With just seven months left to prepare for a global post-2012 agreement in time for the Copenhagen conference, uncertainty over a future market regime prevails. Initiatives like the Post 2012 Carbon Credit Fund, established by the European Investment Bank and four leading European promotional banks, with Conning as investment manager and First Climate as investment advisor, contribute substantially to reducing this uncertainty, by absorbing market risks. However, a stable political framework is indispensable for the carbon market to develop further and unleash its full potential both in an economic and – inseparably linked – an ecological sense. Alina Averchenkowa reports on recent developments.
The Obama administration has raised hopes that a future global climate regime can rely on substantial support from the US. As the article on the current status of the post-2012 negotiations shows, the changed position of the US government has brought a lot of optimism to the process. In the end, however, the US contribution will largely depend on the speed and accuracy of the design and implementation of a federal cap-and-trade system. Aleka Seville from our US offices sheds light on the decisive design element of offsets in one of the articles of this edition.
We also use this opportunity to inform you about First Climate's recent activities in this 3rd edition of First Climate Insights.
Wishing you an enjoyable read,
Benefits of Offset Inclusion in a California Cap-and-Trade: An Environmentally and Economically Strategic Transition
As US climate policy discussions and regional rulemaking processes continue to move forward, key policy decision makers consistently tout the value of incorporating greenhouse gas (GHG) offsets into mandatory cap-and-trade schemes. Aleka Seville sheds light on the current discussion.
Negotiations on Post-2012 Policy Get off to a Slow Start in 2009
The Bonn Climate Change Talks, held on 28 March – 8 April, marked the first session of the international negotiations on post-2012 climate change policy after the decision of countries in Poznan last December to shift to the full negotiation mode. Although
the meeting has confirmed that the real negotiations have started, the progress was still rather slow.
The first preparatory session of the Major Economies Forum took place at the Department of State on April 27-28, 2009. The meeting was held in preparation for the leaders’ meeting of the Major Economies Forum that will take place at the Heads of State level in Italy, in July 2009. While the recent meeting was of preparatory nature and was not expected to deliver any major outcomes, the participants have been reported to be more optimistic on the prospects of reaching a global deal in Copenhagen at the end of the meeting. Delegates had been positively struck by the change in the stance and the level of commitment to act on climate change in the US administration. Having said that, the key issues, including how much developed countries will pledge to reduce their emissions and what how to raise the financing to help developing countries adapt to climate change, remain unresolved.
The aim of the Forum is to facilitate a dialogue among major developed and developing economies to generate the political will for a successful outcome in Copenhagen in December, while advancing concrete initiatives and joint ventures that increase the supply of clean energy, cutting GHG emissions.
The Forum includes participants from Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States. Denmark, as the President of the December 2009 Climate Change Talks in Copenhagen has also been invited to participate in this dialogue.
Remarks by Secretary Clinton at the Major Economies Forum on Energy and Climate held at the State Department on April 27, 2009. View Video
Spotlights From the Regions
South East Asia
First Climate expanded its presence in Asia with the opening of a Representative Office in Singapore in March 2009. With the new South East Asian hub the company increases its outreach for the origination of more high quality projects in this dynamic and high potential region and demonstrates at the same time its commitment to diversify both its project portfolio and business activities.
Africa & Middle East
First Climate has expanded its presence in Africa by signing agreements with local companies in the African region to explore CDM opportunities.
First Climate has been actively involved in discussing problems infringing the success of CDM in Africa as a key contributor to the German-African Energy Forum in Hamburg (20-22 April). Many important players in the African energy sector, from African ministers to German companies in the sector gathered in Hamburg to foster ways and means to translate the huge and untapped energy potential of Africa into power available to local populations. First Climate took an active part in the session discussing the CDM, describing the problems impairing the development of more CDM projects in Africa and presenting tentative solutions to the problem.
First Climate was showing its commitment to the region by attending the Middle East and North Africa Carbon Forum 2009 held in Cairo.
China
First Climate has strengthened its market position in China. In the rapidly evolving Chinese market, our Beijing office’s seasoned technical team has registered three more CDM projects in March. Noteworthy was especially the Xiangcheng project, the first project registered worldwide, that uses coke-oven-gas-to-electricity generation as a fuel switch for public use. The project uses an innovative approach to benchmarking and has hence become the first of its kind to demonstrate its additionality using the officially approved CDM methodology ACM0004.
Latin America
First Climate is exploring CDM wind projects in Mexico. Mexico is one of the most privileged countries in the world regarding its wind energy potential, but so far has been slow to explore its benefits. There are several areas in Mexico with exceptionally high wind energy potential. Regulatory issues have so far hampered much progress but recent developments suggest that prospects for potential project developers are soon to improve.
First Climate and Inspired Evolution in New Cooperative Partnership
The two companies agree to cooperate in a new partnership that is to provide greater market access to clean energy projects in Southern Africa.
First Climate AG and Inspired Evolution, a leading cleantech and sustainable investment management company based in South Africa, have announced a partnership to share and grow their deal flow of carbon and non-carbon projects in the Southern African Development Cooperation (SADC) region. First Climate will contribute its extensive knowledge of the CDM sector and the relevant climate- friendly technologies to the partnership, hoping to encourage higher growth rates in the African CDM sector. Its technical expertise, international best practice credentials and carbon investment experience will assist in providing much needed market access to clean energy projects in the whole of SADC.
