MERCHANDISER
DowJones/CCX
EUA&CERIndices
Brazil Launches Amazon Fund
A levy on oil production could raise nearly US$200 million a year to fund proj-
Launched
ectstoreducegreenhousegasemissionsandtohelpadapttoclimatechange,
DowJonesIndexes,aleadingglobalindex
underproposalssenttoCongressbyBrazil’sPresidentLuizInacioLuladaSilva.
provider,andtheChicagoClimateExchange
The new Climate Change Fund was announced alongside details of Brazil’s
(CCX),theworld’sfirstandNorthAmerica’sonly
much heralded Amazon Fund, projected to raise around US$1 bn in its first
voluntary,legallybindingintegratedgreenhouse
year from government and private sector donors, for measures to combat
gasemissionsreduction,registryandtrading
destruction of the world’s largest tropical forest.
system,hasannouncedthelaunchoftheDow
Companies with high earning oil production facilities in Brazil already pay a
Jones/CCXEuropeanCarbonIndexandDow
levy divided between national, state and local governments, of which 10%
Jones/CCXCertifiedEmissionsReductions(CER)
goes to the Ministry of Environment in the form of insurance against the cost
Index,whicharedesignedtoserveas
of cleaning up oil spills and leaks. Under the new proposed legislation, up to
benchmarksforparticipantsseekingexposureto
60% oftheenvironmentministryportionwouldbecommittedtotheClimate
theEUETSandKyotoProtocolClean
Change Fund, raising an estimated R$300 million (US$192million) per year.
DevelopmentMechanism(CDM)respectively.
The scheme, which is likely to take many months to get congressional
Thetwonewindexesarethefirstinaseriesof
approval, is aimed at providing a secure funding base for the government’s
globalemissionsindexestobelaunchedjointly
national climate change plan, which is expected to be launched in the second
byDowJonesIndexesandCCX.
half of September.
ThenewDowJones/CCXindicesarecomposed
The details have yet to be announced, but government sources have indi-
ofactivelytradedEUAfuturescontractsonthe
cated that it will cover a combination of measures to prevent a rapid
EuropeanClimateExchange.Itmeasuresthe
increaseinemissionsfromBrazil’sgrowingindustrialsector,andschemesto
presentdiscountedvalueofEUAs–thecarbon
helpwithadaptationtotheimpactsofclimatechange,especiallyinregions
creditsissuedintheEUETS,acrossdifferent
such as the dry northeast, which is expected to experience growing pres-
maturities:TheDowJones/CCXCERIndex
sures from drought.
measuresthepresentdiscountedvalueofCERs.
Administered by the Brazilian Development Bank (BNDES), this will be a vol-
“Reducinggreenhousegasesandother
untary fund pooling donations from foreign governments and private institu-
pollutantshasbecomeamajorworldwide
tions, and directed at measures to reduce deforestation, which currently
initiativethathasdrawntheparticipationof
accounts for approximately 75% of Brazil’s greenhouse gas emissions. The
industrialisedandemergingeconomiesinkey
headofthebank’senvironmentandsocialresponsibilitydepartment,Eduardo
regionsaroundtheglobe.Emissionstrading
Bandeira de Mello, estimated that the fund would raise approximately US$1
hassurfacedasthemostcost-efficientmeans
bninitsfirstyearofoperation,andcouldsurpassUS$21bnby2021.Thegov-
ofachievingthisgoalandtheCCXiswell
ernmentofNorwayhasalreadycommittedUS$100m.DeMellosaidthefund
positionedtofacilitatethistradingonaglobal
wouldbeaimedatactionsthatcontributetoprevention,monitoringandcom-
basis.TheDowJones/CCXEUAandCER
batingofdeforestation,andatmeasurestopromotetheconservationandsus-
Indicesprovidemarketparticipantswithprice
tainableuseoftheAmazonrainforest.Donorswouldbeissuedwith‘diplomas’
gaugestoassesstheirexposuretothisgrowing
in recognition of their contribution rather than carbon credits.
assetclass.Wehopetoexpandourofferings
“The diplomas will be nominal, untransferable and will not generate owner-
foremissions-themedbenchmarksinthe
ship rights or carbon credits as compensation,” said De Mello. This underlined
future,”saidMichaelPetronella,president,Dow
theBraziliangovernment’spositioninthecurrentUN-ledinternationalnegoti-
JonesIndexes.
ations on measures to reward developing countries that reduce their rates of
“The launch of theDow Jones/CCX EUA and
deforestation.Brazilarguesthatanyregimeonreducingemissionsfromdefor-
CERIndexeshighlightsCCX’s commitmentto
estation should be based on voluntary contributions from industrialised coun-
build a robust marketso that theprivate sector
tries, rather than having any formal link with the carbon tradingmarket.
canplay its critically important role in
Thetwofundsarebeinglaunchedatatimewhenreal-timesatellitedatafrom
advancing environmentaland social
the Brazilian Space Research Agency have indicated falling rates of deforesta-
objectives,” said Dr.Richard Sandor,Chairman
tionintheAmazoninMayandJune,followingastringofhighmonthlyfigures.
and CEO, CCX.“Thissuite of index products
Brazilian Environment Minister Carlos Minc said that while there was not
will broadenthepoolof participantsin the
yet any cause for celebration, it was an indication of the success of recent
market while furtheringtransparency.Our
governmentmeasures,includingacrackdownonillegalloggersandabanon
alliance withsucha world renownedbrand as
the marketing of agricultural products from illegally occupied forest areas.
DowJones is a win-win for thegrowing
However,asurveypublishedbytheInstituteforManandtheEnvironmentin
worldwide emissionsmarket.”
theAmazon(Imazon),arespectedresearchorganisation,suggestedthatthe
Allcontractsusedintheindexes’calculations
cumulative deforestation total from August 2007 to June 2008 was 9% up
aretheEuropeanClimateExchangeCarbon
on the previous year. Even Minc has admitted that the official annual defor-
FinancialInstrumentFutureslistedonICE
estation figure to August, to be released later this year, is likely to be higher
Futures.
than last year’s total of 11,000 square kilometres, ending a three year trend
of falling rates.
www.djindexes.com
www.pointcarbon.com
20 SEPTEMBER2008 COMMODITIES NOW
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