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| News February 2001 |
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| IFC to take weather hedges to developing world |
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| The World Bank and
its private sector arm, the International Finance Corporation (IFC),
are embarking on a radical initiative to make weather hedges available
to governments and companies in the developing world. As well as helping
protect vulnerable economies against the effects of weather, the move
could have positive knock-on effects for weather derivatives markets
in the industrialised world, say dealers. "There is a need to jump-start the weather market in developing countries," explains Ulrich Hess, economist, Middle East and North Africa at the IFC in Washington. "These are wonderful tools, and could have a huge development impact." |
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| Cinergy to spend $1.4bn to settle emissions lawsuit |
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| The US Environmental
Protection Agency (EPA) has announced a record-breaking $1.4 billion
agreement to settle an emissions lawsuit it had brought against power
company Cinergy. The settlement is "the largest ever reached by the
EPA under the Clean Air Act," the agency said in a December 21 statement.
Cincinnati-based Cinergy is one of eight companies charged by the federal government in November 1999 with violating the law by making major modifications to coal-fired power plants without installing equipment required to control smog, acid rain and soot. Several states and environmental groups later joined the EPA's action. A similar case, against Virginia Power, a subsidiary of Dominion Resources, was settled in November at a cost estimated by the EPA of $1.2 billion |
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| EMA warns of threat to carbon trading |
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| The US-based Emissions
Marketing Association (EMA) says a European Union proposal to ensure
countries comply with their obligations under the Kyoto Protocol could
prevent a viable international emissions market evolving. In a 21 December letter to David Sandalow, the US assistant secretary of state for oceans, environment and sciences, the EMA board said: "The stringent compliance reserve proposals from the EU are not workable." In particular, the board wrote: "the proposals will severely limit market liquidity, deter needed speculative participation and undermine the development of additional financial instruments.". |
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| SRI fund avalanche from CGNU |
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| Norwich Union Investment
funds is to branch six socially responsible investment (SRI) mutual
funds in the UK on 19 February. It is also looking to launch an SRI
investment trust, specifically aimed at institutional investors, later
this year. An it is considering SRI products for Asian markets, and
venture capital and property portfolio SRI funds. The six funds - Norwich Union's first SRI products - follow the acquisition of the bulk of Henderson Investors SRI team last autumn by Morley Asset Management, Norwich Union's fund manager. Norwich Union is part of CGNU, the UK's largest insurance group. |
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| AGF, SG boost weather capacity |
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| SG has teamed up
with AGF - a top three French insurance company - to launch a new
fund that will invest in weather derivatives and catastrophe bonds.
The $95 million fund, called Meteo Transformer, was launched at
the end of December, and will be jointly managed by the two firms.
The fund - alongside two other new SG funds - will dramatically increase the capacity of SG, the investment banking arm of French bank Societe Generale, to offer weather derivatives to its clients. It also represents a bolstering of AGF's 'alternative risk transfer' capability, the company says, which brings together insurance and capital markets risk management techniques. |
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| Prebon seeks out wind energy investors |
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| Prebon Energy has
been appointed by Sustainable Energy Technologies (SET) of Canada
to help the Calgary-based company find partners in Australia to help
develop its wind turbine business. The aim is to find licensees for
the technology; joint venture partners to develop the products; or
possibly a buyer for the whole business, says SET project developer
Jonathan Dogterom. SET has decided it does not have sufficient resources of its own to develop its wind turbine products. It plans now to concentrate on its core business of power electronics and power conversion devices, particularly for alternative energy sources such as fuel cells and very small gas turbines. |
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| Permit trading to clean US waterways? |
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| Lessons learned
from controlling acid rain in the US could soon be applied to the
nation's waterways. The World Resources Institute (WRI) - in conjunction
with the States of Michigan and Idaho - is conducting trial emissions
permit trading to help control pollution caused by nutrients (such
as phosphorus, nitrogen and ammonia) leaching from farmland and industrial
plants. Under the terms of the 1972 Clean Water Act, caps are imposed on pollutants into waterways designated as 'impaired'. Polluters are then allocated the right to emit limited amounts of pollutants. In 1996, the Environmental Protection Agency found that 40% of US waterways were too polluted for fishing and swimming. |
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| 'Little thought' given to measuring SRI success |
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| Many UK investment
managers have given little thought as to how they could measure the
success - or otherwise - of their socially responsible investment
(SRI) strategies, according to a survey by accountancy firm Deloitte
& Touche. And some do not even feel that measuring success is
relevant. The findings show that "the practical application of SRI is falling well short of the original political aspiration," says Tony Osborn-Baker, chief investment officer at Deloitte |
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| Renewables boom to continue |
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| Annual growth in the global capacity of wind energy systems is expected to average 25% up to 2006, according to a new study by investment bank Dresdner Kleinwort Wasserstein (DKW). This would result in an installed base of 67GW in 2006 - but implies a slowdown from the heady 30% annual growth seen over the past five years, the bank notes. |
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| Degrees of green to mar Australian renewables market? |
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| Controversy over
what constitutes renewable energy could lead to different values emerging
for green certificates in Australia - potentially hitting liquidity
in the market, says analysts. Under legislation passed in December, wholesale energy purchasers will, starting from April, have to purchase increasing amounts of electricity from renewable sources, growing to 9500GWh per year - or an extra 2% of total electricity consumption - by 2010. |
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| Good times for insurers unlikely to last |
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| The year 2000 may
have been kind to insurers in terms of natural catastrophes, according
to figures from Swiss Re and Munich Re, but the long-term trend towards
higher losses is likely to continue, they say. Last year, insurance companies paid out around $7.5 billion for damage caused by floods, storms, earthquakes, drought and forest fires. The two firms estimate that actual economic losses were over $30 billion. This compares with insured losses of $22 billion and economic losses of $100 billion in 1999 - a record year. |
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| SO2 reductions compound global warming |
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| Success in tackling sulphur dioxide (SO2) emissions is making the task of slowing global warming more difficult, according to a new report from the Intergovernmental Panel on Climate Change (IPCC). SO2 emissions create aerosols in the atmosphere which can partially offset the warming effect of greenhouse gases, the IPCC notes in its Third Assessment Report, issued in Shanghai in late January. |
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