• 2010.08.23
  Balancing growth and decline » more
• 2010.08.22
  Addiction » more
• 2010.08.21
  The Ministry of Economic Decline » more

ERUs to play increasing role in the future

New instrument to enter carbon credit trading
ERUs to play increasing role in the future

***
According to a survey conducted in November 2009 by Vertis Environmental Finance on JI projects and their ERU issuance, a total of 4.49 million ERUs have been issued so far.  Below you can read the beginning of the analysis, if you are interested to read more about where these hardly known ERUs come from, how is the environmental integrity of JI projects and what the future holds for ERUs and JI, please send us a request to eru@vertisfinance.com with your contact details.

***

Budapest, Hungary - 26 November 2009 - International carbon credit markets will see more of a new tradable instrument in coming months and years, creating a new opportunity for companies and governments to fulfill their compliance obligations.

Emission Reduction Units (ERUs) – issued as a result of investment projects under the Joint Implementation (JI) mechanism of the Kyoto Protocol – are starting to come to international carbon credit markets as several JI projects now have verified reductions and are generating ERU credits.

“ERUs are new to the market compared to other instruments. Only four and a half million ERUs have been issued to date, and we expect further 140-150 million ERUs to be generated by 2012,” said James Atkins, Chairman of Vertis Environmental Finance, a leading player in the European spot carbon trading market. Vertis completed the first ever ERU exchange transaction over Climex on 30th September.

The first units that reached international carbon credit markets were issued in April 2009 in Ukraine. However the first ever units that were converted from a country’s own Assigned Amount Units (AAUs) to ERUs came from a renewable project in New Zealand in 2008. Credits from a few projects in New Zealand issued before April 2009 were bought on a forward basis directly by end-users who used them for compliance and thus did not reach carbon credit markets and thus did not reach carbon credit markets. 

ERUs stem from emission reduction projects established under the JI mechanism in countries which have binding commitments to reduce emissions, such as most of the Central and East European nations.  JI differs from the Clean Development Mechanism (CDM), which promotes similar projects in developing countries which do not have any binding reduction commitments.

“JI projects are happening in countries where it is often very difficult to make changes to existing infrastructure,” said Atkins. “These countries had to establish their own regulations and authorities for managing JI projects – whereas CDM is centrally managed by a body of the UN.  For this reason, among others, JI projects are only now starting to generate emission reductions, which can now be sold on the markets in the form of ERUs.”

Vertis estimates that in the next three years about 100 JI projects will reach the maturity where ERU credits can be issued from them. These projects are mostly realized in Central and East European countries, with a handful additionally in New Zealand, France and Germany. The number of JI projects which generate ERUs may significantly increase as Russia is currently making decisions on its climate change strategy. Vertis, for its part, assists the process of originating a total of 20 million ERUs until 2012 from four different projects located in Lithuania, Poland, Romania and Hungary.

« All news