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Centre for Energy Studies Indian Institute of Technology New Delhi, June 4, 2 0 0 8

Carbon finance for Solar Energy Applications

Chandra Shekhar Sinha Head for Asia, Environmental Markets

Carbon finance for Solar Energy Applications Chandra Shekhar Sinha Head for Asia, Environmental Markets

O V E R V I E W — I N T E R N A L

M A R K E T S

E N V I R O N M E N T A L

l

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I N T E R N A L

Outline of the Presentation

Background Culprits of climate change

International agreements to address climate change

Market mechanisms in international agreements to address climate change

Carbon Markets: carbon credits or offsets and allowances

Impact of carbon credits on projects

Carbon finance for Solar Energy Application

Annex: Carbon Finance at JP Morgan

on projects  Carbon finance for Solar Energy Application  Annex: Carbon Finance at JP Morgan

I N T E R N A L

Flow Diagram: Global Greenhouse Gas Emissions -- the “culprits” of climate change

Global Greenhouse Gas Emissions -- the “culprits” of climate change Source: WRI, Baumert et al, 2005
Global Greenhouse Gas Emissions -- the “culprits” of climate change Source: WRI, Baumert et al, 2005

Source: WRI, Baumert et al, 2005

Global Greenhouse Gas Emissions -- the “culprits” of climate change Source: WRI, Baumert et al, 2005
Global Greenhouse Gas Emissions -- the “culprits” of climate change Source: WRI, Baumert et al, 2005

I N T E R N A L

Cumulative Investment in Energy Infrastructure, 2005 - 2030

Cumulative Investment in Energy Infrastructure, 2005 - 2030 Source: IEA, WEO, 2006 I N T E
Cumulative Investment in Energy Infrastructure, 2005 - 2030 Source: IEA, WEO, 2006 I N T E
Cumulative Investment in Energy Infrastructure, 2005 - 2030 Source: IEA, WEO, 2006 I N T E

Source: IEA, WEO, 2006

I N T E R N A L

Incremental Coal-fired Investment

While there is no silver bullet solution for climate change – there is a single bullet that can kill…. COAL

CO2 emissions from electricity, largely from increases in coal, are projected to increase by 2/3 between 2004 and 2030, rising at about 2% a year.

This increase occurs in spite of efficiency improvements in coal fired generation (from 42% in 1990, to 46% today). Efficiency is expected to reach 51% in 2030.

42% in 1990, to 46% today). Efficiency is expected to reach 51% in 2030. 7785 TWh

7785 TWh

Source: IEA, WEO, 2006

I N T E R N A L

International Agreements to Address Climate Change

United Nations Framework Convention 0n Climate Change (UNFCCC) – 1992

Ultimate objective of stabilizing global greenhouse gas concentrations in the atmosphere

Developed countries (Annex I countries) to

aim to restore GHG emissions to 1990 levels

Support capacity building in, and facilitate technology transfer to developing countries to mitigate, and to adapt to climate change

Meet as a “Conference of Parties” in the future, consider progress

The Kyoto Protocol to the UNFCCC – 1997

38 Developed Countries and Economies in Transition (Annex B countries) agreed in 1997 to:

reduce GHG emissions by 5.2 % below 1990 levels in the commitment period 2008-2012

Create market mechanism to manage the cost of GHG reductions

Status: In force since February 2005

Coming into force: required ratification of 55 Parties to UNFCCC representing 55 % of CO2 emissions

United States (36% of GHG emission) is not a Party

Marrakech Accord: agreed in Nov 2001 sets rules of implementation

Total demand created for GHG Reductions: ~2800 or 4800 Mt CO2, including US

rules of implementation  Total demand created for GHG Reductions: ~2800 or 4800 Mt CO2, including

I N T E R N A L

Carbon Finance as a Market Instrument to Address Climate Change

Two Main drivers till date

Kyoto Protocol

European Trading Systems

Increasingly relevant in the future

Japans industries (Keidanren) voluntary action plan

Regional trading systems in the United States and Australia

Voluntary offset programs in Europe and United States

systems in the United States and Australia  Voluntary offset programs in Europe and United States

I N T E R N A L

M A R K E T S

C A R B O N

A B O U T

A N N E X — B A C K G R O U N D

The Kyoto Protocol—Dominant international compliance market

Global treaty

international compliance market Global treaty  The KP contains the following market mechanisms 

