Premium Financing Leveraging Assets for Wealth Transfer Planning
Leveraging Environmental Market Assets in Financingggyj … · 2017. 4. 11. · Leveraging...
Transcript of Leveraging Environmental Market Assets in Financingggyj … · 2017. 4. 11. · Leveraging...
Leveraging Environmental Market Assetsin Financing Renewable Energy Projects g gy j
Charles ReithCharles [email protected]
504.481.7344
April 2008April 2008
Outline
• Purpose of Markets
Renewable Energy Certificates• Renewable Energy Certificates
• Carbon Offsets
• Risk Mitigation
• Opportunities for Leverage
- 2 -Proprietary & Confidential The Power of Integration
Purpose of Environmental Markets
• Combat Global Warming
• Promote Renewable Energy
• Tap Success of Air Quality Markets
• Take Advantage of Variable Technologies
• Realize Efficiencies
• Reward Innovators and Proactive Players
- 3 -Proprietary & Confidential The Power of Integration
Renewable Energy Certificates (RECs)
• Something extra to sell• Something extra to sell on top of electricity
• One REC = One mWHOne REC One mWH “premium,” earned when RE is generated
• Voluntary and mandatory markets
Anticipated RECs improve forecasted
profitability of blrenewable energy
projects
- 4 -Proprietary & Confidential The Power of Integration
States with Renewable Portfolio Standards (RPS) Create Regulated REC DemandRegulated REC Demand
15 % by
202030%
VT: Equals Load
Growth
23.8% by 2025
105 MW
15% 25%
18% by
10%24% by
2013
30% MA: 4% by 2009 + 1% / year
RI: 16% by 2020
by 201225% by 2025 (large utilities
5%-10% by 2025 (small utilities)
10% by 2015
20% by
2010
105 MW
15%
25% by
2025
18% by 2020
CT: 13% by 2020
by 2020
11% by 2020
15% by
2025
20% by 2020 (IOUs), 10% by 2020 (co-ops)
5,880 MW by 2015
NJ: 22.5% by 2021
DE:20% by 2019
State RPS
y
DC:11%
MD: 9.5% by
2022HI: 20% by
2020
20%
State RPS with
- 5 -Proprietary & Confidential The Power of Integration
State Goal
DC:11% by 20222020 12% by
2022 significant flux
PJM RPS Renewable Generation Demand by State
Pennsylvania: Tier I Only Maryland: Tier I Only
New Jersey: Class I Only DC: Tier I Only
35 000
40,000
45,000
25,000
30,000
35,000
Wh
10 000
15,000
20,000GW
-
5,000
10,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
- 6 -Proprietary & Confidential The Power of Integration
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
New Jersey Pennsylvania Maryland Delaware DC
Milestones in Developing the Carbon Markets• Accelerating Progress
• Applies to Greenhouse Gases (GHG)• Applies to Greenhouse Gases (GHG)
• GHGs Standardized in CO2 equivalents
V l t d M d t• Voluntary and Mandatory
• Diverse and Dynamic
• Rewarding Pro-action
- 7 -Proprietary & Confidential The Power of Integration
Examples of Regulated Emissions and Categories
- 8 -Proprietary & Confidential The Power of Integration
Economic Uncertainty
Carbon Cost Projections90.0
100.0
60.0
70.0
80.0
eCO
2e)
30 0
40.0
50.0
2006
$/to
nne
10.0
20.0
30.0(2
Range of Projections E pected Range
0.0
- 9 -Proprietary & Confidential The Power of Integration
Range of Projections Expected Range
Source: Pace and various entities’ carbon projections including EPA, MIT, Nicholas Institute, CRAI, ACCF&NAM
Potential Impact on Industrial Facility
Future Estimated Financial CO2e Risk
$40,000,000
$45,000,000
$50,000,000
$20 000 000
$25,000,000
$30,000,000
$35,000,000
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$-
, ,
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
Low-Case Price Risk High Case Price Risk
- 10 -Proprietary & Confidential The Power of Integration
Forthcoming Climate-Driven Responsibilities
• GHG InventoryG G e o y
• GHG Disclosure– Liability Reporting (e g 10K)– Liability Reporting (e.g., 10K)
– Stakeholder Expectations
– Pre-compliance ReportingPre compliance Reporting
• GHG Performance Improvement (Carbon Intensity)
• Carbon Trading• Carbon Trading
- 11 -Proprietary & Confidential The Power of Integration
How Best to Reduce GHG Liability?
