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News April 2003
The following are summaries of news stories that appeared in the April 2003 print edition of Environmental Finance magazine
Sustainable development plans split mining sector
Efforts to develop a sector-wide approach to sustainable development have split the mining industry, it has emerged. Six companies have pulled out of the International Council on Mining and Metals, following wrangles over cash and the direction its development of social and environmental standards for the industry is heading.
Phelps Dodge in the US, Canadian companies Barrick Gold and Inco, Codelco in Chile, France’s Metaleurop and Outokumpu in Finland quit the association last October, Environmental Finance has learned.
Aquila weather desk rises from ashes
The core of Aquila Energy’s weather team has re-emerged in a new venture, called GuaranteedWeather. Ten former members of the desk set up the new company, which is backed by reinsurance agreements with Mitsui Sumitomo in Japan and Germany’s Hannover Re (see Environmental Finance, November 2002, page 5).
Brian O’Hearne, former president and chief executive of Aquila Energy Re, Aquila’s reinsurance subsidiary, is president and chief executive of the new firm, which is based in Kansas City – the home of Aquila. Brad Hoggatt, the former head of weather at Aquila Europe in London, is chief operating officer, with Kevin Colgan as head trader.
New carbon fund targets Asia, Eastern Europe
FE Clean Energy Group is launching a new private equity fund to invest in energy efficiency, renewable energy and emissions reduction projects in emerging Asian markets and Eastern Europe.
The Global-Asia Clean Energy Services Fund is expected to raise between $100 million and $150 million and its first closing is scheduled for June this year. Initial investors include trading giant Mitsubishi Corp and Chubu Electric, the third largest Japanese utility company.
Dutch back relative caps for NOx market
A national permit trading system to curb industrial emissions of nitrogen oxides (NOx) could be introduced in the Netherlands by the middle of next year, says a government official.
Such a scheme has been under consideration by the environment ministry and private sector consultants for many years to help the Netherlands meet its obligations under the Gothenburg Protocol and European Union regulations to combat acid rain and smog.The 1999 UN Gothenburg agreement calls for Europe to reduce its NOx emissions to 59% of their 1990 level by 2010.
UK considers trading to curb aircraft emissions
The possibility of using an emissions trading system to tackle the aviation industry’s growing contribution to global warming has been raised by the UK government.
In a discussion paper issued by the Department for Transport in mid-March, the government says emissions from UK civil aviation could represent more than 10% of the national total of carbon dioxide (CO2) emissions by 2020, up from an estimated 5% in 2000. As aircraft emissions are produced largely at high altitudes and include more potent greenhouse gases than CO2, their contribution to global warming is even higher, the paper notes.
CHP industry eyes certificate trading
A system of tradable certificates could be introduced to help stimulate the use of combined heat and power (CHP) in Europe. Such systems – also known as cogeneration – produce electricity and heat simultaneously and boast an overall efficiency which is typically far higher than that of most electricity-only power plants.
A working group of five industrial companies and five consultants set up by Cogen Europe, the industry’s European trade association, has concluded that such a scheme could help deliver new CHP investment at least overall cost, says Cogen director Simon Minett. He adds that a report based on the working group’s findings will be presented to the European Commission later this month.
SO2 and NOx prices seen staying high
Sulphur dioxide (SO2) and nitrogen oxide (NOx) allowance prices in the US are expected to remain high following dramatic jumps in recent weeks, brokers say. Prices spiked in late February, following a steep rise in oil and natural gas prices, before settling back to sustained high levels in March. Current year NOx allowances rose the most: from $5,100 a ton in January to a high of $7,700 on 25 February, before falling back to $6,400 by 25 March. SO2 allowance prices surged from $143 a ton to $166 a ton on 25 February, and slipped back only to $158 by 25 March.
Innovest launches ‘carbon audit’ for investors
Innovest Strategic Value Advisors has launched a service to help investors analyse the relative “carbon risk” of their portfolios.The Carbon Value at Risk Audit generates an estimate of a portfolio’s financial exposure to climate change issues, compared to the investor’s chosen benchmark.
Companies face increasingly significant financial risks from climate change, Innovest says, whether via efforts to reduce greenhouse gases, such as energy taxes and emissions trading schemes, or from the effects of global warming, such as more extreme weather events. But Innovest notes that companies in the same sectors face sometimes widely differing financial exposures.
NGOs slam Dutch on CDM
The Dutch government has signed contracts to buy carbon credits from 18 projects in the developing world – but the announcement has met with a barrage of criticism from non-governmental organisations.
The government plans to buy credits equivalent to up to 16.5 million tonnes of carbon dioxide, from projects in nine developing world countries. It is to pay between €3.30 ($3.51) and €5.50 a tonne.The contracts were signed under the government’s Certified Emissions Reduction Unit Procurement Tender, which buys credits from ‘Clean Development Mechanism’ projects in developing world countries, under the terms of the Kyoto Protocol, the international greenhouse gas reduction agreement.
NZ credits wind farms
The New Zealand government has given in-principle agreement to provide carbon credits to help ensure two proposed wind farms are economically viable, energy minister Pete Hodgson announced on 4 March.
The announcement comes ahead of the launch of a ‘project mechanism’, flagged in the government’s climate change policy unveiled last October, designed to encourage projects that reduce greenhouse gas emissions.
ICF looks east in climate change tie-up
ICF Consulting has become the latest western company to forge a climate change tie-up with a Japanese partner. It announced an agreement in mid-March to cooperate in providing climate change advice with Fuji Research Institute Corporation, part of Mizuho Financial Group, the world’s largest bank by asset value.
“Some of Fuji’s clients have assets in Europe and North America, and some of our clients have an interest in what’s going on in Japan,” says Abyd Karmali, ICF’s London-based director of climate change services.“ It makes sense for us to cooperate.”
EcoSecurities sells carbon credits on own account
EcoSecurities is on the verge of completing its first sale of carbon credits on its own account. The credits were generated by the NovaGerar Brazilian landfill gas project that the advisory firm half owns. In late March, EcoSecurities was finalising the pricing of a sale of credits equivalent to between 2.6 million and 5 million tonnes of carbon dioxide to the Dutch government, via a facility run by the World Bank.
“Our objective has always been to eventually develop our own projects, to act a bit like an investment bank in this area,” says Pedro Moura Costa, managing director at the UK-based greenhouse gas consultancy.
FTSE raises bar for SRI indexes, advises JSE
Seven companies have been dropped from the FTSE4Good family of socially responsible investment (SRI) equity indexes, as FTSE continues to “raise the bar” for inclusion. The index provider is also helping the Johannesburg Stock Exchange (JSE) create its own SRI index in South Africa.
The companies have been excluded from the indexes for indicating that they “will take no steps” to meet stricter environmental criteria, FTSE says. They are: Hafslund, a Norwegian energy distribution company; US firms Tenet Healthcare and Suntrust Banks; Irish biopharmaceutical company Elan Corporation, and UK companies RoyalBlue Group,a software company, pharmaceuticals firm Goldshield Group, and St Ives, a printer.
FTSE is also working with the JSE to develop an SRI index for South African companies. The criteria it adopts will be similar to FTSE4Good’s, but will be tailored to the domestic market and might include HIV/AIDS and black empowerment issues, says Oulton. It hopes to launch the index early next year.