Tag Archives: climate
Buyer Liability Insurance Now Available for California’s Cap-and-Trade Offset Program
In a unique alliance, Parhelion offers insurance on compliance offset credits that originate from the Climate Action Reserve May 22, 2013 01:42 PM Eastern Daylight Time LOS ANGELES & LONDON–( BUSINESS WIRE )–The Climate Action Reserve, North America’s premier carbon offset registry, and Parhelion Underwriting Ltd., the leading innovator for carbon market insurance products, today announced a unique, strategic alliance to support the delivery of the first insurance product for compliance offset credits in California’s Cap-and-Trade Program. Under this alliance, Parhelion is offering insurance against invalidation for compliance offset credits that were transitioned from credits originally issued by the Reserve and the Climate Action Reserve will share its unrivalled experience and deep insight in to North American carbon offset projects, thereby, supporting the wider market development and helping its clients solve a critical risk issue. “We designed the cap-and-trade program to ensure the integrity of the emission reductions and had hoped and expected that the private insurance market would provide a solution to backstop our right to invalidate improper offsets” “Invalidation of offset credits has been a concern for the market, especially for compliance buyers. While the Reserve has a well-established reputation for its knowledge and experience in reviewing offset projects and ensuring that offsets have real environmental integrity, we are always looking for ways to further protect our account holders and market participants. So, we are very excited to enter this agreement with Parhelion and be a part of this pioneering initiative,” said Gary Gero, President of the Climate Action Reserve. The insurance product, Parhelion California ARB Offset Credit Invalidation Insurance, covers ARB Offset Credits (ARBOCs) that were transitioned from Reserve-issued Registry Offset Credits (ROCs) or Early Action Offset Credits (EAOCs). The insurance underwrites the risk of invalidation of ARBOCs, removing the financial risk associated with this from the holder of the offsets. This private insurance of the most trusted offset credits provides the assurance and security being sought by the market. “We saw a definite need in the market for insurance covering offsets in California’s cap-and-trade program. Not wanting to commit to a risky move ourselves, we conducted exhaustive research into the offsets program and found the Reserve has an outstanding history of thoroughly analyzing projects and issuing only high quality offset credits. We are delighted to be benefiting from the Climate Action Reserve’s extensive experience and knowledge. It will give us the opportunity to provide their clients with even greater confidence in the offset created,” said Julian Richardson, CEO of Parhelion Underwriting Ltd. The offsets program of California’s cap-and-trade market represents a key means for regulated companies to keep their costs of compliance manageable, which means extra costs are not passed on to consumers. It also provides a way to incentivize non-regulated industries to reduce their emissions. Parhelion’s offset credit insurance provides additional confidence for buyers and sellers to participate in this program. “We designed the cap-and-trade program to ensure the integrity of the emission reductions and had hoped and expected that the private insurance market would provide a solution to backstop our right to invalidate improper offsets,” said Mary Nichols, Chairman of the California Air Resources Board (ARB). “We are very happy to see that such a product is now available and congratulate Parhelion and the Climate Action Reserve for their fine work.” The Climate Action Reserve is the most experienced, trusted and efficient offset registry to serve the carbon markets. With deep roots in California and a reach across North America, the Reserve encourages actions to reduce greenhouse gas emissions and works to ensure environmental benefit, integrity and transparency in market-based solutions to address global climate change. It operates the largest accredited registry for the California compliance market and has played an integral role in the development and administration of the state’s cap-and-trade program. For the voluntary market, the Reserve establishes high quality standards for carbon offset projects, oversees independent third-party verification bodies and issues and tracks the transaction of carbon credits (Climate Reserve Tonnes) generated from such projects in a transparent, publicly-accessible system. The Reserve program promotes immediate environmental and health benefits to local communities and brings credibility and value to the carbon market. The Climate Action Reserve is a private 501©(3) nonprofit organization based in Los Angeles, California. For more information, please visit www.climateactionreserve.org . Parhelion Underwriting Limited is a specialist insurance business