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Vol.
3, No. 7: June 27, 2008
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New tools for managing climate risk
Across the globe, insurance groups are both developing new tools and modifying existing products to help clients prepare for a variety of climate change-related risks and helping pad the pitfalls surrounding carbon market opportunities. As a recent example, the Gold Standard Foundation and Carbon Re AG announced a new agreement where Carbon Re insurance clients with Gold Standard credits will receive the perk of project insurance at a reduced rate. Gold Standard Foundation Director Michael Schlup, describes the partnership as marking a “new level of maturity in the market...” And indeed, the meeting of insurance concepts and companies on the carbon front highlights the markets’ movements toward the realm of the ‘responsible (well insured) adult.’
Also in the name of risk management, Sir Nicholas Stern, author of the landmark UK study on the economics of climate change, yesterday announced plans to launch a carbon credit rating agency housed under his company IdeaCarbon, which will rate credits in a fashion similar to debt rating.
Read on for more on the latest marketplace insurance tools, as well as other news from the past two weeks.
-The Ecosystem Marketplace Team
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VOLUNTARY
CARBON
Carbon Re AG teams up with Gold Standard
Carbon risk management service provider Carbon Re AG and the Gold Standard Foundation have joined forces to offer certification insurance services to carbon project developers in pursuit of high quality credits. Insurance clients of Carbon Re that receive the Gold Standard certification will receive project insurance at a reduced rate. According to the organizations’ press release. the partnership reflects CarbonRe AG’s acknowledgement that Gold Standard projects pose lower risks than conventional CDM/JI projects.
– Read the press release
Climex VER Auctions 45,000 pre-CDM VERs
On July 17, 45,000 VERs will be sold in open auction on the Climex Exchange. The pre-CDM VERs are generated from two small hydro projects in China and are available in 2006-2008 vintages. The credits will be certified by TUV SUD’s VER+ Standard, with the VCS II Standard available upon request. Prices start at 3 euro.
– Read the Climex News article
CDM rejects find a home on CCX
According to Carbon Finance, two Indian projects that failed to receive CDM status are being registered with CCX for offset credits. Project developer Bajaj Auto, whose project was rejected by the CDM Executive Board due to questionable additionality, said its bundled wind farm project was subsequently verified by the Voluntary Carbon Standard before CCX. Bajaj Auto believes its credits were additional, as similar projects that have been installed at the same location but at a later time have been approved by the CDM. Carbonyatra, the other project developer, has one biomass project registered with CCX and others in the pipeline. CEO of CCX's parent company Climate Exchange Neil Eckert said that failed CDM projects are sometimes eligible to register on CCX because they were installed too early to qualify as CDM projects, which would support Bajaj Auto’s claim.
– Read the Carbon Finance article
Carbon Trust Standard recognizes real reductions
In the latest wave of certifying GHG reductions, businesses can now apply to The Carbon Trust to certify their emissions reductions. The Carbon Trust Standard covers only a company’s direct emissions from fuel and electricity use, as well as business travel. Firms that receive the standard must continue to shrink their carbon footprint in the future, or else will lose certification. Cost of assessment and certification ranges depending on the energy bill of the company and can reach 12,000 pounds. So far, twelve companies have received the standard.
– Read the Environmental Leader article
– Visit the Carbon Standard website
Indonesia and Australia sign Forest Carbon Partnership
Australian Prime Minister Kevin Rudd and Indonesian President Susilo Bangbang Yudhoyono have formally agreed to work together in fighting GHG emissions from deforestation. The agreement, known as the Forest Carbon Partnership, aims to help Indonesia turn forest conservation into a tradable commodity. "We need to set a value- a real dollar value- on the carbon stored in rainforests," Rudd told a meeting of business leaders.” The agreement also aims to expand security cooperation between the two countries. The Australian Prime Minister hopes to develop an Asia-Pacific Community similar to the European Union that would tackle issues such as climate, security, and food.
– Read the Reuters article
Reduce, reuse, recycle....offset!
Taking the carbon offset concept a step further, RecycleNet Corporation, which operates the Online Secondary Commodities Exchange, has launched a Recycling Offset Credit (ROC) program. The program is designed to provide a certification system that recognizes and rewards companies for recycling. RecycleNet will award ROCs for each ton of material recycled. However, the “ROCs” do not translate into carbon offsets. The program is free and open to companies, institutions, and organizations at any stage of the recycling/reverse distribution supply chain. Companies may join the program simply by reporting their recycled materials.
– Read the Fox Business article
Cheers! Kampai!
Japanese brewer Sapporo and Australian beer company Foster’s are coming clean on their carbon footprints, or least taking steps toward it. Sapporo Breweries has said it will start putting a label on cans of its Black Label draft beer stating the quantity of C02 emitted during the manufacturing and disposal process. Cascade, a beer line owned by Fosters, released its green brand in March, and according to sustainability manager Scott Delzoppo, sales have exceeded expectations. Cascade offsets its emissions via a Tasmanian landfill gas project.
– Read the Environmental Leader article
– Link to the ABC Australia article
REDUCE & RETIRE: THE LATEST ON CARBON NEUTRAL
Light on carbon, heavy on pounds
The Scottish town of Stirling has received a bit of limelight, after receiving 1.25 million pounds from the Scottish Government and the Big Lottery Fund for efforts to become the first carbon neutral city in the UK. The project, called “Going Carbon Neutral Sterling,” has as its goal to bring down the carbon footprint per person from 12 tonnes to 1 tonne. The project will involve a large information gathering effort to track the city’s consumption of electricity, fuel, and local versus overseas products.
