This Week in Voluntary Carbon: It’s Complicated

It seems the market’s hottest couple these days is carbon offset projects paired with other sources of revenue/savings or appeal to other environmental markets. Even in Latin America, where in 2009 voluntary buyers fell hard for forestry-based projects, investors are looking for projects they can monetize in multiple markets.

NOTE:   This article has been reprinted from Ecosystem Marketplace’s Voluntary Carbon Newsletter.   You can receive this summary of global news and views from the world of Voluntary carbon automatically in your inbox every two weeks by clicking here.

25 October 2010 | As voluntary carbon market players mature in their relationship with project finance and market mechanisms, they’re apparently realizing the value of keeping their options open.

It seems the market’s hottest couple these days is carbon offset projects paired with other sources of revenue/savings or appeal to other environmental markets. Even in Latin America, where in 2009 voluntary buyers fell hard for forestry-based projects, investors are looking for projects they can monetize in multiple markets.

Think cacao futures, renewable energy certificates, electric power generation, bottom line energy savings or sustainable development aid – plus carbon credits.

With this in mind, voluntary carbon market veteran MGM Innova Capital recently announced that it will manage the Inter-American Development Bank’s newly launched MicroCarbon Development Fund (MCDF), extending up to US$50 million to projects in Latin America focused on energy efficiency.

The MCDF may also allocate up to 20% of the total committed capital to forestry and other land-based project types. But while forest carbon projects remain Latin America’s darling, talk at last week’s Latin American Carbon Forum revealed investors’ new crush on project types with multiple revenue streams.

“It helps to have a second source of funds because depending exclusively on carbon makes the investment riskier,” says MGM’s president and CEO Marco Monroy. “The way to protect your company from carbon market uncertainty is to have a dual income and be happy with other market returns in case carbon doesn’t happen.”

This issue spotlights some voluntary carbon programs and projects exploring open relationships with other markets. From to SOCIALCARBON to Google to Citivest, market participants are renewing their vows with renewable energy, a project type that lost significant market share in 2009. Even in the US, a region traditionally underrepresented in the renewables space, project developers are eying the project type.

Point Carbon’s Justin Felt reveals that one US project developer – NextEra Energy Resources – is bringing renewable energy projects to the relatively untapped US southeast. Felt also reported that four biomass and five wind projects are currently undergoing VCS certification in the US offsets market.
 
Community Energy’s Jay Carlis says that the argument for US-based renewables is strong. Why? “Because it’s not just about carbon.”

“It’s about clean air, green jobs, economic growth, preventing health conditions like asthma and lung disease from coal-based generation, providing income to farmers, ranchers and landowners and tax revenues to local schools. And then there’s energy security.”
 
It helps that renewable energy projects are attractive as a potential suitor for venture capitalists. Says John Paul Moscarella, Senior Managing Director at Emerging Energy and Environment, “We’re bullish on renewables projects.”
 
“The best approach we’ve seen,” he explains, “is to go upstream and get in with early stage renewable project developers before they’ve created a lot of value – and then ride along the upside of their value creation.”

Bookmark and Share

For comments or questions, please email: vcarbonnews@ecosystemmarketplace.com

V-Carbon News

Voluntary Carbon

Chicago Climate Exhange issues 2010-2013 program update
The Chicago Climate Exchange – the world’s only voluntary cap-and-trade system – has been cooling its jets since IntercontinentalEXchange acquired CCX earlier this year. For market followers who’ve been pondering program’s fate, CCX yesterday released a program update for years 2010-2013. It reports that the well-know voluntary emissions reduction program will conclude as scheduled at the end of this year and registry and trading services will remain available for all CCX Phase I and Phase II allowances and offset contracts through the middle of 2011. Included in the update, though, is a new offsets registry program for 2011 and 2012 CCX offsets that includes a publicly-available registry and a transfer mechanism to process transactions. The program update responds to some of the market’s nagging questions about the outlook for CCX post-2010 that were aired in a recent Chicago Business report.

Download the program update (1 page, pdf)
Read the Chicago Business article

Carbon fund to energize efficiency in Latin America
If the goal is to attract and marry some of the markets’ emerging capital solutions to early-stage emissions reduction projects, MGM Innova Capital president and CEO Marco Monroy offers this advice: smart projects in this market are those with multiple revenue streams. For instance, energy efficiency credits plus bottom line energy savings. With this in mind, MGM recently announced that it will manage the Inter-American Development Bank’s newly launched MicroCarbon Development Fund (MCDF), extending up to US$50 million to projects in Latin America focused on energy efficiency. The MCDF may also allocate up to 20% of the total committed capital to forestry and other land-based project types, with an eye on US carbon markets via verification under the VCS and Climate Action Reserve.

