CMIA Press Releases
Merger of CMA and INCIS Forms Carbon Markets and Investors Association (CMIA)
August 5th, 2008
LEADING investment banks and service providers in the carbon finance sector have come together to form a super-grouping dedicated to promoting market efficiency and environmental integrity in the global carbon markets.
The move comes in the wake of repeated studies suggesting that a global carbon market with large financial flows to stem carbon emissions in developing countries is urgently needed to reduce the costs of mitigating climate change.
Carbon Markets and Investors Association (CMIA) whose international membership of 60 organisations accounts for an estimated three quarters of the transaction value in the global carbon market worth an estimated 64bn USD in 2007.
CMIA companies will aim to provide their market insights in the run up to climate change talks in Copenhagen in 2009, with a view to helping to ensure that the role of the markets is maximised. The UN-brokered international climate talks in Copenhagen are seen as a deadline to agree a new deal to follow the Kyoto Protocol whose emissions reduction commitments expire in 2012.
CMIA's newly elected President, Mr Abyd Karmali, Managing Director and Global Head of Carbon Markets at investment bank Merrill Lynch, said today that the transition to any post-2012 global carbon market would be "extremely challenging" given the current regulatory, political and economic challenges.
"We are now entering the adolescent phase of the carbon market and the transition to a global carbon market is likely to be extremely challenging," said Mr Karmali, who brings to the role 18 years experience working on the climate change challenge and in the carbon markets.
"During this period, almost certainly taking place against a backdrop of rising energy prices and a softer economic footing, the underlying basis and principles behind the carbon market will likely be questioned by a variety of stakeholders. It is important that market myths and inaccuracies be corrected by those who have had first-hand experience putting capital at risk."
Mr Karmali also predicted further increased volatility in the price of carbon permits as the world's major economies including the US and China struggled to reach agreement on climate change and stressed the importance of ensuring that investment continues to fund the change to a global low-carbon economy.
"The road to Copenhagen in December 2009 started in Bali and will have to go through both Washington DC and Beijing. Negotiations are likely to be bruising resulting in additional volatility in the market," added Mr Karmali. "It is absolutely critical that the negotiated outcome leads to well designed, liquid, and efficient carbon markets so that investors continue to have a clear price signal and can allocate capital accordingly."
CMIA companies will aim to provide their market insights in the run up to climate change talks in Copenhagen in 2009, with a view to helping to ensure that the role of the markets is maximised. The UN-brokered international climate talks in Copenhagen are seen as a deadline to agree a new deal to follow the Kyoto Protocol whose emissions reduction commitments expire in 2012.
CMIA's newly elected President, Mr Abyd Karmali, Managing Director and Global Head of Carbon Markets at investment bank Merrill Lynch, said today that the transition to any post-2012 global carbon market would be "extremely challenging" given the current regulatory, political and economic challenges.
"We are now entering the adolescent phase of the carbon market and the transition to a global carbon market is likely to be extremely challenging," said Mr Karmali, who brings to the role 18 years experience working on the climate change challenge and in the carbon markets.
"During this period, almost certainly taking place against a backdrop of rising energy prices and a softer economic footing, the underlying basis and principles behind the carbon market will likely be questioned by a variety of stakeholders. It is important that market myths and inaccuracies be corrected by those who have had first-hand experience putting capital at risk."
Mr Karmali also predicted further increased volatility in the price of carbon permits as the world's major economies including the US and China struggled to reach agreement on climate change and stressed the importance of ensuring that investment continues to fund the change to a global low-carbon economy.
"The road to Copenhagen in December 2009 started in Bali and will have to go through both Washington DC and Beijing. Negotiations are likely to be bruising resulting in additional volatility in the market," added Mr Karmali. "It is absolutely critical that the negotiated outcome leads to well designed, liquid, and efficient carbon markets so that investors continue to have a clear price signal and can allocate capital accordingly."
Mr Karmali brings a wealth of relevant experience to the role. Over the past 18 years he has provided strategic advice on the commercial risks and opportunities posed by carbon emissions constraints to dozens of European, US, and Asian companies as well as to several government agencies and regional development banks. Mr Karmali is joined so far by 9 further Board members.
The new grouping comes as a result of a merger between Carbon Markets Association (CMA) and International Carbon Investors and Services (INCIS). Adam Nathan, Director of Communications and Public Affairs for CMIA, said the two groups have been working on a combined set of agreed principles as well as the merger process and governance structure.
"We are entering a critical period for the carbon markets in Europe, the US, Asia and Australia as well as the overarching global process that's leading to Copenhagen in 2009," Mr. Nathan said.
A series of international climate change talks will take place before the December 2009 gathering, including a session of working groups on long-term cooperative action and further emissions reduction commitments in Accra, Ghana, tabled for August 21-27, 2008, and a full meeting of the Conference of Parties to the UN Framework Convention on Climate Change in Poznan, Poland in December 2008.
"Far better for the organizations to bulk up by combining forces and hopefully we can be much more effective in the critical discussions going forward in the next 18 months." Mr. Nathan added.
