CCAC Commits to Scaling Up Action on Short-Lived Climate Pollutants

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3 September 2013: Members of the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants (CCAC) met for the third meeting of the High Level Assembly, adopting a Communiqué reiterating their commitment to address near-term climate change, improve air quality and public health, and strengthen food and energy security, by taking urgent action to reduce emissions of short-lived climate pollutants (SLCPs) like black carbon, methane, tropospheric ozone, and hydrofluorocarbons (HFCs).

In the Communiqué, CCAC members encourage a global awareness-raising effort to prevent air pollution-related diseases, which account for over six million deaths annually. The Communiqué also includes sections on scaling-up global efforts on: oil and natural gas production; municipal solid waste; hydrofluorocarbon (HFC) alternative technology and standards; heavy duty diesel vehicles and engines; support to national planning for action on SLCPs; brick production; household cooking and domestic heating; and regional assessments of SLCPs.

The meeting of the Assembly, which took place on 3 September 2013, in Oslo, Norway, was co-hosted by Norway's Minister of Environment and the Minister of International Development. At the meeting, Norway committed to contributing an additional 110 million Norwegian kroner (approximately US$20 million) to reduce emissions of SLCPs in developing countries.

The CCAC also announced three new members, namely: the Nordic Environment Finance Corporation; the Centre for Science and Environment; and Local Governments for Sustainability. The Coalition now brings together 72 partners, including 33 government partners, the European Commission, eight intergovernmental organizations and 30 non-governmental organizations (NGOs).

Launched in February 2012, CCAC aims to catalyze action on reducing black carbon, methane, certain hydroflurocarbons (HFCs) and other short-lived climate pollutants (SLCPs) to maximize agricultural, climate, energy and health benefits. The UN Environment Programme (UNEP) hosts the Coalition Secretariat. [UNEP Press Release] [Communiqué] [CCAC Website] [CCAC Press Release]

read more: http://climate-l.iisd.org/news/ccac-commits-to-scaling-up-action-on-short-lived-climate-pollutants/

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Businesses soon may meet California air rules by paying someone else to slash emissions

Published: Sunday, Aug. 11, 2013 - 12:00 am | Page 1A

Last Modified: Monday, Aug. 12, 2013 - 9:38 am

Copyright 2013 The Sacramento Bee. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

It will be a lifeline of sorts for the cement factories, oil refiners and hundreds of other businesses struggling with California's stringent greenhouse-gas restrictions.

Soon they'll be able to comply – in part – by paying other people to reduce their own carbon emissions.
That's right: Under standards being drawn up by the California Air Resources Board, companies that have to meet the state's greenhouse-gas standards will be able to satisfy part of their burden by purchasing "offsets" – credits that are generated when carbon emissions are slashed by others.

Such as a dairy farmer in Michigan. Or a company in Arkansas that destroys gaseous coolants from old refrigerators. Or a tree planter on California's own North Coast.

The use of offsets will inject a somewhat controversial element into California's effort to battle global warming.

Two environmental groups sued the state last year to prevent the use of offsets, although the case was dismissed in January. Their argument: Offsets undermine the basic goal of curbing greenhouse gases by letting companies buy credits for emission reductions that almost certainly would have happened anyway.
"What we actually need is straightforward, meaningful reductions in emissions," said Mark Reynolds of Citizens Climate Lobby, one of the groups that sued.

But state officials and some environmentalists say offsets are a perfectly legitimate way to combat global warming.

They say offsets give California companies greater leeway in how they follow the state's climate-change law, AB 32, which was signed into law in 2006. With companies spending an estimated $1 billion a year to comply, this flexibility will help them save money.

"Offsets are a low-cost mechanism," said Rajinder Sahota, manager of the ARB's climate change program evaluation branch. The ARB oversees the state's year-old carbon emissions standards and will police the use of offsets.

Still, some critics say companies in California shouldn't be allowed to satisfy part of their regulatory burden by paying someone in another state to curb their carbon emissions.

"The local communities living on the fence lines of the refineries and power plants and incinerators don't receive the benefits," said Jeff Conant of Friends of the Earth, another critic of offsets.

But because climate change is truly a global issue, advocates say it isn't important whether some of the emission reductions occur in another state.

"California is still cutting climate change pollution, which is what the law is about," said Derek Walker, an associate vice president with the Environmental Defense Fund.

Offsets aren't new; they've long been a part of the European Union's mandatory carbon program. In the United States, many businesses and individuals already use them voluntarily, often to show their concern for the environment.

Most famously, former Gov. Arnold Schwarzenegger has bought credits from the Pacific Forest Trust, manager of the Fred M. van Eck Forest near Arcata, to offset the carbon emissions from his private jet travel. The money was used to help keep the forest healthy so its redwoods could soak up more carbon.
But for many companies facing California's carbon rules, offsets will likely become a necessity, not a luxury item.

AB 32 sets an annual cap on greenhouse-gas emissions, and reduces it each year. The goal is to reduce California's emissions to 1990 volumes by 2020, a drop of about 30 percent from current levels.

More than 400 manufacturers, food processors and other big industrial firms are subject to the rules. They currently have two ways to get their emissions under the cap: Shrink their carbon footprint somehow, or buy state-issued emission permits.

Offsets will provide a third avenue for compliance. Companies will be allowed to use offsets to satisfy up to 8 percent of their obligation under the law.

To this point, the ARB hasn't approved any offset projects. But the agency is evaluating more than 60 different projects, all of which are designed to dispose of methane, carbon and other forms of greenhouse gases. Decisions are expected by the end of summer, said ARB spokesman David Clegern.
"Everybody's waiting for this," said Jon Costantino, head of a Sacramento-based group called the Association of Carbon Market Participants. "Once there are approvals, there will certainly be activity – they will be bought and sold."

The projects awaiting the ARB's approval, located all over the country, are already in operation.
A privately run Arkansas incinerator has already destroyed nearly 3 million tons of greenhouse gases found in refrigerator coolants. Dairy farms as far away as Virginia and upstate New York have installed "digesters" that consume methane from livestock, while forest managers in California and Maine are offering offsets tied to increased tree planting and other measures.

