Isra-Mart srl:CDM carbon offsets top 500 million mark

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Isra-Mart srl news:

The new year passed its first carbon market milestone this week, as the UN announced it has issued 500 million offset credits under its Clean Development Mechanism (CDM).

Under the CDM, emission reduction projects earn an offset credit, termed certified emission reduction (CER) credits, for each tonne of CO2 saved. CERs are sold to companies or countries to meet carbon emissions targets set under the Kyoto Protocol.

Currently, there are about 2,740 CDM projects registered across 70 developing countries, 855 of which have had credits issued.

On Monday, 1.3 million credits were issued to an Indian project that destroys greenhouse gas HFC-23, pushing the total generated since the CDM began to about 501 million.

A subsequent, similarly sized issuance swelled the total further, adding to the 3.5 million awarded last week, which has set up January to be a bumper month for new credits.

The flood of new credits caused CER prices to dip to €11 (£9.15) a tonne, the lowest level since February 2010.

Barclays Capital has also scaled down its price forecast for CDM carbon offsets over the first half of 2011, from €14.5 a tonne to €13.

"With all of that (and some more) expected to be issued in Q1, CER liquidity in the coming months should remain high and we forecast that 200 million (metric) tons of CERs will be issued over 2011," its analysts said.

Even so, CDM Executive Board chair Clifford Mahlung was quick to praise the CDM for topping the 500 million mark and extending its influence in the face of criticism over its efficiency and effectiveness.

December's climate talks in Cancun resulted in a series of proposals on how to reform the scheme, including an investigation into allowing carbon capture and storage (CCS) projects into the CDM and introducing standardised baselines to monitor projects.

"Last year was a year of accomplishment, with new procedures adopted and broad, significant improvement in the function of the CDM. Now we're kicking off 2011 by marking an important milestone," said Mahlung.

"We've come a very long way in a very short time. All CDM stakeholders can take pride in that. When we reflect on our accomplishments, which are many, we should also give thought to the work ahead of us to ensure that the CDM delivers fully on its considerable potential," he added.

In related news, Reuters reported that Trading Emissions Plc, an Isle of Man-based clean energy investment fund, had received further expressions of interest for both its private equity and carbon portfolios following an unsolicited approach for the former in November.

However, rather than a piecemeal sale, Reuters reported that the whole company may be sold to realise greater value – a contrary position to earlier declarations of its intent to sell off assets in its private equity portfolio over the short and medium term.