News May 2008
The following are summaries of news stories from
the May 2008 print edition of Environmental
Finance magazine
EU allowance delays threaten
‘cascade of defaults’

An ongoing delay in the
issuance of EU allowances
to emitters in
the EU Emissions Trading
Scheme could lead to
“mass-scale default” in the
EU emissions market, market
participants have warned.
Lionel Fretz, CEO of London-based carbon trading
firm and fund manager Carbon
Capital Markets, told
Environmental Finance that “a
lot of our clients traded in
the forward market last year
for delivery in February”,
and owing to the failure of
EU governments to issue the
allowances, the contracts are
now in default. More...
ADB rejects Bangladeshi coal project

The Asian Development
Bank has pulled the
controversial Phulbari coal project
from its pipeline.
The proposed $3 billion project
involves London-listed GCM
Resources establishing an openpit
coal mine and up to 1,000MW
of coal-fired power generation in north-western Bangladesh. The
plan has raised concerns about
local pollution, climate change
impacts and human rights. More...
Global food crisis threatens
EU biofuels target

The European Commission’s
target to use 10%
biofuels in petrol and diesel by
2020 has come under pressure
from rocketing food prices and
shortages in developing countries.
Most of the feedstocks for
producing bioethanol and
biodiesel are also foodstuffs, such
as maize (corn), soy and palm oil.
The prices of almost all agricultural
commodities have soared
this year, with some blaming a
shift to biofuels. More...
Credit crunch hits clean
energy financing

New investment in clean energy fell
sharply in the first quarter of 2008,
according to figures from New Energy
Finance, while mergers and acquisitions
activity jumped dramatically – indicating
that contracting financial liquidity is
making its effect felt. However, the Londonbased
analysis company is holding to its 2012
investment forecasts, maintaining that the
“fundamentals remain strong”.
Just $807 million was raised on the public
markets, down from $5.2 billion in the first
quarter of 2007,while private equity and venture
capital investment dropped to $2.4
billion, down from $3.7 billion. More...
US power firms go on solar spree 
US power developers and
utilities this month
signed a series of solar deals
worth billions of dollars, as the
firms seek to supply their own
customers with solar power and
exploit global opportunities.
AES Corporation and private
equity firm Riverstone Holdings
led the pack, launching a joint
venture that plans to invest up to
$1 billion into photovoltaic
solar projects around the world. More...
EU emissions data helps
drive allowance prices

Carbon dioxide (CO2) emissions from
installations in the EU Emissions Trading
Scheme rose 1% in 2007, catching
most participants in the European emissions
market by surprise, it emerged at the start of
April. A decline in emissions had been widely
expected,owing to a milder-than-usual winter
last year, plentiful hydro reserves, cheaper gas
prices in the summer (which would have
encouraged more gas-burn in place of coal for
power generation) and a slowing economy in
the second half of the year.
Analysts have thus extrapolated that the
cap on emissions over Phase II (running from
2008 to 2012) will be even tougher than initially
thought. Deutsche Bank analysts Mark
Lewis and Isabelle Curien calculate that 2007
emissions – including installations that have
since joined the scheme – will reach 2,247 Mt
CO2, compared with an annual cap of 2,083
Mt over 2008–12. More...
Investor to market Guyanese
forest’s ecosystem services

Canopy Capital has
signed a deal tomarket
the ecosystem services provided
by 371,000 hectares of
rainforest in Guyana.The London-based private equity firm,
established last year by UK
charity the Global Canopy
Programme (GCP),hopes the
deal will lead to a proper
value being placed on the‘utility’
services provided by rainforests,
such as sequestering
and storing carbon, generating
rainfall, storing water and
providing biodiversity.
“Science is showing us is
that forests are like global
utilities that we all use but
don’t pay for. Currently,
forests are worth more dead
than alive. we don’t know
their value economically,”
said Andrew Mitchell, executive
director of the GCP and
a partner in Canopy Capital. More...
IMO proposes ship emissions
offset scheme, eyes CDM

The International Maritime Organisation
(IMO) is to consider using an emissions trading
scheme (ETS) to control the greenhouse gases
produced from shipping, as well as an offset scheme
which would tap into the Kyoto Protocol’s Clean
Development Mechanism.
Despite ruling out the use of emissions trading
to control other pollutants, such as sulphur dioxide
and nitrogen oxides, the IMO’s Marine Environment
Protection Committee (MEPC) decided at a meeting
in April to work on proposals for an ETS to tackle
carbon dioxide, which it would consider
alongside other control measures at the next MEPC
meeting. More...
New regulations to boost
US wetlands market 
The size of the US wetland
banking mitigation
market is set to treble, following
new regulations likely to
transform the emergingecobusiness. On 10 April, the
US Army Corps of Engineers
and the Environmental Protection
Agency jointly
released regulations that promote
wetland mitigation
banking while pushing back
its competitors.
The endorsement is expected
to increase the number
of mitigation banks operating
in the US from 500 to 1,500
within the next three to five
years, said Rich Mogensen, a
wetland scientist and past
president of the National Mitigation
Banking Association. More...
Ceres attacks Wall Street
‘inconsistency’ on climate change 
Mutual fund providers such as Morgan Stanley
are “inconsistent” on climate change, voting
against shareholder resolutions on global warming,
even though they offer products and invest in the
opportunities it poses, such as clean energy, according
to a report by Ceres.
The investor and environmentalist coalition
analysed the proxy voting patterns of 1,285 mutual
funds offered by 62 firms, and found that opposition
to shareholder resolutions on climate change fell
between 2004 and 2007. More...
RAN slams Citi, BoA
on coal financing
Despite big-number climate
change commitments,
Citi and Bank of
America are continuing to
bankroll the coal sector, according
to a report by the
Rainforest Action Network.
It argues that Citi and
Bank of America, while making
headline-grabbing commitments
on climate change,
“are directing the lion’s share
of their energy financing
resources into an out-of-date
energy infrastructure, based
on coal and other fossil fuels”. More...
Babcock & Brown pitches
2.2GW of wind assets

Babcock & Brown Wind Partners has
put up for sale 2.2GW of European wind
energy assets, and has appointed Deutsche Bank and
JP Morgan to advise on the disposal of some or all of
the portfolio.
The Australia-listed wind energy developer
hopes that the sale will “demonstrate and capture
currently unrecognised value”, leading to speculation
that it will settle for a partial sale to provide a pricing
point for the rest of its book, while others suggest
it is looking to take advantage of prices for wind
assets “that will never be higher”. More...
Electricity users, generators
at odds over ETS

The International Federation of Industrial Energy
Consumers is calling for an overhaul
of the EU EmissionsTrading Scheme (ETS), moving
away from auctions of allowances towards free
allocations based on a system of ‘benchmarking’ – a
proposal slammed by generators.
Under proposals from the European Commission,
as part of a package on how the bloc will meet
its climate and renewable energy targets, auctioning in
the EU ETS will be ramped up from a maximum of
10% in Phase II (2008–12) – although only a few
member states have chosen to take up the option –
to 100% by the end of the 2013–20 phase. Electricity
generators would be expected to buy all their
allowances from the first year of the phase. More...
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