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Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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Presentation on theme: "Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative."— Presentation transcript:

1 Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative

2 TFS Green Awards TFS is an international commodities broker in energy, finance, and emissions, and is part of one of the three largest brokerages in Europe. Our commodities include Energy: Emissions, Coal, Natural Gas, Distillates, Naptha, etc, and Finance: FX, Options, Swaps, etc, and Other: Pulp and Paper, Freight, Precious Metals TFS Green has received numerous awards by the industry: 2009 TFS received an unprecedented 16 Winner or Runners Up awards in the 2009 Environmental Finance Awards, including "Best Primary Originator for GHG Emissions Kyoto Projects Credits" 2008 Broker of the Year award by Energy Risk 2008 Appointed Joint Exclusive Broker to the Asian Development Bank 2008 Deal of the Year award by Energy Risk for the first Gold Standard CDM project in China 2008 Best Broker by Point Carbon

3 TFS Network of Offices LONDON COPENHAGEN FRANKURT OSLO MELBOURNE PERTH SYDNEY BEIJING HONG KONG SINGAPORE TOKYO MANILA JOHANNESBURG HOUSTON NEW YORK STAMFORD LOS ANGELES MEXICO CITY SANTIAGO SAO PAULO

4 What role does TFS Green play? TFS is a pure brokerage firm Does not buy for its own portfolio, so no conflict of interest, wants best price for CERs and optimal project financial structure Provides access to best-CER-value buyers to Sellers; Buyers include governments, state utilities, energy traders, banks, regional/national financial institutions, carbon funds, hedge funds, etc. Financial expertise to assist in financial structure of project Provides good referrals for technical project development

5 What role does TFS Green play? TFS is a pure brokerage firm Negotiates ERPA and provides clear and transparent communication to Seller on standard commercial terms and conditions TFS is an independent market intermediary regulated by the Financial Services Authority in the UK; TFS Green HQ based in London with global offices TFS Green engages in projects from the early stage, at feasibility study stage or PIN, to registered and issued CDM projects

6 What role does TFS Green play? TFS Green is part of Tradition, one of the largest and most successful interdealer brokers across the world, employing over 2,250 people. Since 2001, Tradition has been prominent in the renewable energy and emissions markets in Europe, the US and Asia Pacific. In 2005, TFS Green began building a presence in the Clean Development Mechanism (CDM), Joint Implementation (JI) and Voluntary Emissions Reductions (VER) markets. TFS Green provides wide and, most importantly, transparent access to the carbon market. Our detailed knowledge of current buyers and sellers, combined with our understanding of the likely future demand and supply for CERs enables us to identify appropriate, interested and willing counterparts for a wide variety of carbon credit transactions. TFS Green has a proven track record of successful transactions in varying sizes, technologies and locations.

7 TFS EXPERIENCE in CDM TFS has brokered projects across a wide range of technologies, including Renewable Energy – Hydro, Biomass, Wind, Waste Heat Recovery, Landfill to Energy, HFC, N2O, as well as others TFS Green has brokered over 40 Million CERs to date from projects around the world. Recent deals include: First Gold Standard Programmatic CDM project in Mexico, using energy efficient light bulbs First Gold Standard CDM Project in China, Windpower First CDM project in Singapore 3.5million HFC23 CDM project in India 2 x Super Critical & Ultra Super Critical Projects in China from the largest State owned Power Co 4 windfarms in China generating >2 Million CERs until 2012 Wide range of renewable energy projects in Southeast Asia, Asia, Latin America, Africa

8 New ways of doing carbon projects: Programmatic CDM TFS Green brokered the first Gold Standard Programmatic PoA: Light Bulb Replacement in Mexico, requesting registration Compact Fluorescent Light Bulbs (CFL) given free to residential households, with trade-in of existing incandescent bulbs First CDM Project Activity (CPA) will give out 1M CFLs to generate 120K CERs until 2012 Aim to roll-out 30M CFLs across Mexico Project is registered for CDM The projects will generate significant social benefits - in Mexico, for the poorest 40% of the population, changing 4 lights to CFLs will save every year the equivalent to around one weeks income (over $20USD pa). Households will be eligible for 4 bulbs, which together would cost almost 70% of one weeks wages and if not distributed for free, would be highly unlikely to be purchased.

