Opportunities and challenges in the Russian carbon market

Moscow Carbon Market Forum 2008, President Hotel (Moscow) 28-29 April 2008

Carbon Trade & Finance is a joint venture between Dresdner Bank and Gazprombank

Carbon Trade & Finance

• • • Carbon Trade & Finance is a joint venture entity between Gazprombank and Dresdner Bank to capture opportunities in the carbon emissions market. The joint venture is based in Luxembourg and invests in primary projects generating CO2 certificates, with a focus on Russia and the Commonwealth of Independent States (CIS).

Gazprombank, one of Russia’s leading banks, is the authorised bank of OAO Gazprom – one of the world’s largest energy groups. With a branch network covering the whole territory of the Russian Federation, Gazprombank has over 40,000 corporate clients in Russia from all the key industries. The bank has a leading position in the Russian domestic capital markets, including a highly experienced project finance team and local investment banking expertise.

Dresdner Bank’s involvement in the joint venture will be led through its investment bank, Dresdner Kleinwort. Dresdner Kleinwort is a prominent player in the emissions and renewables markets and is part of Allianz Group. Allianz is one of the world’s leading insurance companies and is at the forefront of investments into sustainable energy. • Moscow Advisory company (CTF Consulting) was established in August 2007.

Supply and Demand in the Carbon Market

• •

Demand

for project credits and AAUs between 2008 and 2012 should be around 3.4 bio. tonnes. This excludes demand from Canada but includes demand from Australia.

Supply

will be generated though CDM (especially China and India), JI (main focus on Russian and Ukraine) and thorugh International Emissions Trading/GIS (CEE, Ukraine, Russia).

CDM: 2 bio. tonnes JI: 400 mio. tonnes GIS/AAU: ?

Source: DKIB, New Carbon Finance, Point Carbon, World Bank

Opportunities in the Russian Carbon Market

Source: DKIB, Dec 2004

Opportunities in the Russian Carbon Market

List of Projects submitted to the MEDT Mt CO 2 e Number of Projects I. Energy II. Industrial processes III. Solvent and other products use IV. Waste V. Land-use, land-use change and forestry VI. Agriculture Total

4 1 3

8 ER proposed to MEDT according to PDD in mio. tonnes

4.33

2.75

6.70

13.79

Sectoral limit in mio. tonnes

205 25 5 15 20

Published Projects (UNFCCC) in mio. tonnes

133.65

29.52

8.60

30

300 171.99

Challenges in Russia

• • • • • Time is running out for greenfield projects until 2012 … post 2012?

Competition from Green Investment Schemes?

Monitoring of existing projects (based on not registered PDD) Russian Approval Procedure • Application and impact of the Efficiency Criteria • • • Track 1 or Track 2 Legal documentation, VAT, … Impact of the credit crisis?