Prices, interest falls in Norway’s second CER tender

Published 13:20 on February 25, 2015  /  Last updated at 15:29 on May 11, 2016  /  Africa, EMEA, International, Kyoto Mechanisms  /  No Comments

Norway's second call to buy CERs drew fewer interested projects and lower offered prices than the first tender in 2013, the tender manager said in a note this week.

Norway’s second call to buy CERs drew fewer interested projects and lower offered prices than the first tender in 2013, the tender manager said in a note this week.

The Nordic Environment Finance Corporation (NEFCO), which manages the tender process for Norway, said in a statement that 112 projects in 27 countries responded to the tender, down from 232 projects in 35 nations in the first call.

NEFCO expects the latest tender, which closed in December, to result in the purchase of 15 million CERs.

The first tender contracted an expected volume of 18.9 million CERs at an average price of €2.28 each.

The second tender attracted offers for an average of €2.85 per CER, down from an average €3.92/unit offered in the first tender. The projects are required to deliver CERs for emission reductions over 2014-2020.

At 24 percent of the total, most project proposals this time around came from China, followed by Malaysia, India and Brazil.

Methane emissions accounted for 56% of the tender offers, mainly from animal waste but also from landfill gas, coalmine and fugitive emissions, NEFCO said.

LDC RESERVE

Unlike the previous tender, the second call included provision to buy up to 5 million CERs from vulnerable projects in Least Developed Countries (LDCs) for a maximum price of €4 per CER. These credits will make up a reserve that the country could use to meet future emissions targets.

LDC projects represented 9% of the offered CERs, which NEFCO pointed out to be higher than the 1% share of LDC projects registered under the CDM.

Norway also held a separate call for CERs from new projects in LDCs, which NEFCO said could result in the purchase of up to 3 million more credits.

Under that tender, NEFCO said 44 proposals for new projects were received, accounting for 15 million CERs offered at an average of €3.68 each. Those projects came from 18 countries and most were for renewable energy.

NEFCO said it would aim to decide on the winners of the tenders within four months, and would base its decisions on several factors including how vulnerable existing projects are and the offered price.

The process blacklists several project types including hydro and wind schemes outside the poorest nations, industrial gas destruction (HFC-23 and N2O from adipic acid) and coal power without CCS.

FACTFILE

  • Norway aims to buy 30 million CERs to help it meet its 2020 greenhouse gas target under the Kyoto Protocol and support vulnerable CDM projects at risk of closure.
  • Many CDM projects are at risk of closure demand for CERs has dried up in the oversupplied EU ETS, the biggest market, pushing market prices down to unprofitable levels of around €0.40 each.
  • China has been the number one producer of CDM projects, but most industrialised governments have restricted purchases from China and other emerging economies to encourage these governments to pay for their own emission cuts.
  • Buyer governments have also been more willing to favour projects in the world’s poorest countries that struggled to compete under free-market conditions and have widely banned HFC-23 and adipic acid destruction schemes which previously raised environmental integrity concerns.

By Ben Garside – ben@carbon-pulse.com