Post 2012 Carbon Credit Fund - Payment Certainty Beyond the Kyoto by epq17009


									Post 2012 Carbon Credit Fund

Payment Certainty
Beyond the Kyoto Protocol
The Post 2012 Carbon Credit Fund continues to provide
payment certainty to owners and developers of CDM and JI
projects despite the uncertainty surrounding the post-Kyoto

In a Climate of Uncertainty
Under the Kyoto Protocol to the United Nation’s Framework
Convention on Climate Change, projects benefiting the glob-
al climate can earn credits for reductions in greenhouse gas
emissions. The international demand for carbon credits is
driven by the commitment of developed nations to reduce
their greenhouse gas emissions from 2008 until 2012. An inter-
national policy regime for emission reductions and carbon
trading after 2012 has yet to emerge. As a result, it remains
difficult for new climate-friendly projects to monetize their
future reductions in greenhouse gas emissions.
A Unique Fund                                    Creating Certainty                                                                               Investment Example
                                                                                                                                                  Hainan Dongfang Gancheng Wind Farm, China
The Post 2012 Carbon Credit Fund was             In establishing the Fund, the investors are    The Fund will consider projects from vari-
established by five leading European             looking to support future greenhouse           ous sectors, including:
                                                                                                                                                  Located on Hainan Island off the south-        The sustainability of the wind farm with
public financing institutions in March           gas mitigation projects by giving value to
                                                                                                •	   Renewable	Energy                             eastern coast of China, this project aims      respect to local environmental and social
2008. As the first of its kind, the Fund is in   their post-2012 emission reductions. By
                                                                                                •	   Energy	Efficiency                            to install 33 wind turbines with a com-        impacts has been carefully and success-
the process of investing its available capi-     accepting the risks relating to the devel-
                                                                                                •	   Fuel	Switch                                  bined electrical generation capacity of        fully assessed.
tal of EUR 125 million in carbon credits         opment of a post-Kyoto regime, these
                                                                                                •	   Fugitive	methane,	including	landfill	        49.5 MW. Starting in 2010, the wind farm
generated after 2012.                            leading public banks are promoting the
                                                                                                     gas	and	coal	bed	methane                     is expected to deliver some 104,000 MWh        The Fund has agreed to purchase the CO2
                                                 development of the market for reduc-
                                                                                                                                                  of electricity from a clean and renewable      emission reductions to be achieved by
The investors in the Fund are:                   tions in greenhouse gas emissions
                                                                                                                                                  energy source to the public grid each          the project in the five-year period 2013 to
                                                 achieved after 2012.
•	   Caisse	des	Dépôts	                                                                         Making Carbon Bankable                            year.                                          2017. Through this forward purchase
•	   European	Investment	Bank                                                                                                                                                                    agreement, the Fund gives the project
                                                                                                The Post 2012 Carbon Credit Fund sup-
•	   Instituto	de	Crédito	Oficial	                                                                                                                By displacing an equivalent amount of          promoter certainty about the level of car-
•	   KfW	Bankengruppe                            Purchasing Vintages                            ports project promoters in raising the up-
                                                                                                                                                  electricity generation in thermal power        bon revenues to be expected in these
                                                                                                front financing required for their projects.
•	   Nordic	Investment	Bank                      up to 2020                                                                                       plants, the Dongfang Gancheng Wind             years. Thereby, the Fund contributes in a
                                                                                                The Fund offers emission reduction pur-
                                                                                                                                                  Farm will lead to a reduction in carbon        decisive manner to the long-term finan-
                                                 The Fund is focused on purchasing Kyo-         chase agreements (ERPAs) which are
Each of the investors has an Aaa credit                                                                                                           dioxide (CO2) emissions by over 80,000         cial viability of this wind farm, which is
                                                 to-compliant carbon credits generated          uniquely positioned for acceptance by
rating – the best available in the market.                                                                                                        tonnes annually. These emission reduc-         among the first of these in Hainan
                                                 after 2012, potentially up to 2020. For this   banks as collateral in their lending decisions.
Correspondingly, the Fund also offers its                                                                                                         tions will be verified and certified accord-   Province.
                                                 purpose, it will enter into forward agree-
optimum credit worthiness to the own-                                                                                                             ing to the rules of the Clean Develop-
                                                 ments with project owners for the deliv-
ers and developers of emission reduction                                                        The key elements of the Fund’s offerings          ment Mechanism of the Kyoto Protocol.
                                                 ery of Certified Emission Reductions
projects.                                                                                       include:
                                                 (CERs) and Emission Reduction Units
                                                 (ERUs) generated under the Clean               •	 Guaranteed	purchase	of	the	carbon	
                                                 Development Mechanism and Joint Im-               credits	irrespective	of	the	emergence	or	
                                                 plementation of the Kyoto Protocol. The           form	of	an	international	agreement	for	
                                                 Fund will sell to compliance and other            the	post-2012	period;	and                                                                                                                   The	computer	graphics	show	what	the	
                                                                                                                                                                                                                                               Dongfang	Gancheng	windfarm	on	Hainan	
                                                 buyers of carbon credits as and when the       •	 Optimum	credit	worthiness	of	the	
                                                                                                                                                                                                                                               Island	will	look	like.	It	is	among	the	first	
                                                 shape of the post-Kyoto regime emerges.           Fund.                                                                                                                                       windfarms	to	be	set	up	in	the	province	of	

                                                               Promoter               carbon-backed
                                                               Company                      loan

                                                                                              A as
                                                                                          ERP      al

                                                             CDM Project              €              CER            Post 2012
                                                              Company                      ERPA                 Carbon Credit Fund
The Post 2012 Carbon Credit Fund is managed by Conning Asset Management
(Europe) Limited, its investment manager, and First Climate in its capacity as
investment advisor.

First Climate is one of Europe’s leading      Conning Asset Management (Europe)
carbon asset management companies.            Limited is part of Conning Asset Man-
With offices on five continents and more      agement, which has assets under con-
than ten years’ experience in the mar-        tract in excess of USD 104 billion as of
ket, it is one of the few intermediaries to   31 December 2008. Conning has been
cover the entire carbon credit value          active in renewable and sustainable in-
chain. First Climate develops, finances,      vestments since 2003 and, along with its
and implements CDM, JI, and VER pro-          parent Swiss Re, has a commitment to
jects, purchases the resulting carbon         developing a portfolio in sustainable or
credits, and customizes trading solu-         alternative energy investments. In 2004,
tions for companies subject to emission       Conning structured and placed a EUR
trading schemes. As investment advisor        354 million European Clean Energy Fund
to several institutional investors, First     and continues to pursue similar oppor-
Climate structures and develops carbon        tunities to expand its portfolio. A fully-
funds and related products. In the volun-     owned subsidiary of Swiss Reinsurance
tary market, the company provides VERs        Company Ltd, Conning is headquartered
verified according to the highest interna-    in Hartford, Connecticut with offices in
tional standards. First Climate is one of     London, New York and Dublin.
the main sponsors of the Gold Standard
Version 2.

Investment Advisor                            Investment Manager

First Climate (Switzerland) AG                Conning Asset Management
                                              (Europe) Limited
Urs Brodmann                                  Markus van der Burg
Stauffacherstraße 45                          14 Fitzwilliam Square
8004 Zurich                                   Dublin 2
Switzerland                                   Ireland
phone: +41 (0)44 298 2800                     phone: +44 (0)20 7933 4501           

                                              Photos: First Climate,

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