Practice/Industry Group Overview
Greenberg Traurig’s Carbon Credits Group advises clients that produce and trade carbon credits, which are transferable rights to emit greenhouse gases created by governmental entities in response to two public policy goals:
- Reducing greenhouse gas (GHG) emissions
- Using a free market to efficiently allocate resources and reduce risk
Whom Do GHG Cap and Trade Systems Impact?
- Many companies, individuals, cities, states and countries are recognizing that the future will bring a cap on their emissions that may contribute to global warming.
- Industries that are energy-intensive, whether or not they emit greenhouse gases, may need to hedge their risk through energy hedges, carbon credit hedges or both, recognizing that the future will bring a cap on their emissions.
- Depending on the regional or national GHG reduction system in place, emitters of GHGs may be forced to obtain the carbon credits needed to reduce their carbon footprint through an auction, through emissions reduction projects or through allocation by the government.
How Cap and Trade Systems Impact Companies
- Energy companies are the largest single producers of GHGs – and under most pending U.S. proposals would be the largest potential purchasers of carbon credits in a cap and trade system.
- Pending U.S. cap and trade proposals will impact companies in the energy, chemical, manufacturing and investment markets.
- Internationally, the Kyoto Protocol caps emissions from numerous point sources such as power plants, chemical plants or smelters and steel mills.
- Energy companies are faced with the prospect of another potential new “virtual” commodity in the form of carbon credits – a derivative security unlike any other because it is based not upon an underlying commodity, but strictly upon governmental fiat or a public relations desire to change a pattern of production.
- Unless and until one of the many pending cap and trade proposals is enacted, the use of carbon credits by energy companies in the United States will be limited and voluntary. However, the legislation that has been proposed would be market-changing and clients need to rely on a firm that is at the forefront of this issue.
GT’s Carbon Credits Experience
- We have experience representing energy companies in the exploration, development, transportation and marketing of hydrocarbon commodities. This experience is valuable because carbon credits are integrated with these commodities.
- Outside the United States, we have positioned our firm at the forefront of these issues through representing companies that invest in, develop and market carbon credits for sale in the European Union, Latin America, the Middle East and Asia.
- In the United States, GT lawyers have participated in the promulgation of marketing and trading form agreements by industry groups, and have facilitated education and training through seminars, including our lead sponsorship of the “Emerging Opportunities in Carbon Markets” conference in Miami in January 2008.
- We have helped companies analyze their product and supply chains to create and sell carbon credits both within the U.S. voluntary market and also internationally, to reduce their deemed carbon production and also to take advantage of an arbitrage between the U.S. and international markets. With GT’s help, U.S. companies can achieve a smaller carbon footprint, perhaps even carbon neutrality, while also providing the potential for a revenue stream that can be used to lower costs or fund other projects.
- Our lawyers also counsel clients with regard to compliance with legislation and regulations enacted by various state or regional initiatives, such as the Western Regional Climate Initiative (WRCI) and the Regional Greenhouse Gas Initiative (RGGI).
How GT Can Help
Our attorneys have experience in virtually every aspect of carbon credit creation and trading, including:
Energy Project Finance and Development
- Traditional energy projects that incorporate greenhouse gas reduction mechanisms
- Alternative energy and emissions projects that produce energy and accrue tax benefits and renewable energy credits or create carbon credits, including:
- Landfill methane capture
- Biomass and bagasse to energy
- Cogeneration projects
- Wind energy
- Waste to energy
- Wastewater process gas recovery
- Green buildings
- Geothermal energy
- Solar energy
- Manure management
Carbon Credit Development
- Sourcing and acquisition of development rights in the United States and internationally
- Engineering, procurement and construction contracts
- Application for approval of methodology and certification of credits, including:
- European Union Allowances (EUAs)
- Certified Emissions Reductions (CERs)
- Emission Reduction Purchase Agreements (ERPAs)
Marketing and Trading
- Trading contracts – bilateral/multiparty agreements, in accordance with the:
- International Swaps and Derivatives Association, Inc. (ISDA)
- International Emission Trading Association (IETA)
- European Federation of Energy Traders (EFET)
- Monetization or securitization of carbon credits
Risk and Dispute Management
- Risk allocation
- Securing and financing of alternative suppliers or purchasers
- Litigation/arbitration of disputes related to emissions projects or marketing and trading