The KP contains the following market mechanisms

International Emissions Trading (IET): Trading blocks of emissions credits between emissions-capped industrialized countries at the national level

Joint Implementation: Project-based trading between annex 1 countries (developed countries)—generate Emission Reduction Unit (ERU)

Clean Development Mechanism: Project-based trading between annex 1 and non-annex 1 countries—generate Certified Emission Reduction (CER)

trading between annex 1 and non-annex 1 countries—generate Certified Emission Reduction (CER) I N T E
trading between annex 1 and non-annex 1 countries—generate Certified Emission Reduction (CER) I N T E

I N T E R N A L

12

M A R K E T S

C A R B O N

A B O U T

A N N E X — B A C K G R O U N D

European Emission Trading Scheme Phases

Timeline
Timeline
Jan 2005 Mar 2006 Feb 2009 Mar 2009 Jan 2011 Launch of Verification of 2005
Jan 2005
Mar 2006
Feb 2009
Mar 2009
Jan 2011
Launch of
Verification
of 2005 EUA’s
Allocation of
EU ETS
2009 EUA’s
Verification
of 2008 EUA’s
Proposed
introduction of
aviation into EU ETS
2005
2008
2006
2007
2009
2010
2011
2012
Feb 2005
April 2006
Feb 2008
April 2009
Allocation of
Surrender of
Allocation of
Surrender of
2005 EUA’s
2005 EUA’s
2008 EUA’s
2008 EUA’s
Phase I
Phase II
Phase III

Allocation of year’s EUAs is in February of that year

Verification of previous year’s EUA’s is in March

Surrender of previous year’s EUAs is in April

of previous year’s EUA’s is in March  Surrender of previous year’s EUAs is in April

I N T E R N A L

13

M A R K E T S

C A R B O N

A B O U T

A N N E X — B A C K G R O U N D

U.S. Federal legislation is coming The next U.S. administration GHG Target Auto Standard Ren. Energy
U.S. Federal legislation is coming
The next U.S. administration
GHG Target
Auto Standard
Ren. Energy
CCS
Obama
-80% by 2050
40 mpg by 2020;
50% improvement by 2025
25% by 2025
No ban on new coal
Clinton
-80% by 2050
55 mpg by 2030
25% by 2025
All new coal w/CCS; fund 10 demos
McCain
-65% by 2050
35 mpg std.
Opposed stds
Support clean coal
Cap-and-trade proposals before senate
Senate bill
Scope of coverage
Other details

Feinstein-Cooper, S.317,

introduced 01/17/07

Electricity sector, “downstream” regulation

Allocation is output-based for generators; auctioned amount increases with time

Kerry-Snow,

introduced 02/01/07

Economy-wide, point of regulation not specified

President determines allocation

McCain-Lieberman, S.280, introduced 01/12/07

Economy-wide, large sources “downstream”, fuels “upstream”

EPA Administrator determines allocation

Sanders-Boxer, S.309,

introduced 01/15/07

Economy-wide, point of regulation not specified

Cap-and-trade is permitted, but not required

Bingaman, discussion draft

Economy-wide, “upstream” regulation

Allocation is specified for some sectors

Cap and trade, proposes carbon efficiency board

Lieberman-Warner S2192 most important introduced 10/07

Economy-wide, upstream and downstream

Allocation is specified for some sectors; auctioned amount increases with time

upstream and downstream Allocation is specified for some sectors; auctioned amount increases with time I N

I N T E R N A L

16

Carbon Market and the Kyoto Protocol

• Kyoto creates binding greenhouse gas emission limit only for Industrialized countries and economies in transition

• Allows a part of the emission reductions (Certified Emission Reductions) to be generated in
• Allows a part of the emission reductions (Certified Emission Reductions) to be generated in developing
(host) countries and Emission Reduction Units in countries with commitments
Host Party which
does not have an
emission cap
Annex I Party (e.g EU
country) which has an
emission cap
ERUs
Specific place in
host party
Specific place in
host party
Emission
Acquired
CERs/ ERUs
are added to
the allowed
emissions
GHG emission from
Gas-based power
Reduction
CER
Host Party benefits
From technology
and financial flows
Actual
Emissions
GHG emission from coal
Fired power plant
$
$
Baseline Scenario
Project Scenario
I N T E R N A L

