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ACCOUNTING AND ALLOWANCES:

TO DEVELOP A COMPLIANCE

STRATEGY

从核算与配额到企业合规战略开发

B-PMR SHANGHAI MISSION

市场准备伙伴关系-上海

2013/10/23

CHARLIE CAO 曹晓磊

B-PMR SHANGHAI MISSION, 29 OCTOBER 2013 2 / / / /

BLOOMBERG & BLOOMBERG NEW ENERGY FINANCE

彭博与彭博新能源财经简介

Founded in 1982, Bloomberg is the leader in global business and financial information

Bloomberg connects more than 300,000 influential decision makers to a dynamic network

of information, people and ideas

Bloomberg has over 15,000 employees in 192 locations, with over 2,300 media & news

professionals, across TV, BusinessWeek, Mobile, Digital and Radio

Founded in 2004 and acquired by Bloomberg in 2009, Bloomberg New Energy

Finance (BNEF) is the definitive source of insight, data and news on the

transformation of the energy sector

BNEF provides analysis and research to help business leaders make smart

decisions in over 700 client organisations

BNEF has over 200 people in 15 locations across 5 continents

BNEF helps its clients stay abreast of developments across the energy

spectrum with unrivalled breadth and depth of sector coverage


GLOBAL SPECIALIST COVERAGE, FROM KEY LOCATIONS

全球分布

San Francisco Washington

New York

London

Cape Town

Singapore

Beijing

Sydney

Sao Paulo

New Delhi

NORTH AMERICA (40)

SOUTH AMERICA (5)

EUROPE (90)

AFRICA (30)

Hong Kong

Tokyo

Zurich

ASIA PACIFIC (35)

Munich

Seoul


WHO WE SERVE: 700+ LEADING PLAYERS GLOBALLY

我们的客户

GOVERNMENT & AGENCIES SUPPLY CHAIN &TECHNOLOGY

UTILITIES & ENERGY FINANCE & INVESTMENT

http://www.hudsoncep.com/index.php

http://www.riverstonellc.com/Default.aspx

http://generationam.com/

http://www.vpcp.com/

https://www.clpgroup.com/Pages/home.aspx

http://www.swissre.com/


INTEGRATED COVERAGE OF THE TRANSFORMATION OF ENERGY SECTOR

能源转型的全面覆盖

POWER MARKETS

(Europe, US)

RENEWABLE ENERGY

(Wind, Solar, Bioenergy)

WATER

(Scarcity, Energy consumption,

Corporate risk)

CARBON & REC MARKETS

(EU, US, California, Australia, Global)

NATURAL GAS MARKETS

(Global Supply /Demand, Upstream

economics)

NON-INTERMITTENT

CLEAN ENERGY

(Geothermal, Hydro, Marine, Nuclear, CCS)

ENERGY SMART

TECHNOLOGY

(Efficiency, Storage, Digital

energy, Advanced transportation)


CONTENTS

目录

1. Accounting and allowance management

碳核算与配额管理

2. Factors that influence the carbon price

碳价的影响因素

3. Strategy development case study: China power sector

合规战略开发案例分析：中国电力行业


ACCOUNTING: TO UNDERSTAND YOUR CARBON LIABILITY

核算：摸清你的“碳债”

WHAT TO ACCOUNT?

做什么？

HOW TO ACCOUNT?

怎么做？

• GHG coverage

温室气体范围

• Emissions scope

排放范围

• The boundaries

核算界限

• Data collection

数据收集

• Accounting standards

核算标准

• Calculation tools

计算工具

WHY TO ACCOUNT?

为什么？

• Emissions trading

碳排放权交易

• Tax implications

税收影响

• Financial reporting

财务报告影响


ACCOUNTING: TO UNDERSTAND YOUR CARBON LIABILITY

核算：摸清你的“碳债”

WHAT TO ACCOUNT?

做什么？

HOW TO ACCOUNT?

怎么做？

• GHG coverage

温室气体范围

• Emissions scope

排放范围

• The boundaries

核算界限

• Data collection

数据收集

• Accounting standards

核算标准

• Calculation tools

计算工具

WHY TO ACCOUNT?

