The document discusses the results of Energy Risk's second annual environmental rankings survey. CF Partners performed well, ranking first in brokering Emission Reduction Units (ERUs). Confidence in emissions and renewables markets remains strong despite uncertainty around future frameworks. Dominant players like Barclays Capital, Deutsche Bank, and JP Morgan held top positions, though many smaller players saw votes, indicating market fragmentation. The carbon market reacted as expected to economic factors with prices dropping. Clarity is sought on future mechanisms and country participation to drive markets forward.
Carbon Disclosure Project: Reducing Risk and Driving Business ValueSustainable Brands
1) Supply chain risks from climate change are greater than ever, with 70% of respondents identifying current or future risks and over half noting risks from drought and precipitation extremes already affecting or expected to affect operations within 5 years.
2) There is a persistent performance gap between CDP Supply Chain members and their suppliers, with members far outpacing suppliers in emissions reduction targets, investments, and achievements.
3) Leading companies are increasingly investing in emissions reductions initiatives, with the proportion of members and high-performing suppliers investing and achieving reductions growing since 2011.
Martin Marietta Materials financial analysisloicfournier
This document provides a financial analysis report on MLM stock by a team of analysts. The analysts issue a BUY rating for MLM stock based on their valuation methods giving a target price range of $100-107. They expect MLM stock to increase when the US economy rebounds. The report highlights MLM's strengths such as revenue growth, net income growth, and growth in earnings per share. It also provides details on MLM's business, strategy, competitors, and financials.
CAMSCORP is an advisory firm located at 26-28 Hammersmith Grove in London, W6 7BA. Their office is northwest of Hammersmith Underground station, approximately 200 meters up Hammersmith Grove towards Shepherd's Bush. Visitors should take the elevator to the 4th floor and ask for CAMSCORP at the main reception. The building is accessible via multiple London Underground lines at Hammersmith station as well as various bus routes from surrounding areas like Shepherd's Bush, Chiswick, Fulham, and Mortlake. Limited parking is available near the Hammersmith flyover with additional transportation options like Santander bikes, private bike stands, and a taxi rank at Hammersmith Broadway.
The suspension of SGS UK Ltd., the largest carbon project verifier, is likely to slow down the UN project process and further issuances. This represents a 3 month suspension in the verification process of more than 300 million pre-2012 carbon credits (CERs), or roughly 9% of pre-2012 supply. However, the suspension will primarily delay the issuance of around 20 million CERs over the next few months. The constraint on CER supply is expected to be noticeable from November 2009 to March 2010, which may push CER prices higher relative to EU carbon allowances (EUAs) over this period. Following a court decision, the EUA and CER prices dropped due to concerns over 815 million additional
1) CF Partners, a London firm focused on environmental investing, will launch a water infrastructure fund and a carbon relative-value hedge fund to outside investors.
2) The water fund will invest in water pipelines, dam projects, and desalination processes, as well as efficiency projects, and may employ a lockup.
3) The carbon fund will seek to profit from pricing inefficiencies in carbon markets to return 20% annually using a relative value approach.
Carbon Disclosure Project: Reducing Risk and Driving Business ValueSustainable Brands
1) Supply chain risks from climate change are greater than ever, with 70% of respondents identifying current or future risks and over half noting risks from drought and precipitation extremes already affecting or expected to affect operations within 5 years.
2) There is a persistent performance gap between CDP Supply Chain members and their suppliers, with members far outpacing suppliers in emissions reduction targets, investments, and achievements.
3) Leading companies are increasingly investing in emissions reductions initiatives, with the proportion of members and high-performing suppliers investing and achieving reductions growing since 2011.
Martin Marietta Materials financial analysisloicfournier
This document provides a financial analysis report on MLM stock by a team of analysts. The analysts issue a BUY rating for MLM stock based on their valuation methods giving a target price range of $100-107. They expect MLM stock to increase when the US economy rebounds. The report highlights MLM's strengths such as revenue growth, net income growth, and growth in earnings per share. It also provides details on MLM's business, strategy, competitors, and financials.
CAMSCORP is an advisory firm located at 26-28 Hammersmith Grove in London, W6 7BA. Their office is northwest of Hammersmith Underground station, approximately 200 meters up Hammersmith Grove towards Shepherd's Bush. Visitors should take the elevator to the 4th floor and ask for CAMSCORP at the main reception. The building is accessible via multiple London Underground lines at Hammersmith station as well as various bus routes from surrounding areas like Shepherd's Bush, Chiswick, Fulham, and Mortlake. Limited parking is available near the Hammersmith flyover with additional transportation options like Santander bikes, private bike stands, and a taxi rank at Hammersmith Broadway.