State officials say industries will be allowed to use offsets from carbon reductions that have already taken place. "Let's reward everyone that took that early action," said the ARB's Sahota.

Project developers say their offsets aren't vague promises. Rather, they represent concrete measures, with results validated by outside auditors, that are making a difference in the fight against climate change.
"These gases have been destroyed, verified by independent third parties," said Patrick Pfeiffer of Eos Climate Inc., a San Francisco company that partners with companies to destroy greenhouse gases that leak out of abandoned refrigerators.

In anticipation of ARB's approval, companies and brokers are already buying and selling some offsets in limited volumes. On average, offsets sell for about $10 per ton of carbon reduced. That's about $3 less than the state-issued emissions permits.

Why the difference? Partly because there's a chance the ARB will reject an offset.
The state agency says it is training dozens of independent contractors to periodically inspect offset project sites and make sure the carbon reductions are legitimate.

As a result, companies could buy offsets only to find out they're worthless.
"There is a risk they're going to be invalidated," Costantino said. "There's just more risk with an offset."

Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

Read more here: http://www.sacbee.com/2013/08/11/5640618/businesses-soon-may-meet-california.html#storylink=cpy

New Compliance Association Unites California Offset Project Developers

Stemming from the Navigating the American Carbon World conference in 2012, the newly formed Compliance Offset Developers Association (CODA) seeks to unite project developers and to support an effective cap-and-trade program in California. CODA provides a platform for sharing technical knowledge and ideas as they pertain to the Air Resources Board.

1 July 2013 | The latest cap-and-trade development to come out of California is reflective of the Golden State’s reputation as the prevailing leader in domestic climate policy. The newly-minted Compliance Offset Developers Association (CODA) is an alliance of six project developers – A-GAS RemTec, Camco, Coolgas, Inc, Diversified Pure Chem, Environmental Credit Corp, and Terrapass – working together with regulators and other offset stakeholders to support an effective statewide offset market. 

At the 10^th anniversary of the Navigating the American Carbon World conference, North America’s largest carbon event, a number of players in California’s offset market recognized the benefits of exchanging ideas and technical know-how related to the Air Resources Board (ARB). Acknowledging ARB’s impact, their own strength in numbers, and a growing need to respond to future technical processes on a collaborative basis, project developers set out to create a forum for technical discussion and knowledge-sharing regarding ARB protocols and the generation of compliance offsets. 

As reported by CODA, policies regulating offsets, transparency, and the timely review of project documents are critical aspects for project developers in generating and issuing offsets. An anticipated 200 million offsets will be required by California’s cap-and-trade program by 2020, further highlighting the need for increased capacity through collective efforts such as CODA, according to the group’s members. 

Intended to function from a procedural and technical perspective rather than from a political stance, CODA aims to connect project developers to better understand the rules and regulations of the offset market. According to Derek Six, CEO of Environmental Credit Corp, “the project developers involved in CODA face a wide variety of common issues.” The association was formed out of a “desire to see a marketplace that is effective, practical, and efficient,” adds Six. 

While CODA is currently only open to project developers that have at least three registered projects under ozone-depleting substances, forestry, or livestock protocols, there may be potential for including project developers involved in other project types in the future. 

In reference to prospective protocols such as rice cultivation, coal mine methane, and REDD+, Charles Purshouse, CODA’s elected chairperson, stated, “If approved, we would welcome members developing those projects.” However, for the time being, the “focus is on the drawing board,” as lobbying for REDD+ and other potential protocols “doesn’t fall under the group’s remit,” adds Purshouse. 

CODA holds bi-weekly meetings and discussions to formulate strategy. Companies interested in joining CODA can email nick@terrapass.com. 

Coming to America

U.K.'s A-Gas Plans Expansion Into North America

A-Gas’s acquisitions in the U.S. will set it up for a significant expansion into North America, including the international rollout of its refrigerant reclamation technology.

This year, A-Gas celebrates its 20th year in business, but no time in those two decades has been quite as busy as last year. The past 12 months have seen intense activity as the Bristol refrigerant distributor and reclaimer bought two U.S. specialists, Coolgas and RemTec, and set up a fully fledged North American division. The firm has transplanted U.K. managing director Ken Logan to oversee the establishment of the U.S. operations for the next two years at least.

The acquisition of the U.S. businesses, plus a further distributor in Australia, Technochem, has seen the A-Gas Intl. group top £100 million turnover for 2012, with a worldwide headcount of 237.

Acquiring Assets

“A-Gas is now the largest independent refrigerant player outside of the U.S.,” said Jon Masters, European managing director. “Our core territories are in the U.K., South Africa, and Australia, in each of which we have a 30-35 percent market share. So we were keen to try and take that offering to the U.S. — it was the right opportunity in terms of the business and the regulatory framework.”

That framework is the U.S. phase out of HCFCs and the probable phase down of HFCs, expected to closely follow the European Commission’s proposed F-Gas model — although progressive states like California are already bringing in more stringent rules.

The particular attraction of RemTec is that its core business is halon reclamation. Although these are largely from fire suppressants, this offers the right range of skills and technology to allow an expansion into refrigerant reclamation. This is where A-Gas brings its own skills to bear, said Masters. “We can bring our reclamation knowhow, and the benefit of the U.K. experience of selling the reclaimed HCFC product. The U.S. market is maybe four or five years behind Europe, but it is rapidly developing, and the EPA [Environmental Protection Agency] has announced more cuts in HCFC volume.”

The plan is for the RemTec operation to be brought up to the same standard for refrigerant reclamation as A-Gas’s Bristol facilities by the end of this year.

The commercial implications of the rapid cuts should not be underestimated; in the U.S. over the past year, virgin R-22 has increased in price from $3 per pound to $15 per pound.

Coolgas, by contrast, is a conventional refrigerant distributor, but again the purchase is strategic, providing a foothold in the Southwest, from which A-Gas can build, with a brand name well known to the American market. It also holds all-important import rights to HCFCs.

A foothold in such a large territory is a big deal in its own right, but the potential is far bigger. “The U.S. business is roughly the same size as the U.K. business, but whereas in the U.K. that brings a 30 percent market share, in the U.S. it is only 2 percent of the market. It should be easier to double from 2-4 percent than from 30-60 percent.”

