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Ways Of Gaining Exposure To Renewable Energy
Biofuel projects are currently in a very strong position. By Jonathan Turney | Published May 13, 2013 The rapidly developing biofuels industry has helped to put renewable energy on the map, with mandated blending targets indicating that the sector is ripe for further growth. Currently, just 6bn litres (or 4.75 per cent) of European transport fuel comes from renewable sources but as this figure needs to rise to 18.5bn litres by 2020, the renewable transport fuel market is set to triple in just seven years. Sustainable biofuel projects are currently in a very strong position. These schemes use technology with known commercial results and operate within a supportive regulatory environment – as demonstrated by the now binding UK Renewable Transport Fuel Obligation. Furthermore the UK is ideally suited to domestic biofuel production, with a large transport fleet, a surplus of low-grade feedstock and an existing petrochemical infrastructure. The renewable energy sector has undergone huge leaps in technology and development in the past few years and there are a range of projects offering attractive investment propositions with market-wide appeal. Many opportunities in the renewable energy sector are supported by government incentives to encourage investment. As a result, these tax efficiencies can be used to enhance returns or offer downside risk protection. Biofuel projects are particularly attractive as they usually have large capital expenditure requirements that generate in-year capital allowance relief that can be used in mitigating tax liabilities. These schemes may also contain expenditure on energy-saving plant and machinery, attracting enhanced capital allowances that generate 100 per cent first-year allowances. Such projects tend to be sited in regeneration areas or ‘enterprise zones’, which may also attract Business Premises Renovation Allowance relief on renovation costs. But project finance can be difficult to secure in the current climate. An alternative source of finance, which is starting to attract interest in the renewable energy sector, is ‘retail debt’. Products often referred to as ‘mini-bonds’ with a fixed term and return have been borne out of a clear demand from retail investors. The best-known example is energy firm Ecotricity, which raised £20m in two tranches – offering a four-year term of 6-7 per cent interest with a minimum investment of £500,000. While other investments look towards peer-to-peer lending, doubts surround the regulation and default-rate risks associated with this type of finance. With retail debt – a proven source for raising project finance in the renewable sector – this type of investment can bypass many of the issues faced and secure the necessary funding. Jonathan Turney is an associate director at Future Capital Partners Continue reading
Carbon Credits from California may be Utilized in the Quebec Market
Published on May 8, 2013 at 8:14 AM KCET, the USA’s largest independent public television station reports that a deal that has been reached wherein “greenhouse gas emission allowances acquired as part of California’s cap and trade auction program can soon be traded along with those issued under a similar program in the Canadian province of Quebec.” 1 According to this report the carbon emissions markets in California and Quebec will essentially merge, commencing January 1, 2014. The report further states that the “emissions credits purchased in California will be able to be used to offset greenhouse gas emissions in Quebec, and vice versa.” “The Board’s action today broadens the environmental impact of California’s cap-and-trade program and helps fight climate change by reducing greenhouse gases,” said CARB Chair Mary D. Nichols in a press release. “California retains absolute control over its own program, and the larger carbon market overall provides additional options for California businesses.” 2 This comes at a time where the “concentration of carbon dioxide in the atmosphere has reached 399.72 parts per million (ppm) and is likely to pass the symbolically important 400ppm level” 3 as reported by John Vidal of the Guardian. Ralph Keeling, a geologist with the Scripps Institution of Oceanography, states that “I wish it weren’t true but it looks like the world is going to blow through the 400ppm level without losing a beat. At this pace we’ll hit 450ppm within a few decades.” The Guardian reports that “The 400ppm threshold is a sobering milestone, and should serve as a wake up call for all of us to support clean energy technology and reduce emissions of greenhouse gases, before it’s too late for our children and grandchildren,” said Tim Lueker, an oceanographer and carbon cycle researcher with Scripps CO 2 Group. 1 http://www.kcet.org/news/rewire/climate-change/california-carbon-credits-will-soon-be-good-in-quebec.html 2 Ibid. 3 http://www.guardian.co.uk/environment/2013/apr/29/global-carbon-dioxide-levels Source: http://www.bluforest.com/ Continue reading
