Tullett Prebon Environmental Asia Pacific

Asia Pacific Emissions Products

Tullett Prebon's global experience in the emissions markets can provide broking services for wholesale trading, as well as structured deals in the Asia Pacific region.

Renewable Energy Markets

In 2000 the Australian Commonwealth enacted the Renewable Energy (Electricity) Act 2000. From 2001 until 2020, the legislation requires electricity retailers and other large users of electricity to proportionately contribute to the generation of additional energy from accredited renewable sources. To meet the requirement, electricity retailers and other large users must purchase 'Renewable Energy Certificates' (RECs).

As at September of 2003, it became clear that the additional 9500 GWh required by the Scheme from 2010 to 2020 would be readily met, several of the State Governments began lobbying the Commonwealth to increase the overall target, in the absence of this the State Governments introduced their own renewable electricity targets above and beyond MRET.

The existing Commonwealth and State based schemes are:

  • Mandatory Renewable Energy Target - Renewable Energy Certificates (RECs) – Clth scheme
  • New South Wales Greenhouse Gas Abatement Scheme - New South Wales Greenhouse Gas Certificates (NGACs)
  • Queensland Gas Scheme – Gas Electricity Certificates (GECs)
  • Victorian Renewable Energy Target Scheme - Victorian Renewable Energy Certificates (VRECs)
  • Green Power Rights (GPRs)
  • Greenhouse Friendly – Greenhouse Friendly Certificates (VERs) - Clth
  • Victorian Energy Efficiency Target – Victorian Energy Efficiency Certificates (VEECs)
  • NSW Energy Efficiency Target – NSW Energy Efficiency Certificates (NEECs)

Tullett Prebon Australia operates in all these markets, providing broking services to those market participants.

Australian Emissions Market

In the Asia-Pacific region, Australia and New Zealand are most advanced with plans for domestic emissions trading schemes.

In Australia the current federal Labor government which was elected in November 2007 has ratified the Kyoto Protocol and is committed to meeting Australia's Kyoto target (108% of 1990 levels by 2008-12). It is also committed to introducing a domestic emissions trading scheme to begin operating in 2010.

In July 2008, the federal government issued a Green Paper for a national Carbon Pollution Reduction Scheme, the central component of which is a broad based national emissions trading scheme. Following consultations on the Green Paper, a White Paper describing the final scheme design and draft legislation will be issued by the end of 2008. It is planned that the required legislation will be passed during 2009 in time for the scheme to commence in 2010.

The development of a national trading scheme with proposed international linkages and the ratification of the Kyoto Protocol, means that Australia will be actively exploring opportunities for participation in that wider international market.

Augmenting the evolution of a formal trading scheme is a growing range of voluntary trading initiatives, particularly focused on providing emission offset opportunities for businesses and consumers.

New Zealand Emissions Market

In the Asia-Pacific region, Australia and New Zealand are most advanced with plans for domestic emissions trading schemes.

Emissions trading is a core component of the NZ government’s climate change solutions and is aimed at meeting New Zealand’s Kyoto commitment (1990 emission levels). Legisalation for Emissions Trading was passed this week. The NZ government’s Finance and Expenditure Committee has recently released its report on the Climate Change (Emissions Trading and Renewable Preference) Bill which was written to amend the Climate Change Response Act 2002 to introduce the New Zealand Emissions Trading Scheme (NZ ETS) covering 'all sectors and all gases'.

The planned phase-in schedule for the NZ ETS is shown in the table below:

Sector Commencement of Obligations End of Initial Compliance Period
Forestry (includes deforestation of pre-1990 forest land and afforestation post-1989) 1 January 2008 31 December 2009 (first compliance period is 2 years)
Liquid fossil fuels (mainly transport) 1 January 2009 31 December 2009
Stationary energy (includes coal, gas and geothermal) 1 January 2010 31 December 2010
Industrial processes (non energy) emissions 1 January 2010 31 December 2010
Agriculture (includes pastoral and arable farming and horticulture) 1 January 2013 31 December 2013
Waste 1 January 2013 31 December 2013

Asia CDM/CERs/VERs

The Clean Development Mechanism (CDM) is part of the Kyoto Protocol that creates credits Certified Emission Reductions (CERs) from emission abatement projects in countries outside the Kyoto process. The CDM provides finance for projects that will contribute to sustainable development in the country where the project is located by producing CERs that can be used for compliance in the EU ETS and other national schemes, such as in Canada, Japan and most likely Australia and New Zealand.

To qualify under the CDM a project must comply with the UNFCC and must be “additional” in reducing emissions.

CDM project can be small cooperatives to large industrial corporations ranging from, from agriculture to heavy industry.

Typical project types:

  • renewable energy
  • methane capture from landfill
  • agriculture
  • fuel-switch in boilers for heat; electricity generation; energy efficiency
  • reduction of industrial gas emissions such as HFCs and N2O

Where an individual resides in a country that is outside of the Kyoto protocol it too can reduce its carbon emissions through the Voluntary offset market and Verified Emission Reductions (VERs). The voluntary offset markets operate outside of the regulated compliance market.

Tullett Prebon Australia - Emissions

The Clean Development Mechanism (CDM) is part of the Kyoto Protocol that creates credits Certified Emission Reductions (CERs) from emission abatement projects in countries outside the Kyoto process. The CDM provides finance for projects that will contribute to sustainable development in the country where the project is located by producing CERs that can be used for compliance in the EU ETS and other national schemes, such as in Canada, Japan and most likely Australia and New Zealand.

To qualify under the CDM a project must comply with the UNFCC and must be “additional” in reducing emissions.

Tullett Prebon’s global experience in the emissions markets can provide broking services for wholesale trading, as well as structured deals in the Asia Pacific region.

Tullett Prebon Australia provides voice and electronic execution to traders and market access for compliance buyers in both the Renewable Energy and Emissions markets. We can also source primary CERs, ERUs and early action AEUs as well VERs and facilitate transactions in the secondary market, brokering derivatives basis these instruments.

Tullett Prebon operating in the Asia Pacific region, can help participants manage the risks inherent in CDM project investment and development under the Kyoto Protocol project mechanism.

For further information on how Tullett Prebon Australia can assist you in your dealings in the Asia Pacific region, please contact us.

Contact

London
Dan Thompson
+44 (0) 20 7200 7555
danthompson@tullettprebon.com