In this issues of General Carbon Newsletter: -REC & CDM for Renewables -Status of REDD -Emerging Emission Trading Schemes -And many more news, updates & highlights of carbon market

1. General Carbon Newsletter
MONTHLY CARBON NEWSLETTER APRIL 2011, ISSUE:03
Point of View
PROJECT HIGHLIGHTS
News that Japan may use force majeure clauses to seek
exemption from the Kyoto Protocol pledges to cut emissions 138 new CDM projects entered
rocked the market in March. While some analysts felt that it the pipeline in March 2011.
would result in a boom in the supply of CERs and reduced
demand for ERUs, others were of the view that the demand The issuance of CERs in March
for CERs would increase due to the increased reliance on was 22.8 mCERs taking the
thermal power generation. Greater demand from Germany for total issuance to 576 Million
CERs due to a revisit of its nuclear power plants was also CERs. The average issuance
projected. However, these views were put to rest when the success stands at 95.3%.
Japanese Environment Minister clarified that Japan had not
decided on any change in its Kyoto commitments. Oman entered CDM Pipeline
with the project: “Waste
The US faced further setback due to defections and court Management Project at Al-
rulings which may postpone California‟s cap-and-trade plan. Amerat”
The buy-side of the carbon market is slowly moving away from
early stage CDM projects, given registration uncertainties prior Cape Verde is not an LDC
to 2012. Increased marketing by CDM EB on the strengths of anymore.
the mechanism seems to be falling on deaf ears. Small scale
and community oriented projects are the current focus areas. The Biomass based
Cogeneration Project by India
New market mechanisms continue to be the main talking point Glycols Limited got successfully
at negotiations, with over 20 submissions made by countries
registered under CDM to
to UNFCCC. Plans to address carbon theft at a registry level
generate 110,157 CERs per
are on the cards, while the market resumed operation and is
annum.
reverting back to normalcy. The Voluntary Market witnessed
reasonable activity during the month despite a limited
UAE becomes first GCC nation
upwardly price movement.
to earn UN carbon credits for
Best, reducing emissions through a
waste heat recovery project.
Satish Kashyap
REC PRICE WATCH
REC: Maximizing Revenue for Renewable Power
IEX: Price (Volume)
The first trade of RECs which took place in India saw a good Non solar -INR 3900 (150)
participation from buyers. Out of the total 532 RECs issued Solar - (Not traded)
(108 RECs- wind energy project in Gujarat & 424- biomass
project in Maharashtra), 424 were placed for trading on IEX PXIL: Price (Volume)
and PXIL power exchanges. There was a combined demand
of 70,701 RECs (160 times the supply) that led the clearing Non solar -INR 2225 (274)
price to touch the forbearance of INR 3900 on IEX while it was Solar - (Not traded)
traded at INR 2225 on PXIL. As of now 53 projects (~280MW)

2. are accredited by the state agencies and 21 of these VCS VER PRICE WATCH
(~170MW) are registered by the central agency for issuance.
The states of Maharashtra, Gujarat, Chhattisgarh, Haryana India, China:
and Rajasthan are currently the most active players in the Renewables, EE
REC process. Pre 2008 vintages
US$ 0.50- 1.00
REC is a tradable certificate of proof that one MWh of Post 2008 vintages
US$ 1.00-2.75
electricity has been generated by a renewable energy (RE)
generator. A RE generator is eligible for availing benefits in Renewables, EE- Pre CDM
the following situations: Pre 2008 vintages
US$ 0.50-2.00
1. If the RE generator sells power to the local distribution Post 2008 vintages
company (DISCOM) at or below the average power US$ 2.00-3.50
purchase cost (APPC).
2. If the RE generator sells power to another licensee or Industrial gases, others
an open access consumer at the mutually agreed Pre 2008 vintages
US$ 0.25-0.50
price.
Post 2008 vintages
3. If the RE generator sells power through a power US$ 0.50-1.00
exchange at a market determined price.
4. If the RE generator is a grid connected captive
consumer, not receiving any concessional wheeling, Rest of Asia, Africa:
transmission or banking charges, or exemption from Renewables, EE
electricity duty. Pre 2008 vintages
US$ 1.00-2.00
The RE generator who is selling power to the DISCOM at the Post 2008 vintages
US$ 2.00-4.00
state determined preferential tariff is not eligible to participate
in the mechanism. And if it terminates the existing PPA (power Renewables, EE- Pre CDM
purchase agreement) with the DISCOM, it cannot participate Pre 2008 vintages
till three years from the date of termination. Similarly a captive US$ 1.50-3.00
consumer who forgoes the concessional benefits would not be Post 2008 vintages
eligible till three years. US$ 2.00-5.00
Most of the new RE generators are confused whether to go Industrial gases, others
the conventional way by signing PPA at preferential tariff or Pre 2008 vintages
US$ 0.25-1.00
whether to sign PPA at the APPC tariff for getting the REC
Post 2008 vintages
benefit. There is also confusion whether the projects are US$ 0.50-1.00
eligible under REC as well as CDM mechanism
simultaneously. The regulatory guidelines of either mechanism
do not restrict a project to apply for the other mechanism at
the moment. Carbon credits are not considered as
concessional or preferential benefits which could restrict a
project from applying for RECs. And there are a few CDM CDM EB NEWS
registered projects which are now also registered under REC.
UN Climate Change Conference
For a project to register under CDM it needs to prove reached a stalemate in Bangkok
“additionality” i.e. the project being financially lesser attractive as rich and poor nations feuded
as compared to the other alternatives available to the project
at the talks.
proponent. In case of most of the REC registered projects,
proving additionality would involve comparison between
“preferential tariff” and “APPC + REC floor price”. In a few COP 16 and CMP 6 official
cases, proving additionality would not be much of a challenge
reports published.
as the APPC + REC floor price is of lesser value. But the
challenge will be in proving additionality for projects with high
APPC + REC floor price. For example, many wind projects
have APPC + REC floor price which ranges around INR 4 to
4.5 per unit of power, while the preferential tariff ranges

