Fwd: EcoSecurities Says Cancun Might Spur Tighter EU Carbon Target

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EcoSecurities Says Cancun Might Spur Tighter EU Carbon Target
2010-12-13 00:18:45.595 GMT

By Mathew Carr
Dec. 13 (Bloomberg) -- Alexander Sarac, general counsel at
JPMorgan Chase & Co.'s EcoSecurities unit, comments on the
climate talks in Cancun, Mexico -- on national emissions targets
and on United Nations offset trading. Dublin-based EcoSecurities
invests in greenhouse-reduction projects.
The European Union has committed to cutting emissions 20
percent by 2020 from 1990 levels and has said it will boost its
reduction target to 30 percent if other countries also
strengthen their commitments. UN offsets can be used for
compliance in the EU. Sarac commented by e-mail.

On country emission targets:
"National targets and national schemes like the EU
emissions trading system are setting the future demand and it is
not just the political signals here that create the demand for
offset credits. From a market perspective it will be interesting
to observe the EU reaction to this outcome, in particular if
this will induce activities to address the 30 percent question
but also what will be the impact on other regional schemes such
as Australia and U.S. China seems to be including carbon markets
as policy solutions in its next five-year plan, which will also
create market opportunities."

On the Cancun text:
"Including a reference to markets and the market-based
mechanisms in the convention text -- which is also endorsed by
the U.S. -- and reiterating the importance of markets in Kyoto
Protocol sends a positive signal that global policy makers
understand that these mechanisms will play an important role in
solving the climate challenge. Since Bolivia had tried to
specifically block market approaches it is clear that the
political will necessary to include these references must have
been substantial."

On investments:
"The Clean Development Mechanism text includes short-term
improvements that address some of the governance and technical
issues that historically lead to delays in the registration
process. Equally standardized baselines approaches may over time
allow for more scale and more predictable timelines for CDM
projects. Combined with positive long-term signals this creates
trust that there is a growing understanding of international
policy makers that market participants will need a level of
certainty and predictability in order to continue to invest in
climate-finance schemes, whether old or new."

On standardized baselines:
"There are already a number of methodologies that include
a level of standardizations and many companies have projects and
methodologies in mind and it shouldn't be too long to see the
first methodologies submitted. Currently it takes up to a year
to have a methodology approved but the text also includes a
mandate to shorten these timelines so hopefully we see a number
of projects developed and registered before December 2012 --
showing that this was the right approach to allow for more scale
in the CDM."

Projects seeking credits for cutting emissions must use approved
methodologies, according to the rules of the CDM program.

For Related News and Information:
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--Editor: Clyde Russell.

To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or

To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net