4 October 2004 — 

Background

The Greenhouse Gas-Credits Aggregation Pool (GG-CAP) was created by Natsource Asset Management (NAM) Corp. to provide buyers with high quality greenhouse gas (GHG) emission reductions (ERs) that can be applied against their GHG emissions limitations. Similar to a mutual fund, the Pool aggregates individual buyers’ demand and diversifies risk by acquiring a portfolio of instruments.

GG-CAP is soliciting candidate projects that create ERs from 2005 to 2012 and conform to the rules that create compliance instruments under the European Union Emissions Trading Scheme (EU ETS). Independent of the Kyoto Protocol's (KP) entry into force, Certified Emission Reductions (CERs) created by Clean Development Mechanism (CDM) projects and Emission Reduction Units (ERUs) created by JI projects will be usable for compliance by installations with emissions reduction requirements. CERs will be usable for compliance in the first phase of the EU program that runs from 2005-2007. Both ERUs and CERs will be usable for compliance in the program’s second phase from 2008-2012.

Emission reductions created by increased nuclear utilization are not usable for compliance. Removals achieved by land-use, land-use changes-forestry (LULUCF) activities are not usable for compliance during the first phase of the EU ETS. Also, hydropower projects larger than 20 MW that do not implement environmental and social recommendations and guidelines specified by the World Commission on Dams will not be accepted.

Selection Criteria

All projects will be scored and evaluated using Natsource’s proprietary Delivery Risk Management Tools. The requested information is necessary to undertake this analysis.

The candidate project activities must conform to the rules that create compliance instruments under the EU ETS. Projects must meet the minimum criteria that follow to be eligible for screening:

• provide real, measurable and long lasting benefits related to climate change mitigation, and achieve permanent emission reduction from sources;
• have started no earlier than January 1st 2000;
• generate ERs that are additional to the reductions that would occur in the absence of the project and the additionality must be proven, including analysis of alternative scenarios that comply with regulations in place and/or current practices;
• be financially sound, i.e. show evidence of solvency, guarantees, etc;
• preferably demonstrate host country approval in the form of suitable confirmation from appropriate in-country agency or letter from regulatory authority;
• show the potential for approval by the Executive Board (based on decisions made for other projects and sectors);
• take into consideration requirements established under the EC Acquis Communautaire as part of their baseline if related to JI projects undertaken in countries that have signed an Accession Treaty with the EU;
• for projects involving power generation from biomass: (1) present an appropriate biomass reposition schedule, duly verifiable and certifiable and prove not to place undue pressure on biomass stocks and end up resulting in a switch back to fossil fuels (on- or off-site); and (2) have a negligible impact on the average grid emissions factor and the grid average carbon emission factor (CEF) must be lower than the CEF of the most likely operating margin candidate.

Project Information

In the absence of a Project Design Document (PDD) the information on each candidate project should be submitted through GG-CAP’s Project Information Form. Other formats will be acceptable as long as the information listed below is provided.

• Type of project;
• Country/State/City;
• Expected emission reductions per year;
• Baseline methodology (indicate if using an approved or a new methodology, in which case a brief description should be provided);
• Proponent’s name and affiliation;
• Credit rating of project owner or counterparty of carbon contract;
• Crediting period;
• Project stage of development (e.g., Concept, Feasibility study, Licensing, Under construction, In operation for less than 1 year, In operation for more than 1 year)
• Status of approval by host country’s DNA (not requested, requested, letter of non-objection in place, letter of approval in place);
• Financing structure (debt to equity structure and percentages, equity holders) and status of negotiation (not started, under negotiation, 50% completed, 100% completed);
• Indicative price in US$ per tonne of carbon dioxide equivalent reduced;
• Percentage of projects ERs under contract to other parties; and
• Where volumes are committed under other contracts, indication whether first rights to emission reductions are available

All project candidates must fill in the project summary in GG-CAP’s Project Information Form. Projects that do not provide the information described above will not be evaluated.

Submission of Projects

All projects should be submitted in electronic form to Solicitation_Administrator@natsource.com. Requests for additional information regarding this call for projects should be made to the same address.

Please note that Natsource will not provide the results of its analysis to project proponents. All submissions that will be considered for contracting will be contacted directly by Natsource.