Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Kyoto protocol: Opportunities of the Carbon Market for Russian Enterprises | Moscow | 26 April 2007 Risk Assessment and Pricing Models for Carbon Credits Marcel Hanakam, Senior Project Manager Company Background 3C Group 3C was founded in autumn 2003 in Frankfurt am Main / Germany by Dr. Sascha Lafeld and Markus Hüwener as independent spin-off from Dresdner Bank Allianz Group 3C Holding AG 100% 3C Consulting GmbH 3C currently employs 35 specialists based in Frankfurt, Berlin, Santiago de Chile and Washington, D.C. 100% Offices in New Dehli, Beijing and Moscow to be set up in 2007 100% Since 2006, 3C is structured as a holding organization and backed by a strategic investor 100% Significant growth expected for 2007 © 3C Group 24.05.2017 Marcel Hanakam 3C Markets AG 3C USA LLC 3C Chile Ltda. others to come 2 Risk Assessment and Pricing Models for Carbon Credits Company Background 3C Consulting GmbH Development and implementation of risk management/ trading strategies 3C focuses on the financial impacts of emissions trading for the affected companies and developed new procedures. Development, implementation, and marketing of JI/CDM-projects 3C offers tailor-made services regarding the development and implementation of projects and the marketing of emission reduction credits. © 3C Group 24.05.2017 Marcel Hanakam Development, implementation and marketing of climate neutral companies, events, products & services 3C acts as portfolio manager for climate neutral clients with ~ 700.000t of CO2e under management in 2006. Carbon Investment Advisory 3C offers advisory services for fund managers, traders and project finance departments. 3 Risk Assessment and Pricing Models for Carbon Credits Carbon Market Currencies of Carbon Credits Emission Allowances Project-Based Certificates AAU assigned amount unit ERU emissions reduction unit Kyoto Unit, relevant for governments from projects in Annex I countries EUA EU - Allowance CER certifed emission reduction allocated in the EU ETS from projects in Non-Annex I countries RMU removal unit VER verified emission reduction from sink projects/activities for voluntary markets Derivatives on emission certificates © 3C Group 24.05.2017 Marcel Hanakam 4 Risk Assessment and Pricing Models for Carbon Credits Carbon Market Driver European Emissions Trading Scheme (EU ETS) 14.000.000 12.000.000 Volumes EEX spot ECX Dec 2007 ECX Dec 2008 35 € 30 € 10.000.000 25 € 8.000.000 20 € 6.000.000 15 € 4.000.000 10 € 2.000.000 5€ 0 Dez. Jan. Feb. Mrz. Apr. Mai. Jun. Jul. Aug. Sep. Okt. Nov. Dez. Jan. Feb. Mrz. Apr. 05 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07 07 © 3C Group 24.05.2017 Marcel Hanakam 0€ 5 Risk Assessment and Pricing Models for Carbon Credits Risk Assessment Risk Assessment for Carbon Credits – Key Factors Management, Legal Matters Finance Partner evaluation – legal matters Partner evaluation Project evaluation – legal matters Project evaluation Project evaluation – management Joint Implementation/ Project evaluation – carbon credit management Clean Development Mechanism Cooperation with 3C (Track Record) Kyoto specific risk Additionality Methodology Emission reduction calculation Stakeholder consultation Host country approval Validation Public comments & request for corrections by the JISC/CDM EB Environment, Development Monitoring Benchmarks Technology planning - implementation and operation costs - implementation and operation technology provider quality of production factors location Reputation risk © 3C Group 24.05.2017 Marcel Hanakam 6 Risk Assessment and Pricing Models for Carbon Credits Investment Fund Climate Change Investment I S.A. Luxembourg based Carbon Fund Target Investment Volume 150 Million € Audited by KPMG „Investment Fund“ - Model Project 1 3 C Consulting GmbH Sponsor Investor Project 2 Reporting obligations Core Investors … Project n Investment Committee Investment Advisory Agreement Investment 1 Investors Investment recommendation Shareholding © 3C Group 24.05.2017 Marcel Hanakam Investment 2 … Climate Change Investment I S.A. SICAR Executes Investments Investment n 7 Risk Assessment and Pricing Models for Carbon Credits Pricing Pricing Models for Carbon Credits Fixed Price VER hedging possibility exact planning horizon Verified Emission Reductions (VERs) can also be sold risk averse No registration at UNFCCC necessary Variable Pricing discount on EUA 2008 price related to development of project single fixing at ERPA closing for a credit stream individual fixing for each credit tranche Price Combination for example: PIN Level project price per t/CO2e = EUA08 – 50% Floor at 7€/t CO2e © 3C Group 24.05.2017 Marcel Hanakam price per t/CO2e = ~3-5 €/t CO2e Limited market for VERs Additional offers Carbon Credit Development Facility (CCDF) to finance carbon related management costs loan provision equity or mezzanine financing support to prepare bankable documentation for individual financing needs up-front payment of ERPAs 8 Risk Assessment and Pricing Models for Carbon Credits Financing Carbon Financing Engineering Emission Reduction Units (ERUs) provide additional cash flows with different risk profiles 0. case: regular project financing without ERUs 1. case: Reduction of interest rates or early redemption Additional profit margin with ERUs Additional profit margin +100 8% 2007 -100 sales ERUs 3% 2008 8% sales ERUs 3% 2009 8% sales ERUs 3% 2010 sales ERUs 3% 8% 2011 8% sales ERUs 3% 2012 Carbon Financing Engineering - provides additional margins and benefits - has a constantly growing impact in investment decisions - offers a communication and marketing benefit (UPS) © 3C Group 24.05.2017 Marcel Hanakam 9 Risk Assessment and Pricing Models for Carbon Credits Summary 3C as Carbon Credit buyer can offer To Sellers of ERUs / VERs professional transactions, backed by a solid Luxembourg-based investment fund attractive and tailor-made pricing models including up-front payments equity / mezzanine / loan co-financing options purchase of both ERU & VER vintages (e.g. of prompt-start projects) To Project Developers a network of technology partners and CDM/JI experts for pre-assessment and support Carbon Credit Development Facility to take-over PDD development, validation and registration, if desired take-over of complete marketing-process, where required © 3C Group 24.05.2017 Marcel Hanakam 10 Risk Assessment and Pricing Models for Carbon Credits Contact 3C Consulting GmbH Dipl. Ing. Marcel Hanakam Senior Project Manager Russia, CIS and CEE Industriestr. 10 61118 Bad Vilbel / Frankfurt, Germany Tel. +49 (0)6101 5 56 58-41 Fax +49 (0)6101 5 56 58-77 [email protected] www.3c-company.com © 3C Group 24.05.2017 Marcel Hanakam 11 Risk Assessment and Pricing Models for Carbon Credits