Environmental Protection products

MK Brokers AD offers:

·     Spot and forward purchases and sales of emission allowances

·     Purchase of quotas of the EUA and EUAA type directly from auctions

·     Swap transactions on EUA/EUAA/CER

·     Stock transactions of quotas

·     Direct redemption of CER from projects owners

 

European market for emission allowances

 

Since 2005 the European Emission Trading System (EU ETS) has managed to develop as a leading and global company-wide system for thresholds and emissions trading for carbon dioxide and other greenhouse gases (“cap-and-trade” market). The EU scheme has become a major tool for tackling environmental pollution. The fight against climate change is promoted through various economic incentives to reduce industrial greenhouse gas emissions. EU ETS includes factories, electricity producers, airlines, and other greenhouse gas installations. By 30 April each year, participants should achieve their obligation to reimburse the number of carbon allowances equal to the total number of verified emissions during the previous calendar year. We are currently in the EU ETS third phase, lasting from 2013 to 2020, in which part of the emission allowances are allocated free of charge and the remaining part is auctioned daily. Each year, the free of charge allocated part decreases, while the number of allowances traded increases accordingly.

 

 

Voluntary market

Voluntary carbon markets operate in parallel with other allowance markets. The voluntary market offers the opportunity for any business, NGO or individual to voluntarily offset their emissions by purchasing carbon credits. These loans can be issued either under the CDM or according to other standards in force on the voluntary market. These markets operate on their own (corporate) responsibility and / or in response to market pressure and public opinion, but not by legal obligation.

A verified emissions reduction unit (VER) cannot be used to fulfil the obligations under the Kyoto Protocol scheme. However, a quota, in accordance with the scheme (i.e. certified emission reduction units, CER), which is used voluntarily to offset emissions, may be accepted.

 

The verified emissions reduction units (VERs) are a type of allowance that certifies carbon offset and can be exchanged on a voluntary basis. These exchanges are validated by various Verified Carbon Standards that directly or indirectly reduce CO2 emissions. These VERs are used by organizations that voluntarily want to neutralize their carbon footprint. One VER quota is equivalent to one tonne of CO2 reduction.

 

Greenhouse gas emission allowances - these are instruments expressing the right to produce a unit volume (one tonne) of greenhouse gases. The current regulatory framework governing the existence and trade of carbon emissions is based on the Kyoto Protocol of 1997. It stipulates specific obligations on participating countries (the so-called Annex I countries) to limit greenhouse gas emissions to their individual real 1990 levels, which is defined as a baseline. The Protocol defines three mechanisms aimed at optimizing the costs of achieving the commitments undertaken by Annex I countries.

 

The facilities are as follows:

1.                 The European Emission Trading System (EU ETS) is a core mechanism in EU policy to combat climate change. It is a key tool for the effective reduction of greenhouse gas emissions generated by industry. EU ETS was launched in 2005 and operates on the principle of cap and trade in greenhouse gases. This means that there is a limit on the total volume of emissions produced by all installations (plants, thermal power plants, etc.) in the Annex I countries of the Kyoto Protocol. Within this limited total volume, market participants (EU ETS) can buy and / or sell emissions. The EU ETS 's universal transferable instrument is the EUA (European Union Allowance). EUAs are traded on several European exchanges as well as on the over-the-counter market. They can be traded both on the current real market (spot), as well on the futures market.

2.                 Clean Development Mechanism. This mechanism is defined in Art. 12 of the Kyoto Protocol and aims to assist developing countries in achieving sustainable development by allowing developed countries to fund projects to reduce greenhouse gas emissions in developing countries and, as a result, to obtain certified emission reductions. The Clean Development Mechanism identifies the different stages through which should pass each project to receive Certified Reduced Emission Units. The main principle of the mechanism operation is the certification and validation that in result of the investments in the project a reduction of greenhouse gas emissions has been achieved.

 

The Certified Emission Reduction units are issued under the Clean Development Mechanism of the Kyoto Protocol. They are measured in one tonne of carbon dioxide equivalent. Certified emission reduction units can be traded and used by developed countries to meet their obligations to reduce greenhouse gas emissions under the Kyoto Protocol. Due the so-called “EU Binding Directive”, these credits can also be used in certain quantities by installations participating in the European Emissions Trading Scheme (EU ETS).

Joint Implementation is a project mechanism between two countries of Annex I. Each saved ton of carbon dioxide, resulting from joint implementation project of the two countries generates the so-called ERU (Emission reduction Unit).