Read more from IDB

SOCIALCARBON dives into Turkish hydropower

Turkey recently became home to not only the first SOCIALCARBON-certified hydropower project, but the first SOCIALCARBON project to be located outside of Latin America. The çakıt Hydropower Plant Project, developed jointly by Norwegian renewable energy giant Statkraft and project developer Mavi Consultants, has a total capacity of 20 MW and should supply electricity to nearly 32,000 households. Also certified under the VCS, the project is expected to generate 509,030 tons of emission reductions over the first 10-year crediting period. Statkraft is aiming to increase clean energy usage in Turkey while ensuring that “respect is given to the social and environmental aspects of project development.”

Read more from Hurriyet Daily News

Forestry sector revives flat-lining VERs

Carbon Positive reports that forestry projects are breathing life into the voluntary market that’s in dire need of support post-recession. Broker Tullet Prebon reports that it’s still a buyers’ market where offset seekers hold off on purchases in search of low prices – because they can. Currently, Tullet Prebon broker David Pontis says that the market is comprised of about 70% sellers, 30% buyers. He also reports that parcels of 100,000 credits or more that will hit the market from Indonesia’s Rimba Raya project – as well as the recent issuance of the first VCS REDD credits from Tanzania and a large forestry VER transaction in New Zealand – show forestry’s strong promise amidst a currently weak VER market.

Read the Carbon Positive article

Ho, ho, ho, Green Giant!

Carbon project developer Green Giant Venture Fund recently entered into a joint venture with Green Globe International to develop U.S.-based sustainable solutions for their clients to monetize carbon credits, beginning with a project proposal in a city and a major school system in the US. Green Globe CEO Steven R. Peacock says of the partnership, “There are significant opportunities for sustainability oriented projects in the United States that generate carbon credits… we look forward to working with Green Giant Venture Fund to assist in the design of a complete solution.” Green Globe brings to the table experience developing projects types from biomass to recycling projects, and several current U.S. projects have already been identified as targets of the joint venture.

Read more about the joint venture
Read more about the targets

ERA deal good Fir everyone

Last week, project developer ERA Ecosystem Restoration Associates Inc. (ERA) announced their newest Canadian forest carbon project on Denman Island, British Columbia. ERA will be working with the BC Government, North Denman Island Lands Inc. and the Forest Carbon Group AG (FCG) in a unique public-private partnership that CEO Dr. Robert Falls calls “a triple win for the province, the environment and the climate.” The Denman Island Conservation Project will permanently protect over 750 hectares (15% of the island) of both crown and private land that are part of the Coastal Douglas-fir biogeoclimatic zone, an area of high concern to conservationists. Just today, ERA announced that it has executed a term sheet with FCG for the sale of all VERs generated by the project.

Read the company news release
Read more from the Vancouver Sun
Read more from Canada.com

Citivest invested in rural Dominican VERs

Latin America’s share of the voluntary carbon pie has grow dramatically over the last two years, but the Dominican Republic has focused almost exclusively on offsets recognized under the Kyoto Protocol. A pioneering few aim to fix that, including Anthony Simmons, COO for Citivest International, who is drumming up business for the island nation’s first large-scale forest carbon VER project. Citivest has partnered with Conocado under which many local landowners operate, aiming to offer upwards of eight million ex ante vintage 2011 credits from the project that Simmons says could impart community co-benefits like a climate event warning system, local “hip” cultural events and amenities to stymie the brain drain from rural to urban areas and multiple revenue streams from carbon credits and cacao futures.

Read more from Ecosystem Marketplace

Tricorona: technology turns dirty CO2 into clean H2O

Tricorona’s latest offset project teams up two of the earth’s major compounds to cut CO2 emissions in Kenyan communities. The project employs the Solvatten – which means “sunwater” in Swedish – to harness the sun’s heat + UV rays to destroy e-coli, cholera, salmonella and other bacteria found in Kenyans’ drinking water. The water is purified in the course of a few hours, when a symbol indicates that the water is ready to drink. This technology will supplant the current approach of collecting and burning firewood to boil drinking water. Tricorona will leverage carbon finance to reduce the price for the Solvatten device and Tricorona’s Niels von Zweigbergk notes that the company is also on the look-out for other CDM-projects in Kenya and East Africa.