为什么？

• Emissions trading

碳排放权交易

• Tax implications

税收影响

• Financial reporting

财务报告影响

Accounting is the base for allowance

allocation and management

核算是配额分配与管理的基础


ALLOWANCE MANAGEMENT: TO DEVELOP A COMPLIANCE STRATEGY

配额管理：开发你的合规战略

THE EXECUTION PROCESS WILL DIFFER DEPENDING ON THE SIZE AND TYPE OF

BUSINESS, BUT ALL COMPANIES WILL NEED TO FORECAST THEIR LIABILIY

战略执行过程取决于企业规模和类型，但所有企业都需要摸清和预测自己的“碳债”

• Market horizon 市场远见

• Policy uncertainty 政策不确定性

• Cost pass through 成本转嫁

• Investment planning 投资规划

• Hedging 风险对冲

• Speculation 投机性交易


ALLOWANCE MANAGEMENT: PRICING FORECAST IS KEY

配额管理：价格预测是关键

THE AIM FOR COMPANIES IS TO MINIMISE OVERALL COMPLIANCE COSTS PROVIDING

ALL OF THE VARIOUS COMPLIANCE OPTIONS AVAILABLE

利用各种合规机制，最小化合规成本

• Allowances 配额

• Offsets 抵消额

• Abatement 减排

‒ Operational 运营减排

‒ Long-term 长期减排


ALLOWANCE MANAGEMENT: PRICING FORECAST IS KEY

配额管理：价格预测是关键

THE AIM FOR COMPANIES IS TO MINIMISE OVERALL COMPLIANCE COSTS PROVIDING

ALL OF THE VARIOUS COMPLIANCE OPTIONS AVAILABLE

利用各种合规机制，最小化合规成本

• Allowances 配额

• Offsets 抵消额

• Abatement 减排

‒ Operational 运营减排

‒ Long-term 长期减排

Forecasting the carbon price for allowances

and offsets is key to managing allowances

碳价预测是配额管理的关键


CONTENTS

目录








WHAT DRIVES THE CARBON PRICING?

什么因素在驱动碳价？

Source: Bloomberg

ICE ECX EMISSION Dec13


CARBON PRICES ARE DETERMINED IN A COMPLEX ENVIRONMENT

碳价由多种因素决定

Source: Bloomberg New Energy Finance

Carbon costs are determined by a complex interaction of economic, political, technological and carbon-specific drivers – all

of which need consideration when forecasting the cost of emitting carbon.

Energy economics 经济

• Power demand

• GDP growth

• Renewables costs

• Fuel costs

• Exchange rates

• Business cycles

Technology 技术

• Emissions abatement

technologies

• Energy efficiency

• Electric vehicles

• Smart meters

• Smart grid

• Energy storage

• New technologies

• CCS

• Direct emissions

regulation

• Energy policy

• Energy efficiency policy

• Nuclear new build

• Government revenue

needs

• Renewables policy

• Carbon market

intervention

• Energy security

Policy 政策 Carbon pricing 碳价

• Carbon targets

• Tax vs. trading system

• Sectoral coverage

• Offset rules

• Linkages to other ETS

• Hedging strategy

• Industry advocacy

• International

agreements

• Global coal prices fall

• Solar cell overcapacity

leads to falling solar

costs

• A breakthrough

invention leads to

cheaper energy

storage

• Smart meter roll-outs

reduce power demand

• Nations legislate

nuclear phase-outs

• Energy efficiency

requirements

• Minimum standards for

thermal plants

• EU and Australia link

carbon trading

schemes

• EU curbs access to

international offsets

Drivers

E

xa

mple

s


IMPACT OF CARBON PRICING ON DIFFERENT COMPANIES

碳价对不同类型企业的影响

• Long-term stability

• Capital intensive businesses like utilities tend to demand predictable financing costs

• Significant existing exposure to uncertain commodity markets

… many carbon-

intensive

thermal plants

Carbon prices tend to

devalue these assets and

narrow profit margins

…many

renewable

assets

May be less sensitive to

carbon pricing as

producers with large

renewable exposure

typically have other

revenue sources beyond

power sales (ie.

subsidies, RECs, etc)

