Legal, technical and commercial consultations under the Joint Implementation projects
Legal consultations of VEMA CARBON are aimed at minimization of legal risks in the business organization and include the elements as follows:
- recommendations for contract paper work regarding purchase/sale of GHG emission reduction units etc.;
- development and adjustment of contracts and other legal paperwork with the counter agent;
- legal drawing up of the deal and “settlement” of property rights to the “commodity”;
- development and/or agreement of financing schemes;
- analysis of the emission reduction units and JI market components;
- analysis of possibilities available from the international banks, brokers and other financial institutions.
VEMA CARBON performs JI market research based on the potential of joint implementation and/or approved project documentation among the most promising buyers of the GHG emission reduction units, banks etc.
Technical consultations include the solution of group of tasks in generation, transformation and management of energy, fuel and resources to enhance energy safety, to minimize harmful impact on environment and to increase energy efficiency without major additional expenses for the company:
- comprehensive appraisal of the production efficiency, energy distribution and consumption;
- appraisal of efficiency and objectivity of the actual resources accounting system;
- analysis of energy efficiency enhancement potential for technological processes, taking into account the best technologies available;
- development of methodological approaches to solving a problem of energy intensity reduction and energy efficiency enhancement;
- development of energy strategy, including identification of main directions, priorities and promising activities.
Commercial consultations include:
- financial analysis of project alternatives;
- estimation of risks and benefits of the JI development and implementation;
- optimization of investment costs under the JI project.
VEMA CARBON performs financial analysis of possible alternatives of the project financing on modernization of the enterprise facilities, considering different JI implementation alternatives which enables to choose the most efficient and less risky financing option for the project. In particular, we compare financial flows of different options of project financing, based on calculation of the Net Present Value, or other financial indices.
The following alternative activities may be subject to comparison: financing of preparation and approval of JI on your own, with forward sale of GHG emission reduction units and attraction of conventional bank loan resources or the sale of all emission reduction units at the initial stage, with equipment supply and preferential financing of the project activity by banks.
Implementation of Strategy may include preparation and agreement of the necessary project documentation.
By taking a decision on Joint Implementation project, enterprises estimate the relevant risks and benefits. To the latter can be added profits from sales of emission reductions units to be generated, image and other benefits. However, there is a possibility of investment loss when implementing JI, which may be caused by instability of carbon market, non-approval of project documentation etc.
Thus, it is necessary to optimize the funds from sales of the GHG emission reductions at a date set by the enterprise and to minimize the investment loss risks. Strategy of preparation and implementation of the JI will determine the most efficient degree of enterprise involvement in the expenses related to the preparation and implementation of JI project, taking into account future profits from sales of GHG emission reduction units and accompanying risks.
The Strategy depends on complication of the project, its scale, lifetime, participants (investors), significance for the country etc., as well as situation and conditions of the project owner.
In addition to the above, in order to optimize the investment expenses, there can be performed the comparison of alternative JI financing options, and carbon units management recommendations presented.