If the plans for reclamation at RemTec go well, it could be joined by other sites. While the U.K. can function well with a single reclamation site, the scale of the U.S. is likely to require a network of two or three more. With reclaimed HCFC expected to be useable in the U.S. beyond 2020, that is an attractive long-term target.

Reclamation Technology

In a relatively short time, refrigerant recovery and reclamation has become a serious business for A-Gas. Its environmental services operations now account for around 20 percent of turnover (refrigerants is the largest proportion at 60 percent).

U.K. business director John Ormerod said, “What we do falls into two areas: cleaning up dirty gas by removing contaminants and separating out gases from refrigerant mixtures.

“We probably lead the world in refrigerant reclamation. There is only one other company in the U.K. and three in the U.S. who can separate refrigerants like we do,” he said.

The separation facilities at Bristol have come on apace since the pioneering days when its technology could be housed in a corner of the warehouse. The original plant is still in situ, but it has been joined by Separator 3, located outside the warehouse and large enough to be able to accommodate tanker-sized volumes of refrigerant, with a capacity to process around 400 tonnes a year.

Although the precise technology is secret, both plants are designed to reclaim refrigerant to Air-Conditioning, Heating & Refrigeration Institute (AHRI) 700 standards, as well as being able to split mixed refrigerants into usable batches and to reclaim individual gases from cocktails of recovered refrigerant. The latter is where A-Gas claims distinctiveness, as “the only supplier who has both the technology and the capacity to provide this level of service.”

Content for the European Spotlight is provided courtesy of Refrigeration and Air Conditioning Magazine, London. For more information, visit www.racplus.com.

Publication date: 5/20/2013

UPDATE 2-California carbon permits sell for record high price

Tue May 21, 2013 4:22pm EDT

(Adds details on market, quotes from consultant and broker)

By Rory Carroll
SAN FRANCISCO May 21 (Reuters) - California's largest greenhouse gas-emitting businesses paid $14 per metric tonne (1.1 tons) for the right to release carbon this year, a record-high price that narrowly beat market expectations, the state said on Tuesday.
The state sold all of the more than 14.5 million allowances it offered to cover carbon emissions in 2013 at its third permit auction on May 16.
Allowances that cover emissions in 2016, which were also for sale, saw lighter demand, with buyers snapping up 7.5 million of the more than 9.5 million permits that were offered.
Those allowances cleared at the program's auction floor price of $10.71 per tonne.
"The auction results show increased maturity from program participants and from the market and confirm the good health of the carbon market in California," said Emilie Mazzacurati, managing director of climate consultancy Four Twenty Seven.
Following the release of the results, California carbon allowances in the secondary market were trading at $14.50 a tonne in large volumes on the IntercontinentalExchange, one carbon broker said on Tuesday.
Had allowances cleared the auction at a price higher than $14 a tonne, market speculators would have been more inclined to buy allowances, he said.
"The market looks pretty flat," he said. "I don't see the results as having a dramatic impact either way."

REVENUE RAISED
The state's three auctions have so far raised $256 million for the state and $556 million for its largest utility companies, which are required to use the money to protect ratepayers from higher energy costs.
The state is currently drafting a spending plan for the revenue it takes in from the program, which is required by law to be spent on efforts to drive down the state's emissions of heat-trapping greenhouse gas emissions.
Last week, California Governor Jerry Brown announced that he would lend the $500 million the state expects to raise during the program's early years to help balance the state's budget under the condition that the money be paid back eventually with interest.

LAWSUITS
California's quarterly allowance auctions are not without controversy.
The auctions are currently the subject of two lawsuits, one by the California Chamber of Commerce, California's largest business group, and one by the Pacific Legal Foundation, a conservative legal group that filed the suit on behalf of a handful of affected California businesses and residents.
Both lawsuits argue that the California Air Resources Board, the program's regulator, is violating state law by raising revenue by selling permits. (Reporting By Rory Carroll; Editing by Peter Galloway, Bernard Orr)

Gov. Brown wants to grab $500 million in cap-and-trade proceeds for general fund

 

Molly Peterson | May 15th, 2013, 10:22am

David McNew/Getty Images

California's carbon-credit market has raised $500 million in revenue, which Governor Brown wants to borrow to balance general fund expenses.

Gov. Jerry Brown plans to borrow $500 million from a program to fight climate change, as part of his effort to balance the budget - a move that has stirred up clean air advocates.

California has begun auctioning off carbon emission permits as part of its cap-and-trade program. They're basically licenses to pollute that businesses can buy to offset their emissions. The money -- $500 million collected so far -- goes into the Greenhouse Gas Reduction Fund.

Brown wants to use that money to cover the state's general fund expenses, and pay it back later, with interest. He argues that it's okay to borrow the money because greenhouse gas reduction programs are just getting off the ground.

The Sierra Club, the Greenlining Institute and other environmental groups say the permit fees can only be spent on programs that reduce greenhouse gases.

They argue that some of the money the governor wants to borrow was going to fund clean air programs in low-income and minority neighborhoods near refineries and other sources of pollution.

The governor did sign a law last year meant to protect carbon fees from being diverted for general fund use. But SB 535 doesn't stop him from borrowing the money.

California Considering 25 Projects for Carbon Offset Credits

 

By Lynn Doan - Mar 8, 2013 6:27 PM ET

             

California, the second-largest carbon-polluting state in the U.S. behind Texas, will decide whether to award its first carbon offset credits for 25 projects designed to cut greenhouse-gas emissions.
The candidates for offset credits include a project to improve forest management practices to avoid emissions related to timber harvesting and several to destroy biogas at farms, according to a list posted on the state Air Resources Board’s website. All of the projects must be reviewed by a certified “offset verifier” and then by the air board itself before being deemed eligible.
Should all of the projects be approved, they’ll generate as many as 3 million offset credits to be used under California’s carbon cap-and-trade program, the only system of its kind in the U.S. and the second-largest in the world, behind the European Union’s program. The state defeated a lawsuit in January that claimed the offsets, which companies can use to cover as much as 8 percent of their emissions, aren’t new efforts to cut carbon and would occur without investments.
The projects listed by the air board today will be held to “rigorous verification standards,” Mary D. Nichols, the agency’s chairman, said in a statement posted on its website. “We have determined that every single California offset credit allowed into the program represents a real ton of greenhouse gas reductions.”