…a large

nuclear fleet

Carbon pricing typically

boosts competitiveness

of low-carbon generation

Typically benefit from low

carbon prices

Typically benefit from

high carbon prices

Bloomberg New Energy Finance

Common

power sector

concerns

Utilities with…


IMPACT OF CARBON PRICING ON BUSINESS OPERATIONS

碳价对企业运营的影响


Investment decisions

Capital raising

Dispatching

Sales/ marketing tactics

Maintenance planning

Back-office and accounting

• Carbon pricing impacts profitability calculations

• Market-driven carbon pricing increases long-term uncertainty

• Investors may demand risk premiums for carbon exposure

• Shareholders may prefer risk mitigation through carbon hedging

• Carbon pricing can affect the merit order (of operating profitability)

• This can move plants in or out of the money and impact if and when plants run

• Retail prices can differ from wholesale power prices. Fluctuating carbon prices need to be considered in retail offerings

• Carbon intensive utilities may come under public pressure from activist groups

• Plant usage changes if carbon prices affect the merit order. This can shorten or extend maintenance cycles

• Carbon exposure needs to be allocated internally to incentivize optimal management (ie. between the generation and retail business units)


CORPORATE REACTION TO THE UNCERTAINTY IN CARBON MARKETS

企业对碳市场不确定性的应对


Medium term

(next 1-5 years)

Long term

(5+ years ahead)

Short term

(next 5-10 days)

Mature

carbon

markets

Carbon

markets

in

planning

• Active trading and

portfolio optimization

• Forward purchases of

carbon as part of

power sales hedging

• Offset origination (if

possible)

• Active involvement in

detail of policy and

regulation

development process

• Advocacy in favour of

stable, predictable

carbon prices

• Adjust generation

fleet

• Advocacy in favour of

stable, predictable

carbon prices

• Consider shadow

carbon pricing in

investment decisions


OUR APPROACH TO CARBON MARKETS INSIGHT

彭博新能源财经碳市场研究方法

SHORT-TERM

(5-10 DAYS)

MEDIUM-TERM

(1-5 YRS)

LONG-TERM

(+5 YEARS)

BUSINESS

UNIT

News

Commodity markets

Timing of supply

and demand into

the secondary

market

Supply and demand

fundamentals

Daily trading

Compliance

Product sales

Investment planning

Technicals

Price direction and

volatility Absolute price level

Impact of key

market events

MARKET

DRIVERS

FORECAST

OUTPUT

TOOLS Correlations Medium-Term-

Model (MTM)

Global Energy &

Emissions Model

(GE2M)

Risk management


SHORT-TERM CARBON PRICING

短期碳价

Source: Bloomberg New Energy Finace Source: Bloomberg New Energy Finance

EUA PRICE MOVEMENTS OVER THE LAST MONTH (€/T)

EUA上月价格变动

RELATED INDEX INDICATORS (START DATE = 100)

相关指数的变动

3.50

4.00

4.50

5.00

5.50

6.00

6.50

02 Sep 09 Sep 16 Sep 23 Sep 30 Sep

5.92

4.38

90

95

100

105

110

115

120

125

130

02 Sep 09 Sep 16 Sep 23 Sep 30 Sep

EUA Brent German power

UK NBP gas ARA coal DAX

euro Fuel switch


MID-TERM CARBON SUPPLY AND DEMAND BALANCE, 2010-16E (MT/MONTH)

碳市场的中期供给与需求


Supply

Demand

-1,600

-1,100

-600

-100

400

900

1,400

-200

-180

-160

-140

-120

-100

-80

-60

-40

-20

0

20

40

60

80

100

120

140

160

180

200

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010 2011 2012 2013 2014 2015 2016

Net demand last month

Net demand this month

Cumulative demand(Y2)

Cumulative demandwithout backloading(Y2)


LONG-TERM CARBON SUPPLY AND DEMAND BALANCE, 2008-28E (MT/YR)

