Van Ness Feldman Law Firm: Emissions Trading, Carbon Markets, & Offset Project Development

Van Ness Feldman Law Firm: Emissions Trading, Carbon Markets, & Offset Project Development: "Van Ness Feldman
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Emissions Trading, Carbon Markets, & Offset Project Development
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More and more companies and investment firms are participating in environmental credit markets, including regulated and voluntary markets for carbon and other greenhouse gas emission reductions and renewable energy credits. Companies’ motivations for participating in these markets include:

* Complying with international, national, state, or local mandates - or hedging against the risk of future mandates.
* Demonstrating corporate social responsibility to customers or shareholders;
* Gaining experience in new markets.
* Taking advantage of emerging investment opportunities in new 'green' or clean energy and technology markets.
* Monetizing emission reduction or sequestration activities.

Comprehensive Services to Environmental Market Participants

Van Ness Feldman’s emissions trading and emissions reduction project development practice integrates decades of environmental, energy, and transactional experience for the benefit of our clients. With one of the largest and most diversified energy practices in the U.S. (including an active renewable energy practice), we bring unique perspective and value to trading transactions and emissions reduction projects.

Since 2000, we have advised on environmental markets transactions for over 50 million credits and voluntary emission reductions (VERs). Surveys of emissions trading market participants by Environmental Finance have consistently ranked Van Ness Feldman as a leading law firm in GHG Emissions, North American Markets, and for the voluntary markets.

Among other services, we help clients:

* Formulate and implement emissions trading strategies.
* Develop projects and structure commercial transactions.
* Understand how greenhouse gas emissions trading can fit within a comprehensive corporate climate change (or portfolio management) strategy.
* Work with third-party project developers, financing sources, brokers, verifiers, and regulators to ensure that credits are marketable and properly documented.
* Form joint ventures and other vehicles to maximize financing and bring together complementary assets and capabilities.

The firm’s deep expertise in environment, energy, and natural resources issues allows us to understand not just the transactional elements but also the underlying projects.

Our emissions trading experience extends to a variety of different types of project activities, including: bagasse generation; coal mine methane capture; landfill methane capture; reforestation, afforestation, and avoided deforestation; gas flaring, fuel switching, and geothermal energy.
Our Clients

We advise buy-side and sell-side U.S. and international market participants, including: energy companies and utilities; emerging clean technology ventures; chemical and metals companies; hedge, venture capital and private equity funds; renewable project developers; market intermediaries; and others.
Representative Greenhouse Gas Emissions Trading Advisory Work

* For an international climate change investment group, counseled and drafted a master agreement for the sale of retail renewable energy certificates, and represented the client in the purchase of carbon dioxide equivalent sequestration rights from a project that will involve grassland restoration and/or preservation.
* Represented a trading company in a series of transactions in which it made a forward purchase of Kyoto Protocol Certified Emission Reductions (CERs) from three bagasse energy projects in Latin America and then sold the bundled credits to an electric power company in an Annex I country.
* For an international investment fund, counseled on purchase of approximately 250,000 emission reduction units that are certified under the Voluntary Carbon Standard and/or Kyoto Protocol Clean Development Mechanism, from a waste incineration and power generation plant in the People’s Republic of China, and counseled on a Voluntary Emission Reduction Purchase Agreement (VERPA) for the sale of 10,000 verified emission reduction units generated from a wind power generation project located in the People’s Republic of China.
* For an international investment fund, advised on a three-party Emission Reduction Purchase Agreement (ERPA) for the purchase of the output CERs from seven manufacturing facilities in the People’s Republic of China.
* For the Climate Cent Foundation of Switzerland, served as primary outside counsel for all emissions trading transactions. The Foundation committed to contracting 6 million tons of Kyoto credits by mid-2008.
* For an international emissions trading consulting firm, drafted a VERPA for the purchase of approximately 300,000 emission reduction units that are certified under the Voluntary Carbon Standard from a hydroelectric power project located in near Asia.
* For a carbon fund, drafted and advised on an Emission Trading Master Agreement for the European Union Emissions Trading Scheme.
* For a UK investment fund, advised on an ERPA for the purchase of approximately 750,000 Certified Emission Reductions from an electricity generation project in Southeast Asia.
* Serving as counsel to PowerTree, a limited liability company that purchases verified emission reduction credits from forestry projects on behalf of two dozen power companies.
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For a multinational energy company, provided counsel on sales of Kyoto Protocol Certified Emission Reductions from a geothermal project and a gas flaring project, both located in Southeast Asia.
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For an oil company, analyzed potential competing claims for ownership of emission credits resulting from carbon sequestration/enhanced oil recovery projects in which the company was participating.
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For a manufacturer in Latin America, provided counsel on the company's sale of Kyoto Protocol Certified Emission Reductions to an international financial institution.
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Counseled a Southeast Asian manufacturing company on the sale of the company to an international carbon fund. The company owns a Clean Development Mechanism project expected to generate approximately 2 million CERs through 2012, including 'prompt start' CERs.
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Advised a company on its participation in the Chicago Climate Exchange.
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For a carbon asset management fund, advised on the creation of standard ERPAs from perspectives of both the Buyer and Seller.

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Federal mandate on emissions reporting... how will corporate America comply?

Considering the mandate is set at a relatively low threshold, all company's will need to self evaluate whether they will be impacted.  LakeShore Global  has primarily been working in the voluntary markets, but we are now moving into the the California Air Resource Board mandatory emissions reporting program. Under that program, just about everyone is required to report, and if you breach the threshold, then verification is required. Verification is when a company (like LakeShore) with an accredited verification body perform an independent audit on your emissions inventory... or a measure of your carbon footprint. This includes everything like office electricity usage and vehicle fleet gas consumption... so it's not just for power production and manufacturing. It makes since that the large industry players such as the EPA Climate Leaders are voluntarily involved to stay abreast of developments in this industry. The good news is that at a federal level, there is currently no mandate for verification and this will save the corporate pocket book for the time being. Because the states have been very pro-active at restricting emissions, there are many special interest groups that advocate a federal mandate, but with administration and enforcement at the state level.

So from a compliance standpoint, it is good news that the federal mandate will not require verification, however companies will need to have the ability to evaluate and measure their carbon footprint in order to submit to the mandated reports. So, back to the question of how? Corporate America is being forced to measure their carbon footprint. You should select a reputable company to evaluate your footprint and set up a "self administered" reporting program (alternatively you may want to outsource the function altogether). Select a vendor who submits to voluntary monitoring to ensure quality product and service offerings to participants in the clean energy compliance marketplace. Expect to see high growth rates for the participants in this market in the coming months due to the massive inflows of investment into clean tech by federal programs. Yesterdays renewable energy companies will be the industry power players of tomorrow and the companies who are already established in these markets will be the ones to go with.

It will be interesting to see what happens at the state level. It will likely fall in some form of extension to the state Renewable Portfolio Standards and/or implementation of programs similar to California or some of the regional cap and trade programs that are in place in half the states in the country already. Watch out if you breach the threshold, because most of those programs will likely require verification. If the market participants can measure their footprint, half the battle is won already. And if the players can actually measure the reduction of their carbon footprint.... one would need to ask what are those players doing with that reduction?  If they are not monetizing, they could be leaving millions in potential revenue on the table.