3 out of 10 registered CDM projects never receive CERs

Oslo (15 December 2009)

To date 1,950 Clean Development Mechanism (CDM) projects, set to generate more than 1,700 million certified emissions reductions (CERs), have been approved by the UN’s CDM Executive Board (EB). However, only 358 million CERs – from little more than 600 projects, which were due to deliver around 1,050 million CERs – have been issued, according to Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.

As most of the regulatory risk is removed once a project is registered, most market participants automatically assume that with time all registered projects get their first issuance. However, according to Point Carbon, 3 out of 10 registered projects have never made it to issuance. Those projects least likely to generate CERs include registered landfill and other waste projects, of which only 50% are likely to come to fruition.

According to Arne Eik, Manager of CDM analysis at Point Carbon “This shows that many of the registered projects that we previously considered delayed, or awaiting issuance, will actually never make it to issuance at all. There are two main reasons for this; problems with project finance caused by the economic downturn and compounded by post-2012 uncertainty and the fact that some projects have not been able to demonstrate emission reductions appropriately”.

Frank Melum, Point Carbon analyst and product manager, said “this new survival rate allows our clients to follow the risk of various projects types and host countries throughout the whole CDM project cycle and thus to find out what the real CER delivery risks are per project and per country”.

Note to editors

• The Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in February 2005, resulted in the launch of the EU’s Emissions Trading Scheme (ETS). The EU ETS is the world’s first international greenhouse gas emissions trading scheme. It works on a cap - and - trade basis, where the total allocation is set at the start of a trading period. EU Allowances (EUAs) are the tradable units under the EU ETS. Up to a certain limit, companies regulated by the EU ETS are also allowed to import carbon permits from third countries (CERs and ERUs).
• Certified Emissions Reductions (CERs) are project credits generated from emission reduction countries in developing countries.
• Point Carbon’s analysis and statistics on this topic are available in the risk management feature of Point Carbon’s Carbon Valuation Tool. The Carbon Valuation Tool was named Innovation of the Year at the Energy Risk Awards, 2008.

For further information, please contact:

Candida Jones
PR Manager, Point Carbon
Mob: +44 (0) 777 5754 763
E-mail: cjo@pointcarbon.com  

Arne Eik
Manager of CDM analysis at Point Carbon Trading Analytics and Research
Direct tel: +47 9179 6009
E-mail: ae@pointcarbon.com  

Frank Melum
Analyst and manager of the Carbon Valuation Tool
Direct tel: +47 4167 0202
E-mail: fm@pointcarbon.com

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