News July/August 2000 Carbon trading across the Atlantic Canadian power company TransAlta is buying greenhouse gas (GHG) emissions reduction 'credits' from a German electricity utility in what it claims is the first trans-Atlantic GHG trade. The German company - Hamburgische ElectricitatsWerke (HEW) - is a $17.22 billion utility which has a mix of generating capacity including a substantial amount of wind power. The GHG emissions reduction 'credits' will be created through increased use of this wind generation. The agreement is for GHGs equivalent to 24,000 tonnes of carbon dioxide, the main GHG. This is much smaller than some previous GHG trades but the contract runs for an unusually long time - it involves the sale of 3,000 tonnes every year for eight years. The price received by HEW is between $0.75 and $2 per tonne of carbon dioxide. Barep launches new weather fund Barep Asset Management has launched a second weather and catastrophe risk fund. The French fund management firm raised E47 million ($44 million) for its new Alizé Fund and related products, which was launched on 21 June. It follows Barep's dollar-denominated Azur Fund, which was launched last July and currently has $38 million under management. July deadline taxes UK pensions A survey by Environmental Resources Management (ERM) has found that 21 of the UK's 25 largest pension funds are now committed to a socially responsible investment (SRI) policy. But the responses to the survey, carried out in May and June by the UK-based consultancy, show that most fund managers are still finalising their policies. Meanwhile, Derek Higgs, chairman of Business in the Environment (BiE) and director of UK insurer the Prudential, has written to the chairmen of the UK's 350 largest companies, with a 12-point checklist to encourage them to ensure their company pension funds incorporate social and environmental issues. WRI points finger at export credit agencies Export credit agencies (ECAs) "appear to be doing more harm than good" to the earth's climate, says a new report from the World Resources Institute, a Washington-based think tank. "ECAs directly undercut the climate commitments and concerns of their own governments," say WRI researchers Crescencia Maurer and Ruchi Bhandari who wrote the report. This is particularly true of G7 countries, they note. This 'policy perversity' stems from a failure to place ECAs within a wider development and environmental context, they say. "Governments pursue one set of objectives through climate negotiations, while their finance and trade arms ignore the global environmental implications of their activities." ECA financing to developing countries disproportionately benefits energy and carbon-intensive industries, the report says. Swiss Re eyes emissions Insurance giant Swiss Re could soon be throwing its weight behind the proposed international market in greenhouse gas (GHG) emissions credits. Swiss Re New Market's environmental solutions unit is conducting a feasibility study into opportunities in what the firm sees as the potentially huge market for emissions credits, says Christopher Walker, Zurich-based associate director of the unit. The study, which is due to be completed in January, is in its early stages. However, Walker says "as a large reinsurance company, we have the financial and risk management strength... to assist companies in mitigating GHG-associated risks and facilitate these companies' participation in the GHG trading market." Aquila offers online weather prices Aquila Energy has jumped on the accelerating weather derivatives e-commerce bandwagon with the launch of GuaranteedWeather.com. The site, which allows end-users to experiment with pricing and structuring weather derivatives online, also offers indicative prices at which Aquila would buy options from end-users. Unlike the internet weather ventures from US energy giant Enron and Swiss Re, the reinsurance company, users cannot transact online and prices are only indicative. However, Aquila expects to beat the posted prices "over 95% of the time", says Ravi Nathan, weather portfolio manager at Aquila, which is part of the Utilicorp group. UK urged to cut more carbon The UK should aim to cut its emissions of carbon dioxide (CO2) to just 40% of current levels by 2050, says an independent think tank, the Royal Commission on Environmental Pollution (RCEP). The government's current goal of cutting CO2 emissions to 80% of their 1990 level by 2010 should be set as a firm target, the commission says. But, it warns, existing proposals may be insufficient to achieve this aim. "There is a moral imperative to act now to curb emissions," the commission says in its new report Energy - the Changing Climate because CO20 concentrations in the atmosphere are having "a discernible effect on climate." "To knowingly cause large-scale disruptions to climate would be unjust and reckless. We stand on the brink of doing just that." Finland's Fortum plans 'carbon' fund Finnish energy company Fortum plans to launch a 'carbon' fund later this year as part of its voluntary Climate Initiative which it announced in March this year. The fund will begin with FM10 million ($1.6 million) but could be increased if it goes well, says Carola Teir-Lehtinen, executive vice-president, health and safety. It is intended that the fund will invest only in projects outside Finland which reduce emissions associated with energy production. EU-US dialogue improves but divisions remain Good progress was made at the June meeting of UN subsidiary bodies on climate change in Bonn, say senior US and European officials. But on several key issues, particularly supplementarity and carbon sinks, the two sides remain far apart. UK funds shop for SRI research Two major UK fund management companies have announced tie-ups with eco-rating companies to boost their socially responsible investment (SRI) activities. SG Asset Management (SGAM) has teamed up with London-based SERM rating agency to help develop the latter's environmental risk rating methodology. And Innovest Strategic Value Advisors, a US investment advisory firm, is to provide Schroders Investment Management with research generated by its EcoValue 21 environmental performance rating tool. FOR THE FULL STORY EVERY MONTH, SUBSCRIBE TO ENVIRONMENTAL FINANCE, OR CONTACT info@environmental-finance.com FOR OUR BACK ISSUES SERVICE