EU ETS Solutions and Strategies

Introduction
If your company is regulated under the EU Emissions Trading Scheme (EU ETS), your main concern is to comply with the rules against the lowest cost. The EU ETS offers many opportunities to optimize your compliance strategy while at the same time to lower your cost and not increasing your risk. To know the rules is to know the opportunities.

Mulder Environmental Finance teamed up with a state-owned energy company with a strong balance sheet and a suit of innovative carbon trading solutions tailored to meet your compliance needs. Our first step is to thoroughly analyze your company's emissions profile. Secondly, we calculate your Cumulative Cost of Compliance using multiple scenario's from our model. Thirdly, we determine the optimal compliance strategy at the least risk and least cost. Contact us for a free appointment.

Compliance 2008-2020
Period 2008-2020 is divided in two phases (2008-2012 and 2013-2020). The two phases are closely interlinked through regulatory developments. An optimal compliance strategy means taking into account the rules of both phases. For example, certain types of CERs will not be eligible after 2012. Thus, some CERs can be carried-over into Phase III and some cannot. This increased regulatory risk means that your company need to familiarize itself with the rules and regulations and choose its trading partner carefully.

Trading Ideas
To manage this increased regulatory risk, a few innovative trading ideas should be considered. Each of these ideas can be executed with our trading partner.

Trading Idea 1: Swap Phase II CERs against Phase III CERs. If your company has purchased CERs for use in Phase II, the standard delivery terms are that the CERs will only be eligible in this phase.  Starting 2013, the rules will change and certain types of CERs will not be eligible anymore.  Swapping your Phase II CERs for Phase III CERs is therefore an insurance against this regulatory uncertainty.

Trading Idea 2: CER Borrowing. If your company has CERs or has contracted CERs for future delivery, it is possible to loan these CERs and receive a cash payment.

Trading Idea 3: Managing Phase III shortfall. We can structure a solution in which your company will purchase a fixed amount of Phase III EU Allowances against the 12-month average closing prices of a published index (for example, the European Climate Exchange) plus a fixed fee for transaction costs. If a percentage of the EU Allowances can be replaced with project credits, a discount to the average closing prices will apply.