Read more from Tricorona

Carbon Trade Exchange: you can bank on it…

…thanks to Westpac, which announced last week that it would provide banking services to Carbon Trade Exchange Ltd. (CTX) and facilitate voluntary carbon transactions on its online trading exchange platform. The deal is part of Westpac’s 5-year climate change strategy to reduce their overall emissions 30% by 2013. According to CTX CEO and founder Wayne Sharpe, “Carbon Trade Exchange is providing Australians with greater access to the multi-billion dollar global voluntary carbon market and Westpac is working with business to support the next generation of environmental and carbon businesses.” Most major voluntary carbon standards will now be tradable electronically on the platform, with Kyoto market credits to follow suit in the future.

Read more from The Age
Read the media release

From Shift 2 rift in DRC

Shift hit the fan this month in the DRC, where V-Carbon brought you news of a what Aussie firm Shift2Neutral reported as several agreements between itself and governments in the Democratic Republic of Congo to develop carbon offset projects. As reported in Reuters, the “deal covers the whole country.” Well, not so fast, says blog REDD Monitor, which translated a recent letter from the DRC’s Minister of the Environment, Nature Conservation and Tourism José E. B. Endundo to the Senator and Chairman of the Board of Congo Investment and Environment Security who inked the questionable MOU. The letter declares the deal illegal and void, noting that “in fact, the Congolese forests as protected areas are owned by the State which alone can decide their fate.”

Read more from REDD-Monitor
Read more from Reuters
Read the letter to the Senator

VCS methodology a jet standard setter

The VCS program recently saw two methodologies pass through its first of two reviews – one that takes energy efficiency to the skies and the other firmly rooted in improved tropical forest management. Aerospace business unit Pratt and Whitney’s methodology to improve jet engine efficiency will enter its second assessment hoping to incentivize market penetration of engine washing practices through carbon finance. Another recent methodology for logged to protected improved forest management was developed by GreenCollar Climate Solutions and passed its first assessment by the Rainforest Alliance. The IFM methodology is designed to protect unlogged tropical forests that would be logged in the absence of carbon finance.

Read about the jet engine methodology
Read about the forest methodology

Reduce & Retire: The Latest on Carbon Neutral

Carbon neutral so easy, even e-commerce can do it

No more excuses – businesses now have a cheaper, quicker and easier way to go green. Launched on October 7th by Richard Benyon, Minister for the Natural Environment, the @UK PLC Green Marketplace provides tools to help organizations both measure and offset their carbon footprints. Responding to the increased demand for carbon accounting driven by recent UK regulations such as the Carbon Reduction Commitment (CRC) and the Companies Act 2010, Chairman Ronald Duncan says they have “removed the barriers that have previously limited organizations from fulfilling these responsibilities.” Already one of the UK’s largest e-commerce portals, @UK PLC have now calculated the carbon footprint of over three million products.

Visit the @UK PLC marketplace
Read the Bracknell Forest Standard article

The shipping news

Paying more for slower delivery? It may sound counterproductive, but Amazon’s latest patent could indeed be the future of green e-commerce. The patent for “environmentally conscious electronic transactions” would give customers the ability to choose different shipping and packaging options based on their environmental impact. Although these options might make shipping slower and more expensive, they would also give customers more control over the environmental footprint of their orders. Furthermore, carbon offsets would be available for them to offset the remaining impact of their transactions. Although it is unclear if and when Amazon will make use of this patent, it has the potential to change the way consumers perceive online shopping.

Read the Fast Company article
Read the TechFlash article
Read the patent

Climate North America

CARB-ing out a cap-and-trade program

Just five days before California voters head to the polls to vote yea or nay on the cap-and-trade killing Proposition 23 ballot initiative, the state’s Air Resources Board (CARB) will release its proposed emissions trading system rules on October 29th. CARB Chairwoman Mary Nichols announced the rules release date at at last week’s Reuters Global Climate and Alternative Energy Summit, explaining that the rules will be available for a 45-day comment period before the Board votes on them at its December 17th meeting. Though she didn’t reveal updates to the rules that readers can expect at the end of this month, she did mention that the scheme would see free allocation of most permits instead of a full auction.

