Carbon Markets: it's money time! Join Dolfio for an exciting webinar on July 30th. The slides are available here.

You can also get the recorded version (video and/or audio) here.

WCI: final cap-and-trade draft The Western Climate Initiative released a draft making a number of new recommendations for the cap-and-trade market to debut in 2012. Here are some new elements:
- carbon dioxide emissions from the combustion of biomass or biofuel are not included in the cap-and-trade program.
- the emission threshold for coverage under the cap-and-trade is set at 25,000 metric tons
- no more than 10% of the compliance obligation of an entity could be met through offsets
- the projects given priority for consideration in an offset system will be US, Canada or Mexico-based in the agriculture, forestry and waste management sectors
- a regional administrative organization will be created to coordinate the auctions of allowances, the offset programs and the reporting of emissions.

The allowance budgets for each state and province partner as well as the minimum percentage of allowances to be auctioned (as opposed to given away) are still TBD.

Also on July 18th, Ontario joined the Western Climate Initiative and became the 4th Canadian province in the scheme.

G8: 50% CO2 reduction by 2050 Leaders of the world's richest nations, the "Group of Eight" industrialized countries, which account for almost 60% of the world economy, have pledged to cut emissions in half by 2050. European leaders see the glass as half-full. They were pleased to see President Bush's commitment to a quantified reduction in CO2 emissions, which is an important step towards a binding international treaty on climate change in 2009.

But other developing countries, such as India, China, Mexico, Brazil and South Africa, see the glass as half-empty. In their response, they challenge the G8 countries to reduce their emissions by 80% to 95% by 2050. They also urged G8 to establish an interim reduction target between 25% to 40% by 2020. This argument is strongly supported by some international NGOs. For example, the WWF described the outcome of the talks as "pathetic", and Oxfam said that the agreement threatened the world's poor.

Click here for the G-8 declaration.

Shrinking oil supply

The international energy agency released its Medium-Term Oil Market Report analyzing market development between now and 2013. The main findings are that projects to bring additional production capacity online face delays averaging 12 months, and more importantly, that production for existing well has declined by 5.2% in 2007 versus a 4% average before.

The increase in decline rate means that more new oil production capacity will be needed to only maintain the current levels of production, let alone match any increase in demand.

BC and California release their climate action plans The plans announced on June 26 include a comprehensive set of measures and incentive programs for individuals, families and businesses to help achieve the climate change goals while preserving the competitiveness of both economies. The policies and initiatives outlined in the action plans cover the major sectors of the economy, including transportation, agriculture, industry, forestry, buildings, waste, and energy.

Both California and BC are partners of the Western Climate Initiative, a collaboration launched in February 2007 between several Western American states and Canadian provinces to create a common carbon cap-and-trade system.

The Climate Change Draft Scoping Plan for California can be viewed at: www.arb.ca.gov
The British Columbia's Climate Action Plan is available at: www.gov.bc.ca

Conference: From Climate Change to Carbon & Renewable Energy Markets Thank you for attending the Dolfio seminar at SFU Harbour Centre.

Participants included Morgan Stanley, JP Morgan, BC Hydro, Pemberton Power, Elemental Markets, and others. To see a selection of the slides, please click here.

The Lieberman-Warner bill dies on the Senate floor The forefront proposal for a Federal level cap-and-trade market has not passed the deliberation phase in Senate, with a 48-36 vote in favor of the bill. 60 votes were required to end the debate and start considering amendments.

Still, Boxer, who co-sponsored the bill with Lieberman and Warner said that "it's clear a majority in the Senate wants to act". Both presumptive nominees for the general election, Obama and McCain, have indicated support for mandatory reductions in greenhouse gas emission reductions, a departure from the Bush administration policy.

General Motors shifting its strategy to efficient cars General Motors has shifted its strategy towards smaller, more fuel-efficient vehicles. Rick Wagoner, GM's CEO, announced that GM will cease the production of SUVs at 4 North American assembly plants, citing a "structural shift" by consumers away from SUVs and into fuel-efficient cars.

On the same day, GM announced that it is undertaking a strategic review of the Hummer brand, and that "all options are being considered". GM's US May sales plunged 30%.

NRG to Buy Calpine Power wholesaler NRG Inc. has made an offer to buy Calpine Corp. for $11.3 Billion, an electricity company that supplies electricity from natural gas. NRG Inc hopes the deal would solidify its base in California since Calpine owns several newer natural-gas-fired generation facilities and 17 geothermal plants, shrink its carbon footprint on a MWh basis and help cut taxes by taking on $5.1B in cumulated Calpine operating losses. Calpine, who emerged from bankruptcy 4 months ago, said the 16% premium on its May 21st share price is not enough, but that the company may seek further negotiations. Meanwhile, high level executives are leaving Calpine. Former Calpine Chairman Kenneth Derr left the company during the last week of May and turnaround specialist and interim CFO Lisa Donahue resigned during the first week of June.

