Research and Markets, the market research firm, has announced the addition of Green Trading: Commercial Opportunities for the Environment to its offering.
DUBLIN, Ireland — Research and Markets, the market research firm, has announced the addition of Green Trading: Commercial Opportunities for the Environment to its offering.
This annual conference is the cutting-edge event for leading practitioners in trading greenhouse gas emission reduction, renewable energy, and energy efficiency. It defines the current status of the emerging green trading markets as well as the convergence of the environmental and capital markets. Research and Markets report on the conference is now available.
Here is a chapter-by-chapter preview of the report:
In Chapter 1, Andy Ertel, President of Evolution Markets, addresses the Megatrends in the Environmental Markets five years after the Kyoto Protocol. With the advent of the European Union's Emissions Trading Scheme, Mr. Ertel argues that the global GHG market is poised to take off and could reach a potential market size of U.S. $60 billion a year. He points to signs of the "second wave" as more companies (in addition to the global environmental leaders) come to realize their compliance issues and as corporations begin to recognize that climate change is a business risk that they need to address more comprehensively. At the same time, the Renewable Energy Credit (REC) markets are going from promise to reality due to technology shifts that make renewable power more efficient, reliable, and economical. Mr. Ertel points to the encouraging activity of both RECs and GHG markets at the state and regional levels while he addresses key cross-cutting issues that constrain the growth of these markets.
In Chapter 2, Doug Akerson, President of CQuest Ltd., discusses the development of the next frontier for the environmental markets in the agricultural sector. Agriculture is not only the second largest industry in the world (next to energy), it also is the second largest emitter of GHG emissions. Focusing on the example of anaerobic digestion of manure from confined animal feedlot operations, Mr. Akerson illustrates the use of biogas to produce the commodities of electricity, heat, and RECs. In addition, this process (together with improved waste management practices) produces Emission Reduction Units (ERUs) by avoiding the emission of and sequestering methane and nitrous oxide--both greenhouse gases with high global warming potential. These two gases are released naturally by manure and, unless contained, escape into the atmosphere. The commodities produced can be traded in bundled together or separated for different commodity markets.
In Chapter 3, David Brand, Director of Hancock Natural Resources' New Forest Program in Australia, discusses market-based mechanisms for pricing and trading the environmental services of forests. He describes the emergence of tradable carbon sequestration credits, water quality contracts, and biodiversity or conservation banks. These asset types, together with emerging forms of investment structure, are promising to revolutionize forestry investment. There is growing recognition that forests are a key part of many global environmental challenges; at the same time, forests provide multiple solutions. In these developing market-based mechanisms, investors are finding new ways to add value and improve return on forest investments as well as manage the risk-return profiles of various assets, depending on investment objectives.
In Chapter 4, Bob Sahadi, Vice President for Product Innovation and Technology at Fannie Mae, explains his institution's motivation for its innovative residential Emissions Trading Initiative (ETI)--making housing more affordable for citizens and less polluting for their communities. Residential housing units account for approximately one-fifth of U.S. fossil fuel consumption. Since energy costs are the second largest household expense (after mortgage or rent), energy efficiency can have a dramatic impact on housing affordability. While GHG emission reductions due to lower or more efficient energy use per residential unit are very small, reductions aggregated across many homes can be substantial. ETI is the first U.S. effort that is designed to bundle and verify emission reductions from residential efficiency programs. Profits from the sale of these GHG emission reduction credits are returned to Fannie Mae's utility partners for further investment in their residential energy efficiency programs.
In Chapter 5, Jerrel Gustafson, Program Manager of Austin Energy's Residential Energy Efficiency Programs, describes his company's experience partnering in Fannie Mae's ETI. Fannie Mae's turnkey service--verifying claimed emission reductions, bundling tradable emission reduction credits, and negotiating with and selling the credits to buyers--allows the utility to concentrate on continuous energy efficiency improvements in its service territory.