Contracts Rising

Contracts based on California offset credits, each allowing the release of one metric ton of carbon, have risen 25 cents, or 2.1 percent, in the past month, according to data compiled by environmental broker Evolution Markets based in White Plains, New York. “Golden” offsets, which come with a seller guarantee to replace any invalidated credits, were unchanged at $12 a ton today, according to Evolution.
The projects would be awarded “early action” credits, which the state agreed to consider to generate an initial supply of offsets for the market. To be eligible, they must cut emissions in the U.S. between 2005 and 2014 and be listed in a preexisting registry designed to meet the state’s early action criteria, among other things.
Emissions-reduction projects that begin in 2015 and beyond must meet a different set of state standards.

Carbon Allowances

Under the cap-and-trade program, California established a pool of carbon allowances, each permitting the release of one metric ton of carbon. That pool is designed to shrink through 2020 to cut statewide emissions by roughly 15 percent. Companies over their emissions limits can buy allowances from those below the cap, as well as a limited number of offset credits, to meet their compliance obligations.
Futures based on 2013 California carbon allowances, which also allow for the release of one metric ton of carbon each, climbed 5 cents to settle at $14.55 a ton today, according to Atlanta-based IntercontinentalExchange Inc. (ICE)
California’s cap-and-trade system will eventually regulate 85 percent of greenhouse-gas emissions released in the state and cover all industries, including power generation, oil refining and transportation. A similar program in the U.S. Northeast, known as the Regional Greenhouse Gas Initiative, regulates emissions from power plants only.

Europe Glut

In Europe, an oversupply of offset credits has added to pressure on European Union carbon futures, already trading 49 percent below a year ago because of a glut of allowances due to the recession.
Kathrin Goretzki, an analyst at Unicredit Bank AG in Munich, estimated Jan. 29 that the EU market may have been oversupplied by much as 1.6 billion metric tons of permits by the end of 2012.
The United Nations Clean Development Mechanism has approved 6,619 offset projects in developing countries, more than half of which are in China, according to the UN’s website. More than 2,000 of these projects have supplied 1.26 billion tons of “Certified Emission Reduction” offsets for emissions-trading systems participating in the Kyoto Protocol, UN data compiled by Bloomberg show.
California’s air resources board may take “several weeks” to issue its first offset credits, according to the agency’s statement.
To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

Canadian Cap-And-Trade Program

http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm

Brown wants California's carbon market to link with Quebec's

Brown wants California's carbon market to link with Quebec's

By Dale Kasler
dkasler@sacbee.com

By Dale Kasler The Sacramento Bee

Last modified: 2013-04-10T15:06:43Z

Published: Wednesday, Apr. 10, 2013 - 12:00 am | Page 6B

 

Starting next January, California's cap-and-trade carbon market probably won't be operating on its own anymore.

Gov. Jerry Brown on Monday gave state regulators the green light to link California's carbon market with a similar market in the Canadian province of Quebec. The California Air Resources Board is expected to vote April 19 on whether to link with Quebec.

If the two become linked, California companies could buy carbon credits from Quebec and vice versa. "The allowances will be completely fungible," said David Clegern, spokesman for the Air Resources Board.

In addition, "this obviously is a way to have an impact (on climate change) beyond what happens in California," he said.

California regulators had hoped that their carbon market would be part of a Western states consortium. But while California's market debuted last fall, no other state has committed to running a market yet; Quebec is the only Canadian province to join in.

The market is the centerpiece of AB 32, the state's 7-year-old global warming law.

Several hundred big industrial polluters are required to reduce their carbon emissions below a certain level – the "cap." If they don't, they have to buy emissions allowances to compensate.
The total cap shrinks slightly each year, which is supposed to result in a gradual reduction in emissions.

Read more here: http://www.sacbee.com/2013/04/10/5329469/brown-wants-californias-carbon.html#storylink=cpy

California carbon market launches, permits priced below expectations

(Reuters) - California's largest greenhouse gas emitting businesses paid $10.09 per metric tonne (1.1 ton) for the right to release carbon, raising almost $300 million for the cash-strapped state and its energy companies in its first-ever carbon permit auction,

The permit price was below market expectations despite strong demand from utility companies, manufacturers and oil refineries participating in the auction, market sources said.

Ahead of the California Air Resources Board announcement on Monday, traders, brokers and analysts had predicted a clearing price in the range of $11.75 to $12.50 a tonne.

"The clearing price was below expectations but total participation was higher than most expected from vintage 2013," said Jeff King, managing director of environmental markets at Scotiabank.
All of the 23.1 million permits offered at the auction to cover 2013 emissions were bought, raising $233 million. The money will be given to the state's utility companies, which must use it to protect ratepayers.

The California carbon auction is a key component of the state's cap-and-trade program, the first of its kind in the country. State officials hope it will serve as a model for other states and the federal government.

The program is part of a broader effort to reduce Californian emissions to 1990 levels by 2020 -- about a 15 percent reduction, compared to business-as-usual forecasts.

The permit sale was held on November 14 and announced Monday. It is a crucial step ahead of the cap-and-trade program's official start on January 1, 2013.

"By putting a price on carbon, we can break our unhealthy dependence on fossil fuels and move at full speed toward a clean energy future," Mary Nichols, chairwoman of the board, said in a statement.
"That means new jobs, cleaner water and air -- and a working model for other states, and the nation, to use as we gear up to fight climate change and make our economy more competitive and resilient."

LAWSUIT LOOMS
Compliance entities -- companies directly affected by the state's carbon caps -- bought around 97 percent of the allowances. Financial institutions bought the remaining 3 percent, the board said.
The state also auctioned 39.5 million permits that cover 2015 emissions but only sold about 5.6 million allowances.

Demand for those permits was weaker than expected, and those allowances cleared at $10.00/t, the lowest price allowed under the program's rules.

The $55 million raised by the sale of those allowances will be deposited into the state's newly minted Air Pollution Control Fund.

The money from the permit auction must be used to fund clean energy projects and energy efficiency programs, although details on how exactly the money should be spent needs to be hammered out by the state legislature.

