Presentation on theme: "Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 1 Perspective of Japanese Buyers towards Green-AAUs -opportunities and barriers- Facilitating Green."— Presentation transcript:
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 1 Perspective of Japanese Buyers towards Green-AAUs -opportunities and barriers- Facilitating Green Investment Schemes: first lessons learnt and the way forward Central and Eastern Europe, Belarus, Russia and Ukraine Budapest, April 24-25, 2008 Itsuho Haruta Natsource Japan Co., Ltd.
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 2 Natsource Japan ~ Organization ~ Natsource Japan was established in May 2001, as a unique firm with multi private sectors’ shareholders. Natsource Japan Tokyo: Carbon Transaction and Advisory Natsource LLC New York: Asset Management Natsource LLC New York: Asset Management Totan Holdings Tokyo:Financial Products Brokerage Totan Holdings Tokyo:Financial Products Brokerage Other Shareholders Cosmo Oil Co., Ltd. ICAP Totan Holdings Co., Ltd. Mizuho Securities Co.,Ltd. Nippon Petroleum Refining Co.,Ltd. Osaka Gas Co.,Ltd. Sumitomo Corp The General Environmental Technos Co., Ltd. Tokyo Gas Co.,Ltd. Tokyo Sangyo Co.,Ltd. Toyota Tsusho Corp Mitsubishi Corporation Tokyo: Trading Company Mitsubishi Corporation Tokyo: Trading Company Mitsubishi International New York Mitsubishi International New York
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 3 Activities Natsource Japan ～ Activities ～ sustainable development in the 21 st century Providing Best Solution Through Market Mechanism Providing Best Solution Through Market Mechanism Advisory Service Natsource Japan Transaction Service Global Warming CDM / JI Project Carbon Fund -AAUs g-AAUs CERs, ERUs GIS Collaboration with
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 4 Kyoto credits: Buyers Source: World Bank “ State and Trend of the Carbon Market 2007”
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 5 Demand and Supply of Carbon Credits -1 Demand for Carbon Credits in: a) EU private sector …. 180 ～ 290 mt/y ⇒ NO g-AAUs, limited use of CERs/ERUs b) EU governments …. 20 ～ 110+ mt/y ⇒ Plans to use Flexible Mechanism c) Japan …. 52 ～ 70 mt/y ⇒ - Government (20mt/y=-1.6%); -Private (32-50mt/y) d) Any other countries? --- 1,100 ～ 2,100 mt/y ?? --- - Demand - Source: Commission of the EC
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 6 Demand and Supply of Carbon Credits -2 a) Project pipeline and estimated delivery (as of Mar, 2008) CDM+JI ⇒ 3,300 + projects Credits Volume by ’ 12 ⇒ 2,700 + million tonnes Any shortfall in delivery? ? ---1,900 ～ 2,200 mt--- b) Green-AAUs ⇒ 1,750 - 4,700 ? - Supply - Source: UNEP Risoe Centre
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 7 Supply & Demand Overview Green-AAUs Demand by 2012Supply (likely to sell in the near future only) EU Gov.20-200 ??Russia1,000-3,000 JPN Gov.60 ?Ukraine400-1250 JPN Private30 ?Poland200-300 NZ Gov.10 ?Czech95 Canada Gov. 0Latvia30 U.S.0Hungary30 TOTAL120-400TOTAL1,750-4,700 There is a significant GAP!
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 8 Japan ’ s GHG Emissions
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 9 Demand of g-AAUs in Japan -1 Demand of Green-AAUs in Japan Maximum Demand for g-AAUs in: a) JPN private sectors … up to 10mt per host country ⇒ unlikely to purchase bulk g-AAUs from one country = “ country diversion ” policy b) JPN public sector … >100mt in total but.. (1) has purchased approx. 20mt through CDM (2) has entered into MoU with Hungary and Poland -20mt? (3) expressed that it would reduce by domestic measures for its 7% surplus (4) is only planning to purchase “ Kyoto Units ” for 100mt ⇒ no assurance for future national budget to purchase more than planned … ⇒ price limitation on g-AAUs against other Kyoto Units (i.e. Chinese Primary CERs)
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 10 Demand of g-AAUs in Japan -2 Price expectation of g-AAUs in Japan What are the initial asking prices of the sellers? Indicatively € 12-15 from a few host countries Where are the appetites? € 4? to €10?? Depends on domestic measures in the host country (i.e. Degree and credibility of Greening) Lower price attracts more demand There is a gap!
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 11 Demand of g-AAUs in Japan -3 Expectation towards host countries -Regulatory- 1.MoU between the parties MoU w/ Japanese Government is in place; or The host country does not require MoU 2.Legislative development Transparency in legal authority for the handling of g-AAUs Traceability of the funds (preferred less than 10 y) Transparent reporting system of emission reductions by GIS Robust human resources development programmes 3.Kyoto requirements Kyoto Eligibility for International Emission Trading 4.Preferable Greening Project Nothing particular but “ No Go ” to Nuclear
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 12 Demand of g-AAUs in Japan -4 Expectation towards host countries -Commercial- 1.Payment on Delivery of g-AAUs Potential buyers maintain high creditworthiness - Aa to A by Moody ’ s 2.Without escrow arrangement for the payment Ditto -high creditworthiness 3.Price Competitiveness Buyers compare g-AAUs with Primary CERs Buyers are anticipating bearish market on g-AAUs 4.Contract Neutral governing law
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 13 Demand of g-AAUs in Japan -5 Other Information to be aware… Private Sector 1.Timing of Purchase Some are ready for g-AAU transaction “ First mover ” may proceed next transaction with same buyer in larger volume We are ready to represent the demand 2.Eligibility of the private buyers for g-AAUs Confirmed: “ Legal entities who opened registry account ” are eligible. … approx 120 entities had opened their accounts 3.Mandate for the private buyers; Keidanren ’ s voluntary target Any Kyoto Units are eligible for its compliance (Tangible replacement may be required for t/l-CERs) 4.ITL Connection: Japanese registry has linked with ITL since Nov 15, 2007 Barrier for EU member states to deliver g-AAUs to JPN by CITL-ITL connection
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 14 (A) Direct Acquisition as a Project Implementer Non-Annex I project implementer NEDO UNFCCC EB Credits ERPA Sharing contract Issuance Annex I project implementer Project Participants NEDO is aiming to acquire credits through the following methods this fiscal year: (A) Direct Acquisition as a Project Participant - Participate in projects and sign emission reduction purchase agreements (ERPA) with other project implementers, NEDO will acquire credits directly from the credits issuers (the UN CDM Executive Board (CDM) and Annex I countries (JI and GIS)). (B) Indirect Acquisition from Annex I countries (i.e. through Natsource Japan/Affiliate) - Purchase AAUs with ERPA from Annex I countries who have eligibility of IET. (B) Indirect Acquisition from Annex I country GIS Host Country NEDO Natsource Japan / Affiliate ITL AAUs ERPA Purchase agreement ERPA AAUs Transfer CDM Project Scenarios GIS Scenarios Public sector ’ s purchase programme
Natsource Japan +81-3-5275-1710 www.natsourcejapan.com 15 Thank you for your attention Köszönöm! ありがとうございました Please contact to… Itsuho “Harry” Haruta (email@example.com); or Toshiaki “Toshi” Abe (firstname.lastname@example.org) for further GIS inquiries