News September 2007

The following are summaries of news stories from the September 2007 print edition of Environmental Finance magazine

Environmental markets seen dodging financial crisis

Capital for financing clean technologies and to trade in environmental markets could get harder to find, some financiers warn, as the effects of losses in the US mortgage markets make themselves felt more widely. But most believe that financing renewable energy is likely to remain attractive, and some argue that environmental markets will offer investors returns that are uncorrelated with equity and debt markets.

Indexes of environmental technology companies – which tend to be comprised of relatively volatile growth stocks – have suffered more than wider market indexes. The Impax ET- 50, made up stocks in the clean energy, water and waste sectors, slumped 13.97% between 13 July and 20 August. The narrower Wilderhill Clean Energy Index was off 10.27% over the same period, during which time the S&P 500 fell 6.95%. More...

More carbon cuts from shareholders, consumers than emissions trading?

Pressure from consumers and shareholders to reduce emissions of greenhouse gases is having more of an impact on many large companies than the EU Emissions Trading Scheme (ETS), according to some emissions specialists.

Calls from institutional investors, via the Carbon Disclosure Project (CDP), for information about companies’ responses to climate change are “more influential on heavy emitters than the EU Emissions Trading Scheme,” said François Dauphin, France-based environmental offering director with software giant LogicaCMG. More...

Showdown looms in US Congress over renewables, cars

The US Congress faces a showdown in the autumn over renewables and automobile efficiency as leaders from the Senate and House of Representatives try to reconcile energy legislation.

On 4 August, the House passed the New Directions for Energy Independence, National Security and Consumer Protection Act (H.R.3221). It strengthens efficiency standards for buildings and appliances, provides incentives for renewables investments and protects sensitive public lands from oil and gas drilling. More...

Chicago drags Goldman, BoA into BP boycott

The City of Chicago may boycott BP over emissions from a nearby refinery, and is to cut Goldman Sachs and Bank of America out of lucrative bond underwriting business, as they have officers on the oil major’s board.

At issue is BP’s oil refinery in Whiting, Indiana, near Chicago, which it plans to expand by 2011 to process Canadian crude, to meet growing gasoline demand, said BP spokesman Scott Dean. More...

Renewable investment ‘to reach $750bn by 2016’

World-wide investment in renewable energy could pass the $750 billion mark by 2016, Ernst & Young predicts.

In a quarterly ranking of how attractive countries are to investors in renewable power, the consultancy says that tough EU targets will contribute to this seven-fold growth in investment in assets, projects and technology from $100 billion in 2006. More...

Japan faces increasing Kyoto gap

The Japanese government is re-examining the policies required for it to meet its Kyoto Protocol target of a 6% reduction in greenhouse gas (GHG) emissions from 1990 levels over 2008–12 – and is likely to become an even bigger buyer in the global carbon market as a consequence.

This follows the submission on 10 August of an interim report outlining the current expectations for the country’s GHG emissions over the period to a government committee tasked with assessing the country’s Kyoto compliance plans. More...

Italian business offered hot weather bet

Merrill Lynch has launched a temperature- linked investment product that will allow farmers and retailers in Italy to mitigate against the impacts of hot weather on crop yields or sales.

The two-year certificate will return up to 16% annually, depending on how far the average annual temperature at Roma-Ciampino airport rises above 16.38°C. If the strike temperature is not reached, investors will have at least 101% of their principal returned after two years. More...

Latest Senate climate bills look overseas

The two latest Senate bills aiming to cap US greenhouse gas (GHG) emissions have opened a new front in the climate debate – targeting US trading partners that fail to cut carbon.

Trade provisions are included in two cap-and-trade bills Congress will take up in the autumn: one introduced in July by Democrat Jeff Bingaman and Republican Arlen Specter, and a bill to be introduced in September by Independent- Democrat Joseph Lieberman and Republican John Warner. More...

Sakhalin finances under spotlight

Two campaign groups have filed for a judicial review of what they say is the UK export credit agency’s decision to underwrite $1 billion of contracts for the controversial Sakhalin II oil and gas project before the environmental impact assessment of the project was completed.

Meanwhile, the European Bank of Reconstruction and Development (EBRD) has withdrawn from negotiations on financing the project on the Russian island of Sakhalin,drawing to a close six years of work and fierce debate over the environmental risks of the project. More...

Hurricane Dean to cost insurers up to $3 billion

Insured losses from Hurricane Dean are likely to be between $1.5 billion and $3 billion, according to extreme risk modeller Eqecat, hitting the insurance sector with its second big bill this summer.

As Environmental Finance went to press on 20 August, the category four hurricane had already wreaked havoc on the island of Jamaica, causing the government to declare a state of emergency, and was predicted to make landfall in the Yucatan region of Mexico and the coast of Belize. The US National Hurricane Center was warning it could worsen to a category five storm within 24 hours. More...

China pledges to starve polluters of credit

China’s top banking regulatory commission, together with its state environmental agency, has vowed to restrict lending to heavily polluting companies. The bold policy created a buzz both on and off the mainland. However, observers were cautious, citing the failure of similar government efforts and an enforcement gap between national and local banking authorities.

State Environmental Protection Administration (SEPA) deputy director Pan Yue announced the “green credit” policy in mid-July, pledging that the agency will work with the Bank of China and the China Banking Regulatory Commission to enforce it, with the financial bodies denying loans to businesses that SEPA identifies as failing to meet environmental standards. More...

ADB in $100m clean energy call

The Asia Development Bank (ADB) is planning to invest $100 million in up to five private equity funds focusing on renewables, energy efficiency or carbon reductions in the region. In a call for proposals,issued in July,the ADB said it aims to “significantly increase its investments in the clean energy sector in Asia through specialised private equity funds”.

“For private sector renewable energy and energy efficiency companies and projects, especially small and medium-sized enterprises, private equity is a critical and complementary type of financing instrument required. ADB believes there is an inadequate supply of risk capital for clean energy projects in Asia that can be accessed by private companies,” the bank said. More...

NOx trading goes annual

Participants in the US nitrogen oxide (NOx) allowance market are beginning to trade for the 2009 annual market, at prices up to $7,000/ton, despite the fact that the Environmental Protection Agency (EPA) has not yet allocated allowances.

NOx allowances are traded in 22 states under the State Implementation Plan (SIP) Call system, which is designed to reduce emissions of smog-causing NOx, primarily from power plants. More...

Barclays’ China deal raises environmental risks

China Development Bank (CDB) has acquired a 3.1% stake in Barclays, which could rise to 6–7%, giving the UK-based bank access to the prized Chinese market. But socially responsible investment research firm Innovest Strategic Value Advisors has raised concerns about the environmental, social and governance risk to Barclays from the deal.

Greg Larkin, a senior analyst at Innovest, based in New York, argued that the deal “poses a significant downside risk” for Barclays, noting that the CBD has been responsible for some of the world’s most “environmentally, socially and politically risky infrastructure transactions”. More...

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