Nichols said she wasn't surprised that not all of the 2015 allowances were sold given the large number of permits offered.

On the eve of last week's auction, the state's largest business group, the California Chamber of Commerce, filed a lawsuit challenging the state's right to sell allowances and keep the profits.
Although the state is giving 90 percent of the program's allowances away for free to covered businesses at the outset of the program, the group said all of the permits should be handed out freely, which would negate the need for the state's quarterly permit auctions.

Nichols told reporters on a conference call the lawsuit had "no impact" on the auction.
During its first two-year phase, the cap-and-trade program will cover 350 businesses representing 600 facilities, including power plants, cement-making facilities and oil refineries.

Banks and other financial institutions are also allowed to participate in the auction, although there are limits to the number of permits any one entity can hold.

Trade of CCA futures contracts, which have been traded on the IntercontinentalExchange since August 2011, were quiet in the run-up to the auction results.

Prior to the announcement, CCAs for 2013 emissions were bid at $10.25 with an asking price of $14, a wider than usual spread, with no trades seen, one trader said.

Ahead of the auction results announcement, traders and brokers said they expected the secondary market price for allowances to quickly align with the auction clearing price.
(Reporting By Rory Carroll; Editing by Bob Burgdorfer and David Gregorio)

UPDATE 2-California's carbon permit auction beats expectations

Feb 22 (Reuters) - California's largest greenhouse gas-emitting businesses paid $13.62 per metric tonne (1.1 tons) for the right to release carbon, narrowly beating market expectations in the state's second carbon permit auction.

At the state-run auction, California managed to sell all of the nearly 13 million carbon permits it offered to cover emissions for this year and less than half of the roughly 9.6 million permits it offered to cover 2016 emissions, the California Air Resources Board (ARB) said on Friday.
Allowances to cover 2016 emissions cleared the auction at the lowest allowable price under the program's rules, $10.71 per tonne amid weak demand, the ARB said.

The quarterly allowance auctions are a critical component of the state's cap-and-trade program, the first of its kind in the United States. It uses market mechanisms to reward companies that figure out ways to reduce pollution below levels set by the government, and serves as the backbone of California's effort to cut emissions back to 1990 levels by 2020.

California hopes its climate change program will serve as a model for other states and the federal government.

Environmentalists and market participants hailed the auction results as a success.
"Today's results represent another successful chapter in California's story of cutting pollution and moving towards a clean energy economy," said Derek Walker, an associate vice president at the Environmental Defense Fund.

"The results also demonstrate that this is a strong, viable carbon market," he said.
Jeff King, managing director of environmental markets for Scotiabank, also hailed the results, noting that the clearing price was more closely correlated with the secondary market price for allowances than it was at the program's inaugural auction in November.

STRONG DEMAND
King said that strong demand for the 2013 vintage allowances was a sign that the new market is developing well.

"The 2.47 times subscription rate is a bullish indicator for future auctions," he said.
At the first auction, demand only barely outstripped supply.

Emilie Mazzacurati, managing director of climate consulting and research firm Four Twenty Seven, said she expects participation to grow again at the next auction, which is scheduled for May 16.
"I think a number of compliance entities that had waited out the first auction have now jumped on the bandwagon and that the financial sector is taking more of an interest in the market."

Banks and other financial institutions upped their participation at this auction, purchasing almost 12 percent of the current year allowances offered, up from about 3 percent in November.

REVENUE
The sale of permits raised about $84 million for the state, an ARB spokesman said, money that will deposited into a new state-run greenhouse gas reduction account.

That money will be added to the nearly $54 million it raised from the sale of allowances at the November auction.

California regulators are currently weighing how to allocate those funds and are holding a series of forums around the state to receive input from the public on how it should be spent.
The next public workshops are scheduled to take place in Sacramento on Monday and in Los Angeles on Wednesday.

California Governor Jerry Brown is expected to release his plan for spending the revenue to the legislature in May, the ARB spokesman said.

But not everyone agrees that California should be raising money from the sale of carbon allowances.
In November, the California Chamber of Commerce sued the ARB, claiming it lacked the legal right to raise revenue through the auctions.

The state's largest business group said the carbon permits should be handed out to businesses freely.
Last week, the National Association of Manufacturers, the nation's largest manufacturing trade group, said it would join the lawsuit on the side of the California Chamber of Commerce.

Environmental organizations including the EDF and the Natural Resources Defense Council have intervened in the suit on the side of the state, saying the auctions are necessary to price carbon correctly and raise revenue to support clean energy.

A hearing in Superior Court in Sacramento County is scheduled for May 31.

Little Unity Over California's Cap-And-Trade Program

Businesses and environmentalists remain deeply divided over California's landmark carbon cap-and-trade program, with industry calling it a job-killing nightmare and clean energy proponents saying it has positioned the state as a global leader in tackling climate change.

The strong feelings over the policy were on display at a conference last week in Sacramento, where business groups and environmentalists repeatedly clashed over the market-based program, a key component of the state's effort to roll back its output of heat-trapping gases to 1990 levels by 2020.
While environmentalists say the effort is already attracting clean energy businesses to the state, industry argue it could drive them away.

"My manufacturers are now living their worst fears," said Dorothy Rothrock, vice president of government relations at the California Manufacturers & Technology Association, which represents 600 businesses in the state.

Without immediate fixes to the program, like giving away all of the program's carbon permits to businesses for free, some of her members may eventually need to raise prices, lay off workers, or flee the state, she said.

"My companies are saying, ‘What are we supposed to not pay for in order to pay this new cost?'" she said.

The success or failure of the 2-month-old program will have broad ramification for the concept of cap and trade, a policy where the government sets a limit on the amount of greenhouse gas emissions that businesses can produce. It then either sells or hands out for free a dwindling number of carbon permits, also known as "allowances."

The allowances can be used for compliance with the regulation or, if the company can reduce its emissions on its own, can be sold to businesses that need them.

The program is also a new source of revenue for the cash-strapped state, having brought $138 million into state coffers from two permit auctions, and millions more to power companies who will use it to offset higher electricity rates. Debate is now underway over how the state will spend the revenue with a draft plan expected to be released by Governor Jerry Brown's administration in April.

