 |
 |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
|
News, September 2001
Complexities cloud UK emissions trading
Businesses and emissions brokers have welcomed government clarification of the rules for the UK’s planned voluntary greenhouse gas (GHG) emissions trading scheme. But there are concerns over the likely level of participation – with a consultancy that helped design the scheme warning that many firms still perceive the process as too complex and risky.
“I’m concerned that not enough companies are excited about joining the bidding process,” says Fiona Mullins, a senior consultant at Environmental Resources Management, (ERM). “They’re more worried about the risks than the opportunities.
“The government should get out and explain the scheme and drum up support from industry,” she says.
Commission ‘could delay’ UK trading scheme
Some UK government officials are privately concerned that the European Commission may delay the introduction of the UK’s planned greenhouse gas (GHG) emissions trading scheme (ETS). The Competition Directorate of the Commission, which is the executive branch of the European Union, is currently assessing whether the ETS complies with EU rules on state aid. But officials within the Environment Directorate (DG XI) are concerned that the design of the scheme could undermine its plans for an EUwide emissions trading system
Deutsche Bank enters emissions market
Deutsche Bank has become the first bank to set up a dedicated greenhouse gas (GHG) emissions trading desk.The bank – German’s largest – is currently hiring staff for the London-based desk which will “cover the full range of financial transactions” involved in buying and selling carbon credits, according to a source at the bank.
“We have a large number of client relationships with both likely buyers and sellers of emissions permits around the world,” says the source.“There’s clear and obvious potential for transacting emissions trades.”
New Japanese Eco-fund bucks market
TRowe Price Global Asset Management has launched its first socially responsible investment (SRI) fund – and has quickly raised over $200 million from Japanese retail investors, despite the country’s uncertain economic outlook.
The fund, the yen-denominated Global Eco Growth Fund, was launched in June, and T Rowe Price, a US-based asset manager which manages $150 billion worldwide, plans to launch a European version before the end of October.
Hancock forest firm promises carbon dividend
Hancock Natural Resources Group (HNRG) has launched a new Australian company that will pay carbon credits instead of cash dividends for the first 20 years of its existence.
A$200 million ($106 million) is being sought to capitalise the new company – Hancock New Forests Australia (HNFA) – via a share offering to ‘sophisticated investors’ with a minimum subscription of A$10 million per investor.
The shares are being offered in Australia by Hastings Fund Management and in Japan by Mizuho Securities. Japanese companies are expected to be major buyers of carbon credits to help them meet curbs on greenhouse gas emissions stemming from the recent political agreement on the Kyoto Protocol.
Insurers forecast rising US hurricane risk
Two hurricanes are predicted to make landfall in the US this year, in addition to two tropical storms which have already hit the country. The forecast comes from the TropicalStorm Risk (TSR) consortium, which comprises UK insurers CGNU and Royal & Sun Alliance, insurance broker the Benfield Group, the UK Met Office and academic researchers at University College, London. It was issued on 6 August, coinciding with tropical storm Barry pounding Florida and Alabama. Tropical storm Alison caused severe flooding in Texas in June.
APT crisis leaves credits in the clear
Australian Plantation Timber (APT), one of the first forestry firms to realise the potential of selling carbon credits, went into voluntary administration on 30 July. But the announcement leaves the firm’s first carbon trade – concluded in June with Japan’s Cosmo Oil – largely unaffected, APT says.
The company’s management is confident that it can pull together the essentials of a rescue package by 31 August, the date set by APT’s bankers for its receiver to begin selling core assets.
Market eyes Liffe weather indexes
The jury is out among weather dealers and brokers on the likely success of the new weather indexes launched by the London International Financial Futures and Options Exchange (Liffe) – and of weather futures contracts the exchange plans to launch by the end of the year.
With the exchange specifically targeting companies that are currently not active in the weather market, observers say it is difficult to predict whether Liffe will succeed where an earlier attempt to list weather futures failed – and steal a march on its continental competitors.
The exchange began publishing indexes of cumulative average temperatures at three sites (London, Paris and Berlin) on 10 July. It has also made available 10 years of historical data on the indexes.
BC Hydro plans future with Pembina
Canadian power company BC Hydro has signed a memorandum of understanding (MoU) with the Pembina Institute for Appropriate Development to help it make progress towards its goal of becoming “a sustainable energy company”.
“The Institute’s perspective and advice on strategic direction and sustainability decision-making is invaluable to BC Hydro,” says company president Michael Costello.
EPA postpones reform of New Source Review
Expected reform of regulations which force US utilities to fit expensive emissions reduction systems when making ‘major modifications’ to old power plants has been postponed until later this month, at the earliest.