First Climate Partnering with Maersk Logistics’ SupplyChain CarbonCheck
Maersk Logistics, a leading provider of global supply chain management solutions, has teamed up with First Climate in a partnership that offers a portfolio of environmental services to Maersk Logistics clients.
The SupplyChain CarbonCheck was developed to reduce carbon emissions in global supply chains while lowering costs. Logistics experts will analyze a company’s supply chain and map the current product flows in terms of carbon emissions. This mapping provides an estimate of the current carbon footprint, broken down into the different legs of the supply chain.
Using simulation techniques, the SupplyChain CarbonCheck estimates carbon emissions for alternative supply chain configurations and compare the results with the current footprint. The resulting carbon emissions reduction potentials are then evaluated in terms of impact and ease of implementation.
Finally, the company can choose to become supply-chain climate neutral and offset the carbon footprint by acquiring and retiring certified carbon credits from First Climate’s portfolio of greenhouse gas reduction projects. With the cost-savings from the optimized supply chain, the complete supply chain carbon management solution is a win-win situation for the company and the environment.
To learn more about the SupplyChain CarbonCheck and how Maersk Logistics has enabled companies to reduce carbon emissions while taking costs out of supply chains, please visit www.maersklogistics.com
First Climate Implementing Carbon Management for Corporación Andina de Fomento
Over the past year First Climate has been working with Corporación Andina de Fomento (CAF), a multilateral financial institution based in Caracas, Venezuela. The institution is highly committed to sustainable development and regional integration. CAF’s environmental strategy defines environmental principles and sets forth action lines and strategic programs through which the Corporation implements environmentally and socially responsible management endeavors.
Within the scope of the environmental steering project “Zero Emissions”, CAF teamed up with First Climate as its carbon management consultant. In close cooperation with the sustainability team at the CAF headquarters, First Climate set up a corporate-wide Greenhouse Gas Inventory for CAF to gain transparency over the organisation’s environmental impact.
For the first year, First Climate calculated the emissions caused by the activities of the headquarters in Caracas. The carbon emission sources included in this calculation are the indirect emissions related to the consumption of purchased electricity, water and paper consumption, company owned vehicle fleet, as well as corporate travel and employee commuter travel to work.
In the subsequent years, the regional offices in Argentina, Bolivia, Brazil, Colombia, Peru, Ecuador and Spain will be included in the carbon management program. The implementation of the GHG Inventory for CAF encompasses the set up of carbon footprinting calculation, monitoring and reporting tools. With First Climate’s “carbon footprinting kit”, CAF will be able to perfom the carbon footprint calculation on an annual basis.
With more than 10 years of experience in the voluntary and compliance markets, First Climate has worked with numerous internationally acclaimed financial institutes around the world that are looking to be leaders in a low-carbon economy.
Please visit www.caf.com to learn more about CAF's carbon management program.
Sascha Lafeld Teaching at UNEP Finance Initiative's e-Learning Course on Climate Change
From June 8 - 26, 2009, the United Nations Environment Programme's Finance Initiative (UNEP FI) will be running an e-Learning Course on "Climate Change: Risks and Opportunities for the Finance Sector".
The course will enable senior and mid-level executives in financial institutions to learn about climate change and how it affects their industry in a flexible, cost-effective and accessible e-learning training environment with opportunities to network and interact with fellow participants and expert tutors.
Sascha Lafeld, Advisor to UNEP FI's Climate Change Working Group (CCWG) and Member of the Executive Board of First Climate, is going to teach Module 3 held from June 22-26.
For detailed information, please visit the Course Outline Registration is open now. To find out more and to register, visit UNEP FI
In Focus at Carbon Expo: Solutions to Overcome Post-2012 Risks
This year's Carbon Expo comes at a time of considerable uncertainty regarding a future market for project-based carbon credits. As project developers monitor current negotiations to gauge a potential market risk, future carbon prices are as uncertain as the willingness and ability of compliance buyers to off-take large volumes of post-2012 carbon credits.
There are measures, however, that project developers can take now to secure part or all of their post-2012 carbon credit stream. At the Carbon Expo, First Climate experts are available to discuss solutions such as the Post 2012 Carbon Credit Fund launched by the European Investment Bank and four other European public finance institutions. Join us in hall 8.1, aisle A, stand 28 to find out how the fund contributes to securing future carbon credit revenue streams.
Risk management strategies concerning the post-2012 carbon credit market will be one of the subjects discussed at a side event "ERPA - a hidden asset? Catalyzing carbon-backed finance" that First Climate is hosting on Thursday May 28th at 18:30. Chaired by our Director Project Finance, Nikolaus Schultze, the discussion will focus on
ERPAs promise long-term cash flows. But who is willing to trust this promise?
Towards privileged relationships between carbon asset developers and banks
Compliance buyer pre-financing via special purpose cash facilities
Underwriting ERPAs through purpose-built guarantee vehicles
Monetizing carbon beyond 2012 by off-loading regulatory and counterparty risks
Nikolaus Wohlgemuth, Regional Manager Africa & Pakistan, will participate in the panel discussion entitled "Attracting the Market to LDCs - Is an EU type of incentive delivery the only option? Weighing different approaches to increase CDM regional distribution" on Friday May 29th from 11:00 to 12:00.
Visit us in hall 8.1, aisle A, stand 28. We look forward to seeing you in Barcelona!
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
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