At the conference, environmentalist pushed back against the idea of giving all the permits away for free saying it would not only deprive the state of money it needs to fund clean energy programs, but could also enrich the very companies the program seeks to regulate if they cash in on the value of the permits while passing the new costs on to consumers.

Alex Jackson, an attorney with the Natural Resources Defense Council, said the program is off to a good start and said it would be a mistake to make major changes to it now.
He added that the 2006 law that led to the cap-and-trade program, AB 32, has already attracted clean energy businesses to the state.
Jackson cited the relocations of biofuels provider Propel Fuels, solar company Sungevity and electric car manufacturer Electric Vehicles International to California after passage of AB 32 as proof that California's landmark law is attracting clean energy businesses to the state.

But California's food processors joined the manufacturers in expressing their concerns about the program, but unlike the state's cement plants or steel mills, they said moving is not an option for them.

"You can't move a tomato processor. They need to stay in the area, so we're trapped," said John Larrea, director of government affairs for the California League of Food Processors.

Both Larrea and Rothrock said that while the program is a drag on business now, it will get even worse in 2015 when it expands to cover many more businesses and the number of permits given for free to their members is reduced.

Both Larrea and Rothrock said they would prefer the state simply tell them how much each facility can emit over the cap-and-trade policy as it is currently designed - ironic since cap-and-trade has long been touted as a business-friendly alternative to direct government regulations.

All sides of the issue are now looking ahead to coming battles over the program, including an updating of the state's "scoping plan," which outlines the suite of policies used to meet the state's long-term emissions goals. A draft of the new plan is expected by the end of the year.

California's largest business group, the California Chamber of Commerce, last year filed a suit against the program, claiming the quarterly auctions are illegal. A hearing on the case is scheduled for May 31 at Sacramento Superior Court.


Read more: http://www.foxbusiness.com/industries/2013/03/06/little-unity-over-california-cap-and-trade-program/#ixzz2NFvW8QVR

First Carbon Offset Projects To Be Reviewed By Air Resources Board

By Bob Moffitt

Twenty five projects initiated before the state finalized its Cap-and-Trade rules will be inspected to ensure they met state requirements.

Permalink

(Sacramento, CA)
Friday, March 08, 2013

The California Air Resources Board says it's reviewing the first twenty five projects submitted that promised to offset greenhouse gas emissions. If approved, the businesses can earn credits under the state's Cap-and-Trade Program.

Stanley Young with the Air Resources Board says certified inspectors will determine how much pollution each project eliminates. "We require that the project developer hire and accredited person- a third-person verifier, to take a close look at the paperwork involved in this and make sure they went through all of the proper steps and followed the stringent rules."

Most of the projects either used manure from dairy farms in biodigesters or eradicate ozone-depleting chemicals.

If the 25 projects performed as promised, they would eliminate three million tons of carbon

California Considering 25 Projects for Carbon Offset Credits

By Lynn Doan - Mar 8, 2013 6:27 PM ET

 

California, the second-largest carbon-polluting state in the U.S. behind Texas, will decide whether to award its first carbon offset credits for 25 projects designed to cut greenhouse-gas emissions.
The candidates for offset credits include a project to improve forest management practices to avoid emissions related to timber harvesting and several to destroy biogas at farms, according to a list posted on the state Air Resources Board’s website. All of the projects must be reviewed by a certified“offset verifier” and then by the air board itself before being deemed eligible.
Should all of the projects be approved, they’ll generate as many as 3 million offset credits to be used under California’s carbon cap-and-trade program, the only system of its kind in the U.S. and the second-largest in the world, behind the European Union’s program. The state defeated a lawsuit in January that claimed the offsets, which companies can use to cover as much as 8 percent of their emissions, aren’t new efforts to cut carbon and would occur without investments.
The projects listed by the air board today will be held to“rigorous verification standards,” Mary D. Nichols, the agency’s chairman, said in a statement posted on its website.“We have determined that every single California offset credit allowed into the program represents a real ton of greenhouse gas reductions.”

Contracts Rising

Contracts based on California offset credits, each allowing the release of one metric ton of carbon, have risen 25 cents, or 2.1 percent, in the past month, according to data compiled by environmental broker Evolution Markets based in White Plains,New York. “Golden” offsets, which come with a seller guarantee to replace any invalidated credits, were unchanged at $12 a ton today, according to Evolution.
The projects would be awarded “early action” credits, which the state agreed to consider to generate an initial supply of offsets for the market. To be eligible, they must cut emissions in the U.S. between 2005 and 2014 and be listed in a preexisting registry designed to meet the state’s early action criteria, among other things.
Emissions-reduction projects that begin in 2015 and beyond must meet a different set of state standards.

Carbon Allowances

Under the cap-and-trade program, California established a pool of carbon allowances, each permitting the release of one metric ton of carbon. That pool is designed to shrink through 2020 to cut statewide emissions by roughly 15 percent. Companies over their emissions limits can buy allowances from those below the cap, as well as a limited number of offset credits, to meet their compliance obligations.
Futures based on 2013 California carbon allowances, which also allow for the release of one metric ton of carbon each, climbed 5 cents to settle at $14.55 a ton today, according to Atlanta-based IntercontinentalExchange Inc. (ICE)
California’s cap-and-trade system will eventually regulate 85 percent of greenhouse-gas emissions released in the state and cover all industries, including power generation, oil refining and transportation. A similar program in the U.S. Northeast, known as the Regional Greenhouse Gas Initiative, regulates emissions from power plants only.