Market Volume Growth 2007

(in MtCO 2 e)

(World Bank assessment, May 2008)

Project-Based Transactions x 1.0 CDM 551 Voluntary & Retail 42 x 3
Project-Based
Transactions
x 1.0
CDM
551
Voluntary
& Retail
42
x 3
x 2.5
x 2.5

Allowance Markets

JI 41 EU Emission x 10 T rading Scheme S econda ry CDM 2,061 240
JI
41
EU Emission
x 10
T rading Scheme
S econda
ry
CDM
2,061
240
x 2
New South Wales
Certificates

25

x 1.3
x 1.3

Chicago Climate Exchange

econda ry CDM 2,061 240 x 2 New South Wales Certificates 25 x 1.3 Chicago Climate

23

x 2 I N T E R N A L
x 2
I N T E R N A L

Market

(in MUS$)

Value Growth 2007

(World Bank assessment, May 2008)

CDM 7,400 x 4 270
CDM
7,400
x 4
270
x 3.5
x 3.5

Project-Based

Allowance Markets

Transactions

JI 500 EU Emission x 12 T rading Scheme S econda ry CDM 50,100 5,500
JI
500
EU Emission
x 12
T rading Scheme
S econda
ry
CDM
50,100
5,500
x 2
New South Wales
Certificates

220

x 1
x 1

Chicago Climate Exchange

x 2 New South Wales Certificates 220 x 1 Chicago Climate Exchange 70 x 2 I

70

x 2 I N T E R N A L
x 2
I N T E R N A L

x 1.3

Voluntary & Retail

M A R K E T S

E N V I R O N M E N T A L

T O

R O D U C T I O N

I N T

Size of the environmental markets

$bn Market size Carbon Market Overview Regulatory framework Tradable units 2007 2012E
$bn
Market size
Carbon Market
Overview
Regulatory framework
Tradable units
2007 2012E

EU ETS

EU Emissions Trading Scheme

Compliance

EUAs (EU Emissions Allowance)

46

325

Largest multi-national, GHG emissions trading scheme globally

   

Commenced operation on 01/01/05

 

JI and CDM credits eligible via “Linking Directive”

Other Kyoto

Protocol to the UN Framework Convention on Climate Change (UNFCCC)

Kyoto driven compliance

CERs (Certified Emissions Reduction/ERUs (Emission Reduction Units)

20

140

compliance

   

Assigns mandatory emission limitations for the reduction of GHG emissions to the signatory nations Key nations include:

Japan

 

Canada

North America

Entities (including corporations, governments, and individuals) voluntarily participate in the reduction of their GHG emissions

Voluntary/pre-compliance

VERs (Verified Emissions Reduction)

0.2

3

pre-compliance

   

voluntary

 

U.S. is key market

Potential compliance market based on cap-and-trade bills in the senate

Compliance

42—150 1

 

Total

66

510—618

1 [Market value with carbon prices seen in EU-ETS, $30/tonne could be $150bn in 2012 and $250bn in 2015 (Warner-Lieberman Bill—Point Carbon Analyst Feb 2008]

2015 (Warner-Lieberman Bill—Point Carbon Analyst Feb 2008] With growing linkages between these markets and the advent

With growing linkages between these markets and the advent of a regulated US market, the environmental products market could approach $550+bn by 2012

the advent of a regulated US market, the environmental products market could approach $550+bn by 2012

I N T E R N A L

4

M A R K E T S

C A R B O N

A B O U T

A N N E X — B A C K G R O U N D

EUA and CER Market Overview

Current Market Status  Designed as an entity-based domestic cap and trade emissions allowance programme
Current Market Status
 Designed as an entity-based domestic cap and trade emissions allowance programme that started
operation on January 1, 2005
 Allowances allocation in accordance with a national allocation plan (NAP I,II and III)
 Phase I (2005-07)
- Learning Phase
2006: $24.5 billion market
 Phase II (2008-12)
– Next Operational Phase
 Phase III (Post 2012) – Review of the Directive: policy
 NAP I (long), NAP II (short ?), NAP III (could be very short)
EUA Historical Prices (€/MT): Dec-06, Dec-07, Dec-08, Dec-09 35 Dec-06 Dec-07 Dec-08 Dec-09 30 25
EUA Historical Prices (€/MT): Dec-06, Dec-07, Dec-08, Dec-09
35
Dec-06
Dec-07
Dec-08
Dec-09
30
25
20
15
10
5
0
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08