The suspension of SGS UK Ltd., the largest carbon project verifier, is likely to slow down the UN project process and further issuances. This represents a 3 month suspension in the verification process of more than 300 million pre-2012 carbon credits (CERs), or roughly 9% of pre-2012 supply. However, the suspension will primarily delay the issuance of around 20 million CERs over the next few months. The constraint on CER supply is expected to be noticeable from November 2009 to March 2010, which may push CER prices higher relative to EU carbon allowances (EUAs) over this period. Following a court decision, the EUA and CER prices dropped due to concerns over 815 million additional
1) CF Partners, a London firm focused on environmental investing, will launch a water infrastructure fund and a carbon relative-value hedge fund to outside investors.
2) The water fund will invest in water pipelines, dam projects, and desalination processes, as well as efficiency projects, and may employ a lockup.
3) The carbon fund will seek to profit from pricing inefficiencies in carbon markets to return 20% annually using a relative value approach.
Carbon credits are permits that allow entities to emit one tonne of carbon dioxide. They are a key part of international attempts to mitigate greenhouse gas emissions. Under the Kyoto Protocol, countries and groups can earn credits by reducing emissions below their quotas, which can then be sold to other entities to offset their emissions. India is the second largest seller of carbon credits globally due to numerous registered clean development mechanism projects. However, Indian companies are hesitant to trade most of the credits they generate due to market uncertainties. One area with potential for credits in India is management of municipal solid waste through conversion to energy.
The document discusses several issues with the Clean Development Mechanism (CDM) under the Kyoto Protocol. It notes that while the stated goals of CDM are to promote sustainable development and clean technologies, in reality the deals are private and opaque. Many CDM projects involve creative or copied carbon accounting with no real oversight. The carbon market has become a mechanism for financial gain rather than climate change mitigation. Developed countries are outsourcing a large portion of their emissions reductions to cheap offsets from developing countries. Reforms are needed to incentivize higher-cost low-carbon technologies and set a minimum carbon price.
Corporate Use of Carbon Prices: Commentary from corporations, investors and t...Sustainable Brands
This report is a follow-up to CDP's previous study on how companies are using internal carbon prices as a strategic tool in business planning. This continuation aims to answer some of the questions generated from the previous piece including: why are companies using a carbon price?, how are prices calculated?, do carbon prices drive strategy and investment?, what are the implications for investors, companies, and policymakers?
Fossil Fuel Risk Through Economic and Financial Markets Joli Holmes
The document analyzes risks that fossil fuel investments face due to climate change and regulations to curb carbon emissions. It discusses how fossil fuel reserves exceed the carbon budget consistent with limiting global warming to 2 degrees Celsius, meaning many reserves will be stranded and lose value. It also examines how direct carbon pricing and regulations are being implemented internationally, increasing costs for fossil fuel companies. Several large fossil fuel companies have also adopted internal carbon pricing to factor these risks into their long-term strategies and valuations. Overall the document argues fossil fuel assets face growing risk of becoming stranded as demand declines and regulations make them less economically viable.
Over 1000 companies now disclose using or planning to use internal carbon pricing to address climate change risks and opportunities. The number of companies reporting an internal carbon price has tripled since last year, with especially large increases in the US, Canada, Asia, and Africa. Companies apply internal carbon prices ranging from $2-150/ton to inform investment decisions and transition to low-carbon operations. Growing use of carbon pricing signals it is now standard practice for mainstream business decision-making.
Carbon credits play a role in sustainability efforts by enforcing caps on emissions through cap-and-trade policies and mechanisms. The evolution of carbon credits began with the 1992 Earth Summit and 1997 Kyoto Protocol, which established the framework for a cap-and-trade system. The European Union Emissions Trading Scheme is the largest cap-and-trade market, covering over 10,000 organizations and 1.6 billion tons of greenhouse gas emissions annually. While the United States has not ratified the Kyoto Protocol, recent policy proposals aim to reduce domestic emissions by 14% by 2020 and 83% by 2050 through the implementation of a cap-and-trade system. The potential for a global cap-and-trade market exists but
Ford is working to reduce greenhouse gas emissions from its supply chain. It plans to survey its top 35 suppliers on their energy use and emissions, representing $20 billion in procurement. This will help Ford understand its supply chain carbon footprint and create a carbon management approach. Ford aims to reduce its overall emissions by 30% by 2020 in response to pressure from investors. By collaborating with suppliers on efficiency, Ford hopes to put pressure on low performers and gain cost reductions as suppliers improve operations.
This document summarizes the opportunities and risks for financial institutions in carbon finance and the potential for an East Africa Carbon Exchange. It outlines the basics of carbon finance, including the role of carbon credits and current carbon market value. It then discusses the types of financial institutions involved in carbon finance and potential roles. Key risks for carbon credit projects are lack of sufficient emissions reductions, lack of expertise, upfront investment exposure, and difficulty demonstrating additionality. It argues for an East Africa Carbon Exchange to help develop carbon trading in the region by addressing barriers like the complexity of CDM procedures. Recommendations include collaborating across East Africa to develop customized methodologies, harmonize policies, and build institutional relationships.
