Carbon Valuation Tool: bringing transparency to global carbon markets since 2004

Oslo (25 June 2008)

Carbon credits are a growing part of the carbon market and a source of revenue for many of the world’s governments, utilities, banks and funds. It is a complex market, fraught with risk, making carbon credit ratings, based on years of expert, independent, information-gathering, especially important for those wishing to invest in global carbon projects.

Point Carbon’s Carbon Valuation Tool provides empirical, independent ratings of global carbon projects, (both CDM and JI) using the world’s largest database of carbon projects. The database, which has been compiled since 2000, contains almost 45% more projects than have been made public by the UN, which oversees carbon projects. Accounting scandals in other commodities markets have highlighted how important it is that valuations are sober and conducted by truly independent experts based on the most comprehensive project databases and analysis available.

Describing the Valuation Tool, Frank V. Melum, Analyst for Point Carbon, said “CDM projects are a risky business, and identifying and quantifying these risks is increasingly important because of the growth of the market. The good news is that there is now enough Point Carbon data, going back some eight years, to allow risks to be calculated using statistical analysis, allowing Point Carbon to determine the value of a project or a portfolio of projects. First indications are that auditors greatly appreciate the Carbon Project Valuation Tool's unique empirical foundation”.

Other, similar tools are available, however Point Carbon’s Valuation Tool is based on empirical data, rather than subjective assessments, going back to the very beginning of the development of global CDM projects. In addition, The Valuation Tool, launched in its current form this year, but based on ratings going back to 2004, has, since 2007, been developed together with 16 of the world’s largest carbon players (both investors in CDM projects and buyers of carbon credits).

The Valuation Tool uses a team of 10 researchers worldwide to gather market intelligence on proposed CDM and JI projects, as well as ten further experts to empirically analyse the information gathered, enabling it to offer the most comprehensive carbon rating’s service available. Because the database was begun in 2000, Point Carbon has acquired a long history of rating projects, an essential pre-requisite to acquiring formal rating’s agency status (NSIRO).

Point Carbon’s Carbon Valuation Tool offers a ratings service both on a project- and a country- basis, allowing users to assess the likelihood of a given project delivering its stated emissions reductions in the stated time period.

The Tool was used to rate the entire CDM portfolio of the Norwegian Ministry of Finance, one of the largest government buyers of carbon credits in the world.

This month, Point Carbon’s Carbon Valuation Tool was named the Innovation of the Year at the Energy Risk Awards, presented in Houston. The Energy Risk Awards, conducted by Energy Risk magazine, recognize industry excellence within energy trading and risk management.

Note to editors

Point Carbon is the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets. 

The Kyoto Protocol on Climate Change, which entered into force in February 2005, resulted in the launch of The EU’s Emissions Trading Scheme (ETS). The world’s first international emissions trading scheme, it works on a cap - and - trade basis, forcing companies to emit less carbon dioxide than their Kyoto target allows or buy carbon permits (CERS or ERUs) from elsewhere. The second phase of the scheme runs from 2008-12 and coincides with the Kyoto Protocol commitment period. No timetable has currently been established for the post-2012 regime. 

Certified Emissions Reductions (CERs) and Emission Reduction Units (ERUs) from Clean Development Mechanism (CDM) and Joint Implementation (JI) projects respectively, are project credits flowing into the global compliance market generated through emission reductions. A number of countries and companies make use of project credits from CDM and JI to be in compliance with their Kyoto targets. Reducing emissions outside one’s own site or country (“external abatement”) can be a cost effective alternative to internal abatement. 

For a CDM project to be registered by the UN’s Executive Board, it needs to be able to prove that the emission reductions it can achieve are additional to business-as-usual scenario.

The carbon market has seen substantial growth since its modest start in 2003. Globally, the traded volume of carbon contracts has increased from 28 Mt in 2003 to 2.7 Gt in 2007, with forecasted further growth to 4.2 Gt in 2008.

For comments or further more information, please contact:

Candida Jones
PR Manager, Point Carbon
Mob: +44 (0) 777 5754 763
E-mail: press@pointcarbon.com

For US press enquiries, please contact:

Jenna Agins
Intermarket Communications
Tel: +1 212 754 5613
E-mail: jagins@intermarket.com  

About Point Carbon

Providing critical insights into energy and environmental markets

Point Carbon is a world-leading provider of independent news, analysis and consulting services for European and global power, gas and carbon markets. Point Carbon’s comprehensive services provide professionals with market-moving information through monitoring fundamental information, key market players and business and policy developments.

Point Carbon’s in-depth knowledge of power, gas and CO2 emissions market dynamics positions us as the number one supplier of unrivalled market intelligence on these markets. Our staff includes experts in international and regional climate policy, mathematical and economic modelling, forecasting methodologies, risk management and market reporting.

Point Carbon now has more than 15,000 clients, including the world’s major energy companies, financial institutions, organisations and governments, in over 150 countries. Reports are translated from English into Japanese, Chinese, Portuguese, French, Spanish and Russian.

Every year, Point Carbon’s Carbon Market Insights conferences gather thousands of key players for the carbon community’s most important annual conferences. Point Carbon also runs a number of high-level networking events, workshops and training courses.

Point Carbon has offices in Oslo (Head Office), Kiev, London, Malmö, Tokyo, Washington D.C and Boston.