Natsource LLC, a global provider of asset management services, transaction services and advisory and research services in emissions and renewable energy markets, announced that its wholly owned subsidiary Natsource Asset Management Corp. (NAMC) has closed the Greenhouse Gas Credit Aggregation Pool (GG-CAP), with total commitments of US$550 million from 26 participants. The GG-CAP is the first private-sector initiative to provide a cost-effective means for companies to meet requirements to reduce their greenhouse gas emissions under the European Union Emissions Trading Scheme and the Kyoto Protocol.
“The closure of GG-CAP, the first private-sector credit aggregation pool, is a watershed in the development of the greenhouse gas market,” said Jack Cogen, president of Natsource LLC. “The participation of so many highly regarded companies from around the world demonstrates the viability of this approach for meeting emissions-reduction targets. We are proud of the confidence that these major corporations have shown in us.”
The 26 participants in the program are among the largest consumer product, manufacturing, energy and utility companies in Europe, Japan, and North America, and have a combined market capitalization of more than US$300 billion.
Participants include: The Chugoku Electric Power Co., Inc.; Cosmo Oil Co. Ltd.; Electricity Supply Board (Ireland); Endesa Generacion; E.ON UK; EPCOR; Hokuriku Electric Power Company; Hokkaido Electric Power Co., Inc.; Iberdrola; Norsk Hydro ASA; The Okinawa Electric Power Co., Inc.; Public Power Corporation S.A.; Repsol YPF; Sergey Brin; Suntory, Ltd.; and Tokyo Gas Co., Ltd.
How the GG-CAP works
The GG-CAP is a “buyers pool” that will combine the purchasing power of the 26 participants to acquire and manage the delivery of a large volume of compliance instruments created by the project-based mechanisms included in the Kyoto Protocol.
These instruments – formally known as Certified Emission Reductions (CERs), created by Clean Development Mechanism projects (CDM), and Emission Reduction Units (ERUs), created by Joint Implementation projects (JI) – can be used by participants to comply with emission reduction requirements from 2005-2012 imposed by the European Union Emissions Trading Scheme and by nations such as Canada and Japan seeking to comply with their obligations under the Kyoto Protocol from 2008-2012. According to Natsource estimates, these countries will be approximately 3.75 billion tonnes short of their Kyoto Protocol emissions-reduction obligations from 2008-2012, based on current emissions trends.
NAMC will identify, evaluate, purchase, and manage delivery of reductions that buyers can use for compliance. Through the GG-CAP, companies will benefit from pooling large-scale demand to secure cost-effective compliance. They will also gain from GG-CAP’s ability to use active risk management techniques to guard against under-delivery of contracted volumes. These techniques include diversification, reserve margins, risk management contracts and insurance products.
They will facilitate the development of a highly-valued portfolio of compliance instruments that participants can use as a component of their overall compliance strategies. Importantly, the use of these instruments for compliance is supplemental to the participants’ domestic efforts to reduce their emissions.
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