This document discusses carbon credits and carbon banking. It begins by defining carbon credits as representing one ton of carbon. It then explains how carbon credits were created to control greenhouse gas emissions and how they work as part of an emissions trading system. It discusses the key concepts and mechanisms behind carbon credits, including additionality, criticism of the system, and how carbon credits can benefit countries and companies.
The 2010 Climate Competitiveness Index shows that in spite of uncertainty surrounding international climate negotiations, countries have forged ahead with low carbon growth strategies in the first quarter of 2010. One third of countries show promising gains in low carbon economic growth since Copenhagen climate accord.
- The Kyoto Protocol established a carbon credit trading mechanism where countries can meet emission reduction targets by purchasing certified emission reduction (CER) credits from emission reduction projects in developing countries under the Clean Development Mechanism (CDM).
- India has high potential for carbon credits due to a wide range of possible CDM project types and sizes, technical expertise, and a transparent CDM approval process. However, carbon credit prices are determined by policy issues, market fundamentals, and technical analysis.
- India is a party to the UNFCCC and has established a National CDM Authority to oversee CDM projects. CDM projects in India span sectors like energy, manufacturing, and waste management, with the energy sector representing most
This document provides an overview and summary of KPMG's 2010 Global Auto Executive Survey. The survey polled 200 auto industry executives from 24 countries between September and November 2009. It gathered perspectives on industry concerns, expectations, and challenges through 2014. Key findings included that overcapacity remains a major issue, innovation and emerging markets will be high priorities, and consolidation in the industry is expected to continue through mergers and acquisitions.
The effect of adverse climate change is of major concern worldwide and several approaches are being developed to mitigate against anticipated economic and social disaster. Carbon emissions has been identified as a major contributor to the adverse climate change and following the Kyoto protocol , European countries have , through a caucus, effected a market to reward or fine members depending on their compliance position. The commodity for the market is the carbon emission credits. Stochastic models for pricing of options on these credits are considered in this paper. In particular, we determine the price basing on the Normal Inverse Gaussian and the Brownian Motion models. Maximum Likelihood Estimation is applied to determine model parameter estimates in each case. It is shown that the Normal Inverse Gaussian model has a better fit to the data but gives higher prices for a given strike price , compared to the Brownian Motion model.
This document discusses carbon credits and their role in addressing global warming. It begins by explaining the concept of carbon credits as tradable permits that represent the right to emit one tonne of carbon dioxide. It then discusses the origins of international agreements to limit greenhouse gas emissions, including the UNFCCC, Kyoto Protocol, and distinctions between Annex I, II, and non-Annex countries. The document outlines flexibility mechanisms established by the Kyoto Protocol, including emissions trading, joint implementation, and the clean development mechanism. It provides examples of India's participation in and benefits from carbon credit markets, positioning the country as a leading generator and seller of credits.
1) Project-based carbon emission reduction mechanisms have successfully attracted investment but have mostly benefited large standalone projects in advanced developing countries. Small-scale and dispersed emissions face high transaction costs.
2) There is uncertainty around the future of Kyoto-based project mechanisms in a post-Kyoto era, with potential scaling up or disappearance.
3) Looking ahead, there will be increased focus on sustainability, geographical distribution, and voluntary markets driven by consumer and CSR trends rather than policy.
The Global Climate Leadership Review is an annual report that evaluates countries' leadership on climate change issues. It finds that Australia ranks poorly compared to other developed countries in terms of its capacity for a low-carbon economy. While Australia's Clean Energy Future package is a step forward, the report recommends that Australia commit to stronger emissions reductions under a new Kyoto agreement and pursue trading partnerships with other countries to boost global climate ambition.
There is increasing pressure on energy producers from climate risks. One key concept which is gaining prominence in lieu of the risks is “Carbon Bubble” and the related impact of divestment movement. As a part of the Paris climate agreement, 192 countries reaffirmed their commitment to reduce emissions and limiting the global temperature increase to less than 20C. Energy producing companies are under scrutiny from investors, shareholders, employees and customers and other related stakeholders to reduce carbon footprint and to demonstrate that their business are aligned to help build an efficient “Low Carbon Portfolio”. The goal is to channelize investments, assess climate risks and opportunities and mitigate future climate change trajectories, align it as key service for fossil fuel energy divestment, portfolio and asset management.
There is increasing pressure on energy producers from climate risks. One key concept which is gaining prominence in lieu of the risks is “Carbon Bubble” and the related impact of divestment movement. As a part of the Paris climate agreement, 192 countries reaffirmed their commitment to reduce emissions and limiting the global temperature increase to less than 20C. Energy producing companies are under scrutiny from investors, shareholders, employees and customers and other related stakeholders to reduce carbon footprint and to demonstrate that their business are aligned to help build an efficient “Low Carbon Portfolio”. The goal is to channelize investments, assess climate risks and opportunities and mitigate future climate change trajectories, align it as key service for fossil fuel energy divestment, portfolio and asset management.