3. around INR 3.5 to 4 per unit. Such cases will require to be OTHER CARBON NEWS
taken care of by structuring the additionality approach
appropriately. We still have projects registered under CDM in Japan could review emissions
India with captive cost as high as INR 4.8 per unit of power. targets in wake of nuclear
Addressing such issues will be a test of the expertise of the crisis
CDM consultant.
The average revenue from carbon credits for a typical RE EU emissions up 3% as
projects is around INR 0.5 to 0.7 per unit of power generated recession eases
and the minimum revenue from RECs is INR 1.5 per unit (floor
price for non solar REC). Thus combining both the revenue
streams could increase the profitability of such RE projects EU May Need Tighter Supply
with a good margin. As is evident from the REC registry and to Avoid CO2 Slump, Adviser
CDM pipeline, a good number of projects are opting for both Says
REC as well as CDM.
Write to gcnews@general-carbon.com for a detailed Airlines to Be Second-Biggest
presentation on the REC mechanism and how it can benefit Sector in EU CO2-Trading
you.
System
California Judge Orders Delay of
State of REDD
Carbon-Market Rules to Study
Reducing Emission from Deforestation and forest Alternatives
Degradation or REDD aims to reduce greenhouse gases
while delivering benefits such as biodiversity conservation,
sustainable management and poverty alleviation. According Australian PM Julia Gillard sees
to IPCC, about 20% of the carbon dioxide emissions are approval dwindle on carbon tax
caused by deforestation, when large forested areas are U-turn
cleared to make way for industrial progress, agriculture and
timber, especially in developing countries. REDD analysts
indicate that controlling deforestation is one of the most Carbon market puts brave face
cost-effective ways to reduce emissions. As per the on headwinds
conservative estimates of IPCC, approximately 25% of
deforestation emissions can be abated at a cost of less than
$20 per metric ton of carbon dioxide (tCO2). N. Korea seeks to earn hard
currency via carbon credits
At Cancun, it was agreed to create a framework for REDD
mechanism where developed nations provide finance to
help developing countries protect forests. Currently the S&P sees Abu Dhabi solar deal
challenge lies in raising requisite finance since there is no as start of new energy era
structured process for this as yet. Also, another concern is
the lack of a proper technical standard for measuring and
monitoring carbon emissions from forests. Thirdly, there is
no robust mechanism in place to account for carbon or to
track “leakage”. For instance, if REDD activities force up the
market price of timber, livestock, and crops, they could drive
deforestation somewhere else.
Even so, there is progress being made on several fronts in
REDD. A standing example would be the UN-REDD
program launched in 2008, which now has 29 partner
countries across Africa, Asia Pacific and Latin America, 13
of which are receiving support for National Program
activities. National Programmes in seven UN-REDD

