By Li Huayu (chinadaily.com.cn)
Updated: 2007-11-07 16:50

In Singapore today a Carbon Asia Forum panel, speakers discussed future demand scenarios and ways to address the impact of climate change and ensure adequate supply in the carbon market.

The panel also talked about the related roles of the Kyoto Protocol's clean development mechanism (CDM), and Non-Annex I countries, developing nations that do not have to agree to the Kyoto Protocol emissions caps.

Carbon trading was established by the United Nations under the CDM, which allows developing countries to sell their carbon credits to developed nations.

At the panel, Rupert Edward, Managing Director & Head of Portfolio Management, Carbon Market of Climate Change Capital, said that a big challenge ahead is that demand is more difficult than supply. "Industrial country demand is insufficient given need for domestic reductions."

Erric Boonman, head of the Environmental Markets Origination, said if no changes are made to baselines, the second creating period of existing UNFCCC (United Nations Framework Convention on Climate Change) pipeline projects could be 2.6 billion tons in 2013-2020, 87 percent of pre-2012 expected demand.

"So the baselines have to change and not just for industrial gases," he added. "That is just the existing potential supply."

As for demand, he said the 2013-2020 EU ETS imports will perhaps reach 1.8 to 2.8 billion tons. It appears new project development is being driven by expectations of other sources of demand such as the United States or governments subscribing to binding post-2012 commitments.

The European Union Emissions Trading Scheme (EU ETS) was put in place in 2005 by the European Union in order to meet its Kyoto target.