Source: JPMorgan, data as of April04, 2008

Jan-08 Apr-08 Source: JPMorgan, data as of April04, 2008 EUA Dec-08 and CER Dec-08 Historical Prices
EUA Dec-08 and CER Dec-08 Historical Prices (€/MT) 35 CER Dec 08 EUA Dec 08
EUA Dec-08 and CER Dec-08 Historical Prices (€/MT)
35
CER Dec 08
EUA Dec 08
EUAs/CERs Spread
30
25
20
15
10
5
0
J un-06
Aug-06
Nov-06
Feb-07
M ay-07
J ul-07
Oct-07
J an-08
Apr-08
I N T E R N A L
14

There are significant opportunities to achieve needed abatement at costs of less than €40/tCO2e

COST OF ABATEMENT, EUR/t CO2e, 2030

40

30

20

10

0

-10

-20

-30

-40

-50

-60

-70

-80

-90

-100

-110

-120

-130

-140

-150

-160

Industrial feedstock substitution CCS EOR, Avoided Coal-to- defores- gas shift tation Soil CCS, Forestation
Industrial
feedstock
substitution
CCS EOR,
Avoided
Coal-to-
defores-
gas shift
tation
Soil
CCS,
Forestation
Livestock/
coal
Waste Asia
Wind,
soils
new coal
Forestation
retrofit
Smart transit
low
Solar
Small hydro
pen.
Nuclear
Industrial non-CO 2
Airplane efficiency
Stand-by losses
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Avoided
Industrial
Cellulose
Industrial
CCS
ethanol
non-CO 2
Co-firing
CCS,
Sugarcane
biomass
new coal
biofuel
Abatement
Gt CO 2 e/year
Fuel-efficient
deforestation
America
Industrial motor
systems
vehicles
Water heating
Air Conditioning
Uncertainties which could
decrease abatement
supply
Uncertainties which could
increase abatement supply
Lighting systems
Fuel-efficient
• Regional or no
participation
• More nuclear
commercial
• CSS (retrofit)
vehicles
• Technology
• Consumer behaviors
Insulation improvements
• Consumer behavior
I N T E R N A L

27

Source:

McKinsey

All CDM Projects in the Pipeline in Brazil + Mexico + India + China as a fraction of all projects

100% 80% 60% 40% 20% 0% Projects Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05
100%
80%
60%
40%
20%
0%
Projects
Q1-04
Q2-04
Q3-04
Q4-04
Q1-05
Q2-05
Q3-05
Q4-05
Q1-06
Q2-06
Q3-06
Q4-06
Q1-07
Q2-07
Q3-07
Q4-07
Q1-08

MexicoQ3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Brazil

BrazilQ3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Mexico

ChinaQ4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Mexico Brazil

IndiaQ4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Mexico Brazil

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Mexico Brazil China India I N T

I N T E R N A L

Number of projects in Asia by type

Fuel switch

1%

Agriculture

HFC & N2O reduction

6%

1% 33%
1%
33%

Affore-station & Refore- station

0%

Demand-

side EE

12%

Renew ables

39%

Landfill etc

Supply-side EE

8%

Nature of Carbon Financing Contract

Investor Banks Equity Debt Power Purchase Agreement $$ Electricity $$ Carbon Credits Carbon Fund Emission
Investor
Banks
Equity
Debt
Power Purchase Agreement
$$
Electricity
$$
Carbon
Credits
Carbon
Fund
Emission Reduction
Purchase Agreement
22
22
I N T E R N A L

