carilec renewable energy conference st lucia renewable energy carbon finance for the caribbean l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
CARILEC: Renewable Energy Conference, St. Lucia Renewable Energy & Carbon Finance for the Caribbean PowerPoint Presentation
Download Presentation
CARILEC: Renewable Energy Conference, St. Lucia Renewable Energy & Carbon Finance for the Caribbean

Loading in 2 Seconds...

play fullscreen
1 / 28

CARILEC: Renewable Energy Conference, St. Lucia Renewable Energy & Carbon Finance for the Caribbean - PowerPoint PPT Presentation


  • 344 Views
  • Uploaded on

CARILEC: Renewable Energy Conference, St. Lucia Renewable Energy & Carbon Finance for the Caribbean. Presented by: John Paul Moscarella Executive Vice President Econergy International Corporation www.eic-co.com November 4-5, 2002. Who is Econergy.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'CARILEC: Renewable Energy Conference, St. Lucia Renewable Energy & Carbon Finance for the Caribbean' - tareq


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
carilec renewable energy conference st lucia renewable energy carbon finance for the caribbean

CARILEC: Renewable Energy Conference, St. LuciaRenewable Energy & Carbon Finance for the Caribbean

Presented by: John Paul Moscarella

Executive Vice President

Econergy International Corporation

www.eic-co.com

November 4-5, 2002

who is econergy
Who is Econergy...

Econergy International Corporation is a technical advisory and financial asset management firm serving clients in the energy and environment industries.

CARILEC: Renewable Energy Conference - - St. Lucia

firm overview
Firm Overview
  • International energy and environmental consulting firm
    • Over 10 yr. history of doing business in over 50 countries
    • Staff includes bilingual French, Spanish, and Portuguese
    • Offices in Mexico, Brazil as well as Washington, DC and Boulder, CO
  • experience in:
    • Financial fund design & management
    • conventional power generation
    • transmission development,
    • renewable energy,
    • energy efficiency,
    • greenhouse gas emissions management,
    • and energy services performance contracting.

CARILEC: Renewable Energy Conference - - St. Lucia

our niche
Our Niche

Energy Development

i.e. “projects”

Environmental Services

i.e. “GHG emissions”

Financing

EIC

CARILEC: Renewable Energy Conference - - St. Lucia

firm overview selected projects
Firm Overview: Selected Projects
  • World Bank $180 MM Prototype Carbon Fund (PCF) Design
  • Co-owner of Mexican ESCO (Empresas ESM, S.A. de C.V.)
  • CleanTech Fund $20 MM VC fund
  • $3 MM carbon intermediary agreement with World Bank
  • $40 MM carbon facility for CAF (regional development bank in Caracas)
  • Peru: Rice Hulls 20MW project
  • Brazil portfolio of biomass cogen (150 MW)
  • Mexico 20 MW wind farm
  • Panama hydro expansion project
  • CREDP – Financial Mechanisms Design (2002)

CARILEC: Renewable Energy Conference - - St. Lucia

us venture capital model
US Venture Capital Model

IPO

Merger

Strategic Sale

Institutional

Investment

Consolidation

Exit

Strategy

Angel or Seed Investors

Growth

Friends & Family

Start-up

EIC Value Proposition: environmental assets in energy business (carbon credits)

CARILEC: Renewable Energy Conference - - St. Lucia

slide7
ESM
  • Founded in 1998
  • Based in Monterrey
  • The leading ESCO in Mexico
  • Up to $2.5 million in projects financed to date
  • $30 million worth of projects in pipeline
  • Carbon Credit Portfolio - 2 MM tCO2e approx.
    • Energy Efficiency
    • Renewable Energy
  • 20MW Wind Farm in development
  • Several Financial Partners
    • EIC Group
    • Environmental Enterprises Assistance Fund (EEAF)
    • Calvert Funds
    • E & Co.
    • Sumitomo
    • Private Investors

CARILEC: Renewable Energy Conference - - St. Lucia

esco value proposition
ESCO Value Proposition

Carbon credits = value added environmental asset

Exit Strategy = 5X EBITDA

CARILEC: Renewable Energy Conference - - St. Lucia

drivers for the ghg credit markets
Drivers for the GHG Credit Markets
  • Kyoto Protocol (Article 3) will require Annex B countries to reduce GHG emissions by at least 5% (in aggregate) below 1990 levels in the period 2008-2012
  • QELRCs are defined in Annex B, e.g.;
    • EU = 92% of 1990 level
    • USA = 93% of 1990 level
    • Japan = 94% of 1990 level
    • Mexico = no cap

CARILEC: Renewable Energy Conference - - St. Lucia

drivers for international ghg credit markets
Drivers for International GHG Credit Markets
  • The Protocol provides for three “Flexibility Mechanisms” to allow Annex B countries to meet their reduction commitments.
    • Article 6: Joint Implementation (JI) (key mechanism for Mexico)
    • Article 12: Clean Development Mechanism (CDM)
    • Article 17: Emissions Trading (ET)
    • AOSIS: Key opportunities for the Caribbean countries