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Industry Body Calls for Amendment to ETS Draft Directive to Safe-Guard CDM Market
April 18, 2008
Carbon Markets Association, the London-based trade association for the carbon industry, responded to media inquires today from Bloomberg News to confirm that it has requested an amendment to the draft EU ETS Directive to reduce the volume of auctioned EUAs and replace this volume with CERs to ensure that investors and project developers can maintain confidence in a post-2012 CDM market without a negative impact on the Commission's political objectives.
Adam Nathan, Director of Communications at the CMA, said: "CMA is entirely at one in working with policy-makers for international agreement, and does not expect unlimited CDM credits into the market. But we know the importance senior EU policy-makers attach to CDM as a means of transferring investment in low-carbon energy to developing countries. There could be wider significance for the development of carbon markets if the CDM is damaged."
The CMA proposal, which is supported by more than 40 companies, follows widespread industry concerns that the ETS Directive as currently drafted would prevent new investment in the CDM including in Least Developed Countries (LDCs). These worries persist even though the Commission has said that in the event of an international agreement, the ETS will automatically increase the use of project credits by 50 per cent of the additional reduction effort. To balance these negative market signals, CMA is proposing a reduction in the volume of EUAs auctioned and to replace this volume with a proportion of CERs.
"We think that our proposal has several advantages," said Adam Nathan. "It sends positive signals about Europe's commitment to the CDM; it does not impact on the need for European industry to find domestic emissions reductions and it preserves the overall volume of credits available to industry. Policy-makers could also argue that this would do more to mitigate climate change, as a CER to market is the result of a genuine emissions reduction activity, as opposed to an auctioned EUA, which is 'grandfathered'."
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Bali Road Map Breakthrough Welcomed by CMA
December 15, 2007
Adam Nathan, Director of Communications for the Carbon Markets Association said:
"CMA welcomes the breakthrough announced today in Bali of a road map to engaging all nations, including the US, in meaningful negotiations toward long-term commitments by 2009.
"The process to 2009 should at a minimum deliver an extension of the first phase binding commitments beyond 2012 as well the engagement of a broader group of nations with binding commitments.
"Long-term credible and binding commitments covering all major emitters are ultimately essential to deliver the massive investments required in emissions abatement.
"Any sectoral solution must come under absolute caps otherwise it will fail to deliver absolute emissions reductions.
"We are pleased to see the inclusion of new financial mechanisms that will provide an incentive for avoided deforestation."
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For further information please contact Adam Nathan, Director of Communications for the Carbon Markets Association on +44 (0) 207 444 5747 or +44 (0) 7970 342 576
NOTES:
- CMA is a trade association formed to represent businesses at the cutting edge of the services sector working to reduce carbon emissions through the market mechanisms of the United Nations Framework Convention on Climate Change and Kyoto Protocol. Members include global investment banks, carbon credit developers and advisory services.
- Global investment in clean energy was 0 billion (2006) and billion (2005). 65% of this 0 billion is managed out of the City of London. The global carbon markets have grown from billion (2005) to billion (2006) and a projected billion in 2007. billion has been raised globally for carbon funds by June 2007.
CMA Press Release for COP13/MOP3
December 10, 2007
UNITED NATIONS (UN) climate change talks in Bali, Indonesia should mandate a formal negotiating process with guidelines for emissions targets for developed countries, a market-based approach to promote avoided deforestation in developing countries and enhancements of the Clean Development Mechanism (CDM) to reach a comprehensive agreement by 2009.
Proposals to be discussed by Ministers this week include guidance that developed countries need to reduce their emissions in a range of 25-40 percent below 1990 levels by 2020 and that global emissions of greenhouse gases need to "peak in the next 10 to 15 years" and be reduced to "well below half levels in 2000 by 2050".
"Climate change talks in Bali must send the markets a strong signal for them to be able to deliver the additional investments of up to 0 billion by 2030, commensurate with proposed emission reduction targets," said Abyd Karmali, Managing Director at investment bank Merrill Lynch and Vice-Chairman of the Carbon Markets Association (CMA).
Ministers will this week be presented with proposals for a new body to develop a "comprehensive international framework for agreement on long-term cooperative action beyond 2012". "CMA understands that most countries will not sign up to mandatory targets until the end of the process which must conclude in 2009," said Adam Nathan Director of Communications of the CMA. "This process should be guided by the level of effort needed to combat climate change."
It is expected that governments will also agree this week to start work on formulating a comprehensive regime to reduce emissions from deforestation (RED) in developing countries. "It is critical that we preserve the integrity of the carbon markets by implementing rigorous national baselines to account for carbon sequestration, and that we ensure transparent frameworks for land rights and protect the indigenous peoples," said Abyd Karmali, Managing Director at investment bank Merrill Lynch and Vice-Chairman of the CMA.