Impact of Carbon Finance

INCREMENTAL IRR - CARBON FINANCE Renewable Energy Purchase period ER Prices 5y ('08-'12) 7y 10y
INCREMENTAL IRR - CARBON FINANCE
Renewable Energy
Purchase period
ER Prices
5y ('08-'12)
7y
10y
14y
21y
$5.00
0.5%
0.6%
0.8%
1.0%
1.2%
$10.00
1.0%
1.4%
1.7%
2.1%
2.3%
$15.00
1.6%
2.1%
2.7%
3.1%
3.3%
$20.00
2.2%
2.9%
3.6%
4.1%
4.5%
INCREMENTAL IRR - CARBON FINANCE
Solid Waste
Purchase period
ER Prices
5y ('08-'12)
7y
10y
14y
21y
0.58 tCO2e/tSW
0.74 tCO2e/tSW
0.93 tCO2e/tSW
1.11 tCO2e/tSW
1.29 tCO2e/tSW
$5.00
17.9%
24.1%
29.2%
31.7%
32.8%
$10.00
52.3%
59.1%
62.4%
63.5%
63.8%
$15.00
88.2%
93.3%
95.4%
95.9%
96.0%
$20.00
123.7%
127.3%
128.6%
128.8%
128.9%
*tSW = ton solid waste
INCREMENTAL IRR - CARBON FINANCE
HFC23
Purchase period
ER Prices
5y ('08-'12)
7y
10y
14y
21y
$5.00
110.8%
112.3%
112.7%
112.7%
112.7%
$10.00
176.7%
177.3%
177.4%
177.4%
177.4%
$15.00
227.3%
227.6%
227.7%
227.7%
227.7%
$20.00
270.0%
270.2%
270.2%
270.2%
270.2%

*65% tax applied on carbon revenues

Impact per Unit

$3.16 / MWh $6.33 / MWh $9.49 / MWh $12.65 / MWh

Impact per Unit

$41 / MWh $82 / MWh $124 / MWh $165 / MWh

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Potential Opportunities in the Power Sector

Power Sector

N T Potential Opportunities in the Power Sector Power Sector  Generation  Generation from renewable

Generation

Generation from renewable energy (hydro, wind, geothermal, biomass, solar)

Limitations on large (>20MW) hydro

Fuel switching from coal and oil to natural gas

Investment in super critical / ultra super critical power generation for coal

Replacement of equipment such as turbines and boilers to improve efficiency

Power Transmission and Distribution

Decentralized power generation (mini-grids or off-grid applications)

Electricity loss reduction from transmission and distribution networks

Reduction of leakage of SF 6 in transformers and switch gears

Energy (end-use) Efficiency Measures

Energy efficient lighting

Municipal water pumping

 Energy (end-use) Efficiency Measures  Energy efficient lighting  Municipal water pumping I N T

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Solar Energy Applications and Carbon Finance

Power Generation – Grid Applications

and Carbon Finance Power Generation – Grid Applications A Solar Thermal or PV power project connected

A Solar Thermal or PV power project connected to the grid might affect:

The choice and/or timing of new power plants (or life extension of existing ones), i.e. the build margin, and/or

The operation of existing power plants, i.e. the operating margin

The methodology for estimating the emission reduction (ACM0002) uses “combined margin” approach, or average of averages with different subsets of power plants, but averages at the end

Calculate a baseline emission factor EFy as the average of the Operating Margin emission factor (EF_OMy ) and the Build Margin emission factor (EF_BMy,):

EFy = 0.5 * EF_OMy + 0.5 * EF_BMy

CEA database in TCO2e/MWh (December 2007) availabale at http://cea.nic.in

 

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

North

0.72

0.73

0.74

0.71

0.71

0.71

0.72

East

1.09

1.06

1.11

1.10

1.08

1.08

1.03

South

0.73

0.75

0.82

0.84

0.78

0.74

0.72

West

0.90

0.92

0.90

0.90

0.92

0.87

0.85

North-East

0.42

0.41

0.40

0.43

0.32

0.33

0.39

India

0.82

0.83

0.85

0.85

0.84

0.82

0.80

0.40 0.43 0.32 0.33 0.39 India 0.82 0.83 0.85 0.85 0.84 0.82 0.80 I N T

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Solar Energy Applications and Carbon Finance

Power Generation – Grid Applications
Power Generation – Grid Applications

Contribution of carbon finance to the cost of electricity

Carbon credit price ($/TCO2e)

US cents/kWh

2006-07

10

15

20

25

30

35

North

0.72

0.72

1.08

1.45

1.81

2.17

2.53

East

1.03

1.03

1.54

2.05

2.57

3.08

3.59

South

0.72

0.72

1.08

1.44

1.79

2.15

2.51

West

0.85

0.85

1.28

1.70

2.13

2.55

2.98

North-East

0.39

0.39

0.58

0.78

0.97

1.16

1.36

India

0.80

0.80

1.20

1.60

2.01

2.41

2.81

0.58 0.78 0.97 1.16 1.36 India 0.80 0.80 1.20 1.60 2.01 2.41 2.81 I N T

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Solar Energy Applications and Carbon Finance