CARILEC: Renewable Energy Conference - - St. Lucia

carbon market 1997 2002 based on eic data
Carbon Market 1997-2002 (based on EIC data)
  • Without regulatory driver, carbon prices most influenced by
    • level of risk
    • transaction costs
    • ability to count toward the buyers compliance with national emission limitation obligations
    • private, bilateral negotiations

CARILEC: Renewable Energy Conference - - St. Lucia

carbon market 1997 2002 based on eic data12
Carbon Market 1997-2002(based on EIC data)
  • Total transactions estimated between 100 million and 180 million tons CO2 equivalent
  • Various economic models predict prices upwards of $300 per ton
  • Real life transactions have seen prices at a fraction of what a future, regulated market would bear
    • Publicized trades prices have ranged from USD $.50 to over $22 since 1997.
    • In the past 12 months, CDM prices have leveled off at $1.50 to $5.00/tCO2e
    • UK market has experienced recent spike in prices up to $16/t
  • Many transactions involve options for future purchase rather than a full-fledged spot or future sale

CARILEC: Renewable Energy Conference - - St. Lucia

total known carbon transactions ca 350 mm
Total Known Carbon Transactions (Ca. $350 mm)

Source: EIC Database 2002 (Mar.)

26 August 2002

CARILEC: Renewable Energy Conference - - St. Lucia

Investments and Climate Change: Opportunities for Mexico

annual sales of carbon reductions tons co2e
Annual Sales of Carbon Reductions (Tons CO2e)

Source: EIC Database 2002 (Mar.)

26 August 2002

CARILEC: Renewable Energy Conference - - St. Lucia

Investments and Climate Change: Opportunities for Mexico

carbon prices tco2e 1994 to present
Carbon Prices ($/tCO2e) 1994 to present

Source: EIC Database 2002

26 August 2002

CARILEC: Renewable Energy Conference - - St. Lucia

Investments and Climate Change: Opportunities for Mexico

sources of demand for ghg credits institutional carbon buyers
Sources of Demand for GHG credits: Institutional Carbon Buyers
  • The Climate Trust (USA)
  • The World Bank Prototype Carbon Fund (PCF) $180MM + €70 million
  • World Bank’s Community Development Fund for Carbon - $100 MM (pending)
  • The Dutch Government (CERUPT & ERUPT)
  • International Finance Corp. – Netherlands Carbon Facility (INCaF) $40 million
  • Rabo Bank – Netherlands Carbon Facility (pending)
  • CAF $40 million available
  • Greenhouse Emissions Management Consortium (GEMCO), (Canada)
  • Private companies (electric companies)

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players the climate trust
Institutional Players:The Climate Trust
  • Approximately $3 million available for offset purchasing by the end of Q1 2002
  • 850,671 tCO2 e under management ($1 M)
  • Closing on another 2.559 M tCO2 ($5.5 M under negotiation)
  • Gross portfolio price = about $2.00 per tCO2 (average price = $1.22)
  • Highest Price Paid = $4.50 per tCO2
  • Closing on 7 new carbon contracts by Q3 2002 - - - 2 new projects recently signed
    • Ecuadorian Rainforest Restoration
    • Portland Web-based Carpool Project

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players world bank prototype carbon fund
Institutional Players:World Bank (Prototype Carbon Fund)
  • $180 mm in resources, plus € 70 mm from the Netherlands; scheduled to terminate in 2012
  • Five projects completed, including host country approval (Latvia, Chile, Uganda, Brazil & Thailand)
  • Clearance for up to 15 projects, ca. $50 M
  • 25-30 projects to be completed in 1st 3 years of operation
  • 8 countries, 6 technologies and 4 regions
  • 30 projects in active review
  • Prices paid between

3.50 – 6.50 per tCO2 e

  • PCFplus provides outreach,

research, & training

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players the netherlands
Institutional Players:The Netherlands
  • Largest Buy Signal with $1 Billion approved by parliament
  • 4 Tracks:
    • Competitive Tenders (ERUPT + CERUPT)
    • Purchasing Credits from all Developing Countries (currently seeking 3 million tCO2e CER) – 125 M tCO2 e (CDM+JI)
    • Also, setting Up Carbon Facilities with intermediaries PCF, IFC, CAF, and Rabo Bank
    • Bilateral agreements
  • Minimum Project Size: 100,000 tCO2e
  • Sustainable Development is important
  • Maximum Prices to be Paid (per tCO2e):
    • Renewable energy $4.90 (EUR 5.50)
    • Biomass $3.92 (EUR 4.40)
    • Energy Efficiency $3.92 (EUR 4.40)
    • Waste, fossil, others $2.94 (EUR 3.30)

