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E-mailOslo, 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”.
Ends --
Read Arne Eik's analysis in the current edition of Commodities Now (December 2009).
