Susan BasuJournal #1
It is my second month at Carbon Credit Capital. So far, I’ve traveled to Dallas with the President and CEO, Olivia Fussell, and begun to formulate the strategy for how this start-up will approach the U.S. market. To understand the approach, one must know that Carbon offsets (also called carbon credits) come from greenhouse gas reduction projects undertaken in uncapped sectors, such as; agriculture, landfills, buildings, and uncapped countries, like China and India. Emitters have several options—they can reduce their own emissions, buy allowances from more efficient companies, or buy offsets—and all of these efforts need to add up for them to meet their annual emissions cap.
Bringing this understanding of offsets to U.S. customers; such as utilities, chemical manufacturers, and oil importers and refiners, is just half the battle. Offsets have a bad reputation for being “hot air”, i.e. they do not accurately and verifiably represent permanent reductions of greenhouse gases. This may or may not be true and it depends on where the offset came from as there are several bodies that certify offsets in the U.S. and abroad; all with different standards, some more strict than others.
In addition, Carbon Credit Capital’s offsets are produced abroad, mostly by biogas and wind projects in India and, in the future, through forestry in South America. We are not sure about how companies will view these international offsets compared to domestic offsets, i.e. offsets produced in the U.S. by Midwestern farmers practicing no-till agriculture to sequester carbon and make profits from selling offsets to our competitors. Will nationalistic tendencies rule or will companies choose international offsets because they are cheaper to produce? What do the energy companies’ investment models and timelines look like? They must be weighing offsets against other measures, such as in-house energy efficiency, renewable, gas, nuclear, and coal project development. There are different risks, timelines, and uncertainties behind development and implementation of these projects– how do they weigh them? Where do offsets come in?
As you can see, there are many questions that I need to answer to find customers who are more likely to buy offsets. This month, I’m leading a team of several employees to assess the ideal customer, to contact those customers, and to conduct focus groups to gather information about how they view international offsets. Furthermore, this team will help find out how the decision making processes within their company influence their likelihood of working with us.
To be clear about what Carbon Credit Capital does and will do, we must search for the right developing countries to operate in, connect with people in these countries to set up projects that reduce greenhouse gases, and develop the project methodology, design, and financials. Moreover, we will maintain a staff in that country to coordinate the monitoring and verification of the emissions reductions and find co-investors that want to buy the offsets at cost rather than at market prices. Finally, we will securitize the emissions reductions and sell them to investors or brokers.
Journal #2
I am in the middle of my last month at Carbon Credit Capital. Yesterday, I presented the strategy that my team is creating to approach the U.S. market for offsets. The audience was the summer intern class at UBS, a rather large group. They were quite unfamiliar with climate change and discussing offsets may have confused them. The potential commoditization of carbon represents a new area of work for their bank and I hope that many realize this opportunity.
In the past few weeks, my supervisor was preparing to present on the topic of how carbon financing can connect to microcredit in India. I spent a substantial amount of time on her presentations and models. Based on a few days of research and discussion, it surprised me that we were presenting to an audience that we are moving into, the microfinance-linked business. In the past, I have been involved in programs that take measured steps based on informed sources and extensive research.
Today, I am having a consultant come in to teach the US team how to effectively make ‘cold calls’. We have gathered information about several key people in carbon-intensive industries. On Monday, we are going to call them to ask about their companies’ demands for carbon offsets.