4. Programme countries are now in their implementation
phase (Bolivia, DRC, Indonesia, Panama, Tanzania, Viet EDITORS
Nam and Zambia). In 2010, 15 more countries were Vinodini Chitrakaran,
welcomed to the Programme as new partners and given vinodini.c@general-carbon.com
observer status to the UN-REDD Programme Policy Board:
Bangladesh, Bhutan, Central African Republic, Colombia, Rameez Shaikh,
Costa Rica, Gabon, Guatemala, Guyana, Kenya, Mexico, rameez.shaikh@general-
Nigeria, the Philippines, Republic of Congo, Solomon carbon.com
Islands and Sudan.
The total amount of funding for UN-REDD National GERERAL CARBON PTE LTD
Programmes was at US$51 million in 2010, with Norway 16 RAFFLES QUAY, #33-03 HONG
LEONG BUILDING,
being the first and the largest donor with US$52.2 million for SINGAPORE 048581.
2008-2009, US$31 million for 2010, and at least US$40
million for 2011-2012. Other donor countries are Denmark
(US$2 million in June 2009 and US$6 million in November
2010), Spain (US$20.2 million over a period of three years,
and US$1.4 million for 2010), Japan (US$3 million) and the
European Commission (US$14 million or €10 million).
Source: http://www.un-
redd.org/AboutUNREDDProgramme/tabid/583/Default.aspx) This newsletter is brought to you
by General Carbon. Contact
A few key success factors have clearly emerged from the
gcnews@general-carbon.com if
experiences of participating countries. These factors are:
you have any queries or
1. Timely access to funds. comments or wish to contribute
2. National level leadership, and linking REDD+
news and updates. We welcome
strategies to broader development policies.
3. Flexibility of the REDD+ tool to be adapted to the your suggestions and
requirements of a specific context or initiative. contributions.
4. Including the stakeholders from the inception stage
and also in the control of resource management.
5. Concrete benefit sharing plans that lend legitimacy If you wish to unsubscribe from
to the programmes. this newsletter please reply to
6. Capacity building and knowledge sharing. this email with “unsubscribe” in
the subject line.
Further, the UN- REDD Program organizes several
international events to disseminate information about the
complex methodologies, and to implement Measuring, General Carbon is a leading
Reporting and Verification (MRV) and Monitoring systems
emission reduction consulting,
(MRV&M) within countries, taking into account their unique
development goals and UNFCCC requirements. sustainability advisory and
investment firm with presence
Similarly, in early 2010, the REDD+ Partnership was across Singapore, India, Sri
launched, where heads of state and government, ministers
and other representatives from 50 countries agreed on a Lanka, Thailand, Philippines,
framework for the rapid implementation of measures for Indonesia, South Africa, Nigeria,
reducing deforestation. Around USD 4 billion were pledged Ethiopia and Kenya.
for the period 2010–2012 for measures to reduce GHG
emissions from deforestation and forest degradation in
developing countries. The core objective of the Partnership
is to contribute to the global battle against climate change
by serving as an interim platform for the Partners to scale
up REDD+ actions and finance. 71 countries are members
of the Partnership to date. This interim Partnership is
expected to be replaced by, or folded into, a UNFCCC

5. mechanism including REDD+ once established and agreed
upon by the Parties.
Emerging Emission Trading Systems
South Korea- Target Management System (TMS), a
precursor to ETS
S. Korea is committed to reduce emissions by 30%
below Business As Usual (BAU) by 2020.
TMS is a system in which the government imposes
the target for GHG emission as well as the energy
use to designated entities (companies with GHG
emission and energy consumption in large volumes
respectively) and by which the government checks
on and manages the achievements of those
entities.
TMS involves systematic management of 70% of
national emissions by regulating 468 entities. Main
focus is GHG mitigation and energy saving.
Covers large corporate emitters with over 125,000
tCO2e/ annum that exceed the baseline volume of
500 terajoules over the latest 3 years, or sites that
generate 25,000 tCO2e/ annum and exceed 100
terajoules of energy consumption.
Entities spread over agriculture (food companies),
power companies, manufacturing units, building
(universities and hospitals), transportation
companies, and waste management companies.
TMS will pave way for the ETS, which will get
implemented from 2013-2015. Initially emission
allocations will be given out to the entities in 2015.
Penalties upto KRW 10 mn for non-compliance.
New Zealand ETS
Eligible units are called New Zealand Unit or NZU
priced at NZD 25.
Participants surrender NZUs to the Crown to meet
their obligations under the scheme. During the
transition phase (July 2010 to December 2012) one
NZU is required to cover every two tonnes of GHG

6. emissions in a calendar year. Participants can also
surrender a range of „Kyoto units‟ which they can
buy overseas.
The government gives out NZUs to owners of
forests that absorb carbon dioxide. Some emitting
entities that can pass on the cost of carbon to
consumers have to purchase and surrender NZUs.
Some other entities that cannot pass on the cost of
carbon to the consumer receive NZU allocations
from the government.
Covers carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and sulphur hexafluoride
(SF6).
Sectors covered are forestry, transport fuels,
electricity production, industrial processes, synthetic
gases, agriculture and waste. All forests face
obligation to surrender NZUs when trees are cut
down. Mandatory emission reduction obligation
staggered out from 2008 to 2015 across sectors.
An electronic register called New Zealand Emission
Unit Register (NZEUR) records who holds emission
units and is like a share registry.
The ETS will be reviewed by June 2011 to decide
further steps and whether new industries should be
roped in.
Post the transition phase, price for NZUs will be
market linked and these can be traded
internationally.