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players ifc netherlands carbon facility incaf
Institutional Players:IFC – Netherlands Carbon Facility (INCaF)
  • IFC purchases greenhouse gas (GHG) emission reductions for the Government of the Netherlands under the CDM
  • $40 mm available over the next 3 years
  • Eligible projects:
    • renewable energy projects (e.g., biomass, wind, geothermal);
    • energy efficiency projects, supply side or demand side;
    • recovery and utilization of methane; and,
    • switching from fuels with greater to lesser GHG intensity.
  • Contracts must specify:
    • the volume of GHG emissions that are expected to be reduced, measured in metric tonnes of CO2 equivalent;
    • the price agreed per tonne of CO2 equivalent; and,
    • the payment period, typically either 10 or 14 years.

CARILEC: Renewable Energy Conference - - St. Lucia

caf netherlands carbon facility
CAF Netherlands Carbon Facility
  • Between CAF and Dutch Ministry of Environment (VROM), for purchase of carbon from projects in Latin America
  • Purchase of 10 million tCO2 by mid-2005 for delivery through end 2012, for total cost of €45 million ($43.6m)
  • Sectors, in descending order of preference: renewable energy (includes small-scale hydro); sustainably grown biomass (no waste); energy efficiency; transportation; fuel switching and methane recovery; sequestration (pending COP/MOP and VROM decision).
  • Maximum purchase price of €5.5/tCO2

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players gemco
Institutional Players:GEMCo
  • GEMCo is a non-profit consortium of Canadian energy companies focused on market-based ways of reducing GHG emissions
    • (ATCO Electric, BC Gas, Endbridge Consumers Gas and Pipelines, EPCOR Utilities, Nova Scotia Power, Ontario Power Generation, SaskPower, and TransCanada Pipelines)
  • Project investments to date:
    • Teletrips: eCommute pilot program 1-3.5 mm ERCs, 2002-2012
    • Petro Source: CO2 injection option 600,000 mtCO2e, 2002-2012
    • Iowa Farmers: agricultural sequestration 2.8 mm mtCO2e through 2012
    • Norseman engineering: methane capture 301,000 ERCs over 14 years

CARILEC: Renewable Energy Conference - - St. Lucia

cleantech fund pending
CleanTech Fund (pending)
  • This private equity (venture capital) fund proposes targeting clean technology startup companies in Latin America & Caribbean
  • It has a proposed investment period of 5 years
  • It has an overall term of 10-12 years
  • Estimated returns: 20%+
  • Carbon facility: 1 MM tCO2e
  • IDB lead investor, Swiss and Dutch investors committed, seeking strategic investor or energy player in Latin America

CARILEC: Renewable Energy Conference - - St. Lucia

institutional players the private sector
Institutional Players:The Private Sector
  • The private sector is starting to engage in a number of transactions:
    • primarily for low cost credits (<$2.5/tCO2); and
    • without government approval.
  • Internal corporate trading programs implemented at BP, Shell, others.
  • Bilateral pilot programs for JI and CDM are being considered.
  • National programs for domestic action are being defined.

CARILEC: Renewable Energy Conference - - St. Lucia

potential carbon credit investors
Potential Carbon Credit Investors
  • Conventional, commercially-oriented
    • Will typically focus on risks to cash flow, demand “fire-sale” prices
  • Non-conventional, environmentally-oriented
    • May accept higher risk and pay slightly higher prices in exchange for environmental benefits
  • Political objectives
    • May allow for higher priced credits to meet regulatory compliance

CARILEC: Renewable Energy Conference - - St. Lucia

carbon finance modalities
Carbon Finance Modalities
  • Corporate Finance
  • Project Finance (off balance sheet)
  • Venture Capital
  • Letters of Credit
  • Insurance and Guarantees
  • Factoring
  • Leasing
  • Financial Intermediaries
  • Carbon Contract

CARILEC: Renewable Energy Conference - - St. Lucia

evolution of the international ghg credit markets
Evolution of the International GHG Credit Markets
  • There are rules at present are being finalized (COP 8 in India).
  • Independent brokers and institutional players are beginning to emerge and establish themselves
  • Brokers appear to be in need of more sellers of “good credits” than buyers.
  • There is significant liquidity in the carbon finance arena today
  • Institutional players are driving the market!

CARILEC: Renewable Energy Conference - - St. Lucia

conclusions remarks renewable energy
Conclusions & Remarks – Renewable Energy
  • Growth in RE segment of energy is strong
  • Wind energy is booming in US and Europe – expect rapid growth in Latin America and Caribbean soon
  • Caribbean has vast renewable resources including wind, solar and biomass
  • Caribbean markets are relatively attractive for investment in renewable projects
  • Carbon financing is available, what is needed are good projects!

CARILEC: Renewable Energy Conference - - St. Lucia