Risk Reduction Target
n Li
abili
tyct
ive
Car
bon
AbatementDemand Reduction
WhichT l
Pros
epe
Renewable Generation (DG)Emission/Allowance Trading
ToolsWhen?
2007 2008 2009 2010 2011
- 12 -Proprietary & Confidential The Power of Integration
Converging Responsibilities Invite an Integrated Perspective
E Ri k C b
Carbon Trading
Energy Risk Management
Carbon Origination
Constrained
A Carbon-driven
Renewable Energy
Energy Procurement
CarbonStrategic Plan
Energy Efficiency
- 13 -Proprietary & Confidential The Power of Integration
Representative Energy/GHG Management Outputs
- 14 -Proprietary & Confidential The Power of Integration
The Integrated Planning Process Starts with Existing Data Streams
Business Processes Strategic Carbon Planning
Compilation Analyticsand
InvoicesEmissions Renewable
Energy
WRI Protocol for GHGs
pand Data
Management
and Display Tools
Meters
MetricsDeliveries
Carbon Offsets
Energy
GHG
Energy Planning
• Actions
• Archives
GHG Inventory
- 15 -Proprietary & Confidential The Power of Integration
The Three Major Categories of Offset-generating Activities
GHG R d ti P j t
Carbon Sequestration Project
GHG Reduction Project
A GHG Avoidance Project
- 16 -Proprietary & Confidential The Power of Integration
j
Examples of Offsets
• Facility ImprovementsDirect Emissions Reductions– Direct Emissions Reductions
– Energy Efficiency
– Carbon Emissions Capture (CCS)
• Renewable Energy– Fuel Switching
Distributed Generation– Distributed Generation
• Carbon Sequestration– Carbon Capture and Injection (CCS)
– On-site Biological Sequestration
– Off-site Biological Sequestration
C b fitMississippi Bottom Land
- 17 -Proprietary & Confidential The Power of Integration
• Co-benefits Green Trees Program
Navigating RECs and Carbon Markets
• Voluntary and compliance y pmarkets are dynamic and volatile
• Each project has a unique path in the environmental landscapep
• RECs and offsets may be differentially attractive, depending on circumstancesg
- 18 -Proprietary & Confidential The Power of Integration
Case Study: Major Mining/Refining Company
• Large energy spend and GHG exposure
• Uses purchased fossil energy to run its mills
• Operates coal-fired power plant to meet Op p psome of its energy needs
• Uses purchased gas and coal to heat its meltersmelters
• Introducing renewable bio-fuel (RF) to generate power or co-fire melting DECISION FACTORS:process
• How best to use fuel? • Point of carbon regulation
• Eligibility of Co-firing for RECs
• Values of RECs and Offsets
- 19 -Proprietary & Confidential The Power of Integration
Navigating RECs and Carbon Markets
• Voluntary and complianceVoluntary and compliance markets are dynamic and volatile
• Each project has a unique path in the environmental landscapein the environmental landscape
• RECs and offsets may be differentially attractive, depending on circumstancesdepending on circumstances
• RECs and/or offsets may apply; don’t presume or double dip
• The first step is Carbon• The first step is Carbon Planning…toward a Managed Carbon Position
- 20 -Proprietary & Confidential The Power of Integration
Leveraging your Carbon Investment
- 21 -Proprietary & Confidential The Power of Integration