Boer, the head of the UN Climate Change secretariat.
He said the official clean development programme (CDM) was working well but some analysis of the scheme was failing to differentiate between the highly regulated CDM and a growing number of unregulated or self regulated enterprises. "Some confusion can be expected, but some analysis of the CDM
The bulk of carbon trading, some $25bn, was carried out through the sale of allowances under the European Union's emissions trading scheme - which covers industries pumping out large amounts of carbon dioxide - according to the bank's seventh annual carbon market intelligence study which was published yesterday.
Officially-backed carbon offset projects, where, under the Kyoto agreement, companies and countries can invest in emission reduction schemes in developing countries and economies in transition, doubled to $5bn, the report said.
The World Bank also estimated that carbon purchases have raised $14bn in "associated investments" supporting clean energy in developing countries since 2002.
"These numbers are relevant because they demonstrate that the carbon market has become a valuable catalyst for leveraging substantial financial flows for clean energy in developing countries," Warren Evans, the World Bank's director of environment said.
"The greenhouse gas markets continued to grow and mature in 2006," Jack Cogen, president of Natsource LLC, an emissions and renewable energy asset management firm, said.
"In 2006 we saw growing activity in this asset class not only from industrial companies, but also from newer participants, like commercial firms, banks and financial institutions that recognise the attractiveness of this market for managing risks and earning returns on capital."
Carbon trading is seen as a market based alternative to either direct taxation or a "command and control" approach which would directly impose emission limits.
However the EU's emission trading scheme has come in for criticism because allowances under the initial phase proved too generous, causing a fall in the carbon price, offering little incentive to cut emissions. Allocations have been toughened for the second phase, which runs from 2008 to 2012. Supporters believe the new levels will make the system more effective and that the European model could provide the hub of a global carbon trading mechanism in coming years.
As well as reducing emissions in developed economies, policymakers are hopeful that carbon trading will help provide the finance to clean up heavy industry in poor countries where economic expansion is set to increase emission levels.
The World Bank cautioned that moves in carbon offsets outside the regulated "cap and trade" systems could pose a threat to the development of the overall market. There has been growing criticism that schemes where companies or individuals seek to offset their emissions by investing in projects to cut emissions elsewhere, are either not delivering or funding developments that would have been financed anyway. Critics say that the system needs a greater degree of standardisation.
The World Bank said that on some estimates voluntary carbon offset schemes could rise to 400m tonnes by 2010. It added: "This high potential voluntary sector, however, lacks a generally acceptable standard, which remains a significant reputation risk not only to its own prospects, but also to the rest of the market, including segments of regulated emissions trading and project offsets."
The concern was underlined yesterday by Yvo de Boer, the head of the UN Climate Change secretariat.
He said the official clean development programme (CDM) was working well but some analysis of the scheme was failing to differentiate between the highly regulated CDM and a growing number of unregulated or self regulated enterprises. "Some confusion can be expected, but some analysis of the CDM
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