碳市场的长期供给与需求


34

-247 -288-434

-842

-167

42215 238

-89 -56

-339

-616

74 131 208 261 300 361 416 465

-2,000

-1,000

0

1,000

2,000

3,000

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028

Annual balance

Emissions at current EUA

Cap based on 45% reduction target by 2030 + imports *


CONTENTS

目录








METHODOLOGY

研究方法

Fore

casts

CO2 emissions

CO2 prices

Investment by

technology

Abatement cost

curvesInputs

GDP

Fossil fuel prices

Carbon caps

Interest rates

Technology

learning

Population

Support policies

GE2M

x yearX sector

X tech

Government Policy

Technology Factors

Carbon Market

Dynamics

Fuel Prices

Electricity Generation

& Grid

Macroeconomics

Climate

Energy Demand

SectoralCapacity

SectoralTrade & Demand


The analysis uses Bloomberg New Energy Finance's proprietary model of the energy system and clean energy technologies – the

Global Energy and Emissions Model (GE²M) – together with expert interpretation of current and proposed policies and targets.


KEY ASSUMPTIONS OF CHINA’S POWER SECTOR’S ETS

中国电力行业碳排放权交易机制的关键假设


Element Details

Trading phase 2017-30

Carbon intensity

reduction targets &

emissions caps

Emissions caps (MtCO2e) will be translated from carbon intensity reduction targets (tCO2e per unit of output)

Carbon intensity reduction targets have been or will be set for the following three periods

Period Base year Carbon intensity reduction targets

2011-15 2010 17%

2016-20 2005 45%

2021-30 2005 55%

GHG coverage CO2

Emissions scope Direct emissions from energy combustion

Technology coverage Coal: conventional, subcritical, supercritical and ultra-supercritical plants

Gas: OCGT and CCGT plants

All oil plants

Allocation Allowances will be allocated on installation level

100% of allowances will be allocated for free before 2020

The free allocation percentage will be reduced by 10% per year post 2020

New entrants will be covered and the newly closed plants can obtain 50% of allowances

Pass-through rate of

freely allocated

credits

The regulators will not completely ease the control of retail electricity prices despite carbon pricing mechanisms

until 2030

The government will make up for 50% of the carbon costs through subsidies until 2025

Offsets Offsets may be used for up to 10% of compliance obligations

Only domestic offsets generated from renewable power generation technologies can be used in the scheme

Credits can be created one-to-one for solar and wind generation, but 50% discount for biomass and waste-to-

energy generation and 85% discount for hydro generation

Banking & borrowing Unlimited banking of allowances between compliance years is permitted

Borrowing is prohibited

Linkage No linkage assumed to other trading schemes


EMISSIONS AND ABATEMENT DEMAND, 2010-30E (MTCO2E)

碳排放情景与减排需求


0

120

240

360

480

600

0

1,000

2,000

3,000

4,000

5,000

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Emissions - Barrier Busting

Targeted emissions

Total emissions Annual abatement demand


MARGINAL ABATEMENT COST CURVE OF CHINA’S POWER SECTOR, 2030E

2030年中国电力行业的边际减排成本曲线


-

50

100

150

200

250

300

350

- 100,000,000 200,000,000 300,000,000 400,000,000 500,000,000

Abatement (MtCO2e)

Wind onshore, strong

NuclearFuel switching

Solar, very abundant region

Waste-to-energy

Solar, abundant region

STEG

Wind offshore

Wind onshore, weak

Coal+CCS

Gas+CCS

Hydro (New build)

0 100 200 300 400 500

2,100

1,800

1,500

1,200

900

600

300

0

Abatement

demand

$/tCO2e CNY/tCO2e


CARBON PRICING FORECAST OF CHINA’S POWER SECTOR ETS, 2017-30E

中国电力行业碳排放权交易机制碳价预测


0

5

10

15

20

25

30

0

30

60

90

120

150

1802

01

7

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

CNY/tCO2 $/tCO2


IMPACT OF ETS ON GENERATION CAPACITY ADDITIONS, 2013-30E (GW)

碳交易对电力新增装机的影响


+45.6

+48.9

+69.4 +0.1 +11.2 -74.5

+100.6

0

20

40

60

80

100

120

140

160

180

200

BarrierBusting

Windonshore

SPV -utility

SPV -distributed

Biomass Gas Coal CarbonETS


IMPACT OF ETS ON POWER GENERATION & CAPACITY

碳交易对电力行业装机及发电结构的影响


Note: Pumped hydro excluded.