Proposals to enhance the Clean Development Mechanism (CDM) and to increase investment in LDCs such as sub Saharan Africa were also warmly greeted by the private sector group. "CMA supports indications that the UNFCCC would be willing to invest in more formal access to the system for the private sector to examine issues such as clarity, consistency and transparency of decision making, the potential for an appeals type process and the need to increase the regional distribution of CDM," said Anthony Hobley, Head of Carbon Finance at Norton Rose LLP and Chairman of CMA. "CMA strongly supports measures on the table to enhance sustainable development in the CDM; to give boost investment through preferential treatment to LDCs such African states and to work on methodologies suited to the region."
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For further information please contact Adam Nathan, Director of Communications for the Carbon Markets Association on + 44 (0) 7970 342 576; Abyd Karmali, Managing Director, Merrill Lynch and CMA Vice Chair + 44 (0) 7977 091 823 and Anthony Hobley, Head of Carbon Finance Norton Rose LLP and Chairman of CMA + 44 (0) 7872 698 580.
November 14, 2007
Exchequer Secretary to the Treasury Angela Eagle today announced the establishment of a carbon markets expert group to discuss ways of enhancing and developing the global carbon market and to act as an industry liaison for the Treasury.
Angela Eagle made the announcement at the International Carbon Markets Conference in London. The economic significance of climate change means it is critical to establish a credible international framework that can deal with climate change efficiently, promoting environmental benefits alongside economic growth and development.
Angela Eagle said: "We all know the scale of the challenge of Climate Change, and its importance. This challenge is international, and the responses must be too. So carbon emissions need a global price, not just a price in the UK, or in Europe. "Creating a global carbon market will, of course, be a real challenge - and we have to recognise the scale of that ambition. If we're to do it, then there's a huge role for the private sector to play. So I'm pleased to be able to announce that to help us to use the knowledge and the skills of the private sector, we are setting up a carbon markets experts group that will act as a sounding board for the Treasury, and that will discuss ways of enhancing and developing the global carbon market."
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Economic Secretary and City Minister Kitty Ussher, who last month called for London to aspire to be the global centre for carbon trading, welcomed the announcement saying: "I want our economy to not only grow strongly, but also to be green and carbon trading is the key to achieving that. It can help us address the challenge of climate change and also further strengthen London's position as a global financial centre. "Already, the global carbon trading market is worth billion a year - and we expect it to increase significantly in future. This is a new market, and a new opportunity for the UK, and for London in particular."
Adam Nathan, Director of Communications for the Carbon Markets Association said: "CMA welcomes today's conference as a way to focus finance ministries worldwide on creating an efficient global carbon market for combating climate change. Now more than ever it is important that finance ministries work in harmony with environment ministries to design a global system that delivers efficient reductions in emissions".
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"Climate Change talks in Bali at the COP/MOP3 cannot afford to fail"
November 29, 2007
A NEW SUBSIDIARY UNITED NATIONS (UN) BODY with a formal negotiating mandate for a global deal on climate change should be agreed upon by Environment Ministers as a direct result of climate change talks to take place Bali in the second week of December.
"Negotiations in Bali cannot afford to fail," said Adam Nathan Director of Communications of the Carbon Markets Association (CMA), the international industry trade association. "One measure of success would be the creation of a mandated body under United Nations conventions to drive through a new agreement in the next two years. It is vitally important that Ministers meeting in Bali do not let the date for a new global agreement slip beyond 2009 as this will send a weak signal to the carbon markets."
The UNFCCC will establish a contact group at the start of Bali tasked with different options on how to successfully conclude the talks. The UNFCCC contact group will hope to narrow down options for the Environment Ministers high-level segment.
Reaching an agreement by 2009 will be difficult as current talks are more complicated than those in Kyoto. The UN Secretary General's meeting in New York in September was successful in committing Head of States to agree that it is vital Bali achieves a "breakthrough".
The formal negotiating body envisaged by policy makers to drive through a global agreement would formalise the role of the current UNFCCC ad hoc working groups on the future commitments of Annex 1 Parties and the effectiveness of instruments under Article 9 of the Kyoto Protocol.
"This body or group will need to map out the building blocks and move forward formally and informally over a two year period to build consensus swiftly while reflecting the latest information from the private sector's experience reducing emissions in the carbon markets," said Abyd Karmali, Managing Director at investment bank Merrill Lynch and CMA's Vice Chair responsible for communications. "Any material delay in the negotiations puts at risk the billions of dollars of capital ready to be deployed for low-carbon technologies."
The danger of a new UN subsidiary body not being created and of remaining with the current ad hoc process would be that if the UNFCCC proceeds too slowly, it will become sidelined in favour of bilateral agreements such as between the EU and California. This would lead to more complexity and fragmentation among the carbon markets. CMA, whose members represent a large proportion of value and volumes transacted in the global carbon markets, would prefer it to take place under the umbrella of the UNFCCC so that there can be a more uniform set of carbon instruments being traded which will lead to greater liquidity and overall lower emission reduction costs for all participants. The UNFCCC has an unparalleled track record in this sphere and must remain the centre of global governance for combating climate change.
For further information please contact: Adam Nathan, Director of Communications for the Carbon Markets Association on +44 (0) 7970 342 576.
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