Archive for business

Animation – Carbon Retirement

Posted in Offsetting with tags , , , , , on November 2, 2008 by Dan

We’ve just produced a short animation about how Carbon Retirement works. Carbon Retirement is a new company I’m involved in. We remove EU Emission Allowances from the EU’s Emission Trading Scheme, reducing the volume of CO2 that can be emitted.

Check out our animation (on the Carbon Retirement homepage, Youtube or below) – we’re really happy with it.

JPMorgan buys Climate Care, reflecting bullishness in the voluntary offset market

Posted in Offsetting with tags , , , , , on March 27, 2008 by Dan

A slightly lower profile JP Morgan acquisition was announced yesterday. The investment bank will buy Climate Care over the next few months in the first outright acquisition of an offset project developer. Climate Care will retain its brand and its main business will continue to be financing and packaging offset projects in the developing world.

Climate Care sells offsets to customers who are not regulated under the EU ETS (i.e. they don’t buy the offsets for any kind of compliance – they buy them for ethical or marketing purposes). Some of these offsets have passed the UN’s Clean Development Mechanism and are called ‘Certified Emission Reductions’, while others use voluntary standards.

The deal reflects continued bullishness in the voluntary offset market at a time when marketing and CSR budgets are under pressure and consumers are cutting back on any unnecessary spending.

Stopgap legislation required to prevent energy generators holding consumers to ransom

Posted in Energy markets with tags , , , , , , , , on January 17, 2008 by Dan

Newpapers today reported a calculation by Ofgem that credits distributed free to energy generators in the second round of the EU ETS will net them £9bn. The Association of Electricity Producer’s denial did not actually deny it. Ofgem apparently then proposed that the Treasury levy some sort of windfall tax and redistribute it to poor consumers who have been hit by rising energy prices (which are mainly driven by wholesale energy prices, not the EU ETS).

But why should free distribution of the credits yield a windfall? The free credits do have a market value, but the generators cannot sell them because they need them to cover their own emissions. There is a highly inefficient reason behind the windfall: consumers have to bribe generators not to shut down. Once generators have been given credits, one option is to shut down and sell them. Consumers must therefore pay the generators the price of the electricity plus the price of the credits to persuade them not to do so. The credits need not be sold. Ofgem estimates that 17 per cent of retail electricity prices and 13 per cent of retail gas prices is accounted for by this cost.

From 2012, more credits will be auctioned. That will not reduce retail energy prices, but it will put the price of credits in the government’s pocket rather than the generators’. In the meantime, stopgap legislation should be passed to allow the government to repossess credits or fine an EU ETS installation if it scales down or ceases trading. Competition should then push retail prices back down so that they do not include the market value of freely distributed credits.