Europe Glut

In Europe, an oversupply of offset credits has added to pressure on European Union carbon futures, already trading 49 percent below a year ago because of a glut of allowances due to the recession.
Kathrin Goretzki, an analyst at Unicredit Bank AG in Munich, estimated Jan. 29 that the EU market may have been oversupplied by much as 1.6 billion metric tons of permits by the end of 2012.
The United Nations Clean Development Mechanism has approved 6,619 offset projects in developing countries, more than half of which are in China, according to the UN’s website. More than 2,000 of these projects have supplied 1.26 billion tons of“Certified Emission Reduction” offsets for emissions-trading systems participating in the Kyoto Protocol, UN data compiled by Bloomberg show.
California’s air resources board may take “several weeks”to issue its first offset credits, according to the agency’s statement.
To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

A-GAS INTERNATIONAL EXPANDS ITS PRESENCE IN AMERICA

LEADING REFRIGERANTS SUPPLIER A-GAS INTERNATIONAL COMPLETES STRATEGIC ACQUISITION OF KEY INDEPENDENT US REFRIGERANTS SUPPLIER AND DISTRIBUTOR, COOLGAS

Bristol-based A-Gas International (or“the Group”), one of the world’s largest independent suppliers of refrigerants, associated environmental services, and speciality gases and chemicals, has completed the acquisition of Houston, Texas based Coolgas Inc. (“Coolgas”), a leading independent supplier and distributor of refrigerants to the US market. The terms of the transaction were not disclosed.

The transaction represents the fifth strategic acquisition completed by A-Gas so far in 2012, and forms part of the Group’s acquisitive growth strategy which is being executed both in the UK and internationally. The enlarged group will have a turnover of c. £130m and 237 employees.

Founded in 1994 by Jesse Combs, Coolgas has grown over the past 18 years to become one of the leading independent distributors of refrigerants in the US. Coolgas’ “refrigerants made simple” philosophy reflects the focus on customer service that has enabled it to grow first to a regional and then to a national player. Coolgas has recently commissioned a new refrigerant storage and packaging facility in Houston and has distribution centres in California, Utah, Arizona, Indiana, Michigan, Maryland and Georgia ensuring that Coolgas is close to its customers wherever they are located.

In recent years Coolgas has also become an EPA registered reclaimer of refrigerants and a project developer for the generation of carbon offsets on the California Climate Action Reserve exchange. These capabilities enable Coolgas to manage the lifecycle of Ozone Depleting Substances (ODS) and substances with high Global Warming Potential (GWP) to safeguard the environment.

The acquisition builds on A-Gas’acquisition of Ohio based refrigerant reclaimer and halocarbon management specialist RemTec International in July 2012. Coolgas provides a strong strategic fit, bringing a strong brand and complementary footprint that will accelerate refrigerants sales growth. Further the reclaim and carbon credits businesses extend A-Gas’ existing operations in the US Environmental Services market which is already well established in the UK and Europe.

The acquisition of Coolgas follows on from the successful acquisitions not only of RemTec International in July 2012 but also of Australian based Technochem in March 2012 and SA Rural in May 2012, and UK based A-Zone Technologies in April 2012.

Commenting on the acquisition:

John Rutley, Executive Chairman and founder of A-Gas International said:
Jesse Combs and his management team have built a great business in the US refrigerant sector and we are delighted to add it to our rapidly expanding presence in this important market. The fit with our recently acquired business, RemTec, is perfect and allows us to offer a full range of products and services to our customers in the world’s largest refrigerant market.

Jon Masters, Regional Managing Director of A-Gas International said:

The acquisition of Coolgas will significantly strengthen our position as the leading independent global supplier of refrigerants at a time when regulatory changes are providing increasing opportunities for reclamation and recycling of used refrigerants using our market leading technology developed in the UK. We look forward to supporting the Coolgas management team and workforce in continuing to provide outstanding service to its customers.

Jesse Combs, CEO of Coolgas said:

I feel honoured that A-Gas saw Coolgas as a strategic fit and entry point into the US refrigerants’ distribution business. Our team of professionals have a customer service mind-set that I believe sets Coolgas apart from the rest of the industry. I have the upmost confidence that the A-Gas team will support and grow upon our "refrigerants made simple" philosophy for many years to come.

About A-Gas International

A-Gas is an international group of companies with headquarters in Bristol, UK. A-Gas is a market leader in the supply of refrigerants within its core territories in the U.K., South Africa, and Australia, and has state of the art storage, blending, packaging and reclamation facilities in Bristol, Cape Town, and Melbourne. The company also has marketing and distribution centres in Singapore, Thailand, China and Mexico. In the US, A-Gas has a Performance Chemicals business located in Doylestown, Pennsylvania; RemTec International, a refrigerant reclaimer and halocarbon management specialist located in Bowling Green, Ohio; and now Coolgas, headquartered in Houston, Texas. For more information, visit www.agas.com

About Coolgas

Coolgas Inc. was started in 1994 as a distributor of refrigerant gases. Through a continual focus on customer service embodied by its “refrigerants made simple” philosophy it has gained customers across the United States and grown to become one of the leading independent distributors of refrigerants. Coolgas supplies a full product range from essential use CFCs through to the most recent HFC blends. Coolgas also supplies in a wide variety of formats from the smallest auto aftermarket disposable cans through to bulk tankers for industrial customers. Coolgas is an EPA approved refrigerant reclaimer. The Coolgas, Inc. headquarters are located 40 miles north of Houston, Texas. For more information visit www.coolgas.com

California carbon twice as expensive as European

The cost of carbon in California has risen sharply while the equivalent in the European Emissions Trading System has so far gained little from yesterday’s long-awaited reform proposals

London, 26 July 2012 – A reduction in regulatory uncertainty in California, and concern about a nuclear power outage, have helped to push the price of a carbon allowance in the US’ most populous state to more than double that in the much longer-established European Union Emissions Trading System.

The value of a California Carbon Allowance (CCA) for delivery in December 2012 closed at $19.50 per metric ton of CO2 equivalent (EUR16.04/tCO2) on 24 July, the highest closing price of the year so far. The price for European Union Allowances (EUAs) for delivery in December 2012 closed at EUR7.20/tCO2 on the same day.

The much higher price in California may be surprising to Europeans, given perceptions about American reluctance to take action on climate change. Ironically, the California scheme was almost derailed earlier this year by legal action taken by an environmental action group (the Association of Irritated Residents) who insisted that the scheme was not strict enough.

The price of EUAs has remained low despite the European Commission’s release yesterday of its proposal for changes to auctioning volumes in Phase III of the EU ETS, which begins in 2013. These changes, if approved by both Parliament and the Council, would delay some of the auctioning volume originally intended for the early years of Phase III, into the later years. The changes were proposed by the European Commission in response to widespread criticism that the price in the EU ETS is too low to promote the necessary investments in clean energy.

