The New Economy: A Green Business Model

By Naresh K Lal

EcoloCap Solutions (OTCBB: ECOS) is focused on delivering shareholder
value through a green business model that includes creating renewable
energy sources and projects that offer high concentrations of CO2 and
methane (CH4) gas (i.e. hydro-power, biomass alternative fuels, and
methane gas capture from landfills) to reduce emissions by
replacing fossil fuels such as coal and natural gas in the production
of electricity. The primary focus of this business model is the
creation of tradable credits, which are termed Certified
Emission Reductions (CERs), at low prices in emerging markets and
selling these credits for much higher prices in established markets.
Over a decade ago, the Kyoto Protocol created free market incentives
called credits to reduce the worldwide emission of greenhouse
gases. The CERs are issued from Kyoto’s Clean Development Mechanisms
(CDM) projects which result in the reduction of harmful
emissions to reduce air pollution – in addition to economic benefits
such as creating jobs and shareholder value. EcoloCap is initially
focusing its efforts in Vietnam and China with plans to follow-up in
the markets of Latin America and Africa, leveraging upon its technical
expertise in clean energy projects and its extensive network of
contacts in Eastern Asia which enjoys a very active CDM market.
In December 1997, the Kyoto Protocol was enacted to reduce the
emission of greenhouse gases by 5.2% from 1990 levels during the
period of 2008 – 2012, resulting in quotas that are imposed on the
industrial emissions of participating nations Greenhouse gas
emissions are quantified as an equivalent of tons of carbon dioxide
(CO2) released into the atmosphere. The CDM provides the opportunity
for developed nations such as the United States (US) to purchase
carbon credits or CERs (certified by the United Nations and equivalent
to the reduction of one ton of CO2 emissions) which are generated from
renewable energy projects in participating countries such as Vietnam
and China. The tremendous financial opportunity for companies such as
EcoloCap lies in their ability to generate CERs in emerging and
frontier markets at a below-market cost and then sell the carbon
credits at current market prices in developed countries such as the
US.
The head of environmental markets at Barclays Capital has predicted
that carbon credits could become not just the world’s biggest
commodity market; but the biggest market overall, with market experts
predicting a staggering total of $1 trillion possible within a decade.
The European Union Emission Trading Scheme (EU ETS) is the largest
market for the trading of emission allowances, spanning 28 countries
throughout Europe; and other developed countries such as the US,
Japan, and Australia are developing similar ETS markets. Carbon
commodity trading is dominated by EU Allowances (EUAs) with a 78%
share, followed by CERs which are created through CDM projects such as
those described earlier.
As part of this bullish view on the future of carbon credit trading as
a new commodity class, Barclays has recently launched an exchange-
traded note (ETN) to track the global price of carbon. The iPath
Global Carbon ETN (NYSE: GRN) trades throughout the day just like
stock and is structured to track Barclay’s Global Carbon Index Total
Return, with several similar products in registration for potential
market launches to provide investors with simple, low-cost access to
the market for carbon credits. These carbon credits are traded by
companies who get tax breaks and other incentives for lowering
pollutants into the air, as well as investors and speculators who want
to participate in the global reduction of greenhouse gases.
EcoloCap Solutions (OTCBB: ECOS) currently has a total of seven signed
renewable energy projects which will generate an estimated $39 million
in revenues (versus a market cap of just $26 million) and $15 million
in cumulative cash flow through 2012, in addition to tradable carbon
credits. In addition, the Company has an equal number of pending
projects in its pipeline which are expected to close before year-end,
resulting in $80 million of potential revenues and $30 million in
cumulative cash flow through the end of 2012. The seven signed
projects are outlined in my previous post, detailing each of the clean
energy initiatives along with their financial and carbon credit
implications.

Source Google Finance

 
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Western Climate Initiative (WCI)

By Naresh K Lal

The Western Climate Initiative is a collaboration which was launched in February 2007 by the Governors of Arizona, California, New Mexico, Oregon and Washington to develop regional strategies to address climate change. WCI is identifying, evaluating and implementing collective and cooperative ways to reduce greenhouse gases in the region. In the spring of 2007, the Governor of Utah and the Premiers of British Columbia and Manitoba joined the Initiative. Montana joined in January, 2008 and Quebec moved from Observer to Partner status in April, 2008. Other US and Mexican states and Canadian provinces have joined as observers

For more info visit: WCI Site

 
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U.S. carbon initiative nets key Canadian province

By Naresh K Lal

VANCOUVER, British Columbia (Reuters) - The province of Ontario, Canada's industrial heartland, will join the Western Climate Initiative, a planned U.S.-based regional carbon credit trading pact aimed at curbing global warming.

Ontario is the fourth province to join the effort that includes California and six other U.S. states, and was established by U.S. state governors tired of what they saw as the Bush administration's inaction on climate change.

Canadian environmentalists hailed the announcement as evidence that provincial leaders were losing faith in Ottawa's stand on climate change, but federal Environment Minister John Baird said he saw no problem with Ontario's decision.

The WCI, which has set a target of cutting greenhouse gas emissions to 15 percent below 2005 levels by 2020, is expected to unveil its plan for capping carbon emissions and trading offset credits next month.

Ontario Premier Dalton McGuinty has been a strong critic of Ottawa's plans to fight climate change, and said at a meeting of premiers in Quebec City on Friday that people were tired of waiting for action.

"Of course there is a system put in place by the federal government, but obviously that doesn't satisfy all Canadians so we see provinces making their own efforts to assume their responsibilities as global citizens," McGuinty said, speaking in French.

The province of Quebec is a member of the WCI along with British Columbia and Manitoba. The U.S. states involved are California, Arizona, Montana, New Mexico, Oregon, Utah and Washington. Several other U.S. and Mexican states hold observer status with the group.

"Ontario is doing some great things to combat global warming, and I welcome them, said California Governor Arnold Schwarzenegger, who has spearheaded the WCI efforts in the United States.

British Columbia Premier Gordon Campbell said Ontario's move was important because it meant that provinces with two-thirds of Canada's population and that were responsible for 73 percent of the country's GDP were now part of the WCI.

A key difference between the WCI and the Canadian government's plan is how emissions would be capped. The group wants a "hard" target for capping total emissions, while Ottawa backs "intensity based" targets, which measure emissions as a percentage of production.

Environmentalist say Ottawa's approach would actually allow emissions to continue increasing, and would not let the market establish a true price on carbon that would be needed for a credit trading system to work.

Baird said the federal government's policies will produce an absolute reduction in emissions of 20 percent by 2020, and said Ottawa was willing to work with the provinces to see how WCI efforts fit within its environmental framework.

"One of the challenges is that there is not a consensus among the provinces on what action to take to fight global warming," Baird told Reuters.

Alberta, home to the oil sands, Canada's single largest source of greenhouse gases and a key source of energy to the United States, has rejected being part of any cap and trade system.

Source: Reuters

 
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