New regulations governing the New Source Review (NSR) programme had been promised for mid-August but, on 14 August, Christie Whitman, administrator of the Environmental Protection Agency (EPA), said NSR should be seen as part of a new package of pollution prevention measures. After discussing the issue with president George Bush, she said: “I am not prepared to come to any conclusions about one isolated issue before we finish work on our entire proposal.
Eco funds outperform in a downturn
Eco-efficiency funds can outperform ‘mainstream’ equity investments even in bear markets, according to research by the Finance Institute for Global Sustainability (FIGS).
Of 26 eco-efficiency funds that have a conventional market benchmark, 19 outperformed the market last year, says the report.
But the authors – John Buffington and John Ganzi – caution against placing too much weight on their findings. The sample size is small and last year’s bear market for equities was the first since eco-efficiency funds first appeared, they note.
Investors ‘should unite’ on climate change
Institutional investors should take concerted action on climate change, according to a recent discussion paper commissioned by the UK’s Universities Superannuation Scheme (USS) – and initial responses suggest that some investors are considering just such action.
The paper, published in July by the £20 billion ($28.8 billion) university staff occupational pension fund, notes that climate change poses a major risk to investment portfolios and suggests a 10- point action plan for institutional investors to manage climate change risks and opportunities.
“Some of the action points suggested can be undertaken by investors alone,” says USS chief investment officer Peter Moon. “But there are strong reasons for thinking that joint action in certain areas will be more effective and less costly.”
Midwest carbon market gets funding boost
The Chicago Climate Exchange (CCX), which aims to create a voluntary market in greenhouse gas (GHG) emissions reductions across seven Midwestern states, is moving into its design phase, thanks to a $760,100 grant from the Joyce Foundation.
An initial $347,600 grant from the same body last May funded an exploratory study which culminated in the recent announcement that more than 30 organisations – including bluechip industrial names such as DuPont, Ford, International Paper, PG&E and Wisconsin Energy – will participate in the design phase.
World Bank report lifts veil on carbon market
Natsource has produced the first publicly available review and analysis* of the emerging greenhouse gas (GHG) emissions reductions market.
The report, which the New York-based energy and environmental brokerage prepared for the World Bank, identified approximately 60 GHG transactions between companies since the first trades in 1996 (not including those in internal company schemes).
These represent 55 million tonnes of carbon dioxide or equivalent, which have mostly changed hands at between $0.60 and $3.00/ton – although the report notes that, because companies are under no obligation to report trades, the actual volume is likely to be higher.
RMS expands weather data coverage
Risk Management Solutions (RMS) has added Japanese and German temperature data to its Climetrix weather risk management system. And data for France, the Netherlands, Belgium and Scandinavia will be added “very soon”, says Steve Jewson, director of business development for Climetrix in London.
Climetrix is an internetbased system, launched in July last year, which offers pricing tools for weather derivatives along with weather data. Initially, only US and UK data was provided.
Trades boost Germany’s weather market
Entergy-Koch Trading has bought the first weather derivatives contracts based on Hamburg and Stuttgart, which dealers say is evidence of rapidly increasing activity across the European weather markets.
The Hamburg and Stuttgart deals were temperature- based options brokered through UK-based firm Spectron. Although the deals did not involve endusers, Entergy-Koch, formerly Axia Energy Europe, hopes they will encourage more German companies to enter the weather market.
Review praises UESR emissions inventory
An independent review of Unified Energy Systems of Russia’s (UESR) greenhouse gas (GHG) emissions inventory has been published by two leading environmental not-for-profits. UESR is the world’s largest single corporate emitter, and produces 30% of Russia’s GHG emissions.
“The pioneering UESR inventory is a model for accurate, transparent GHG emissions accounting,” says Alexander Golub, an economist with New York-based Environmental Defense, one of the organisations that reviewed UESR’s inventory.
CO2e.com plans simulation series
CO2e.com, the New Yorkbased electronic carbon market, has carried out the first of a series of simulations designed to help companies understand how they should respond to the developing market in carbon credits.
37 participants “across the range of Japanese industries” took part in the simulation in Tokyo in July, hosted by trading giant Mitsui & Co and organised by CO2e.com, says chief executive Carlton Bartels.
WWF stamp of approval for GHG projects
The World Wildlife Fund (WWF) is proposing a ‘green label’ scheme to certify the environmental and social integrity of greenhouse gas (GHG) emissions reductions projects. Only “top-end” projects – such as renewable energy, small-scale hydro or certain end-use energy efficiency schemes – would qualify, says Mark Kenber, a UKbased climate change campaigner at the WWF.