Carbon Trading: It s s already happening. The story so far..

Transcription

1 Carbon Trading: It s s already happening. The story so far.. Presented by Ken Edwards This presentation may be used in its current format provided the source is acknowledged and the content is not modified.

2 Overview of Presentation About Nextgen Introduction to Carbon/Environmental Markets Environmental overview Background on Local Schemes Acronyms Market Jargon Historical & Current credit prices Price drivers and future outlook Questions

3 Introduction to Carbon Markets Why Carbon markets? Carbon or environmental markets are primarily aimed at dealing with w the problem of increasing concentrations of greenhouse gases in the atmosphere due to human activities. Carbon markets can also be attributed to technological and industry development as well as a new area for employment growth. Carbon markets are seen by policy makers and economists as the most m efficient policy measure available for reducing greenhouse emissions. ions. Carbon markets operate through the use of tradeable certificates,, much like a stock exchange with each certificate (credit) symbolising a unit of exchange such as a megawatt-hour of renewable energy or a tonne of carbon dioxide.

4 Introduction to Carbon Markets Solution based or Pollution based carbon markets? Carbon markets fall into two types. 1. Solution based markets prescribe target in terms of units of production from a prescribed sub-section section of abatement technologies such as megawatt-hours of electricity generated from renewable energy. 2. Pollution based markets have their unit of exchange measured in a tonne of pollution typically carbon dioxide equivalent. Examples: European Emissions Trading Scheme (ETS) NSW Greenhouse Gas Abatement Scheme.

5 Introduction to Carbon Markets Benchmark & Trade versus Cap & Trade? Drilling down to Pollution based carbon markets, we see there are e divided into two different types: A cap & trade scheme involves setting a cap or limit on the total amount of greenhouse emissions that can be emitted from defined sets of polluting facilities such as power stations. (ETS) example: For a power station to be allowed to emit greenhouse gases it must acquire permits equal in quantity to its emissions. A benchmark & trade system sets up greenhouse performance benchmarks whereby those that can deliver a particular product with emissions below the benchmark can earn (create) abatement credit certificates. example: power stations can create credits to the extent their greenhouse g intensity of their electricity is lower than a predetermined level (currently 0.92 tonnes of CO2 per MWh under GGAS)

6 Environmental overview Types of greenhouse gases. Type of gas Symbol Global Warming Potential Carbon Dioxide CO Methane CH Nitrous oxide N2O Relative contribution to global warming % Per fluorocarbons PFC Hydro fluorocarbons HFC ,700 Sulphur hexafluoride SF6 23,900

7 Environmental overview Sources of greenhouse gases in Australia (2004). Sector and Sub sector 1. All energy (combustion & fugitive) Stationary energy Transport 76.2 Fugitive emissions from fuel Industrial processes Agriculture Land use, change and forestry Waste 19.1 Total net emissions CO2 equivalent (Mt) (34.6% of total)

8 Local Schemes MRET Mandatory Renewable Energy Target 2 % NGPA National Green Power Accreditation Scheme GGAS NSW Greenhouse Abatement Scheme GF Australian Greenhouse Friendly (Challenge Plus) QGS Queensland 13% GAS Scheme VRET Victorian Renewable Energy Target 10 % NRET NSW Renewable Energy Target 15 % SRET SA Renewable Energy Target (proposed) 20% WARET WA Renewable Energy Target (proposed) 20 % NETS National Emissions Trading Scheme Others CarbonSMART ( Landcare)..announced today

9 Market Jargon REC GPR NGAC VER/CER GEC VREC NREC SREC WAREC NERU Renewable Energy Certificate Green Power Right (old & new) NSW Greenhouse Abatement Certificate VER/CER Verified/Certified Emission Reduction Unit Gas Electricity Certificate Victorian Renewable Energy Certificate NSW Renewable Energy Certificate SA Renewable Energy Certificate WA Renewable Energy Certificate National Emissions Reduction Unit

10 Historical & current credit prices (Spot price) Start High Low Current REC $/MWh GPR $/MWh NGAC $/tco2-e VER (AGO) $/tco2-e CER (ETS) /tco2-e GEC $/MWh VREC $/MWh (est) NREC $/MWh (est) SREC $/MWh (est) n/a WAREC $/MWh (est) NERU $/tco2-e e (est)

11 Price drivers and future outlook Supply an Demand Rules and Regulations Political - Federal and state Climate change Kyoto post 2008 Market Liquidity Voluntary Off-sets Oil Prices & International Schemes MWH = Tonnes of CO2

12 Thank you! I m m sure you have some questions For further enquiries please call Nextgen (03) or visit our new website