Investment Opportunities in the Carbon Sector. Michiel Tijmensen - Risk Manager December

Transcription

1 Investment Opportunities in the Carbon Sector Michiel Tijmensen - Risk Manager December

2 Summary 1. OneCarbon 2. Carbon Market Basics 3. The Carbon Value Chain 4. Performance of Carbon Credit Actors 5. Investment Opportunities OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

3 OneCarbon Who we are The sustainable energy solution provider Our goal is to contribute to the mission of Econcern: A sustainable energy supply for everyone The sustainable energy knowledge and innovation company The sustainable energy system supplier The sustainable energy project developer The sustainable energy innovation entrepreneur The sustainable carbon credit originator OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

4 OneCarbon Offices Brazil: Sao Paulo Chile: Santiago de Chile China: Beijing, Wuhan Germany: Cologne, Berlin Mexico: Saltillo Netherlands: Utrecht Ukraine: Kiev Spain: Barcelona South Africa: Johannesburg OneCarbon Carbon Market Basics Turkey: Value Chain Istanbul Performance Invesment Opportunities

5 Variations of the Earth s surface temperature: Year 1000 to year 2100 Source: IPCC

6 Emissions Trading basic concept Emission reductions have a monetary value OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

7 3 Main Carbon Markets OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

8 Kyoto Protocol 1997 (2005) Greenhouse gas emission targets for for industrialised countries OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

9 Status Kyoto protocol Yellow: Ratified, with reduction obligations Purple: Ratified, without reduction obligations Dark grey: Not ratified, possibly at later date Light grey: Not ratified, position unknown

10 Kyoto Mechanisms Kyoto Targets industrialised countries Domestic action Kyoto Mechanisms International Emissions Trading (Unit: AAU) Joint Implementation (JI; Unit: ERU) Clean Development Mechanism (CDM; Unit: CER) OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

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12 EU ETS: demand for project based credits

13 Project related emission reductions Hurdles to cross Potential Emission Reductions Registration PDD Baseline Additionality Implementation Monitoring Carbon Credits OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

14 EUA and CER Prices OneCarbon Carbon Market Basics Value Chain Source: Reuters, ECX Performance Invesment Opportunities

15 CER price vs CDM life cycle Carbon Price Secondary CER price REG 1 st ISS ISSUED LOA PDD Project Cycle OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

16 OneCarbon - What we do: Originate Identify and initiate potential carbon reduction projects all over the world. Participate in CDM, JI and voluntary projects as project developers and credit originators. Use our financial and technical expertise to deal with all aspects of emission trading. OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

17 OneCarbon activities Project Development CDM/JI Process Management Financial Structuring & Credits Sales OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

18 Carbon Value Chain Pure Carbon Player Credits Origination Idea Feasibility Finance CDM Realisation O&M Wholesale / retail End User Credits Trading Non Pure Carbon Player

19 Performance Volatile market: prices Portfolio volumes: write-offs Critical success factors Project quality Project control Managing price volatility Little correlation with equity markets -> diversification of investment portfolios OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

20 Investment opportunities private equity/vc Funds Originators Retail offset providers Technical solutions OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

21 1. Funds 2007: 7 billion invested in 58 public and private funds 2008(E): 9.4 billion in 67 public an private funds Effectively two types of funds related to the carbon market exist: a) Compliance World Bank Prototype Carbon Fund (public/private) European Carbon Fund KFW Carbon Fund b) Aggregating/trading Trading Emissions Climate Change Capital Carbon Funds Tricorona Carbon Funds Strategy funds: Direct purchase of credits Project investment Investment in development companies OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

22 1. Funds (cont d) Status: sufficient funds available for direct purchase of credits still not enough funds available for direct project investment. Innovative funds: Post 2012 (EIB: Post-2012 Carbon Credit Fund) VER focused funds (OneCarbon?) OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

23 2. Originators Various originators are listed (AIM) Camco Ecosecurities Econergy International Privately held originators: OneCarbon Syndicatum Carbon Capital Carbon Capital Markets OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

