Sceptre International Group Limited – Point Carbon lowers CER supply forecast

Published: 22 Dec 2010

Point Carbon has cut its CER supply estimate to the end of 2012 by 2.8 per cent.

The Oslo-based information provider, owned by Thomson Reuters, trimmed 31 million from its certified emission reduction (CER) forecast to 1.074 billion CERs to the end of 2012, according to a report published on Tuesday.

Point Carbon analysts said the downward revision was due to lower than expected monitoring reports for clean development mechanism (CDM) projects, which are required for CER issuance, and reduced expectations for CER demand post-2012.

The analysts have also trimmed their CER forecast to the end of 2020 by 41 million CERs to 3.667 billion CERs.

Of these, almost 1.4 billion CERs will come from industrial projects, mainly HFC 23 and N2O adipic acid schemes, while another 1.3 billion will come from renewable projects, the report said.

2011 supply

Point Carbon estimates that a total of 134 million CERs will be handed out in 2010, however the analysts expect 253 million CERs to be issued in 2011, a year-on year increase of almost 90 per cent.

There are several reasons for this predicted rise, according to Frank Melum, an analyst at Point Carbon.

He said these were due to this year’s backlog in CER issuance, because of delays in project registration, and hold-ups in processing the credits by the executive board of the CDM.

“We estimate that by the end of 2010 close to 850 million emission reductions have been generated from CDM, and that close to 500 million CERs have been issued. This leaves a backlog of some 350 million emission reductions waiting to get issued,” Melum said.

Issuance of credits to HFC 23 destruction projects were suspended in August by the CDM’s executive board while the UN carried out an investigation into allegations that project developers were gaming the system.

The probe did not find any developers guilty of misconduct and the board resumed issuing credits to the project type at the end of November.

These delays have impacted the overall issuance figure for 2010, while next year Melum also expects to see higher numbers of CERs awarded to other project types like renewable schemes.

Point Carbon’s 2011 forecast assumes that the executive board has the capacity to make 100 issuance awards a month.

For this figure to be achieved, the board will need to significantly ramp up the number of monthly issuances from this year’s average of 48 awards per month, and 44 awards a month in 2009.

Suspensions to project auditors, which carry out checks on emission reductions made, or specific issues regarding certain project types such as this year’s HFC 23 probe could also hit supply, the report warned.

Slashed forecasts

Problems faced by developers this year led Point Carbon to make several downgrades over 2010 from its January forecast of 1.18 billion CERs to be issued by the end of 2012.

This most recent forecast is a 9 per cent reduction, or 106 million CERs, from the projection at the start of 2010.

Other analysts have seen similar CER supply forecast dips.

In January 2010, Unep Risoe set its CER supply forecast at 1.092 billion. But its latest estimate on 1 December wiped 129 million, or 12 per cent, from this at 963 million CERs.

A total of 2,645 CDM projects have been registered by the UN, with the potential to generate 1.89 billion CERs by the end of 2012, according to data on the UNFCCC website.

source: www.pointcarbon.com  

Sceptre Group Limited is a specialist investment firm focused on the promotion of green oil, bioenergy, associated green technologies and environmental credits. For more information, visit our website: www.sceptreinternational.com

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