focused on developing and implementing innovative risk finance and insurance solutions for the global carbon markets and the wider climate finance sector. Parhelion provides advisory and transactional services to a wide range of sector stakeholders including project developers, compliance buyers, investors, traders, governments and multilateral organisations. Established in 2006 Parhelion has been leading the way for the insurance industry to contribute effectively to the growing climate finance sector and carbon markets. In 2011 Parhelion developed the innovative ‘EU Eligibility Risk Insurance’ to cover risks associated with Kyoto offsets being eligible for compliance obligations in the European Emissions Trading Scheme. Parhelion was awarded ‘Carbon Finance Transaction of the Year’ runner-up award by Environmental Finance magazine. Parhelion is a private sector company authorized and regulated by the UK Financial Conduct Authority. For more information please visit: www.parhelion.co.uk . Contacts Climate Action Reserve Jennifer Weiss + 1-213-891-6934 jennifer@climateactionreserve.org or Parhelion Underwriting Limited Julian Richardson, +442076458331 Info@Parhelion.co.uk Continue reading
Taking Stock of Climate Change Efforts: As European Carbon Market Falters, CA Expands Cap and Trade to Canada
May 20, 2013 Unlike many environmental problems, which can be addressed at a local or regional scale, climate change is inherently global in nature: greenhouse gas (“GHG”) emissions from any source join with historic and contemporary GHG emissions from other sources globally to contribute to the total store of GHGs in the atmosphere. The global nature of the issue is a key reason why, from the onset of climate change efforts, policymakers and environmentalists have attempted to address GHG emissions at an international scale. Failure of Kyoto Protocol Leaves Void in International Climate Change Efforts The primary effort to address climate change at an international scale is the Kyoto Protocol, adopted in 1997 in connection with the United Nations Framework Convention on Climate Change. Unfortunately, through the first “commitment period” (which ended in 2012), the Kyoto Protocol has not achieved expectations, as the two largest GHG emitting countries—China and the United States—never signed the Protocol. The sense that the Kyoto Protocol will ultimately fail as a climate program was compounded by the inability of negotiators at the 2009 Copenhagen Summit to agree on a framework for climate change mitigation for the period following the end of the first commitment period in 2012. Since Copenhagen, climate policymakers have looked for a regional model to lead the way to a new international climate framework. European Trading System in Disarray With the Kyoto Protocol faltering, hopes have been pinned on the European Union’s climate change program—the Emissions Trading Scheme (“ETS”). These hopes are rapidly fading. In the past few months, the ETS has experience significant growing pains, with the price of carbon allowances having dropped from about € 25 per ton in 2008 to below € 3 per ton in April. Although reductions in GHG emissions in the EU are still on pace to meet the target of the Europe 2020 Strategy (20% lower than 1990 emissions), most analysts believe that carbon prices at this level are too low to spur investment. The severe drop in carbon allowance prices has led many, including The Economist , to question whether the ETS has any future. California Expanding its Cap and Trade Program to Canadian Province of Quebec In the midst of Europe’s difficulties, California has moved forward to link its cap and trade system with that of the Canadian Province of Quebec. On April 19, 2013, the California Air Resources Board (“CARB”) approved a plan to formally link with Quebec beginning on January 1, 2014. Linkage will create a relatively seamless cap and trade market, with compliance instruments—carbon allowances and offset credits—being interchangeable in the two systems. California and Quebec will also hold joint auctions of carbon allowances. The linkage of the California and Quebec cap and trade systems is a modest first step towards a robust North American cap and trade system. Although Quebec is Canada’s largest province by size and has a population of about eight million people (second only to Ontario among provinces), its economy is not nearly as large as that of California: Quebec has a GDP of about $300 billion compared to California’s GDP of about $1.9 trillion. About 80 entities (referred to as “establishments” in Quebec’s program) are subject to Quebec’s cap and trade regulations. In comparison, California’s cap and trade program covers about 350 entities representing 600 facilities. Also, Quebec’s allowable GHG emissions are substantially lower than those of California: Quebec’s cap starts at about 23.2 million tons of GHG emissions (CO 2 e) in 2013 and ends at about 54.7 million tons in 2020, while California’s cap starts at about 162 million tons of GHG emissions (CO 2 e) in 2013 and ends at about 334 million tons in 2020. (Note that the increase reflects the addition of transportation fuels and natural gas in 2015; over time, the cap will go down — become more stringent —for all covered sectors.) Testing the New Model CARB recognizes that a key aspect of linkage with Quebec is that it may establish a new template for climate change efforts globally. As stated by CARB in its response to comments: “[T]he experience gained now in demonstrating that two separate governments, in two separate countries, with two separate economies, can effectively partner to put a price on carbon and reduce greenhouse gas emissions is invaluable to accelerating national and international efforts to address climate change.” However, California’s cap and trade program is less than a year old and already several lawsuits have been filed challenging various aspects of the program. So the jury is still out as to whether California’s program will succeed. Moreover, the addition of Quebec will make the cap and trade program more complicated (and mistake prone) without offering a meaningful test run that could be expected of a larger, more complex regional program. Nonetheless, given the problems with the Kyoto Protocol and the ETS, the need for a successful model is certainly there, and California and Quebec may be the start of such a model. In the interim, California and Quebec will undoubtedly have to iron out a number of issues (ranging from the integrity of offsets to the logistics of operating a linked market in two languages). In the event that the California-Quebec market sets the tone for a revamped European system or a new Kyoto, monitoring the developments of the North American effort will be a key task for businesses and governments (not only within California and Quebec, but in other states and provinces as well), as they may be incorporated into the system at some point in the future. Marc Luesebrink is of counsel in the Los Angeles office of Manatt, Phelps & Phillips. He has extensive experience advising both private industry and public sector clients on environmental and land use matters. Earlier in his career, he served as a Senior Attorney at Southern California Edison and Deputy Attorney General in the Office of the California Attorney General. Mr. Luesebrink can be reached at (310) 312-4261 or mluesebrink@manatt.com . This column is part of a series of articles by law firm Manatt, Phelps & Phillips, LLP’s Energy, Environment & Natural Resources practice. The first column in the third edition of this series discussed What the Sequester Means for Environmental Regulation . Continue reading
Advanced Biofuels Industry Calls For Solid Regulations
15 May 2013 The Leaders of Sustainable Biofuels (LSB) met the European Parliament (EP) in Brussels this May at a meeting hosted by the ITRE (Industry, Research and Energy) Committee. EP VP Alejo Vidal Quadras introduced the positions of the EP ITRE Committee on the European Commission revision of the Renewable Energy Directive (RED). The Leaders sent a clear message to the EP members: ‘Second generation advanced biofuel technologies are ready to compete with conventional biofuels, with companies keen to invest in commercial projects given appropriate conditions.’ Such conditions include a long-term stable legislative framework and specific targets for the use of second generation biofuels. The European advanced biofuel Industry is recognised as one of the technologically advanced in the world via investment companies like those LSB members coupled with support from the European Commission and member states. ‘Now is the time to bring advanced second-generation biofuels to the market,’ says Guido Ghisolfi, chairman of LSB and CEO of Chemtex. ‘The industry is committed to delivering on its promise but we need stable long-term investment conditions which encourage investment while, at the same time, promoting true advanced biofuels. This will have a positive economic as well as ecological impact on the EU.’ Today the competition in this sector is on the rise and a risk for the EU is that investments will occur in other places where more favourable policies and investment conditions exist, like the US, South America and Asia. The LSB believes a minimum 2% mandate for advanced biofuels should be set as a sub-target of the RED, with a well defined pathway for growth heading toward 2030 by aligning policies with market realities, securing long-term perspectives and mobilising resources into commercial activities. ‘Certification schemes should also be further developed or adapted to respond to the specific characteristics of lignocellulosic fuel chains, particularly when produced from agricultural and forestry residues and wastes,’ the LSB adds. ‘These actions are essential if the EU wants to meet the Climate and Energy Policy targets.’ The LSB is composed by the CEOs of seven European biofuel producers and European airlines: Chemtex, British Airways, BTG, Chemrec, Clariant, Dong Energy and UPM. Continue reading
