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The Role of Emissions Trading in Asian Clean Energy Finance

23 September 2003

Presented At PowerGenAsia
Ho Chi Minh City, Vietnam

The development of certain energy projects as assets able to claim and transact emission reduction credits for the betterment of their balance sheets is an emerging market fraught with process requirements and complexities. A comparative minority of energy developers understands these processes and complexities.

Moreover, the pricing, depth, liquidity and long term relevance of these emergent markets is a subject of considerable debate, as the Kyoto Protocol moves toward implementation throughout most of the world. While these questions are in their own right worthy topic(s) for discussion in a forum such as PowerGenAsia, we by and large assume the existence of this market and of the processes required to create Certified Emission Reductions (CERs) under Kyoto. We feel that this assumption can be justified – in late 2003 we can point to dozens of instances of clean energy projects tapping this market and there are numerous firms – ours among them – that assist firms in identifying, packaging and transacting these kinds of emissions assets using increasingly standardized processes.

Rather, this paper focuses on the relative project finance impacts of this nascent commodity currently and presents analytic mechanisms to gauge that impact in project pro formas. We place particular emphasis on a case study in an industrial scale renewable energy project. The paper then concludes with some general observations concerning the range of projects that can be positively impacted by the Kyoto markets and therefore the analytics presented within. We also discuss some of the key challenges of making Asian assets more competitive in this emergent market, which is global, not local or regional, in nature.

EcoSecurities Ltd
Environmental Finance Solutions
www.ecosecurities.com

030923_EcoSecurities_Emissions_Trading_Asian_Clean_Energy.pdf

030923_EcoSecurities_Emissions_Trading_Asian_Clean_Energy_2.pdf