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

28

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

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

Carbon Finance in Renewable Energy Projects

Arturo Brandt

Senior Emissions BrokerLatin American Representative

 

  

Page 2: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 3: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

TFS Network of Offices

LONDONCOPENHAGEN

FRANKURTOSLO

MELBOURNEPERTH SYDNEY

BEIJINGHONG KONGSINGAPORE

TOKYOMANILA

JOHANNESBURG

HOUSTONNEW YORKSTAMFORD

LOS ANGELES

MEXICO CITYSANTIAGOSAO PAULO

Page 4: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 5: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 6: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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.

Page 7: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 8: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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 week’s income (over $20USD pa).

Households will be eligible for 4 bulbs, which together would cost almost 70% of one week’s wages and if not distributed for free, would be highly unlikely to be purchased.

Page 9: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

CDM Projects → 4,588

CDM Renewable energy projects worldwide → 2,709

Number (%) of CDM projects in each category

HFCs, PFCs & N2O reduction

2%

Renewables59%CH4 reduction &

Cement & Coal mine/bed

20%

Supply-side EE11%

Fuel switch3%

Demand-side EE4%

Afforestation & Reforestation

1,1%

Transport0,3%

Page 10: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Expected kCERs until 2012 → 2,781,335

Issuance sucess average to date → 97,4%

Expected CERs Until 2012 (%) in each category

HFCs, PFCs & N2O reduction

27%

Renewables35%

CH4 reduction & Cement & Coal

mine/bed20%

Supply-side EE11%

Fuel switch6%

Demand-side EE1%

Afforestation & Reforestation

0,4%

Transport0,2%

Page 11: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

CDM projects → 805

CDM renewable energy projects → 386

Number of projects in Latin America by type

Renewables48,0%

Methane avoidance

25,8%

Landfill gas14,7%

Fuel switch2,5%

Supply-side EE

3,4%

Demand-side EE

2,2%

HFC & N2O reduction

2,0%

Afforestation &

Reforestation

1,5%

Page 12: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Expected KCERs until 2012 → 393,565

Volume of CERs until 2012 in Latin America by type

Renewables28,9%

Methane avoidance

14,2%Landfill gas

30,1%

Fuel switch1,2%

Supply-side EE

4,2%

Demand-side EE

1,9%

HFC & N2O reduction

18,1%

Afforestation &

Reforestation

1,4%

Page 13: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Renewables in LA by type

Number of CDM projects from renewable energy → 386

Hydro48%

Biomass41%

Geothermal1%

Wind 10%

Page 14: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Hydro47%

Biomass35%

Wind 15%

Geothermal3%

Page 15: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

CDM wind projects by MW

Total MW from wind CDM projects → 2,515

Colombia 1%

Mexico51%

Ecuador0%

Uruguay 2%

Brazil27%

Chile4%

Dominican Republic

7%

Costa Rica3%

Nicaragua 2%

Panama3%

Page 16: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Hydro projects by MW

Total MW by hydro projects → 5,316

Brazil49%

Chile12%

Peru 21%

Ecuador12%

Honduras 1%

Guatemala5%

Page 17: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

KCERs until 2012 by biomass

Expected KCERs until 2012 by CDM biomass projects → 39,415

Brasil72%

Chile11%

Colombia 2%

Ecuador3%

Honduras2%

Others10%

Page 18: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Peruvian CERs

Biomass0%

EE Supply side10%

Hydro62%

Methane avoidance

1%

Landfill17%

FF switch10%

Number of CDM Projects → 29

Expected KCERs 2012 → 14,714

Page 19: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

© First Climate | 10.04.23 Referee + additional information

19Name 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

Page 20: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

© First Climate | 10.04.23 Referee + additional information

20Name 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

Page 21: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

© First Climate | 10.04.23 Referee + additional information

21Name 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 2008-2012

→ 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

Page 22: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

© First Climate | 10.04.23 Referee + additional information

22Name 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

Page 23: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 24: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 25: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

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)

Page 26: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Selling your CERs from Renewable Energy Projects

Alternatives to sell CERs

→ Fix price

→ Floating price (floor & cap)

→ Spot price

→ Public bid (TFS Platform)

Page 27: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

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

Page 28: Carbon Finance in Renewable Energy Projects Arturo Brandt Senior Emissions Broker Latin American Representative.

Thank You

Arturo BrandtSenior Emissions Broker

Latin America Representative

Mobile: +56 99 0203526

Email: [email protected]: www.tfsgreen.com / www.tfsbrokers.com