Green Finance: Business Opportunities and Role of Financial InstitutionsADFIAP
1) The document discusses the role of development finance institutions (DFIs) in supporting low-carbon investment and green growth through mobilizing private funding and providing financing support such as guarantees, insurance, and co-financing.
2) It outlines Japan Bank for International Cooperation's (JBIC) efforts to develop a "Joint Crediting Mechanism" (J-MRV) to quantify greenhouse gas emission reductions from low-carbon investment projects and apply it to their due diligence and project finance processes.
3) JBIC aims for J-MRV to serve as an internationally accepted methodology and help scale up low-carbon investment while preparing for future carbon market mechanisms.
Carbon credits are permits that allow entities to emit one tonne of carbon dioxide. They are a key part of international attempts to mitigate greenhouse gas emissions. Under the Kyoto Protocol, countries and groups can earn credits by reducing emissions below their quotas, which can then be sold to other entities to offset their emissions. India is the second largest seller of carbon credits globally due to numerous registered clean development mechanism projects. However, Indian companies are hesitant to trade most of the credits they generate due to market uncertainties. One area with potential for credits in India is management of municipal solid waste through conversion to energy.
The document discusses several issues with the Clean Development Mechanism (CDM) under the Kyoto Protocol. It notes that while the stated goals of CDM are to promote sustainable development and clean technologies, in reality the deals are private and opaque. Many CDM projects involve creative or copied carbon accounting with no real oversight. The carbon market has become a mechanism for financial gain rather than climate change mitigation. Developed countries are outsourcing a large portion of their emissions reductions to cheap offsets from developing countries. Reforms are needed to incentivize higher-cost low-carbon technologies and set a minimum carbon price.
Corporate Use of Carbon Prices: Commentary from corporations, investors and t...Sustainable Brands
This report is a follow-up to CDP's previous study on how companies are using internal carbon prices as a strategic tool in business planning. This continuation aims to answer some of the questions generated from the previous piece including: why are companies using a carbon price?, how are prices calculated?, do carbon prices drive strategy and investment?, what are the implications for investors, companies, and policymakers?
Fossil Fuel Risk Through Economic and Financial Markets Joli Holmes
The document analyzes risks that fossil fuel investments face due to climate change and regulations to curb carbon emissions. It discusses how fossil fuel reserves exceed the carbon budget consistent with limiting global warming to 2 degrees Celsius, meaning many reserves will be stranded and lose value. It also examines how direct carbon pricing and regulations are being implemented internationally, increasing costs for fossil fuel companies. Several large fossil fuel companies have also adopted internal carbon pricing to factor these risks into their long-term strategies and valuations. Overall the document argues fossil fuel assets face growing risk of becoming stranded as demand declines and regulations make them less economically viable.
Over 1000 companies now disclose using or planning to use internal carbon pricing to address climate change risks and opportunities. The number of companies reporting an internal carbon price has tripled since last year, with especially large increases in the US, Canada, Asia, and Africa. Companies apply internal carbon prices ranging from $2-150/ton to inform investment decisions and transition to low-carbon operations. Growing use of carbon pricing signals it is now standard practice for mainstream business decision-making.
Carbon credits play a role in sustainability efforts by enforcing caps on emissions through cap-and-trade policies and mechanisms. The evolution of carbon credits began with the 1992 Earth Summit and 1997 Kyoto Protocol, which established the framework for a cap-and-trade system. The European Union Emissions Trading Scheme is the largest cap-and-trade market, covering over 10,000 organizations and 1.6 billion tons of greenhouse gas emissions annually. While the United States has not ratified the Kyoto Protocol, recent policy proposals aim to reduce domestic emissions by 14% by 2020 and 83% by 2050 through the implementation of a cap-and-trade system. The potential for a global cap-and-trade market exists but
Ford is working to reduce greenhouse gas emissions from its supply chain. It plans to survey its top 35 suppliers on their energy use and emissions, representing $20 billion in procurement. This will help Ford understand its supply chain carbon footprint and create a carbon management approach. Ford aims to reduce its overall emissions by 30% by 2020 in response to pressure from investors. By collaborating with suppliers on efficiency, Ford hopes to put pressure on low performers and gain cost reductions as suppliers improve operations.
This document summarizes the opportunities and risks for financial institutions in carbon finance and the potential for an East Africa Carbon Exchange. It outlines the basics of carbon finance, including the role of carbon credits and current carbon market value. It then discusses the types of financial institutions involved in carbon finance and potential roles. Key risks for carbon credit projects are lack of sufficient emissions reductions, lack of expertise, upfront investment exposure, and difficulty demonstrating additionality. It argues for an East Africa Carbon Exchange to help develop carbon trading in the region by addressing barriers like the complexity of CDM procedures. Recommendations include collaborating across East Africa to develop customized methodologies, harmonize policies, and build institutional relationships.