Read the Point Carbon article

The Lisa Jackson Five

The U.S. EPA recently released its FY 2011-2015 Strategic Plan outlining the five broad strategic goals the EPA hopes to achieve in the next five years: 1) Taking Action on Climate Change and Improving Air Quality; 2) Protecting America’s Waters; 3) Cleaning Up Communities and Advancing Sustainable Development; 4) Ensuring the Safety of Chemicals; and 5) Preventing Pollution and Enforcing Environmental Laws. Administrator Lisa Jackson delivered a message along with the plan, declaring that the EPA “will take broad steps to expand the conversation on environmentalism to communities across America, building capacity, increasing transparency and listening to the public.” The Plan is designed to advance Jackson’s seven priorities while achieving the EPA’s overall mission to protect human health and the environment.

Read more about the Plan
Read the news release
Read more from OMB Watch

Shareholders strike back!

Shareholders are challenging three big oil companies that have poured millions of dollars into the campaign for Proposition 23 that threatens to overturn California’s AB32 climate change law. Resolutions were filed with Occidental Petroleum, Valero Energy Corp. and Tesoro Corp. asking their boards to review political spending and policies. The Global Warming and Solutions Act of 2006 (AB 32) will reduce GHG emissions and boost the green economy but may be suspended if Proposition 23 is approved this November. According to Mindy Lubber, director of the Investment Network on Climate Risk, “rolling back this law will delay the nation’s much needed transition to a clean energy economy and greater energy independence.” A recent Reuters/Ipsos poll found that 49% of California residents oppose Proposition 23.

Read the ClimateBiz article

The US/China love/hate stalemate

The latest UN climate talks closed in Tianjin amidst finger pointing between the US and China, the world’s two biggest emitters. While the US attacked China for ignoring its Copenhagen commitments, China fired back with criticism over the failure of the US to reduce emissions. Despite this supposed rift in US-China relations, days later EPA administrator Lisa Jackson was in China on her first official visit, which she called “an expansive and productive trip, one in which we were able to renew our historic environmental partnership with China and lay the groundwork for expanding that partnership into the future.” While there, she and her counterpart at China’s Ministry of Environmental Protection (MEP) signed an MOU formalizing their partnership and commitment to environmental protection.

Read more about the MOU
Read more about the official visit to China
Read more from Carbon Positive

Kyoto & Beyond

Developed nations re-gifting climate cash

Last year in Copenhagen, the world’s rich nations pledged $30 billion to help poor countries cope with climate change. So where’s the money? A recent report by consultancy Climate Analytics found that rather than the “new additional finance” promised at Copenhagen, much of the funds have been diverted from other aid budgets. According to them, the only truly “new” climate funds additional to aid budgets add up to $8.2 billion ($17 billion under a more generous definition). These allegations arose during the latest round of climate talks in Tianjin, where questions were raised over where the $100 billion long-term climate finance pledged to poor nations is going to come from.

Read the BBC article

Not quite REDD ready?

Despite mounting enthusiasm for REDD, Dharsono Hartono of Indonesian project developer Rimba Makmur Utama says the market isn’t quite ready. Speaking at the Reuters Climate and Alternative Energy Summit, he predicted, “Best case scenario, I think 2013… worst-case scenario (would be) 2017.” He says by then “the economy is getting better, people’s awareness of climate change is much higher, there will be a lot of disasters between now and 2017 and people will say that’s all because of climate change.” Hartono blames stalled U.S. legislation, saying “No one will do anything until the U.S. comes to the table.” Despite this skepticism, he is hopeful that Japanese companies could turn to REDD credits to meet government targets.

Read the Reuters article

Auditors may not get with the programme

Last week’s Latin American Carbon Forum was marked by some serious discussion and enthusiasm around the CDM’s Programme of Activities (POA) option for project development. But the CDM’s Executive Board is concerned that the CDM will find some audit firms unwilling to validate projects under the project grouping mechanism. In theory, the grouped projects enable more large-scale emissions reductions than individual projects and also reduce transaction costs for small- to micro-scale projects. To weigh its concerns, the Executive Board is asking auditors to provide feedback at a board meeting in Cancun, Mexico planned for the five days through Nov. 26.

Read the Bloomberg article

En-Thai-cing investments

EDF Trading is considering six more Thai carbon credit projects to add to their growing portfolio, in addition to the ten for which they have already signed purchasing agreements. A unit of the mammoth Electricité de France power utility and one of the top three global carbon credit buyers, EDF already has over 110 CDM projects on the ground. According to Thai representative Suchai Lertpichet, “We expect to have five to six more projects in Thailand next year with projects under discussion including a waste heat generator (WHG), biomass and energy efficiency projects.” EDF are not the only ones with their sights set on Thailand; MPO, the European optical disk giant, are eyeing Thailand as a location for their photovoltaic cell manufacturing business.

