Mixed Greens: Global cleantech Index hits nine-year low

The WilderHill New Energy Global Innovation Index (NEX), a global index of clean-energy stocks, has fallen to a nine-year low, hit by market oversupply, falling prices and uncertain government support. Bloomberg reports that the NEX – which tracks 96 solar, power storage, energy efficiency, wind and biofuel companies – fell 81 cents to $102.40 in New York on Wednesday, its fourth consecutive drop and its lowest price since April 2003. The index has lost 19 percent of its value this year.

“Renewable-energy valuations got a bit out of hand and they crumpled,” said Aaron Chew, an analyst at Maxim Group in New York, adding his view that cleantech industries may follow the same pattern as previous emerging industries: “In 1998 to 2000, there was an Internet sector and we now call it technology or media,” he said. “Maybe that’s the way to see it – alternative energy is really just the energy and utility sector.”

“There is certainly a risk element to the sector,” Bloomberg New Energy Finance analyst Joseph Salvatore said from London yesterday. “There is a lot of policy uncertainty, which is not good for an industry that is still heavily reliant on government support.” The NEX’s fall is in contrast with the Standard & Poor’s 500 Index, which gained 6.4 per cent this year. “Investors are redeeming and exiting,” Salvatore said. “It’s been consistent for the last year.” The NEX is down about 78 per cent since a 2007 high, before the global economic crisis drove down valuations, says Bloomberg.

EU flags boost to CO2 market

The European Commission has unveiled a plan to prop up the flagging carbon price by reducing a surplus of allowances in its emissions trading scheme. BusinessGreen reports that Commissioners revealed on Wednesday a plan to delay the sale of EU Allowances (EUAs) that had been scheduled to be auctioned between 2013 and 2015 – a manoeuvre known as backloading that aims to boost the value of the remaining emissions permits. The plan – if approved by member states – would ask those states what volume of allowances should be taken out of auctions. Climate Action Commissioner Connie Hedegaard said it would “improve the functioning of the market” in the immediate future, and that long-term structural measures to improve the market should be finalised after the summer break.

“It is not wise to deliberately continue to flood a market that is already oversupplied,” Hedegaard said. “This is why the Commission today has paved the way for changing the timing of when allowances are auctioned. …If the political will is there, all the necessary decisions can be taken before the next auctioning phase starts at the beginning of 2013. Now it is up to the European Parliament and member states to deliver.” And while the Commission did not outline how many permits would be backloaded, it released analysis outlining scenarios where the the auctioning timetable would see 400 million, 900 million or 1.2 billion allowances held back.

Carbon cuts begin at home

South Korea is asking its biggest emitters to make cuts at home before they giving them credit for overseas spending ton offsets. Bloomberg reports that the nation with the fastest-growing emissions in the developed world, and whose cap-and-trade system is due to commence in 2015, won’t permit the use of global offsets until after 2020, according to a statement posted this week on the prime minister’s website. After 2020, the more than 400 companies participating in the scheme will be able to use offsets for as much as 50 per cent of their required emissions reductions, the government said.

“We hope to use the system in an initial stage to support the government pledges for reduction,” Nam Kwang Hee, director- general of the Presidential Committee on Green Growth, said by phone. “As companies focus on cutting domestic emissions, it will help the country meet planned reduction targets.” South Korea has pledged to reduce greenhouse-gas emissions by 30 per cent from forecast levels. With the price of offset credits in the UN’s Clean Development Mechanism trading near record lows, offsets can reduce compliance costs for emitters subject to carbon limits. Australia’s scheme allows companies to achieve as much as 50 per cent of their compliance using UN Certified Emission Reductions. New Zealand permits factories to achieve all their compliance using CERs.