This document discusses carbon credits and carbon banking. It begins by defining carbon credits as representing one ton of carbon. It then explains how carbon credits were created to control greenhouse gas emissions and how they work as part of an emissions trading system. It discusses the key concepts and mechanisms behind carbon credits, including additionality, criticism of the system, and how carbon credits can benefit countries and companies.
The 2010 Climate Competitiveness Index shows that in spite of uncertainty surrounding international climate negotiations, countries have forged ahead with low carbon growth strategies in the first quarter of 2010. One third of countries show promising gains in low carbon economic growth since Copenhagen climate accord.
- The Kyoto Protocol established a carbon credit trading mechanism where countries can meet emission reduction targets by purchasing certified emission reduction (CER) credits from emission reduction projects in developing countries under the Clean Development Mechanism (CDM).
- India has high potential for carbon credits due to a wide range of possible CDM project types and sizes, technical expertise, and a transparent CDM approval process. However, carbon credit prices are determined by policy issues, market fundamentals, and technical analysis.
- India is a party to the UNFCCC and has established a National CDM Authority to oversee CDM projects. CDM projects in India span sectors like energy, manufacturing, and waste management, with the energy sector representing most
This document provides an overview and summary of KPMG's 2010 Global Auto Executive Survey. The survey polled 200 auto industry executives from 24 countries between September and November 2009. It gathered perspectives on industry concerns, expectations, and challenges through 2014. Key findings included that overcapacity remains a major issue, innovation and emerging markets will be high priorities, and consolidation in the industry is expected to continue through mergers and acquisitions.
The effect of adverse climate change is of major concern worldwide and several approaches are being developed to mitigate against anticipated economic and social disaster. Carbon emissions has been identified as a major contributor to the adverse climate change and following the Kyoto protocol , European countries have , through a caucus, effected a market to reward or fine members depending on their compliance position. The commodity for the market is the carbon emission credits. Stochastic models for pricing of options on these credits are considered in this paper. In particular, we determine the price basing on the Normal Inverse Gaussian and the Brownian Motion models. Maximum Likelihood Estimation is applied to determine model parameter estimates in each case. It is shown that the Normal Inverse Gaussian model has a better fit to the data but gives higher prices for a given strike price , compared to the Brownian Motion model.
This document discusses carbon credits and their role in addressing global warming. It begins by explaining the concept of carbon credits as tradable permits that represent the right to emit one tonne of carbon dioxide. It then discusses the origins of international agreements to limit greenhouse gas emissions, including the UNFCCC, Kyoto Protocol, and distinctions between Annex I, II, and non-Annex countries. The document outlines flexibility mechanisms established by the Kyoto Protocol, including emissions trading, joint implementation, and the clean development mechanism. It provides examples of India's participation in and benefits from carbon credit markets, positioning the country as a leading generator and seller of credits.
1) Project-based carbon emission reduction mechanisms have successfully attracted investment but have mostly benefited large standalone projects in advanced developing countries. Small-scale and dispersed emissions face high transaction costs.
2) There is uncertainty around the future of Kyoto-based project mechanisms in a post-Kyoto era, with potential scaling up or disappearance.
3) Looking ahead, there will be increased focus on sustainability, geographical distribution, and voluntary markets driven by consumer and CSR trends rather than policy.
The Global Climate Leadership Review is an annual report that evaluates countries' leadership on climate change issues. It finds that Australia ranks poorly compared to other developed countries in terms of its capacity for a low-carbon economy. While Australia's Clean Energy Future package is a step forward, the report recommends that Australia commit to stronger emissions reductions under a new Kyoto agreement and pursue trading partnerships with other countries to boost global climate ambition.
There is increasing pressure on energy producers from climate risks. One key concept which is gaining prominence in lieu of the risks is “Carbon Bubble” and the related impact of divestment movement. As a part of the Paris climate agreement, 192 countries reaffirmed their commitment to reduce emissions and limiting the global temperature increase to less than 20C. Energy producing companies are under scrutiny from investors, shareholders, employees and customers and other related stakeholders to reduce carbon footprint and to demonstrate that their business are aligned to help build an efficient “Low Carbon Portfolio”. The goal is to channelize investments, assess climate risks and opportunities and mitigate future climate change trajectories, align it as key service for fossil fuel energy divestment, portfolio and asset management.
There is increasing pressure on energy producers from climate risks. One key concept which is gaining prominence in lieu of the risks is “Carbon Bubble” and the related impact of divestment movement. As a part of the Paris climate agreement, 192 countries reaffirmed their commitment to reduce emissions and limiting the global temperature increase to less than 20C. Energy producing companies are under scrutiny from investors, shareholders, employees and customers and other related stakeholders to reduce carbon footprint and to demonstrate that their business are aligned to help build an efficient “Low Carbon Portfolio”. The goal is to channelize investments, assess climate risks and opportunities and mitigate future climate change trajectories, align it as key service for fossil fuel energy divestment, portfolio and asset management.