POWER GENERATION CAPACITY MIX UNDER

DIFFERENT SCENARIOS, 2012 VS. 2030E (%, GW)

对装机结构的影响

POWER GENERATION MIX UNDER DIFFERENT

SCENARIOS, 2012 VS. 2030E (%, TWH)

对发电结构的影响

67%

45% 44% 43%38%

3%

8%6%

6%6%

6%6%

6%6%

20%

14%14%

14%

13%

5%

11%12%

12%13%

4% 5% 6%7%

7% 8% 8% 10%

2012 2030:TraditionalTerritory

2030:New

Normal

2030:BarrierBusting

2030:BB+ETS

Geothermal

Waste

Biomass

STEG

SPV -distributedSPV - utility

Wind offshore

Wind onshore

Hydro

Nuclear

Oil

Gas

Coal

1,124 2,675 2,707 2,766 2,867

72%

54%58% 56%

52%

3%

8% 2%1%

2%

12%12%

12%

12%

17%

11%11%

11%

11%

3%

9%10%

10%11%

2% 2% 3%5%

3% 3% 3% 4%

4,841 10,259 10,259 10,259 10,259

2012 2030:TraditionalTerritory

2030:New

Normal

2030:BarrierBusting

2030:BB+Carbon

ETS

Geothermal

Waste

Biomass

STEG

SPV - distributed

SPV - utility

Wind offshore

Wind onshore

Hydro

Nuclear

Oil

Gas

Coal


IMPACT OF ETS ON POWER SECTOR INVESTMENTS

碳交易对电力行业投资的影响

TOTAL CAPITAL INVESTMENT REQUIREMENTS FOR

POWER GENERATION CAPACITY ADDITIONS

UNDER DIFFERENT SCENARIOS, 2013-30E ($BN)

对电力装机投资的影响

ADDITIONAL INVESTMENT REQUIREMENTS FOR

SUPPORTING INFRASTRUCTURE UNDER

DIFFERENT SCENARIOS, 2013-30E ($BN)

对电力基础设施投资的影响

316 317 317 255

100 70 64 70

1,092 1,092 1,092 1,092

297 297 298 298

309 354 375 434

146 202 273 273 131 137

174 296 223 225 255

353 2,714 2,863

3,033

3,256

TraditionalTerritory

New Normal BarrierBusting

BB+ETS

Waste

Biomass

STEG

SPV - distributed

SPV - utility

Wind offshore

Wind onshore

Hydro

Nuclear

Gas

Coal

429 442 458 491

355 360 364 375

164 166 174

192 53 56 59

65

TraditionalTerritory

New Normal BarrierBusting

BB+ETS

Demand response

Storage

Smart grid

Transmission

1,0011,024

1,055

1,123






CHINA’S POWER SECTOR’S EMISSIONS, 2010-30E (MTCO2E)

中国电力行业的碳排放情景


2,500

3,000

3,500

4,000

4,500

5,000

201

0

201

1

2012

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

2023

202

4

202

5

202

6

202

7

202

8

202

9

203

0

Historical Forecast

New Normal

基准情景





2,500

3,000

3,500

4,000

4,500

5,000

201

0

201

1

2012

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

2023

202

4

202

5

202

6

202

7

202

8

202

9

203

0

Historical Forecast

Barrier Busting

快速发展

New Normal

基准情景





2,500

3,000

3,500

4,000

4,500

5,000

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

202

9

203

0

Historical Forecast

Barrier Busting

+ ETS

快速发展/碳交易

Barrier Busting

快速发展

New Normal

基准情景


To develop a compliance

strategy for your company

开发您的合规战略


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版权与免责声明

This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may be

photocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any

way without prior consent of Bloomberg New Energy Finance.

The information contained in this publication is derived from carefully selected sources we believe are

reasonable. We do not guarantee its accuracy or completeness and nothing in this document shall be

construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgment of

the author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg New

Energy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates ("Bloomberg"). The opinions

presented are subject to change without notice. Bloomberg accepts no responsibility for any liability arising

from use of this document or its contents. Nothing herein shall constitute or be construed as an offering of

financial instruments, or as investment advice or recommendations by Bloomberg of an investment strategy or

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B-PMR SHANGHAI MISSION

CHARLIE CAO, [email protected]

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