The EU ETS review and its implications for the carbon market

The revision of the EU Emissions Trading Directive is in full swing. More sectors and gases will be included and the overall cap will be tightened. Yet one crucial feature of its final design will depend on the outcome of the parallel post-Kyoto negotiations: The use of project-based carbon credits. Stefan Kleeberg and Frieder Frasch outline what industry and carbon market participants can expect.

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Post Kyoto: Roadmap and funds to decrease uncertainty

With the "Bali Road Map", a timeline was agreed and furnished with issues to be tackled in the process of negotiating a successor protocol regulating the era after 2012. The objective is an agreement in Copenhagen in 2009. Mischa Classen and Fritz Wilhelm explain the crucial points along the way to such an agreement and show current developments in the carbon market as it anticipates the development of a new political framework.

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First Climate and Verde Consulting announce joint venture in India

New company set to gain major strategic advantage in sourcing and managing carbon emission reduction projects.

First Climate AG and Verde Consulting Pvt. Ltd. (VCPL) announced a joint venture to manage carbon emission reduction projects and source carbon credits primarily in India. The joint venture was announced at the recent India Carbon Market Conclave taking place in New Delhi from October 14 to 16, 2008.

The new company called First Climate (India) Private Limited and headquartered in Kolkata will cover a wide range of services including CDM and VER project development, carbon credit sourcing, project due diligence and climate neutral services.

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First Climate launches new Luxembourg subsidiary

First Climate marks its new asset management license with the opening of its Luxembourg subsidiary.

First Climate launched its new subsidiary, First Climate Asset Management S.A., in Luxembourg. The new company has received a comprehensive asset management license from the Luxembourg financial services authority CSSF. This license enables First Climate Asset Management S.A. to act as a private portfolio manager, distributor of UCI (Undertakings for Collective Investments) units or shares and registrar agent, as domiciliary agent of companies and as administrative agent of the financial sector. By opening an office in the second largest fund center in the world, First Climate is further developing its customer base among institutional investors in Europe, providing carbon investment advisory, asset management and administration services.

The carbon market continues to grow rapidly, reaching a size of $60 billion in 2007, almost doubling from just $33 billion in 2006. Institutional investors are increasingly looking for ways to participate in this new and largely uncorrelated asset class. First Climate already is advisor to two Luxembourg regulated SICARs, Climate Change Investment I and II, and plans to expand its carbon asset advisory capacities from its new base in Luxembourg.

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First Climate expertise in the world's first public fund placement for CO2

The DWS Carbon Opportunities Fund, initiated by DWS Investments, the mutual fund arm of Deutsche Asset Management, is a UCITS III fund offering daily liquidity to investors. Aquila Capital, a Hamburg-based independent investment house specialized in alternative and non-traditional investments, holds the fund management mandate and draws on the expertise of First Climate as fund advisor.

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The Carbon Disclosure Project launched its 2008 Global and US Reports at the CDP Global Forum in New York on September 22. European and North American companies set the pace among constituents of the ‘Global 500’ with response rates of 83% and 82% respectively.

Financial services firms recognize the long-term impact climate change will have on the capital markets and cite the need to finance and invest in initiatives that could encourage ground-breaking changes in energy transmission and create a low-carbon economy. They also consider the reputation and credit worthiness of investments in the portfolio as key risk areas.

Numerous sectors describe physical risk factors as material. The manufacturing sector cites temperature changes, flooding, increased storm intensity, water shortages, spread of disease and change in local weather patterns as significant physical risks. Water supply was cited as a critical risk by the raw material, mining, paper and packaging sector, as well as the utilities sector, which also saw consumers becoming more aware of greenhouse gases (GHG) due to rising fuel prices, which could lead to a decrease in demand.

In the United States, 254 companies (81% of respondents) perceive climate change as a risk, while only 102 respondents (33%) have GHG emission reduction targets in place. This demonstrates that while many US companies are increasingly aware of the issue, they are still lagging behind their global counterparts when it comes to taking action.

The Carbon Disclosure Project (CDP) is an independent not-for-profit organization which acts as an intermediary between shareholders and corporations on all climate change related issues, providing primary climate change data from the world’s largest corporations to the global market place. CDP currently represents some 385 global institutional investors with more than $57 trillion in assets under management.

For more information, please visit   www.cdproject.net

First Climate has joined the International Carbon Reduction and Offset Alliance (ICROA) to support its mission of promoting best practice in the voluntary carbon market.

Members are required to submit annual reports to demonstrate compliance with the ICROA Code of Best Practice, which includes measuring footprints according to accepted international standards and implementing a responsible "reduce and offset" approach to internal and external greenhouse gas reductions.

ICROA provides an industry benchmark to guarantee reliable standards, credibility and environmental integrity of voluntary carbon offsets.

For more information, please visit   www.icroa.org

Barclaycard has recently launched Germany’s first environmental credit card "Barclaycard Green" in cooperation with First Climate.

With every purchase, Barclaycard Green holders will support climate protection: 0.5 percent of the card’s revenue will go towards one of three carbon reduction projects. The credit card itself is made of recyclable PETG plastic, and customers can save paper by choosing to receive their statements online instead of by regular mail.

First Climate selected two projects that replace outdated methods of energy generation with modern state-of-the-art technologies in India and Brazil. The third project provides incentives to reduce energy in German schools and is organized by Klimabündnis e.V.

Furthermore, Barclaycard Green customers can take advantage of numerous special offers to support environmentally friendly products and services.

For more information, please visit   www.barclaycard-green.de

Registries: VCS registries expected to be operational in October

After a rigorous 12 month process to design a registries system, four VCS registries operated by APX Inc., Bank of New York Mellon, Caisse des Depots and TZ1 will announce in early November when they expect to go live. No registry can issue Voluntary Carbon Units before then.

The web-based system will create trusted and tradable voluntary offset credits, provide a clear chain of ownership for voluntary offsets that prevents double-counting, and stimulate investments in emissions reductions and low-carbon solutions.

Founded by the International Emissions Trading Association (IETA), The Climate Group, and the World Business Council for Sustainable Development (WBCSD), the VCS provides quality assurance for the world’s carbon markets through a robust global program for approval of credible voluntary carbon offsets, or Voluntary Carbon Units (VCUs). In 2007, VCUs represented approximately one third of the voluntary carbon market, making it the most widely used carbon offset standard.

For more information, please visit   www.v-c-s.org

First Climate staff regularly participate as speakers or workshop leaders
in numerous conferences and events, where they discuss the latest market developments and opportunities.

For more information about upcoming speaking engagements, please visit our   Event Calendar