Green Finance: Business Opportunities and Role of Financial InstitutionsADFIAP
1) The document discusses the role of development finance institutions (DFIs) in supporting low-carbon investment and green growth through mobilizing private funding and providing financing support such as guarantees, insurance, and co-financing.
2) It outlines Japan Bank for International Cooperation's (JBIC) efforts to develop a "Joint Crediting Mechanism" (J-MRV) to quantify greenhouse gas emission reductions from low-carbon investment projects and apply it to their due diligence and project finance processes.
3) JBIC aims for J-MRV to serve as an internationally accepted methodology and help scale up low-carbon investment while preparing for future carbon market mechanisms.
Green Finance: Business Opportunities and Role of Financial Institutions
Energy Risk Survey Dec09
1. commodit y risk management & tr ading
Reprinted from
www.cf-partners.com december 2009
ReneweD
ConfiDenCe
CF Partners figures well in this
year’s awards
environmental
rankings 2009
2. environmental
rankings 2009
ReneweD
ConfiDenCe
Energy Risk carried out its second annual environmental Rankings
survey this year in which respondents voted for their preferred
players in emissions & renewables markets. Katie Holliday analyses
the results and talks to market participants about their views
C
onfidence in the potential Morgan Stanley, CF Partners and
of the environmental Element Markets, who all gained
markets continues to be first places, as did Orbeo, a joint
strong despite the absence venture between Société Générale
of an international framework for a and Rhodia, and Carbon Trade &
global carbon market and it looking Finance, a joint venture between
increasingly likely a deal won’t investment bank Dresdner Kleinwort
be reached at the United Nations and Gazprombank. The top-placed
Climate Change Conference (COP- brokers were Icap, Evolution Markets
15) held in Copenhagen this month, and Tradition.
say market participants.
They hope that Copenhagen will Carbon markets
give clarity to other issues such as This year has been a testing one for
the shape of future carbon market the carbon markets due to the global
mechanisms and which new countries economic recession and subsequent
will sign up to the new Kyoto drop in the carbon price, and a lack of
agreement, and that this will drive the available project finance. In February data, the global carbon market shrank
markets forward. this year, the price of carbon in the by 21% to $30 billion in the third
Against this backdrop, Energy Risk’s European Union Emissions Trading quarter of 2009, from $38 billion in
second Environmental Rankings Scheme (EU ETS) dropped to €8 the second quarter of 2009, with the
Survey provides a timely insight in to ($11.89) per tonne of carbon dioxide majority of the deterioration focussed
how energy industry participants view (t/CO2 ), from highs of around €30 in on the European side of the market.
the current state of play. The Survey the summer of 2008, according The North American markets and the
had 461 valid responses this year, a to European Climate Exchange international offset markets
90% increase on last year, reflecting (ECX) data, causing critics to say grew, but not enough to compensate
the increasing interest in these the price was too low to incentivise for the reduction in volumes traded
growing markets. investment in clean technology and on the EU ETS. New Energy
The dominant players from last year therefore that the scheme wasn’t Finance still expects the total value
held on to most of the top positions working. Carbon is currently trading of the global carbon market to grow
but a large amount of votes were cast on ECX at around €13 per t/CO2 . to $122 billion by the end of 2009,
for a vast array of smaller players, According to New Energy Finance a 3% increase on the 2008 value of
showing the current fragmentation
and immaturity of some of these
markets. Consolidation amongst A global recession will prompt a drop in
smaller players is expected to be a
trend in the coming years. prices. The carbon market reacted exactly
Dominant players in the survey
this year include Barclays Capital,
as it should have done
Deutsche Bank, JP Morgan, Louis Redshaw, head of environmental markets, Barclays Capital
Reprinted from energyrisk.com December 2009
4. environmental
rankings 2009
that will not undertake reduction Simon Glossop, company partner
targets; these countries are most likely at CF partners, which gained
to continue to play a role in developing first place in the brokers of ERUs
emissions reductions projects in the category, is confident that clarity
long-term,” adds Oza. on the future of the ERU market
Oza attributes Tradition’s post 2012 will lead to an increase
success in CER broking down to in trading activity and interest from
its continued commitment to the compliance buyers.