In the long term, Bloomberg New Energy Finance expects prices in both the Californian and EU ETS to rise significantly, since the emission reduction targets in both parts of the world for the period beyond 2020 are likely to continue to strengthen. At the moment the firm’s base case forecast for the spot price of an allowance in 2020 in both markets is the same, at EUR45/tCO2 ($55/tCO2). The fact that the forecasts are the same is purely coincidental and belies significant structural differences in the two markets; the EU ETS has access to the Kyoto market for international credits whereas California does not; and the largest sector in the EU ETS is the power sector while transportation is the largest emitter in the California market.

Matthew Cowie, head of carbon market research at Bloomberg New Energy Finance, commented, “While it appears that Europe has the political will to give the EU ETS more teeth in the long term, the process of fixing the problems continues to suffer delays. A month ago most market participants thought that changes to the Auctioning Regulation could be in place by the end of 2012, but most commentators now expect that this will take well into 2013 to accomplish. This market needs both ambition and structural stability in order to regain its lost importance.”

Michel Di Capua, head of North American research at Bloomberg New Energy Finance, commented, “After several failed attempts to introduce cap-and-trade at the national level, there’s a widespread belief that carbon markets are dead in North America. Not so. We are on the verge of seeing the emergence of a meaningful tradable market that over the long run will transform California’s power, industrial, and transport sectors. The business community should take note; this market will impact some of the country’s largest utilities and some of the world’s biggest oil and gas players, among others.”

Futures contracts for the California market have been trading since 2011. Its underlying spot market is due to begin in 2013. The EU ETS saw the first futures trading in 2003, and the start of spot trading in 2005.

For further information:
Matthew Cowie
Bloomberg New Energy Finance
+44 20 3216 4780
mcowie2@bloomberg.net

 

Carbon Credits Provide Cash Incentives and Environmental Benefits for the Recovery and Destruction of CFCs

Used CFCs found in any condition, or mixed with other refrigerants can be turned into cash with the additional benefit of protecting the environment!    

The California Climate Action Reserve (CAR) has formally released a Destruction of Ozone Depleting Substances (ODS) Protocol, that provides a standardized approach for quantifying and monitoring Green House Gas (GHG) reductions, from projects that destroy ODS with high global warming potential. Specifically, the CAR Protocol version 2.0 provides incentives for the destruction of R-11, R-12, R-13, R-113, R-114 and R-115, with the caveat that these gases were previously used in refrigerant applications, or are from virgin stockpiles. Other CFCs recovered from foam building insulation and from appliance insulation are also eligible. The protocol is available at the following link: http://www.climateactionreserve.org/how/protocols/adopted/ods/current/

“The current market value of these offset credits not only covers all the costs of destruction, but also provides cash incentives to contractors and end users who are willing to recover these refrigerants and send them to an approved recycling facility that is recognized by CAR as a site that can convert these CFCs to verified carbon credits. “

For more information contact RemTec today or visit our website www.remtec.net

From the Carbon-California Desk

09.13.12
Study Highlights California Carbon Offset Supply Shortage

American Carbon Registry releases offset supply analysis for California carbon market, projecting 29% shortage by 2015, 67% shortage by 2020.

A report released today by the American Carbon Registry (ACR) points to a significant shortage of offsets in the California carbon market. Offset demand in a California cap-and-trade market is expected to reach just over 200 million metric tons co2 equivalent (MMTCO2e) by 2020. To date, the regulators in California have only adopted four protocols for compliance use – US ODS, Livestock Methane, Forestry and Urban Forestry.

Based on the four Compliance and Early Action Protocols adopted, the analysis projects a shortage of 29%, or 7.6 MMTCO2e, in the first compliance period (CP1) rising to 67%, or 134 MMTCO2e, in the third compliance period (CP3). As is currently the case in the pre-compliance market, US ODS and Forestry projects are forecasted to provide the majority of supply to the market.

Forecast Cumulative ARB Offset Supply vs. Potential Offset Demand (2012-2020)*

The analysis looked at currently adopted protocols and considered the addition of the following protocols: Coal Mine Methane (CMM), Low-bleed Pneumatic Valves, Rice Management and Fertilizer Management. Despite their inclusion in the ACR study, ARB made statements in June indicating they are no longer considering pneumatics as an eligible project type.

ACR anticipates a majority of the 7.6 MMTCO2e short in CP1 would addressed by the adoption Pneumatics (5 MMTCO2e). Based on ARB's statements, these credits will not be available for compliance use, and credits from CMM and Rice Management protocols will still be insufficient to make up for the shortfall. If pneumatics are in fact "off the table" for California, compliance offset supply appears to remain short in CP1, and CMM early action is the only supply option with enough potential capacity to address this shortfall.

If the three aforementioned protocols were adopted in 2013 by California, the report states it will reduce the 2020 market short from 134 MMTCO2e to 70 MMTCO2e. Discounting for lack of supply from pneumatic projects, this shortfall is more likely to be 96 MMTOCO2e by 2020, and even larger amount of offsets needed to satisfy demand.

Forecast Offset Supply: Current Compliance Protocols + Rice, CMM, Pneumatics, Fertilizer*

The analysis does not model the potential for credits from Reduced Emissions from Deforestation and Forest Degradation (REDD). Under the regulation, California has stated they will allow regulated entities to surrender credits from countries with high rates of deforestation, i.e. specific states within Brazil, Indonesia and Mexico. The credits are generated from protecting forested lands from deforestation, one of the largest sources (20-25%) of greenhouse gas emissions, globally.

Credits generated from nested REDD projects are expected to be large. However, California has restricted the quantity the market can absorb to 25% (of the 8% limit) each compliance period, or just over 50 MMTCO2e (2013-2020).

ARB can also consider a host of other protocols including Mexican-based ODS, N2O abatement, Organic Waste Digestion, amongst others, which ACR did not include in their analysis.
If you have any questions regarding offsets, or the California carbon market in general, please contact Evolution Markets' US Carbon Markets team at: +1 415.963.9137 or +1 914.323.0265.
(*: source: "Compliance Offset Supply Forecast", September 2012, Winrock International, American Carbon Registry)