Read the ecobusiness.com article

Global Policy Update

Comme Ci, Comme Ça, COMESA

Recent carbon news from Africa has been a mixed bag – ranging from Liberia’s call to extradite a British businessman accused of bribery in connection with a $2.2bn carbon offsetting deal, to the Common Market for Eastern and Southern Africa (Comesa)’s finalized multi-million shillings finance facility to enable member-states access carbon markets. The fund is expected to raise Sh40 billion from international donors and sovereign funds. Africa’s Standard Bank also says that, despite technical hurdles like the ones described elsewhere in this issue, it expects a boom in African green project developments. Standard Bank’s bullishness isn’t surprising – earlier this year, they teamed up with the UN and German Government on the African Carbon Asset Development Facility (ACAD).

Read the BusinessGreen article
Read the Standard article
Read the Reuters article

Kiwi approach to Kyoto forests

Consultation opened last Friday in New Zealand for a new approach to accurately assess forest carbon. The proposed regulations would require owners of 100 hectares or more of “Kyoto” forests (post-1989) in the Emissions Trading Scheme or Permanent Forest Sink Initiative to use a measurement-based approach to measure forest carbon stocks. The approach is designed to be more fair and accurate than the current look-up table approach, which will continue to be used for smaller forests. The Ministry of Agriculture and Forestry (MAF) is encouraging forest owners with an interest in carbon forestry to provide feedback on the proposed approach before the consultation closes on November 16th.

Read more from MAF

A (be)spoke hub for Asia-Pacific carbon

It was a g’day for carbon last week at Carbon Expo Australasia 2010, where funding for a new national Carbon Market Institute was announced. Financial Services Minister John Lenders stated that “the Brumby Labor Government is leading Australia in tackling climate change and helping businesses prepare for a carbon constrained future.” The institute, expected to open in January 2011, will be established in collaboration with the Asia-Pacific Emissions Trading Forum as an independent, non-profit organization. Melbourne, already considered the centre of Australian climate change action, is set to become the major hub for carbon market business in the Asia-Pacific region.

Read the Gov Monitor article

EU’s fits, starts and stalls

This issue’s EU carbon news update is about speeding up to slow down. A meeting of the International Civil Aviation Organization (ICAO) was considered by the EU to be a positive step towards the inclusion of aviation in the EU-ETS; however, others were not so convinced by the non-binding targets. On Thursday, European environment ministers met in Brussels to discuss raising the emission reductions target for 2020 to 30%. Failing to reach an agreement, they released a statement expressing their intent to “examine options to move beyond 20%.” Later on Thursday, the Netherlands cancelled an auction for 2 million EUAs on the Climex Exchange due to what Climex called “a technical fault” where “some participants had more information than others”. The auction was rescheduled for October 27th.

Read the Business Green article
Read the Carbon Positive article
Read the Bloomberg article

Green Power Play: Renewable Energy

Solar eclipses California

BrightSource Energy Inc. has been given the go-ahead to develop what will be one of the world’s largest solar thermal projects in sunny California. Approved last month by the California Energy Commission and now by the United States Bureau of Land Management, the company is set to start developing the proposed 392-MW Ivanpah Solar Electric Generating System on 3,500 acres of land in San Bernardino County. Comprised of 3 power plants containing fields of solar mirrors, it is projected to deliver enough energy to power 140,000 homes and offset over 400,000 tons of CO2 emissions annually. Two other solar power projects have also recently been approved in California, Tessera Solar’s 709-MW Imperial Valley project and Chevron’s smaller Lucerne Valley project.

Read more from Ecoticias.com

Camco’s new deal shifts from offsets to energy

Last month UK carbon investor Camco announced their new Malaysian joint venture, part of the company’s strategy to ramp up their energy generation business and produce carbon offsets. Speaking at last week’s Reuters Global Climate and Alternative Energy Summit, Chief Executive Scott McGregor said Camco expects to focus on waste to energy and industrial waste heat projects, aiming to complete 5 to 10 projects in 2011 alone. Camco expects its energy generation business to grow from zero to 40% of its total business by 2012, with carbon offsets falling from 80% to about 40%. Given the uncertain future of the Kyoto Protocol, Camco says they have focused on pursuing projects that would break even without a post-2012 climate deal.

Read the Reuters article
Read the Waste Managment World article

Additional resources

Please see our Reprint Guidelines for details on republishing our articles.