Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Wider CO2 markets may increase trading efficiency  Join our daily free Newsletter

MENAFN - Arab News - 10/09/2012

No. of Ratings : 0
Add to Mixx!


 


(MENAFN - Arab News) A link between European Union and Australian cap and trade schemes could inject new life into emissions trading as long as regulators take into account risks such as the impact of market intervention in one region on energy prices in the other.

The European Union's executive Commission and Australian government recently proposed a link between their emissions trading schemes from July 2015, pending domestic approval.

The link would allow Australian polluters to meet half their emissions caps by buying allowances issued in the EU from 2015 and European polluters to do the reverse from 2018.

A wider carbon market would increase liquidity and trading efficiency and reduce the system-wide economic costs of carbon abatement through a bigger community of buyers and sellers.

International cooperation may also deflect opposition by industrial companies, which in isolated domestic schemes see themselves at a competitive disadvantage.

And against the background of failing UN climate talks, a European-Australian tie-up could be a focus for other cap and trade schemes that are proliferating.

Additional schemes already exist in New Zealand and some north-eastern US states. California and Quebec will launch markets in January 2013. South Korea plans to start a scheme in 2015, and China has said it will run pilot markets in various cities and regions.

A precedent has already been set by the link-up of the EU emissions trading scheme (ETS) and the UN's project-based clean development mechanism (CDM) under the Kyoto Protocol, and it shows the dangers of having an excessively influential trading partner.

Under the CDM, projects in uncapped developing countries can reduce emissions to earn tradable carbon offsets, which they can sell into capped schemes.

Companies and traders under the EU ETS buy the vast bulk of purchases of these certified emission reductions (CERs), and their prices have moved in lock-step with EU carbon allowances (EUAs). The two have shown a daily price correlation of 0.91 in the past 12 months.

That close dependence has made the CDM vulnerable to European regulatory intervention - such as the European Commission decision to ban credits from all new projects from Jan. 1 except those in least developed countries.

As a result, the value of the primary origination market in the CDM has shrunk to 40 percent of its peak, and existing projects are winding down.

When the link involves two capped markets, in which electricity generation includes the cost of carbon permits, intervention could have an even bigger economic impact.

Each regulator would have the scope to impact the other's carbon prices, and the costs would be passed on to industrial and domestic energy consumers.

The impact of cap and trade schemes on energy costs has already been a source of discontent among miners in Australia and steelmakers in Europe, not to mention opposition from world airlines against the extension of the EU scheme to aviation.

It is difficult to anticipate the impact of the Australian scheme on energy prices, because the carbon market will not enter fully into force until 2015.
But it is easy to illustrate the impact in Europe, where the scheme is in its eighth year and carbon prices are fully passed through to wholesale power prices.

Coal-fired power plants, the marginal electricity source in Germany, have to buy permits to cover emissions of about 0.82 tons of CO2 per megawatt hour (MWh). EUA prices are currently low at 8 euros per ton, and even then they still amount to about 13 percent of wholesale power prices around 50 euros per MWh.

Regulators in both the European bloc and Australia will have the power to set caps on emissions, but the larger EU scheme would have more weight.
For example, the European Commission later this year is to consider whether to withdraw hundreds of millions of EUAs to remove a glut caused by the region's financial crisis.

The commission then has a mandate to propose new, lower caps on carbon emissions after 2020.

Any such move would tend to boost carbon prices and indirectly raise the cost of doing business for Australian utilities and industries in a linked market.

On the Australian side, the regulator sets emissions caps every five years, which could affect European carbon prices.
The recent announcement of the European-Australian proposal bore the hallmarks of a half-baked plan, which neglected to explain such risks beyond a note to take account of "comparable market oversight arrangements."
If regulators can explicitly tackle such jurisdictional issues, then linking schemes makes sense.


- The author is a Reuters market analyst. The views expressed are his own.

 






  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014Georgian Justice Minister Leaves Doha ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - HE Minister of Justice of Georgia Tia Tsulukiana left Doha on Thursday morning wrapping up a two-day official visit to the country. An agreement on ...

Apr 24 2014Egyptian Premier Off to Chad ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egyptian Prime Minister Ibrahim Mehlib left cairo on Thursday for Chad the first leg of a three-day two-state trip that will also take him to Tanzania ...

Apr 24 2014Australian Federal Parliament Deputy Speaker Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Canberra April 24 - Australian Federal Parliament Deputy Speaker Bruce Scott met here Thursday with HE Qatar's Ambassador to Australia Yousef bin Ali Al ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...

Apr 24 20143 GCC countries among top 30 on network readiness index ,MENAFN
(MENAFN) According to an annual global technology survey for network readiness index for 2014, three GCC countries have made it to the top 30 list for the third year in a row, Gulf Daily News ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014Morocco Admitted As Observer Member to SICA ,Qatar News Agency
(MENAFN - Qatar News Agency) La Romana Dominican April 24 - Morocco has been admitted as an observer member in the Central American Integration System (SICA) which also includes each of Belize ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

more...


 
Live Currency Rates






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help