In Chapter 6, Ed Holt, President of Ed Holt & Associates, provides a comprehensive picture of the state of the U.S. market for Renewable Energy Certificates (RECs). He discusses the rationale for RECs, various forms of RECs in the wholesale and retail markets, utility green pricing programs, green power products in states with competitive electricity markets, and the participants in the REC markets. Central to the integrity of these markets is the verification of REC ownership. Such ownership is tracked by different systems, which are subject to the rules and particularities of different jurisdictions. In explaining key design elements of such tracking systems, Mr. Holt highlights critical issues that must be addressed in order for the REC markets to become liquid and seamless. In addition, he explores the frontier question of whether and how RECs can be used in emission reduction programs and markets.
In Chapter 7, Marc Chupka, a senior advisor at The Brattle Group, examines the economics underlying REC supply and demand in order to evaluate the view that a Renewable Portfolio Standard (RPS) policy can improve the operation of electricity markets by enhancing the stability of fuel costs. Typically, a RPS requires retail electricity providers to purchase a set percentage of their utility sales from renewable generating sources. Mr. Chupka points to the need to consider RPS implementation details that might lead to severe REC price volatility. From his analysis, he concludes that a reasonable degree of intertemporal flexibility (such as allowing "banking" and "borrowing") would dampen REC price volatility and promote a rational investment climate for increasing renewable generation capacity.
In Chapter 8, Jonathan Saiger, President of The Saiger Company, discusses the use of green credits (renewable energy credits, GHG emission reduction credits, and other environmental instruments) in limited recourse project financing of facilities. Lenders and investors want to understand the financial credit issues presented by using green credits as a revenue stream in project financing; also, they need to be comfortable that there is adequate mitigation of the risks associated with such a revenue stream. Mr. Saiger explains the components in a typical credit analysis for certified green credits and factors that should be considered when borrowing against such credits. Such "green finance" will be the wave of the future in energy project finance.
In Chapter 9, Martin Whittaker, a managing director at Innovest Strategic Value Advisors, summarizes the responses of Financial Times 500 companies (businesses with the world's largest market capitalization) to international policy measures aimed at cutting GHG emissions and to increasingly severe weather events. Mr. Whittaker is an author of a 2003 report from the Carbon Disclosure Project that surveyed FT500 top management on behalf of 35 institutional investors (representing assets of more than U.S. $4.5 trillion). This report finds that investors failing to take account of climate change and carbon finance issues in their asset allocation and equity valuations are exposed to potentially significant risks, and that corporate performance will increasingly be impacted by regulations and climate change itself. While many FT500 firms have recognized the need to act in response to climate change, the report finds a significant "information deficit" among financial service companies, particularly U.S.-based investors. It identifies this "information deficit" as a significant concern from a fiduciary perspective.
In Chapter 10, Dr. Nedia Miller, an energy derivatives strategist and Options Principal at Miller CTA (member of NYMEX), provides an overview of the current trading tools and financial instruments in the energy-related emerging markets. Focusing on the GHG emissions trading market and the renewable energy certificate markets, she describes the use of options, and points out the overlap between trading tools and financial instruments in these embryonic markets.
In Chapter 11, Guy Battle who founded the environmental and engineering consultancy Battle McCarthy, explains that the building sector accounts for over 50 percent of the world's energy consumption and resultant carbon dioxide production. He describes the lessons of the University Carbon Club which has aggregated carbon emission reductions from a number of small producers and traded the block of emission reduction credits in the U.K. Emissions Trading Scheme. Using various design examples, he illustrates the benefits of "low-carbon" or "negative-carbon" facilities for building developers, owners, occupants, and the environment. Mr. Battle argues that, for the first time ever, the environment has a real dollar value and that the financial markets must engage the biggest carbon producer--the building industry-to develop a rigorous trading system. Carbon is the New Gold!
Finally, in Chapter 12, Peter Fusaro and Marion Yuen sketch out new emerging-market scenarios for what is the shape of environmental trading to come.
For more information visit http://www.researchandmarkets.com/reports/c20033
Source: BusinessWire
