Why you Need to Manage your Carbon Risk ?
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Get ahead of the curve on the latest sustainability and green wellness trends.
Carbon Risk Management
- Carbon Risk Mitigation – Mattcons helps clients to identify and implement the most cost efficient method of managing their carbon exposure.
- Carbon Risk Quantification – Mattcons helps to estimate the financial risk that the client is exposed to based on their carbon footprint, emission allowance and client’s carbon credit portfolio.
Carbon neutrality
Carbon neutrality or simply put net zero carbon footprint, refers to achieving net zero carbon emissions by balancing the amount of carbon that is produced with equal amount of credible Offset credits.
Mattcons Consultants help its clients calculate their carbon footprint according to the ISO & GHG protocol standards and then help them neutralize their emission footprints with the best available Offset credits. Mattcons Consultants helps clients by providing solutions to reduce their carbon footprint and create strategies to become carbon neutral. We measure, quantify, reduce & offset their footprint and then report their Carbon footprint.
Carbon Neutrality Process
Ø Calculate
Ø Reduce
Ø Offset
Ø Report
Carbon Fund Management
Mattcons has developed a range of proprietary carbon project valuation and portfolio management tools to accurately price, value and
gauge risk for primary market ERPA based portfolios. Mattcons utilizes these skills to manage the Carbon FUND, a carbon consolidation and aggregation fund.
gauge risk for primary market ERPA based portfolios. Mattcons utilizes these skills to manage the Carbon FUND, a carbon consolidation and aggregation fund.
Mattcons offer tailor made fund management support services through external carbon stream valuations, portfolio delivery risk assessment and Carbon Capital at Risk (CCAR) analysis.
Investment Approach:
Carbon Fund
The Carbon Fund seeks to acquire, consolidate and manage a portfolio of environmental offsets and streams of yet-to-be generated credits. The fund’s focus is on Certified Emission Reductions (CERs) generated from Clean Development Mechanism (CDM) projects. It acquires outright or consolidates the smaller fragmented holdings of project developers and consultants and seeks to unlock value through scale economies, diversification, centralized monitoring, project pricing and portfolio management techniques.
The Fund is an umbrella for several smaller closed funds, each of them of a specific size and risk profile.
Investment Approach:
The fund acquires and consolidates forward positions of CERs in 3 main ways:
- Consolidation and Aggregation of Developers/Consultants CER streams into a centrally managed fund.
- Direct forward CER off take commitments (ERPA agreements) with project owners or with owners of CER streams under ERPA agreements.
- Special Transactions involving upfront payment and direct purchase of carbon streams.
Forward purchase agreements for yet-to-be delivered carbon credits are subject to a number of variables that can drastically alter the value of holding the notional commitment. Carbon valuation involves quantifying the project specific risks for a given CDM project and calculating, under current prices, the “fair value” of holding that ERPA commitment at the ERPA price.
Carbon Pricing
Carbon Credits exist in various shapes, under various national or international arrangements. They are often sold on a forward basis before they are generated, or even at very early stages of conception or implementation.
Carbon Ratings
Carbon Ratings are an important building block in the determination of pricing recommendations. Carbon Ratings measure the overall quality and likely performance of an emission reduction project. All factors that are likely to influence the projects capacity to generate CERs (or other units) are considered.
It is important to mention that there is no recipe or formula in rating assignment. If there was anyone could obtain a mechanical rating through data analysis. The reality is that ratings do not strictly measure a probability of delivery, and they certainly would not do so on a linear basis. Therefore the various rating levels should reflect an ordinal approach rather than a cardinal approach: the project with a higher rating has a better probability to deliver than the project with a lower rating.
Rating experts first rank a sufficiently large number of projects, based on their delivery risk, on the strength of a "memory database", made of what the experts have seen in the past about the degree of success or failure of hundreds of similar projects. Subsequently, all other projects receive ratings based on the ordinal approach, which of course apply also to the periodic review of existing ratings.
Mattcons has the skills needed to gauge delivery risk in all its components, even in the face of limited or unreliable information. We rely on in-house risk management tools that are based on methods used by the global rating standard.
The Mattcons analyst team begins the rating with a quick review of the basic project documentation to identify a set of simple explanatory questions which are discussed with the client before a detailed analysis is initiated.
The valuation must be refreshed at different stages of the project cycle, under current prices, with different risk predictions and expectations. As a result the ongoing change of a position’s value can easily be tracked over time.
This helps to simplify the complex process of the risk management of carbon portfolios and provides signals for potential re-balancing of a portfolio’s risk exposure from time to time.
By their very nature, forward carbon credits cannot be priced by direct reference to an established market spot price or market forward price unless the transaction volume is guaranteed and other conditions are met.
The forward price is dictated by a combination of delivery risk and other exogenous investment related risks. Delivery risk is mainly composed of registration risk (until registration takes place) and of other technical, commercial or financial risks (prior to and after registration). Crucially, the impact of predictability, volatility and stability of a project’s CER yield prospects needs also to be carefully analyzed. Other exogenous risks include the local investment climate, counterpart strength, legal and contractual risk, as well as post Kyoto eligibility and project specific regulatory risk.
It is important to mention that there is no recipe or formula in rating assignment. If there was anyone could obtain a mechanical rating through data analysis. The reality is that ratings do not strictly measure a probability of delivery, and they certainly would not do so on a linear basis. Therefore the various rating levels should reflect an ordinal approach rather than a cardinal approach: the project with a higher rating has a better probability to deliver than the project with a lower rating.
Rating experts first rank a sufficiently large number of projects, based on their delivery risk, on the strength of a "memory database", made of what the experts have seen in the past about the degree of success or failure of hundreds of similar projects. Subsequently, all other projects receive ratings based on the ordinal approach, which of course apply also to the periodic review of existing ratings.
Mattcons has the skills needed to gauge delivery risk in all its components, even in the face of limited or unreliable information. We rely on in-house risk management tools that are based on methods used by the global rating standard.
Mattcons Carbon Rating Process
Depending on the rating type and the level of analysis required by the client, the analyst team will assess the project in detail in order to form an evaluation of the same within the scope of the rating exercise.
Drawing upon Mattcons database, a thorough statistical analysis and in-depth discussions with the project developer and involved stakeholders, if applicable, the Mattcons will determine the likelihood of the project performing according to its PDD prediction. In the event that the client requires a full rating exercise for a project or portfolio, the Mattcons will conduct site visits in addition to the normal desk-based analyses.
In order to assure the quality of its work to clients, the Mattcons works with specific experts needed for the rating, and, where necessary, uses external specialists. For this purpose, the Mattcons has established relationships with a number of partner companies that provide the in-depth, technical experience needed to cover all technologies and sectors assessed by the Mattcons Rating Services.
Carbon Rating Scale