origination of projects. “We have As a diversified company CF
a strong supply line coming out partners isn’t concerned about the
of Latin America and Africa as uncertainty surrounding future
well. We’re also working on new carbon market mechanisms: “We are
areas, such as the UN’s programme a focused environmental advisory,
for Reducing Emissions from trading and investments firm. We
Deforestation and Forest Degradation offer a variety of different services,
(REDD), where we’ve seen strong
demand from companies in Europe,
the US and Australia looking to
The importance of JI will grow going
purchase these credits,” he says. forward since the number of countries with
In terms of the market for
Emission Reduction Units (ERUs), emissions caps will grow. A future climate
credits generated from the Kyoto
Protocol’s Joint Implementation (JI) agreement therefore becomes pivotal
mechanism, Carbon Trade Finance Ingo Ramming, executive director, Carbon Trade Finance
gained first place in the dealer
category, while Deutsche Bank came
in second. In the broker category, at Deutsche Bank, says they have from buying and selling credits, fund
CF Partners were voted first with typically viewed JI as a “single management, arranging structure
Evolution Markets and Tradition market” scheme to 2012. “There transactions, mergers and acquisitions
coming second and third. are many proposals on the table at and advisory”, says Glossop.
So far, the market for JI projects Copenhagen and it is far from certain Evolution Markets gained first
has not grown as much as was that JI in its current form will be place in the broker category for
originally anticipated in comparison extended into the next phase of the SO2 and NOx and US RECs, while
with the CDM markets. The JI Kyoto Protocol or its replacement,” Tradition gained first place for RGGI
market was valued at $294 million, says Lawless. and Evolution Markets topped the
equivalent to 20Mt/CO 2 in 2008, Carbon Trade Finance’s broker category for US VERs.
according to the World Bank, a executive director, Ingo Ramming, The US voluntary markets have
figure vastly overshadowed by the has a more optimistic outlook for the suffered a decline this year. Trading of
CDM’s $32.8 billion. future of trading ERUs. “Of course, Carbon Financial Instruments (CFIs)
Experts blame the lack of the CDM market is much bigger on the Chicago Climate Exchange
development in this area of the than the JI market, but this is because (CCX) has decreased, for example.
market on political wrangling over ERUs could only be generated from A total of 3.2 million contracts
operational procedure. Russia and 2008,” he says. were traded in October 2008, while
the Ukraine are viewed to be the Ramming says he expects 2.6 million were traded in the same
hotspots for JI development, but approximately 300 million tonnes month this year.
while the Ukrainian market has of CO2 reductions to be generated Barcap’s Redshaw says it is likely
generated a number of projects, the through JI from 2008 to 2012. “The that the voluntary markets, both in
Russian government stalled over importance of JI will grow going the US and Europe, will be eclipsed
finalising legislative procedures forward since the number of countries by mandatory schemes. “Trading of
and projects only very recently with emissions caps will grow. A voluntary credits will continue for
have begun to be approved. Many future climate agreement therefore corporate social responsibility (CSR)
industry experts are sceptical as to becomes pivotal,” he says. obligations, so we’ll continue to see
whether the JI projects will continue Ramming puts Carbon Trade companies offsetting in that, but by
as a carbon market mechanism once Finance’s success down to its and large the voluntary sector will be
a new global carbon agreement is focussed approach. “We believe it is superseded,” he says. “The question
finalised post-2012. extremely difficult to develop projects is, what emissions credits will count
Martin Lawless, head of across the globe and focus therefore under the US scheme? And will the
environmental financial products solely on JI,” he says. voluntary credits count within a US
Reprinted from energyrisk.com December 2009
5. environmental
rankings 2009
cap-and-trade scheme?” he adds. sectors. This year the results for best market for energy efficiency credits
Angela Schwarz, president and supplier were varied, with no one is one to watch. “We have recently
chief operating officer of Element supplier dominating the renewables participated with transactions
Markets says the shape of the US’s space. Spanish utility Iberdrola taking place in Connecticut, and we
mandatory cap-and-trade scheme is topped the wind power category, continue to monitor other states as
now viewed as an eventuality rather while global solar developer SunPower we foresee this as a potential high
than a possibility, but reiterates Corporation gained first place for growth market,” she says.
this does not mean that the current solar power. Spanish multinational In terms of green energy project
US compliance markets should be corporation Abengoa was ranked the finance, CF Partners was voted
ignored. “While the SO2 and NOx best supplier of biofuels. best advisor in this category, while
markets are not viewed as high In terms of investment, Spanish JP Morgan was the most highly
growth markets in comparison to ranked investment bank for both
carbon, we do not expect regulatory project finance and green energy
changes to occur over the next two funds and indexes.
years to buoy the markets,” she says. CF Partners performed well this
The US REC market is still year across the renewables advisory
fragmented, with approximately 30 categories, gaining first place for wind
US states now having introduced and biofuels. Global accountancy firm
renewable portfolio standards Deloitte gained second place in both
(RPSs), but a lack of uniformity these categories but surpassed CF
in RPS design makes it difficult to Partners in the solar power category
trade across state lines. But this year, and gained first place.
the Waxman-Markey Bill, which Roman Webber, head of the
was approved by the US House of renewable energy team at Deloitte,
Representatives in June but is yet to says that despite the unlikelihood of
be voted on in the Senate, brought a deal being reached in Copenhagen,
the US closer to establishing a
federal mandate for renewable
energy generation.