24 Originators - example JP Morgan: Full take-over of Climate Care/Pioneer Carbon TEP: Majority of Environmental Credit Corporation (ECC) Vitol: Minority Carbon Resource Management Syndicatum Carbon Capital Equity invested by: Citigroup Venture Capital International AIG Black River Asset Management Foresight Venture Partners OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

25 3. Retail Offset Providers ROP: providing carbon credits to end users Warehousing facility Internet based infrastructure to deliver Registry Climate Care Climate Friendly Greenseat Etc A lot of them are currently looking for equity investments Valuation typically based on NPV of future cash flows, with low or no historical revenues OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

26 4. Technical solutions Typically companies that are dedicated to one or a few dedicated technical solutions that can be part paid by carbon structures Example 1: d.light Product LED lighting for the Bottom of the Pyramid Example 2: biogas company Product technology supplier for waste water treatment projects in tropical regions

27 What will 50m get you? About 5 Mtonne of primary carbon credits (compliance) About 3 Mtonne of secondary carbon credits (compliance) Almost 10 Mtonnes of primary post 2012 credits About half of an originator One large Retail Offset Provider, or two small ones A relatively mature Bottom of the Pyramid technology company OneCarbon Carbon Market Basics Value Chain Performance Invesment Opportunities

28 Thank you for your attention Michiel Tijmensen Mobile: +31 (0)

29 Back-up

30 Sample CDM Project EECOPALSA, CDM Gold Standard Project, Honduras Biogas power generation plant Installed capacity: 1 MW Carbon credits: Gold Standard CERs (25,000 tons CO2e/year) Winner of the EDIE Environmental Excellence Award Solved environmental problems of wastewater and lack of irrigation Plant started in September 2006 Buyers: Klimarappen (CH)

31 Sample CDM Project Xinguan-Nanchang, landfill gas-toenergy project, China Landfill gas-to-energy plant Installed capacity: 3 MW Expected generation: 22.2 GWh/yr Expected carbon credits (CERs) 150,000t CO2e/yr for 10 years Replace part of the electricity generated by thermal power in the grid by a renewable energy source Boost local investment and employment

32 Sample Voluntary Project Mare, Gold Standard Voluntary Emission Reduction Project, Turkey Wind farm Installed capacity 39.2 MW (49 wind turbine units) Electricity generation: GWh/yr Carbon credits (VERs): 94,000 tco 2 e/yr One of the first ever registered Gold Standard Voluntary Emission Reduction projects Operational since January 2007

33 Sample CDM Project Tonk Biomass Project, India Biomass power generation plant Installed capacity 8 MW Energy generation: 43.7 GWh/yr Primary fuel: mustard crop residue Carbon credits (CERs): 30,000 tco 2 e/yr The electricity generated will replace a mixture of coal and gas-based power generation

34 Our Services Project Origination Identify potential projects Commercial feasibility Initial planning Project structuring Contract management Equipment sourcing Operation & maintenance

35 Our services Carbon Credits Development Direct work with assets owners Determination of project additionality Project design document Project registration Monitoring plan implementation Assistance during the verification and certification of greenhouse gases emissions reductions

36 Our services Project Sales Support Project concept note Identification of potential buyers Advise on credits buyers selection & documentation Negotiation and support for the Emission Reduction Purchase Agreement (ERPA) Equity support for projects

37 Project areas Bioenergy Landfill Gas Waste Water Treatment Biomass Wind energy Hydro Power Coal Mine Methane

38 Why choose us? High quality carbon credits World s first three Gold Standard Voluntary Emission Reduction Projects ever registered. 50% of our portfolio represented by Gold Standard projects. Proven track record Extensive knowledge and substantial experience in the carbon market. Strong partners Access to Econcern s specialist expertise in sustainable energy. Large diversified portfolio Projects of all sizes and maturities, a range of countries, based on a variety of technologies.

39 OneCarbon and the Gold Standard Gold Standard: First independent quality label to CDM/JI and voluntary offset projects. OneCarbon is one of the main providers of Gold Standard projects in the market. We develop Gold Standard projects for both the CDM/JI market and voluntary market.

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