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Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
CleanTech and Carbon in the Pacific Northwest
Seattle, WA
November 8, 2007
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Presentation Preview
1) Environmental Markets Don’t Work without a Legal Framework
Oregon’s Bottle Bill in early 1970s
Portland vs. Vancouver, WA
Carbon Markets Today
US vs. Europe and Japan
2) Once the rules are set, there are many opportunities.
Will describe many concrete opportunities
Will describe how EcoSecurities partners with technology providers
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Annex I
The Kyoto Protocol
Non-Annex I
Not ratified
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Emissions Trading between Annex 1 Countries
> Based on historic emissions, each nation is granted a certain number of allowances through a National Allocation Plan.
> If Nation A emits less than its total number of allowances (EUAs), it can sell it’s extra credits to Nation B.
> This trading can happen between nations or between capped companies.
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Emission cap
Actual emissions
Buyer
Carbon Credits (CERS)
Carbon value ($)
Annex I (e.g. England) Non – Annex I (e.g. Mexico)
Seller
A CDM project reduces the GHG emissions in the CDM country
Emissions Trading between Annex 1 and non-Annex 1 Countries
U.N. – approved emissions reductions from a Non–Annex I country can be sold – as CERs -- to an Annex I country
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
The EU ETS and European emissions
Others
Power
Other Industry
Household
Services &
Agriculture
Refineries
Other Energies
Iron & Steel
Cement
31
33
6318
24
15
6
Transportation
> The EU ETS sectors (turquoise) currently account for approximately 46% of the emissions of the EU, over 2 billion tonnes of CO2 emissions per year covering approximately 11,000 industrial installations
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Annex I
The Kyoto Protocol
Non-Annex I
Not ratified
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Origination Implementation Commercialisation
Consulting
Finance & Accounting / HR / Legal / IT / Marketing / CSR
Investment
Originating CDM Offsets:
Selling Non-Annex 1 Credits to Annex 1 Emitters
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
EcoMethane Partnership
Aguascalientes project, Mexico
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
N2O from nitric acid plants
EcoSecurities is the largest developer in the world (24 million tonnes from 27 projects)
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Other Kinds of Emissions Reduction Projects
Biomass and waste mgt
Small scale hydropower
Pig waste biodigestors
Landfills
Industrial energy efficiency
Current projects use 18 technologies in 36 countries
Agricultural biodigestors
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Future CleanTech Partnerships
1. Agricultural methane digesters for bovine and porcine power generation.
2. Small dimensional wood pelletization for biomass fuel switching.
3. High tech, GPS-guided precision agriculture.
4. Satellite-monitored avoided deforestation.
5. Programmatic energy efficiency.
6. Transportation.
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
EcoS
ecur
ities
gui
des
proj
ects
thro
ugh
this
pro
cess
Implementation Process
PIN=Project Idea Note, PDD=Project Design Document, PP=Project Participant, DNA=Designated National Authority, DOE=Designated Operational Entity
The project cycle is convoluted, time consuming, and demands specialized skills
EcoSecurities implementation team has 64 skilled professionals, working with sophisticated internal tools and systems
Experience leads to successful track record of implementation:
> 13 new methodologies approved
> Approximately 90 Projects Registered – and growing every week
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
CDM Risks and Rewards
CER price
Re
gistra
tion M
on
itorin
gHo
st cou
ntry a
pp
rova
l
Ve
rificatio
nVa
lida
tionP
rod
uctio
n C
ost
Issua
nc
e Imp
ort to
EU
E
TS
High Risk with binary outcome Even on issuance,
ongoing performance risk from project. Requires close relationship with project to maximise projected output
Supply considerations - I
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Guaranteed Delivery Transaction> EcoSecurities delivers CERs from the portfolio, not specific projects
> Delivery risk removed from buyer (firm volume)
> EcoSecurities pays liquidated damages in case of non delivery
> Utilising portfolio approach and adding value to the transaction
> Projects kept in portfolio until final issuance
> Sales price dependent on EUA reference price
Project A
Project B
Project C
Project D
Project E
“ secondary” CERs
EcoSecuritiesNet-Portfolio
Buyer
Delivery Risk
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Recap
1) Environmental Markets Don’t Work without a Legal Framework.
2) Once the rules are set, there are many opportunities. If your technology significantly reduces GHG emissions, contact us.
Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc
Thank you.
Steve GutmannSenior Commercialisation Manager
503-333-7564