Power Generation – Off- grid Applications
Power Generation – Off- grid Applications

Can be for solar thermal or PV power generation for capacity < 15MW Default emission factor: 0.8TCO2e/MWh or where there is adequate justification:

0.8TCO2e/MWh or where there is adequate justification: Carbon credit price ($/TCO2e) US cents/kWh EF 10 15

Carbon credit price ($/TCO2e)

US cents/kWh

EF

10

15

20

25

30

35

2.40

2.40

3.60

4.80

6.00

7.20

8.40

1.20

1.20

1.80

2.40

3.00

3.60

4.20

0.80

0.80

1.20

1.60

2.00

2.40

2.80

1.20 1.80 2.40 3.00 3.60 4.20 0.80 0.80 1.20 1.60 2.00 2.40 2.80 I N T

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Solar Energy Applications and Carbon Finance

Solar Thermal Applications

Applications and Carbon Finance Solar Thermal Applications  Small-scale methodology applicable for thermal

Small-scale methodology applicable for thermal generation capacity up to 45MW for thermal devices (co-firing is permitted) that supply individual household or users. Solar thermal water heaters, dryers and solar cookers would fall in this category. Methodology I.C is applicable.

Baseline emission: fossil fuel that would have been used in the absence of the solar technology. IPCC default emission factors can be used.

Cogeneration application is permitted. Equivalent electricity (from grid or captive generation) and thermal energy is used for estimation of the baseline emissions.

When non-renewable biomass was used for thermal energy and is displaced (instead of fossil fuels) by the renewable technology (such as solar cooker), use small-scale methodology I.E

Some limitations (e.g. non-renewable biomass in use since 31 December 1989)

Assume that equivalent fossil fuel likely to be used by similar consumers instead of the non-renewable biomass (using IPCC default values)

Need to ensure that definition of non-renewable biomass and of renewable biomass is met

values)  Need to ensure that definition of non-renewable biomass and of renewable biomass is met

I N T E R N A L

P R O J E C T S

C A R B O N

I N G

I F Y

I D E N T

Solar Energy Applications and Carbon Finance

Conclusions
Conclusions

Carbon markets have developed rapidly, driven by the EU Emissions Trading System and the Clean Development Mechanism of the Kyoto Protocol

India has been at the forefront of this development

Solar technologies have seen limited benefits of the carbon market

Carbon prices have been low till very recently

Solar technologies have been relatively expensive and only now does it seem that cost reduction potential may be achievable

While there are some uncertainties about the size of the carbon market, the long term prospects are very promising

In India the development of promotional policy and addressing of institutional issues may permit rapid expansion and diffusion of the solar technologies, partially aided by carbon finance.

may permit rapid expansion and diffusion of the solar technologies, partially aided by carbon finance. I

I N T E R N A L

Chandra Shekhar Sinha

Head for Asia, Environmental Markets JP Morgan Chase NA, Mafatlal Centre (9 th Floor), Nariman Point, Mumbai. T: +91-22-6719-8084 E: chandra.s.sinha@jpmorgan.com

Centre (9 t h Floor), Nariman Point, Mumbai. T: +91-22-6719-8084 E: chandra.s.sinha@jpmorgan.com I N T E

