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Carbon prices likely to recover after 2011

Carbon prices likely to recover after 2011
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First Published: Tue, May 11 2010. 08 49 PM IST
Updated: Tue, May 11 2010. 08 50 PM IST
New Delhi: Weak global carbon prices will probably continue into next year before recovering, clean-energy investors said on Tuesday at a carbon meeting in India, adding that they remained confident about the market in the longer term.
Concerns are growing over the fate of the UN-backed clean development mechanism (CDM), which rewards investors by issuing internationally tradeable carbon offsets in return for developing clean-energy projects in poorer nations. India is the world’s second top source of carbon offsets, called certified emissions reductions (CERs).
CDM is part of the Kyoto Protocol, whose 2008-12 first commitment period set emissions targets for rich nations that drive demand for offsets.
But UN-led climate talks have become bogged down and that has led to concern over the shape of CDM if there is no extension of the Kyoto Protocol from 2013. “We do not think CDM will disappear. It will be there, may be under a different name,” said J.M. Mauskar, additional secretary of the ministry of environment and forests, at the two-day carbon gathering.
Project developers were also confident.
“We are positive about the post-2012 scenario,” said Ram Babu, chief executive officer of General Carbon. “The current lull phase (will) continue until end of 2011,” Babu said and projected a €15-20 (Rs860-1,146) price band in 2015-16 for CERs. “Offsets generated from renewable projects will be in demand,” Babu added.
Benchmark CER futures were trading at €13.13 a tonne on Tuesday on the European Climate Exchange, off a low of just over €7 in early 2009 but well off a high set in 2008 of around €24.
“We don’t see any skyrocketing prices, but expect high volatility until 2012,” said Nils Medenbach, vice-president, business development, First Climate Group, a Swiss-based CDM project developer, carbon asset manager and trader.
Project developers and consultants are also positive about the future prospects in the carbon offset business.
“The demand scenario is quite good,” said Rishi Seth, head, business development, Emergent Ventures India, a CDM project developer in India and Asia.
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First Published: Tue, May 11 2010. 08 49 PM IST