Cli-Mit GHG Business Planning Model

The greenhouse gas (GHG) market could become the largest environmental commodity market in the world, with estimates of annual turnover under a ratified Kyoto Protocol exceeding $100 billion annually by 2010. An emerging market of this magnitude creates major business opportunities for companies, which either will have to participate in the market (as a matter of basic risk management) or which will want to participate in the market to advance their corporate financial interests.

TC+ES created the Cli-Mit Greenhouse Gas Business Planning Model© to allow users to evaluate the financial implications of a wide variety of GHG market entry strategies and portfolio options. To facilitate users' ability to present the results of the Model's analysis to corporate financial decisionmakers, the Model produces outputs that include financial profit and loss statements and balance sheets. Like all of TC+ES's models and tools, the GHG Business Planning Model was built to solve a specific problem facing one of our clients, and was tested "by fire" in its ability to support financial decisionmaking within the company.

The Model provides insight into a number of key questions, including:

 

What are the NPV returns of a given market entry strategy and portfolio, calibrated against alternative forward price curves for the GHG market?

What is the cost (or foregone opportunity) of waiting to enter the GHG market until the rules are clear?

What rates of return are available with a sophisticated market entry strategy?

Which types of mitigation investments are most rewarding (e.g. carbon funds, options, projects, or spot market credits)?

How dependent are the investment returns on forward price curve estimates?

How do returns change based on different portfolio risk weightings?

The Model is easy to use. It can be leased from TC+ES, or used as part of a consulting services package focused on answering a company's portfolio questions. For a copy of the GHG Business Planning Model borchure, email Laura Kosloff at lkosloff@climateservices.com