I N T E R N A L

M A R K E T S

E N V I R O N M E N T A L

T O

R O D U C T I O N

I N T

JPMorgan’s activity in the carbon market

U C T I O N I N T JPMorgan’s activity in the carbon market Environmental
Environmental Markets are a growth business within the JPMorgan Energy Business  Emission Trading: 
Environmental Markets are a growth business within the JPMorgan Energy Business
 Emission Trading:
 JPMorgan can provide transactional support services for the compliance and pre-compliance/voluntary carbon
markets
 Emission Distribution:
 JPMorgan benefits from its extensive Global Energy Franchise and has, so far, built a solid distribution platform
of secondary-market Certified Emissions Reduction (CERs) to compliance buyers in Europe and Japan
 Emission Origination:
 In order to originate quality CERs in specific markets, JPMorgan is working with selected quality specialists that
combine:
— Local presence and knowledge of doing business in their local emerging markets
— Have the relevant expertise in Clean Development Mechanism (CDM) methodology and execution
 Origination agreements established with a number of leading suppliers of registered CERs in Asia, Africa and
Latin America
Climate Care acquisition  JPMorgan has significantly expanded its team capabilities to address growing client
Climate Care acquisition
 JPMorgan has significantly expanded its team capabilities to address growing client demand. As part of this build out,
the bank has hired highly experienced staff and also recently acquired Climate Care, a pioneer in carbon emission
reductions; offering carbon offsets to businesses and individuals.
 Combined strength provides a strong platform for JPMorgan to invest in large-scale carbon emission reduction
projects and renewable energy credits that meet high quality requirements.
carbon emission reduction projects and renewable energy credits that meet high quality requirements. I N T

I N T E R N A L

M A R K E T S

E N V I R O N M E N T A L

T O

R O D U C T I O N

I N T

Environmental markets are a growth business within JPMorgan’s commodities business

Global Commodities Blythe Masters

JPMorgan Energy Trading Catherine Flax and Ray Eyles Oil and Power Gas Coal and emissions
JPMorgan Energy Trading
Catherine Flax and Ray Eyles
Oil and
Power
Gas
Coal and emissions
refined products

Actively trading

since 1997

WTI, Brent, Tapis, Dubai and Urals

Also present in light products, distillates and fuel oil, covering and offering a wide range of products and services

Experienced team with strong relationship with major producers and consumers worldwide

Actively trading

since 2004

Rapidly developing

business

Supply power to utilities, retail power suppliers and end users

These activities are quickly establishing JPMorgan as a top tier

player in the electricity derivatives and risk management marketplace

Note: Please refer to annex for acronyms

marketplace Note: Please refer to annex for acronyms  Actively trading since 1997  Significant

Actively trading

since 1997

Significant presence in NYMEX futures

and options

Basis—large number of locations

actively traded

 Actively trading since 2004  Coal, including PRB and Central Appalachian  Emissions allowances
 Actively trading
since 2004
 Coal, including PRB and
Central Appalachian
 Emissions allowances (SO2,
NOx)
 EU ETS carbon
 Kyoto Protocol Driven CDM
and JI Carbon Credit
origination
Bruce Tozer
Global Head
Environmental
 Voluntary emission
Markets
reductions
 Renewable energy credit
and RPS risk management
 Physical and financial
capabilities

I N T E R N A L

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R O D U C T I O N

I N T

Our environmental markets team has both depth and experience

Trading and risk management

Sales

Project

origination

and structuring

Principal

Investments

Climate Care

structuring Principal Investments Climate Care  Mansoor Sheikh , Head European Energy, London, 44 207

Mansoor Sheikh, Head European Energy, London, 44 207 7774392

Nigel Felgate, Executive Director, London, 44 207 7779925

Bruce Tozer, Global Head Environmental Markets, London, bruce.c.tozer@jpmorgan.com, 44 207 7771531

Donnatella Cuocci, Vice President, London, 44 207 7774005

Charlie Pool, Analyst, London, 44 207 777 3674

Kedin Kilgore, Head Environmental Markets Americas, kedin.e.kilgore@jpmchase.com, 1 212 834 6387

Bhavna Prasad, Vice President, New York 1 212-834-2231

Tina Reine, Vice President, New York 212 834 4281

Chris Neidow, Head of Energy Sales and Marketing Asia, Singapore, (65) 68822107

Daniel Rosetto, Vice President, Sydney, 61 2 9220 1503

Odin Knudsen, Managing Director, Policy and Business Development, D.C., odin.k.knudsen@jpmchase.com, 1 202 585 3785

Chandra S. Sinha, Head for Asia, Mumbai, 91 22 6719 8084

Fernando Cubillos, Vice President, Origination, Santiago

Tiffany Bourgoin-Heskia, Associate, London, 44 207 777 0381

Paul Kelly, Executive Director, New York, 1 212 834 7263

Jose Tumkaya, Vice President, New York, 1 212 834 5654

Matt Ginzberg, Analyst, New York, 1 212 834 9103

Mike Mason, founder of Climate Care, Oxford

Edward Hanrahan, Head of Sales, Oxford

Tom Morton, Head of Origination, Nairobi

I N T E R N A L