9 Selling your CERs from Renewable Energy Projects CDM Projects 4,588 CDM Renewable energy projects worldwide 2,709

10 Selling your CERs from Renewable Energy Projects Expected kCERs until ,781,335 Issuance sucess average to date 97,4%

11 Selling your CERs from Renewable Energy Projects CDM projects 805 CDM renewable energy projects 386

12 Selling your CERs from Renewable Energy Projects Expected KCERs until ,565

13 Selling your CERs from Renewable Energy Projects Renewables in LA by type Number of CDM projects from renewable energy 386

14 Selling your CERs from Renewable Energy Projects KCERs until 2012 in LA by renewable CDM projects Total KCERs until 2012 from renewables energy projects 113,899

15 Selling your CERs from Renewable Energy Projects CDM wind projects by MW Total MW from wind CDM projects 2,515

16 Selling your CERs from Renewable Energy Projects Hydro projects by MW Total MW by hydro projects 5,316

17 Selling your CERs from Renewable Energy Projects KCERs until 2012 by biomass Expected KCERs until 2012 by CDM biomass projects 39,415

18 Selling your CERs from Renewable Energy Projects Peruvian CERs Number of CDM Projects 29 Expected KCERs ,714

19 © First Climate | Referee + additional information 19 Name of Presentation Conclusions 48 % of the CDM projects are renewable energy projects (386 out of 805) 28.9% of the CERs to 2012 come from CDM renewable energy projects 89% of CERs to 2012 from CDM renewable energy projects come from 2 type of projects (hydro, biomass) 97% of CERs to 2012 from CDM renewable energy projects come from 3 type of projects (hydro, biomass and wind) Selling your CERs from Renewable Energy Projects

20 © First Climate | Referee + additional information 20 Name of Presentation Conclusions No solar, no tidal and just 4 CDM geothermal projects (2 in Salvador) CDM Wind projects (MW) 78% in 2 countries (Mexico (51%) and Brasil) CDM Hydro projects (MW) 70% in 2 countries (Brasil (49%), Peru) Biomass CDM projects (kCERs 2012) 72% in one country (Brasil) and 83% in two countries (Brasil and Chile) 46% of the total expected CERs until 2012, came from Brazil, and 17% come from Mexico ( 63% from 2 countries and 73% from 3 countries if we add Chile) out of 20 countries Selling your CERs from Renewable Energy Projects

21 © First Climate | Referee + additional information 21 Name of Presentation What can the carbon market do for your project? At 15 USD per CER, IRR increase 1.5%, at USD 20 per CER IRR increase 2,2% within ERPA serves as a debt guarantee in private banking Buyers can provide funds to develop your project equity or debt Up front payment according to your requirements (guarantees!!) Selling your CERs from Renewable Energy Projects

22 © First Climate | Referee + additional information 22 Name of Presentation What can the carbon market do for your project? To sell in advance is a guarantee income (fixed cash flow) Less diversification (less stakeholders involved in a project finance schemme) Development cost can be paid by the buyers CDM project cycle Fix incertainty post 2012 selling in advance Selling your CERs from Renewable Energy Projects

23 Price Trends in a Post 2012 Regime CER prices can go down !!! (from EUR 21 to EUR 7,7 on spot market) Country Eligibility (Future Annex 1 Countries : China? India? Brazil? Mexico? ….) Projects Eligibility (No? : HFC,N2O) - (Yes?: CCS, REED, Nuclear) CERs eligibility within EU ETS. (policy makers can manage the CERs price!) Selling your CERs from Renewable Energy Projects

24 Price Trends in a Post 2012 Regime AAUs being bought by some Annex 1 countries (Japan, Spain, Portugal, etc) Looking for higher price? improve your CER quality !!! (Gold Standard) USA on board ? More demand, but not higher price Big Hydros: > 20 MW ( WDC Check List) Prices post 2012 are lower than pre 2012 !!! Selling your CERs from Renewable Energy Projects

25 CDM in a Post Kyoto 2012 regime Programmatic CDM (EE, small hydros) Sectorial CDM (cement, aluminium, energy, iron, steel) Additionality issues ( technologies, bench mark base line)

26 Selling your CERs from Renewable Energy Projects Alternatives to sell CERs Fix price Floating price (floor & cap) Spot price Public bid (TFS Platform)

27 TFS VALUE PROPOSITION What are Sellers looking for? What are Buyers looking for? Best value Strong partner Transparency Efficiency Equality Reliability Competitive bidding across many Buyers Comparisons across fixed/floating structure Target Buyers with A-rating, government backing or strong financial assets Matching to Buyers in the same field and with same strong reputation as Seller Negotiate with the same level of expertise and understanding of industry standards as Buyer, to ensure a fair and effective negotiation Transparent marketing process, so Buyers are not bidding against themselves Important as this allows them to submit best bid The longer the negotiation, the higher the costs Prefers efficient path to signed contract, which needs strong communication and guidance for both Buyer and Seller Projects should have a good probability of delivering the expected volume of CERs Competitive bidding process Wide network of strong buyers Guidance on industry standards Exclusive representative to ensure transparency TFS is objective, does not buy or sell CERs, represents both sides fairly TFS is rewarded only on success TFS has a track record of successful projects

28 Thank You Arturo Brandt Senior Emissions Broker Latin America Representative Mobile: Web: /


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