– Read the Scotsman article
This time, you want to buy green bananas
In attempt to help the country become the first carbon neutral nation, Costa Rica’s banana industry has announced that it too will be going carbon neutral. The Central American country joins at least three other countries in a race to become carbon neutral. Costa Rica has set its target year as 2021, which coincides with the country’s 200th anniversary of independence. Bananas are Costa Rica’s largest agricultural commodity, and 14.4% of country’s replanted forests are used for banana plantations. The National Banana Corporation (CORBANA) has invested over one million dollars in two new research facilities to research more sustainable and less chemically-intensive methods of banana farming.
–Read the Fresh Plaza article
National parks go carbon neutral
Forty national parks have now pledged to go carbon neutral through the “Climate Friendly Parks Initiative.” Qualifying parks must work with the US EPA to quantify their emissions and are aiming for zero net carbon emissions within the next 20 years. Numerous parks can expect to see the effects of warming from vanishing snowpacks, or rising water. Some – like Glacier National Park in Alaska – already have. In addition to reducing their parks’ carbon footprint, park operators hope that these moves will inspire visitors to make similar changes.
–Read the Contra Costa Times article
CLIMATE NORTH AMERICA
A Hot Commodity
The head of the US Commodity Futures Trading Commission has stated that GHG emissions market could become the largest commodity market. According the World Bank’s 2008 report, carbon trading was worth $64 billion in 2007. Carbon market analyst group Point Carbon has estimated that the market could reach $3,000 billion by 2020 if the US were to participate in the global carbon market, whether through a successor treaty to Kyoto or through its own federal legislation.
– Read the Financial Times article
LEEDing buildings to RECs
Following the growing popularity of the US Green Building Council’s LEED certification system, BeGreen has released a carbon calculator to help designers and builders determine their buildings’ carbon footprints. After entering basic information about their buildings, users of the online calculator are provided with a contract and a certificate for renewable energy certificates (RECs). BeGreen is a division of Green Mountain Energy company, the longest serving green power provider in the US.
– Visit the BeGreen website
– Link to the BeGreen calculator
California Air Board pushes landmark climate proposal
The California Air Resources Board issued a proposal yesterday to cut emissions by 33% over the business-as-usual scenario through altered electricity generation, car and building design, and carbon trading. If California is successful, it will bring its emissions in 2020 down to 1990 levels, reducing the carbon footprint of the average Californian from 14 tons to about 10 tons. The Board is still hashing out what share of allowances to auction and what share to disburse freely, but offsets could involve projects outside of California as long as they are within the Western region. The Board has also stated its commitment to reducing emissions 80% by mid-century, a plan that Governor Schwarzenegger has sanctioned through an executive order.
– Read the Los Angeles Times article
A TOUCH OF KYOTO
MIT study gives thumbs up to EU ETS
Contrary to much media criticism of the EU ETS in its first commitment period, a recent MIT study found that the ETS is achieving its goal efficiently and cost effectively. Said A. Denny Ellerman, senior lecturer at the MIT Sloan School of Management and a report contributor: “This important public policy experiment is not perfect, but it is far more than any other nation or set of nations has done to control greenhouse gas emissions—and it works surprisingly well.” The report authors conclude that the EU cap-and-trade programs has done a good job at balancing centralized and decentralized control, and has also served the role of prototype for a global emissions trading scheme.
– Read the Science Daily article
CARBON FINANCE
Natsource launches European carbon asset pool
Natsource, the New York based carbon asset manager, announced it has formed a carbon pool for European companies to buy credits that can be used to fulfill Kyoto compliance requirements. "We try to bring them cheaper carbon credits for their compliance than they would otherwise be able to get," said the fund’s manager Egbert Liese. This is Natsource’s second carbon asset pool, which has a target value of 200 million euros. The first pool, established in 2005, collected about 520 million euros, but it targeted business from a larger geographic area. Liese said the new fund is smaller because it is being offered to European companies only.
– Read the Reuters article
Insurance products expand to capture climate risks
Insurance companies are developing new tools and fine-tuning already existing products to help commercial clients prepare for future climate-related risks. These new and refined products include coverage for companies using new technologies that have not been recently tested, and coverage for companies having to offset energy use by purchasing carbon credits. The new types of coverage reflect current and expected legislation requiring companies to step up their risk disclosure and meet carbon emission rules.
– Read the Reuters article
Nicholas Stern launches credit ratings agency
The author of the landmark UK study quantifying the economic impact of climate change, Sir Nicholas Stern, launched a carbon credit rating agency yesterday. The agency is the first to rank carbon credits in a similar fashion to debt rating. "If we are to attract the levels of finance necessary to make this a mainstream market and have a strong impact on emissions reduction,” said Stern, “risks must be clearly understood, articulated and managed. A detailed ratings system is a vital tool to bring greater clarity, transparency and certainty to the market.” The agency will be run by IdeaCarbon, of which Stern is vice-chairman.
– Read the Financial Times article
– Read the Business Green article
SCIENCE & TECHNOLOGY
Seeing the Planet for the Trees: Climate Models need better forest dynamics data
Two studies published in the journal Science call out the need for better understanding of forest dynamics in order to predict forests’ response to deforestation and climate change. The studies’ authors, led by a researcher from Microsoft Research, argue that the lack of understanding of forest dynamics is the single most important impediment to developing robust climate models, not to mention understanding biodiversity and deforestation. Both studies highlight the immediate need for additional resources to study forests.
– Read the Science Daily article
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