Issue: 17 Friday, 20 April 2018
Dear ,
After a raft of announcements at the end of last year, 2018 has so far seen carbon markets around the world respond positively as major policy decisions begin to take effect. The work now continues as policymakers focus on implementation and the ongoing operation of their systems.
As always, we are pleased to share the ICAP newsletter, a quarterly summary of the latest developments in emissions trading around the world and an update on ICAP activities.For more information on cap-and-trade programs in force and in the works around the world, please visit the ICAP Interactive ETS Map on the ICAP website. It is updated regularly as new information becomes available.
Kind regards,
On 21 February 2018, California, Québec and Ontario held their first joint allowance auction after formally linking at the beginning of the year. Despite a record number of allowances on offer (over 98 million), the auction sold out, clearing at USD 14.61, just above the minimum price of USD 14.53 (see auction report by the California Air Resources Board - CARB). The record offer was due to allowances reintroduced from previously undersubscribed auctions. Over 8.5 million 2021 vintage allowances were also sold, signaling confidence in the future of the program.
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On 29 January, Governor Phil Murphy signed an executive order directing the New Jersey Department of Environmental Protection (NJDEP) and the Board of Public Utilities to prepare to reenter the Regional Greenhouse Gas Initiative (RGGI) program. In a presentation during a public hearing on 29 March, the NJDEP laid out plans to rejoin the program, indicating that preparations would take place in the first half of next year, with New Jersey intending to participate in RGGI auctions from the third quarter of 2019.
New Jersey was a founding member of RGGI in 2009. However, Governor Chris Christie opted to leave the program in September 2012. Rejoining RGGI will require negotiations with the current RGGI states, including with regard to the adjustment of the program’s emissions cap.
On 9 April 2018, public comments on Virginia’s proposed CO2 Budget Trading regulation closed. The nine participating RGGI states submitted joint comments generally addressing issues of regulatory compatibility with the 2017 Model Rule, which is the guiding document of the RGGI program, as well as the proposed stringency of Virginia’s cap. The RGGI states applauded Virginia’s move to draft a cap-and-trade regulation and have been in talks with Virginia officials about joining the RGGI program. If Virginia were to join RGGI it would significantly increase the size of the market, as Virginia’s covered emissions would then make up approximately one third of the total RGGI cap.
On 27 February 2018 the Council of the European Union formally approved the reform of the EU ETS for the period after 2020. The reform will put the EU on track to deliver on its 2030 climate target. Formal approval of the directive by the Council representing EU Member States was the final step in a legislative process that lasted more than two years. Since the passing of the ETS reform, carbon prices in the European market have steadily risen, recently reaching above EUR 14, a 7-year-high and more than double the average price of 2017.
On 21 March 2018, during a parliament committee hearing on the Impact of Brexit on the European Union Emissions Trading System (EU ETS), the United Kingdom (UK) Government expressed its aim to ensure UK participation to the EU ETS until the end of phase three in 2020. Three days earlier, Brexit negotiators had reached agreement on a transition period that would warrant UK compliance with the EU ETS until 2019. Negotiations continue on the part of the agreement that would ensure UK participation in the market in 2020.
It is currently unclear whether the UK will continue to participate in the EU ETS in the post-2020 period, as this also depends on the larger question of whether it will remain part of the EU single market. Otherwise, a Swiss-style linking between the EU and UK could be an option, although establishing such a link would likely take some time. During the committee hearing, the UK Government signaled its preference for a market-based carbon pricing mechanism but stated that other options outside the EU ETS would also need to be considered.
On 17 March 2018, the first session of the 13th National People's Congress of China approved the plan to restructure the State Council, the highest executive and administrative body of the Chinese state. The changes also affect the governance structure of the Chinese national ETS, with the Ministry of Ecology and Environment (MEE) – previously named Ministry for Environmental Protection (MEP) – assuming responsibility for climate change policy including the ETS from the National Development and Reform Commission (NDRC).
The ongoing implementation of the national ETS will continue to be guided by the ‘Work Plan for Construction of the National Emissions Trading System (Power Sector)’, which was approved by the State Council at the end of last year.
Read more...
On 7 March 2018, the Korean Ministry for Environment (MoE) released draft rules regarding the introduction of auctioning and the use of international offsets; both new design features for phase two of the Korea Emissions Trading System (2018-2020). From next year, at least 3% of allowances in the Korean ETS will be auctioned rather than freely allocated. According to the draft guidance, auctions are to take place monthly and will be open only to market participants who do not receive all of their allowances for free. Auctions will be subject to a minimum price, which will be set by the government for each auction based on recent market developments. The draft rules also specify that with the start of phase two in 2018, the use of Certified Emission Reduction units (CERs) from both international and domestic Clean Development Mechanism (CDM) projects developed by Korean-owned companies will be allowed, up to 5% of each entity’s compliance obligation. In phase 1, only domestic CERs had been eligible for compliance.
Also, On 6 April 2018, the Greenhouse Gas Inventory & Research Center for Korea (GIR) published the first annual status report (Korean) on the implementation of the Korean Emissions Trading System (KETS) for Financial Year (FY) 2015-2016. The report shows high levels of compliance (98.5% in FY2015 and 100% in FY2016), with trading volumes increasing from 1.2 to 5.1 MtCO2 over the period. This compares to an emissions cap of 560 MtCO2 for the KETS in 2016. Prices have also steadily risen over the period, from around USD 10 in late 2015 to USD 17 in 2016, with current prices reaching about USD 20.
On 21 February 2018, the Tokyo Metropolitan Government (TMG) released emissions data for Financial Year (FY) 2016. In aggregate, entities under its cap-and-trade program have achieved a 26% reduction in emissions since its launch in 2010. Reductions continue despite an increase in the overall size of facilities under the program, indicating a decrease in the energy intensity of Tokyo’s urban facilities.
According to the TMG report, many of the emissions reductions have been achieved through the installation of high-energy-efficiency equipment, such as LED lights. From FY2015, covered entities have also been able to reduce their emissions by purchasing electricity or heating from lower-carbon suppliers.
CNY 47.10 (USD 7.50)**CNY 24.00 (USD 3.82)**CNY 13.58 (USD 2.16)**CNY 39.00 (USD 6.21)**CNY 15.99 (USD 2.55)**CNY 43.12 (USD 6.87)**CNY 8.51 (USD 1.36)**CNY 19.45 (USD 3.10)**
19.04.2018
Tanjiaoyi News Service (Chinese)
KRW 22,000 (USD 20.66)**
OMF CommTradeNew Zealand
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