14 November 2011
14 November 2011 CARBONrisk now introduces the ability to take into account project-specific past issuance, which are volumes generated earlier during the crediting period in question. CARBONrisk incorporates considerations of past issuance into future delivery risk estimates.
Applicable project stages, relevant dates, and contractual terms add specificity. CARBONrisk now introduces the ability to take into account project-specific past issuance, which are volumes generated earlier during the crediting period in question. CARBONrisk incorporates considerations of past issuance into future delivery risk estimates.
• What is it?
Past issuance is the volume of credits already issued by a project prior to CARBONrisk analysis. When past issuance information is available, CARBONrisk incorporates this data into its estimation for future delivery risk. Depending on the volumes generated and the contractual terms of the ERPA in question, past issuance affects the risk proposition of credits expected in the future.
• How is it captured?
For every year of the project crediting period, the user may enter in a past issuance volume. CARBONrisk takes this volume, the volume expected per PDD, and priority of the delivery distribution under the ERPA to estimate future delivery. As past performance cannot guide future expectation, CARBONrisk wanes the importance of past issuance in each subsequent year of analysis.
• What’s the impact?
Past issuance is treated as a ‘given’ for years in which it is entered, and CARBONrisk performs no delivery risk estimates for those crediting periods. CARBONrisk biases delivery expectations and uncertainty in future periods by past issuance. The first of the figures on the right illustrate how past issuance in 2010 and 2011 sets an initial trend for delivery in 2012 and beyond. The lower figures illustrates that the trend attenuates over the passage of time: expected delivery increases, accompanied by increasing uncertainty. (The expectation and variance are determined by the Carbon Rating Agency’s historical parameterizations for the project type under study.)
• How can this help you?
Past issuance allows the user to ask:
- What can the past tell me about my portfolio’s future delivery??- Given delivery targets, what are my past issuance ‘break-evens?’?- How does past performance de-risk future delivery??- What contractual arrangements are most advantageous, given past issuance history?
For more information on CARBONrisk, click here: http://www.ideacarbon.com/cra/carbonrisk/index.htm .
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