McCain: 60% GHG reduction by 2050. In a speech at a wind power company in Oregon, US Senator John McCain stated that the US should cut its emissions by 60% below the 1990 levels by 2050. That is lower than the 80% proposed by Mrs. Clinton and Mr. Obama. Mr. McCain sought to distance himself from President Bush, who has not rejected the concept of a cap on emissions. The Lieberman-Warner bill calls for a 66% reduction below 2005 levels. With the three presidential hopefuls supporting a cap-and-trade system for carbon emissions and the current WCI and RGGI initiatives on the East and West coasts, the establishment of a pan-North American carbon market in the near future becomes very likely.

Hydro Quebec OKs 2,000MW in wind power Hydro-Quebec has accepted 15 bids for wind power totaling 2,004MW of power to come on stream between 2011 and 2015, at an average price of $0.105/kWh, and representing $5.5B in investments. The tender call was issued in 2005. Geographic constraints ensure that a sizable portion of the equipment will be manufactured within Quebec. Saint Laurent Energies, a consortium between Hydromega Services Inc, EDF Energies Nouvelles and RES Canada will install 960MW of capacity. The Boralex and Gaz Metro will install 272MW Consortium. Five other companies will install the other 758MW of power. Congratulation to the winners!

Alberta GHG Emission Reductions The Government of Alberta revealed the first results of its own climate change legislation. The law requires facilities producing more than 100,000 CO2e tonnes per year to reduce their intensity by 12% compared to their 2003-2005 average baseline. To comply with this requirement, companies have a choice of either improving the efficiency of their operations, buying carbon offsets, or paying $15 into the Climate Change and Emissions Management Fund for every ton above their target. The government of Alberta said that 2.6 Million CO2e tonnes of reductions and investments in verified carbon offsets were recorded, and $40M (or the equivalent of 2.7M CO2e tonnes) were paid to the fund. Pembina has critized the mechanism, by saying that half of the greenhouse gas emission reduction did not occur.

Quebec joins the WCI At the 2008 Conference on Climate Change at Yale University, Quebec Premier Jean Charest announced that Quebec is joining the Western Climate Initiative (WCI). Why did Quebec join the WCI and not not the geographically closer Regional Greenhouse Gas Initiative? "We are all hydro power, not thermal power", Charest said. The Montreal Climate Exchange wants to host the carbon trading market and will launch a future on CO₂ on May 30.
At the Yale conference, the governors of four states and representatives of 14 others signed a joint statement calling for presidential candidates to commit to climate initiatives within the first 100 days of their administration.

Bush hinting at a Federal-scale RGGI? President Bush has proposed a target for stopping the growth of the US GHG emissions by 2025. In today's rose garden speech, he stated that new Congress laws "should not force the government to regulate more than just power plant emissions." According to CNN, several conservative GOP lawmakers have viewed Bush’s statements as a move toward endorsing a limited type of "cap-and-trade" emissions reduction proposal targeting power plants. This suggests a Federal-scale version of the Regional Greenhouse Gas Initiative of the Northeast and Mid-Atlantic US States.
President Bush called for a common post-Kyoto approach but stopped short of mentioning a post-Kyoto protocol. He also discussed at length the development of nuclear power, clean coal, wind and solar power.

WCI Draft Design Documents The 5 Western Climate Initiative subcommittees have each released a draft design document, open to stakeholder feedback until mid-April. The main points are as follows:
- the scope of the program is ambitious (at least 47% of the region's emissions would be covered),
- transportation is included,
- between 25 to 75% of the allowances are to be auctioned by the WCI States and Provinces,
- the generator-based approach is preferred for the electricity sector,
- an offset program is considered for projects either within the WCI jurisdiction or including of all Canada, the US and Mexico.

Al Gore's new crusade Former Vice-President Al Gore launches the 3 year, US$300M Alliance for Climate Protection advocacy campaign to promote emissions reduction in the US. Advertisments draw parallels between ending global warming and major historic endeavours, such as the fight against fascism in Europe during World War II. TV ads will pair high-profile figures such as Speaker Nancy Pelosi and Newt Gingrich.

Here is a recent 20 minute speech by Al Gore at the TED conference on the reasons for being optimistic about climate change. Also, part 1 and part 2 of his Nobel Prize acceptance speech.