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


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


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


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


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


Examples of Regulated Emissions and Categories


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


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


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


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


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


Representative Energy/GHG Management Outputs


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


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


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


• 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


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


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


Leveraging your Carbon Investment


Charles Reith

[email protected]


leveraging environmental market assets in financingggyj … · 2017. 4. 11. · leveraging...

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