It’s vitally important to have an idea of
Schwarz says REC trading in what role CERs will play post-2012. India
the US is set to explode. “US REC
trading is extremely complex and and China are most likely to continue
rules-based. We have extensive
research capability that tracks and
to play a role in developing emissions
analyses developments across the reductions projects in the long-term
new and existing REC markets as
Amit Oza, senior emissions broker, TFS Green
we move closer to a national RPS,”
Schwarz says.
Over in the UK, Morgan Stanley
gained first place for UK Renewables investment bank Banco Santander the environmental community
Obligation Certificates (ROCs) gained first place for the wind, solar remains upbeat about an international
in the dealer category, while CF and biofuels categories. UK-based agreement being reached in the
Partners surpassed Tradition and electric power station Drax gained future. “What is likely to emerge is
Evolution Markets for the best first place for best utility in terms of some sort of ‘agreement to agree’.
broker of ROCs. This year, the biofuels production. While we are more likely to have a
UK government boosted trading US energy services company political rather than legally binding
of ROCs through a change to the Ameresco gained first place for agreement, the latter is not that far
allocation of ROCs in May. Offshore preferred firm in the energy efficiency off,” he says. “I expect to see China
wind developers now receive 1.5 category. US-based research firm and the US agreeing to be part of a
ROCs per megawatt hour (MWh) Sustainability International gained future global pact at Copenhagen,”
of wind power rather than 1 ROC. the top position for best advisor in the he adds.
Onshore wind projects receive 1 energy efficiency. Webber says having a carbon price
ROC per MWh. The trading of energy efficiency is an indirect driver for the renewables
credits, or white certificates as sector incentivising investment.
Clean and efficient they are often termed, has been Roman Webber, “A global agreement on carbon, and
The survey also looked at supply and described as a potential new growth head of the a rise in the price of carbon, will be
investment in the renewables, clean market by some experts. Element renewable energy positive for the renewables industry
technology and energy efficiency Markets’ Schwarz says the US team at Deloitte long-term,” he says. n
December 2009 www.cf-partners.com
6. environmental rankings
Carbon trading
European Union ETS Allowances (EUAs)
2009 2008 Dealer % 2009 2008 Broker
1 1 Barclays Capital 18 1 1 ICAP
2 3 Deutsche Bank 15 2 – Tradition
3 2 Orbeo 12 3 3 Evolution Markets
4 – BNP Paribas 8 4 – CF Partners
5 – Credit Suisse 6 Emissions rEnEwablEs
EUA options UK Renewable Obligation Certificates
2009 2008 Dealer % 2009 2008 Broker 2009 2008 Dealer % 2009 2008 Broker
1 1 Orbeo 19 1 – Evolution Markets 1 2 Morgan Stanley 23 1 – CF Partners
2 – Deutsche Bank 13 2 3 Tradition 2 =3 Scottish Power 10 2 3 Tradition
3 – JP Morgan 12 3 1 Tullett Prebon =3 – Centrica 8 3 – Evolution Markets
4 – BNP Paribas 8 4 – Spectron =3 =3 EDF Trading 8
CERs – primary (CDM)
EnErgy EffiCiEnCy
2009 2008 Dealer % 2009 2008 Broker
1 1 Deutsche Bank 22 1 – Tradition
Preferred firm % Preferred advisory
2 – BNP Paribas 18 2 – Evolution Markets
Ameresco 10 Sustainability International
3 – CF Partners 12 3 – CF Partners
Nextant 8 –
4 2 Orbeo 10
CERs – secondary (CDM)
2009 2008 Dealer % 2009 2008 Broker
finanCials
1 1 Deutsche Bank 19 1 3 Tradition Green energy project finance
2 2 Orbeo 15 2 – CF Partners 2009 2008 Investment bank % Advisory
3 – CF Partners 14 3 2 Evolution Markets 1 1 JP Morgan 22 CF Partners
4 – BNP Paribas 10 4 – Tullett Prebon 2 – Morgan Stanley 18 Baker McKenzie
=5 4 Barclays Capital 8 3 3 Deutsche Bank 12
=5 – Morgan Stanley 8 =4 – Goldman Sachs 10
=4 – BoA Merrill Lynch 10
ERUs – primary (JI)
2009 2008 Dealer % 2009 2008 Broker Green energy funds/indices
1 1 Carbon Trade Finance 25 1 – CF Partners 2009 2008 Investment bank %
2 3 Deutsche Bank 18 2 3 Evolution Markets 1 – JP Morgan 15
3 – CF Partners 15 3 1 Tradition 2 – SGCIB 10
4 _ Citigroup 10 3 – Deutsche Bank 7
Reprinted from energyrisk.com December 2009